WAL-MART DE MÉXICO, S.A.B. DE C.V.
BLVD. MANUEL AVILA CAMACHO # 647, COLONIA PERIODISTAS
DELEGACION MIGUEL HIDALGO, ZIP. 11220 MEXICO, D.F.
PH. (52) 55 5283-0100
www.walmartmexico.com.mx
FREE TRANSLATION, NOT TO THE LETTER
REPRESENTATIVE SHARES OF CAPITAL STOCK FOR WAL-MART DE MÉXICO, S.A.B. DE C.V., ARE:
ƒ
COMMON
ƒ
REGISTERED
ƒ
NO-PAR VALUE
TICKER SYMBOL:
WALMEX
SAID SHARES ARE REGISTERED WITH THE NATIONAL REGISTRY FOR SECURITIES AND ARE TRADED IN
THE MEXICAN STOCK EXCHANGE.
REGISTRATION WITH THE NATIONAL REGISTRY FOR SECURITIES DOES NOT IMPLY CERTIFICATION
REGARDING THE SOUNDNESS OF THE SECURITY OR THE FINANCIAL STANDING OF THE ISSUER, OR
ACCURACY OR VERACITY OF THE INFORMATION CONTAINED IN THE PROSPECT, NOR DOES IT
CONFIRM ANY ACTIONS THAT MAY, OR MAY NOT, HAVE BEEN CONDUCTED IN VIOLATION OF THE
LAW.
ANNUAL REPORT PRESENTED IN KEEPING WITH GENERAL PROVISIONS APPLICABLE TO SECURITIES
ISSUERS AND OTHER MARKET PLAYERS: YEAR ENDING DECEMBER 31, 2010.
TABLE OF CONTENTS
1)
GENERAL INFORMATION................................................................. 4
A) GLOSSARY OF TERMS AND DEFINITIONS ........................................................................... 4
B) EXECUTIVE SUMMARY ............................................................................................................ 6
I)
WALMEX IN THE STOCK MARKET............................................................................................ 6
C) RISK FACTORS ............................................................................................................................ 9
D) OTHER SECURITIES ................................................................................................................. 10
E) PUBLIC DOCUMENTS .............................................................................................................. 10
2)
THE COMPANY ................................................................................... 12
A) ISSUER BACKGROUND AND DEVELOPMENT ................................................................... 12
B) BUSINESS DESCRIPTION ........................................................................................................ 13
I)
II)
III)
IV)
V)
VI)
VII)
VIII)
IX)
X)
XI)
XII)
XIII)
3)
MAIN ACTIVITY........................................................................................................................... 13
DISTRIBUTION CHANNELS ....................................................................................................... 16
PATENTS, PERMITS, BRANDS AND OTHER CONTRACTS................................................... 16
PRIMARY CUSTOMERS .............................................................................................................. 17
APPLICABLE LEGISLATION AND TAX SYSTEM ................................................................... 17
HUMAN RESOURCES .................................................................................................................. 18
ENVIRONMENTAL PERFORMANCE ........................................................................................ 18
MARKET INFORMATION ........................................................................................................... 18
CORPORATE STRUCTURE ......................................................................................................... 20
DESCRIPTION OF MAIN ASSETS .............................................................................................. 21
LEGAL, ADMINISTRATIVE OR ARBITRATION CASES......................................................... 22
REPRESENTATIVE SHARES OF CAPITAL STOCK ................................................................. 22
DIVIDENDS ................................................................................................................................... 22
FINANCIAL INFORMATION............................................................ 24
A) SELECTED FINANCIAL INFORMATION ............................................................................... 24
B) FINANCIAL INFORMATION BY LINE OF BUSINESS AND GEOGRAPHICAL
REGION ....................................................................................................................................... 25
C) MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS ....................................... 26
I)
II)
III)
OPERATION RESULTS ................................................................................................................ 27
FINANCIAL SITUATION, LIQUIDITY AND CAPITAL RESOURCE ...................................... 27
INTERNAL CONTROL ................................................................................................................. 29
D) CRITICAL ACCOUNTING POLICIES ...................................................................................... 30
4)
ADMINISTRATION ............................................................................. 31
A)
B)
C)
D)
INDEPENDENT AUDITORS ..................................................................................................... 31
CONFLICTS OF INTEREST ...................................................................................................... 31
ADMINISTRATORS AND SHAREHOLDERS ......................................................................... 32
CORPORATE BYLAWS (IN FORCE AS OF MARCH 10, 2011) ............................................ 38
Page 2 of 78
5)
STOCK MARKET ................................................................................ 49
A) STOCK STRUCTURE................................................................................................................. 49
B) STOCK PERFORMANCE IN THE SECURITIES MARKET ................................................... 49
6)
PEOPLE IN CHARGE ......................................................................... 51
7)
ATTACHMENTS .................................................................................. 53
A) CONSOLIDATED FINANCIAL STATEMENTS AND OPINION OF THE STATUTORY
AUDITOR .................................................................................................................................... 53
Notes:
1.
For comparison purposes, all securities are shown with an adjustment due to the 2-to-1 split which took
place on April 23, 2010.
Page 3 of 78
2) GENERAL INFORMATION
A) GLOSSARY OF TERMS AND DEFINITIONS
ADR
American Depositary Receipts ANTAD
National Retailers Association Apparel stores
Offering the best in fashion for the whole family at the best possible
price
Associate
Employee who works at Walmart de México y Centroamérica
Banco Walmart
Universal banking institution aimed at Walmart de México
customers, with an initial offering of basic banking and financial
products and services
(Banco Wal-Mart de México Adelante, S.A., Institución de Banca
Múltiple)
Bodegas &
discount stores
Austere stores offering basic merchandise, food and household
items at the best prices
Center
Consisting of the following states: Aguascalientes, Colima, Hidalgo,
State of Mexico, Guanajuato, Jalisco, Michoacán, Morelos, Puebla,
Queretaro, San Luis Potosi and Tlaxcala
Clubs
Membership warehouse clubs focused on
consumers who seek the best possible prices
CNBV
Mexican National Banking and Securities Commission
DC
Location for the receipt of goods from suppliers
and store distribution
EBITDA
Earnings Before Interest, Taxes, Depreciation,
and Amortization
Every Day
Low Prices
Permanent philosophy of Walmart de México y Centroamérica, in
order to contribute towards improving the quality of life for the
region
GDP
Gross Domestic Product
GLS
Global Logistics System
Hypermarts
Self-service stores providing the widest assortment of goods from
groceries and fresh, to apparel and general merchandise
ISSSTE Stores
Instituto de Seguridad y Servicios Sociales de los Trabajadores del
Estado (Social Security and Services Institute for Government
Employees).
businesses
and
Metropolitan Area
Consisting of the following: Mexico City Federal District and the
Metropolitan Area
MSE
Mexican Stock Exchange
Net sales
Goods sold in our stores
North
Consisting of the following states: Coahuila, Chihuahua, Durango
and Zacatecas
Northeast
Consisting of the following states: Nuevo Leon and Tamaulipas
Northwest
Consisting of the following states: Baja California Norte, Baja
California Sur, Nayarit, Sinaloa and Sonora
Page 4 of 78
Restaurants
Leading chain in the restaurant cafeteria segment
Sales floor
Surface area set aside for merchandise retail
Southeast
Consisting of the following states: Campeche, Quintana Roo,
Tabasco, Veracruz and Yucatán
Southwest
Consisting of the following states: Guerrero, Chiapas and Oaxaca
Supermarkets
Self-service stores located in residential areas
Total revenues
Net sales plus other income
UNAM Stores
Universidad Nacional Autónoma de México (National Autonomous
University of Mexico)
WALMEX
Stock Symbol for Wal-Mart de México S.A.B. de C.V.
Page 5 of 78
B) EXECUTIVE SUMMARY
Walmart de México y Centroamérica is one of the most important retail chains in the region with
operations in 384 cities located in six countries: Costa Rica, El Salvador, Guatemala, Honduras,
Mexico and Nicaragua. As of December 31, 2010 it operates 2,279 units, including self-service stores,
warehouse membership clubs, apparel stores, and restaurants as well as 263 bank branches.
During 2010, Walmart de México y Centroamérica achieved once again, its best results.
Financial Data
Million pesos
2010
Growth
2009
(%)
RESULTS
Income Tax
Ps. 334,511
1,346
335,857
74,059
47,015
27,044
33,294
27,630
8,066
Ps. 269,397
1,054
270,451
58,600
36,332
22,268
26,915
23,018
6,212
24.2
27.7
24.2
26.4
29.4
21.4
23.7
20.0
29.8
Net income
Ps. 19,550
Ps. 16,806
16.3
Ps. 24,661
29,036
9,043
102,300
29,768
Ps. 19,483
22,520
6,243
84,893
-
26.6
28.9
44.9
20.5
100.0
Total assets
Ps. 194,808
Ps. 133,139
46.3
Suppliers
Ps.
Ps.
Net sales
Other income
Total revenues
Gross profit
General expenses
Operating income
EBITDA
Income before taxes
FINANCIAL POSITION
Cash
Inventories
Other assets
Fixed assets
Goodwill
Other liabilities
Shareholders’ equity
Non Controlling Interest
Total liabilities, shareholders’
noncontrolling Interest
equity
and
38,000
33,948
122,531
329
Ps. 194,808
30,378
19,613
83,148
-
25.1
73.1
47.4
100.0
Ps. 133,139
46.3
Our continuous and long-term growth has always set us aside from the rest. We are one of the
companies that most generates value for its shareholders, the result of long-term thinking that guides
our day-to-day activities. It is because of this vision that we acquired Walmart Centroamérica,
thereby opening new horizons.
Because of the countless opportunities for profitable growth offered by the region, we will continue
investing here, supported by our financial strength.
Year after year, our achievements become new challenges that we are able to face thanks to a
series of clear and well-defined principles:
•
•
•
•
Results-oriented approach
Disciplined investment
Continuous improvement
Adapting to our customers’ needs
Page 6 of 78
Results-oriented approach
During 2010, we once again achieved record figures in sales, operating income, and EBITDA. These
results are the reflection of a rigorous process to efficiently monitor and control our operations.
In Mexico, sales amounted to $295.6 billion pesos, representing 9.7% growth for total units and 3.2% for
comp units. Furthermore, we honored our commitment to leverage profits by increasing operating
income and EBITDA beyond sales growth (14.3% and 14.2%, respectively). This was possible thanks to
enhanced operating and logistics efficiency.
In Central America, sales increased 6.9% for total units and 5.2% for comp units. Operating income
and EBITDA were also higher than sales (7.2% and 7.5%, respectively). After consolidating figures,
these indicators grew more than 20%.
The integration of both operations -Mexico and Central America- focuses on three main objectives:
value generation, a business-centered approach, and single-company operations. In less than one
year, since becoming an international retailer, we have already identified synergies between Mexico
and Central America that will allow us to generate further value in the medium and long terms.
Disciplined investment
Our sound financial position, cash-generation capacity, and confidence in the growth opportunities
offered by the region allow us to continue investing and bring our value proposition to more
customers.
In 2010, we invested a record $13.1 billion pesos to open 297 new stores, remodel over 130 existing
stores and further modernize our logistics network. All of our business formats grew, both in new cities
and in those where we were already present.
In Mexico, we opened 267 stores, reaching a final number of 1,730 stores in operation. Bodega
Aurrerá opened 220 stores from all its business formats; Walmart, 20; Sam’s Club, 10; Superama, 6;
Suburbia, 4; and 7 Vips restaurants. Furthermore, Banco Walmart opened 73 new branches.
Altogether, these new units added more than 5,000,000 sq. ft., representing an installed-capacity
increase of 11.4%.
In Central America, we have increased our installed capacity by 3.7% through the opening of 30
stores: 12 Despensa Familiar, 12 Palí, 2 Paiz and 4 Maxi Bodega. In total, we have 549 stores already in
operation.
In addition to our investment in fixed assets, we paid $5.7 billion pesos in dividends to our shareholders
and $3.5 billion for the repurchase of shares. Our sound financial structure is defined by the absence
of debt and a cash balance of $24.7 billion pesos.
Fully confident in the prospects offered by the countries where we operate, we will continue investing
to make the best of the many profitable-growth opportunities in the region.
Continuous improvement
Our highest priority is to continue being the ¿ retailer with the lowest cost structure in the market, so as
to be in a position of giving our customers Every Day Low Prices. We are always looking for new
opportunities to improve our operation, so as to invest in those areas that allow us to do more with
less.
An example of our permanent commitment to greater operational efficiencies can be found in the
improvements introduced in our 25 Distribution Centers (DCs).
As part of our expansion plan in Mexico, we opened a fully automated DC for dry products in
Villahermosa, Tabasco, with the capacity of handling over 350,000 cases per day. It will allow us to
more efficiently serve stores in Southeast Mexico. Furthermore, we have automated the operations of
a section of our Cuautitlán DC, located in Greater Mexico City. With an investment of more than
$1.0 billion pesos, these two distribution centers will increase productivity by up to 30% for these
facilities, allowing us to transport more merchandise to a larger number of stores.
In Central America, the logistics network has started the integration process of implementing Walmart
systems used throughout the world. The San Rafael DC in Costa Rica is the first one to use GLS, a
flexible and robust logistics platform that gives further visibility to operating areas, increasing
productivity vis-à-vis merchandise management.
Page 7 of 78
Throughout the year, in our store operations we developed a number of productivity initiatives that
generated significant savings for our Company. The primary initiatives encompassed several
operating areas: changes in processes and work routines; headcount based on realistic workloads;
and production and display of perishables stemming from each unit’s specific requirements. Savings
generated in 2010 amounted to more than $140 million pesos, and represented the beginning of a
new project with broader scope that will lead us to the creation of world-class operating standards.
Adapting to our customers’ needs
Aware of the fact that customer needs are continuously changing, we keep on updating our value
proposition at stores, clubs, restaurants and bank branches with the purpose of permanently offering
the best possible shopping experience.
In the case of Bodega Aurrerá, we introduced important changes pertaining to merchandise
distribution and department organization. This has resulted in more productive and customerconvenient stores. In line with these changes, we also modified Bodega’s look to make it more
modern. An important aspect is that this image and layout changes were completed in a matter of
just one month.
Suburbia also changed the look of the Junior’s Department in order to make it more suitable to
target customers regarding layout, therefore making it easier for them to find what they need.
Vips’ new concept was launched in several units. It included a revamped logo, new furniture and
innovative menus. The warm colors and organic shapes used in the new logo make it friendlier, more
contemporary and appealing, in addition to creating a more family-like environment. The new
furniture is more comfortable and modern, the lights are warmer, and the visual elements are more
casual. The menu still includes many of our traditional dishes –Tlalpeño soup, Swiss enchiladas, and
key lime pie– but we have also introduced creative and innovative recipes, such as the au gratin
onion soup, Roquefort sirloin, pastrami Ciabatta sandwich, and apple strudel.
In Central America, we started upgrading our supermarkets. Two Más por Menos stores were
remodeled, making them similar to Mexico’s Superama. This upgrade included changing the look of
the stores and their logo, as well as providing a broader assortment of gourmet products. The new
position in the marketplace allowed these supermarkets to improve their value offering, which
received great acceptance by our customers.
Banco Walmart focused on developing financial products best suited to meet the needs of individual
and corporate customers. Throughout the year, over 590,000 individual accounts were opened
including checking, payroll accounts, investment, and savings accounts, thus generating $895 million
pesos in deposits. Moreover, our credit portfolio includes 112,000 cardholders who, from October to
December, received $5.8 million pesos back in cash just by using their cards in our stores.
Approximately 25% of these customers were first-time credit cardholders. We were able to grow our
credit portfolio 78% through strict risk control measures, as shown by the 61% reduction in past-due
portfolio, currently representing 3.5% of the total consumer credit portfolio, which is fully reserved.
Regarding corporate financial services, we granted $700 million pesos in loans to 57 companies, 11 of
which had their first credit relationship with a banking institution.
I) WALMEX IN THE STOCK MARKET
Walmart de México y Centroamérica (WALMEX) is listed in the Mexican Stock Exchange since 1977. It
is one of the most important companies in the Mexican Stock Exchange index and in capitalization
value. Its market value as of December 31, 2010 was $ 632.5 billion pesos, represented by 17,848
million shares.
Wal-Mart Stores, Inc., through one of its subsidiaries (Intersalt, S. de R.L. de C.V.), is the majority
shareholder of Wal-Mart de México S.A.B. de C.V. and as of December 31, 2010, its equity interest
represented 68.5% of the capital stock.
Page 8 of 78
Top ten companies in the MSE 1
Million pesos
Stock Symbol
1.
2.
América Móvil
Walmart de México y
Centroamérica
3. Grupo México
4. Grupo Modelo
5. FEMSA
6. Carso Global Telecom
7. Telmex Internacional
8. Coca Cola Femsa
9. Grupo Televisa
10. Teléfonos de México
AMX
WALMEX
GMEXICO
GMODELO
FEMSA
TELECOM
TELINT
KOF
TLEVISA
TELMEX
Capitalization
Value
$ 1,424,787
632,533
393,843
247,158
231,973
222,832
209,980
188,660
186,815
181,703
Total Revenues
2010
Employees
$ 607,855
150,618
334,511
102,750
85,019
169,702
64,196
100,433
103,456
57,857
113,563
219,767
23,931
36,566
108,572
70,787
25,250
68,449
24,739
52,062
C) RISK FACTORS
México is exposed to factors that affect the purchasing power and/or consumer habits of the
population. These factors can be economic, political or social, and among the most important are
the following:
•
Employment and wages. A positive or negative variation in employment rates and/or in real
wages could affect per capita income, thereby impacting sales figures.
•
Interest rates, exchange rates and inflation. Historically Walmart de México y Centroamérica has
generated surplus cash, enabling it to create financial income. A drop in interest rates could
cause a reduction in said income, thus affecting the growth in earnings. Nevertheless, the
Company feels that a drop in interest rates has a positive effect in the medium and long terms
because it serves to improve the purchasing power of the population. On the other hand,
fluctuation in exchange rates may impact inflation forecasts and consumer purchasing power,
which in turn may have an adverse effect on Company sales figures. It should be noted that the
Company has no liabilities with cost, in either domestic or foreign currency, except those
represented by the capitalization of property leasing to third parties, pursuant to Financial
Information standards.
•
Competition. The Retail sector became extremely competitive during the last few years, forcing
the participants to search for new ways to differentiate from each other.
In accordance with our corporate governance standards, does not deal in derivatives.
Centroamérica is exposed to events that could affect the purchasing power and/or shopping
habits of its consumers. Said events may be economic, political or social in nature. Many Latin
American countries have faced economic, political and social crisis, natural disasters and major
weather conditions in the past and these same events could reoccur in the future. It could be
affected by several factors, including, among others, the following:
−
−
−
−
−
−
−
−
−
1
Significant government interference in local economies;
Economic slowdowns;
High inflation levels;
Wage and price controls;
Changes in economic or tax policies enforced by the government;
Natural disasters and severe climate conditions;
Imposed trade barriers;
Unexpected regulatory changes; and
Overall political, social and economic instability.
Source: Mexican Stock Exchange (MSE). Figures as of December 31, 2010.
Page 9 of 78
Adverse events and conditions in Central America may inhibit demand and create uncertainly in
the operations, which in turn could have material impacts on México.
We have the conviction at Walmart de México y Centroamérica to not only focus on volume as
our competitive advantage, but on a long-term strategy focused in our clients along with a
significant and relevant value offer. This strategy, supported by investments in technology and
distribution centers, allows us to deliver Every Day Low Prices to our customers.
•
Inflation
Some countries in Central America have historically experienced high inflation levels. Elevated
inflation rates could undermine the financial atmosphere for the Company and its results. This
would produce a direct impact on customer purchasing power, and on the demand for
products and services.
D) OTHER SECURITIES
Walmart de México y Centroamérica with its sponsored level 1 ADR program that has Bank of New
York as depositary bank is one of the three first international issuers to trade in “International OTCQX
Market Tier” (www.otcqx.com ).
The “International OTCQX Market Tier” recognizes the companies that have ADRs trading in the Over
the Counter market in the U.S., who distinguished themselves by providing credible information to
investors, and meet the financial qualifications of the NYSE listing standards. Among the main benefits
is the electronic quotation and trading system, and an online financial information system.
Walmart de México y Centroamérica has complied, in the last three fiscal periods, in form and time
with the requirements of Mexican and foreign legislations regarding relevant matters and periodical
information such as quarterly and yearly reports on results.
E) PUBLIC DOCUMENTS
The following documents are available to the Investor Public at large, through the MSE website,
www.bmv.com.mx, and Walmart de México y Centroamérica´s website,
www.walmartmexico.com.mx :
•
Annual report – MSE format
•
Notification of important events
•
Monthly sales report
•
Quarterly report on results: Consolidated Financial Statements (Financial Statements compared
against the same quarter of the previous year)
•
Annual Report, including the Consolidated and Audited Financial Statements for the latest
fiscal periods, as well as a comparison of the previous period.
•
Social Responsibility and Sustainable Development Report is based on the methodology used
in Global Reporting Initiative (GRI).
•
Code of Corporate Best Practices
•
Authenticated copy of the bylaws
Page 10 of 78
CONTACTS
INVESTOR RELATIONS:
Mariana Rodríguez de García (m.rodriguez@wal-mart.com)
Telephone: (52)55 5283 0289
Paulina Clark Guzmán (paulina.clark@wal-mart.com)
Telephone: (52)55 5283 0100 ext. 8540
CORPORATE AFFAIRS:
Raúl Argüelles (raul.arguelles@wal-mart.com)
Telephone: (52)55 5283 0928
Antonio Ocaranza (antonio.ocaranza@wal-mart.com)
Telephone: (52)55 5283 0271
WALMART DE MÉXICO FOUNDATION:
María Gisela Noble (fundacion@wal-mart.com)
Telephone: (52)55 5283 0100 ext. 8106
Page 11 of 78
3) THE COMPANY
A) ISSUER BACKGROUND AND DEVELOPMENT
1958
1960
1964
1970
1977
1986
1991
1992
1993
1994
1997
2000
2001
2004
2006
2007
2009
2010
The first Aurrerá store was opened to the public in Mexico City.
Superama begins operations.
Vips begins operations.
Suburbia and Bodega Aurrerá initiate operations.
Company shares were first traded in the Mexican Stock Exchange. Its Stock Symbol was
AURRERÁ.
The company changes its name to Cifra, S.A. de C.V. (Cifra).
A joint venture agreement is signed with Wal-Mart Stores, Inc. (50%-50%) to open Sam’s Club
in Mexico. The first club opened its doors in December of the same year.
Joining the agreement are the new Aurrerá, Bodega Aurrerá and Superama units, in addition
to the Walmart Supercenters.
With this purpose in mind, two companies are created: Cifra-Mart and WMHCM, of which
Cifra owns 50% and Wal-Mart Stores, Inc., the other 50%.
Cifra keeps 100% of its units opened prior to May 1992.
Walmart Supercenter initiates operations.
The new Suburbia and Vips units are incorporated into the agreement.
The joint venture companies merge into Cifra. Walmart Stores makes a public tender offer in
the Mexican Stock Exchange acquiring control of the Company.
Cifra remains a public company that operates all the businesses in Mexico (Sam’s Club,
Bodega Aurrerá, Walmart Supercenter, Aurrerá, Superama, Suburbia and Vips).
The General Shareholders’ Assembly approved the change in name from Cifra, S.A. de C.V.,
to Wal-Mart de México, S.A. de C.V. Its Stock Symbol is WALMEX.
All Aurrerá stores are converted to either Walmart Supercenter or Bodega Aurrerá.
Our Shareholders’ Assembly granted voting rights to holders of Series “C” shares, and
converted them to Series “V”. The conversion was par value, that is, a Series “V” share for
each share of Series “C”. All capital stock for Walmart de México is represented by a single
series, thus giving all Shareholders equal voting rights.
The General Shareholders’ Assembly approved the official name change from Wal-Mart de
México, S.A. de C.V. to Wal-Mart de México, S.A.B. de C.V.
Walmart Bank begins operations.
We approved the acquisition of 100% of Walmart Centroamérica’s operation, the leading
retailer in the region, with 519 operating units throughout Guatemala, El Salvador, Honduras,
Nicaragua and Costa Rica.
On February 15, the acquisition of Walmart Centroamérica was completed, changing the
commercial brand name to Walmart de México y Centroamérica.
Investment in fixed assets
Openings (number of units)
Investment (million pesos)
2010
2009
2008
297
275
182
$ 13,130
$ 9,735
$ 11,316
During 2010 we invested $13.1 billion pesos and increased our installed capacity in all of our business
formats with the opening of 297 new stores. These openings have increased our installed capacity in
11.4% in sales floor in México and 3.7% in Central America.
During 2009 we opened 275 new stores, increasing of 10.6% in sales floor installed capacity.
During 2008 we opened 182 new stores, representing an increase in installed capacity of 11.7% in
sales floor and 3.2% in restaurant seating.
Page 12 of 78
B) BUSINESS DESCRIPTION
I)
MAIN ACTIVITY
As of December 31, 2010, Walmart de México y Centroamérica operates 2,279 units, including selfservice stores, warehouse membership clubs, apparel stores, and restaurants as well as 263 bank
branches, all of which are located in 384 cities in the six countries.
Bodegas 38.6% of total sales $129.2 billion pesos 86,777 associates in sales 1,336 units 21,759,734 sq. ft. of 368 cities sales floor 248 openings 27.0% of total sales $90.2 billion pesos in sales 17,599,550 sq. ft. of sales floor 20 openings $76.0 billion pesos in sales 8,589,451 sq. ft. of sales floor 10 openings and discount stores Hypermarts 22.7% of total sales Clubs 58,867 associates 208 units 79 cities 24,994 associates 110 units 67 cities Supermarkets 7.0% of total sales $23.4 billion pesos 19,599 associates in sales 169 units 2,747,994 sq. ft. of 39 cities sales floor 8 openings 3.0% of total sales $10.1 billion pesos in sales 4,016,764 sq. ft. of sales floor 4 openings $5.6 billion pesos in sales 83,408 seats 7 openings Apparel stores 1.7% of total sales Restaurants 910,000 account holders Bank 7,666 associates 90 units 32 cities 20,040 associates 366 units 65 cities $1.3 billion pesos in 1,824 associates deposits 263 branches $1.0 billion pesos in 31 cities credit portfolio 73 openings Page 13 of 78
In Mexico is present in 308 cities throughout the country.
275
50
30
23
378
23
80
481
67
22
16
5
110
10
38
158
96
20
10
126
7
18
151
41
19
8
68
3
15
86
32
24
13
69
1
17
87
Southwest
Northeast
340
50
22
47
459
43
184
686
Northwest
Southeast
899
192
108
75
1,274
90
366
1,730
North
Center
TOTAL
Metropolitan
Area
Bodega Aurrerá
Walmart
Sam’s Club
Superama
Total Self-service
Suburbia
Vips
Total
Presence by geographical region
48
7
9
64
3
14
81
NORTH
NORTHEAST
NORTHWEST
SOUTHEAST
CENTER
METROPOLITAN
AREA
SOUTHWEST
Page 14 of 78
Bodegas and discount stores
Hypermarts
Clubs
Supermarkets
TOTAL
Honduras
Nicaragua
El salvador
Guatemala
Costa Rica
Total
Presence in Central America by countries
437
149
136
51
53
48
16
6
7
2
-
1
2
-
2
-
-
-
94
25
30
25
7
7
549
180
175
78
60
56
HONDURAS
GUATEMALA
EL
SALVADOR
NICARAGUA
COSTA RICA
CYCLICAL PERFORMANCE
The demand for goods and services increases significantly during the last few months of each year as
result of the holiday season. The fourth quarter represented 29.9% of the year’s total revenues.
Revenues by Quarter
2010 Total revenues
(Million pesos)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
Ps.
72,334
80,940
82,288
100,295
Ps. 335,857
Contribution
(%)
21.5
24.1
24.5
29.9
100.0
Vacations and Bank holidays also have a significant impact on sales performance.
Page 15 of 78
II) DISTRIBUTION CHANNELS
The 25 distribution centers currently have an installed capacity of more than 21.5 million square feet.
Mexico Distribution Centers
City
Name
Service
Mexico
Cuautitlan
La Naranja
San Martin Obispo (2)
Centralized Kitchen
Santa Barbara
Chalco
Dry goods
Apparel distribution for Suburbia
Dry goods / Perishables
Distribution for Vips
Dry goods
Dry goods
Monterrey
Dry
Perishables
Dry goods
Produce
Guadalajara
Dry
Perishables
Dry goods
Produce
Villahermosa
Dry
Perishables
Dry goods
Produce
Culiacan
Dry
Dry goods
Central America Distribution Centers
Country
Name
Service
Guatemala
Amatitlán
Bárcenas
Integrada
General Merchandise
Perishables
General Merchandise
El Salvador
Apopa
Arboledas
Food / General Merchandise
General Merchandise
Honduras
San Pedro (2)
Tegucigalpa
Food / General Merchandise
Food
Nicaragua
Managua
Food / General Merchandise
Costa Rica
Desamparados
Santa Ana
General Merchandise
Food
III) PATENTS, PERMITS, BRANDS AND OTHER CONTRACTS
All commercial brands for the different business formats in Mexico (Walmart, Sam’s Club, Superama,
Bodega Aurrerá, Mi Bodega Aurrerá, Bodega Aurrerá Express, Prichos, Suburbia, Vips, El Porton,
Ragazzi, La Finca, San Remo Café and Banco Walmart Adelante), as well as the products bearing
the private labels (Great Value, Equate, Members Mark, Medimart, Aurrerá, GRX, Week End, MC
Metropolis Company, Non Stop, etc.), are registered trademarks property of Wal-Mart Stores, Inc.
and Wal-Mart de México, S.A.B. de C.V. Said trademarks are used by the operating companies
under license agreements and/or sub-license agreements for an indefinite term. The Company also
uses brands registered to third parties through license agreements that guarantee use and
compliance with the applicable legislation.
Page 16 of 78
“Vips” is one of the main brands of the group under which several restaurants operate. Six of these
restaurants are franchises that are located in four different cities (Mérida, Veracruz, Xalapa y Tuxtla).
These franchises expire from 2011 to 2013.
“Banco Walmart”, which operates a low cost bank in order to serve better our customers.
All the banners for the different retail formats in Central America (Despensas Familiar, Pali, la
Despensa de Don Juan, La Unión, Paiz, Más x Menos, Maxi Bodega, Híper Más, and Híper Paiz and
ClubCo), as well as the different private labels (Great Value, Equate, SAM’s Choice, George &
Design, SABEMAS, SuperMax, Suli, etc.), are registered trademarks owned by Wal-Mart Stores, Inc.,
Broadstreet Global Activities Ltd. Liab. Co., Ahold Retail Services Ag, and different subsidiaries of TFB
Corporation N.V., that operates throughout Central America.
Included among the distinct banners of the Group are the various brands owned by the subsidiaries
of the Agroindustrial Division, an operation that was created with the purpose of supporting the WalMart Centroamérica retail operations, through the supply, distribution and sale of fresh products and,
separately, the development of private label grocery and consumer products.
The legal use and preservation of the rights of the private labels is of great importance to WALMEX,
they grant value to the Company and in some way are responsible for the prestige of the
Corporation. The customer identifies the products related to these private labels as quality goods.
IV) PRIMARY CUSTOMERS
Our principal customer is the public in general. Throughout 2010, we had more than 1,633 million
customers served in México and Central America.
Mexico and Central America is a country with great diversity, differing demographics, preferences
and socioeconomic levels. Our multi-format strategy allows us sufficient flexibility to efficiently meet
the needs of the different population sectors. The diversity in demographic characteristics and
income levels in each of the countries are best served by the multiformat approach, wherein the
needs of all customers are more efficiently met.
V)
APPLICABLE LEGISLATION AND TAX SYSTEM
Wal-Mart de México, S.A.B de C.V., is a corporation established under Mexican law that complies
with all the legal provisions for the construction and operation of its units, with special emphasis on:
environmental and ecological constructions, urban development, operation, hygiene, the sale of
alcoholic beverages, animal and pest control, and advertisements, pursuant to all applicable
federal, state and municipal regulations.
Furthermore, Walmart de México y Centroamérica complies with the commercial basic principles
ruling the relation between suppliers and consumers established by the Federal Consumer Protection
Law.
México is registered in the Ministry of Finance and Public Credit under the regime for major
contributors and consolidates for fiscal proposes except the bank; WALMEX complies with all the
fiscal dispositions regarding the development of the Corporation.
The primary laws that regulate WALMEX in México are: the Securities Market Law, General
Corporation and Partnership Law, Income Tax Law, Value-Added Tax Law, Tax on Cash Deposit Law,
Luxury Tax Law, Intellectual Property Law, Federal Consumer Protection Law, Federal Anti-Trust Law,
Foreign Investment Law, Banking Law and Single Rate Business Tax Law.
The operation known as Wal-Mart Centroamérica is consolidated under TFB Corporation, N.V. (an
incorporated Company in Antillas Neerlandesas, currently Curaçao), an indirect subsidiary of WalMart Stores, Inc. (the majority shareholder). TFB Corporation, N.V., was incorporated on September
20, 2005, with the purpose of serving as the holding Company for a number of subsidiaries that
operate stores and run agroindustrial operations, and incorporated in Guatemala, Honduras, El
Salvador, Nicaragua, and Costa Rica. All companies comply with each and every legal provision
under administrative law, to build and operate its different units, in full compliance with the following
types of legislation: construction, environmental and ecological, road and urban development,
operations, health, the sale of alcoholic beverages, plant health, and signage, both at federal and
Page 17 of 78
local levels, pursuant to the different jurisdictions of the differing federal, state, and municipal
authorities in the respective countries.
Likewise, there is full compliance with the basic principles of commercial relations between suppliers
and established consumers in each of the countries served.
Regarding the tax position of TFB Corporation, N.V. and its operating subsidiaries are subject to each
country Fiscal Bylaws and are registered in their Tax ID and in compliance with any and all tax
requirements related to the development of their respective businesses operation.
VI) HUMAN RESOURCES
We are in the process of building a high-performance organization capable of developing all of our
associates, so as to guarantee quality and quantity of talent to support continuous profitable growth.
Talent development is a priority that has resulted in the ongoing effort to help our people achieve
outstanding performance and be ready to occupy positions with greater levels of responsibility.
This year, 20,058 associates were promoted and 11 million man-hours were invested in training. This
means that every associate received approximately 50 hours of training throughout the year on
topics related to technology and leadership. As for quality of life, we have relocated 6,782 associates
to units closer to their homes.
In 2010 we set out to define and implement our own Leadership Model, whose purpose is to clearly
establish the process needed to help people grow as high-performers within the organization in line
with our six core competencies. Leadership training complements this model and develops leaders
capable of developing future leaders.
Due to the importance of being a good business partner and the fact that Merchandising is one of
the Company’s key strategic areas, we have created the Merchandising Academy, a training
program that clearly shows the Company’s commitment to developing skills and boosting the growth
of our people in line with business needs.
We will continue concentrating our efforts on building a high-performance organization, so as to
support the growth of the Company.
VII) ENVIRONMENTAL PERFORMANCE
We know that being a socially responsible enterprise is just as important as producing good financial
statements and developing our people’s talent. That is why we are not only committed to the
operation of our stores, but equally so to the environment and the communities we serve.
One very important component of our programs continues to be the active participation of our
associates in volunteer activities. Throughout the year, 86,901 associates from Mexico and Central
America participated in different community support activities (i.e. painting walls, maintaining green
areas, planting trees, cultivating vegetable gardens and organizing nutrition-related training courses).
Furthermore, we have allocated more than $491 million pesos to 449 social institutions in the region,
including food banks, shelters and nursing homes, benefiting more than 2.7 million people.
The Walmart de México Foundation channeled food baskets and economic donations to
communities and associates affected by natural disasters, including victims of Hurricane Alex in
Monterrey and Karl in Veracruz, or victims of earthquakes that struck Baja California, Haiti and Chile.
In line with our objective to generate renewable energy, we are now supplying 348 self-service stores,
clubs and restaurants, located in greater Mexico City, the State of Mexico and the state of Morelos,
with clean energy obtained from the new Wind Farm Oaxaca I Lamatalaventosa, reducing CO2
emissions by 137,000 tons per year –an amount equivalent to removing 21,000 motor vehicles from
the roads for a year.
Additionally, this year we organized the First Sustainability Forum “Together for a Better Planet” with
the purpose of sharing best practices and information with companies deeply committed to the
topic of sustainability. At the end of the day, the intention is to have a multiplying effect resulting in
further benefits for the community.
Page 18 of 78
VIII) MARKET INFORMATION
Walmart de México y Centroamérica is a publicly-held retail company that operates self-service
stores, membership wholesale clubs, apparel stores, restaurants and bank.
In Mexico competition consists of:
•
Establishments with a sales area of more than 6,458 square feet, three or more exit lanes and
scanning technology, as well as independent self-service stores with one or two exit lanes an a
sales area no greater than 6,458 square feet, such as: Soriana, Comercial Mexicana, Fresko,
Chedraui, Casa Ley, Futurama, San Francisco de Asis, HEB, Almacenes Zaragoza, Casa Chapa,
Central Detallista, Comercial V.H., among others.
•
Convenience stores, a sales area of more than 1,080 square feet, such as: Oxxo, 7 Eleven, Extra,
Super 7, Mode, Super Rapiditos, Bip-Bip, Mercados Mexicali, Super Flash, Super K, Super Deli,
Supers del Río, Super Tiendas del Hogar, Super Fiesta, Círculo K, Super Dos, Comextra, JV,
Matador, On the Run, Super Tip, etc.
•
Apparel and specialized stores, such as: Coppel, El Palacio de Hierro, El Puerto de Liverpool, Sears
Roebuck, Sanborns Hermanos, Famsa, Elektra, Home Depot, Office Max, Office Depot, Zara,
Radio Shack, Singer, Deportes Marti y Best Buy.
•
Membership warehouse clubs, such as: Costco, City Club and Chesuma.
•
Establishments operated by public agencies, such as: ISSSTE, UNAM, etc.
As of December 2010, ANTAD membership included 100 retail chains, of which self-service, apparel
and specialized chains. Its installed capacity reached 205 million square feet and throughout 2010
posted sales for $906 billion pesos. 2
Nevertheless, a major part of the population in our country customarily shops in traditional
establishments, such as municipal markets, open-air markets, grocery stores and mom-and-pop
businesses, or through the informal sector of the economy. Both maintain a high market share since
they are able to supply populations that, due to mere numbers, cannot access other establishments.
On the other hand, Walmart Centroamérica is a retail chain, which primarily operates self-service
units throughout five countries in the region.
The market where it competes is described as follows:
•
Supermarkets with over 13,993 square feet of sales floor, with three or more lines of cash registers,
developed scanning technology, as well as mini-supermarkets, which are independent selfservice units with one or two lines of cash registers, and a maximum of 3,983 square feet of sales
floor. Among them are retail chains such as La Torre (Guatemala), La Colonia (Honduras), Súper
Selectos (El Salvador), La Colonia (Nicaragua), Perimercados, Auto Mercados, Súper Compro,
Jumbo (Costa Rica), and Price Smart (clubs in Costa Rica, Guatemala, El Salvador, Honduras,
and Nicaragua), among others.
•
Department and specialty stores such as Carrion, Siman, Cemaco, EPA, Monolit, ACE, Grupo M,
Elektra, Curacao, Bullock’s and Pequeño Mundo.
The formal market in the five countries where Walmart Centroamérica operates is estimated at
having 6,000 supermarkets and mini-supermarkets, 8,900 pharmacies, 1,000 general merchandise
stores and large category killers, and 15,000 small-sized stores.
The region has a strong informal market. This market includes traditional establishments such as
municipal markets, flea markets, grocery stores, second-hand clothing, and general merchandise, in
addition to a large number of street vendors. Both sectors have considerable market share as they
are able to supply communities that, due to mere size, restrict the entry of other establishments.
The investment made by Walmart de México y Centroamérica in growth, systems, logistics and
distribution are meant to increase and modernize both installed capacity and distribution, thus
resulting in a more efficient operation, reduced costs and ever improving service for its customers.
2
Source: ANTAD (Media report 2011)
Page 19 of 78
IX) CORPORATE STRUCTURE
Wal-Mart de México S.A.B. de C.V., is listed in the Mexican Stock Exchange whose major shareholder
is Wal-Mart Stores, Inc., through Intersalt, S. de R.L. de C.V. one of its subsidiaries, holding 68.5% of the
shares.
As of December 31, 2010, the company’s market value was $632.5 billion pesos.
WALMEX has a 99.9% equity interest in the following groups of companies:
Group
Line of Business
O p e r a t i o n o f 8 9 9 (6 8 4 i n 2 0 0 9 ) B o d e g a A u r r e r á d i s c o u n t
Nueva Walmart
s t o r e s , 1 9 2 ( 1 6 9 i n 2 0 0 9 ) Wa l m a r t h y p e r m a r k e t s , 1 0 8 (9 8 i n
2009) Sam’s Club membership self-service wholesale stores,
a n d 7 5 (6 9 i n 2 0 0 9 ) S u p e r a m a s u p e r m a r k e t s .
Suburbia
O p e r a t i o n o f 9 0 (8 6 i n 2 0 0 9 ) S u b u r b i a s t o r e s wi t h a p p a r e l a n d
accessories for the entire family.
Operation
Vips
of
266
(2 6 0
in
2009)
Vips
restaurants
serving
international cuisine, 93 El Portón restaurants serving Mexican
food and 7 Ragazzi restaurants specializing in Italian food
during both years
Importing companies
Real estate
Import of goods for sale.
Real estate developments and management of real estate
companies.
Rendering of professional services to Group companies, not-
Services companies
for-profit
services
to
the
community
at
large
and
shareholding.
Walmart Bank
O p e r a t i o n o f 2 6 3 (1 9 0 i n 2 0 0 9 ) b a n k b r a n c h e s .
Operation of 401 discount stores (Despensa Familiar and
P a l í ) , 9 4 s u p e r m a r k e t s (P a i z , L a D e s p e n s a d e D o n J u a n , L a
Walmart Central America
U n i ó n a n d M á s x M e n o s ) , 3 6 d i s c o u n t w a r e h o u s e s t o r e s (M a x i
B o d e g a ) , 1 6 h y p e r m a r k e t s (H i p e r P a i z a n d H i p e r M á s ) a n d 2
ClubCo membership self-service wholesale stores.
WAL-MART STORES, INC.
Wal-Mart Stores, Inc. American Society, through Intersalt, S. de R.L. de C.V., Mexican Society, one of
its subsidiaries, is the majority shareholder for Wal-Mart de México, S.A.B. de C.V.
As of January 31, 2011, Wal-Mart Stores, Inc. operated 8,980 commercial units throughout 15
countries, of which 4,413 are in the United States, 1,738 in Mexico, 181 are in Costa Rica, 78 in El
Salvador, 176 in Guatemala, 55 in Honduras, 61 in Nicaragua, 63 in Argentina, 479 in Brazil, 325 in
Canada, 279 in Chile, 328 in China, 5 in India, 414 in Japan and 385 in the United Kingdom.
Sales for Wal-Mart Stores, Inc. during the last fiscal period amounted to $419 billion dollars, an
increase of 3.4% over the similar prior year period.
Walmart Stores, Inc. common stock is listed on the New York and Pacific Stock Exchanges under
ticker symbol WMT.
Page 20 of 78
X.
DESCRIPTION OF MAIN ASSETS
As of December 31, 2010, our cash ($ 24.6 billion pesos), inventories ($ 29.0 billion pesos) and fixed
assets such as real estate, stores, restaurants, distribution centers, fixtures and equipment
($ 102.3 billion pesos). We must point out that cash represents 12.7% of our assets, is wisely and
carefully invested following highly conservative standards, and always based on security, liquidity,
and yield criteria established by our Treasury Committee, in that order of importance.
Some of the units are owned and others are leased.
Fixed assets are formed by business units, as described:
Description by Business Format
Format
Description
Units
Sales area
(square feet)
Mexico
Bodega Aurrerá
Austere discount stores
899
19,116,796
Walmart
Supercenters
192
16,582,174
Sam's Club
Superama
Membership warehouse clubs.
Supermarkets
108
8,509,870
75
1,325,674
Suburbia
Vips
Apparel stores
Restaurant chains. This division includes
Vips, el Porton, and Ragazzi restaurants.
90
366
4,016,764
83,408 3
Walmart Bank
Universal banking institution aimed at
Walmart de México customers, with an
initial offering of basic banking and
financial products and services.
263
N/A
401
1,994,463
Paiz, La despensa de Supermarkets.
Don Juan, La Unión
and Más x Menos
94
1,422,320
Hiper Paiz and Hiper Hypermarkets.
Más
36
648,475
MaxiBodega
Discount warehouses.
16
1,017,376
ClubCo
Membership warehouse clubs.
2
79,581
Central America
Despensa Familiar y Palí Discount stores.
WALMART DE MÉXICO Y CENTROAMÉRICA GROWTH PLAN
Mexico and Central America offer considerable growth opportunities, since they have almost 112 4
and 38 5 million inhabitants respectively.
In Mexico, 28.9% of the population is below the age of 14, 26.4% between 15-29 years of age5, 37.2%
between 30-64 years of age, and in the Central American countries where Walmart is present, 46.8% is
below the age of 21, and 36.0% under 15 years of age. It is worth mentioning that 1/3 of the Central
American population lives in Guatemala.
3
Number of seats.
4
Source: National Population Committee (CONAPO) – Projections of Mexico’s population 2005-2050
5
Source: Boletín Observatorio Demográfico No. 3: Proyección de Población. CELADE (April 2007)
Page 21 of 78
Our multi-format operation enables us to serve practically all income levels in Mexico and Central
America and meet their different buying needs, either for use at home or outside the home. Also, we
have developed different prototypes within the existing formats, thus allowing us to efficiently serve
different types of communities.
We will continue investing in growth and productivity. The growth plan for the next 12 months
considers the opening of 445 operating units in Mexico and Central America; we estimate an 11.9%
growth in installed capacity. This will require an investment of over $ 19.0 billion pesos.
XI) LEGAL, ADMINISTRATIVE OR ARBITRATION CASES
There are currently no cases of this type that could substantially affect the operation of the
corporation.
XII) REPRESENTATIVE SHARES OF CAPITAL STOCK
As of December 31, 2010, 2009 and 2008, nominal capital stock was as follows:
Capital Stock
Thousand pesos
2010
2009
2008
Fixed
Variable
Ps.
5,574,801
37,586,089
Ps. 1,844,173
12,525,307
Ps. 1,844,173
12,625,520
Total
Ps. 43,160,890
Ps.14,369,480
Ps.14,469,693
Capital stock at December 31, 2010, 2009 and 2008 consisted of the following registered shares with
no par value:
Stock Structure
Number of shares
Series
Serie “V” free subscription common shares
2010
2009
17,848,403,000
16,752,528,446
2008
16,869,360,846
XIII) DIVIDENDS
During recent years the Company has decreed dividend payments in stock or in cash, to be
decided by each shareholder.
Page 22 of 78
Dividend payments
Decided by each shareholder
Cash
2007
2008
2009
2010
Ps. 0.255
0.295
0.305
0.350
In stock
One stock for
each:
89.37
77.12
-
As a result of 2010’s dividend payment, $ 5.7 billion pesos were paid in cash.
The Company intends to continue paying yearly dividends, the amount of which will depend upon
growth opportunities, the economic situation, and the competitive environment, among other
factors.
RELEVANT MATTERS SUBSEQUENT TO THE CLOSE OF THE FISCAL YEAR
•
The Annual Shareholders Assembly of Wal-Mart de Mexico S.A.B. de C.V. took place on March
10, 2011 where among other concepts, the following were approved:
−
Grant a dividend payment allowing each shareholder in cash payment of Ps. 0.38 per share
and an extraordinary dividend of Ps. 0.17 per share in April 29,2011.
Page 23 of 78
4) FINANCIAL INFORMATION
A) SELECTED FINANCIAL INFORMATION
Millions pesos
2010
Mexico GDP (Growth,%)
Mexico Annual Inflation (%)
Peso Devaluation (%)
Average Exchange Rate
Year-end Exchange Rate
Mexico Average Interest Rate (28 Day Cetes,%)
2009
5.5
4.4
(5.6)
12.6
12.4
4.4
(6.1)
3.6
(4.5)
13.4
13.1
5.4
334,511
24
3
1,346
28
335,857
24
74,059
22.1
47,015
14.0
27,044
8.1
21
33,294
9.9
460
27,630
8,066
19,550
16
269,397
10
3
1,054
19
270,451
10
58,600
21.7
36,332
13.4
22,268
8.2
13
26,915
10.0
662
23,018
6,212
16,806
CASH
INVENTORIES
OTHER ASSETS
FIXED ASSETS
GOODWILL
TOTAL ASSETS
SUPPLIERS
OTHER LIABILITIES
SHAREHOLDERS' EQUITY
NON CONTROLLING INTEREST
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY AND
NON CONTROLLING INTEREST
2008
2007
2006
1.5
6.5
25.5
11.2
13.7
7.7
3.3
3.8
0.8
10.9
10.9
7.2
5.2
4.1
1.7
10.9
10.8
7.2
RESULTS
NET SALES
% of Growth Total units
% of Growth Comp units
OTHER INCOME
% of Growth
TOTAL REVENUES
% of Growth
GROSS PROFIT
% of profit margin
OPERATING EXPENSES
% of total revenues
OPERATING INCOME
% of total revenues
% of Growth
EBITDA
% of total revenues
COMPREHENSIVE FINANCIAL INCOME
INCOME BEFORE TAX
INCOME TAX
CONSOLIDATED NET INCOME ATTRIBUTABLE TO THE PARENT
% of Growth
15
244,029
11
5
888
13
244,917
11
53,284
21.8
33,533
13.7
19,751
8.1
8
23,887
9.8
474
19,857
5,184
14,673
5
219,714
13
6
787
11
220,501
13
47,751
21.7
29,428
13.3
18,323
8.3
16
21,973
10.0
1,468
19,536
5,574
13,962
15
193,969
20
10
711
11
194,680
20
42,032
21.6
26,237
13.5
15,795
8.1
31
19,019
9.8
1,378
17,119
4,943
12,176
31
24,661
29,036
9,043
102,300
29,768
194,808
19,483
22,520
6,243
84,893
133,139
11,350
22,808
5,020
79,286
118,464
8,984
20,883
5,355
71,522
106,744
14,985
18,058
4,370
61,449
98,862
38,000
33,948
122,531
329
30,378
19,613
83,148
-
27,005
17,183
74,276
-
25,381
15,179
66,184
-
25,864
13,502
59,496
-
194,808
133,139
118,464
106,744
98,862
899
192
108
75
90
366
1,730
684
169
98
69
86
360
1,466
442
153
91
67
84
360
1,197
313
136
83
64
76
348
1,020
258
118
77
60
62
311
886
401
94
36
16
2
549
377
92
32
16
2
519
-
-
-
263
190
38
16
-
219,767
35.44
176,463
29.35
170,014
18.50
157,432
18.85
141,704
23.78
FINANCIAL POSITION
NUMBER OF UNITS MEXICO
Bodega Aurrerá
Walmart
Sam's Club
Superama
Suburbia
Restaurants Vips
TOTAL
NUMBER OF UNITS CENTRAL AMERICA
Discount Stores
Supermarkets
Bodegas
Hypermarts
Clubs
TOTAL
Banco Walmart
Bank branches
OTHER INFORMATION AT THE END OF THE YEAR
Number of Associates
Share Price 1 (pesos)
Number of Outstanding Shares 1 (millons)
Market Value
Earnings per Share 1 (pesos)
Payment of Dividends
1
Number of Shares Repurchased (millons)
Investment in Shares Repurchasing Operations
17,848
16,752
16,870
16,946
17,144
632,533
1.105
491,671
0.999
312,095
0.866
319,347
0.817
407,684
0.705
5,743
5,040
4,902
4,313
3,223
112
117
152
288
307
3,472
2,509
2,869
6,065
4,842
1 Adjusted according to split conducted in April 2010
Page 24 of 78
B) FINANCIAL INFORMATION BY LINE OF BUSINESS AND GEOGRAPHICAL REGION
As of December 31, 2010, Mexico had 1,730 operating units, representing 49,551,277 square feet of
sales floor and 83,408 restaurant seats. Central America had 549 operating units, representing
5,162,216 square feet of sales floor.
Shares in sales by business format in Mexico
2010
2010
2009
2008
Bodega Aurrerá
Walmart
Sams’s Club
Superama
Suburbia
Vips
$ 108,169
75,500
82,375
13,821
10,071
5,637
37%
28%
25%
5%
3%
2%
36%
28%
26%
5%
3%
2%
34%
28%
27%
5%
4%
2%
Ventas netas (million pesos)
Ps. 295,574
100%
Ps. 269,397 Ps. 244,029
Shares in sales by country in Central America
MARCH-DECEMBER
Costa Rica
Guatemala
El Salvador
Honduras
Nicaragua
Ventas netas (million pesos)
2010
2010
16,758
11,505
4,215
4,028
2,431
43%
30%
11%
10%
6%
$ 38,937
100%
The geographical breakdown of the business units for México and Central America is as follows in the
next page:
Breakdown of units by geographical region in Mexico
2010
2009
2008
Metropolitan Area
Center
Northeast
North
Northwest
Southeast
Southwest
39.7%
27.8%
8.7%
5.0%
5.0%
9.1%
4.7%
40.4%
27.9%
6.5%
5.4%
5.2%
9.9%
4.7%
37.6%
29.4%
5.5%
5.6%
5.6%
11.3%
5.0%
Total Units
1,730
1,466
1,197
Page 25 of 78
Breakdown of units by geographical region in
Central America
2010
2009
Costa Rica
Guatemala
El Salvador
Nicaragua
Honduras
32.8%
31.9%
14.2%
10.9%
10.2%
32.8%
31.6%
14.8%
10.6%
10.2%
Total Units
549
519
As of December 31, 2010, the installed capacity for the company by geographical region is as follow:
Breakdown of units by geographical region and by business format in Mexico
Units
Metropolitan area
Center
Northeast
North
Northwest
Southeast
Southwest
Total
Self-service + Clubs
+ Suburbia
686
481
151
86
Vips
28.6 %
30.7 %
8.4 %
7.2 %
87
158
81
1,730
50.6 %
21.9 %
4.9 %
3.9 %
8.7 %
10.6 %
5.8 %
49,551,277
square feet
4.6 %
10.2 %
3.9 %
83,408
restaurant seats
Breakdown of units by geographical region in Central America
Unit
Costa Rica
Guatemala
El Salvador
Nicaragua
Honduras
Total
180
175
78
60
56
549
Self-service +
Clubs
34.6 %
36.6 %
13.9 %
5.3 %
9.6 %
5,162,216
square feet
Page 26 of 78
C) MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
I)
OPERATION RESULTS
INCOME STATEMENT
In 2010 we achieved very sound growth figures. We increased our leadership position in Mexico and
incorporated the Central American operation to our results, thus becoming an international retailer
with presence in six countries.
Central American operations were included in consolidated financial statements as of March 2010.
Nonetheless, throughout this analysis, references will be made to annual figures for Central America
with the intention of providing a more thorough assessment of performance.
SALES
Total sales for 2010 amounted to $334.5 billion pesos, $65.1 billion pesos more than the previous year.
This represented an increase of 24.2% over sales figures for 2009.
Sales in Mexico amounted to $295.6 billion pesos, thus representing 9.7% growth as compared to
figures posted for 2009 and 88.4% of total consolidated sales.
During the March-December period, sales in Central America amounted to $38.9 billion pesos, thus
representing 11.6% of consolidated sales. Total annual sales in Central America amounted to $46.0
billion pesos; this represents an increase of 6.9% versus the same period last year.
Throughout the year, we opened 297 units from different business formats. This represents a sales-floor
increase of 11.4% in the case of Mexico, and 3.7% for Central America.
The consolidation of Central American operations and the previously mentioned sales-floor increase
resulted in the growth of total sales. This growth was also the result of the performance of units in
operation over a year, which recorded a sales increase of 3.2% versus 2009. Central American units
are currently growing at an annual comp-store rate of 5.2%.
In Mexico, total and comp-store growth was above that of the domestic market. Our successful EDLP
strategy –based on having the lowest cost structure in the market– allowed us to consistently lower
prices, thus increasing customer loyalty.
The daily average customer count this year amounted to 4.4 million; this includes stores, clubs and
restaurants.
We also invested far more than the rest of the market in opening new units, enhancing our logistics
network, and remodeling existing units.
The percentage of total sales for all our formats in Mexico and Central America is as follows:
Business Format
Bodegas & discount stores
Hypermats
Clubs
Supermarkets
Apparel Stores
Restaurants
% of total sales
38.6
27.0
22.7
7.0
3.0
1.7
GROSS MARGIN
Our gross margin was 22.1%, some 40 basis points higher than that posted in 2009. The gross margin in
Central America is slightly higher than that of Mexico, so it does not have a significant impact on the
consolidated gross margin.
Despite price investment, Mexico’s gross margin was 22.0%, some 30 basis points higher than that
posted in 2009. The gross margin of Central America during both the consolidated period and the full
year was 22.2%, some 10 basis points higher than that of the previous year in both cases.
Page 27 of 78
GENERAL EXPENSES
General expenses were the toughest challenge of the year. In addition to this, the most significant
effect of the consolidation of Central America is found in general expenses expressed as a
percentage of total revenue, as this indicator is significantly higher in Central America than in
Mexico.
In the case of Mexico, general expenses increased 9.9%, a figure slightly higher than the total
revenues increase of 9.7%. We did a good job in keeping control over expenses and improving
productivity measurement at stores and throughout the distribution network. However, our costs
received the impact of depreciation and electricity-fee increases. Expenses without depreciation
grew 9.3%.
In Central America, general expenses, expressed as a percentage of revenues, are 390 basis points
higher than those of Mexico. Throughout the year, general expenses increased 7.5%
OPERATING MARGIN AND EBITDA
The operating and EBITDA margins went down as a result of the consolidation of Central America, as
both indicators are lower in this region; however, they have a positive effect in terms of growth, i.e.,
21.4% for operating income and 23.7% for EBITDA.
EARNINGS PER SHARE
Net income increased 16.3% throughout the year, whereas earnings per share grew 10.6%. On the
one hand, during the first quarter of the year, 1.2 billion shares were issued to pay for the acquisition
of the Central American operations; on the other hand, during the year we continued our ongoing
program for the repurchase of shares, this year totaling of 112.1 million shares.
II) FINANCIAL SITUATION, LIQUIDITY AND CAPITAL RESOURCE
BALANCE
CASH AND CASH EQUIVALENTS
Our cash position upon closing of 2010 amounted to $24.7 billion pesos, $5.2 billion pesos more than
the previous year, even after having invested $13.1 billion pesos in fixed assets, repurchased shares in
the amount of $3.5 billion pesos, and paid a cash dividend of $5.7 billion pesos.
Our cash comes from our business operations, where $21.5 billion pesos is from self-service units in
Mexico; $866 million pesos from Banco Walmart; and $2.2 billion pesos from our Central American
operations.
Cash is invested in short-term debt securities. The Company neither conducts transactions with
derivatives, nor does it invest in the stock market. The Company has not conducted any transactions
not recorded in the Financial Statements.
Our cash generation and sound finances allowed us to invest aggressively in prices, open 297 new
stores throughout 2010, remodel existing units, in addition to paying dividends and repurchasing own
shares.
USES OF CASH
•
Investment in Fixed Assets: We continue reinvesting our earnings in projects that allow us to
modernize our operating structure, from information systems to logistics networks and the
renovation of our stores, clubs and restaurants, including the opening of new and profitable
stores. Over the course of the last five years, we have invested $54.3 billion pesos in fixed assets,
thereby representing the reinvestment of 81% of our earnings.
Page 28 of 78
•
Dividends: The following chart shows the dividends paid during the last four years (with values
adjusted due to the split conducted in 2010).
YEAR
Dividend
Per share (pesos)
% of earnings for
the previous year
Choice for the
shareholder
% of shareholders
that requested
dividends in shares
Cash spent
(millon of pesos)
2010
2009
2008
2007
$ 0.350
$ 0.305
$ 0.295
$ 0.255
35%
34%
-
-
35%
Una
acción
por cada
77.12
acciones
en
posesión
35%
Una
acción
por cada
89.37
acciones
en
posesión
-
-
35%
48%
$5,743
$5,040
$3,208
$2,236
• Repurchase of Shares: The shareholders authorize the maximum amount available for the
repurchase of shares. Repurchased shares are subtracted from the shareholders’ equity at the
moment of repurchase and are formally cancelled during the Shareholders’ Annual Meeting. The
following chart shows the investment in the repurchase of shares during the last four years (with
values adjusted from the split conducted in 2010).
Program
2010
2009
2008
2007
Repurchased shares
(millones)
112
117
152
288
Invested amount
(millions of pesos)
$ 3,472
$ 2,509
$ 2,869
$ 6,065
WORKING CAPITAL
In 2010, the Company continued operating with negative working capital requirements, which has
historically allowed for the self–financing of growth and modernization.
The inventory balance as of December 31st amounted to $29.0 billion pesos, which was financed by
accounts payable to suppliers totaling $38.0 billion pesos.
WALMEX SHARE
Stock total return for 2010 was 22%, which compares to the 21% generated by the Mexican Stock
Exchange Index. Since we began trading in the stock market some 34 years ago, we have always
been one of the most consistent and professionally managed Companies, always respectful of our
minority shareholder rights.
These corporate governance practices, together with the results obtained from the operation of the
Company, have allowed us to become the second most important company in the Mexican Stock
Exchange Index and one of the top three in marketability on the Mexican exchange.
Page 29 of 78
III) INTERNAL CONTROL
Having the highest regulation standards and an appropriate control atmosphere is fundamental to
achieving the objectives established by Walmart de México y Centroamérica.
The company’s internal control assures:
•
Assets safety
•
Compliment of established policies
•
Proper operations registry
•
Reliable and timely information
•
Prevention, identification and detection of frauds
The control of our operation is supported in several administrative systems in order to comply with
fiscal requirements and obtain detailed information.
Our control processes are dynamic, continuously adapting to the changes in our environment:
1.
Policies and procedures
•
2.
3.
Restrictive regulatory environment
Accounting control
•
Account catalog
•
Accounting guidelines and allocation of balance accounts
•
Monthly conciliations and exception reports
Duties segregation
As a Public Corporation, Walmart de México y Centroamérica operates with the Corporate Best
Practices
•
Ethics Code
•
Board of Directors integrated in terms for Securities Market Law
•
Audit Committee
•
Executive Committee
•
Corporative Practices Committee
•
Financial transparency and communication of relevant information
•
Open-door policy; any associate can inform irregularities to higher hierarchy levels
•
The company adopted the Sarbanes-Oxley law for its main Balance Sheet and P&L
accounts. No significant gaps in internal control have been found.
D) CRITICAL ACCOUNTING POLICIES
We follow Mexican Financial Reporting Standards in preparing our financial statements. These
principles require us to make certain estimates in some of the items. However, we do not have any
Critical Accounting Policies.
Page 30 of 78
4) ADMINISTRATION
A) INDEPENDENT AUDITORS
The Consolidated Financial Statements for the company and its subsidiaries as of December 31 of
each year have been audited by Mancera, S.C., a member of Ernst & Young Global since 1998, and
there were no adverse comments for any of the periods audited.
Approval of the Independent Auditor is the sole domain of the Board of Directors for WALMEX, after
receiving the opinion of the Audit Committee.
The fees paid in 2010 to the Independent Auditor amounted to $ 24.8 million pesos for auditing and
other services rendered.
B) OPERATIONS WITH RELATED PARTIES AND CONFLICTS OF INTEREST
There are operations conducted with Wal-Mart Stores, Inc., and other related parties. These consist of
the purchasing of merchandise and the payment of services and royalties.
Accounts payable to suppliers and other accounts payable include the following balances owed
related parties:
Accounts payable due to related parties as of December 31,
2010
2009
2008
Accounts payable to suppliers:
C.M.A. – U.S.A., L.L.C. (affiliated company)
Ps. 434,746
Ps. 467,582
Ps. 715,474
Global George, L.T.D. (affiliated company)
11,584
5,320
5,290
Ps. 446,330
Ps. 472,902
Ps. 720,764
Ps. 358,993
Ps. 363,229
Ps. 329,641
832
33,065
22,582
Ps. 359,825
Ps. 396,294
Ps. 352,223
Other accounts payable:
Wal-Mart Stores, Inc (holding company)
Global George, LTD. (affiliated company)
During the fiscal periods that ended on December 31st, the following operations were conducted
with related parties:
Operations with related parties as of December 31,
2010
2009
2008
Imported merchandise for sale
Ps. 2,632,921
Ps. 2,717,272
Ps. 3,930,879
Technical assistance, services and
royalties
Ps. 1,683,979
Ps. 1,539,110
Ps. 1,350,920
Page 31 of 78
C) ADMINISTRATORS AND SHAREHOLDERS
The structure and responsibilities of the Board of Directors, our Code of Ethics and in general all the
activities performed by our Company follow corporate governance best practices.
Board of Directors
Our Board of Directors is charged with overseeing the management of the business.
Composition
•
•
•
•
All the members are appointed on a yearly basis by the shareholders at the annual meeting
Independent Directors must comprise a minimum of 25% of the total number of Board Directors
Minority shareholders whose shares represent at least 10% of total owners’ equity shall have the
right to appoint a Director and the corresponding Alternate, neither may be removed until the
other members of the Board of Directors are also removed
The Board meets a minimum of four times a year
Primary Responsibilities
•
•
•
•
•
Choosing the Chief Executive Officer
Acting as consultant/counsel for Company top management
Working actively with the CEO to develop general corporate strategies for the Company and
any organizations the Company controls
Overseeing the performance of Company Officers
Approve all information policies and communication with shareholders and the market
Other Practices
•
•
•
•
•
The duties of Chairman of the Board of Directors and of the CEO are kept separate
The Board evaluates the performance of each Director
Independent Directors have experience in the line of business of the Company
The Board has access to independent consultants
The Chairman of the Board is forbidden from acting as Secretary or presiding over Board
committees
The Board of Directors has three committees, whose duties include detailed analysis of matters
pertaining to its sphere of action and making suggestions to the Board so it may study the information
and make the decision most suitable to creating the best possible value for all the shareholders.
Page 32 of 78
BOARD OF DIRECTORS AS OF MARCH 10, 2011
Chairman
Eduardo Solórzano
Directors
Secretary
Shelley Broader
José Luis Rodríguezmacedo
Olga Gonzalez
Alternate Secretary
Rafael Matute
Antonio Pérez de la Riva
Doug McMillon
Kristin Oliver
Salvador Paiz*
Scot Rank
Cathy R. Smith
Blanca Treviño*
Ernesto Vega*
Alterative Directors
Alberto Ebrard
Antonio Echebarrena*
Gian Carlo Nucci
Philippe Schrader
* Independent director
Audit and Corporate Practices Committees
There are three Directors, all of them independent.
Included among the primary responsibilities are appointing the Independent Auditor for the
Company; establishing the fees; overseeing internal controls and ensuring they meet all applicable
legal and accounting regulations; and reviewing related-party transactions conducted by the
Company.
They are also empowered to review Financial Statements to ensure they reflect a true and accurate
overview of the financial situation of the Company. These Committees have the necessary
procedures to receive, keep and respond to all complaints regarding accounting practices and
controls, and all audit-related matters. Also, the Committees are authorized and have the resources
needed to retain legal counsel and any other outside consultant service required to meet its
obligations.
The purpose is to reduce the potential risk of conducting transactions that could compromise
Company assets or that could favor a specific group of shareholders.
Principal Practices and Requirements:
•
•
•
All members are Independent Directors
All members have experience in finance
Independent auditors are not allowed to perform consultancy services for the Company
Page 33 of 78
•
The partner from the Independent Audit firm who renders an opinion on Financial Statements for
the Company must be periodically changed
•
The Committees hold private meetings and receive periodic reports from Internal Audit, Legal
and Compliance, and Ethical Behavior
•
•
Approving policies that govern the use and possession of Company assets
Authorizing related-party transactions, total compensation for the CEO, and all policies regarding
total compensation for top management
Assisting the Board of Directors in its duty to produce reports on accounting practices
Calling shareholder meetings and including all pertinent matters in the order of business for the
meeting
•
•
Members of the Audit and Corporate Practices Committees:
Antonio Echebarrena*
Blanca Treviño*
Ernesto Vega*
* Independent director
Executive Committee
There are three Directors. Among their duties is that of strategic planning for the Company.
Members of the Executive Committee:
Doug McMillon
Scot Rank
Eduardo Solórzano
Code of Ethics
For Walmart de México y Centroamérica, honesty and integrity continue being non-negotiable core
values, and we always ensure that they permeate and govern all our activities.
The following are some of the primary points covered in our Code of Ethics:
• Open-door policy
• Supplier relations
• Non-discrimination
• Conflicts of interest
• No gifts and gratuities
• Privileged information
• Health, safety and the environment
• Inappropriate behavior
• No repercussions
• Financial investments
• Fair trade practices
• Financial integrity
• Anticorruption
• No political involvement
• International trade
Page 34 of 78
Walmart de México y Centroamérica’s Ethics and Compliance area, which reports to the Senior Vice
President of Legal and Corporte Relations, is charged with communicating and fostering observance
of our ethical behavior policies and corporate governance, and strict adherence to the statutes
governing our Company. The Audit Committee periodically receives reports from this area.
Each year we reply and send to the Mexican Stock Exchange the Code of Corporate Best Practices,
which is available on the institution’s website.
Page 35 of 78
SENIOR OFFICER AS OF MARCH 31, 2011
SCOT RANK
CEO
50 years old and 10 years of experience in the Company
CARLOS ÁLVAREZ
GABRIELA GUTIERREZ
Vice President, Merchandising, Grocery, Walmart and
Superama
Vice President, Realty Admin.
51 years old and 16 years of experience in the Company
44 years old and 2 years of experience in the Company
MANUEL ÁLVAREZ
JESÚS GUZMÁN
Vice President, Suburbia
40 years old and 17 years of experience in the Company
Vice President, Merchandising, General Merchandise and
Apparel, Walmart and Superama
41years old and 16 years of experience in the Company
RAÚL ARGÜELLES
JOSÉ LUIS JOSÉ
Senior Vice President, Corporate Affairs
47 years old and 7 years of experience in the Company
Vice President, Operations, Sam´s Club
49 years old and 29 years of experience in the Company
MAURICIO ARNÁBAR
MÓNICA LOAIZA
Vice President, Merchandising, Bodega Aurrerá
41 years old and 14 years of experience in the Company
Vice President, Corporate Audit
49 years old and 1 year of experience in the Company
ÁLVARO ARRIGUNAGA
RAFAEL MATUTE
Senior Vice President, Walmart
46 years old and 17 years of experience in the Company
EVP & CFO, Admin. & Finance, Mexico and Central America
51 years old and 24 years of experience in the Company
MIGUEL BALTAZAR
IVONNE MONTEAGUDO
Senior Vice President, Bodega Aurrerá
58 years old and 34 years of experience in the Company
Senior Vice President, Sam’s Club
44 years old and 2 years of experience in the Company
GUSTAVO CAMACHO
MARÍA GUADALUPE MORALES
Vice President, Commercial, Central America
49 años de edad y 20 years of experience in the Company
Vice President, Operations, Walmart
58 years old and 3 years of experience in the Company
FEDERICO CASILLAS
HERNAN MUNTANER
Vice President, Finance, Banco Walmart
49 years old and 22 years of experience in the Company
Vice President, Negotiating with Suppliers , Central America
39 years old and 16 years of experience in the Company
DAVID DÁGER
GIAN CARLO NUCCI
Vice President, Merchandising, Sam´s Club
52 años de edad y 25 years of experience in the Company
EVP, COO, Mexico
41 years old and 18 years of experience in the Company
LINDA E. DÍAZ
LAURENCE PEPPING
Vice President, Integration, Mexico and Central America
59 years old and 6 years of experience in the Company
Vice President, Superama
45 years old and 3 years of experience in the Company
XAVIER DEL RÍO
GUILLERMO PESCHARD
Senior Vice President, People Division, Mexico and Central
America
63 years old and 33 years of experience in the Company
Vice President, Strategic Planning
38 years old and 1 year of experience in the Company
ALBERTO EBRARD
Vice President, Logistics, Central America
42 years old and 16 years of experience in the Company
Executive Vice President and Managing Director, Central
America
50 years old and 18 years of experience in the Company
JULIO QUEVEDO
JOSÉ MANUEL RODRÍGUEZ
XAVIER EZETA
Vice President, Agro-industrial Development, Central America
49 years old and 11 years of experience in the Company
Senior Vice President, Business Development
44 years old and 22 years of experience in the Company
JOSÉ LUIS RODRÍGUEZMACEDO
ALFONSO FERREIRA
Senior Vice President, Legal and Corporate Relations
55 years old and 7 years of experience in the Company
Vice President, Realty Admin.
43 years old and 4 years of experience in the Company
PILAR ROJAS
SERGIO GUILLIN
Vice President, Systems
42 years old and 16 years of experience in the Company
Vice President, Commercial and Financial Service, Banco
Walmart
46 years old and 7 years of experience in the Company
JOSÉ LUIS TORRES
Vice President, Operations, Bodega Aurrerá
52 years old and y 36 years of experience in the Company
Page 36 of 78
MARIO ROMERO
JOSÉ MARÍA URQUIZA
Vice President, Distribution and Logistics, Mexico
49 years old and 7 years of experience in the Company
Senior Vice President and CEO, Banco Walmart
52 years old and 2 years of experience in the Company
JESÚS RUIZ
ROQUE VELASCO
Vice President, Retail Development and Productivity
33 years old and 5 years of experience in the Company
Vice President, Administration
48 years old and 4 years of experience in the Company
SANTIAGO SAPIÑA
MARIANO VENTURA
Vice President, Marketing, Central America
48 years old and 2 years of experience in the Company
Vice President, Vips and El Portón
42 years old and 3 years of experience in the Company
FARLEY SEQUEIRA
MANUEL ZÚÑIGA
Vice President, Expansion, Bodega Aurrerá
47 years old and 18 years of experience in the Company
Vice President, COO, Central America
38 years old and 4 years of experience in the Company
TIZOC SUÁREZ
Vice President, Integration, Central America
45 years old and 16 years of experience in the Company
JOSÉ DAVID ZÚÑIGA
Vice President, Legal, Central America
38 years old and 8 years of experience in the Company
No members of the Board or Executives are related to each other. No Director or Executive has
significant holdings in the Company, either as individuals or as a group.
The total payment made from the Company to its Directors and main Executives during the year
ended December 31, 2010 amounted to $696.4 million pesos. The payment made by the Company
to the totality of its personnel, including its main Executives but excluding its Directors, consists of a
fixed part and a variable component, represented by a bonus for results, whose amount depends on
accomplishing the goals stated in the Business Plan for the year in question.
As of December 31, 2010, the Company had a Personnel Stock Option Plan, constituted by
278,834,298 WALMEX shares presented in the Balance Sheet of the Company at their purchase cost
and restated according to the National Consumer Price Index. Said fund is to offer stock purchase
programs to company Executives, pursuant to the authorization granted by the National Bank and
Securities Commission and to that outlined in the company bylaws. During the period from January 1
to December 31, 2010, a total of 38,942,702 shares were assigned, and 50,287,056 shares were
exercised. The Company purchased the stock necessary for this plan through the Mexican Stock
Exchange. The stock holdings in the Personnel Stock Option Plan Fund represent only 1.6% of
outstanding shares as of December 31, 2010.
Intersalt, S. de R.L. de C.V. is the majority shareholder of Wal-Mart de México, S.A.B. de C.V., and its
equity interests as of December 31, 2010 amount to 68.5% of the representative shares of the Capital
Stock. The remaining shares trade freely in the Mexican Stock Exchange.
Stock Situation as of December 31, 2010
Millions of
Shares
%
Intersalt, S. de R.L. de C.V.
Personnel Stock Option Plan Fund
Subtotal
Market
12,217
279
12,496
4,808
68.5
1.6
70.0
30.0
Total
17,848
100.0
In turn, Wal-Mart Stores, Inc. is the majority shareholder of Intersalt, S. de R.L. de C.V.
Wal-Mart Stores, Inc. is a U.S. Corporation listed in the New York and Pacific Stock Exchanges; its ticker
symbol is WMT.
Page 37 of 78
CORPORATE BYLAWS (IN FORCE AS OF MARCH 10, 2011)
1) Changed Corporate Bylaws
It was reformed the five clause on the Corporative bylaws of Wal-Mart de México S.A.B de
C.V. in order to modify the amount of the Capital stock shall be variable with a fixed
minimum of FIVE BILLION, FIVE HUNDRED AND EIGHTY-THREE MILLION, ONE HUNDRED AND
TWENTYSEVEN THOUSAND, THREE HUNDRED AND SEVENTY SIX Mexican Pesos, without the right
to withdrawal, represented by Two billion, three hundred and five million, six hundred and
four thousand five hundred and ninety-two series “V” shares.
2) Corporate Bylaws
CHAPTER ONE
NAME, ADDRESS, PURPOSE, AND TERM
ONE.- The Corporation is to be named WALMART DE MÉXICO. This name shall be employed always
followed by the words SOCIEDAD ANONIMA BURSATIL DE CAPITAL VARIABLE, or with its abbreviation
S.A.B. DE C.V.
TWO.- The legal domicile for the company shall be in Mexico City, Federal District, but representations
or branch offices may be established or conventional domiciles may be stipulated in any other place
within the Republic of Mexico or abroad.
THREE.- The purpose of the corporation is:
1.
To build, acquire, or transfer property and use it, transfer it and lease it, and in general conduct
any operation allowed by law with regards to said property.
2.
Establish and use, lease out or be leased, purchase or transfer by means of any negotiable
instrument, one or more businesses such as those known as stores, department stores,
supermarkets, restaurants, Cafes, cafeterias, soda fountains or similar establishments, as well as
any other business whose use is not the exclusive domain of the State, or Mexican corporations
with an exclusion clause for foreign nationals, or which requires more than fifty-one percent of
Mexican capital.
3.
To purchase, sell, manufacture, outsource, import and export any manner of national and
foreign products or merchandise, or market the same either directly or through third parties.
4.
Enter into general commercial transactions with any type of negotiable instruments, issued either
by Mexican or foreign corporations and in particular the purchasing of stock or corporate shares
in commercial or industrial ventures, including the temporary purchase of stock issued by the
Corporation itself, charged to the capital stock and if the case, a reserve fund stemming from
net earnings for the purpose of purchasing own shares, in compliance with legal requirements
regarding the purchase of stock or shares. Any companies in which Wal-Mart de México, S.A.B.
de C.V., is a majority shareholder shall not directly nor indirectly invest in shares of the same, nor
in any other company who is a majority shareholder for Wal-Mart de México, S. A. B. de C.V.,
except in the case when the shares are purchased to comply with granted stock options or
which can be given to the employees of said companies, if and only if the shares held do not
exceed twenty-five percent of the total shares in stock of the corporation.
5.
Conduct all manner of commercial commission operations and mediation in commercial
businesses, pursuant to that outlined in the previous paragraphs.
6.
Directly or through third parties, build, install and operate workshops, laboratories, retail shops
and warehouses with the purposes outlined in the previous paragraphs.
7.
Render legal, financial, economic and administrative professional services, and in general
services of any type to all manner of companies, either commercial or industrial, as well as to
individuals or corporations.
8.
Execute all manner of contracts with individuals or corporations to direct, manage, finance,
establish or run any type of commercial or industrial company.
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9.
Sign all manner of contracts as corporations or partnerships with individuals or corporations
required to meet the purposes of the Company.
10. Issue, purchase, sell and endorse all manner of credit instruments and securities permitted by law;
give all manner of real or personal guarantees, and enter into mortgage, guarantee and surety
agreements.
11. Perform all legal proceedings and enter into any and all agreements and contracts that are
directly or indirectly related to the purpose of the Company.
FOUR. – The term of the Corporation shall be ninety-nine years beginning on the eighth day of March,
in the year nineteen hundred and ninety-three.
CHAPTER TWO
CAPITAL STOCK AND SHARES IN STOCK
FIVE. – Capital stock shall be variable with a fixed minimum of FIVE BILLION, FIVE HUNDRED AND
EIGHTY-THREE MILLION, ONE HUNDRED AND TWENTYSEVEN THOUSAND, THREE HUNDRED AND SEVENTY
SIX Mexican Pesos, without the right to withdrawal, and an unlimited variable amount.
Capital stock shall be divided into two classes of shares:
A).- Class one, consisting of representative shares of minimum capital, and
B).- Class two, comprising representative shares of variable capital.
The aforementioned classes correspond to a single series, free subscription nominal shares, identified
as Series “V”, which shall represent one hundred percent of the shares and which may be subscribed
or purchased by local or foreign individuals or companies.
The minimum capital stock shall be represented by Two billion, three hundred and five million, six
hundred and four thousand five hundred and ninety-two series “V” shares, non par value, wholly
subscribed and paid in full. Said amounts may vary due to the repurchase of own shares by the
Company, informing the Annual Regular Shareholders’ Assembly of said decision.
Capital shall be subject to increases due to later contributions from partners or from admitting new
partners, and due to the presumptions set forth in Article one hundred and sixteen of the General
Corporation and Partnership Law. Moreover, the capital can be subject to reductions due to partial
or complete withdrawals of contributions and because of reimbursements to shareholders and to
absorb losses.
Increases and/or reductions to the capital stock shall be approved by the General Regular or Special
Shareholders’ Assembly, as deemed best. Said increase or reduction shall then be included in the
minutes of the corresponding meeting, except in those cases when the increases or reductions
derived from the purchase of the Corporation’s own shares.
The amount resulting from increases and decreases approved by the Shareholders’ Committee, both
in class one and class two, must be reflected on stock and provisional certificates.
SIX.
1. All the shares into which the capital stock is divided are registered, indivisible, and with no par
value. Shares confer rights on the holders and make them liable to those obligations corresponding
to common stock.
The Corporation shall keep a shares record containing the data required by article one hundred and
twenty-eight of the General Law on Comercial Enterprises. The Corporation will consider as owner of
said registered shares whomever appears as such in the aforementioned record. To this end, the
corporation must record the transfers performed at the request of any holder.
2. Printed instruments shall represent all shares. Provisional certificates may be issued until definitive
instruments are printed.
3. The provisional certificates and definitive instruments for the shares representing the capital stock
must be consecutively numbered and may guarantee one or several shares. They must contain all
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that is required by article one hundred and twenty-five of the General Law on Commercial
Enterprises. Clauses five, six and twenty-five herein must be printed to the letter on them. They must
have two written or facsimile signatures of either the Chairman or CEO if a board member, or
secretary or alternate secretary for the Board of Directors of the corporation, or that of two members
of said board as appointed by the board for said purpose. They shall also include an attachment of
coupons duly numbered upon request of the owner. The instruments or provisional stock certificates
may be exchanged for others of different denominations, but only if the new instruments or
certificates guarantee the same number of shares as those given in exchange. Should the
instruments or provisional certificates be lost, stolen or destroyed, they may be replaced pursuant to
that set forth under Heading One, Chapter Roman Numeral One, Paragraph Two of the General Law
on Credit Instruments and Operations, where expenses for said replacement to be covered by the
owner of said certificates or instruments.
CHAPTER THREE
GENERAL SHAREHOLDERS’ ASSEMBLY
SEVEN.
1. The supreme authority for the Corporation is the General Shareholder Assembly, who shall hold
either regular or special meetings.
2. The regular shareholder assembly should meet:
I. To become familiarized with the matters outlined under article one hundred and eighty-one of the
General Law on Commercial Enterprises.
II. To approve the purchase or transfer of shares and in exercise of the right of withdrawal under the
following circumstances:
a) When the purchase value for shares from another corporation, due to one or several simultaneous
or successive purchases, exceeds twenty percent of the book value for Wal-Mart de México
Sociedad Anonima Bursatil de Capital Variable, according to the latest financial statement for the
Corporation. Assembly approval is not required when purchasing shares from other corporations
whose activities are similar to the industrial, commercial or service-related activities of Wal-Mart de
México Sociedad Anonima Bursatil de Capital Variable.
b) When the transfer value for stock from another corporation, due to one or several simultaneous or
successive transfers, exceeds twenty percent of book value according to the latest financial
statement for Wal-Mart de México, Sociedad Anonima Bursatil de Capital Variable. Prior approval by
the assembly shall be required if the share transfer implies, due to one or several simultaneous or
successive operations, the loss in control by the Corporation, whose activities are similar to the
industrial, commercial or service-related activities of Wal-Mart de México, Sociedad Anonima Bursatil
de Capital Variable.
c) When the right to withdraw variable capital of another corporation, due to one or several
simultaneous or successive transactions, and the reimbursement of shares whose value exceeds
twenty percent of the book value according to the latest financial statement for Wal-Mart de
México, Sociedad Anonima Bursatil de Capital Variable, prior approval from the Assembly shall also
be required when said withdrawal implies, due to several simultaneous or successive transactions, loss
of control over the Corporation, whose activities coincide with the industrial, commercial or servicerelated activities conducted by Wal-Mart de México, Sociedad Anonima Bursatil de Capital
Variable.
III. In cases required, to present the amount of capital stock that could be affected by the purchase
of own shares as well as the maximum net equity amount, with the only limitation being that the sum
of the resources allocated for that purpose shall under no circumstances exceed the total balance
for net earnings for the Corporation.
IV. To appoint and remove the Chairman of the Audit Committee Chairman as well as the Chairman
of the Corporate Practices Committee.
V. Any other matter not established by law or by the Bylaws herein as being the sole domain of the
General Special Shareholders’ Assembly.
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3. The general Regular Assembly Meetings may be held at any time but must meet at least once a
year within four months after the close of the corporate period. The general regular assembly that is
informed of the results of the period must in turn present a report pursuant to that outlined under
article one hundred and seventy-two of the General Law on Commercial Enterprises. Said report shall
be in regards to the prior corporate period for the company or companies for which Wal-Mart de
México, Sociedad Anonima Bursatil de Capital Variable owns fifty percent or more of shares and
when the purchase value has exceeded twenty percent of the book value for the controlling
company upon close of the corporate period. In addition, the shareholders shall receive a report
from the Audit Committee and the Corporate Practices Committee. Both may hold sessions together
with the same attendees.
4. The General Regular Assembly meetings shall be considered legally held at the first call to the
same when at least half of the shares in capital stock are represented and the decisions made shall
be considered valid when arrived at through a majority of votes of those present at said meetings.
Should it not be possible for the Assembly to meet on the date designated, a second call shall be
made and shall be designated as such. Said meeting may be held and considered as legal with as
many shares that are represented and decisions made shall be considered as valid when arrived at
through a majority vote of those present.
5. Special General Assembly meetings shall deal with the following matters as per that outlined under
article one hundred and eighty-two of the General Law on Commercial Enterprises:
I. An extension of Corporate duration;
II. Termination of the Corporation in advance of agreed upon date;
III. Increase or reduction in Capital Stock;
IV. Changes to the Corporate purpose;
V. A change in Corporate nationality;
VI. Transformation of the Corporation;
VII. Corporate mergers or break-up;
VIII. Issuance of preferred stock;
IX. Amortization by the Corporation of own shares, issuance of common stock for preferred stock
called in;
X. Issuance of bonds; and
XI. Any other change to the corporate contract.
In addition to the matters listed above, the Special General Assembly meetings must deal with the
following:
a) Legal restructuring of the corporation.
b) Changes to the rights of any corporate stock. Special General Shareholder meetings are
considered legally constituted, in the case of a first call, when at least seventy-five percent of shares
are represented. The decisions made are considered valid if approved by shareholders holding at
least half of said shares. In the case of second or later calls, the Special General Shareholder
meetings are considered legally constituted when at least fifty percent of shares are present. Their
decisions are considered valid if approved by shareholders representing at least fifty percent of
stock.
6. Should the General Regular Assembly need to deal with matters that according to the Bylaws
herein are the domain of the special shareholders’ assemblies due to reforms made to articles one
hundred and eighty-one and one hundred and eighty-two of the General Law on Commercial
Enterprises, the same quorum and the same majority rule as that outlined under paragraph five
above are required for decisions to be deemed valid.
EIGHT.General Shareholders’ Assemblies shall be held according to the following rules:
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1. - Meetings are to be held at the corporate legal domicile, with the exception of unforeseeable
circumstances or cases of force majeure. The call to meeting shall be made by the Board of
Directors. Said call shall be published in the Official Daily Gazette or in a major newspaper obtained
in the place of the legal domicile. Said call is to be published at least fifteen days prior to the
meeting, with the exception of that set forth under clause seven, paragraph two, subparagraph
Roman numeral two of the Bylaws herein, whereby the minimum notice shall be five days prior to the
meeting. The call to meeting shall include the date, time and place of the assembly, the Order of
Business, and shall be signed by whom makes said call. During the aforementioned period of time,
the books and documents related to the purpose of the Assembly meeting shall be made available
at corporate offices for any and all shareholders to be able to consult and, if applicable, shall
include the Financial Information Document with its corresponding attachments.
2. - When the attendees at the Assembly represent the totality of stock issued, the call shall not be
necessary. Nor shall it be necessary when an Assembly is suspended for whatever reason and is to
continue on a different date and time. In both cases, it shall be noted in the corresponding Minutes.
3. - The owners of stock may attend assembly meetings in person or through general or special proxy,
where in the latter case only a power of attorney signed by said Shareholder is required.
4. - In order to attend the Assembly meetings, shareholders must present, a minimum of two days prior
to the date of the meeting, proof of ownership of one or more shares. Said proof may be the
instrument itself or certification from some National or Official Credit Institution authorized for deposit
in the sense that said instrument or instruments are in deposit and that the person mentioned in the
proof of deposit issued by the institution has the right to represent the stock registered by the
instrument or instruments.
5. Before calling the meeting to order, the presiding official shall appoint one or more examiners who
shall verify the number of shares in stock represented and shall make a list of the attendees, listing the
number of shares each represents.
6. Once necessary attendance or quorum is established, the Chairman shall call the Assembly
meeting to order and shall proceed to cover the Order of Business, presiding over all agreements
and debates.
7. The Chairman of the Board of Directors shall preside over the Assembly meeting and should he be
absent, the person elected by the Assembly itself. The Secretary for the Assembly shall be the
Secretary of the Board of Directors. If absent, the person elected by the Assembly itself.
8. The Secretary shall keep the Minutes and create a file for the same. The file shall contain the
following:
a) A copy of the newspaper in which the call to meeting was published, should it be the case.
b) The attendance list of owners of stock.
c) The powers of attorney presented or the extract of the document used as proof certified by the
Secretary or Examiner.
d) A copy of the minutes of the Assembly meeting.
e) All reports, opinions and any and all documents presented during the Assembly meeting.
f) Certification by the Secretary that provisions in paragraph III of Article 49 in the Securities Market
Law has been observed.
9. - Should for any reason the call to order for a legally established Assembly meeting not be
performed, a document stating the same with the corresponding reasons is required. A file of the
same shall be kept as per paragraph eight above.
10. - The decisions made by the General Assembly are legally binding for all shareholders in terms of
the document herein. This includes opposing votes and those not present. There shall be no later
recourse and the decisions are considered definitive. The Board of Directors is thereby authorized to
act on the agreements, pronounce judgment and conduct the necessary measures or enter into the
necessary contracts that are required for full compliance with agreements approved by the
Assembly.
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11. Shareholders who own twenty percent or more of the capital stock may judicially oppose to the
decisions reached by the Assembly.
12. Shareholders that own ten percent of the Corporation’s capital stock may request that the vote
of an issue, for which they deem no sufficient information has been provided, is postponed for three
calendar days without the need for a new call.
13.- If a General Regular or Special Shareholders’ Assembly, duly called, were not to have the
necessary quorum, the call would be repeated with the same requirements and the same time
periods outlined under paragraph one of this clause. An Assembly meeting stemming from a second
or later call shall be held if and only if the numbers of shares in stock represented are those
established under clause seven of these Bylaws, and shall be applicable for all types of Assembly
meetings.
CHAPTER FOUR
CORPORATE ADMINISTRATION
NINE.- The corporate administration shall be conducted by a Board of Directors and the CEO. Said
board shall consist of the number of directors determined by the General Regular Shareholders’
Assembly, and they shall be no more than twenty-one, at least twenty-five percent of which shall be
independent directors. Moreover, for each director, a corresponding alternate shall also be
appointed. Alternates for independent directors shall be independent as well.
TEN.- The Board of Directors shall be in charge of Corporate business, operations, actions and
contracts related to the corporate purpose, with the exception of those deemed the sole domain of
the General Regular or Special Assemblies by law or by the bylaws herein. Said Board shall represent
the Corporation before any and all administrative and judicial authorities, with general proxy for acts
of ownership and management and for collections, with no limits as per article two thousand five
hundred and fifty-four of the Civil Code for Mexico City. It is also authorized to perform those duties
stipulated by law as requiring special clause, including, but not limited to, the following powers:
a) Perform actions strictly pertaining to ownership such as, sell, mortgage or in any other manner
perform a transfer or lien, as well as lease or affect, corporation property.
b) Accept money as a loan, pay guarantees, buy in installments and conduct credit operations
without any limitations, including the signing and accepting of any manner of negotiable instruments
and become a surety on behalf of the Corporation.
c) Direct, manage and in general control corporate businesses and the administration of all its
properties, overseeing compliance of all contracts and agreements that have been signed with the
purpose of meeting corporate objectives.
d) Prepare, approve and present to shareholders the yearly financial information document as
required by law, and present to the shareholders the resolutions deemed appropriate with regards to
income, profits and losses.
e) Suggest plans and standards to be followed by the Corporation, especially with regards to
purchase, sale, leasing, liens, mortgages and transfers of all manner of properties, real estate, rights
and concessions, franchises, the securing of loans, and all other major administrative proceedings
and problems.
f) Freely appoint and remove proxies and other corporation officials and employees, grant them
powers and modify the same but always setting the limits outlined under the Clause Seventeen,
establish the emoluments and set the personal guaranty that should be paid to secure absolute
compliance with obligations and approve the outside auditor the corporation, prior
recommendation by the Audit Committee.
g) Establish and close branch and agency offices for the Corporation.
h) With limits established under Clause Seventeen, wholly or partially delegate powers to any person,
entity, group of persons, managers or any other official or proxy, as well as granting general or
special powers, legal mandates or administrative proxy for any period of time, and delegate to any
person, whether a member or not of the Board of Directors, the power to confer or revoke general
and special powers, and to perform any other proceeding that should be completed.
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i) To issue and convert shares when it does not imply changes to the Capital Stock.
j) The non-delegable power to resolve the purchasing of representative shares of Capital Stock,
through the Mexican Stock Exchange, at current market price, chargeable to Net Equity and, should
the case arise, to Capital Stock; and its later placement among the investor community.
k) The non-delegable power of the Board to approve operations not falling under the regular line of
business and which would take place between the corporation and its partners with persons who are
part of the corporate management, or with whom said persons have equity ties, or if applicable,
blood ties or ties to the second degree, the spouse or common law spouse, and those transactions
representing more than one percent of corporate assets. The purchase or sale of five percent or
more of assets and the granting of guarantees for amounts exceeding five percent of assets.
l) After having first received an opinion from the Audit and Corporate Practices Committees, decide
on and approve those transactions that the Corporation or its Subsidiaries wish to execute with
related parties or which compromise corporate wealth.
m) Appoint among proprietary members the members for the Audit and Corporate Practices
Committees. It shall be understood that both Committees can act as one, provided, however that
provisions in Articles 41, 42 and 43 of the Securities Market Law are observed.
n) All others conferred by national law and Company Bylaws that are not reserved as the sole
domain of the shareholders.
ELEVEN.
1. The members of the Board of Directors shall be appointed as outlined under Clause Nine and shall
hold that position for the time period established by the assembly, until such time as replacements
have been elected and assume their duties. Notwithstanding, a duly called Shareholders’ Assembly
may revoke the appointment of one or more Directors.
The Board of Directors may appoint provisional directors pursuant to, and for the purposes set forth in
Article 24 in the Securities Law.
2. The members of the Board of Directors shall deposit with the Corporation Treasury the amount of
one thousand pesos or shall produce a guarantee for said amount, to the satisfaction of the
Assembly. Said amount deposited or in guarantee is to cover the liability that could be incurred
during the performance of their duties. Notwithstanding, the shareholders may demand a larger or
different amount.
3. The directors shall be appointed through the majority rule of stock present during the General
Regular Shareholders’ Assembly.
4. The minority of shareholders representing at least ten percentage of the capital stock of subscribed
shares shall be entitled to:
a) Appoint or remove a member of the Board of Directors. Such appointment may only be revoked
when the other members of the Board of Directors are removed, in which case, removed members
shall not be appointed as such for a period of 12 months immediately following the date of removal.
b) Request the Chairman of the Board of Directors or the Chairman of the Committees to enforce
corporate and audit practices, at any moment, and call for a general shareholders’ assembly.
5. If upon holding elections as per that outlined under paragraph three of this clause, a minority
shareholder or group of minority shareholders exercise the right during any shareholder assembly, as
outlined under paragraph four above regarding the appointment of a Director and the
corresponding Alternate Director for a given corporate period or part of one, said minority
shareholder or group of minority shareholders may not vote during the appointment of the rest of the
Directors for the same complete or partial period.
TWELVE.
1. The Board of Director meetings shall be held at the corporate domicile, in the branch offices or
agencies that have been set up anywhere else in Mexico that the board may designate.
Decisions may be unanimously made outside of board sessions, and these decisions shall have the
same validity as if they had been made during board meetings. In this case, these decisions may be
made regardless of the location of each board member, and of the means used for communication.
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Said decisions should be confirmed in writing, and shall be set down in the book containing board
minutes and be duly signed by the chairman and secretary or alternate secretary.
2. Board of Director meetings may take place at any moment called by the chairman, the secretary,
the alternate secretary, the Audit and Corporate Practices Committees or twenty-five percent of the
directors, either in writing or through any other means at least five days prior to the meeting date,
specifying the time, date and the Order of Business.
The Board of Directors must meet at least four times a year.
3. The Board members may waive in writing the need for a call to meeting and when a Director is
present, it shall be considered as a waiver to the call.
4. With the exception of cases that will be outlined further in this same paragraph regarding the
establishing of a quorum for any Board of Directors meeting, a minimum of one half plus one directors
or alternates for the same must be present. Decisions regarding all matters in the domain of the
Board and listed on the Order of Business shall be considered approved when at least one half plus
one of Directors or Alternates issues a positive vote. To deal with and legally arrive at a decision on
the matters listed below, the Chairman of the Board must be present, in addition to at least half of
the Directors or Alternate Directors. Decisions are considered approved with a positive vote of the
Chairman and at least half of the Directors or Alternate Directors. These matters are:
a) Any operation meant to purchase or acquire by whatever instrument, to sell or transfer any
instrument regarding fixed assets of corporate property or to enter into any permanent investment
exceeding twenty-five percent of book value according to the latest Financial Information statement
approved by the shareholders.
b) Incur debts with an expiration date beyond twelve months and in excess of twenty-five percent of
Net Equity according to the latest Financial Information document approved by the shareholders.
c) Grant guarantees, 1iens, mortgages and other securities of any kind in excess of twenty-five
percent of Net Equity according to the latest financial information document approved by the
shareholders.
d) The appointment or removal of the Chairman of the Board and the company CEO, as well as the
granting or revoking of their respective powers.
e) Supply instructions regarding the form and terms for issuing votes on shares pertaining to the
Corporation, in General Regular and Special Assemblies, for those companies where it is majority
shareholder. In the case of a tie, the Chairman of the Board shall have the deciding vote.
5. There is to be official Minutes recorded for every Board of Directors meeting and the same is to be
kept in the Document Book, and is to be signed by the Chairman and Secretary or alternate
Secretary of the Board.
6. The Directors are to receive fees for their services as such. Said fees are to be set by the General
Shareholders’ Assembly. In addition, travel expenses incurred by Company operations are to be
paid, as well as travel expenses to and from the place where the meeting is to be held.
7. Board members are in charge of decisions made regarding matters outlined under section k) of
clause ten, with the exception of that stated under article one hundred and fifty-nine of the General
Law on Commercial Enterprises.
8. The members of the Board of Directors and the CEO shall meet due diligence and loyalty duties as
set forth in Articles 30, 31, 32, 34, and 35 of the Securities Market Law, and shall refrain from engaging
in behaviors that may be deemed illicit deeds or actions pursuant to Article 36 of the Securities
Market Law.
CHAPTER FIVE
OFFICIALS
THIRTEEN.- Once the Board of Directors is duly formed, in its first meeting it should appoint among its
members a Chairman. In addition, a secretary, an alternate secretary can be appointed, and a
treasurer is optional, none of them shall be a Board member.
FOURTEEN.- The duties and obligations for the Chairman of the Board are as follows:
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I. Preside over General Shareholder Assemblies and ensure compliance with resolutions when a
special executor is not appointed.
II. Make calls to Board of Director meetings, preside over the same and ensure compliance with
resolutions when a special executor is not appointed.
III. Sign Minutes for Shareholder Assemblies and Board meetings presided over, as well as copies of
said documents when issued upon request of interested parties.
IV. Supervise strict compliance with the Corporation Bylaws and all agreements approved by board
assemblies and committees.
V. On a yearly basis, produce a detailed report for the Shareholders on the state of affairs of the
Corporation.
VI. Any other duties and obligations granted or imposed by the Board of Directors.
FIFTEEN.- Should the Board of Directors decide to create the position of Treasurer, the latter shall have
the following duties and obligations:
I. The safekeeping of corporate funds and supervises management and investment of the same.
II. The safekeeping of shares and cash deposited by the Directors, CEO and other officials,
guaranteeing proper management, or the security policies and issuing the corresponding receipts.
III. Supervise that corporation accounting be properly conducted and that applicable tax provisions
be strictly followed.
IV. Ensure that the annual Financial Information document be properly prepared and presented in a
timely manner to the Board for approval, who in turn must obtain the opinion of the legal entity who
is to prepare the audit for the Corporation and present information to the General Regular
Shareholders’ Assembly.
SIXTEEN.- The Secretary and the alternate secretary for the Board of Directors shall be in charge of
the following:
1. Perform the duties appointed during Shareholder Assemblies and Board meetings, in addition to
taking the Minutes for both, and signing the same together with the Chairman of the Board.
2. Keep the record book for Shareholder Assemblies and Board of Director meetings, as well as the
Record for Registered Shares and the Record for Increases and Reductions in Capital Stock.
3. Supply, upon request, to those with right to the same, copies of documents recorded in said books,
and documentation related to the corporation, as well as to subscribe certificates and
communiqués in compliance with regulations applicable to limited liability stock corporations trading
in the stock market.
4. Notarize the decisions reached by the Board of Directors and Shareholders’ Assemblies, and those
decisions that under the applicable law are required to be notarized.
SEVENTEEN.- The Board of Directors may freely appoint and remove the CEO and relevant executive
officers, who may or may not be a shareholder, and who shall have the obligations, rights and
compensation allocated and those stated by law; additionally they shall guarantee the proper
management in keeping with the same manner conduct observed by Directors. The attributions
granted to said CEO as well as to any other official employed by the corporation shall always be
limited to prior authorization by the Board, as per that contained under clause twelve, paragraph
four of the bylaws herein. The duties for the Directors and CEO shall be compatible and may be
performed by one same person, and in such case, the aforementioned guarantee need only be
produced one single time.
The CEO shall perform management, administrative and business execution activities on behalf of
the Corporation and the legal entities controlled by the same, as well as those activities described in
Articles 44, 45, 46 and those applicable under the Securities Market Law.
EIGHTEEN.- The CEO, or in his absence, the Board, may freely appoint and remove one or more
Managers, Assistant Managers and Proxies for the corporation, and who may or may not be
shareholders. They are to be instructed on their authorizations, obligations and emoluments, with
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clear indication given of the scope of their attributes so their duties may be properly conducted in
the businesses and places that the Board itself designates.
CHAPTER SIX
SUPERVISION OVER THE CORPORATION
NINETEEN.- Supervision over the corporation shall be the responsibility of the Board of Directors,
through the Audit and Corporate Practices Committees, which shall consist of at least three regular
directors, who shall be independent. In addition, they shall perform surveillance activities on the legal
entity that conducts the outside audit for the Corporation. The members of the Audit and Corporate
Practices Committees shall be annually appointed by the Board of Directors and shall perform the
activities contemplated in Articles 42 and 43 in the Securities Market Law. They shall hold their
positions for one year or until proper replacements have been appointed and can assume the
position.
CHAPTER SEVEN
PROFITS AND RESERVE FUND
TWENTY. - Upon close of each fiscal year, the Financial Information document shall be prepared
within the following three months, presenting the same to the General Shareholders’ Assembly for
their approval regarding net profits. Once the Shareholders’ Assembly has approved inventory and
the financial information document, the following distribution is in order:
a) A minimum of five percent is to be set aside for the reserve fund as per that stipulated under
article twenty of the General Law on Commercial Enterprises, until said fund amounts to twenty
percent of capital stock. Said amounts are also to be used to create any other fund approved by
the General Assembly.
b) The remaining profits shall be used as agreed by the General Regular Shareholders’ Assembly.
When so instructed to do so, the Board of Directors may at any time pay dividends on profits earned
according to the Financial Information documents approved by the shareholders. All dividends
decreed and not collected by shareholders within a period of five years shall be deemed waived in
favor of the corporation.
c) When so decreed by the General Special Shareholders’ Assembly, the corporation may proceed
to amortize shares with distributable profits by following the rules set forth under the General Law on
Commercial Enterprises.
CHAPTER EIGHT
CORPORATION TERMINATION AND SETTLEMENT
TWENTY-ONE.- The corporation shall be terminated upon expiration of the time period mentioned
under clause four, unless said period is extended prior to its expiration date by agreement reached
during a Special Shareholders’ Assembly meeting or prior to said expiration for any of the reasons
outlined under article two hundred and twenty-nine of the General Law on Commercial Enterprises.
TWENTY-TWO.- After completing the termination of the Corporation by the Shareholders’ Assembly,
one or two liquidators shall be appointed. They shall conduct settlement procedures for the same
and distribute the products among the shareholders in the exact same proportion of the shares in
stock each possesses. Said liquidators shall be fully empowered to perform the settlement, collect all
amounts due the Corporation and pay all amounts owed. They are to initiate any and all forms of
suits and follow through on the same to conclusion with the full general legal powers of attorney
pursuant to articles two thousand five hundred and fifty-four and two thousand five hundred and
eighty-seven of the Civil Code for Mexico City. They are equally authorized to cancel mortgages and
other liens; settle disputes and sell properties or securities of any kind. With regards to any powers and
obligations not specifically set forth in these bylaws, the liquidators shall have all those conferred by
articles two hundred and forty-two and those that follow under the Law on Commercial Enterprises.
.
Page 47 of 78
TWENTY-THREE.- The shareholders shall be responsible for corporation losses only in the amount of the
value of their respective subscribed shares in stock, regardless of non-payment of the same.
TWENTY-FOUR.- The founding partners as such do not set aside any special sharing of profits.
CHAPTER NINE
GENERAL PROVISIONS
TWENTY-FIVE.- Any foreigner who during the incorporation or at any later period acquires interests or
shares in the Corporation shall, by virtue of either fact, be considered as a Mexican and it shall be
understood that said foreigner agrees not to invoke the protection of his/her government. Should this
condition be breached, he/she shall lose said interests or shares in favor of the Mexican nation.
TWENTY-SIX.- Corporate periods for the Corporation shall begin on January first and end on
December thirty-first of each year.
TWENTY-SEVEN.- For the purpose of canceling stock of the Registry, pursuant to terms in Article 108,
section II in the Securities Market Law, the Corporation shall be excluded from tendering the public
offering set forth in said legal provision; provided however the Corporation proves to the Commission
that shareholders, representing at least ninety-five percent of the Corporate Capital Stock, have
given their consent through agreement reached by the assembly, that the amount offered for
publicly traded shares is less than 300,000 investment units. In addition to the fact that, the
Corporation shall create a trust as contemplated in the last paragraph of section II of Article one
hundred and eight, and notify that the cancellation and creation of the hereinbefore mentioned
trust through the SEDI.
TWENTY-EIGHT.- In addition to the legal provisions under which the Corporation can be dissolved, a
special cause for dissolution shall be that the Capital Stock of the Corporation, set forth in Clause Five
herein, drops below Fifty Thousand Pesos.
TWENTY-NINE.- Any case not specifically contemplated in this document, the provisions in the
Securities Market Law and the General Law shall apply.
Page 48 of 78
5) STOCK MARKET
A) STOCK STRUCTURE
Walmart de México y Centroamérica stock trades in the Mexican Stock Exchange under the
WALMEX ticker symbol.
Stock Structure
As of December 31, 2010
Millions of Shares
Series
“V”
Number of Shares
%
17,848
100
Free subscription, with voting rights
The company has a sponsored ADR program on its series “V” shares. The depositary bank is The Bank
of New York.
B) STOCK PERFORMANCE IN THE SECURITIES MARKET
Relevant Stock Indicators
2010
2009
2008
2007
2006
Maximum Price
Minimum Price
Closing Price
35.74
27.78
35.44
30.05
13.82
29.35
23.69
14.28
18.50
24.68
17.16
18.85
23.78
13.12
23.78
Volume (millions)
3,940.5
5,015.6
6,093.4
6,447.6
4,426.4
Relevant Stock Indicators 2010
QUARTER
Maximum Price
Minimum Price
Closing Price
Volume (millions)
1st
2nd
3rd
4th
32.50
27.98
31.56
919.3
31.88
27.78
28.64
1,130.3
31.58
28.55
31.58
936.2
35.74
31.04
35.44
954.7
Relevant Stock Indicators 2009
QUARTER
Maximum Price
Minimum Price
Closing Price
Volume (millions)
1st
2nd
3rd
4th
18.99
13.82
16.54
1,737.0
20.12
16.94
19.48
1,227.6
24.80
18.97
23.47
1,006.9
30.05
22.80
29.35
1,044.1
Page 49 of 78
Relevant Stock Indicators (October 2010- March 2011)
October
Maximum Price
Minimum Price
Closing Price
Volume (millions)
November
December
January
February
March
33.78
31.04
33.78
35.56
33.15
35.12
35.74
34.69
34.55
35.86
33.43
33.70
35.60
33.71
34.62
36.46
33.82
35.63
416.0
293.7
245.0
218.0
274.2
334.5
Page 50 of 78
6) PEOPLE IN CHARGE
“The undersigned hereby swear that in the scope of our
respective duties, we have prepared information on the issuer
contained in the present yearly report and it is to the best of our
knowledge a reasonable reflection of its situation. In addition, we
hereby claim to know of no deliberate omission or altering of
relevant information in this annual report, which could lead to
errors by investors.”
José Luis Rodríguezmacedo
Senior Vice President of Legal
and Corporate Relations
Rafael Matute
Executive Vice President and
CFO
Scot Rank
Chief Executive Officer
Date: April 15, 2011
Page 51 of 78
“The undersigned hereby swears that opinion was rendered on the financial
statements contained in the present annual report for Wal-Mart de México,
S.A.B. de C.V., and subsidiaries, as of December 31, 2010 and 2009 and for
the years ending on these dates, according to generally accepted
auditing standards in Mexico. In addition, I hereby claim that within the
scope of the work performed to render the aforementioned opinion, to my
knowledge no relevant financial information contained in this annual report
was deliberately omitted or altered, and that said report contains no
information that could lead to errors by investors.”
Enrique García
Independent Auditor
Date: April 15, 2011
Page 52 of 78
7) ATTACHMENTS
A) CONSOLIDATED FINANCIAL STATEMENTS AND OPINION OF THE STATUTORY AUDITOR
Audit and Corporate Practice Committee Report
To the Board of Directors for Wal-Mart de México, S.A.B. de C.V.
Dear Directors:
In accordance to Article 43 of the Securities Market Law in effect, and the internal regulation
approved by the Board of Directors, we wish to inform you of the activities undertaken during the
year ended on December 31, 2010.
In the performance of our duties, we have maintained strict compliance not only with the Mexican
Securities Market Law, but we have also considered the recommendations contained in the
Company’s Code for Corporate Best Practices and the Code of Ethics.
With the purpose of complying with our supervisory process, during the last year the Audit Committee
has held five meetings to analize the overview of the most relevant issues related to Accounting,
Legal, Operations, and Ethics of the Company, complemented by our involvement in the Treasury,
Real Estate, Ethics, and Walmart de México Foundation Committees, and in the Year-Beginning and
Year-End Meetings, emphasizing the following:
I.
As to Corporate Practices:
a) We were informed on:
1 . The performance assessment processes for relevant executives and the authorization of the
replacement plan, with no observations noted.
2. Processes followed during the year to conduct transactions with related parties, which are
mentioned by the management in Note 11 of the Company’s Financial Statements, with no
observations noted.
3. Processes to determine the comprehensive compensation packages for the CEO and other
relevant executives listed under Note 11 of the Company’s Financial Statements. There were
no observations noted.
b) The Board of Directors did not grant any waivers to board members, relevant executives nor
anyone else in the chain of command for privilege whatsoever specified under Article 28,
Section III, Paragraph f) of the Security Markets Law.
II.
As to Audit:
a) We analyzed the status of the internal control system and were informed in detail of the Internal
and Independent Audit programs and work development, as well as the main aspects requiring
improvement, and follow-up on preventive and corrective measures deployed. Therefore, our
opinion is that all effectiveness requirements have been properly met for the Company to
operate under a general control environment.
b) We evaluated the performance of the independent auditors who are in charge of rendering an
opinion on the reasonability of the Company’s Financial Statements and their compliance with
Mexican Financial Information Standards. We therefore consider that the partners at Mancera,
S.C. (a member of Ernst & Young Global) meet the necessary requirements of professional
qualification and independence for intellectual and financial action and thus, we recommend
Page 53 of 78
their appointment to examine and issue an opinion on the Financial Statements for Wal-Mart de
México, S. A. B. de C.V. and Subsidiaries as of December 31, 2010.
c) We attended several meetings to review the quarterly and annual financial statements for the
Company and recommended the release of such financial information.
d) We followed up on Walmart Mexico’s operations and accounting integration with Central
America.
e) We were informed on the approved accounting policies throughout 2010, finding no changes
that would have any material effect on the figures reported in the Financial Statements.
f)
We followed up on the agreements reached at Shareholders and Board meetings.
Based on the work performed and the report from the independent auditors, it is our opinion that the
accounting and reporting policies and criteria followed by the Company are adequate and
sufficient and have been consistently applied and as a result, the information submitted by the CEO
reasonably reflects the financial position and results of the Company.
Therefore, we recommend that the Board of Directors submit the Financial Statements for Wal-Mart
de México, S.A.B. de C.V. and Subsidiaries, for the year ended on December 31, 2010 to the
Shareholders’ Meeting for their approval.
Sincerely,
Ernesto Vega
Chairman of the Audit and Corporate Practices Committees
Mexico City, February 21, 2011
Page 54 of 78
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
Wal-Mart de México, S.A.B. de C.V.
We have audited the accompanying consolidated balance sheets of Wal-Mart de México, S.A.B. de
C.V. and Subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of
income, changes in shareholders’ equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Mexico.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement and are prepared in
conformity with Mexican Financial Reporting Standards. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the financial reporting standards used and significant estimates made by
management, as well as evaluating the overall consolidated financial statements presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
at December 31, 2010 and 2009, the consolidated results of their operations, changes in their
shareholders’ equity and cash flows for the years then ended, in conformity with Mexican Financial
Reporting Standards.
Our audit opinion, the accompanying consolidated financial statements and footnotes have been
translated from original Spanish version into English for convenience purposes only.
Mancera, S. C.
A Member Practice of
Ernst & Young Global
Enrique García
Mexico City, February 4th, 2011. Note 22 referring to final approval of financial statements is dated
February 21, 2011.
Page 55 of 78
Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Notes 1,2 and 3)
Thousands of Mexican pesos
December 31
2010
2009
Assets
Current assets:
Cash and cash equivalents
Ps.
24,661,050
A c c o u n t s r e c e i v a b l e , n e t (N o t e 5 )
I n v e n t o r i e s , n e t (N o t e 6 )
Prepaid expenses
Total current assets
P r o p e r t y a n d e q u i p m e n t , n e t (N o t e 7 )
Other assets (Note 8)
5,540,699
29,036,076
22,519,684
849,278
703,322
61,423,246
48,246,421
102,300,004
84,892,733
1,316,221
-
29,768,097
-
Ps. 194,807,568
Ps. 133,139,154
G o o d w i l l (N o t e 9 )
Total assets
Ps. 1 9 ,482,716
6,876,842
Liabilities, shareholders’ equity and noncontrolling interest
Current liabilities:
A c c o u n t s p a y a b l e t o s u p p l i e r s (N o t e 1 1 )
Ps.
37,999,509
Other accounts payable (Notes 11 and 12)
Ps.
30,377,580
12,466,450
9,535,022
259,567
-
Total current liabilities
50,725,526
39,912,602
O t h e r l o n g - t e r m l i a b i l i t i e s (N o t e 1 5 )
13,532,992
4,451,132
6,954,799
5,476,165
734,641
151,477
71,947,958
49,991,376
Capital stock
52,161,256
23,427,611
Legal reserve
4,718,199
4,718,199
67,178,951
56,585,673
S h o r t - t e r m d e b t (N o t e 1 3 )
D e f e r r e d i n c o m e t a x (N o t e 1 6 )
L a b o r o b l i g a t i o n s (N o t e 1 7 )
Total liabilities
S h a r e h o l d e r s ’ e q u i t y (N o t e 1 8 ) :
Retained earnings
Cumulative translation adjustment
470,218
Premium on sale of shares
Employee stock option plan fund
Total shareholders’ equity
Noncontrolling interest
(
2,292,985
(
22,480)
2,260,365
4,290,556)
(
3,821,590)
122,531,053
83,147,778
328,557
-
Ps. 194,807,568
Ps. 133,139,154
Total liabilities, shareholders’ equity and noncontrolling
interest
Th e accom pan yi ng note s are a n i ntegral par t of th es e fi nanci al sta tem e n ts .
Page 56 of 78
Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Notes 1, 2 and 3)
Thousands of Mexican pesos
Year ended December 31
2010
Net sales
Ps. 334,511,085
Other income
Total revenues
Cost of sales
Ps. 269,396,831
1,346,312
1,054,320
335,857,397
270,451,151
( 261,797,921)
Gross profit
General expenses
2009
( 211,850,788)
74,059,476
(
Operating income
58,600,363
47,015,002)
(
27,044,474
36, 3 3 1 , 8 6 4 )
22,268,499
Other non-operating income, net
125,828
87,793
C o m p r e h e n s i v e f i n a n c i n g r e s u l t (N o t e 1 9 )
459,934
662,090
27,630,236
23,018,382
Income before income tax
Income tax (Note 16)
(
Consolidated net income
8, 0 6 5 , 7 5 9 )
(
19,564,477
6, 2 1 2 , 2 3 9 )
16,806,143
Consolidated net income attributable to
noncontrolling interest
(
14,053)
-
Consolidated net income attributable to the parent
Ps.
19,550,424
Ps.
16,806,143
E a r n i n g s p e r s h a r e (i n p e s o s )
Ps.
1.105
Ps.
0.999
Th e acc o m panyi ng no tes are an i ntegr al part o f th es e fi nanci al sta t em en ts .
Page 57 of 78
Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the year ended December 31, 2010 and 2009
(Notes 1, 2, 3 and 18)
Thousands of Mexican pesos
Legal
Balance at December 31, 2008
Retained
Capital stock
reserve
earnings
P s . 23,590,996
P s . 4,421,048
P s . 47,535,428
Cumulative
Premium on
Employee
translation
sale of
stock option
adjustment
Ps.
-
shares
P s . 2,274,854
plan fund
Ps.
(3,546,132)
Total
P s . 74,276,194
Movements in employee stock option plan
fund
(
Increase in legal reserve
Repurchase of shares
297,151
(
163,385)
Dividends paid
(
14,489)
(
275,458)
(
289,947)
297,151)
-
( 2 ,345,647)
( 2,509,032)
( 5 ,039,743)
(
5,039,743)
Income tax on subsidiary dividends
(
Comprehensive income
Balance at December 31, 2009
23,427,611
4,718,199
73,357)
(
16,806,143
(
22,480)
56,585,673
(
22,480)
73,357)
16,783,663
2,260,365
( 3,821,590)
83,147,778
Movements in employee stock option plan
fund
Repurchase of shares
32,620
(
274,972)
Dividends paid
Shares issued for the acquisition of Walmart
(
468,966)
(
436,346)
( 3 ,196,986)
( 3,471,958)
( 5 ,743,228)
(
29,008,617
5,743,228)
29,008,617
Central America
Stock premium of noncontrolling interest
(
Comprehensive income
16,932)
(
19,550,424
492,698
16,932)
20,043,122
Balance at December 31, 2010
P s . 52,161,256
P s . 4,718,199
P s . 67,178,951
Ps.
470,218
P s . 2,292,985
Ps.
(4,290,556)
P s . 122,531,053
The accompanying notes are an integral part of these financial statements.
Page 58 of 78
Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Notes 1, 2 and 3)
Thousands of Mexican pesos
Year ended December 31
2010
2009
Operating activities
Income before income tax
Ps.
27,630,236
Ps.
2 3 ,018,382
Items related to investing activities:
Depreciation
6,249,058
4,646,212
Loss from disposal of property and equipment
456,736
193,384
Stock option compensation expense
248,900
205,954
639,324
261,082
Items related to financing activities:
Interest payable under capital leases
Accrued interest on contingent liability
Gross cash flows
158,037
-
35,382,291
28,325,014
Variances in:
Accounts receivable
(
Inventories
( 3,400,029)
835,453)
Prepaid expenses and other assets
(
165,954)
( 1,778,833)
288,259
(
171,389)
Accounts payable to suppliers
4,042,884
3 ,372,458
Other accounts payable
1,877,830
779,263
Income tax
( 8,113,173)
Labor obligations
(
4,521, 7 3 0 )
77,536
24,057
28,865,932
26,317,099
Purchase of property and equipment
(13,129,968)
( 9 ,734,557)
Employee stock option plan fund, net
(
685,246)
(
Purchase of shares of noncontrolling interest
(
390,999)
-
508,362
-
Net cash flows from operating activities
Investing activities
Acquisition of Walmart Central America
Proceeds from the sale of property and equipment
Net cash flows from investing activities
Cash surplus to be applied to financing activities
495,901)
127,139
122,392
(13,570,712)
(10,108,066)
15,295,220
16,209,033
Financing activities
Dividends paid
( 5,743,228)
( 5,039,743)
Repurchase of shares
( 3,471,958)
( 2,509,032)
Payments for property and equipment under capital leases
(
818,831)
(
Payment of short-term debt
(
5,615)
-
Net cash flows from financing activities
(10,039,632)
( 8 ,053,635)
Net increase in cash and cash equivalents
Adjustment to cash flows for changes in exchange rate
5,255,588
(
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
77,254)
504, 8 6 0 )
8, 1 5 5 ,398
(
22,480)
19,482,716
11,349,798
Ps. 24,661,050
Ps. 19,482,716
The accompanying notes are an integral part of these financial statements.
Page 59 of 78
Wal-Mart de México, S.A.B. de C.V. and Subsidiaries
NOTE 1 – DESCRIPTION OF THE BUSINESS:
AT DECEMBER 31, 2010 AND 2009
Thousands of Mexican pesos, unless otherwise indicated
Wal-Mart de México, S.A.B. de C.V. (WALMEX or “the Company”) is a company incorporated under
the laws of Mexico and listed on the Mexican Stock Exchange. The principal shareholder of WALMEX is
Wal-Mart Stores, Inc., a U.S. corporation, through Intersalt, S. de R.L. de C.V., a Mexican company.
WALMEX has a 99.9% equity interest in the following groups of companies in Mexico and Central
America:
Grupo
Actividad
Nueva Walmart
Oper ati on of 899 (684 i n 2009 ) B odega A urrerá di scount
stor es , 192 (1 6 9 i n 2009 ) Wal m ar t hyp ermark ets , 10 8 (98
i n 2009 ) Sam’s Cl ub membershi p sel f-serv ice whol esal e
stor es , and 75 (69 i n 2009 ) Sup erama superm arkets .
Sub ur b i a
Oper ati on of 90 (8 6 i n 2009 ) Suburbi a stor es
app arel and accessori es for the enti re fami l y.
I m p or ti ng c o m p a n i e s
wi th
Oper ati on of 266 (260 i n 2009) Vi ps restaur ants serv i ng
i ntern a ti onal c ui si ne, 93 El P ortó n res ta ur an ts s erv i ng
M exi can food and 7 Ragazzi restaura nts sp eci ali zi ng in
I tal i an food duri ng both year s
R ea l es ta t e
I m port of goods for sal e .
Ser vi ces c o m p a n i e s
Real es ta te dev el opm ents a nd m anag em en t of re a l
es ta te com pani es.
Walmart Bank
Renderi ng of professi onal serv i ces to Grou p compani es,
no t- for- prof i t serv i ces to t he co m m uni ty a t l arg e a nd
shar ehol di ng.
Walmart Central America
Oper ati on of 263 (190 i n 2009 ) bank branches .
I m p or ti ng c o mp a n i e s
Oper ati on of 401 di scount s tores (D espens a Fami li ar and
P alí ), 94 su perm ark e ts (P ai z , L a D espe ns a d e D on Jua n ,
La Uni ón and M ás x M enos ), 3 6 di scount war eh ous e
stor es (M ax i Bodega ), 16 hyp erm arke ts (Hi per Pai z and
Hi per M ás) and 2 Cl ubCo membershi p sel f-serv i ce
wh ol es al e stor es .
NOTE 2 – NEW FINANCIAL REPORTING STANDARDS:
On December 18, 2009, the Mexican Financial Reporting Standards Research and Development Board
(Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera, A.C. or
CINIF) issued Mexican Financial Reporting Standards (Mexican FRS) B-16, Financial Statements of NotFor-Profit Organizations; Mexican FRS C-1, Cash and Cash Equivalents; and Mexican FRS E-2, Donations
Received or Made by Not-For-Profit Organizations, all of which came into force as of January 1, 2010.
The CINIF also issued Mexican FRS B-5, Financial Information by Segment, and Mexican FRS B-9, Interim
Financial Information, which will become effective as of January 1, 2011. The adoption of these new
Mexican FRS have no material effect on the Company’s financial statements.
On August 31, 2010, the CINIF issued the Interpretation to Mexican FRS-19, Changes resulting from the
Adoption of International Financial Reporting Standards (IFRS), which became effective as of
September 30, 2010 and requires entities to disclose their progress in transitioning to IFRS. Since the
Company is a public company that is listed in the Mexican Stock Exchange, it must begin to prepare
Page 60 of 78
and file financial information under IFRS as of 2012. At date, the financial statement captions expected
to be affected by this requirement are: inventories, property and equipment, deferred taxes, labor
obligations and shareholders’ equity. The Company is in the process of quantifying these effects on the
financial statements.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES:
The significant accounting policies observed by the Company in the preparation of the consolidated
financial statements, in conformity with the Mexican FRS issued by the CINIF, are described below.
Mexican FRS are understood to encompass the new standards issued by the CINIF and the bulletins
issued by the Accounting Principles Board of the Mexican Institute of Public Accountants that have not
been modified, replaced or abolished by Mexican FRS and that were transferred to the CINIF. As such,
any of the documents comprising Mexican FRS will hereinafter be referred to by their original name or
rather, either as “Mexican FRS” or as “accounting Bulletin”, as the case may be.
a.
The accompanying consolidated financial statements include the statements of WALMEX and
those of its subsidiaries in Mexico and abroad, which are grouped as described in Note 1 and are
prepared for the same accounting period. All related party balances and transactions have been
eliminated in the consolidation, in conformity with Mexican FRS B-8, Consolidated and Combined
Financial Statements.
Noncontrolling interest represents the equity interest in the net assets of the subsidiary not held by
the controlling company. Noncontrolling interest is shown separate from the shareholder´s equity.
b.
WALMEX prepares its financial information in conformity with Mexican FRS B-10, Effects of Inflation,
based on the economic environments (accumulated rates of inflation) during the prior three years
of the countries in which it operates. Accordingly, since El Salvador (10.4%), Mexico (14.5%),
Guatemala (18.6%) and Honduras (24.3%) have non-inflationary environment, as so defined in
Mexican FRS B-10, their financial information is presented in thousands of nominal pesos. However,
the financial information for Costa Rica (31.3%) and Nicaragua (34.2%) includes the effects of
inflation of such countries using the comprehensive inflation recognition method set forth in
Mexican FRS B-10.
In Mexico, beginning January 1st, 2008, WALMEX stopped to recognize the effects of inflation on its
financial information and thus, the date through which the Company’s financial information was
restated for inflation is December 31, 2007.
c.
d.
In order to provide a better understanding of the Company’s business performance, the
consolidated statements of income were prepared on a functional basis, which allows for the
disclosure of the cost of sales separately from other costs and expenses, and of operating income
as well, as established under Mexican FRS B-3, Statements of Income.
The Walmart Bank’s financial statements, which are included in the Company’s consolidated
financial statements, were prepared based on the accounting criteria established by the National
Banking and Securities Commission (CNBV), as issued as part of the General Provisions for Credit
Institutions, which consider the guidelines of Mexican FRS. At date, there are no significant
differences between these two sets of standards.
Also, before the financial statements of Walmart Central America are consolidated, they are
adjusted to conform to Mexican FRS and translated to Mexican pesos in conformity with Mexican
FRS B-15, Foreign Currency Translation.
e.
f.
The preparation of financial statements in conformity with Mexican FRS requires the use of
estimates in some items. Actual results might differ from these estimates.
Cash and cash equivalents consist basically of bank deposits and highly liquid investments. Such
investments are stated at acquisition cost plus accrued interest, not in excess of market value.
Walmart Bank makes the monetary regulation deposits required by Banco de México, the amounts
of which are determined based on traditional deposits in Mexican pesos.
The Company has no transactions with derivative financial instruments.
Page 61 of 78
g.
The balance of the Walmart Bank’s receivables portfolio is represented by amounts actually given
to borrowers, plus uncollected earned interest. The preventive allowance for credit risks is
presented net of the portfolio balances.
h. WALMEX recognizes bad debt reserves at the time the legal collection process begins in
conformity with its internal procedures.
i. Inventories are stated at average cost, determined largely using the retail method, not in excess of
market value.
Inventory pertaining to Agro-industrial Development of grains, edibles and meat is valued using the
average-cost method.
The buying allowances are charged to the results of operations based on the turnover of
inventories that gave rise to them.
j. Property and equipment are initially recorded at acquisition cost. In Costa Rica and Nicaragua are
comprehensively restated based on the price index of each country.
Fixed asset depreciation is computed using the straight-line method, at annual rates ranging from
2.5% to 33%.
k. The Company classifies its operating and capital leases for the rental of property following the
guidelines established in accounting Bulletin D-5, Leases.
l. Based on the guidelines of Mexican accounting Bulletin C-15, impairment in the value of long-lived
assets and disposal of such is recognized by applying the expected present value method to
determine value in use, considering each store or restaurant as the minimum cash generating unit.
m. Goodwill represents the excess cost of the acquisition of the shares over the total fair value of the
net assets of Walmart Central America at the date of acquisition and the fair value of the
noncontrolling interest, as determined in conformity with the guidelines of Mexican FRS B-7, Business
Acquisitions. Goodwill is not amortized, but is evaluated for impairment tests at least once a year in
conformity with the guidelines of Mexican accounting Bulletin C-15.
n. Foreign currency denominated monetary assets and liabilities are translated to Mexican pesos at
the prevailing exchange rate as of the balance sheet date. Exchange differences determined are
charged or credited to income and are presented as part of comprehensive financing result, as
required by Mexican FRS B-15, Foreign Currency Translation.
The financial statements of subsidiaries abroad are translated from the local currency into Mexican
pesos using average exchange rate for income statements and the year-end exchange rate for
balance sheets. The cumulative translation adjustment is the effect of translating the financial
statements of the Company’s foreign subsidiaries into Mexican pesos. This item is recorded directly
in shareholders’ equity.
o.
p.
q.
r.
Liabilities for traditional deposits of the Walmart Bank are comprised of demand deposits in debit
card accounts. These liabilities are recorded at either deposit or placement cost, plus accrued
interest.
Liability provisions are recognized whenever the Company has current obligations (legal or
assumed) derived from past events that can be reasonably estimated and that will most likely give
rise to a future cash disbursement for their settlement.
Deferred income tax is determined using the asset and liability method established in Mexican FRS
D-4, Taxes on Profits. Under this method, deferred income tax is recognized on all temporary
differences between the financial reporting and tax basis of assets and liabilities, applying the
enacted income tax rate or the flat-rate business tax rate effective as of the balance sheet date,
or the enacted rate at the balance sheet date that will be in effect when the deferred tax assets
and liabilities are expected to be recovered or settled.
Deferred tax assets are evaluated periodically in order to determine their recoverability.
In conformity with the laws of each country in which the Company operates, the termination
benefits for dismissal or death to which the Company’s employees are entitled, as shown in the
next page.
Mexico:
Seniority premiums accruing to employees under the Mexican Labor Law and termination
payments made at the end of employment, except when resulting from corporate restructuring,
are recognized as a cost of the years in which services are rendered, based on actuarial
computations made by an independent expert, using the projected unit-credit method, in
conformity with Mexican FRS D-3, Employee Benefits.
Page 62 of 78
Actuarial gains and losses are amortized based on the expected remaining working life of the
Company’s employees.
All other payments accruing to employees or their beneficiaries in the event of involuntary
retirement or death, in terms of the Mexican Labor Law, are expensed as incurred.
Central America:
Termination benefits to which employees of the Walmart Central America companies are entitled
according to the Labor Law applicable in each country are recognized as liabilities based on
actuarial valuations carried out by independent experts.
In Guatemala employees are entitled to termination benefits after working three or more years in
the Company, except in the case of justified dismissals.
In El Salvador and Honduras employees are entitled to termination benefits after working one or
more years in the Company, except in the case of justified dismissals.
Termination benefits are paid in Nicaragua in conformity with the Labor Law of such country.
Payouts vary from one to five months of salary of the period during which the services were
provided.
In the case of the companies in Costa Rica, termination benefits are paid to employees based on
current corporate policy and in conformity with the laws of such country.
s.
t.
u.
Employee profit sharing is presented in the income statement under the other non-operating
income, net caption and represents a liability due and payable in less than one year.
In conformity with the Mexican Corporations Act, the Company is required to appropriate at least
5% of the net income of each year to increase the legal reserve. This practice must be continued
until the legal reserve reaches 20% of capital stock.
The employee stock option plan fund is comprised of WALMEX shares presented at acquisition
cost. The plan is designed to grant stock options to executives of the companies in the Group, as
approved by the CNBV.
All employee stock options are granted to executives of subsidiary companies at a value that is no
less than the market value on the date of grant.
In accordance with current policies, WALMEX executives may exercise their option to acquire the
shares in equal parts over five years. The right to exercise an employee stock option expires in a
period of ten years from the date the option is granted, or up to sixty days following the executive’s
labor termination with the Company.
Stock-based compensation is determined using the Black-Scholes financial valuation technique, in
conformity with Mexican FRS D-8, Share-Based Payments.
v.
The premium on the sale of shares represents the difference between the cost of the shares,
restated through December 31, 2007 based on the Mexican National Consumer Price Index (NCPI),
and the value at which such shares were assigned to executives of companies in the Group, net of
the corresponding income tax.
w. The Company’s comprehensive income consists of its net income for the year and the cumulative
translation effect.}
x. Sales revenues are recognized at the time the customer takes ownership of the products, in
conformity with International Accounting Standard No. 18, issued by the International Accounting
Standards Committee, applied on a supplementary basis.
Sam’s Club and ClubCo membership revenues are deferred over the twelve-month term of the
membership, in conformity with the requirements of Staff Accounting Bulletin No. 104, Revenue
Recognition in Financial Statements, issued by the U.S. Securities and Exchange Commission,
applied on a supplementary basis. Such revenues are presented in the other income caption in
the statement of income.
The Walmart Bank’s interest and fee revenues are recognized in the other income caption in the
statement of income.
Page 63 of 78
y.
z.
Earnings per share is computed by dividing net income attributable to the parent by the weighted
average number of shares outstanding, as specified in Mexican accounting Bulletin B-14, Earnings
per Share.
Segment financial information is prepared using the management approach established in
accounting Bulletin B-5, which is based on the information used by Company management to
make business decisions and monitor the Company’s performance.
NOTE 4 - BUSINESS ACQUISITIONS:
At an extraordinary shareholders’ meeting held on December 22, 2009, the shareholders approved the
acquisition of the shares of TFB Corporation N.V. and Subsidiaries (Walmart Central America) through
the merger of such company into WALMEX via a related party. This operation came in full force and
effect on February 15th, 2010, date on which WALMEX acquired the assets and assumed the liabilities
of Walmart Central America, which was paid by issuing 1,207,937,278 series “V” Class 2 WALMEX shares
and by making a cash payment of Ps. 1,497,777 from the Company’s own resources.
Furthermore, WALMEX acknowledged a contingent payment as part of the purchase acquisition price,
which shall be paid in subsequent installments both in shares and cash. On the subject of payment of
shares, 88,062,722 were issued and shall remain unpaid and unsubscribed treasury stock, so they can
be handed over to the former shareholders of Walmart Central America, provided the acquired
company reaches a certain level of profitability during a period no longer than 10 years. Cash
payments shall be fixed and payable during a five-year period at a rate of 10 million dollars annually.
Present values have been used to estimate both payments, but they may differ due to exchange rate
differences, as the transaction was agreed upon in American dollars and based on the Company’s
results.
The purchase price acquisition of Walmart Central America is as follows:
Thousands of
Mexican pesos
Payment in shares
Ps.
29,008,617
Payment in cash
1,497,777
Contingent payments
5,941,484
Total purchase price
Ps.
36,447,878
This acquisition strengthens the Company’s growth strategy, as it creates a solid platform permitting
higher levels of income and profitability. The merger of Walmart Mexico and Walmart Central America
is expected to create synergies, thus making it possible to increase sales, streamline administrative and
operational processes, and leverage best practices.
This transaction was recorded as a business acquisition in conformity with Mexican FRS B-7. For such
purpose, the Company determined the fair values of the net assets acquired, in conformity with
valuation guidelines provided in this standard.
Additional expenditures related to the acquisition do not represent part of the value of the business
acquired and are charged to the income statement at the time they are incurred.
In order to provide a broader view of the operating performance of the Company, a breakdown of
the amounts from March to December and the percentage contributed by Walmart Central America
in the consolidated figures of WALMEX as of December 31, 2010, are shown below:
Page 64 of 78
Walmart
Consolidated
Central America
%
Statement of income:
Net sales
Ps.
334,511,085
Other income
Total revenues
38,936,736
18.7
335,857,397
39,188,379
11.7
74,059,476
(
11.6
251,643
Gross profit
General expenses
Ps.
1,346,312
47,015,002)
(
8,689,713
11.7
7,100,046)
15.1
Operating income
27,044,474
1,589,667
5.9
Income before income tax
27,630,236
1,582,385
5.7
Consolidated net income
19,564,477
1,008,461
5.2
994,408
5.1
Consolidated net income
attributable to the parent
Ps.
19,550,424
Ps.
Balance sheet:
Current assets
Ps.
Property and equipment, net
61,423,246
Current liabilities
Ps.
9.3
1,187,825
90.2
29,768,097
29,768,097
100.0
47,270,324
24.3
194,807,568
Ps.
50,725,526
Ps.
6,315,733
12.5
21,222,432
8,529,510
40.2
122,531,053
32,096,524
26.2
328,557
328,557
100.0
47,270,324
24.3
Long-term liabilities
Shareholders’ equity
11.1
1,316,221
Goodwill
Ps.
6,831,421
9,482,981
Other assets
Total assets
Ps.
102,300,004
Noncontrolling interest
Total liabilities, shareholders’
equity and noncontrolling
interest
Ps.
194,807,568
Ps.
NOTE 5 – ACCOUNTS RECEIVABLE, NET:
An analysis of accounts receivable is as follows:
December 31
2010
Trade receivables
Recoverable taxes
Other accounts receivable
A l l o wa n c e f o r b a d d e b t s
Total
(
Ps.
2009
3,537,958
Ps.
Ps.
2,902,040
2,547,742
2,222,536
943,841
551,614
152,699)
6,876,842
(
Ps.
135,491)
5,540,699
Page 65 of 78
NOTE 6 – INVENTORIES, NET:
An analysis of inventories is as follows:
December 31
2010
Inventory of merchandise for sale
Ps.
2009
27,348,731
Merchandise in transit
Ps.
21,797,162
1,161,172
Agro-industrial Development
Others
Total
Ps.
682,728
488,978
-
37,195
39,794
29,036,076
Ps.
22,519,684
NOTE 7 – PROPERTY AND EQUIPMENT, NET:
An analysis of property and equipment is as follows:
December 31
2010
2009
Investments subject to depreciation:
Buildings
Ps.
33,664,586
Facilities and leasehold improvements
Ps.
29,114,493
29,053,302
24,462,360
62,717,888
53,576,853
Less:
Accumulated depreciation
( 17,489,368)
( 15,139,162)
Property, net
45,228,520
38,437,691
Fixtures and equipment
39,194,838
32,260,293
( 18,397,990)
( 15,865,572)
20,796,848
16,394,721
Property
8,817,555
5,438,747
Fixtures and equipment
1,152,465
878,132
9,970,020
6,316,879
1,675,886)
( 1,344,036)
Less:
Accumulated depreciation
Fixtures and equipment, net
Capital lease:
Less:
Accumulated depreciation
(
Capital lease, net
Investments
subject
8,294,134
to
depreciation,
net
Ps.
74,319,502
Investments not subject to depreciation:
Land
Ps.
25,787,774
Construction in progress
Investments
not
4,972,843
Ps.
Ps.
2,192,728
subject
59,805,255
23,221,885
1,865,593
to
depreciation
Ps.
27,980,502
Ps.
25,087,478
Total
Ps.
102,300,004
Ps.
84,892,733
Page 66 of 78
NOTE 8 - OTHER ASSETS:
At December 31, 2010 an analysis of other assets is as follows:
2010
Licenses and brands
Ps.
804,151
Held to – maturity securities
259,567
Other investments
152,620
Royalties
75,514
Patents
Total
24,369
Ps.
1,316,221
Held-to-maturity corresponds to a restricted investment held in HSBC bank pledged in guarantee
over the bank loan of the subsidiary CARHCO. This investment matures on September 11, 2011 and
bears annual interest of 3.75%.
NOTE 9 – GOODWILL:
As of February 2010, the Company recognized goodwill as a result of the acquisition of Walmart
Central America which corresponds to the excess of purchase price over the fair value of net assets
acquired and the noncontrolling interest of Walmart Central America. This goodwill is subject to the
treatment provided for under Mexican FRS B-7.
An analysis of goodwill at December 31, 2010 is as follows:
Amount
Payment in shares
Ps.
Payment in cash
1,497,777
Total acquisition cost
30,506,394
Contingent payment
Total purchase price
29,008,617
5,941,484
Ps.
36,447,878
Page 67 of 78
The assets acquired and liabilities assumed in the acquisition are as follows:
Fair value
Assets acquired
Cash and cash equivalents
Ps.
Inventories
2,006,132
3,114,290
Other current assets
558,370
Property and equipment, net
8,760,614
Other assets
1,221,211
Total assets acquired
15,660,617
Liabilities assumed
Current liabilities
4,786,552
Long-term liabilities
1,603,208
Labor obligations
530,142
Long-term debt
268,199
Deferred taxes
1,123,669
Total liabilities assumed
8,311,770
Net assets acquired
7,348,847
Noncontrolling interest
669,066
Current liabilities
6,679,781
Goodwill
Ps.
29,768,097
The Company engaged the services of an independent expert to determine the fair values of the
assets acquired and liabilities assumed shown above.
NOTE 10 - FOREIGN CURRENCY DENOMINATED ASSETS AND LIABILITIES:
The Company has the following monetary assets and liabilities translated into U.S. dollars:
Thousands of U.S. dollars
December 31
2010
2009
Monetary assets:
Mexico
$
Central America
121,978
$
103,437
351,544
$
103,437
601,377
$
118,193
229,566
$
-
Monetary liabilities:
Mexico
$
Central America
Net monetary position
593,259
-
$
1,194,636
$
118,193
$
( 843,092)
$
( 14,756)
Page 68 of 78
The Company had the following U.S. dollar denominated transactions (excluding property and
equipment):
Thousands of U.S. dollars
December 31
2010
2009
Revenues
$
3,115,168
$
-
Costs and expenses
$
3,955,752
$
816,264
The costs and expenses shown above include imported merchandise for sale of US$ 839,531 (US$
691,698 in 2009) and technical assistance, services and royalties of US$ 139,196 (US$ 124,566 in 2009)
that correspond to Walmart Mexico.
The exchange rates at December 31, 2010 (Ps. 13.0903 per U.S. dollar in 2009) used to translate assets,
liabilities and transactions in foreign currency to Mexican pesos are as follows:
Country
Currency
Mexico
Peso
El Salvador
U.S. Dóllar
Guatemala
Year-end exchange rate
Average exchange
with respect to
rate with respect to
U.S. dollar
peso
Peso
Ps.
12.3603
Ps.
1.0000
Ps. 12.6340
US$
1.0000
US$
0.0809
US$
Quetzal
Q
8.0155
Q
0.6485
Q
0.6152
Honduras
Lempira
L
18.8950
L
1.5287
L
1.4960
Costa Rica
Colon
₡
41.5014
₡
41.6047
Nicaragua
Cordoba
C$
1.7704
C$
1.6910
₡ 512.9700
C$
21.8825
0.0792
At the date of the issuance of these financial statements, the exchange rate with respect to Mexican
peso was Ps. 12.0145, per U.S. dollar.
Balances and transactions with Walmart Central America are translated to Mexican pesos using the
year-end exchange rate and the average monthly exchange rate, respectively..
NOTE 11 – RELATED PARTY BALANCES AND TRANSACTIONS:
An analysis of balances due to related parties at December 31, are as follows::
2010
2009
Accounts payable to suppliers:
C . M . A . – U . S . A . , L . L . C . (a f f i l i a t e d c o m p a n y )
Ps.
G l o b a l G e o r g e , L T D . (a f f i l i a t e d c o m p a n y )
434,746
Ps.
11,584
467,582
5,320
Ps.
446,330
Ps.
472,902
Ps.
358,993
Ps.
363,229
Ps.
359,825
Ps.
396,294
Other accounts payable:
W a l - M a r t S t o r e s , I n c . (h o l d i n g c o m p a n y )
G l o b a l G e o r g e , L T D . (a f f i l i a t e d c o m p a n y )
832
33,065
Page 69 of 78
The Company carried out the following transactions with related parties:
December 31
2010
2009
Imported merchandise for sale
Ps.
2,632,921
Ps.
2,717,272
Technical assistance, services and royalties
Ps.
1,683,979
Ps.
1,539,110
During the year ended December 31, 2010, the Company paid its primary officers compensations
aggregating Ps. 696,397 (Ps. 480,635 in 2009). Such compensation is primarily comprised of direct
short-term benefits as defined in Mexican FRS D-3.
NOTE 12 – OTHER ACCOUNTS PAYABLE:
An analysis of other accounts payable is as follows:
December 31
2010
Accrued liabilities and others
Ps.
Taxes payable
10,285,106
2009
Ps.
7,133,035
1,454,379
1,728,056
R e l a t e d p a r t i e s (N o t e 1 1 )
359,825
396,294
C a p i t a l l e a s e s (N o t e 1 5 )
349,588
261,639
L a b o r o b l i g a t i o n s (N o t e 1 7 )
Total
17,552
Ps.
12,466,450
15,998
Ps.
9,535,022
The accrued liabilities and others caption includes provisions in the amount of Ps. 708,643 (Ps. 671,013
in 2009).
NOTE 13 – SHORT-TERM DEBT:
On September 8, 2008, CARHCO Company a subsidiary of Walmart Central America, obtained a
loan from HSBC of twenty one million of dollars that bears annual interest of 4.15% and matures on
September 8, 2011. As mentioned in Note 8, this loan is guaranteed with a long-term investment.
NOTE 14 – COMMITMENTS:
At December 31, 2010, the Company has entered into commitments for the purchase of inventory,
property and equipment and maintenance services for Ps. 7,504,837 (Ps. 6,751,765 in 2009).
NOTE 15 – LEASES:
The Company has entered into operating leases with third parties for compulsory terms ranging from
2 to 15 years. Rent paid under capital leases may either be fixed or variable, based on a percentage
of sales.
The Company has entered into property lease agreements that are qualified for consideration as
capital leases. These agreements are recorded at the present value of future minimum payments or
at the market value of the property, whichever is less, and are amortized over the term of the lease
agreements, including renewal periods.
The Company has also entered into capital leases for the rental of residual water treatment plants
used to meet environmental protection standards. The term of payment ranges from 7 to 10 years.
Page 70 of 78
Future rental payments are as follows:
Operating
Capital
Lease
Lease
(Compulsory term)
Year
(Minimum payments)
2011
Ps.
268,399
Ps.
349,588
2012
Ps.
258,819
Ps.
324,732
2013
Ps.
241,683
Ps.
322,839
2014
Ps.
221,093
Ps.
304,246
2015
Ps.
204,313
Ps.
330,788
2016 and thereafter
Ps.
445,604
Ps. 6,770,989
Total rent under operating leases recorded to results of operations for the years ended December 31,
2010 and 2009 was Ps. 2,849,261 and Ps. 2,039,433, respectively.
NOTE 16 – INCOME TAX:
The Company and its subsidiaries, except Walmart Bank and Walmart Central America, have been
authorized by the Ministry of Finance and Public Credit to determine their tax results on a
consolidated basis.
An analysis of taxes recorded to results of operations is as follows::
December 31
2010
Current income tax
Ps.
7,722,616
Deferred income tax
2009
Ps.
343,143
Total
Ps.
8,065,759
6,252,431
(
Ps.
40,192)
6,212,239
An analysis of the deferred tax liabilities (assets) derived from temporary differences is as follows:
December 31
2010
Property and equipment
Ps.
7,812,433
Inventories
Repatriation
of
earnings
of
Walmart
tax
loss
for
the
Wa l m a r t
Ps.
6,862,736
24,409
33,934
890,390
-
Central
America
Unamortized
2009
Bank
and
Walmart Central America
(
667,230)
(
468,864)
Advance collections
(
191,267)
(
159,472)
Other long-term liabilities
(
401,530)
(
168,600)
Other items, net
(
512,406)
(
623,569)
Total
Ps.
6,954,799
Ps.
5,476,165
At December 31, 2010, the effective consolidated tax rate is 29.2% (27.0% in 2009).
Page 71 of 78
In Mexico, the applicable income tax rate will be 30% for 2010 to 2012 (28% in 2009), 29% in 2013 and
28% beginning 2014 and thereafter. The applicable income tax rates for the other countries are as
follows:
Rate
Guatemala
31%
El Salvador
25%
Honduras
30%
Costa Rica
30%
Nicaragua
30%
In Mexico, the Company’s current income tax for 2010 and 2009 includes the partial taxation of the
inventory held at December 31, 2004, since as provided for under the Income Tax Law, the Company
had opted to consider such inventories as taxable over a number of years for purposes of deducting
cost of sales at merchandise sold.
The goodwill resulting from the acquisition of Walmart Central America is not deductible under
Mexican income tax law and thus, it has no effect on the Company’s deferred taxes.
The Company has tax losses from Walmart Bank and Walmart Central America, and in conformity
with the current income tax laws of each of the countries where these subsidiaries operate, such
losses may be carried forward against the taxable income generated in future years.
An analysis of the available tax loss carryforward at December 31, 2010 is as follows:
Year of expiration
2012
Ps.
Walmart
Walmart
Bank
Central América
-
Ps.
4,577
2013
-
4,622
2014
-
1,949
2015
-
1,896
2016
25,186
-
2017
251,472
-
2018
611,048
-
2019
748,900
-
2020
687,773
Ps.
2,324,379
PS
13,044
Based on the forecast of its taxable income, the Company will continue generating income tax in
upcoming years.
NOTA 17 – OBLIGACIONES LABORALES:
Mexico:
The Company has set up a defined benefits trust fund to cover seniority premiums accruing to
employees. Workers make no contributions to this fund. The Company also recognizes the liability for
employee termination payments. Both these obligations are computed using the projected unit
credit method.
At December 31, the Company’s assets, liabilities and costs related to seniority premiums and
employee termination payments for reasons other than corporate restructuring are as follows:
Page 72 of 78
Employee termination
Seniority premiums
payments
2009
2010
2010
2009
Vested benefit obligation
Ps. 247,908
Ps. 185,204
Ps.
84,789
Ps.
44,616
Defined benefit obligation
Ps.5 2 8 ,164
Ps. 448,637
Ps. 140,165
Ps.
122,375
( 478,853)
( 421,623)
-
Plan assets
Unamortized items
-
(
1,110)
12,844
2,545
Net projected liability
Ps.
48,201
Ps. 39,858
Ps. 142,710
Ps.
127,617
Labor cost for current service
Ps.
70,080
Ps.
Ps.
8,975
Financial cost
Return on plan assets
Ps.
61,621
38,806
33,947
10,297
9,354
( 35,367)
( 32,485)
-
-
A c t u a r i a l l o s s (g a i n )
7,959
Net period cost
9,889
5,242
Ps.
81,478
Ps.
3,782
(
5,093)
(
6,815)
66,865
Ps.
15,093
Ps.
11,514
Benefits paid from and contributions made to the trust for seniority premiums in Mexico at December
31, 2010 aggregated Ps. 36,523 (Ps. 32,822 in 2009) and Ps. 73,135 (Ps. 53,760 in 2009), respectively.
At December 31, 2010, the plan assets have been invested through the trust as follows: 98% in the
money market and 2% in mutual funds.
The following is an analysis at December 31 of the Company’s assets and liabilities that make up its
labor obligations related to seniority premiums and employee termination payments for reasons other
than corporate restructuring:
Employee termination
Seniority premiums
payments
Defined
Defined
benefit
Plan
Unamortize
benefit
Unamortize
obligation
d items
Year
obligation
Plan assets
status
d items
2010
Ps. 528,164
P s . (4 7 8 , 8 5 3 )
Ps. 49,311
Ps. ( 1 ,110)
Ps. 140,165
Ps.
2,545
2009
Ps. 448,637
P s . (4 2 1 , 6 2 3 )
Ps. 27,014
Ps.
12,844
Ps. 122,375
Ps.
5,242
2008
Ps. 382,977
P s . (3 6 7 , 1 4 5 )
Ps. 15,832
Ps.
11,438
Ps. 108,543
Ps.
7,605
2007
Ps. 347,421
P s . (3 1 9 , 7 9 2 )
Ps. 27,629
Ps. ( 3,009)
2006¹
Ps. 298,380
P s . (2 7 9 , 3 9 9 )
Ps. 18,981
(1)
Ps.
6,349
Ps.
99,378
-
Ps.
42,600
-
Figures in thousands of Mexican pesos with purchasing power at December 31, 2007.
In Mexico, the Company computed deferred employee profit sharing for the years ended
December 31, 2010 and 2009 using the asset and liability method, as required by Mexican FRS D-3.
The result of these computations is that the Company had no deferred employee profit sharing in
such years.
Page 73 of 78
Central America:
At December 31, 2010, an analysis of the liabilities and costs associated to employee’s termination
payments in Central America are as follows:
Defined benefit
Labor cost
obligation
for current service
Country
Guatemala
Ps.
421,511
Ps.
100,893
El Salvador
42,749
Honduras
66,117
20,746
Costa Rica
21,484
37,958
Nicaragua
9,421
7,158
Total
Ps.
18,394
561,282
Ps.
185,149
At December 31, 2010, termination payments aggregated Ps. 138,438.
At December 31, 2010, the actuarial assumptions used in the valuation of each country are as
follows:
Salary
Return rate of
Discount rate
increase rate
the plan assets
Mexico
9.0%
5.25%
8.75%
Guatemala
9.0%
5.4%
N/A
El Salvador
8.0%
3.4%
N/A
11.0%
6.5%
N/A
Costa Rica
7.0%
4.4%
N/A
Nicaragua
15.8%
11.7%
N/A
Honduras
NOTE 18 – SHAREHOLDERS’ EQUITY:
a.
At a Board of Directors’ meeting held on February 11, 2010, the members of the Board approved
a two-to-one stock split. As a result, the Company’s capital stock is now represented by
17,926,000,000 shares. The stock split was carried out on April 23, 2010 by having the shareholders
exchange their old shares through coupon No. 49. The issuance of the new shares had no effect
on the amount of capital stock and all data related to the number of shares has been adjusted
by the split.
b.
Ordinary and extraordinary shareholders’ meetings:
At an ordinary meeting held on March 11, 2010, the shareholders adopted the following
resolutions:
1. Approval of a cap of Ps. 8,000,000 on the amount the Company will use in 2010 to
repurchase its own shares.
2. Cancellation of 137,158,124 series “V” shares resulting from the repurchase of shares.
3. A declared dividend, for which shareholders will receive a cash payment at the rate of $ 0.35
pesos per share. Such dividend will be paid on April 16, 2010.
At an extraordinary shareholders’ meeting held on December 22, 2009, the shareholders
approved the acquisition of the shares of TFB Corporation N.V. and Subsidiaries (Walmart Central
America) through the merger of such company into WALMEX via a related party.
At an ordinary meeting held on March 12, 2009, the shareholders adopted the following
resolutions:
1. Approval of a cap of Ps. 8,000,000 on the amount the Company will use in 2009, to
repurchase its own shares.
Page 74 of 78
2.
3.
4.
c.
Cancellation of 139,880,200 series “V” shares resulting from the repurchase of shares.
Increase in the legal reserve of Ps. 297,151, charged to retained earnings.
A declared dividend, for which shareholders will receive a cash payment at the rate of $
0.305 pesos per share. Such dividend will be paid on April 30, 2009.
The Company’s capital stock is comprised of unlimited registered shares with no par value.
At December 31, unrestated capital and the number of shares are as follows:
Capital Stock
Fixed
2010
Ps.
Variable
Total
Ps.
5,574,801
2009
Ps.
-
1,844,173
37,586,089
12,525,307
43,160,890
Ps. 14,369,480
Number of freely subscribed
common series “V” shares:
F i j x e d (C l a s s 1 )
2010
2,305,357,888
2009
-
2,150,012,148
Variable (Class 2)
15,543,045,112
14,602,516,298
Total
17,848,403,000
16,752,528,446
Capital stock at December 31, 2010 and 2009 includes in both years capitalized earnings of Ps.
11,451,328 and Ps. 899,636 in capitalized restatement accounts.
During the year ended December 31, 2010, WALMEX repurchased 112,062,724 (116,832,400 in
2009) of its own shares, of which 34,465,724 (14,140,000 in 2009) were cancelled as per the
resolution adopted at the shareholders’ meeting held on March 11, 2010 (March 12, 2009). As a
result of the share repurchases, historical capital stock was reduced by Ps. 217,207 (Ps. 100,213 in
2009). The difference between the theoretical value and the repurchase cost of the shares
acquired was applied against retained earnings.
d.
Distributed earnings and capital reductions in excess of the balance of the net tax profit account
(CUFIN) and the restated contributed capital account (CUCA) will be subject to taxation in terms
of Articles 11 and 89 of the Mexican Income Tax Law.
At December 31, 2010 and 2009, the total balance of the aforesaid tax accounts is Ps.
117,570,192 and Ps. 76,682,126, respectively.
e.
The employee stock option plan fund consists of 278,834,298 WALMEX shares, of which
273,581,106 shares have been placed in a trust created for such purpose.
The amount recorded to results of operations for this item aggregates Ps. 248,900 in 2010 and Ps.
205,954 in 2009, which represents no cash disbursement.
Page 75 of 78
An analysis of movements in the Company’s employee stock option plan is as follows:
Weighted average
Number of
price per share
shares
(pesos)
Balance at December 31, 2008
266,793,314
12.67
63,212,136
15.97
Granted
Exercised
( 39,272,738)
Cancelled
(
9.24
20.06
4,720,176)
286,012,536
13.75
38,942,702
29.69
Exercised
( 50,287,056)
11.17
Cancelled
(
9,458,231)
19.73
265,209,951
16.37
Balance at December 31, 2009
Granted
Balance at December 31, 2010
Shares available for option grant:
December 31, 2010
13,624,347
December 31, 2009
2,492,818
Regarding the information at December 31, 2009, there was a change in the number of granted
shares compared to the number shares available on the same date. This change had no material
effect on the Company’s result of operations, in conformity with Mexican FRS D-8, Share-based
Payments.
At December 31, 2010, the employee stock options granted and exercisable, included in the
employee stock option plan fund were as shown below:
Granted
Exercisable
Weighted
Weighted
Average
average
average
remaining
price per
exercise price
Number of
life (in
share
Number of
share
(pesos)
shares
years)
(pesos)
shares
(pesos)
Range of
price per
4.98 – 5.71
5,253,192
0.1
5.68
5,253,192
5.68
5.37 – 6.32
10,116,268
1.2
6.26
10,116,268
6.26
5.78 – 6.88
16,080,688
2.2
6.29
16,080,688
6.29
8.45 – 9.09
21,958,621
3.2
8.46
21,958,621
8.46
9.90
26,772,152
4.2
9.90
26,772,152
9.90
14.40 – 15.02
28,260,710
5.2
14.40
19,960,213
14.39
21.55
25,934,349
6.2
21.55
13,514,590
21.55
19.35
39,355,149
7.2
19.35
12,727,131
19.35
15.85 – 22.80
54,407,575
8.2
15.94
7,572,212
15.98
29.69 – 31.05
37,071,247
9.2
29.70
-
265,209,951
6.0
16.37
133,955,067
13.24
Page 76 of 78
NOTE 19 – COMPREHENSIVE FINANCING RESULT:
An analysis of comprehensive financing result is as follows:
December 31
2010
Financial income, net
Ps.
2009
498,027
Ps.
672,723
E x c h a n g e g a i n (l o s s ) , n e t
61,341
(
10,633)
Monetary position gain
58,603
-
( 158,037)
-
Accrued interest on contingent payment
Total
Ps.
459,934
Ps.
662,090
The monetary position gain is the result of the application of Mexican FRS B-10 in Costa Rica and
Nicaragua. Such gain was determined by applying factors resulting from changes in the purchasing
power of each country’s currency to the net monetary assets and liabilities during the year.
As a result of the acquisition of Walmart Central America, the Company recognized a contingent
liability at present value in its financial statements at February 28, 2010. Since March 2010, the
difference between future value and present value of such liability has given rise to interest that
requires no cash disbursement..
NOTE 20 – SEGMENT FINANCIAL INFORMATION:
The Company’s segment financial information was prepared based on a managerial approach and
the criteria established in Mexican FRS B-5. The Company operates in Mexico and Central America,
its sales are made to the general public, and it is primarily engaged in operating self-service stores.
The Company has identified the following operating segments and by geographical area:
Mexico:
•
•
•
Self-service: Operation of discount stores, hypermarkets, membership self-service wholesale stores
and supermarkets.
Financial services: Operation of bank branches to provide banking and credit services.
Other: Consists of department stores, restaurants and the real estate transactions with third
parties.
Central America:
Operation of discount stores, supermarkets, hypermarkets discount, warehouse stores and
membership self-service wholesale stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa
Rica.
An analysis of segment information and geographical area at December 31 is as follows:
Total revenues
Segment
Operating income
2010
2009
2010
Ps. 280,778,127
Ps. 256,313,101
181,797
173,081
2009
Mexico:
Self-service
Financial services
Others
Subtotal
Ps. 24,179,330
(
723,222)
Ps. 21,429,255
(
745,328)
15,709,094
13,964,969
1,998,699
1,584,572
296,669,018
270,451,151
25,454,807
22,268,499
Central America:
Self-service
Consolidated
39,188,379
-
1,589,667
-
Ps. 335,857,397
Ps. 270,451,151
Ps. 27,044,474
Ps. 22,268,499
Page 77 of 78
Purchase of property and
equipment
Segment
Depreciation
2009
2010
2010
2009
Mexico:
Self-service
Ps.
10,506,652
Ps.
9,107,442
Ps.
4,535,342
Ps.
3,895,827
Financial services
130,098
203,344
49,642
64,837
Others
910,141
423,771
695,501
685,548
11,546,891
9,734,557
5,280,485
4,646,212
1,583,077
-
968,573
-
Subtotal
Ps.
Central America:
Self-service
Consolidated
Ps.
13,129,968
Ps.
9,734,557
Total assets
Segment
Ps.
6,249,058
Ps.
4,646,212
Current liabilities
2010
2009
Ps. 124,208,356
Ps. 109,641,979
Ps. 37,383,055
2,236,009
1,399,093
1,424,884
541,748
14,636,370
14,483,375
2,298,213
2,033,073
2010
2009
Mexico:
Self-service
Financial services
Others
Ps. 33,859,456
Un a s s i g n a b l e
items
Subtotal
6,456,509
7,614,707
3,303,641
3,478,325
147,537,244
133,139,154
Ps. 44,409,793
39,912,602
Central America:
Self-service
Consolidated
47,270,324
-
6,315,733
-
Ps. 194,807,568
Ps. 133,139,154
Ps. 50,725,526
Ps. 39,912,602
Unassignable items refer primarily to reserve land, cash and cash equivalents of the parent and real
estate companies, as well as income tax payable.
NOTE 21 – NEW ACCOUNTING PRONOUNCEMENTS:
In 2010, the CINIF approved the publication of Mexican FRS C-4, Inventories; Mexican FRS C-5,
Prepayments; Mexican FRS C-6, Property, Plant and Equipment; and Mexican FRS C-18, Obligations
Related to the Retirement of Property, Plant and Equipment. All of these new pronouncements will
become effective as of January 1st, 2011, except for the changes resulting from the segregation of
property, plant and equipment that clearly have different useful lives, which will be required as of
2012. The application of these new standards will have no material effect on the Company’s
financial statements.
NOTE 22 – APPROVAL OF FINANCIAL STATEMENTS
The accompanying financial statements and their notes at and for the years ended December 31,
2010 and 2009 were approved by the Company’s Board of Directors at a meeting held on February
21, 2011.
Page 78 of 78