UNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWashingtonDC20549

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ___________________________________________

FORM 10-K ___________________________________________

ý Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended January 31, 2019 , or

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-6991. ___________________________________________

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

___________________________________________

Delaware 71-0415188 (State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

702 S.W. 8th Street

Bentonville, Arkansas 72716 (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

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

Title of each class Name of each exchange on which registered

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

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

Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ý Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company o Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As o f July 31, 2018, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2018, was $126,810,267,035 . For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common stock are the affiliates of the registrant.

The registrant had 2,869,684,230 shares of common stock outstanding as of March 26, 2019 .

DOCUMENTS INCORPORATED BY REFERENCE

Document Parts Into Which Incorporated

Portions of the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held June 5, 2019 (the "Proxy Statement")

Part III

Walmart Inc. Form 10-K

For the Fiscal Year Ended January 31, 2019

Table of Contents

Page Part I Item 1 Business 7 Item 1A Risk Factors 15 Item 1B Unresolved Staff Comments 23 Item 2 Properties 24 Item 3 Legal Proceedings 26 Item 4 Mine Safety Disclosures 27

Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6 Selected Financial Data 29 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A Quantitative and Qualitative Disclosures About Market Risk 43 Item 8 Financial Statements and Supplementary Data 45 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 79 Item 9A Controls and Procedures 79 Item 9B Other Information 80

Part III Item 10 Directors, Executive Officers and Corporate Governance 81 Item 11 Executive Compensation 81 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 81 Item 13 Certain Relationships and Related Transactions, and Director Independence 81 Item 14 Principal Accounting Fees and Services 81

Part IV Item 15 Exhibits, Financial Statement Schedules 82 Item 16 Form 10-K Summary 82

Signatures 83 Exhibit Index 85

WALMART INC.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2019

All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on June 5, 2019 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or the context otherwise requires, that corporation's consolidated subsidiaries.

PART I Cautionary Statement Regarding Forward-Looking Statements This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and prior or future public announcements and presentations that we or our management have made or may make, include or may include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy the protection of the safe harbor for forward- looking statements provided by the Act.

Nature of Forward-Looking Statements Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking statements relate to:

• the growth of our business or change in our competitive position in the future or in or over particular periods; • the amount, number, growth, increase, reduction or decrease in or over certain periods, of or in certain financial items or measures or operating measures, including our earnings per share,

including as adjusted for certain items, net sales, comparable store and club sales, our Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain categories, expense leverage, returns, capital and operating investments or expenditures of particular types, new store openings and investments in particular formats;

• investments and capital expenditures we will make and how certain of those investments and capital expenditures are expected to be financed; • our increasing investments in eCommerce, technology, store remodels and other omni-channel customer initiatives, such as grocery pickup and delivery; • volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations; • the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share repurchase authorization over a certain period or the source of funding of a

certain portion of our share repurchases; • our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund and finance our operations, expansion activities, dividends and share repurchases, to meet our cash

needs and to fund our operations; • the insignificance of ineffective hedges; and reclassification of amounts related to our derivatives; • our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of resolutions of tax-related matters; • the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are subject; • the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or amendments to existing, accounting standards; or • our commitments, intentions, plans or goals related to the sustainability of our environment and supply chains, the promotion of economic opportunity or other societal initiatives.

Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations, including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion," "expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected," "may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy," "to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"

"will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result," "will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.

Risks Factors and Uncertainties Affecting Our Business Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, outside of our control. One, or a combination, of these risks, factors and uncertainties could materially affect any of those matters as to which we have made forward-looking statements and cause our actual results or an actual event or occurrence to differ materially from those results or an event or occurrence described in a forward-looking statement. These risks, factors and uncertainties, which may be global in their effect or affect only some of the markets in which we operate and which may affect us on a consolidated basis or affect only some of our reportable segments, include, but are not limited to: Economic Factors

• economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates; • currency exchange rate fluctuations; • changes in market rates of interest; • changes in market levels of wages; • changes in the size of various markets, including eCommerce markets; • unemployment levels; • inflation or deflation, generally and in certain product categories; • transportation, energy and utility costs; • commodity prices, including the prices of oil and natural gas; • consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels, and demand for certain merchandise; • trends in consumer shopping habits around the world and in the markets in which Walmart operates; • consumer enrollment in health and drug insurance programs and such programs' reimbursement rates and drug formularies; and • initiatives of competitors, competitors' entry into and expansion in Walmart's markets, and competitive pressures;

Operating Factors • the amount of Walmart's net sales and operating expenses denominated in U.S. dollar and various foreign currencies; • the financial performance of Walmart and each of its segments, including the amounts of Walmart's cash flow during various periods; • customer traffic and average ticket in Walmart's stores and clubs and on its eCommerce platforms; • the mix of merchandise Walmart sells and its customers purchase; • the availability of goods from suppliers and the cost of goods acquired from suppliers; • the effectiveness of the implementation and operation of Walmart's strategies, plans, programs and initiatives; • Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space; • unexpected changes in Walmart's objectives and plans; • the amount of shrinkage Walmart experiences; • consumer acceptance of and response to Walmart's stores and clubs, eCommerce platforms, programs, merchandise offerings and delivery methods; • Walmart's gross profit margins, including pharmacy margins and margins of other product categories; • the selling prices of gasoline and diesel fuel; • disruption of seasonal buying patterns in Walmart's markets; • Walmart's expenditures for Foreign Corrupt Practices Act ("FCPA") and other compliance-related matters including the adequacy of our accrual for our FCPA matter; • disruptions in Walmart's supply chain; • cybersecurity events affecting Walmart and related costs and impact of any disruption in business; • Walmart's labor costs, including healthcare and other benefit costs; • Walmart's casualty and accident-related costs and insurance costs; • the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that workforce; • the availability of necessary personnel to staff Walmart's stores, clubs and other facilities; • developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party or is subject, and the liabilities, obligations and expenses, if any, that

Walmart may incur in connection therewith; • changes in the credit ratings assigned to the Company's commercial paper and debt securities by credit rating agencies; • Walmart's effective tax rate; and • unanticipated changes in accounting judgments and estimates;

Regulatory and Other Factors • changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the adoption and interpretation of administrative rules and regulations; • the imposition of new taxes on imports and new tariffs and changes in existing tariff rates; • the imposition of new trade restrictions and changes in existing trade restrictions; • adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the markets in which Walmart operates and elsewhere and actions with respect to

such policies, programs and initiatives; • changes in currency control laws; • changes in the level of public assistance payments; • one or more prolonged federal government shutdowns; • the timing and amount of federal income tax refunds; • natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and • changes in generally accepted accounting principles in the United States.

We typically earn a disproportionate part of our annual operating income in the fourth quarter as a result of seasonal buying patterns, which patterns are difficult to forecast with certainty and can be affected by many factors.

Other Risk Factors; No Duty to Update The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forward-looking statements we make or are made on our behalf is not exclusive. We are subject to other risks discussed under "Part I, Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and Results of Operations under "Part II, Item 5," and in risks that may be discussed under "Part II, Item 1A. Risk Factors" and "Part I, Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations" appearing in our Quarterly Reports on Form 10-Q or may otherwise be disclosed in our Quarterly Reports on Form 10-Q and other reports filed with the SEC. Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating our forward-looking statements. The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

ITEM 1. BUSINESS

General Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our customers. Each week, we serve nearly 275 million customers who visit our more than 11,300 stores and numerous eCommerce websites under 58 banners in 27 countries. Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2019 ("fiscal 2019 "), January 31, 2018 ("fiscal 2018 ") and January 31, 2017 ("fiscal 2017 "). During fiscal 2019 , we generated total revenues of $514.4 billion , which was primarily comprised of net sales of $510.3 billion . We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the New York Stock Exchange under the symbol "WMT."

The Development of Our Company Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In 1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first Walmart Neighborhood Market. In 1991, we began our first international initiative when we entered into a joint venture in Mexico. Since then, our international presence has expanded and, as of January 31, 2019 , our Walmart International segment conducted business in 26 countries. In 2000, we began our first eCommerce initiative by creating walmart.com. That same year, we also created samsclub.com. Since then, our eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores. In 2016, we acquired jet.com in the U.S. and formed a strategic alliance with JD.com in China. Since the jet.com purchase, we have continued to expand our U.S. eCommerce capabilities through acquisitions including Shoes.com, Moosejaw, Bonobos and other digital consumer brands. In 2017, walmart.com launched free two-day shipping on more than 2 million items and we created Store N o 8, a technology incubator with a focus to drive commerce forward. In fiscal 2019, we acquired a majority stake of Flipkart Private Limited ("Flipkart"), an Indian-based eCommerce marketplace , with an ecosystem that includes eCommerce platforms of Flipkart, Myntra and Jabong. In the U.S., we added more grocery pickup and delivery locations and as of January 31, 2019, we offered grocery pickup at more than 2,100 locations and grocery delivery at nearly 800 locations. Our eCommerce efforts and innovation have led to omni-channel offerings in many of our markets. We are building an ecosystem with our omni-channel capabilities, stores, services, eCommerce sites, supply chain and more than 2.2 million associates to better serve our customers.

Information About Our Segments We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom, as well as Brazil prior to the sale of the majority stake of Walmart Brazil discussed in Note 13 to our Consolidated Financial Statements. Our operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. We define our segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. We sell similar individual products and services in each of our segments. It is impractical to segregate and identify revenues for each of these individual products and services.

We measure the results of our segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation. In fiscal 2019, we revised certain of our corporate overhead allocations to the operating segments and, accordingly, revised prior period amounts for comparability.

Walmart U.S. Segment Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood Market" brands, as well as walmart.com, jet.com and other eCommerce brands. Walmart U.S. had net sales of $331.7 billion for fiscal 2019 , representing 65% of our fiscal 2019 consolidated net sales, and had net sales of $318.5 billion and $307.8 billion for fiscal 2018 and 2017 , respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income.

Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce , through services such as "Walmart Pickup," "Pickup Today", "Grocery Pickup", "Grocery Delivery," and "Endless Aisle." As of January 31, 2019, we had over 2,100 Grocery Pickup locations and nearly 800 Grocery Delivery locations. Our eCommerce websites include walmart.com, jet.com and others. The following table provides the approximate size of our retail stores as of January 31, 2019 :

Minimum Square Feet Maximum Square Feet Average Square Feet Supercenters (general merchandise and grocery) 69,000 260,000 178,000 Discount stores (general merchandise and limited grocery) 30,000 206,000 105,000 Neighborhood markets (1) (grocery) 28,000 65,000 42,000 (1) Excludes other small formats.

The following table provides the retail unit count and retail square feet by format for the fiscal years shown:

Supercenters Discount Stores

Fiscal Year Opened Closed Conversions (1) Total (2) Square Feet (2) Opened Closed Conversions (1) Total (2)

Square Feet (2)

Balance forward 3,288 589,858 508 53,496 2015 79 — 40 3,407 607,415 2 — (40) 470 49,327 2016 55 (16) 19 3,465 616,428 — (9) (19) 442 45,991 2017 38 (2) 21 3,522 625,930 — (6) (21) 415 43,347 2018 30 — 9 3,561 632,479 — (6) (9) 400 41,926 2019 6 (2) 5 3,570 634,198 1 (10) (5) 386 40,626

Neighborhood Markets and Other Small Formats Total Segment

Fiscal Year Opened and acquired

(3) Closed Conversions (1) Total (2)

Square Feet (2)

Opened and acquired (3)(4) Closed Total (2)

Square Feet (2)

Balance forward 407 15,778 4,203 659,132 2015 235 (3) — 639 23,370 316 (3) 4,516 680,112 2016 161 (133) — 667 27,228 216 (158) 4,574 689,647 2017 73 (5) — 735 30,012 111 (13) 4,672 699,289 2018 85 (20) — 800 30,111 115 (26) 4,761 704,516 2019 24 (11) — 813 29,895 31 (23) 4,769 704,719 (1) Conversions of discount stores or neighborhood markets to supercenters. (2) "Total" and "Square Feet" columns are as of January 31 for the years shown. "Square Feet" columns are reported in thousands. (3) Includes acquired retail locations related to Walmart U.S. eCommerce brands (4) Total opened, net of conversions of discount stores or neighborhood markets to supercenters.

Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below:

• Grocery consists of a full line of grocery items, including meat, produce, natural & organics, deli & bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables such as health and beauty aids, baby products, household chemicals, paper goods and pet supplies;

• Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other medical products;

• General merchandise includes: ◦ Entertainment (e.g., electronics, cameras and supplies, photo processing services, wireless, movies, music, video games and books); ◦ Hardlines (e.g., stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture); ◦ Apparel (e.g., apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories); and ◦ Home/Seasonal (e.g., home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics and crafts and seasonal merchandise).

Walmart U.S. also offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers, money transfers, check cashing and bill payment. These services total less than 1% of annual net sales.

Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of merchandise under our private-label brands, including brands such as: "Athletic Works," "Bonobos," "Equate," "Everstart," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "ModCloth," "No Boundaries," "Onn," "Ozark Trail," "Parent's Choice," "Time and Tru" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware," "Russell" and "SwissTech."

Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When revisions are made, the previous periods' presentation is adjusted to maintain comparability.

Operations. Many supercenters, discount stores and neighborhood markets are open 24 hours each day. A variety of payment methods are accepted.

Competition. Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce retailers. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following:

• EDLP: our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity; • EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers; and • Omni-channel offerings such as Walmart Pickup, where a customer places an order online and picks it up for free from a store; Pickup Today, where a customer places an order online and picks

it up for free from a store; Grocery Delivery, where a customer places a grocery order online and has it delivered; or Grocery Pickup, where a customer places a grocery order online and picks it up at one of our participating stores or remote locations.

Distribution. For fiscal 2019 , approximately 77% of Walmart U.S.'s purchases of store merchandise were shipped through our 156 distribution facilities, which are located strategically throughout the U.S. The remaining store merchandise we purchased was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 33 dedicated eCommerce fulfillment centers.

Walmart International had net sales of $120.8 billion for fiscal 2019 , representing 24% of our fiscal 2019 consolidated net sales, and had net sales of $118.1 billion and $116.1 billion for fiscal 2018 and 2017 , respectively. The segment's net sales have been negatively impacted by currency exchange rate fluctuations for all years presented. The gross profit rate is lower than that of Walmart U.S. primarily because of its merchandise mix. To deliver strong efficient growth, we have to be decisive when it comes to our capital and our time. As such, we have taken certain strategic actions to reposition Walmart International, including:

• Acquisition of a majority stake of Flipkart in August 2018 for $16 billion, or $13.8 billion net of cash acquired. We began consolidating Flipkart's results in the third quarter of fiscal 2019, using a one-month lag . The ongoing operations negatively impacted fiscal 2019 net income and this negative impact will continue in fiscal 2020.

• Proposed combination of J Sainsbury plc and Asda Group Limited ("Asda"), our wholly-owned United Kingdom retail subsidiary. Under the terms, we would receive approximately 42 percent of the share capital of the combined company and approximately £3.0 billion in cash, subject to customary closing adjustments, while retaining obligations under the Asda defined benefit pension plan . Due to a complex regulatory review process, the outcome of which is uncertain and may take some time to complete, the held for sale classification criteria for the disposal group has not been met as of January 31, 2019. Further, there can be no assurance as to whether regulatory approval will be obtained or the proposed combination will be consummated. In the future, if the held for sale classification criteria is met for the disposal group, we expect to recognize a loss, the amount of which may fluctuate based on the changes in the value of share capital received and foreign exchange rates.

• Divestiture of 80 percent of Walmart Brazil to Advent International (“Advent”) in August 2018. Advent agreed to contribute additional capital to the business over a three-year period and we agreed to indemnify Advent for certain pre-closing tax and legal contingencies and other matters. We recorded a pre-tax net loss of $4.8 billion in fiscal 2019 for the sale, of which $2.0 billion related to cumulative foreign currency translation loss which was reclassified from accumulated other comprehensive loss.

• Consistent with our focus on core retail capabilities, the divestiture of the Walmart Chile banking operations in December 2018 and the proposed divestiture of the Walmart Canada banking operations , classified as held for sale as of January 31, 2019 .

Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and eCommerce , such as through services like "Click & Collect" in the United Kingdom, our grocery pick-up and delivery business in several other markets, and our marketplaces, such as Flipkart in India. Generally, retail units range in size from 1,500 square feet to 186,000 square feet. Our wholesale stores generally range in size from 25,000 square feet to 155,000 square feet. Other includes stand-alone gas stations operating in the United Kingdom, which range in size up to 2,200 square feet. The following tables provide the unit count (1) and square feet (2) for the fiscal years shown:

Africa Argentina Brazil (3) Canada Central America Chile

Fiscal Year Unit Count Square Feet Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Balance forward 379 20,513 104 8,062 556 32,501 389 49,914 661 10,427 380 13,697 2015 396 21,223 105 8,119 557 33,028 394 50,927 690 11,094 404 14,762 2016 408 21,869 108 8,280 499 30,675 400 51,784 709 11,410 395 15,407 2017 412 22,542 107 8,264 498 30,642 410 53,088 731 11,770 363 15,260 2018 424 23,134 106 8,305 465 29,824 410 53,082 778 12,448 378 15,990 2019 436 24,317 92 8,095 — — 411 53,167 811 12,978 371 16,411 (1) "Unit Count" includes retail stores, wholesale clubs and other. Walmart International unit counts, with the exception of Canada, are as of December 31, to correspond with the fiscal year end of the related geographic market. Canada

unit counts and square footage are as of January 31. (2) "Square Feet" columns are reported in thousands. (3) The Company sold the majority stake of Walmart Brazil in fiscal 2019.

China India Japan Mexico (4) United Kingdom Total Segment

Fiscal Year Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Unit Count

Square Feet

Balance forward 405 67,205 20 1,083 438 24,489 2,199 94,900 576 35,416 6,107 358,207 2015 411 68,269 20 1,083 431 24,429 2,290 98,419 592 36,277 6,290 367,630 2016 432 71,724 21 1,146 346 22,551 2,360 100,308 621 37,044 6,299 372,198 2017 439 73,172 20 1,091 341 21,921 2,411 101,681 631 37,338 6,363 376,769 2018 443 73,615 20 1,091 336 21,181 2,358 97,024 642 37,587 6,360 373,281 2019 443 71,543 22 1,204 332 20,290 2,442 98,623 633 37,582 5,993 344,210 (1) "Unit Count" includes retail stores, wholesale clubs and other. Walmart International unit counts, with the exception of Canada, are as of December 31, to correspond with the fiscal year end of the related geographic market. Canada

unit counts and square footage are as of January 31. (2) "Square Feet" columns are reported in thousands. (4) All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in fiscal 2015.

Unit counts (1) as of January 31, 2019 for Walmart International are summarized by major category for each geographic market as follows:

Geographic Market Retail Wholesale Other (2) Total Africa (3) 346 90 — 436 Argentina 92 — — 92 Canada 411 — — 411 Central America (4) 811 — — 811 Chile 363 8 — 371 China 420 23 — 443 India — 22 — 22 Japan 332 — — 332 Mexico 2,279 163 — 2,442 United Kingdom 615 — 18 633 Total 5,669 306 18 5,993

(1) Walmart International unit counts, with the exception of Canada, are as of December 31, 2018 , to correspond with the balance sheet date of the related geographic market. Canada unit counts are as of January 31, 2019 . (2) Other includes stand-alone gas stations. (3) Africa unit counts by country are Botswana ( 11 ), Ghana ( 4 ), Kenya ( 2 ), Lesotho ( 3 ), Malawi ( 2 ), Mozambique ( 6 ), Namibia ( 4 ), Nigeria ( 5 ), South Africa ( 389 ), Swaziland ( 1 ), Tanzania ( 1 ), Uganda ( 1 ) and Zambia ( 7

). (4) Central America unit counts by country are Costa Rica ( 256 ), El Salvador ( 97 ), Guatemala ( 250 ), Honduras ( 105 ) and Nicaragua ( 103 ).

Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality, low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," and "Parent's Choice," our international markets have developed market specific brands including "Aurrera," "Cambridge," "Lider," "Myntra," "Jabong," "PhonePe," and "Extra Special." In addition, we have developed relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at low prices.

Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, the segment's highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the business varies by country due to different national and religious holidays, festivals and customs, as well as different weather patterns.

Competition. Walmart International competes with omni-channel retailers who operate department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and eCommerce retailers, as well as catalog businesses. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We believe price leadership is a critical part of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant impact on our competitive position in the markets where we operate.

Distribution. We utilize a total of 226 distribution facilities located in Argentina, Canada, Central America, Chile, China, Japan, Mexico, South Africa, India and the United Kingdom. Through these facilities, we process and distribute both imported and domestic products to the operating units of the Walmart International segment. During fiscal 2019 , approximately 83% of Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart International's purchases directly to our stores in the various markets in which we operate. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 90 dedicated eCommerce fulfillment centers, as well as more than 1,900 eCommerce sort centers in India.

Sam's Club Segment Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also operates samsclub.com. Sam's Club had net sales of $57.8 billion for fiscal 2019 , representing 11% of our consolidated fiscal 2019 net sales, and had net sales of $59.2 billion and $57.4 billion for fiscal 2018 and 2017 , respectively. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.

Membership. The following two options are available to members:

Plus Membership Club Membership Annual Membership Fee $100 $45 Number of Add-on Memberships ($40 each) Up to 16 Up to 8 Eligible for Cash Rewards Yes No

All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is a benefit that provides $10 for every $500 in qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on the majority of merchandise, with no minimum order size, and receive discounts on prescriptions, glasses and contacts.

Omni-channel. While Sam's Club is a membership-only warehouse club, it provides an omni-channel experience to customers, integrating retail stores and eCommerce . The warehouse facility sizes generally range between 34,000 and 168,000 square feet, with an average size of approximately 134,000 square feet. The following table provides the retail unit count and retail square feet for the fiscal years shown :

Fiscal Year Opened Closed Total (1) Square Feet (1)

Balance forward 632 84,382 2015 16 (1) 647 86,510 2016 8 — 655 87,552 2017 9 (4) 660 88,376 2018 4 (67) 597 80,068 2019 2 599 80,240 (1) "Total" and "Square Feet" columns are as of January 31 for the fiscal years shown. "Square Feet" column is reported in thousands.

Members have access to a broad assortment of merchandise, including products not found in our clubs, and services online at samsclub.com and through our mobile commerce applications, providing the option of delivery direct-to-home or to the club through services such as "Club Pickup." Sam's Club omni-channel capabilities also include "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.

Merchandise. Sam's Club offers merchandise in the following five merchandise categories: • Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic and nonalcoholic beverages, floral, snack foods, candy, other grocery

items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies and other consumable items; • Fuel and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery centers; • Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry, housewares, toys, seasonal items, mattresses and small appliances; • Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music, office supplies, office furniture, photo processing and third-party gift cards;

and • Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.

The Member's Mark brand continues to expand assortment and deliver member value. In fiscal 2019 , Member's Mark sales exceeded $12 billion, driven by growth across multiple categories in the private brand portfolio.

Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31.

Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well as omni-channel and eCommerce retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a quality merchandise assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and mobile commerce applications have increasingly become important factors in our ability to compete.

Distribution. During fiscal 2019 , approximately 70% of Sam's Club's non-fuel club purchases were shipped from Sam's Club's 23 dedicated distribution facilities, located strategically throughout the U.S., or from some of the Walmart U.S. segment's distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club segment's club purchases directly to Sam's Club locations. Sam's Club ships merchandise purchased on samsclub.com and through its mobile commerce applications by a number of methods from its six dedicated eCommerce fulfillment centers and other distribution centers, including two dedicated import facilities.

The principal focus of Sam's Club's distribution operations is on cross-docking merchandise while minimizing stored inventory. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour. Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs.

Intellectual Property We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights to third parties.

Suppliers and Supply Chain As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around the world, including in the United States, from whom we purchase the merchandise that we sell in our stores, clubs and online. In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of a number of our suppliers' annual sales, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the attractiveness of our merchandise assortment we offer to our customers and members.

Employees As of the end of fiscal 2019 , Walmart Inc. and our subsidiaries employed more than 2.2 million employees ("associates") worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good. A large number of associates turn over each year, although Walmart U.S. turnover has improved in both fiscal 2019 and 2018 as a result of our focus on increasing wages and providing improved tools, technology and training to associates. Certain information relating to retirement-related benefits we provide to our associates is included in Note 12 to our Consolidated Financial Statements. In addition to retirement-related benefits, in the U.S. we offer a broad range of Company-paid benefits to our associates. These include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of associate purchases of our stock through our Associate Stock Purchase Plan and life insurance. In addition to the health-care benefits for eligible full-time and part-time associates in the U.S., we offer maternity leave and a paid parental leave program to all full-time associates. We also offer a $5,000 benefit to assist eligible associates with adoption. Additionally, we offer eligible associates tuition assistance towards earning a college degree. Similarly, in the

operations outside the U.S., we provide a variety of associate benefits that vary based on customary local practices and statutory requirements.

Executive Officers of the Registrant The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.

Name Business Experience

Current Position

Held Since Age Daniel J. Bartlett

Executive Vice President, Corporate Affairs, effective June 2013. From November 2007 to June 2013, he served as the Chief Executive Officer and President of U.S. Operations at Hill & Knowlton, Inc., a public relations company.

2013

M. Brett Biggs

Executive Vice President and Chief Financial Officer, effective January 2016. From January 2014 to December 2015, he served as Executive Vice President and Chief Financial Officer of Walmart International.

2016

Rachel Brand

Executive Vice President, Global Governance, Chief Legal Officer and Corporate Secretary, effective April 2018. From May 2017 to February 2018, she served as Associate Attorney General in the United States Department of Justice. From January 2017 to May 2017, she was an Associate Professor of Law at George Mason University Antonin Scalia Law School. From August 2012 to February 2017, she served as a Board Member on the Privacy and Civil Liberties Oversight Board of the U.S. government.

2018

Jacqueline P. Canney

Executive Vice President, Global People, effective August 2015. From September 2003 to July 2015, she served as the Managing Director of Global Human Resources at Accenture plc., a global management consulting, technology services and outsourcing company.

2015

David M. Chojnowski

Senior Vice President and Controller effective January 2017. From October 2014 to January 2017, he served as Vice President and Controller, Walmart U.S. From January 2013 to October 2014, he served as Vice President, Finance Transformation, of Walmart International.

2017

Gregory Foran

Executive Vice President, President and Chief Executive Officer, Walmart U.S. effective August 2014. From May 2014 to August 2014, he served as President and Chief Executive Officer for the Walmart Asia region. From March 2012 to May 2014, he served as President and Chief Executive Officer of Walmart China.

2014

John Furner

Executive Vice President, President and Chief Executive Officer, Sam's Club, effective February 2017. From October 2015 to January 2017, he served as Executive Vice President and Chief Merchandising Officer of Sam's Club. From January 2013 to October 2015, he served as Senior Vice President and Chief Merchandising Officer of Walmart China.

2017

Marc Lore

2016

Judith McKenna

Executive Vice President, President and Chief Executive Officer, Walmart International, effective February 2018. From February 2015 to January 2018, she served as Executive Vice President and Chief Operating Officer of Walmart U.S. From April 2014 to February 2015, she served as Executive Vice President and Chief Development Officer for Walmart U.S. From April 2013 to April 2014, she served as Executive Vice President, Strategy and Development, for Walmart International.

2018

C. Douglas McMillon

President and Chief Executive Officer, effective February 2014. From February 2009 to January 2014, he served as Executive Vice President, President and Chief Executive Officer, Walmart International.

2014

Our Website and Availability of SEC Reports and Other Information Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, such as the Company, that file electronically with the SEC. The address of that website is www.sec.gov. Our SEC filings, our Code of Ethics for our CEO and senior financial officers and our Statement of Ethics can be found on our website at www.stock.walmart.com. These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal offices. A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and senior financial officers or our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such description will be located on our website for a period of 12 months following the amendment or waiver.

ITEM 1A. RISK FACTORS

The risks described below could materially and adversely affect our business, results of operations, financial condition and liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally.

Strategic Risks General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial performance. General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil, natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation, deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax laws, changes in healthcare laws, other regulatory changes, the imposition of tariffs or other measures that create barriers to or increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products we sell in the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater markdowns of inventory, or otherwise materially adversely affect our operations and operating results and could result in impairment charges to intangible assets, goodwill or other long-lived assets. In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially adversely affect our operations and operating results. The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing goods in the volume typically available to us for sale.

We face strong competition from other retailers and wholesale club operators which could materially adversely affect our financial performance. Each of our segments competes for customers, employees, digital prominence, products and services and in other important aspects of its business with many other local, regional, national and global eCommerce and omni-channel retailers, wholesale club operators and retail intermediaries. We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability, services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and digital operations.

Certain segments of the retail industry are undergoing consolidation, which could result in increased competition and significantly alter the dynamics of the retail marketplace. Other segments are substantially reducing operations which could also result in competition rushing to fill the void created by such corporate actions. Such consolidation, or other business combinations or alliances, or reduction in operation may result in competitors with greatly improved financial resources, improved access to merchandise, greater market penetration than they previously enjoyed and other improvements in their competitive positions. Such business combinations or alliances could result in the provision of a wider variety of products and services at competitive prices by such consolidated or aligned companies, which could adversely affect our financial performance.

It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of merchandise, the related impact on the demand for existing products and the competitive environment. Price transparency, assortment of products, customer experience, convenience, ease and the speed and cost of shipping are of primary importance to customers and continue to increase in importance, particularly as a result of digital tools and social media available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively respond to changing consumer tastes, preferences and shopping patterns, or any other failure on our part to timely identify or effectively respond to changing consumer tastes, preferences and shopping patterns could negatively affect our relationship with our customers, the demand for the products we sell, our market share and the growth of our business.

Failure to successfully execute our omni-channel strategy and the cost of our increasing eCommerce investments may materially adversely affect our market position, net sales and financial performance.

The retail business is rapidly evolving and consumers are increasingly embracing shopping digitally. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of this increase could accelerate.

Our strategy, which includes acquisitions, joint ventures, investments in eCommerce, technology, store remodels and other customer initiatives may not adequately or effectively allow us to grow our eCommerce business, increase comparable store sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club openings. The success of this strategy will depend in large measure on our ability to build and deliver a seamless omni-channel shopping experience and is further subject to the risks we face as outlined in this Item 1A . As a result, our market position, net sales and financial performance could be adversely affected, which could also result in impairment charges to intangible assets or other long-lived assets. In addition, a greater concentration of eCommerce sales could result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect our financial performance.

Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred will adversely impact our financial performance in the short-term and may adversely impact our financial performance over the longer term.

The performance of strategic alliances and other business relationships to support the expansion of our business could materially adversely affect our financial performance.

We may enter into strategic alliances and other business relationships in the countries in which we have existing operations or in other markets to expand our retail operations. These arrangements may not generate the level of sales we anticipate when entering into the arrangement or may otherwise adversely impact our business and competitive position relative to the results we could have achieved in the absence of such alliance. In addition, any investment we make in connection with a strategic alliance or business relationship could materially adversely affect our financial performance.

country in which we operate or in which our suppliers are located could adversely affect our operations and financial performance. Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or more stores, clubs and distribution facilities, the lack of an adequate work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from areas in which our stores, clubs and distribution facilities are located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers and in consumers' disposable income, the temporary or long-term disruption in the supply of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the delivery of goods to our distribution facilities or stores within a country in which we are operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our facilities, and disruption in our communications with our stores. We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our financial performance.

Risks associated with our suppliers could materially adversely affect our financial performance. The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws, including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner, is a significant challenge, especially with respect to suppliers located and goods sourced outside the U.S. Political and economic instability in the countries in which our foreign suppliers and their manufacturers are located, the financial instability of suppliers, suppliers' failure to meet certain of our supplier standards (including our responsible sourcing standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise safety and quality issues, disruption in the transportation of merchandise from the suppliers and manufacturers to our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of merchandise we purchase enters into the markets in which we operate, currency exchange rates, transport availability and cost, transport security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, the U.S. foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and our access to products could adversely affect our financial performance.

If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience a material impact to our brand, reputation and financial performance. We may also face reputational and other risks related to third-party sales on our digital platforms. Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish and may also expose us to product liability or food safety claims. As such, any issue regarding the safety of any food or non-food items we sell, regardless of the cause, could adversely affect our brand, reputation and financial performance. In addition, third-parties sell goods on some of our digital platforms, which we refer to as marketplace transactions. The applicability to us of laws related to such sales is currently unsettled and we may face reputational, financial and other risks, including liability, for third-party sales of goods that are counterfeit or otherwise fraudulent. We rely extensively on information systems to process transactions, summarize results and manage our business. Disruptions in our systems could harm our ability to conduct our operations. Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our business-critical information systems. Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations), catastrophic events such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information systems are essential to our business operations, including the processing of transactions, management of our associates, facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully

redundant and if our systems are damaged, breached or cease to function properly, we may have to make a significant investment to repair or replace them, and we may suffer interruptions in our business operations in the interim. Any interruption to our information systems may have a material adverse effect on our business or results of operations. In addition, we are constantly updating our information technology processes and systems. The risk of system disruption is increased when significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we may fail to realize the cost savings anticipated to be derived from these initiatives.

If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our eCommerce business globally, could be materially adversely affected. Increasingly, customers are using computers, tablets, and smart phones to shop with us and with our competitors and to do comparison shopping. We use social media and electronic mail to interact with our customers and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, in addition to home delivery, we offer "Walmart Pickup," "Pickup Today," "Club Pickup" and "Online Grocery" programs under which many products available for purchase online can be picked up by the customer at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a rapidly evolving part of the retail industry and of our operations in the U.S. (whether through organic growth or eCommerce acquisitions) and in a number of markets in which our Walmart International segment operates. We must anticipate and meet our customers' changing expectations while adjusting for technology investments and developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and that continually meet the changing expectations of online shoppers and developments in online and digital platform merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally and have a material adverse impact on our business and results of operations. Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the computer and operating systems on which they run, including those applications and systems in our acquired eCommerce businesses, are regularly subject to cyber-attacks. Those attacks involve attempts to gain access to our eCommerce websites (including marketplace platforms) or mobile commerce applications to obtain and make unauthorized use of customers' or members' payment information and related risks discussed below. Such attacks, if successful, may also create denials of service or otherwise disable, degrade or sabotage one or more of our digital platforms and otherwise significantly disrupt our customers' and members' shopping experience. If we are unable to maintain the security of our digital platforms and keep them operating within acceptable parameters, we could suffer loss of sales, reductions in traffic, reputational damage and deterioration of our competitive position and incur liability for any damage to customers whose personal information is unlawfully obtained and used, any of which events could have a material adverse impact on our business and results of operations and impede the execution of our strategy for the growth of our business.

Associate error or malfeasance, faulty password management or other irregularities may also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. We or our third-party service providers may not discover any security breach and loss of information for a significant period of time after the security breach occurs. Any breach of our security measures or any breach, error or malfeasance of those of our third-party service providers and loss of our confidential information, or any failure by us to comply with applicable privacy and information security laws and regulations, could cause us to incur significant costs to protect any customers, members, associates and vendors whose personal data was compromised and to restore their confidence in us and to make changes to our information systems and administrative processes to address security issues and compliance with applicable laws and regulations. In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers, members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our stores thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and liquidity. Such events could also result in the release to the public of confidential information about our operations and financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures we employ to guard personal information against cyber-attacks and other attempts to access such information and could result in a disruption of our operations, particularly our digital operations. We accept payments using a variety of methods, including cash, checks, credit and debit cards, our private label credit cards and gift cards, and we may offer new payment options over time, which may have information security risk implications. As a retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain or detect any cyber-attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed in the future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider's information systems results in the loss, damage or misappropriation of information, we may be materially adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, payment card association rules and obligations to which we are subject under our contracts with payment card processors make us liable to payment card issuers if information in connection with payment cards and payment card transactions that we hold is compromised, which liabilities could be substantial. In addition, the cost of complying with stricter and more complex data privacy, data collection and information security laws and standards could be significant to us.

Changes in the results of our retail pharmacy business could adversely affect our overall results of operations, cash flows and liquidity. Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments. A large majority of our retail pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and pharmacy benefit managers ("PBMs"). Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans and programs toward plans and programs with less favorable reimbursement terms); changes in third party payer drug formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential coverage treatment); growth in, and our participation in or exclusion from, exclusive and preferred pharmacy network arrangements operated by PBMs and/or any insurance plan or program; increases in the prices we pay for brand name and generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement; changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug programs; increased competition from other retail pharmacy operations; further consolidation among third party payers, PBMs or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for them to the extent the costs are not reimbursed by a third party; failure to meet any performance or incentive thresholds to which our level of third party reimbursement may be subject; and changes in the regulatory environment for the retail pharmacy industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of

the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other changes in laws, rules and regulations that affect our retail pharmacy business. If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy customers transferring their prescriptions to other pharmacies. One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations or result in the loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of operations, cash flows and liquidity.

Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance. Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to fill positions that become vacant at our existing stores, clubs and distribution centers, while controlling our associate wage and related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and adoption of new or revised employment and labor laws and regulations. If we are unable to locate, to attract or to retain qualified personnel, the quality of service we provide to our customers may decrease and our financial performance may be adversely affected. In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected.

Financial Risks Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported results of operations. Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates that were unfavorable have had adverse effects on our reported results of operations. As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may also result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our reported consolidated results of operations. We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding adverse effect on our gross profit. Consequently, fluctuations in currency exchange rates may adversely affect our results of operations.

Failure to meet market expectations for our financial performance could adversely affect the market price and volatility of our stock. We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure to meet or delay in meeting these expectations, including our comparable store and club sales growth rates, eCommerce growth rates, gross margin, or earnings and earnings per share could cause the market price of our stock to decline, as could changes in our dividend or stock repurchase programs or policies. Additionally, failure of Walmart's performance to compare favorably to that of other retailers may have a negative effect on the price of our stock.

Legal, Tax, Regulatory, Compliance, Reputational and Other Risks Our international operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic risks and conditions specific to the countries or regions in which we operate, which could materially adversely affect our business or financial performance. In addition to our U.S. operations, we operate our retail business in Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. During fiscal 2019, our Walmart International operations generated approximately 24% of our consolidated net sales. Walmart International's operations in various countries also sources goods and services from other countries. Our future operating results in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These factors include political conditions, including political instability, local and global economic conditions, legal and regulatory constraints (such as regulation of product and service offerings including regulatory restrictions on eCommerce offerings in international markets, such as India), restrictive governmental actions (such as trade protection measures), local product safety and environmental laws, tax regulations, local labor laws, anti-money laundering laws and regulations, trade policies, currency regulations, laws and regulations regarding consumer and data protection, and other matters in any of the countries or regions in which we operate, now or in the future. Our business and results of operations in the UK may be negatively affected by increases in food costs, changes in trade policies, changes in labor, immigration, tax or other laws and fluctuations in currency exchange rates resulting from the UK's pending exit from the European Union. We expect continued uncertainty around the extent of the impact of this exit on our business until the UK and the European Union put in alternative trade and other arrangements. The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries, laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with having numerous facilities located in countries which have historically been less stable than the U.S. Additional risks inherent in our international operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations. In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act ("FCPA"), or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our reputation.

Changes in tax and trade laws and regulations could materially adversely affect our financial performance. In fiscal 2019, our Walmart U.S. and Sam's Club operating segments generated approximately 76% of our consolidated net sales. The federal government has created the potential for significant changes in trade policies, including tariffs and government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in our stores and clubs. Potential changes which have been discussed include the renegotiation or termination of trade agreements and the imposition of higher tariffs on imports into the U.S. A significant portion of the general merchandise we sell in our U.S. stores and clubs is manufactured in other countries. Any such actions could increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers, which could materially adversely affect the financial performance of our U.S. operations and our business. We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax laws, regulations, or accounting principles.

For example, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") significantly changed income tax laws that affect U.S. corporations and there are aspects of the Tax Act that remain unclear as additional guidance from the U.S. tax authority is pending. As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, any resulting changes in our estimates will be treated in accordance with the relevant accounting guidance. In addition, we are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and settlement is made. Changes in and/or failure to comply with other laws and regulations specific to the environments in which we operate could materially adversely affect our reputation, market position, or our business and financial performance. We operate in complex regulated environments in the United States and in the other countries in which we operate and could be adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Our pharmacy operations in the United States are subject to numerous federal, state and local regulations including licensing and other requirements for pharmacies and reimbursement arrangements. The regulations to which we are subject include, but are not limited to: federal and state registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act, laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"), trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws; and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care and nurse practitioner services. For example, in the United States the DEA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal and holding of controlled substances. The DEA, the FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and state laws and regulations of general applicability, including laws and regulations related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and employment matters, laws and regulations related to competition, and antitrust matters, and health and wellness related regulations for our pharmacy operations outside of the United States. In addition, certain financial services we offer or make available, such as our money transfer agent services, are subject to legal and regulatory requirements, including those intended to help detect and prevent money laundering, fraud and other illicit activity. The impact of new laws, regulations and policies and the related interpretations and changes in enforcement practices or regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services we offer. Untimely compliance or noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs in the United States; loss of licenses; and significant fines or monetary damages and/or penalties. In addition, failure to comply with applicable legal or regulatory requirements in the United States or in any of the countries in which we operate could result in significant legal and financial exposure, damage to our reputation, and have a material adverse effect on our business operations, financial condition and results of operations.

In addition, ASDA Stores, Ltd. ("Asda"), a wholly-owned subsidiary of the Company, has been named as a defendant in numerous "equal value" claims pending in the Manchester Employment Tribunal (the "Employment Tribunal") in the United Kingdom. The claimants, who are current and former Asda store employees, allege that the work performed by female employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs to that of male employees working in Asda's warehouses and distribution facilities, and that the disparity in pay between these different job positions is not objectively justified. The claimants are seeking differential back pay based on higher wage rates in the warehouses and distribution facilities and higher wage rates on a prospective basis. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these matters . In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) , and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from such claims. We discuss these cases and other litigation to which we are party below under the caption " Item 3. Legal Proceedings " and in Note 10 in the " Notes to our Consolidated Financial Statements ," which are part of this Annual Report on Form 10-K.

We could be subject to liability, penalties and other sanctions and other adverse consequences arising out of our on-going FCPA matter. As previously disclosed, we are under investigation by the U.S. Department of Justice (the "DOJ") and the SEC regarding possible violations of the FCPA. We have been cooperating with those agencies and discussions have been ongoing with them regarding the resolution of these matters. These discussions have progressed to a point that in fiscal 2018, we reasonably estimated a probable loss and recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). A number of federal and local government agencies in Mexico also investigated these matters. Walmex cooperated with the Mexican governmental agencies that conducted these investigations.

Furthermore, lawsuits relating to the matters under investigation were filed by several of our shareholders against us, certain of our current and former directors and former officers and certain of Walmex's former officers. These matters have been resolved or immaterial accruals have been made for proposed settlements. We could be exposed to a variety of negative consequences as a result of the matters noted above. One or more enforcement actions could be instituted in respect of the matters that are the subject of some or all of the on-going government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or other relief, criminal convictions and/or penalties. Shareholder lawsuits may result in judgments against us and our current and former directors and officers named in those proceedings. We also expect that there will be ongoing media and governmental interest regarding these matters, including additional news articles on these matters that could impact the perception among certain audiences of our role as a corporate citizen. Moreover, we have incurred and expect to continue to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending the shareholder lawsuits and with respect to investigations. While we have made an Accrual for these matters, because the discussions are continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters. Although we do not presently believe that these matters, including the Accrual (and the payment of the Accrual at some point-in-time in the future) will have a material adverse effect on our business, financial position, results of operations or cash flows, given the inherent uncertainties in such situations, we can provide no assurance that these matters will not be material to our business, financial position, results of operations or cash flows in the future.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

United States The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2019 , unit counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:

Walmart U.S. Sam's Club

State or Territory Supercenters Discount Stores Neighborhood Markets and other small formats (1) Clubs Grand Total

Alabama 101 1 30 13 145 Alaska 7 2 — — 9 Arizona 83 2 31 12 128 Arkansas 76 5 37 9 127 California 141 72 80 29 322 Colorado 70 4 18 17 109 Connecticut 12 21 1 1 35 Delaware 6 3 — 1 10 Florida 232 9 98 46 385 Georgia 154 2 35 24 215 Hawaii — 10 — 2 12 Idaho 23 — 3 1 27 Illinois 139 15 12 25 191 Indiana 97 6 12 13 128 Iowa 58 2 — 9 69 Kansas 58 2 16 9 85 Kentucky 78 7 9 9 103 Louisiana 89 2 34 14 139 Maine 19 3 — 3 25 Maryland 30 18 3 11 62 Massachusetts 27 22 3 — 52 Michigan 91 3 10 23 127 Minnesota 65 4 1 12 82 Mississippi 65 3 10 7 85 Missouri 112 9 18 19 158 Montana 14 — — 2 16 Nebraska 35 — 7 5 47 Nevada 30 2 11 7 50 New Hampshire 19 8 — 2 29 New Jersey 33 30 — 8 71 New Mexico 35 2 9 7 53 New York 80 17 7 12 116 North Carolina 144 6 45 22 217 North Dakota 14 — — 3 17 Ohio 139 6 3 27 175 Oklahoma 81 8 35 13 137 Oregon 29 7 10 — 46 Pennsylvania 116 21 3 24 164 Puerto Rico 13 5 12 7 37 Rhode Island 5 4 — — 9 South Carolina 84 — 27 13 124 South Dakota 15 — — 2 17 Tennessee 117 2 21 14 154 Texas 393 18 112 82 605 Utah 41 — 13 8 62 Vermont 3 3 — — 6 Virginia 109 6 25 15 155 Washington 52 10 6 — 68 Washington D.C. 3 — 3 — 6 West Virginia 38 — 1 5 44 Wisconsin 83 4 2 10 99 Wyoming 12 — — 2 14 U.S. total 3,570 386 813 599 5,368

(1) Includes 698 neighborhood markets, 77 Walmart U.S. eCommerce retail locations and 38 other small formats.

International The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2019 (1) for Walmart International are summarized by major category for each geographic market as follows:

). (4) Central America unit counts by country are Costa Rica ( 256 ), El Salvador ( 97 ), Guatemala ( 250 ), Honduras ( 105 ) and Nicaragua ( 103 ).

Owned and Leased Properties The following table provides further details of our retail units and distribution facilities, including return facilities and dedicated eCommerce fulfillment centers, as of January 31, 2019 :

Owned and Operated

Owned and Third Party Operated Leased and Operated

Third Party Owned and Operated Total

U.S. properties Walmart U.S. retail units 4,075 — 694 — 4,769 Sam's Club retail units 513 — 86 — 599 Total U.S. retail units 4,588 — 780 — 5,368 Walmart U.S. distribution facilities 107 2 29 18 156 Sam's Club distribution facilities 7 3 4 9 23 Total U.S. distribution facilities 114 5 33 27 179

Total U.S. properties 4,702 5 813 27 5,547 International properties Africa 38 — 398 — 436 Argentina 67 — 25 — 92 Canada 124 — 287 — 411 Central America 327 — 484 — 811 Chile 218 — 153 — 371 China 2 — 441 — 443 India 2 — 20 — 22 Japan 54 — 278 — 332 Mexico 680 — 1,762 — 2,442 United Kingdom 434 — 199 — 633 Total International retail units 1,946 — 4,047 — 5,993 International distribution facilities 33 5 122 66 226

Total International properties 1,979 5 4,169 66 6,219 Total properties 6,681 10 4,982 93 11,766

Total retail units 6,534 — 4,827 — 11,361 Total distribution facilities 147 10 155 93 405 Total properties 6,681 10 4,982 93 11,766

We own office facilities in Bentonville, Arkansas, that serve as our principal office and own and lease office facilities throughout the U.S. and internationally for operations as well as for field and market management. The land on which our stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent escalation clauses. For further information on our distribution centers, see the caption "Distribution" provided for each of our segments under " Item 1. Business ."

ITEM 3. LEGAL PROCEEDINGS

II. CERTAIN OTHER PROCEEDINGS: The Company is a defendant in a lawsuit in which the complaint closely tracks the allegations set forth in a news story that appeared in The New York Times (the "Times") on April 21, 2012. This is a securities lawsuit, City of Pontiac General Employees Retirement System v. Wal-Mart Stores, Inc. , USDC, Western Dist. of AR, that was filed on May 7, 2012, in the United States District Court for the Middle District of Tennessee, and subsequently transferred to the Western District of Arkansas, in which the plaintiff alleges various violations of the U.S. Foreign Corrupt Practices Act (the "FCPA") beginning in 2005, and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. The plaintiff seeks to represent a class of shareholders who purchased or acquired stock of the Company between December 8, 2011, and April 20, 2012, and has sought damages and other relief based on allegations that the defendants' conduct affected the value of such stock. On September 20, 2016, the court granted plaintiff's motion for class certification. On October 6, 2016, the defendants filed a petition to appeal the class certification ruling to the U.S. Court of Appeals for the Eighth Circuit. On November 7, 2016, the U.S. Court of Appeals for the Eighth Circuit denied the Company's petition. On October 26, 2018, the parties filed a motion asking the court to approve a proposed settlement under which the Company would pay $160 million (the “Settlement Amount”) to resolve the claims of all class members. On December 6, 2018, the court preliminarily approved the settlement and scheduled the final approval hearing for April 4, 2019. The settlement does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant. The Settlement Amount was expensed in the Company’s fiscal 2019 financial statements. Securities Class Action : City of Pontiac General Employees Retirement System v. Wal-Mart Stores, Inc., USDC, Western Dist. of AR; 5/7/12.

In September 2018, the United States Environmental Protection Agency (the “EPA”) notified the Company that it had initiated an administrative penalty action by issuing a Draft Consent Agreement and Final Order. The letter accompanying the Draft Consent Agreement and Final Order alleges that the Company distributed and/or sold three unregistered pesticide products from March 1, 2017 through June 23, 2017. The EPA is seeking a penalty of $960,000. The manufacturer of the product is responsible for ensuring that a FIFRA-regulated product is properly registered prior to its sale. The Company is cooperating with the EPA.

In January 2018, the Environmental Prosecutor of the State of Chiapas (Procuraduría Ambiental del Estado de Chiapas) in Mexico imposed a fine of approximately $163,000 for the absence of an Environmental Impact Authorization License related to the store Mi Bodega Las Rosas. The Company is challenging the fine.

In April 2017, the California Air Resources Board (the "ARB") notified the Company that it had taken the position that retailers are required to use unclaimed deposits collected on sales of small containers of automotive refrigerant to fund certain consumer education programs. The ARB alleged that the Company had improperly retained approximately $4.2 million in unclaimed deposits and has sought reimbursement. The Company has denied any wrongdoing.

In April 2013, a subsidiary of the Company, Corporacion de Compañias Agroindustriales, operating in Costa Rica, became aware that the Municipality of Curridabat is seeking a penalty of approximately $380,000 in connection with the construction of a retaining wall for a perishables distribution center that is situated along a protected river bank. The subsidiary obtained permits from the Municipality and the Secretaria Técnica Nacional Ambiental at the time of construction, but the Municipality now alleges that the wall is non-conforming.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Stock Walmart's common stock is listed for trading on the New York Stock Exchange, which is the primary market for Walmart's common stock. The common stock trades under the symbol "WMT."

Holders of Record of Common Stock As of March 26, 2019 , there were 223,968 holders of record of Walmart's common stock.

Stock Performance Chart This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending with fiscal 2019 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison assumes $100 was invested on February 1, 2014, in shares of our common stock and in each of the indices shown and assumes that all of the dividends were reinvested.

*Assumes $100 Invested on February 1, 2014 Assumes Dividends Reinvested

Fiscal Year Ending January 31, 2019

Fiscal Years Ended January 31, 2014 2015 2016 2017 2018 2019

Walmart Inc. $ 100.00 $ 116.63 $ 93.60 $ 96.88 $ 158.71 $ 146.06 S&P 500 Index 100.00 114.22 113.46 136.20 172.17 168.19 S&P 500 Retailing Index 100.00 119.10 140.73 167.11 241.08 256.26

Issuer Repurchases of Equity Securities From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2019 were made under the current $20.0 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2019 , authorization for $11.3 billion of share repurchases remained. Any repurchased shares are constructively retired and returned to an unissued status.

Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended January 31, 2019 , was as follows:

Fiscal Period Total Number of

Shares Repurchased

Average Price Paid per Share (in dollars)

Total Number of Shares Repurchased as Part of Publicly Announced Plans or

Programs

Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Plans or Programs (1)

(in billions)

November 1-30, 2018 8,949,106 $ 98.25 8,949,106 $ 13.7 December 1-31, 2018 14,204,024 91.52 14,204,024 12.4 January 1-31, 2019 11,660,639 $ 95.59 11,660,639 $ 11.3 Total 34,813,769 34,813,769

(1) Represents the approximate dollar value of shares that could have been repurchased at the end of the month.

ITEM 6. SELECTED FINANCIAL DATA

Five-Year Financial Summary Walmart Inc.

As of and for the Fiscal Years Ended January 31,

(Amounts in millions, except per share and unit count data) 2019 2018 2017 2016 2015

Operating results

Total revenues $ 514,405 $ 500,343 $ 485,873 $ 482,130 $ 485,651 Percentage change in total revenues from previous fiscal year 2.8% 3.0% 0.8% (0.7)% 2.0% Net sales $ 510,329 $ 495,761 $ 481,317 $ 478,614 $ 482,229 Percentage change in net sales from previous fiscal year 2.9% 3.0% 0.6% (0.7)% 1.9% Increase (decrease) in calendar comparable sales (1) in the U.S. 4.0% 2.2% 1.4% 0.3 % 0.5%

Walmart U.S. 3.7% 2.1% 1.6% 1.0 % 0.6% Sam's Club 5.4% 2.8% 0.5% (3.2)% 0.0%

Gross profit margin 24.5% 24.7% 24.9% 24.6 % 24.3% Operating, selling, general and administrative expenses, as a percentage of net sales 21.0% 21.5% 21.2% 20.3 % 19.4% Operating income $ 21,957 $ 20,437 $ 22,764 $ 24,105 $ 27,147 Interest, net 2,129 2,178 2,267 2,467 2,348 Loss on extinguishment of debt — 3,136 — — — Other (gains) and losses 8,368 — — — — Income from continuing operations attributable to Walmart 6,670 9,862 13,643 14,694 16,182 Diluted income per common share from continuing operations attributable to Walmart $ 2.26 $ 3.28 $ 4.38 $ 4.57 $ 4.99 Dividends declared per common share 2.08 2.04 2.00 1.96 1.92 Financial position Inventories $ 44,269 $ 43,783 $ 43,046 $ 44,469 $ 45,141 Property, equipment, capital lease and financing obligation assets, net 111,395 114,818 114,178 116,516 116,655 Total assets 219,295 204,522 198,825 199,581 203,490 Long-term debt and long-term capital lease and financing obligations (excluding amounts due within one

year) 50,203 36,825 42,018 44,030 43,495

Total Walmart shareholders' equity 72,496 77,869 77,798 80,546 81,394 Unit counts (2) Walmart U.S. segment 4,769 4,761 4,672 4,574 4,516 Walmart International segment 5,993 6,360 6,363 6,299 6,290 Sam's Club segment 599 597 660 655 647 Total units 11,361 11,718 11,695 11,528 11,453

(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including sales from acquisitions when such acquisitions have been owned for 12 months. Sales at a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Comparable sales include fuel.

(2) Unit counts related to discontinued operations have been removed from all relevant periods.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview This discussion, which presents our results for the fiscal years ended January 31, 2019 ("fiscal 2019 "), January 31, 2018 ("fiscal 2018 ") and January 31, 2017 ("fiscal 2017 ") should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of each of the three segments to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income and other measures as determined by the information regularly reviewed by our chief operating decision maker. In fiscal 2019, the Company revised certain of its corporate overhead allocations, including depreciation expense, to the operating segments and, accordingly, revised prior period amounts for comparability . Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated online or though mobile applications, including omni-channel transactions which are fulfilled through our stores and clubs. Sales at a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Additionally, sales related to acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies. In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars or for countries experiencing hyperinflation. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31 . We made certain strategic portfolio decisions, further discussed in Item 1. Business , which include the following:

• Acquisition of 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart Private Limited ("Flipkart") in August 2018. The ongoing operations negatively impacted fiscal 2019 net income and this negative impact will continue in fiscal 2020.

• Proposed combination of J Sainsbury plc and Asda Group Limited ("Asda"), where we would receive approximately 42 percent of the share capital of the combined company, however, the held for sale criteria has not been met as of January 31, 2019. Further, there can be no assurance as to whether regulatory approval will be obtained or the proposed combination will be consummated. In the future, if the held for sale classification criteria is met for the disposal group, we expect to recognize a loss, the amount of which may fluctuate based on the changes in the value of share capital received and foreign exchange rates.

• Divestiture of 80 percent of Walmart Brazil to Advent International ("Advent") in August 2018, for which we recorded a pre-tax loss of $4.8 billion in fiscal 2019. • Divestiture of banking operations in Walmart Chile in December 2018 and the proposed divestiture of banking operations in Walmart Canada, classified as held for sale as of January 31, 2019.

The Retail Industry We operate in the highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or international omni-channel or eCommerce presence. We also compete with a number of companies for attracting and retaining quality employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, the imposition of tariffs, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be found herein under " Item 1A. Risk Factors ," and under " Cautionary Statement Regarding Forward-Looking Statements ."

Company Performance Metrics We are committed to helping customers save money and live better through everyday low prices, supported by everyday low costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which we operate. We define our financial framework as:

• strong, efficient growth; • consistent operating discipline; and • strategic capital allocation.

As we execute on this financial framework, we believe our returns on capital will improve over time.

Strong, Efficient Growth Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities, increasing comparable store and club sales, accelerating eCommerce sales growth and expansion of omni-channel initiatives while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-term growth of the Company. Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar. Calendar comparable sales, as well as the impact of fuel, for fiscal 2019 and 2018 , were as follows:

Fiscal Years Ended January 31, 2019 2018 2019 2018 With Fuel Fuel Impact Walmart U.S. 3.7% 2.1% 0.1% 0.1% Sam's Club 5.4% 2.8% 1.6% 1.0% Total U.S. 4.0% 2.2% 0.4% 0.2%

Walmart U.S. comparable sales increased 3.7% and 2.1% in fiscal 2019 and 2018 , respectively, driven by ticket and traffic growth. Walmart U.S. eCommerce sales positively contributed approximately 1.3% and 0.7% to comparable sales for fiscal 2019 and fiscal 2018 , respectively, as we continue to focus on a seamless omni-channel experience for our customers . Sam's Club comparable sales increased 5.4% and 2.8% in fiscal 2019 and 2018 , respectively. Sam's Club fiscal 2019 comparable sales were driven by strong traffic, which was aided by transfers of sales from our closed clubs to our existing clubs and fuel sales. These increases were partially offset by reduced tobacco sales due to our decision to remove tobacco from certain locations in fiscal 2019 . Sam's Club fiscal 2018 comp sales were driven by strong traffic and fuel sales. Sam's Club eCommerce sales positively contributed approximately 0.9% and 0.7% to comparable sales for fiscal 2019 and 2018 , respectively.

Consistent Operating Discipline We operate with discipline by managing expenses, optimizing the efficiency of how we work and creating an environment in which we have sustainable lowest cost to serve. We invest in technology and process improvements to increase productivity, manage inventory and reduce costs. We measure operating discipline through expense leverage, which we define as net sales growing at a faster rate than operating, selling, general and administrative expenses.

Fiscal Years Ended January 31,

(Amounts in millions, except unit counts) 2019 2018 Net sales $ 510,329 $ 495,761 Percentage change from comparable period 2.9% 3.0% Operating, selling, general and administrative expenses $ 107,147 $ 106,510 Percentage change from comparable period 0.6% 4.6% Operating, selling, general and administrative expenses as a percentage of net sales 21.0% 21.5%

For fiscal 2019 , operating, selling, general and administrative ("operating") expenses as a percentage of net sales decreased 48 basis points, when compared to the same period in the previous fiscal year. The primary drivers of the expense leverage were strong sales performance in conjunction with productivity improvements and lapping fiscal 2018 charges discussed in the following paragraph . The improvements in fiscal 2019 were partially offset by additional investments in eCommerce and technology, as well as a $160 million charge related to a securities class action lawsuit .

For fiscal 2018, operating expenses as a percentage of net sales increased 32 basis points, when compared to the previous fiscal year. While our increase in net sales and improving expense management had a positive impact on our operating expenses as a percentage of net sales, we did not leverage expenses as a result of approximately $0.6 billion in charges related to Sam's Club closures and discontinued real estate projects, $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, the legal accrual of $283 million related to the FCPA matter, a charge of $244 million related to discontinued real estate projects in Walmart U.S. and the decisions to exit certain international properties and wind down the first party Brazil eCommerce operations.

Strategic Capital Allocation We are allocating more capital to eCommerce, technology, supply chain, and store remodels and less to new store and club openings, when compared to prior years. This allocation aligns with our initiatives of improving our customer proposition in stores and clubs and a seamless omni-channel experience for our customers . Total fiscal 2019 capital expenditures increased slightly compared to the prior year; the following table provides additional detail:

(Amounts in millions) Fiscal Years Ended January 31,

Allocation of Capital Expenditures 2019 2018 eCommerce, technology, supply chain and other 5,218 4,521 Remodels 2,152 2,009 New stores and clubs, including expansions and relocations $ 313 $ 914 Total U.S. 7,683 7,444 Walmart International 2,661 2,607 Total capital expenditures $ 10,344 $ 10,051

Returns As we execute our financial framework, we believe our return on capital will improve over time. We measure return on capital with our return on assets, return on investment and free cash flow metrics. We also provide returns in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.

We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of 8. Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of 8 for rent expense that estimates the hypothetical capitalization of our operating leases. As mentioned above, we consider ROA to be the financial measure computed in accordance with generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI. Beginning in fiscal 2020, our calculation of ROI will change upon adoption of ASU 2016-02, Leases , primarily to replace the factor of 8 for rent expense with US GAAP operating lease assets. The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 CALCULATION OF RETURN ON ASSETS Numerator

Consolidated net income $ 7,179 $ 10,523

Denominator Average total assets (1) $ 211,909 $ 201,674

Return on assets (ROA) 3.4% 5.2%

CALCULATION OF RETURN ON INVESTMENT Numerator

Operating income $ 21,957 $ 20,437 + Interest income 217 152 + Depreciation and amortization 10,678 10,529 + Rent 3,004 2,932 = Adjusted operating income $ 35,856 $ 34,050

Denominator

Average total assets (1) $ 211,909 $ 201,674 + Average accumulated depreciation and amortization (1) 85,107 79,995 - Average accounts payable (1) 46,576 43,763 - Average accrued liabilities (1) 22,141 21,388 + Rent x 8 24,032 23,456 = Average invested capital $ 252,331 $ 239,974

Return on investment (ROI) 14.2% 14.2%

As of January 31, 2019 2018 2017 Certain Balance Sheet Data Total assets $ 219,295 $ 204,522 $ 198,825 Accumulated depreciation and amortization 87,175 83,039 76,951 Accounts payable 47,060 46,092 41,433 Accrued liabilities 22,159 22,122 20,654 (1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2.

Free Cash Flow Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities. We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $27.8 billion , $28.3 billion and $31.7 billion for fiscal 2019 , 2018 and 2017 , respectively. We generated free cash flow of $17.4 billion , $18.3 billion and $21.1 billion for fiscal 2019 , 2018 and 2017 , respectively. Net cash provided by operating activities for fiscal 2019 declined when compared to fiscal 2018 primarily due to timing of vendor payments, partially offset by lower tax payments mainly resulting from U.S. tax reform enacted on December 22, 2017 ("Tax Reform") and the timing of tax payments. Free cash flow for fiscal 2019 declined when compared to fiscal 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.3 billion in increased capital expenditures . The decrease in net cash provided by operating activities and free cash flow in fiscal 2018 from fiscal 2017 were primarily due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital management and the benefit from the application of tax regulations adopted in fiscal 2017. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows .

Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Net cash provided by operating activities $ 27,753 $ 28,337 $ 31,673 Payments for property and equipment (10,344) (10,051) (10,619) Free cash flow $ 17,409 $ 18,286 $ 21,054

Net cash used in investing activities (1) $ (24,036) $ (9,079) $ (13,896) Net cash used in financing activities (2,537) (19,875) (19,072) (1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

Results of Operations Consolidated Results of Operations

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2019 2018 2017 Total revenues $ 514,405 $ 500,343 $ 485,873 Percentage change from comparable period 2.8% 3.0% 0.8% Net sales $ 510,329 $ 495,761 $ 481,317 Percentage change from comparable period 2.9% 3.0% 0.6% Total U.S. calendar comparable sales increase 4.0% 2.2% 1.4% Gross profit rate 24.5% 24.7% 24.9% Operating income $ 21,957 $ 20,437 $ 22,764 Operating income as a percentage of net sales 4.3% 4.1% 4.7% Consolidated net income $ 7,179 $ 10,523 $ 14,293 Unit counts at period end 11,361 11,718 11,695 Retail square feet at period end 1,129 1,158 1,164

Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased $14.1 billion or 2.8% and $14.5 billion or 3.0% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. Net sales increased $14.6 billion or 2.9% and $14.4 billion or 3.0% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , net sales were positively impacted by overall positive comparable sales for Walmart U.S. and Sam's Club segments, along with positive comparable sales in the majority of our International markets and net sales

from Flipkart, which we acquired in the third quarter of fiscal 2019. Additionally, for fiscal 2019 , the increase in net sales was partially offset by a $4.5 billion decrease in net sales due to club closures in the Sam's Club segment during fiscal 2018 , a $ 3.1 billion reduction in net sales due to the sale of the majority stake in Walmart Brazil in the International segment, and $0.7 billion of negative impact from fluctuations in currency exchange rates . For fiscal 2018 , net sales were positively impacted by overall positive comparable sales, the impact from new store openings and sales generated from eCommerce acquisitions. The positive effect of such factors on our consolidated net sales for fiscal 2018 was partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and the $0.5 billion of negative impact from fluctuations in currency exchange rates. Our gross profit rate decreased 18 and 26 basis points for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , the decrease was due to the mix effects from our growing eCommerce business, the consolidation of Flipkart, our planned pricing strategy and increased transportation expenses. For fiscal 2018 , the decrease was primarily due to our planned pricing strategy and the mix effects from our growing eCommerce business. Membership and other income decreased for fiscal 2019 , when compared to the previous fiscal year, primarily due to the prior year recognition of a $387 million gain from the sale of Suburbia in our International Segment. Membership and other income was relatively flat for fiscal 2018 , when compared to the previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia, along with a $47 million gain from a land sale, higher recycling income from our sustainability efforts and higher membership income from increased Plus Member penetration at Sam's Club, these gains were offset by gains recognized in fiscal 2017 .

For fiscal 2019 , operating expenses as a percentage of net sales decreased 48 basis points, when compared to the same period in the previous fiscal year. The primary drivers of the expense leverage were strong sales performance in conjunction with productivity improvements and lapping fiscal 2018 charges discussed in the following paragraph . The improvements in fiscal 2019 were partially offset by additional investments in eCommerce and technology, as well as a $160 million charge related to a securities class action lawsuit . For fiscal 2018, operating expenses as a percentage of net sales increased 32 basis points, when compared to the previous fiscal year. While our increase in net sales and improving expense management had a positive impact on our operating expenses as a percentage of net sales, we did not leverage expenses as a result of approximately $0.6 billion in charges related to Sam's Club closures and discontinued real estate projects, $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, the legal accrual of $283 million related to the FCPA matter, a charge of $244 million related to discontinued real estate projects in Walmart U.S. and the decisions to exit certain international properties and wind down the first party Brazil eCommerce operations. Other losses were $8.4 billion for fiscal 2019 , primarily the result of the $4.8 billion pre-tax loss on the sale of the majority stake in Walmart Brazil and a $3.5 billion pre-tax decrease in the market value of our investment in JD.com. Fiscal 2018 results included loss on extinguishment of debt of $3.1 billion . Our effective income tax rate was 37.4% for fiscal 2019 , 30.4% for fiscal 2018 , and 30.3% for fiscal 2017 . Although the U.S. statutory rate was lowered due to the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), our effective income tax rate increased in fiscal 2019 primarily because we recognized minimal tax benefit related to the sale of the majority stake in Walmart Brazil and Flipkart's results. Additionally, our effective income tax rate may also fluctuate as a result of factors including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix and size of earnings among our U.S. operations and international operations, which are subject to statutory rates that, beginning in fiscal 2019, are generally higher than the U.S. statutory rate. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2019 , 2018 and 2017 is presented in Note 9 in the " Notes to Consolidated Financial Statements ." As a result of the factors discussed above, we reported $7.2 billion and $10.5 billion of consolidated net income for fiscal 2019 and 2018 , respectively, which represents a decrease of $3.3 billion and $3.8 billion for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $2.26 , $3.28 and $4.38 for fiscal 2019 , 2018 and 2017 , respectively.

Walmart U.S. Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2019 2018 2017 Net sales $ 331,666 $ 318,477 $ 307,833 Percentage change from comparable period 4.1% 3.5% 3.2% Calendar comparable sales increase 3.7% 2.1% 1.6% Operating income $ 17,386 $ 16,995 $ 17,012 Operating income as a percentage of net sales 5.2% 5.3% 5.5% Unit counts at period end 4,769 4,761 4,672 Retail square feet at period end 705 705 699

Net sales for the Walmart U.S. segment increased $13.2 billion or 4.1% and $10.6 billion or 3.5% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in comparable store sales of 3.7% and 2.1% for fiscal 2019 and 2018 , respectively, driven by ticket and traffic growth. Walmart U.S. eCommerce sales positively contributed approximately 1.3% and 0.7% to comparable sales for fiscal 2019 and 2018 . Additionally, for fiscal 2018 , year-over-year growth in retail square feet further contributed to the year-over- year increase. Gross profit rate decreased 28 and 24 basis points for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , the decrease was primarily due to our planned pricing strategy, increased transportation expenses, and the mix effects from our growing eCommerce business. For fiscal 2018 , the decrease was primarily due to our planned pricing strategy and the mix effects from our growing eCommerce business. Partially offsetting the negative factors for fiscal 2018 was the positive impact of savings from procuring merchandise. Operating expenses as a percentage of segment net sales decreased 23 basis points for fiscal 2019 and was relatively flat for fiscal 2018 , when compared to the previous fiscal year. The decrease in fiscal 2019 was primarily due to strong sales performance in conjunction with productivity improvements and the prior year comparable period including charges related to discontinued real estate projects of $244 million. These improvements more than offset investments in eCommerce, technology and omni-channel initiatives and raising the starting wage rate at the beginning of fiscal 2019. As a result of the factors discussed above, segment operating income increased $391 million for fiscal 2019 and was relatively flat for fiscal 2018 , respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2019 2018 2017 Net sales $ 120,824 $ 118,068 $ 116,119 Percentage change from comparable period 2.3% 1.7% (5.9)% Operating income $ 4,883 $ 5,229 $ 5,737 Operating income as a percentage of net sales 4.0% 4.4% 4.9 % Unit counts at period end 5,993 6,360 6,363 Retail square feet at period end 344 373 377

Net sales for the Walmart International segment increased $2.8 billion or 2.3% and $1.9 billion or 1.7% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , the increase was primarily due to positive comparable sales in the majority of our markets and net sales from Flipkart, which we acquired in the third quarter of fiscal 2019. These increases were partially offset by a $ 3.1 billion reduction in net sales due to our sale of the majority stake in Walmart Brazil , a $0.7 billion negative impact from fluctuations in currency exchange rates , the continued wind down of our first party Brazil eCommerce operations and a reduction in net sales of $140 million due to divesting our Suburbia business in the second quarter of fiscal 2018. For fiscal 2018 , the increase in net sales was due to positive comparable sales in the majority of our markets and the impact of new stores, partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and a $0.5 billion negative impact from fluctuations in currency exchange rates. Gross profit rate decreased 41 and 28 basis points for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , the decrease was due to Flipkart and strategic price investments in certain markets. For fiscal 2018 , the decrease in the gross profit rate was primarily due to strategic price investments in certain markets. Membership and other income decreased 22.4% and 14.0% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. The decrease in fiscal 2019 was due to the prior year recognition of a $387 million gain from the sale of Suburbia. While fiscal 2018 included the $387 million gain from the sale of Suburbia and a $47 million gain from a land sale, these gains were less than gains recognized in fiscal 2017 , which included a $535 million gain from the sale of our Yihaodian business and a $194 million gain from the sale of shopping malls in Chile .

Operating expenses as a percentage of segment net sales decreased 37 basis points for fiscal 2019 and was flat for 2018 , when compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net sales for fiscal 2019 was primarily due to impairment charges in the previous fiscal year of approximately $0.5 billion, which included charges from decisions to exit certain properties and wind down the first party Brazil eCommerce operations; this decrease in operating expenses was partially offset by the addition of operating expenses from Flipkart in fiscal 2019 . While fiscal 2018 was benefited by an increase in net sales, this benefit was offset by restructuring and impairment charges in certain markets of approximately $0.5 billion, including charges from decisions to exit certain properties and wind down the first party Brazil eCommerce operations . As a result of the factors discussed above, segment operating income decreased $346 million and $508 million for fiscal 2019 and 2018 , respectively.

Sam's Club Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2019 2018 2017 Including Fuel

Net sales $ 57,839 $ 59,216 $ 57,365 Percentage change from comparable period (2.3)% 3.2% 0.9% Calendar comparable sales increase 5.4 % 2.8% 0.5% Operating income $ 1,520 $ 915 $ 1,628 Operating income as a percentage of net sales 2.6 % 1.5% 2.8% Unit counts at period end 599 597 660 Retail square feet at period end 80 80 88

Excluding Fuel (1)

Net sales $ 52,332 $ 54,456 $ 53,289 Percentage change from comparable period (3.9)% 2.2% 1.8% Operating income $ 1,383 $ 797 $ 1,576 Operating income as a percentage of net sales 2.6 % 1.5% 3.0%

(1) We believe the "Excluding Fuel" information is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the future.

Net sales for the Sam's Club segment decreased $1.4 billion or 2.3% for fiscal 2019 and increased $1.9 billion or 3.2% for fiscal 2018 , when compared to the previous fiscal year. For fiscal 2019 , the decrease was primarily due to a $4.5 billion decrease in net sales resulting from the net closure of 63 clubs during fiscal 2018 , as well as reduced tobacco sales due to our decision to remove tobacco from certain locations. These decreases were partially offset by increases in comparable sales, which were benefited by transfers of sales from our closed clubs to our existing clubs. Sam's Club eCommerce sales positively contributed approximately 0.9% to comparable sales for fiscal 2019 . Additional fuel sales of $0.7 billion partially offset the decreases in net sales for fiscal 2019 . For fiscal 2018 , the increase in net sales was primarily due to an increase in comparable sales which were benefited by an increase of $0.7 billion in fuel sales from higher fuel prices. Sam's Club eCommerce sales positively contributed approximately 0.7% to comparable sales for fiscal 2018 . Gross profit rate was relatively flat for fiscal 2019 and decreased 44 basis points for fiscal 2018 , when compared to the previous fiscal year. For fiscal 2019 , gross profit rate was benefited by lapping the impact of markdowns to liquidate inventory related to club closures in fiscal 2018 and decreased tobacco sales in fiscal 2019 , which have lower margins. This benefit to the gross profit rate was offset by higher transportation costs and eCommerce shipping costs, investments in price and increased shrink in fiscal 2019. For fiscal 2018 , the decrease in gross profit rate was primarily due to the impact of markdowns to liquidate inventory related to club closures, a reclassification of certain supply expenses from operating expenses to cost of goods sold, increased shrink, increased eCommerce shipping costs and the investment in cash rewards. Membership and other income increased 2.6% and 2.3% for fiscal 2019 and 2018 , respectively, when compared to the previous fiscal year. For fiscal 2019 , the increase was due to an increase of 1.5% in membership income resulting from increased Plus Member penetration and gains on property sales. These increases were partially offset by lower recycling income when compared to the previous fiscal year. For fiscal 2018 , the increase in membership and other income was primarily due to higher recycling income from our sustainability efforts and an increase of 1.3% in membership income resulting from increased Plus Member penetration. Operating expenses as a percentage of segment net sales decreased 99 basis points for fiscal 2019 and increased 83 basis points for fiscal 2018 , when compared to the previous fiscal year. For fiscal 2019 , the decrease in operating expenses as a percentage of segment net sales was primarily due to a charge of approximately $0.6 billion in the prior year's comparable period related to club closures and discontinued real estate projects. This charge resulted in the increase in operating expenses as a percentage of segment net sales in fiscal 2018 .

As a result of the factors discussed above, segment operating income increased $605 million for fiscal 2019 and decreased $713 million f or fiscal 2018 , when compared to the previous fiscal year.

Liquidity and Capital Resources Liquidity The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or all of the remaining available cash flow has been used to fund dividends on our common stock and share repurchases. We believe our sources of liquidity will continue to be adequate to fund operations, finance our global investment and expansion activities, pay dividends and fund our share repurchases for the foreseeable future.

Net Cash Provided by Operating Activities

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Net cash provided by operating activities $ 27,753 $ 28,337 $ 31,673

Net cash provided by operating activities was $27.8 billion , $28.3 billion and $31.7 billion for fiscal 2019 , 2018 and 2017 , respectively. Net cash provided by operating activities for fiscal 2019 declined when compared to the previous fiscal year primarily due to timing of vendor payments, partially offset by lower tax payments mainly resulting from Tax Reform and the timing of tax payments . The decrease in net cash provided by operating activities for fiscal 2018 , when compared to the previous fiscal year, was due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital management and the benefit from the application of tax regulations adopted in fiscal 2017.

Cash Equivalents and Working Capital Cash and cash equivalents were $7.7 billion and $6.8 billion as of January 31, 2019 and 2018 , respectively. Our working capital deficit was $15.6 billion and $18.9 billion as of January 31, 2019 and 2018 , respectively. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of cash dividends and share repurchases. The decreased working capital deficit as of January 31, 2019 compared to 2018 was primarily due to higher current assets as a result of the consolidation of Flipkart. Historically, we have used intercompany financing arrangements to make cash available in the country in which it is needed with the minimum cost possible. During fiscal 2019, we repatriated to the U.S. $5.3 billion of cash at a tax cost of approximately $40 million . As of January 31, 2019 and 2018 , cash and cash equivalents of $2.8 billion and $1.4 billion , respectively, may not be freely transferable to the U.S. due to local laws or other restrictions. Of the $2.8 billion as of January 31, 2019 , approximately $1.2 billion can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart minority shareholders; however, this cash is expected to be utilized to fund the operations of Flipkart.

Net Cash Used in Investing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Net cash used in investing activities $ (24,036) $ (9,079) $ (13,896)

Net cash used in investing activities was $24.0 billion , $9.1 billion and $13.9 billion for fiscal 2019 , 2018 and 2017 , respectively, and generally consisted of payments for business acquisitions and to expand our eCommerce capabilities, invest in other technologies, remodel existing stores and club and add new stores and clubs. Net cash used in investing activities increased $15.0 billion for fiscal 2019 when compared to the previous fiscal year. This increase was primarily due to the $13.8 billion payment for Flipkart , net of cash acquired, as well as payments for other, smaller acquisitions. Net cash used in investing activities decreased $4.8 billion for fiscal 2018 when compared to the previous fiscal year. Fiscal 2018 included cash received of $1.0 billion from the sale of Suburbia in Mexico, while fiscal 2017 included our acquisition of Jet.com, Inc. ("jet.com") for $2.4 billion and our purchase of $1.9 billion of shares in JD.com ("JD"). Refer to Note 13 to our Consolidated Financial Statements for further details on our acquisition of jet.com and investment in JD. Additionally, refer to the " Strategic Capital Allocation " section in our Company Performance Metrics for capital expenditure detail for fiscal 2019 and 2018 .

Growth Activities For the fiscal year ending January 31, 2020 ("fiscal 2020 "), we project capital expenditures will be approximately $11.0 billion. In fiscal 2020 , we expect to add approximately 300 new stores in Walmart International, primarily in Mexico, Central America and China, and add less than 10 stores in Walmart U.S.

Net Cash Used in Financing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Net cash used in financing activities $ (2,537) $ (19,875) $ (19,072)

Net cash used in financing activities generally consists of transactions related to our short-term and long-term debt, financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interest shareholders are also classified as cash flows from financing activities. Fiscal 2019 net cash used in financing activities decreased $17.3 billion when compared to the same period in the previous fiscal year. The decrease was primarily due to the $15.9 billion of net proceeds received from the issuance of long-term debt to fund a portion of the purchase price for Flipkart and for general corporate purposes, as well as a decrease in share repurchases due to the suspension of repurchases in anticipation of the Flipkart announcement. Fiscal 2018 net cash used in financing activities increased $0.8 billion for fiscal 2018 when compared to the same period in the previous fiscal year. The increase was primarily due to premiums paid for early extinguishment of debt. Further discussion of financing activities is provided by major categories below.

Short-term Borrowings Net cash flows provided by short-term borrowings were relatively flat in fiscal 2019 and increased $4.1 billion in fiscal 2018 , when compared to the balance at the end of the previous fiscal year. We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. For fiscal 2018 , the additional cash provided by short-term borrowings was primarily due to the timing of our January 2018 debt extinguishment. The following table includes additional information related to the Company's short-term borrowings for fiscal 2019 , 2018 and 2017 :

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Maximum amount outstanding at any month-end $ 13,389 $ 11,386 $ 9,493 Average daily short-term borrowings 10,625 8,131 5,691 Annual weighted-average interest rate 2.4% 1.3% 1.8%

In addition to our short-term borrowings, we have $15.0 billion of various undrawn committed lines of credit in the U.S. and approximately $2.8 billion of various undrawn committed lines of credit outside of the U.S. , as of January 31, 2019 , that provide additional liquidity, if needed.

Long-term Debt The following table provides the changes in our long-term debt for fiscal 2019 :

(Amounts in millions) Long-term debt due within one

year Long-term debt Total Balances as of February 1, 2018 $ 3,738 $ 30,045 $ 33,783 Proceeds from issuance of long-term debt — 15,872 15,872 Payments of long-term debt (3,763) (21) (3,784) Reclassifications of long-term debt 1,864 (1,864) —

Other 37 (512) (475) Balances as of January 31, 2019 $ 1,876 $ 43,520 $ 45,396

Our total long-term debt increased $11.6 billion for fiscal 2019 , primarily due to the net proceeds from issuance of long-term debt to fund a portion of the purchase price for Flipkart and for general corporate purposes .

Dividends Our total dividend payments were $6.1 billion , $6.1 billion and $6.2 billion for fiscal 2019 , 2018 and 2017 , respectively. The Board of Directors approved, effective February 19, 2019 , the fiscal 2020 annual dividend of $2.12 per share, an increase over the fiscal 2019 annual dividend of $2.08 per share. For fiscal 2020 , the annual dividend will be paid in four quarterly installments of $0.53 per share, according to the following record and payable dates:

Record Date Payable Date March 15, 2019 April 1, 2019 May 10, 2019 June 3, 2019 August 9, 2019 September 3, 2019 December 6, 2019 January 2, 2020

Company Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2019 were made under the current $20 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2019 , authorization for $11.3 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded through the Company's free cash flow. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2019 , 2018 and 2017 :

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2019 2018 2017 Total number of shares repurchased 79.5 104.9 119.9 Average price paid per share $ 93.18 $ 79.11 $ 69.18 Total amount paid for share repurchases $ 7,410 $ 8,296 $ 8,298

Share repurchases decreased for fiscal 2019 and were relatively flat for fiscal 2018 , respectively, when compared to the previous fiscal year. The decrease in fiscal 2019 was due to the suspension of repurchases in anticipation of the announcement of the Flipkart acquisition. Repurchases of Company stock returned to a more normalized level in the latter half of fiscal 2019.

Capital Resources

We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our capital expenditures, acquisitions, dividend payments and share repurchases. We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. As of January 31, 2019 , the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

Rating agency Commercial paper Long-term debt Standard & Poor's A-1+ AA Moody's Investors Service P-1 Aa2 Fitch Ratings F1+ AA

Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing. The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.

Contractual Obligations The following table sets forth certain information concerning our obligations to make contractual future payments, such as debt and lease agreements, and certain contingent commitments as of January 31, 2019 :

Payments Due During Fiscal Years Ending January 31, (Amounts in millions) Total 2020 2021-2022 2023-2024 Thereafter Recorded contractual obligations:

Long-term debt (1) $ 45,396 $ 1,876 $ 8,427 $ 7,439 $ 27,654 Short-term borrowings 5,225 5,225 — — — Capital lease and financing obligations (2) 9,896 917 1,650 1,260 6,069

Unrecorded contractual obligations: Non-cancelable operating leases (3) 14,118 1,856 3,075 2,296 6,891 Estimated interest on long-term debt 23,039 1,745 3,219 2,851 15,224 Syndicated and other letters of credit 2,180 2,180 — — — Purchase obligations 14,343 7,325 4,249 1,441 1,328

Total contractual obligations $ 114,197 $ 21,124 $ 20,620 $ 15,287 $ 57,166

(1) "Long-term debt" includes the fair value of our derivatives designated as fair value hedges. (2) "Capital lease and financing obligations" represents undiscounted aggregate minimum annual rentals, which are recorded on the balance sheet at present value. Refer to Note 11 to our Consolidated Financial Statements for more

information. (3) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2019 .

Under the terms of the sale of the majority stake of Walmart Brazil, we agreed to indemnify Advent for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion , adjusted for interest based on the Brazilian interbank deposit rate. As of January 31, 2019 , the indemnification liability recorded was $0.8 billion and included in deferred income taxes and other in the Company's Consolidated Balance Sheet.

Additionally, we have $15.0 billion of various undrawn committed lines of credit in the U.S. and approximately $2.8 billion of various undrawn committed lines of credit outside of the U.S. which, if drawn upon, would be included in the current liabilities section of the Company's Consolidated Balance Sheets. Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding as of January 31, 2019 , and assumes interest rates remain at current levels for our variable rate debt. Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts. For the purposes of the above table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not include a fixed or minimum quantity, are excluded from the table above. Accordingly, purchase orders for inventory are not included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for cancellation without significant penalty. The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations. In addition to the amounts shown in the table above, $1.3 billion of unrecognized tax benefits are considered uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.

Off Balance Sheet Arrangements As of January 31, 2019 , we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Other Matters

We discuss our existing FCPA investigation and related matters and possible effects of those matters on Walmart's business, including certain risks arising therefrom, in Part I, Item 1A of this Form 10- K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We discuss the "ASDA Equal Value Claims" which includes certain existing employment claims against our United Kingdom subsidiary, ASDA Stores, Ltd., including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss the National Prescription Opiate Litigation and related matters including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss various legal proceedings related to the FCPA investigation, ASDA Equal Value Claims, and National Prescription Opiate Litigation in Part I, Item 3 herein under the caption "Legal Proceedings." The foregoing matters and other matters described elsewhere in this Annual Report on Form 10-K represent contingent liabilities of the Company that may or may not result in the Company incurring a material liability upon their final resolution.

Summary of Critical Accounting Estimates Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations as reflected in our financial statements. These judgments and estimates are based on past events and expectations of future outcomes. Actual results may differ from our estimates. Management continually reviews our accounting policies, how they are applied and how they are reported and disclosed in our financial statements. Following is a summary of our critical accounting estimates and how they are applied in preparation of the financial statements.

Inventories

We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a decrease to the carrying value of inventory. As of January 31, 2019 and 2018 , our inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

Impairment of Assets We evaluate long-lived assets for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments regarding the existence of impairment indicators are based on market conditions and financial performance. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level. The variability of these factors depends on a number of conditions, including uncertainty about future events and changes in demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to conclude that indicators of impairment exist and require impairment tests be performed, which could result in management determining the value of long-lived assets is impaired, resulting in a write-down of the related long-lived assets. While fiscal 2019 included a pre-tax loss of $4.8 billion related to the sale of the majority stake in Walmart Brazil, which included full impairment of all related-assets, there were no other material impairment charges for fiscal 2019. As a measure of sensitivity, fiscal 2019 impairment would not change materially with a 10% decrease in the undiscounted cash flows for the stores or clubs with indicators of impairment. For fiscal 2018, although impairment charges were $1.4 billion, these charges primarily related to restructuring activities described in Note 14 , as well as discontinued real estate projects in the U.S. and decisions to exit certain international properties . Impairment charges not related to restructuring activities or decisions to exit properties for fiscal 2019 and 2018 were not material.

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Business Combinations, Goodwill, and Acquired Intangible Assets

We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, be recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques when market value is not readily available. For intangible assets acquired in a business combination, we typically use the income method. Significant estimates in valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2019 , our reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units and other indefinite-lived acquired intangible assets have generated sufficient returns to recover the cost of goodwill and other indefinite-lived acquired intangible assets. Because of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be materially impacted. For approximately $300 million of certain acquired indefinite-lived intangible assets, the fair value approximated the carrying value; any deterioration in the fair value may result in an impairment charge.

Income Taxes Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Accordingly, the determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors, including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and international operations where the statutory rates are generally lower than the U.S. statutory rate, and may fluctuate as a result. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating our tax positions and assessing the timing and amounts of deductible and taxable items. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies heavily on estimates. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S. income tax law. Effective beginning January 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on foreign-sourced earnings and related-party payments. As discussed in Note 9 to our Consolidated Financial Statements, we completed our accounting for the tax effects of the Tax Act in fiscal 2019. As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard–setting bodies, any resulting changes to our estimates will be treated in accordance with the relevant accounting guidance.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates, currency exchange rates and the fair value of our equity investment in JD.com. The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a change in another, which may magnify or negate other sensitivities.

Interest Rate Risk We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt. We hedge a portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2019 , the net fair value of our interest rate swaps increased $13 million primarily due to fluctuations in market interest rates. The table below provides information about our financial instruments that are sensitive to changes in interest rates. For long-term debt, the table represents the principal cash flows and related weighted- average interest rates by expected maturity dates. For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing market rates as of January 31, 2019 .

Expected Maturity Date (Amounts in millions) Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Thereafter Total Liabilities Short-term borrowings:

Variable rate $ 5,225 $ — $ — $ — $ — $ — $ 5,225 Weighted-average interest rate 2.7% —% —% —% —% —% 2.7%

Long-term debt (1) : Fixed rate $ 1,576 $ 4,597 $ 2,330 $ 2,844 $ 4,595 $ 27,654 $ 43,596 Weighted-average interest rate 2.5% 2.9% 3.7% 1.7% 3.2% 4.5% 3.9% Variable rate $ 300 $ 750 $ 750 $ — $ — $ — $ 1,800 Weighted-average interest rate 2.8% 2.9% 3.1% —% —% —% 2.9%

Interest rate derivatives Interest rate swaps:

Fixed to variable $ — $ 750 $ — $ — $ 1,750 $ 1,500 $ 4,000 Weighted-average pay rate —% 4.1% —% —% 3.2% 3.8% 3.6% Weighted-average receive rate —% 3.3% —% —% 2.6% 3.3% 3.0%

(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.

As of January 31, 2019 , our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 22% of our total short-term and long-term debt. Based on January 31, 2019 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $110 million .

In addition to currency swaps, we also hedge a portion of our foreign currency risk by designating foreign-currency-denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion as of January 31, 2019 and January 31, 2018 that was designated as a hedge of our net investment in the United Kingdom. As of January 31, 2019 , a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted in a change in the value of the debt of $201 million . In addition, we had outstanding long-term debt of ¥180 billion as of January 31, 2019 and January 31, 2018 that was designated as a hedge of our net investment in Japan. As of January 31, 2019 , a hypothetical 10% change in value of the U.S. dollar relative to the Japanese yen would have resulted in a change in the value of the debt of $150 million . In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of purchase commitments denominated in non-functional currencies.

Investment Risk

We are exposed to changes in the JD.com ("JD") stock price as a result of our equity investment in JD. Since February 1, 2018, when we adopted the new financial instrument accounting standard, the change in fair value recorded within other gains and losses resulted in a loss of $3.5 billion due to a decrease in the stock price of JD. As of January 31, 2019 , the fair value of our equity investment in JD was $3.6 billion .

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of Walmart Inc. For the Fiscal Year Ended January 31, 2019

Table of Contents

Page Report of Independent Registered Public Accounting Firm 46 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 47 Consolidated Statements of Income 48 Consolidated Statements of Comprehensive Income 49 Consolidated Balance Sheets 50 Consolidated Statements of Shareholders' Equity 51 Consolidated Statements of Cash Flows 52 Notes to Consolidated Financial Statements 53

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2019 and 2018 , the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2019 , and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2019 and 2018 , and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2019 , in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2019 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 28, 2019 expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-01 As discussed in Note 1 to the consolidated financial statements, the Company changed its method of measuring certain equity investments to fair value and recognizing the change in fair value in net income effective February 1, 2018, due to the adoption of Accounting Standards Update (“ASU”) No. 2016-01, Financial Instruments-Overall (Topic 825) .

Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP We have served as the Company's auditor since 1969. Rogers, Arkansas March 28, 2019

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on Internal Control over Financial Reporting We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2019 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2019 , based on the COSO criteria. As indicated in the accompanying Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Flipkart Private Limited (“Flipkart”), except for the recognition of goodwill and intangible assets that were included in management’s assessment. Flipkart is included in the 2019 consolidated financial statements of the Company and constituted approximately 2% of the Company’s total assets as of January 31, 2019 after excluding goodwill and intangible assets recorded and approximately 1% of the Company’s net sales for the year ended January 31, 2019. Accordingly, our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Flipkart, except for the recognition of goodwill and intangible assets. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2019 and 2018 , the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2019 , and the related notes and our report dated March 28, 2019 expressed an unqualified opinion thereon.

Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Rogers, Arkansas March 28, 2019

Walmart Inc. Consolidated Statements of Income

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2019 2018 2017 Revenues:

Net sales $ 510,329 $ 495,761 $ 481,317 Membership and other income 4,076 4,582 4,556

Total revenues 514,405 500,343 485,873 Costs and expenses:

Cost of sales 385,301 373,396 361,256 Operating, selling, general and administrative expenses 107,147 106,510 101,853

Operating income 21,957 20,437 22,764 Interest:

Debt 1,975 1,978 2,044 Capital lease and financing obligations 371 352 323 Interest income (217) (152) (100)

Interest, net 2,129 2,178 2,267 Loss on extinguishment of debt — 3,136 — Other (gains) and losses 8,368 — — Income before income taxes 11,460 15,123 20,497 Provision for income taxes 4,281 4,600 6,204 Consolidated net income 7,179 10,523 14,293 Consolidated net income attributable to noncontrolling interest (509) (661) (650) Consolidated net income attributable to Walmart $ 6,670 $ 9,862 $ 13,643

Net income per common share:

Basic net income per common share attributable to Walmart $ 2.28 $ 3.29 $ 4.40 Diluted net income per common share attributable to Walmart 2.26 3.28 4.38

Weighted-average common shares outstanding:

Basic 2,929 2,995 3,101 Diluted 2,945 3,010 3,112

Dividends declared per common share $ 2.08 $ 2.04 $ 2.00

See accompanying notes.

Walmart Inc. Consolidated Statements of Comprehensive Income

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Consolidated net income $ 7,179 $ 10,523 $ 14,293

Consolidated net income attributable to noncontrolling interest (509) (661) (650) Consolidated net income attributable to Walmart 6,670 9,862 13,643 Other comprehensive income (loss), net of income taxes

Currency translation and other (226) 2,540 (3,027) Net investment hedges 272 (405) 413 Cash flow hedges (290) 437 21 Minimum pension liability 131 147 (397) Unrealized gain on available-for-sale securities — 1,501 145

Other comprehensive income (loss), net of income taxes (113) 4,220 (2,845) Other comprehensive (income) loss attributable to noncontrolling interest 188 (169) 210

Other comprehensive income (loss) attributable to Walmart 75 4,051 (2,635) Comprehensive income, net of income taxes 7,066 14,743 11,448

Comprehensive (income) loss attributable to noncontrolling interest (321) (830) (440) Comprehensive income attributable to Walmart $ 6,745 $ 13,913 $ 11,008

See accompanying notes.

Walmart Inc. Consolidated Balance Sheets

As of January 31, (Amounts in millions) 2019 2018 ASSETS Current assets:

Cash and cash equivalents $ 7,722 $ 6,756 Receivables, net 6,283 5,614 Inventories 44,269 43,783 Prepaid expenses and other 3,623 3,511

Total current assets 61,897 59,664 Property and equipment:

Property and equipment 185,810 185,154 Less accumulated depreciation (81,493) (77,479)

Property and equipment, net 104,317 107,675 Property under capital lease and financing obligations:

Property under capital lease and financing obligations 12,760 12,703 Less accumulated amortization (5,682) (5,560)

Property under capital lease and financing obligations, net 7,078 7,143 Goodwill 31,181 18,242 Other long-term assets 14,822 11,798 Total assets $ 219,295 $ 204,522

LIABILITIES AND EQUITY Current liabilities:

Short-term borrowings $ 5,225 $ 5,257 Accounts payable 47,060 46,092 Accrued liabilities 22,159 22,122 Accrued income taxes 428 645 Long-term debt due within one year 1,876 3,738 Capital lease and financing obligations due within one year 729 667

Total current liabilities 77,477 78,521 Long-term debt 43,520 30,045 Long-term capital lease and financing obligations 6,683 6,780 Deferred income taxes and other 11,981 8,354 Commitments and contingencies Equity:

Common stock 288 295 Capital in excess of par value 2,965 2,648 Retained earnings 80,785 85,107 Accumulated other comprehensive loss (11,542) (10,181)

Total Walmart shareholders' equity 72,496 77,869 Noncontrolling interest 7,138 2,953

Total equity 79,634 80,822 Total liabilities and equity $ 219,295 $ 204,522

See accompanying notes.

Walmart Inc. Consolidated Statements of Shareholders' Equity

Accumulated Total Capital in Other Walmart

(Amounts in millions)

Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity

Balances as of February 1, 2016 3,162 $ 317 $ 1,805 $ 90,021 $ (11,597) $ 80,546 $ 3,065 $ 83,611 Consolidated net income — — — 13,643 — 13,643 650 14,293 Other comprehensive income (loss), net of income taxes — — — — (2,635) (2,635) (210) (2,845)

Cash dividends declared ($2.00 per share) — — — (6,216) — (6,216) — (6,216) Purchase of Company stock (120) (12) (174) (8,090) — (8,276) — (8,276) Cash dividend declared to noncontrolling interest — — — — — — (519) (519) Other 6 — 740 (4) — 736 (249) 487 Balances as of January 31, 2017 3,048 305 2,371 89,354 (14,232) 77,798 2,737 80,535 Consolidated net income — — — 9,862 — 9,862 661 10,523 Other comprehensive income (loss), net of income taxes — — — — 4,051 4,051 169 4,220

Cash dividends declared ($2.04 per share) — — — (6,124) — (6,124) — (6,124) Purchase of Company stock (103) (10) (219) (7,975) — (8,204) — (8,204) Cash dividend declared to noncontrolling interest — — — — — — (687) (687) Other 7 — 496 (10) — 486 73 559 Balances as of January 31, 2018 2,952 295 2,648 85,107 (10,181) 77,869 2,953 80,822 Adoption of new accounting standards on February 1, 2018, net of income taxes

—

2,361

(1,436)

925

(1)

924

Consolidated net income — — — 6,670 — 6,670 509 7,179 Other comprehensive income (loss), net of income taxes — — — — 75 75 (188) (113)

Cash dividends declared ($2.08 per share) — — — (6,102) — (6,102) — (6,102) Purchase of Company stock (80) (8) (245) (7,234) — (7,487) — (7,487) Cash dividend declared to noncontrolling interest — — — — — — (488) (488) Noncontrolling interest of acquired entity — — — — — — 4,345 4,345

Other 6 1 562 (17) — 546 8 554 Balances as of January 31, 2019 2,878 $ 288 $ 2,965 $ 80,785 $ (11,542) $ 72,496 $ 7,138 $ 79,634

See accompanying notes.

Walmart Inc. Consolidated Statements of Cash Flows

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Cash flows from operating activities:

Consolidated net income $ 7,179 $ 10,523 $ 14,293 Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization 10,678 10,529 10,080 Unrealized (gains) and losses 3,516 — — (Gains) and losses for disposal of business operations 4,850 — — Deferred income taxes (499) (304) 761 Loss on extinguishment of debt — 3,136 — Other operating activities 1,734 1,210 206 Changes in certain assets and liabilities, net of effects of acquisitions:

Receivables, net (368) (1,074) (402) Inventories (1,311) (140) 1,021 Accounts payable 1,831 4,086 3,942 Accrued liabilities 183 928 1,280 Accrued income taxes (40) (557) 492

Net cash provided by operating activities 27,753 28,337 31,673 Cash flows from investing activities:

Payments for property and equipment (10,344) (10,051) (10,619) Proceeds from the disposal of property and equipment 519 378 456 Proceeds from the disposal of certain operations 876 1,046 662 Purchase of available for sale securities — — (1,901) Payments for business acquisitions, net of cash acquired (14,656) (375) (2,463) Other investing activities (431) (77) (31)

Net cash used in investing activities (24,036) (9,079) (13,896) Cash flows from financing activities:

Net change in short-term borrowings (53) 4,148 (1,673) Proceeds from issuance of long-term debt 15,872 7,476 137 Repayments of long-term debt (3,784) (13,061) (2,055) Premiums paid to extinguish debt — (3,059) — Dividends paid (6,102) (6,124) (6,216) Purchase of Company stock (7,410) (8,296) (8,298) Dividends paid to noncontrolling interest (431) (690) (479) Purchase of noncontrolling interest — (8) (90) Other financing activities (629) (261) (398)

Net cash used in financing activities (2,537) (19,875) (19,072) Effect of exchange rates on cash, cash equivalents and restricted cash (438) 487 (452) Net increase (decrease) in cash, cash equivalents and restricted cash 742 (130) (1,747) Cash, cash equivalents and restricted cash at beginning of year 7,014 7,144 8,891 Cash, cash equivalents and restricted cash at end of period $ 7,756 $ 7,014 $ 7,144

Supplemental disclosure of cash flow information: Income taxes paid 3,982 6,179 4,507 Interest paid 2,348 2,450 2,351

See accompanying notes.

Walmart Inc. Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies General Walmart Inc. ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers. Each week, the Company serves over 275 million customers who visit its more than 11,300 stores and numerous eCommerce websites under 58 banners in 27 countries. The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.

Principles of Consolidation The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2019 ("fiscal 2019 "), January 31, 2018 ("fiscal 2018 ") and January 31, 2017 ("fiscal 2017 "). Intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. These variable interest entities and equity method investments are immaterial to the Company's Consolidated Financial Statements. The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of January 2019 related to the operations consolidated using a lag that materially affected the Consolidated Financial Statements.

Use of Estimates The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles. Those principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Restricted Cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows–Restricted Cash (Topic 230) , which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The Company adopted this ASU on February 1, 2018. Restricted cash held outside of cash and cash equivalents was $34 million as of January 31, 2019 , primarily recorded in prepaid expenses and other in the Consolidated Balance Sheets, and $300 million as of January 31, 2018 , primarily recorded in other long-term assets in the Consolidated Balance Sheets.

Receivables Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following: insurance companies resulting from pharmacy sales; banks for customer credit and debit cards and electronic bank transfers that take in excess of seven days to process; governments for income taxes; suppliers for marketing or incentive programs; and real estate transactions.

Inventories

The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. As of January 31, 2019 and January 31, 2018 , the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

Assets Held for Sale Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. The Company reviews all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. As of January 31, 2019 and January 31, 2018 , immaterial amounts for assets and liabilities held for sale were classified in prepaid expenses and other and accrued liabilities, respectively, in the Consolidated Balance Sheets.

Property and Equipment Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis:

As of January 31, (Amounts in millions) Estimated Useful Lives 2019 2018 Land N/A $ 24,526 $ 25,298 Buildings and improvements 3-40 years 101,006 101,155 Fixtures and equipment 1-30 years 54,488 52,695 Transportation equipment 3-15 years 2,316 2,387 Construction in progress N/A 3,474 3,619 Property and equipment $ 185,810 $ 185,154 Accumulated depreciation (81,493) (77,479) Property and equipment, net $ 104,317 $ 107,675

Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under financing obligations, property under capital leases and intangible assets for fiscal 2019 , 2018 and 2017 was $10.7 billion , $10.5 billion and $10.1 billion , respectively.

Leases The Company leases land, buildings, fixtures and equipment and transportation equipment. The Company estimates the expected lease term by assuming the exercise of renewal options where an economic penalty exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such renewal is at the sole discretion of the Company. The expected lease term is used in the determination of whether a store or club lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant expenditures are made for leasehold improvements late in the expected lease term and renewal is reasonably assured, the useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases.

The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the leased assets for accounting purposes. As a result, the payments, regardless of the significance, are automatic indicators of ownership and require the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon completion of the lessor's project, the Company performs a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have "continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated Balance Sheets and are generally amortized over the lease term. At the end of the lease term, including exercise of any renewal options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash gain.

Long-Lived Assets Long-lived assets are initially recorded at cost. Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows, which is at the individual store or club level. Undiscounted cash flows expected to be generated by the related assets are estimated over the assets' useful lives based on updated projections. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.

Goodwill and Other Acquired Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2019 , the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill. The following table reflects goodwill activity, by reportable segment, for fiscal 2019 and 2018 :

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Total Balances as of February 1, 2017 $ 2,236 $ 14,488 $ 313 $ 17,037 Changes in currency translation and other — 996 — 996 Acquisitions 209 — — 209 Balances as of January 31, 2018 2,445 15,484 313 18,242 Changes in currency translation and other — (743) — (743) Acquisitions (1) 107 13,575 — 13,682 Balances as of January 31, 2019 $ 2,552 $ 28,316 $ 313 $ 31,181

(1) Goodwill recorded in fiscal 2019 for Walmart International relates to Flipkart.

Intangible assets are included in other long-term assets in the Company's Consolidated Balance Sheets. These assets are evaluated for impairment based on their fair values using valuation techniques which are updated annually based on the most recent variables and assumptions. There were no significant impairment charges related to intangible assets for fiscal 2019 , 2018 and 2017 .

Fair Value Measurement

In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-01, Financial Instruments–Overall (Topic 825) , which updated certain aspects of recognition, measurement, presentation and disclosure of financial instruments ("ASU 2016-01"). The Company adopted this ASU on February 1, 2018, which primarily impacted the Company's accounting for its investment in JD.com, Inc. ("JD") and resulted in a positive adjustment to retained earnings of approximately $2.6 billion , net of tax, based on the market value of the Company's investment in JD as of January 31, 2018. The adoption required prospective changes in fair value of the Company's investment in JD to be recorded in the Consolidated Statement of Income, which the Company classifies in other gains and losses.

Self Insurance Reserves The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits . Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.

Derivatives The Company uses derivatives for hedging purposes to manage its exposure to changes in interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivatives in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivatives will change. In a hedging relationship, the change in the value of the derivative is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to a derivative represents the possibility that the counterparty will not fulfill the terms of the contract. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty when appropriate. The Company only enters into derivatives with counterparties rated "A-" or better by nationally recognized credit rating agencies. Subsequent to entering into derivatives, the Company regularly monitors the credit ratings of its counterparties. The notional, or contractual, amount of the Company's derivatives is used to measure interest to be paid or received and does not represent the Company's exposure due to credit risk. The contractual terms of the Company's derivatives closely mirror those of the hedged items, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative is recorded using hedge accounting, depending on the nature of the hedge, changes in fair value will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Any hedge ineffectiveness is immediately recognized in earnings. The Company's net investment and cash flow hedges are highly effective and the ineffective portion has not been, and is not expected to be, significant. Derivatives that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings during the period of the change.

Fair Value Hedges The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value of fixed-rate debt. The notional amounts are used to measure interest to be paid or received and do not represent the Company's exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay variable-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivatives match those of the fixed-rate debt being hedged, the derivatives are assumed to be perfectly effective hedges. Changes in the fair values of these derivatives are recorded in earnings, but are offset by corresponding changes in the fair values of the hedged items, also recorded in earnings, and, accordingly, do not impact the Company's Consolidated Statements of Income. These derivatives will mature on dates ranging from October 2020 to April 2024 .

Net Investment Hedges The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All changes in the fair value of these derivatives are recorded in accumulated other comprehensive loss, offsetting the currency translation adjustment of the related investment that is also recorded in accumulated other comprehensive loss. These derivatives will mature on dates ranging from July 2020 to February 2030 . The Company has issued foreign-currency-denominated long-term debt as hedges of net investments of certain of its foreign operations. These foreign-currency-denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive loss, offsetting the foreign currency translation adjustment of the related net investment that is also recorded in accumulated other comprehensive loss.

Cash Flow Hedges The Company is a party to receive fixed-rate, pay fixed-rate cross-currency interest rate swaps to hedge the currency exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The swaps are designated as cash flow hedges of the currency risk related to payments on the non-U.S. denominated debt. The effective portion of changes in the fair value of derivatives designated as cash flow hedges of foreign exchange risk is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The hedged items are recognized foreign currency-denominated liabilities that are re-measured at spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's allocable portion of the initial spot-forward difference associated with the hedging instrument. These derivatives will mature on dates ranging from April 2022 to March 2034 .

Financial Statement Presentation Realized derivative gains and losses are recorded in interest, net, in the Company's Consolidated Statements of Income. Although subject to master netting arrangements, the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. Derivatives with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and derivatives with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of the Company's derivatives. Additionally, the Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset and records cash collateral it posts with counterparties as amounts receivable from those counterparties exclusive of any derivative liability.

Income Taxes

Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates. The Tax Cuts and Jobs Act contains a provision which subjects a US parent of a foreign subsidiary to current US tax on its global intangible low–taxed income (“GILTI”). The GILTI income is eligible for a deduction, which lowers the effective tax rate to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. The Company will report the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis differences expected to reverse as GILTI. In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.

The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). This ASU provides that the stranded tax effects from the Tax Cuts and Jobs Act of 2017 ("Tax Act") in accumulated other comprehensive loss may be reclassified to retained earnings. The Company adopted this ASU on February 1, 2018, which resulted in an immaterial negative adjustment to retained earnings.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The Company adopted this ASU on February 1, 2018, using the modified retrospective approach and applied this ASU only to contracts not completed as of February 1, 2018. The accounting policies and other disclosures are below as well as the disclosure of disaggregated revenues in Note 15 . The impact of adopting this ASU was not material to the Consolidated Financial Statements. Net Sales The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Additionally, estimated sales returns are calculated based on expected returns.

Membership Fee Revenue The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. Membership fee revenue was $1.4 billion for each of fiscal 2019, 2018 and 2017, respectively. Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. Deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets.

Gift Cards Customer purchases of gift cards are not recognized as sales until the card is redeemed and the customer purchases merchandise using the gift card. Gift cards in the U.S. and some countries do not carry an expiration date; therefore, customers and members can redeem their gift cards for merchandise and services indefinitely. Gift cards in some countries where the Company does business have expiration dates. While gift cards are generally redeemed within 12 months, a certain number of gift cards, both with and without expiration dates, will not be fully redeemed. Management estimates unredeemed balances and recognizes revenue for these amounts in membership and other income in the Company's Consolidated Statements of Income over the expected redemption period. Management periodically reviews and updates its estimates.

Financial and Other Services The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from services is classified as a component of net sales in the Company's Condensed Consolidated Statements of Income.

Contract Balances Contract balances as a result of transactions with customers primarily consist of receivables included in receivables, net, and deferred gift card revenue included in accrued liabilities in the Company's Condensed Consolidated Balance Sheets. The following table provides the Company's receivables and deferred gift card revenue from transactions with customers:

(Amounts in millions) As of January 31, 2019 Assets: Receivables from transactions with customers, net $ 2,538 Liabilities: Deferred gift card revenue $ 1,932

Cost of Sales Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments that are not a reimbursement of specific, incremental and identifiable costs.

Payments from Suppliers The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures. Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited situations when the payment is a reimbursement of specific, incremental and identifiable costs, and are recognized in the Company's Consolidated Statements of Income when the related inventory is sold.

Operating, Selling, General and Administrative Expenses Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.

Advertising Costs Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.5 billion , $3.1 billion and $2.9 billion for fiscal 2019 , 2018 and 2017 , respectively.

Currency Translation The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income statements.

Recent Accounting Pronouncements Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which requires lease assets and liabilities to be recorded on the balance sheet. Certain qualitative and quantitative disclosures are also required. The Company will adopt this ASU and related amendments as of the beginning of the first quarter of the year ending January 31, 2020 ("fiscal 2020") and will be electing certain practical expedients permitted under the transition guidance, including to retain the historical lease classification as well as relief from reviewing expired or existing contracts to determine if they contain leases. The Company will be exempting leases with an initial term of twelve months or less from balance sheet recognition and, for most classes of assets, the Company will be combining non-lease components with lease components. Management has implemented and continues to implement new lease systems in connection with the adoption.

The adoption of this ASU and related amendments will result in total assets and liabilities increasing approximately $15 billion , which is primarily due to recognizing approximately $17.5 billion of operating lease assets and liabilities, partially offset by derecognizing approximately $3 billion of assets and liabilities related to financial obligations connected with the construction of leased stores. Several other line items in the Company’s Consolidated Balance Sheet will also be impacted by immaterial amounts. The Company’s Consolidated Statements of Income and Consolidated Statements of Cash Flows will not be materially impacted. Finally, management expects the first quarter fiscal 2020 disclosure of future operating commitments to significantly increase compared to the aggregate minimum rentals disclosed in Note 11 , primarily because the new standard requires reasonably assured renewals be included.

Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326) , which modifies the measurement of expected credit losses of certain financial instruments. The Company will adopt this ASU on February 1, 2020. Management is currently evaluating this ASU to determine its impact to the Company's consolidated financial statements.

Note 2. Net Income Per Common Share Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share- based awards outstanding that were antidilutive and not included in the calculation of diluted net income per common share attributable to Walmart for fiscal 2019 , 2018 and 2017 . The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2019 2018 2017 Numerator

Consolidated net income $ 7,179 $ 10,523 $ 14,293 Consolidated net income attributable to noncontrolling interest (509) (661) (650) Consolidated net income attributable to Walmart $ 6,670 $ 9,862 $ 13,643

Denominator

Weighted-average common shares outstanding, basic 2,929 2,995 3,101 Dilutive impact of stock options and other share-based awards 16 15 11 Weighted-average common shares outstanding, diluted 2,945 3,010 3,112

Net income per common share attributable to Walmart

Basic $ 2.28 $ 3.29 $ 4.40 Diluted 2.26 3.28 4.38

Note 3. Shareholders' Equity The total authorized shares of $0.10 par value common stock is 11.0 billion , of which 2.9 billion and 3.0 billion were issued and outstanding as of January 31, 2019 and 2018 , respectively. Share-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's consolidated subsidiaries granted in the subsidiaries' respective stock, was $773 million , $626 million and $596 million for fiscal 2019 , 2018 and 2017 , respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $181 million , $150 million and $212 million for fiscal 2019 , 2018 and 2017 , respectively. The following table summarizes the Company's share-based compensation expense by award type for all plans:

Fiscal Years Ended January 31,

(Amounts in millions) 2019 2018 2017 Restricted stock and performance share units $ 293 $ 234 $ 237 Restricted stock units 456 368 332 Other 24 24 27 Share-based compensation expense $ 773 $ 626 $ 596

The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as amended and restated effective February 23, 2016, as amended further as of February 1, 2017, and as renamed on February 1, 2018, was established to grant stock options, restricted (non-vested) stock, performance share units and other equity compensation awards for which 260 million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933, as amended. The Company believes that such awards serve to align the interests of its associates with those of its shareholders.

The Plan's award types are summarized as follows: • Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share

units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance share units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance share units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance share units in fiscal 2019 , 2018 and 2017 was 6.2% , 7.2% and 8.3% , respectively.

• Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period; generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date. The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2019 , 2018 and 2017 was 7.2% , 9.0% and 9.0% , respectively.

In addition to the Plan, the Company's United Kingdom subsidiary has stock option plans for certain colleagues which generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table above. Flipkart also maintains a stock option plan primarily for the benefit of employees and nonemployee directors under which options to acquire Flipkart common shares may be issued. The grants have no exercise price and no compensation expense was recognized during fiscal 2019 due to a liquidity event performance condition that was not deemed probable of occurrence. The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2019 :

Restricted Stock and Performance Share Units (1) Restricted Stock Units

(Shares in thousands) Shares Weighted-Average Grant-Date Fair

Value Per Share Shares Weighted-Average Grant-Date Fair

Value Per Share Outstanding as of February 1, 2018 8,558 $ 70.47 24,153 $ 66.69

Granted 3,600 84.94 7,946 80.94 Vested/exercised (2,448) 74.67 (5,524) 69.52 Forfeited (911) 68.24 (2,620) 69.74

Outstanding as of January 31, 2019 8,799 $ 75.39 23,955 $ 70.47

(1) Assumes payout rate at 100% for Performance Share Units.

The following table includes additional information related to restricted stock and performance share units and restricted stock units:

Fiscal Years Ended January 31,

(Amounts in millions, except years) 2019 2018 2017

Fair value of restricted stock and performance share units vested $ 183 $ 181 $ 149

Fair value of restricted stock units vested 386 344 261 Unrecognized compensation cost for restricted stock and performance share units 362 291 211 Unrecognized compensation cost for restricted stock units 1,002 972 986 Weighted average remaining period to expense for restricted stock and performance share units (years) 1.1 1.2 1.3 Weighted average remaining period to expense for restricted stock units (years) 1.6 1.8 1.9

Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal year 2019 were made under the current $20.0 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2019 , authorization for $11.3 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.

The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations and the market price of the Company's common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2019 , 2018 and 2017 :

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2019 2018 2017 Total number of shares repurchased 79.5 104.9 119.9 Average price paid per share $ 93.18 $ 79.11 $ 69.18 Total cash paid for share repurchases $ 7,410 $ 8,296 $ 8,298

Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2019 , 2018 and 2017 :

(Amounts in millions and net of income taxes)

Currency Translation and Other

Net Investment Hedges

Unrealized Gain on Available-for-Sale

Securities Cash Flow Hedges Minimum

Pension Liability Total Balances as of February 1, 2016 $ (11,690) $ 1,022 $ — $ (336) $ (593) $ (11,597) Other comprehensive income (loss) before reclassifications, net (2,817) 413 145 (22) (389) (2,670) Amounts reclassified from accumulated other comprehensive loss, net — — — 43 (8) 35 Balances as of January 31, 2017 (14,507) 1,435 145 (315) (990) (14,232) Other comprehensive income (loss) before reclassifications, net 2,345 (405) 1,501 436 83 3,960 Amounts reclassified from accumulated other comprehensive loss, net 26 — — 1 64 91 Balances as of January 31, 2018 (12,136) 1,030 1,646 122 (843) (10,181) Adoption of new accounting standards on February 1, 2018 (1) 89 93 (1,646) 28 — (1,436) Other comprehensive income (loss) before reclassifications, net (2,093) 272 — (339) 93 (2,067) Reclassifications to income, net (2) 2,055 — — 49 38 2,142 Balances as of January 31, 2019 $ (12,085) $ 1,395 $ — $ (140) $ (712) $ (11,542)

(1) Primarily relates to the adoption of ASU 2016-01 and ASU 2018-02. (2) Includes a cumulative foreign currency translation loss of $2.0 billion , for which there was no related income taxes, upon sale of the majority stake in Walmart Brazil (see Note 13 ).

The income tax impact for each of the amounts shown in the table above is immaterial. Amounts reclassified from accumulated other comprehensive loss for derivatives are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business, are recorded in other gains and losses in the Company's Consolidated Statements of Income.

Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following as of January 31, 2019 and 2018 :

January 31, (Amounts in millions) 2019 2018 Accrued wages and benefits (1) $ 6,504 $ 6,998

Self-insurance (2) 3,979 3,737

Accrued non-income taxes (3) 2,979 3,073

Deferred gift card revenue 1,932 2,017

Other (4) 6,765 6,297 Total accrued liabilities $ 22,159 $ 22,122

(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans. (2) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits . (3) Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes. (4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising, interest and legal contingencies.

Note 6. Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2019 and 2018 were $5.2 billion and $5.3 billion , respectively, with weighted-average interest rates of 2.7% and 1.5% , respectively. The Company has various committed lines of credit in the U.S., committed with 22 financial institutions, totaling $15.0 billion and $12.5 billion as of January 31, 2019 and 2018 , respectively. These committed lines of credit are summarized in the following table:

January 31, 2019 January 31, 2018 (Amounts in millions) Available Drawn Undrawn Available Drawn Undrawn Five-year credit facility (1) $ 5,000 $ — $ 5,000 $ 5,000 $ — $ 5,000 364-day revolving credit facility (1) 10,000 — 10,000 7,500 — 7,500 Total $ 15,000 $ — $ 15,000 $ 12,500 $ — $ 12,500

(1) In May 2018, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its commercial paper program.

The committed lines of credit in the table above mature at various times between May 2019 and May 2023 , carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt. Additionally, the Company also maintains other committed lines of credit outside of the U.S., with available amounts of approximately $3.0 billion and $4.0 billion as of January 31, 2019 and 2018 , respectively, of which approximately $0.2 billion and no amount was drawn as of January 31, 2019 and 2018 , respectively. Apart from the committed lines of credit, the Company has syndicated and fronted letters of credit available totaling $1.8 billion as of January 31, 2019 and 2018 , of which $1.6 billion and $1.5 billion was drawn as of January 31, 2019 and 2018 , respectively. The Company also has trade letters of credit, without stated limits, of which $0.4 billion was drawn as of January 31, 2019 and 2018 . The Company's long-term debt, which includes the fair value instruments further discussed in Note 8 , consists of the following as of January 31, 2019 and 2018 :

January 31, 2019 January 31, 2018

(Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate (1) Amount Average Rate (1)

Unsecured debt Fixed 2020 - 2049 $ 35,816 3.9% $ 24,540 3.9% Variable 2020 - 2022 1,800 2.9% 800 4.1%

Total U.S. dollar denominated 37,616 25,340 Fixed 2023 - 2030 2,870 3.3% 3,101 3.3% Variable — —

Total Euro denominated 2,870 3,101 Fixed 2031 - 2039 3,524 5.4% 3,801 5.4% Variable — —

Total Sterling denominated 3,524 3,801 Fixed 2021 - 2028 1,651 0.4% 1,655 0.4% Variable — —

Total Yen denominated 1,651 1,655 Total unsecured debt 45,661 33,897

Total other (2) (265) (114) Total debt 45,396 33,783 Less amounts due within one year (1,876) (3,738) Long-term debt $ 43,520 $ 30,045

(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. Interest costs are also impacted by certain derivatives described in Note 8 . (2) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. As of January 31, 2019 and 2018 the Company had secured debt in the amount of $8 million and $10 million , respectively, which was

collateralized by property that had an aggregate carrying amount of $82 million and $101 million , respectively.

As of January 31, 2018 , the Company had $500 million in debt with embedded put options. These bonds matured in June 2018, and were fully repaid. The issuance of money market puttable reset securities in the amount of $500 million is structured to be remarketed in connection with the annual reset of the interest rate. If, for any reason, the remarketing of the notes does not occur at the time of any interest rate reset, the holders of the notes must sell and the Company must repurchase the notes at par.

Accordingly as of January 31, 2018 , this issuance was classified as long-term debt due within one year in the Company's Consolidated Balance Sheets. Annual maturities of long-term debt during the next five years and thereafter are as follows:

(Amounts in millions) Annual Fiscal Year Maturities 2020 $ 1,876 2021 5,347 2022 3,080 2023 2,844 2024 4,595 Thereafter 27,654 Total $ 45,396

Debt Issuances Information on long-term debt issued during fiscal 2019 to fund a portion of the purchase price for the Flipkart acquisition discussed in Note 13 and for general corporate purposes, is as follows:

(Amounts in millions)

Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds June 27, 2018 750 USD June 23, 2020 Floating Floating $ 748 June 27, 2018 1,250 USD June 23, 2020 Fixed 2.850% 1,247 June 27, 2018 750 USD June 23, 2021 Floating Floating 748 June 27, 2018 1,750 USD June 23, 2021 Fixed 3.125% 1,745 June 27, 2018 2,750 USD June 26, 2023 Fixed 3.400% 2,740 June 27, 2018 1,500 USD June 26, 2025 Fixed 3.550% 1,490 June 27, 2018 2,750 USD June 26, 2028 Fixed 3.700% 2,725 June 27, 2018 1,500 USD June 28, 2038 Fixed 3.950% 1,473 June 27, 2018 3,000 USD June 29, 2048 Fixed 4.050% 2,935

Various 21 USD Various Various Various 21 Total $ 15,872

The June 2018 issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants and do not restrict the Company's ability to pay dividends or repurchase company stock.

During fiscal 2018 , significant long-term debt issuances were as follows:

(Amounts in millions)

Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds July 18, 2017 70,000 JPY July 15, 2022 Fixed 0.183% $ 619 July 18, 2017 40,000 JPY July 18, 2024 Fixed 0.298% 354 July 18, 2017 60,000 JPY July 16, 2027 Fixed 0.520% 530 October 20, 2017 300 USD October 9, 2019 Floating Floating 299 October 20, 2017 1,200 USD October 9, 2019 Fixed 1.750% 1,198 October 20, 2017 1,250 USD December 15, 2020 Fixed 1.900% 1,245 October 20, 2017 1,250 USD December 15, 2022 Fixed 2.350% 1,245 October 20, 2017 1,000 USD December 15, 2024 Fixed 2.650% 996 October 20, 2017 1,000 USD December 15, 2047 Fixed 3.625% 990 Total $ 7,476

As described in Note 8 , the prior year issuances of foreign-currency-denominated long-term debt are designated as a hedge of the Company's net investment in Japan.

Repayments and Extinguishments The following table provides details of debt repayments during fiscal 2019 :

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment February 15, 2018 1,250 USD Fixed 5.800% $ 1,250 April 11, 2018 1,250 USD Fixed 1.125% 1,250 June 1, 2018 500 USD Floating Floating 500 December 15, 2018 724 USD Fixed 1.950% 724 Various (1) 60 USD Various Various 60

Total $ 3,784 (1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations.

During fiscal 2018 , the following long-term debt matured and was repaid:

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment (2)

April 5, 2017 1,000 USD Fixed 5.375% $ 1,000 April 21, 2017 500 USD Fixed 1.000% 500 Various (1) 289 USD Various Various 289 Total repayment of matured debt 1,789

December 15, 2018 1,000 USD Fixed 1.950% $ 276 February 1, 2019 500 USD Fixed 4.125% 136 July 8, 2020 1,500 USD Fixed 3.625% 661 October 25, 2020 1,750 USD Fixed 3.250% 553 April 15, 2021 1,000 USD Fixed 4.250% 491 October 16, 2023 250 USD Fixed 6.750% 98 April 5, 2027 750 USD Fixed 5.875% 267 February 15, 2030 500 USD Fixed 7.550% 412 September 4, 2035 2,500 USD Fixed 5.250% 532 September 28, 2035 1,000 GBP Fixed 5.250% 260 August 17, 2037 3,000 USD Fixed 6.500% 1,700 April 15, 2038 2,000 USD Fixed 6.200% 1,081 January 19, 2039 1,000 GBP Fixed 4.875% 851 April 2, 2040 1,250 USD Fixed 5.625% 499 July 9, 2040 750 USD Fixed 4.875% 372 October 25, 2040 1,250 USD Fixed 5.000% 731 April 15, 2041 2,000 USD Fixed 5.625% 1,082 April 11, 2043 1,000 USD Fixed 4.000% 291 October 2, 2043 750 USD Fixed 4.750% 481 April 22, 2044 1,000 USD Fixed 4.300% 498 Total repayment of extinguished debt 11,272

Total $ 13,061

(1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations. (2) Represents portion of the principal amount repaid during fiscal 2018.

In fiscal 2018, in connection with extinguishing debt, the Company paid premiums of approximately $3.1 billion which resulted in a loss on extinguishment of debt of approximately $3.1 billion .

Note 7. Fair Value Measurements Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

• Level 1: observable inputs such as quoted prices in active markets; • Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and • Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The Company measures the fair value of equity investments (primarily its investment in JD) on a recurring basis and records them in other long-term assets in the accompanying Consolidated Balance Sheets. Measurement details about the Company's two portions of the investment in JD are as follows:

• The purchased portion of the investment in JD measured using Level 1 inputs, which prior to fiscal 2019 was classified as available-for-sale with changes in fair value recognized through other comprehensive income; and

• The portion of the investment in JD received in exchange for selling certain assets related to Yihaodian, the Company's former eCommerce operation in China, measured using Level 2 inputs. Fair value is determined primarily using quoted prices in active markets for similar assets. Prior to fiscal 2019, the investment was carried at cost.

Information for the cost basis, carrying value and fair value of the Company's investment in JD is as follows:

(Amounts in millions) Cost Basis Carrying Value as of January 31,

2018 Fair Value as of February

1, 2018 Fair Value as of January

31, 2019

Investment in JD measured using Level 1 inputs $ 1,901 $ 3,547 $ 3,547 (1) $ 1,791

Investment in JD measured using Level 2 inputs 1,490 1,490 3,559 (2) 1,792 Total $ 3,391 $ 5,037 $ 7,106 $ 3,583 (3)

(1) Fair value was already recognized on the balance sheet. Upon adoption of the new financial instrument standard on February 1, 2018, the excess of fair value over cost was reclassified from accumulated other comprehensive loss to retained earnings.

(2) Upon adoption of the new financial instrument standard on February 1, 2018, the excess of fair value over cost was recognized by increasing the carrying value of the asset and retained earnings.

(3) The decreases in fair value from February 1, 2018 to January 31, 2019 of $ 3.5 billion was recognized in net income and included in other gains and losses in the Company's Consolidated Statements of Income.

The Company also has derivatives. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2019 and January 31, 2018 , the notional amounts and fair values of these derivatives were as follows:

January 31, 2019 January 31, 2018 (Amounts in millions) Notional Amount Fair Value Notional Amount Fair Value Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges $ 4,000 $ (78) $ 4,000 $ (91) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges 2,250 334 2,250 208 Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges 4,173 (272) 4,523 205 Total $ 10,423 $ (16) $ 10,773 $ 322

For the fiscal year ended January 31, 2018 , the Company recorded impairment charges related to assets measured at fair value on a non-recurring basis of approximately $1.4 billion primarily related to the following:

• in the Sam's Club segment as discussed in Note 14 , $0.6 billion for restructuring charges for closures of underperforming clubs; the impaired assets consisted primarily of buildings and related store fixtures, and leased assets of its retail operations;

• in the Walmart International segment as discussed in Note 14 , $0.2 billion for restructuring charges for the wind-down of the Brazil first-party eCommerce business; the impaired assets consisted primarily of fixtures and equipment; and

• immaterial discontinued real estate projects in the Walmart U.S. and Sam's Club segments and decisions to exit certain international properties in the Walmart International segment. These impairment charges were classified in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The fair value was determined based on comparable market values of similar properties or on a rental income approach, using Level 2 inputs. Impairment charges not related to restructuring or decisions to exit properties for fiscal 2018 were not material.

Other Fair Value Disclosures The Company records cash and cash equivalents, restricted cash and short-term borrowings at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities. The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2019 and 2018 , are as follows:

January 31, 2019 January 31, 2018 (Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including amounts due within one year $ 45,396 $ 49,570 $ 33,783 $ 38,766

Note 8. Derivatives In connection with various derivative agreements, including master netting arrangements, the Company held cash collateral from counterparties of $220 million and $279 million as of January 31, 2019 and January 31, 2018 , respectively. Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties. The Company did not have any cash collateral posted with counterparties as of January 31, 2019 and January 31, 2018 , respectively. As of January 31, 2019 and January 31, 2018 , the Company had ¥180 billion of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding long-term debt of £1.7 billion as of January 31, 2019 and January 31, 2018 that was designated as a hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging from July 2020 to January 2039 . The Company's derivatives, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as follows as of January 31, 2019 and 2018 in the Company's Consolidated Balance Sheets:

January 31, 2019 January 31, 2018

(Amounts in millions) Fair Value Hedges

Net Investment Hedges

Cash Flow Hedges

Fair Value Hedges

Net Investment Hedges

Cash Flow Hedges

Derivatives Derivative assets: Other long-term assets $ — $ 334 $ 78 $ — $ 208 $ 300 Derivative liabilities: Deferred income taxes and other 78 — 350 91 — 95 Nonderivative hedging instruments Long-term debt — 3,863 — — 4,041 —

Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant.

Note 9. Taxes The components of income before income taxes are as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2019 2018 2017 U.S. 15,875 10,722 15,680 Non-U.S. (4,415) 4,401 4,817 Total income before income taxes 11,460 15,123 20,497

A summary of the provision for income taxes is as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2019 2018 2017 Current:

U.S. federal $ 2,763 $ 2,998 $ 3,454 U.S. state and local 493 405 495 International 1,495 1,377 1,510

Total current tax provision 4,751 4,780 5,459 Deferred:

U.S. federal (361) (22) 1,054 U.S. state and local (16) (12) 51 International (93) (146) (360)

Total deferred tax expense (benefit) (470) (180) 745 Total provision for income taxes $ 4,281 $ 4,600 $ 6,204

measurement period provisions of this guidance to certain income tax effects of the Tax Act when it became effective. The provisional measurement period ended in the fourth quarter of fiscal 2019. While management believes the Company's accounting for Tax Reform is complete, it is based on prevailing regulations and currently available information, and any additional guidance issued by the IRS could impact the aforementioned amounts in future periods. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $207 million , and in fiscal 2019, the Company recorded $442 million of additional tax expense related to the Tax Act, included as a component of provision for income taxes .

One-time Transition Tax The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. In fiscal 2018, the Company recorded a provisional amount of $1.9 billion of additional income tax expense for its one-time transitional tax liability. The Company finalized the calculations of the Transition Tax liability and increased the provisional amount by $413 million , with the increase included as a component of provision for income taxes in fiscal 2019.

Deferred Tax Effects The Tax Act reduced the U.S. statutory tax rate from 35.0% to 21.0% , beginning January 2018. Accordingly, the Company re-measured its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized. In fiscal 2018, the Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and other effects of the Tax Act. In fiscal 2018, the Company made no provisional adjustment with respect to the GILTI provision of the Tax Act. Upon finalizing the provisional accounting for the remeasurement of U.S. deferred tax assets and liabilities in fiscal 2019, the Company recorded an additional tax benefit of $75 million , which is included as a component of provision for income taxes.

Effective Income Tax Rate Reconciliation In the past, the Company's effective income tax rate was typically lower than the U.S. statutory tax rate primarily because of benefits from lower–taxed global operations, including the use of global funding structures and certain U.S. tax credits as further discussed in the "Cash and Cash Equivalents" section of Note 1 . However, beginning January 2018, the US statutory rate of 21.0% generally falls below statutory rates in international jurisdictions. A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pretax income from continuing operations is as follows:

Fiscal Years Ended January 31,

2019 2018 2017 U.S. statutory tax rate 21.0 % 33.8 % 35.0 % U.S. state income taxes, net of federal income tax benefit 3.3 % 1.8 % 1.7 % Impact of the Tax Act:

One-time transition tax 3.6 % 12.3 % — % Deferred tax effects (0.7)% (14.1)% — %

Income taxed outside the U.S. (3.5)% (6.3)% (4.5)% Disposition of Walmart Brazil 6.7 % — % — % Valuation allowance 6.4 % 2.1 % — % Net impact of repatriated international earnings 0.8 % (0.1)% (1.0)% Federal tax credits (1.2)% (0.9)% (0.6)% Other, net 1.0 % 1.8 % (0.3)% Effective income tax rate 37.4 % 30.4 % 30.3 %

Deferred Taxes The significant components of the Company's deferred tax account balances are as follows:

January 31, (Amounts in millions) 2019 2018 Deferred tax assets:

Loss and tax credit carryforwards $ 2,964 $ 1,989 Accrued liabilities 2,135 2,482 Share-based compensation 245 217 Other 1,131 1,251

Total deferred tax assets 6,475 5,939 Valuation allowances (2,448) (1,843) Deferred tax assets, net of valuation allowances 4,027 4,096 Deferred tax liabilities:

Property and equipment 4,175 3,954 Acquired intangibles 2,099 401 Inventory 1,354 1,153 Other 899 540

Total deferred tax liabilities 8,527 6,048 Net deferred tax liabilities $ 4,500 $ 1,952

The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:

January 31, (Amounts in millions) 2019 2018 Balance Sheet classification Assets: Other long-term assets $ 1,796 $ 1,879 Liabilities: Deferred income taxes and other 6,296 3,831 Net deferred tax liabilities $ 4,500 $ 1,952

Unremitted Earnings Prior to the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings. During fiscal 2019, the Company repatriated to the U.S. $5.3 billion of cash relating to fiscal 2019 and prior earnings at a tax cost of approximately $40 million . As of January 31, 2019, the Company has not recorded approximately $ 3 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation.

Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances As of January 31, 2019 , the Company had net operating loss and capital loss carryforwards totaling $12.2 billion . Of these carryforwards, $8.0 billion will expire, if not utilized, in various years through 2039 . The remaining carryforwards have no expiration. As of January 31, 2019 , the Company's transition tax calculation fully utilized all foreign tax credit carryforwards. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. To the extent that a valuation allowance has been established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the valuation allowance will be released. The Company had valuation allowances of $2.4 billion and $1.8 billion as of January 31, 2019 and 2018 , respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has determined it is more likely than not that the deferred tax assets will not be realized. Net activity in the valuation allowance during fiscal 2019 related to the acquisition of Flipkart and disposal of Walmart Brazil, changes in judgment regarding the future realization of deferred tax assets, releases arising from the use of deferred tax assets and decreases due to operating loss expirations and fluctuations in currency exchange rates. Management believes that it is more likely than not that the remaining deferred tax assets will be fully realized.

Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2019 and 2018 , the amount of unrecognized tax benefits related to continuing operations was $1.3 billion and $1.0 billion , respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $1.1 billion and $690 million as of January 31, 2019 and 2018 , respectively. A reconciliation of unrecognized tax benefits from continuing operations is as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2019 2018 2017 Unrecognized tax benefits, beginning of year $ 1,010 $ 1,050 $ 607 Increases related to prior year tax positions 620 130 388 Decreases related to prior year tax positions (107) (254) (32) Increases related to current year tax positions 203 122 145 Settlements during the period (390) (23) (46) Lapse in statutes of limitations (31) (15) (12) Unrecognized tax benefits, end of year $ 1,305 $ 1,010 $ 1,050

Interest expense and penalties related to these positions were immaterial for fiscal 2019 , 2018 and 2017 . During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2014 through 2019 . The Company also remains subject to income tax examinations for international income taxes for fiscal 2012 through 2019 , and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2019 .

ASDA Equal Value Claims ASDA Stores, Ltd. ("Asda"), a wholly-owned subsidiary of the Company, is a defendant in nearly 30,000 "equal value" claims that are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom ("UK") on behalf of current and former Asda store employees, and further claims may be asserted in the future. The claimants allege that the work performed by female employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs compared to that of male employees working in Asda's warehouse and distribution facilities, and that the disparity in pay between these different job positions is not objectively justified. As a result, claimants are requesting differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a prospective basis. On March 23, 2015, Asda asked the Employment Tribunal to stay all proceedings and to "strike out" substantially all of the claims because the claimants had not adhered to the Tribunal's procedural rule for including multiple claimants on the same claim form. On July 23, 2015, the Employment Tribunal denied Asda's requests. Following additional proceedings, on June 20, 2017, the Employment Appeal Tribunal ruled in favor of Asda on the "strike out" issue and remitted the matter to the Employment Tribunal to determine whether the improperly filed claims should be struck out. On July 12, 2017, claimants sought permission from the Court of Appeals to appeal this ruling, which was granted on October 3, 2017. A hearing before the Court of Appeals on the "strike out" issue was held on October 23, 2018. On January 17, 2019, the Court of Appeals declined to strike out any claims relying on the Employment Tribunal’s finding that claimants had not deliberately disregarded the Tribunal’s procedural rule. As to the initial phase of the Equal Value claims, on October 14, 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions in Asda's retail stores with those of employees in Asda's warehouse and distribution facilities. On August 31, 2017, the Employment Appeal Tribunal affirmed the Employment Tribunal's ruling and also granted permission for Asda to appeal substantially all of its findings. Asda sought permission to appeal the remainder of the Employment Appeal Tribunal's findings to the Court of Appeals. A hearing before the Court of Appeals on the comparability findings was held on October 10, 2018 and the Court of Appeals upheld the Employment Tribunal’s findings. Claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work performed by employees in Asda's warehouse and distribution facilities. At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously.

National Prescription Opiate Litigation and Related Matters In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) , and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, but believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. The Company has also been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids. The Company cannot reasonably estimate any loss or range of loss that may arise from these matters. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

FCPA Investigation and Related Matters The Audit Committee (the "Audit Committee") of the Board of Directors of the Company has been conducting an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and other alleged crimes or misconduct in connection with foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. The Audit Committee and the Company have engaged outside counsel from a number of law firms and other advisors who are assisting in the on-going investigation of these matters. The Company has also been conducting a voluntary global review of its policies, practices and internal controls for anti-corruption compliance. The Company is engaged in strengthening its global anti- corruption compliance program through appropriate remedial anti-corruption measures. In November 2011, the Company voluntarily disclosed that investigative activity to the U.S. Department of Justice (the "DOJ") and the Securities and Exchange Commission (the "SEC"). Since the implementation of the global review and the enhanced anti-corruption compliance program, the Audit Committee and the Company have identified or been made aware of additional allegations regarding potential violations of the FCPA. When such allegations have been reported or identified, the Audit Committee and the Company, together with their third party advisors, have conducted inquiries and when warranted based on those inquiries, opened investigations. Inquiries or investigations regarding allegations of potential FCPA violations were commenced in a number of foreign markets where the Company operates or has operated, including, but not limited to, Brazil, China and India. As previously disclosed, the Company is under investigation by the DOJ and the SEC regarding possible violations of the FCPA. The Company has been cooperating with the agencies and discussions have been ongoing regarding the resolution of these matters. These discussions have progressed to a point that, in fiscal 2018, the Company reasonably estimated a probable loss and recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). As the discussions are continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters.

A number of federal and local government agencies in Mexico also investigated these matters. Walmex cooperated with the Mexican governmental agencies that conducted these investigations.

Furthermore, lawsuits relating to the matters under investigation were filed by several of the Company's shareholders against Walmart, certain current and former directors and former officers and certain of Walmex's former officers. These matters have been resolved or immaterial accruals have been made for proposed settlements.

The Company could be exposed to a variety of negative consequences as a result of the matters noted above. There could be one or more enforcement actions in respect of the matters that are the subject of some or all of the on-going government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or other relief, criminal convictions and/or penalties and shareholder lawsuits may result in judgments against the Company and its current and former directors and officers named in those proceedings. The Company expects that there will be on-going media and governmental interest, including additional news articles from media publications on these matters, which could impact the perception among certain audiences of the Company's role as a corporate citizen.

In addition, the Company has incurred and expects to continue to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred. For the fiscal years ended January 31, 2019 , 2018 and 2017 , the Company incurred the following third-party expenses in connection with the FCPA investigation and related matters:

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Ongoing inquiries and investigations $ 17 $ 26 $ 80 Global compliance program and organizational enhancements 13 14 19 Total $ 30 $ 40 $ 99

The Company does not presently believe that these matters, including the Accrual (and the payment of the Accrual at some point-in-time in the future), will have a material adverse effect on its business, financial position, results of operations or cash flows, although given the inherent uncertainties in such situations, the Company can provide no assurance that these matters will not be material to its business, financial position, results of operations or cash flows in the future.

Note 11. Commitments Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $3.0 billion , $2.9 billion and $2.6 billion in fiscal 2019 , 2018 and 2017 , respectively. Aggregate minimum annual rentals as of January 31, 2019 , under non-cancelable leases are as follows:

(Amounts in millions)

Fiscal Year Operating Leases (1) Capital Lease and Financing

Obligations 2020 $ 1,856 $ 917 2021 1,655 856 2022 1,420 794 2023 1,233 667 2024 1,063 593 Thereafter 6,891 6,069 Total minimum rentals $ 14,118 $ 9,896 Less estimated executory costs 23 Net minimum lease payments 9,873 Financing obligation noncash gains and other 2,278 Less imputed interest (4,739) Present value of minimum lease payments $ 7,412

(1) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2019 .

Certain of the Company's leases provide for the payment of contingent rentals based on a percentage of sales. Such contingent rentals were not material for fiscal 2019 , 2018 and 2017 . Substantially all of the Company's store leases have renewal options, some of which may trigger an escalation in rentals.

Note 12. Retirement-Related Benefits The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest at 100% for each associate. Participants can contribute up to 50% of their pretax earnings, but not more than the statutory limits. Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which they are established.

The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2019 , 2018 and 2017 :

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Defined contribution plans:

U.S. $ 1,165 $ 1,124 $ 1,064 International 126 126 173

Total contribution expense for defined contribution plans $ 1,291 $ 1,250 $ 1,237

Additionally, the Company's subsidiaries in the United Kingdom and Japan have sponsored defined benefit pension plans. The plan in the United Kingdom was overfunded by $326 million and $97 million as of January 31, 2019 and 2018 , respectively. The plan in Japan was underfunded by $175 million and $184 million as of January 31, 2019 and 2018 , respectively. Overfunded amounts are recorded as assets in the Company's Consolidated Balance Sheets in other assets and deferred charges. Underfunded amounts are recorded as liabilities in the Company's Consolidated Balance Sheets in deferred income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant.

Note 13. Acquisitions, Disposals and Related Items

The following significant transactions impact, or are expected to impact, the operations of the Company's Walmart International segment. Other immaterial transactions have also occurred or been announced. Walmart Brazil In August 2018, the Company sold an 80 percent stake of Walmart Brazil to Advent International ("Advent"). Under the terms, Advent agreed to contribute additional capital to the business over a three- year period and Walmart agreed to indemnify Advent for certain matters. Additionally, the Company may receive up to approximately $250 million in contingent consideration. The disposal group consisted of the following:

• Assets of $3.3 billion , which were fully impaired as discussed in Note 7 upon meeting the held for sale criteria; • Liabilities of $1.3 billion , consisting of $0.7 billion in accounts payable and accrued liabilities, $0.1 billion of capital lease and financing obligations, and $0.5 billion of deferred taxes and

other long-term liabilities; and • Cumulative foreign currency translation loss of $2.0 billion , which was reclassified from accumulated other comprehensive loss (see Note 4 ).

As a result, the Company recorded a pre-tax net loss of $4.8 billion during during fiscal 2019 in other gains and losses in the Company's Consolidated Statement of Income . In calculating the loss, the fair value of the disposal group was reduced by $0.8 billion related to an indemnity, for which a liability was recognized upon closing and is recorded in deferred income taxes and other in the Company's Consolidated Balance Sheets. Under the indemnity, the Company will indemnify Advent for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion , adjusted for interest based on the Brazilian interbank deposit rate. The Company deconsolidated the financial statements of Walmart Brazil during the third quarter of fiscal 2019 and began accounting for its remaining 20 percent ownership interest, determined to have no initial fair value, using the equity method of accounting. Flipkart In August 2018, the Company acquired 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart, an Indian-based eCommerce marketplace , for cash consideration of approximately $16 billion . The acquisition increases the Company's investment in India, a large, growing economy. The purchase price allocation, which is still preliminary primarily due to certain tax items, is as follows:

• Assets of $24.1 billion , which comprise primarily of $2.2 billion in cash and cash equivalents, $2.8 billion in other current assets, $5.0 billion in intangible assets and $13.6 billion in goodwill. Of the intangible assets, $4.7 billion represents the fair value of trade names, each with an indefinite life, which were estimated using the income approach based on Level 3 unobservable inputs. The remaining $0.3 billion of intangible assets primarily relate to acquired technology with a life of 3 years . The goodwill arising from the acquisition consists largely of anticipated synergies and economies of scale primarily related to procurement and logistics and is not expected to be deductible for tax purposes;

• Liabilities of $3.7 billion , which comprise primarily of $1.8 billion of current liabilities and $1.8 billion of deferred income taxes; and • Noncontrolling interest of $4.3 billion , for which the fair value was estimated using the income approach based on Level 3 unobservable inputs.

The Company began consolidating the financial statements of Flipkart in the third quarter of fiscal 2019, using a one-month lag . To finance the acquisition, the Company used a combination of cash provided by long-term debt as discussed in Note 6 and cash on hand. The Flipkart results of operations since acquisition and the pro forma financial information are immaterial. Asda In April 2018, the Company entered into a definitive agreement and announced the proposed combination of J Sainsbury plc and Asda Group Limited ("Asda Group"), the Company's wholly owned UK retail subsidiary. Under the terms of the combination, the Company would receive approximately 42 percent of the share capital of the combined company. In addition, the Company would receive approximately £3 billion in cash, subject to customary closing adjustments, and retain obligations under the Asda Group defined benefit pension plan . Due to a complex regulatory review process, the outcome of which continues to be uncertain, the held for sale classification criteria for the disposal group was not met as of January 31, 2019 . If the transaction closes, the Company would deconsolidate the financial statements of Asda Group and account for the ongoing investment in the combined company using the equity method of accounting.

Suburbia

In April 2017, the Company sold Suburbia, the apparel retail division in Mexico, for $1.0 billion . As part of the sales agreement, the Company is also leasing certain real estate to the purchaser. The sale resulted in a pre-tax gain of $0.7 billion , of which $0.4 billion was recognized in the second quarter of fiscal 2018 in membership and other income, and the remainder was deferred and is being recognized over the lease terms of approximately 20 years .

Yihaodian and JD In June 2016, the Company sold certain assets relating to Yihaodian, its eCommerce operations in China, including the Yihaodian brand, website and application, to JD in exchange for Class A ordinary shares of JD, valued at $1.5 billion , representing approximately five percent of JD's outstanding ordinary shares on a fully diluted basis. The sale resulted in the recognition of a $535 million noncash gain, which was included in membership and other income in the accompanying Consolidated Statements of Income. Subsequently, during fiscal 2017, the Company purchased $1.9 billion of additional JD shares, representing an incremental ownership percentage of approximately five percent , for a total ownership of approximately ten percent of JD's outstanding ordinary shares.

The following significant transaction primarily impacts the Company's Walmart U.S. segment. Other immaterial transactions have also occurred or been announced.

Jet.com, Inc. In September 2016, the Company completed the acquisition of jet.com, a U.S.-based eCommerce company. The integration of jet.com into the Walmart U.S. segment is building upon the current eCommerce foundation, allowing for synergies from talent, logistical operations and access to a broader customer base. The total purchase price for the acquisition was $2.4 billion , net of cash acquired. The allocation of the purchase price includes $1.7 billion in goodwill and $0.6 billion in intangible assets. As part of the transaction, the Company is paying additional compensation of approximately $0.8 billion over a five year period.

Note 14. Restructuring Charges In fiscal 2018, the Company announced several organizational changes to position the business for more efficient growth going forward. As a result, the Company recorded $1.2 billion in pre-tax restructuring charges in fiscal 2018 as follows:

Fiscal Year Ended January 31, 2018 (Amounts in millions) Asset Impairment Severance Costs Total Walmart International 193 43 236 Sam's Club 596 69 665

Corporate and support — 300 300 Total $ 789 $ 412 $ 1,201

The asset impairment charges primarily relate to the real estate of the Sam's Club closures and the wind-down of the Brazil first-party eCommerce business, which were written down to their estimated fair value. Refer to Note 7 for information on the fair value measurement. The pre-tax restructuring charges of $1.2 billion are classified in operating, selling, general and administrative expenses in the Company's Consolidated Statement of Income for fiscal 2018. As of January 31, 2018, substantially all of the severance costs were recorded in accrued liabilities in the Company's Consolidated Balance Sheets and were subsequently paid during fiscal 2019.

Note 15. Segments and Disaggregated Revenue

Segments The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom, as well as Brazil prior to the sale of the majority stake of Walmart Brazil discussed in Note 13 . The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products and services. The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce and omni-channel initiatives. The Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by its CODM. In fiscal 2019, the Company revised certain of its corporate overhead allocations, including depreciation expense, to the operating segments and, accordingly, revised prior period amounts for comparability . Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before income taxes, is provided in the following table:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Corporate and

support Consolidated Fiscal Year Ended January 31, 2019 Net sales $ 331,666 $ 120,824 $ 57,839 $ — $ 510,329 Operating income (loss) 17,386 4,883 1,520 (1,832) 21,957 Interest, net (2,129) Other gains and (losses) (8,368) Income before income taxes $ 11,460 Total assets $ 105,114 $ 97,066 $ 12,893 $ 4,222 $ 219,295 Depreciation and amortization 6,201 2,590 639 1,248 10,678 Capital expenditures 6,034 2,661 450 1,199 10,344 Fiscal Year Ended January 31, 2018 Net sales $ 318,477 $ 118,068 $ 59,216 $ — $ 495,761 Operating income (loss) 16,995 5,229 915 (2,702) 20,437 Interest, net (2,178) Loss on extinguishment of debt (3,136) Income before income taxes $ 15,123 Total assets $ 104,347 $ 81,549 $ 13,418 $ 5,208 $ 204,522

Depreciation and amortization 6,005 2,601 698 1,225 10,529 Capital expenditures 5,680 2,607 626 1,138 10,051 Fiscal Year Ended January 31, 2017 Net sales $ 307,833 $ 116,119 $ 57,365 $ — $ 481,317 Operating income (loss) 17,012 5,737 1,628 (1,613) 22,764 Interest, net (2,267) Income before income taxes $ 20,497 Total assets $ 104,262 $ 74,508 $ 14,125 $ 5,930 $ 198,825 Depreciation and amortization 5,598 2,629 712 1,141 10,080 Capital expenditures 6,090 2,697 639 1,193 10,619

Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of property and equipment, net, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2019 , 2018 and 2017 , are as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2019 2018 2017 Revenues U.S. operations $ 392,265 $ 380,580 $ 367,784 Non-U.S. operations 122,140 119,763 118,089 Total revenues $ 514,405 $ 500,343 $ 485,873

Long-lived assets U.S. operations $ 81,144 $ 81,478 $ 82,746 Non-U.S. operations 30,251 33,340 31,432 Total long-lived assets $ 111,395 $ 114,818 $ 114,178

No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals. Additionally, the Company did not generate material total revenues from any single customer.

Disaggregated Revenues In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales related to eCommerce are provided for each segment, which include omni- channel sales, where a customer initiates an order online and the order is fulfilled through a store or club.

(Amounts in millions)

Fiscal Year Ended January 31, 2019Walmart U.S. net sales by merchandise category Grocery $ 184,202 General merchandise 108,739 Health and wellness 35,788 Other categories 2,937

Total $ 331,666

Of Walmart U.S.'s total net sales, approximately $15.7 billion related to eCommerce for fiscal 2019 .

(Amounts in millions)

Fiscal Year Ended January 31, 2019Walmart International net sales by market

Mexico and Central America $ 31,790 United Kingdom 30,547 Canada 18,613 China 10,702 Other $ 29,172

Total $ 120,824

Of International's total net sales, approximately $6.7 billion related to eCommerce for fiscal 2019 .

(Amounts in millions)

Fiscal Year Ended January 31, 2019Sam’s Club net sales by merchandise category Grocery and consumables $ 33,708 Fuel, tobacco and other categories 12,110 Home and apparel 5,452 Technology, office and entertainment 3,388 Health and wellness 3,181

Total $ 57,839

Of Sam's Club's total net sales, approximately $2.7 billion related to eCommerce for fiscal 2019 .

Note 16. Subsequent Event Dividends Declared The Board of Directors approved, effective February 19, 2019 , the fiscal 2020 annual dividend of $2.12 per share, an increase over the fiscal 2019 dividend of $2.08 per share. For fiscal 2020 , the annual dividend will be paid in four quarterly installments of $0.53 per share, according to the following record and payable dates:

Record Date Payable Date March 15, 2019 April 1, 2019 May 10, 2019 June 3, 2019 August 9, 2019 September 3, 2019 December 6, 2019 January 2, 2020

Note 17. Quarterly Financial Data (Unaudited)

Fiscal Year Ended January 31, 2019 (Amounts in millions, except per share data) Q1 Q2 Q3 Q4 Total Total revenues $ 122,690 $ 128,028 $ 124,894 $ 138,793 $ 514,405 Net sales 121,630 127,059 123,897 137,743 510,329 Cost of sales 91,707 95,571 93,116 104,907 385,301 Consolidated net income (loss) 2,276 (727) 1,817 3,813 7,179 Consolidated net income (loss) attributable to Walmart 2,134 (861) 1,710 3,687 6,670 Basic net income (loss) per common share attributable to Walmart 0.72 (0.29) 0.58 1.27 2.28 Diluted net income (loss) per common share attributable to Walmart (1) 0.72 (0.29) 0.58 1.27 2.26 Fiscal Year Ended January 31, 2018 Q1 Q2 Q3 Q4 Total Total revenues $ 117,542 $ 123,355 $ 123,179 $ 136,267 $ 500,343 Net sales 116,526 121,949 122,136 135,150 495,761 Cost of sales 87,688 91,521 91,547 102,640 373,396 Consolidated net income 3,152 3,104 1,904 2,363 10,523 Consolidated net income attributable to Walmart 3,039 2,899 1,749 2,175 9,862 Basic net income per common share attributable to Walmart 1.00 0.96 0.59 0.74 3.29 Diluted net income per common share attributable to Walmart (1) 1.00 0.96 0.58 0.73 3.28 (1) The sum of quarterly amounts may not agree to annual amount due to rounding and the impact of a decreasing amount of shares outstanding during the year.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

General Management is responsible for the preparation, integrity and objectivity of Walmart Inc.'s Consolidated Financial Statements and other financial information contained in this Annual Report on Form 10- K. Those Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States. In preparing those Consolidated Financial Statements, management is required to make certain estimates and judgments, which are based upon currently available information and management's view of current conditions and circumstances. The Audit Committee of the Board of Directors oversees our process of reporting financial information and the audit of our Consolidated Financial Statements. The Audit Committee stays informed of the financial condition of Walmart Inc. and regularly reviews management's financial policies and procedures, the independence of our independent auditors, our internal control over financial reporting and the objectivity of our financial reporting. Both the independent auditors and the internal auditors have free access to the Audit Committee and meet with the Audit Committee regularly, both with and without management present. Acting through our Audit Committee, we have retained Ernst & Young LLP, an independent registered public accounting firm, to audit our Consolidated Financial Statements appearing in this Annual Report on Form 10-K. We have made available to Ernst & Young LLP all of our financial records and related data in connection with their audit of our Consolidated Financial Statements. We have filed with the SEC the required certifications related to our Consolidated Financial Statements as of and for the year ended January 31, 2019 . These certifications are attached as exhibits to this Annual Report on Form 10-K. Additionally, we have also provided to the New York Stock Exchange the required annual certification of our Chief Executive Officer regarding our compliance with the New York Stock Exchange's corporate governance listing standards. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries. In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems, automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations and increasing monitoring controls. During fiscal 2019, we announced an agreement to outsource select accounting transaction-processing activities which is part of an ongoing initiative to enhance our shared service model. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting and ensure that our internal control environment remains effective. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

Report on Internal Control Over Financial Reporting Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting as of January 31, 2019 . In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013). Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of January 31, 2019 . The Company's internal control over financial reporting as of January 31, 2019 , has been audited by Ernst & Young LLP as stated in their report which appears herein.

Under guidelines established by the SEC, companies are allowed to exclude acquisitions from their first assessment of internal control over financial reporting following the date of acquisition. Based on those guidelines, management's assessment of the effectiveness of the Company's internal control over financial reporting excluded Flipkart Private Limited ("Flipkart"), which the Company acquired in fiscal 2019, except for the recognition of goodwill and intangible assets that were included in management's assessment. Flipkart represented approximately 2% of the Company’s total assets as of January 31, 2019, after excluding goodwill and intangible assets recorded, and approximately 1% of the Company’s net sales for the year ended January 31, 2019. The Company's acquisition of Flipkart is discussed in Note 13 to its Consolidated Financial Statements for fiscal 2019.

Changes in Internal Control Over Financial Reporting There has been no change in the Company's internal control over financial reporting as of January 31, 2019 , that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Report on Ethical Standards Our Company was founded on the belief that open communication and the highest ethical standards are necessary to be successful. Our long-standing "Open Door" communication policy helps management be aware of and address issues in a timely and effective manner. Through the open door policy all associates are encouraged to inform management at the appropriate level when they are concerned about any matter pertaining to Walmart. Walmart has adopted a Statement of Ethics to guide our associates in the continued observance of high ethical standards such as honesty, integrity and compliance with the law in the conduct of Walmart's business. Familiarity and compliance with the Statement of Ethics is required of all associates. The Company also maintains a separate Code of Ethics for our senior financial officers. Walmart also has in place a Related-Party Transaction Policy. This policy applies to Walmart's senior officers and directors and requires material related-party transactions to be reviewed by the Audit Committee. The senior officers and directors are required to report material related-party transactions to Walmart. We maintain a global ethics and compliance office which oversees and administers several reporting mechanisms, including an ethics helpline. The ethics helpline provides a channel for associates to ask questions and make confidential complaints regarding potential violations of our statements of ethics, including violations related to financial or accounting matters. These contacts may be made anonymously.

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Please see the information concerning our executive officers contained in Part I, Item 1 herein under the caption " Executive Officers of the Registrant ," which is included there in accordance with Instruction 3 to Item 401(b) of the SEC's Regulation S-K. Information required by this item with respect to the Company's directors, certain family relationships, and compliance by the Company's directors, executive officers and certain beneficial owners of the Company's common stock with Section 16(a) of the Securities Exchange Act of 1934, as amended, is incorporated by reference to such information under the captions entitled "Proposal No. 1 – Election of Directors" and "Stock Ownership – Section 16(a) Beneficial Ownership Reporting Compliance" included in our Proxy Statement relating to our 2019 Annual Meeting of Shareholders (our "Proxy Statement"). No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to our board of directors since those procedures were disclosed in our proxy statement relating to our 2018 Annual Shareholders' Meeting as previously filed with the SEC. The information regarding our Audit Committee, including our audit committee financial experts and our Codes of Ethics for the CEO and senior financial officers and our Statement of Ethics applicable to all of our associates, including our Chief Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this item is incorporated herein by reference to the information under the captions "Corporate Governance" and "Proposal No. 3: Ratification of Independent Accountants" included in our Proxy Statement. " Item 1. Business " above contains information relating to the availability of a copy of our Code of Ethics for our CEO and senior financial officers and our Statement of Ethics and the posting of amendments to and any waivers of the Code of Ethics for our CEO and senior financial officers and our Statement of Ethics on our website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item 11 is incorporated herein by reference to the information under the captions "Corporate Governance – Director Compensation" and "Executive Compensation" included in our Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item 12 is incorporated herein by reference to the information that appears under the caption "Stock Ownership" included in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item 13 is incorporated herein by reference to the information under the caption "Corporate Governance – Board Processes and Practices" included in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item 14 is incorporated herein by reference to the information under the caption "Proposal No. 3 – Ratification of Independent Accountants" included in our Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report are as follows:

1. Financial Statements: See the Financial Statements in Part II, Item 8 .

2. Financial Statement Schedules: Certain schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements, including the notes thereto.

3. Exhibits: The required exhibits are included at the end of the Form 10-K or are incorporated herein by reference and are described in the Exhibit Index immediately preceding the first exhibit to this Annual Report on Form 10-K.

(b) The exhibits furnished with this Annual Report on Form 10-K in accordance with the requirement of Form 10-K of the SEC are listed in the Exhibit Index, which appears immediately following the signature pages to this Annual Report on Form 10-K and which is incorporated in this Item 15(b) by reference to such Exhibit Index.

ITEM 16. FORM 10-K SUMMARY

None.

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Walmart Inc.

Date: March 28, 2019 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Date: March 28, 2019 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer and Director (Principal Executive Officer) Date: March 28, 2019 By /s/ Gregory B. Penner Gregory B. Penner Chairman of the Board and Director Date: March 28, 2019 By /s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 28, 2019 By /s/ David M. Chojnowski David M. Chojnowski Senior Vice President and Controller (Principal Accounting Officer)

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2019

Date: By Cesar Conde Director Date: March 28, 2019 By /s/ Stephen J. Easterbrook Stephen J. Easterbrook Director Date: March 28, 2019 By /s/ Timothy P. Flynn Timothy P. Flynn Director Date: March 28, 2019 By /s/ Sarah Friar Sarah Friar Director Date: March 28, 2019 By /s/ Carla A. Harris Carla A. Harris Director Date: March 28, 2019 By /s/ Thomas W. Horton Thomas W. Horton Director Date: March 28, 2019 By /s/ Marissa A. Mayer Marissa A. Mayer Director Date: March 28, 2019 By /s/ Steven S Reinemund Steven S Reinemund Director Date: March 28, 2019 By /s/ S. Robson Walton S. Robson Walton Director Date: March 28, 2019 By /s/ Steuart L. Walton Steuart L. Walton Director

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2019

Exhibit Index (1),(2) The following exhibits are filed or furnished as part of this Form 10-K or are incorporated herein by reference.

3(a)

Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on February 1, 2018 (File No. 001-06991)

3(b)

Amended and Restated Bylaws of the Company are incorporated herein by reference to Exhibit 3.2 to the Report on Form 8-K filed by the Company on February 1, 2018 (File No. 001-06991)

4(a)

Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on Form S-3 (File Number 33- 51344) (P)

4(b)

First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344) (P)

4(c)

Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number 333-101847)

4(d)

Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number 333-126512)

4(e)

First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post-Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)

4(f)

Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration Statement on Form S-3 (File Number 333-201074)

4(g)

Third Supplemental Indenture, dated June 26, 2018, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4(S) to Current Report on Form 8-K filed on June 26, 2018.

10(a)* Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2019 (c)

10(b)

Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(b) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(c)

Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(c) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(d)

Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(d) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(e)

Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(e) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(f)

Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(g)

Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2011, filed on March 30, 2011 (1)(c)

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10(g).1*

Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2011, filed on March 30, 2011 (c)

10(h)

Walmart Deferred Compensation Matching Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(h) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(i)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Performance Unit Award, Notification of Award and Terms and Conditions of Award is incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014 (1)(c)

10(j)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Restricted Stock Award, Notification of Award and Terms and Conditions of Award is incorporated by reference to Exhibit 10(t) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014 (1)(c)

10(k)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions (January 2017 annual award - all executive officers) is incorporated by reference to Exhibit 10(t) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 31, 2017 (C)

10(l)

Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award (January 2018 annual award - all executive officers) is incorporated by reference to Exhibit 10(l) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (C)

10(m)

Form of Walmart Inc. Global Share-Settled Performance-Based Restricted Stock Unit Award Notification of Award and Terms and Conditions of Award (January 2018 annual award - all executive officers) is incorporated by reference to Exhibit 10(m) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018 (c)

10(n)

Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Marc Lore on September 19, 2016, is incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended October 31, 2016, filed on December 1, 2016 (C)

10(o)

Deferred Contingent Merger Consideration Agreement dated August 7, 2016, between the Company and Marc Lore is incorporated herein by reference to Exhibit 10(v) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)

10(p)

Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016, between the Company and Marc Lore is incorporated herein by reference to Exhibit 10(w) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)

10(q)

Non-Competition, Non-Solicitation and No-Hire Agreement between the Company and Marc Lore dated September 19, 2016 is incorporated herein by reference to Exhibit 10(x) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)

10(r)

Transition and Retirement Agreement by and among the Company, Wal-Mart Canada Corp., and David Cheesewright dated March 29, 2018 is incorporated by reference to the Current Report on Form 8-K of the Company filed on April 4, 2018 (C)

10(s)

Share Issuance and Acquisition Agreement by and Between Flipkart Private Limited and Walmart Inc. dated as of May 9, 2018. is incorporated herein by reference to Exhibit 10.1. to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)

10(t)

Counterpart Form of Share Purchase Agreement by and Among Wal-Mart International Holdings, Inc. the shareholders of Flipkart Private Limited identified on Schedule I thereto, Fortis Advisors LLC and Walmart Inc. dated as of May 9, 2018 is incorporated herein by reference to Exhibit 10.2. to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)

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32.2** Chief Financial Officer Section 906 Certification 99.1* State Court Prescription Opiate Litigation Cases 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

Notes to Exhibit Index:

1. The exhibits listed in this Exhibit Index and incorporated as exhibits to the Annual Report on Form 10-K of Walmart Inc. (the "Company") for the fiscal year ended January 31, 2019 by reference to an Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K of the Company previously filed with the SEC by the Company are available for review online on the EDGAR system of the SEC at www.sec.gov as exhibits to the Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K referred to above in the description of the exhibit incorporated by reference. The historical filings of the Company may be reviewed and copied at the Public Reference Room of the SEC at 100 F Street, NE Washington, DC 20549-2521 under Commission File No. 001-6991.

2. The Company and its subsidiaries have in the past issued, and may in the future issue from time to time, long-term debt instruments, but the aggregate principal amount of the debt instruments of any one series of such debt instruments has not exceeded or will not exceed 10% of the assets of the Company at any pertinent time. The Company has previously filed with the SEC its agreement to, and hereby agrees to, file copies of the agreements relating to long-term debt instruments and the instruments representing or evidencing such long-term debt instruments with the SEC upon request. As a result, in accordance with the provisions of paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K of the SEC, copies of such long-term debt instruments have not been filed as exhibits to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2019. The Company has previously filed the documents and instruments establishing the specific terms of long-term debt instruments offered and sold by the Company pursuant to its effective registration statements filed with the SEC pursuant to the Securities Act of 1933, as amended, as exhibits to the applicable registration statement or as exhibits to a Current Report on Form 8-K filed in connection with the applicable registration statement and the sale and issuance of those long-term debt instruments.

WALMART DEFERRED COMPENSATION MATCHING PLAN Amended and Restated Effective February 1, 2019

TABLE OF CONTENTS PAGE ARTICLE I. GENERAL ............................................................................................................... 1 1.1 Purpose. ........................................................................................................................... 1 1.2 Effective Date. ................................................................................................................ 1 1.3 Nature of Plan. ................................................................................................................ 1 ARTICLE II. DEFINITIONS ....................................................................................................... 1 2.1 Definitions....................................................................................................................... 1 ARTICLE III. DEFERRAL CREDITS AND MATCHING CONTRIBUTION CREDITS AND ACCOUNT ALLOCATIONS ........................................................................................................ 6 3.1 Deferred Compensation. ................................................................................................. 6 3.2 Deferred MIP Bonuses. ................................................................................................... 8 3.3 Deferred Special Bonuses. .............................................................................................. 9 3.4 Employer Matching Contribution Credits. ................................................................... 10 3.5 Account Allocation Elections ....................................................................................... 11 3.6 Irrevocability of Deferral Elections and Account Allocation Elections. ...................... 12 3.7 Automatic Suspension of Deferral Elections. ............................................................... 13 ARTICLE IV. ACCOUNTS AND TIMING OF CREDITS TO ACCOUNTS ......................... 14 4.1 Nature of Accounts. ...................................................................................................... 14 4.2 Deferral Credits and Employer Matching Contribution Credits. .................................. 14 4.3 Valuation of Accounts. ................................................................................................. 14 4.4 Credited Earnings.......................................................................................................... 15 ARTICLE V. PAYMENT OF PLAN BENEFITS ...................................................................... 15 5.1 Scheduled In-Service Benefits. ..................................................................................... 15 5.2 Separation Benefits. ...................................................................................................... 15 5.3 Death Benefits. .............................................................................................................. 16 5.4 Form of Distribution. .................................................................................................... 18 5.5 Distributions for Unforeseeable Emergencies. ............................................................. 19 5.6 Distributions for Payment of Taxes…………………………………………………...20 5.7 Reductions Arising from a Participant’s Gross Misconduct......................................... 20 ARTICLE VI. ADMINISTRATION .......................................................................................... 21 6.1 General. ......................................................................................................................... 21 6.2 Allocation and Delegation of Duties. ............................................................................ 22 ARTICLE VII. CLAIMS PROCEDURE ................................................................................... 22 7.1 General. ......................................................................................................................... 22 7.2 Appeals Procedure. ....................................................................................................... 23 ARTICLE VIII. MISCELLANEOUS PROVISIONS ................................................................ 24 8.1 Amendment, Suspension or Termination of Plan. ........................................................ 24 8.2 Non-Alienability. .......................................................................................................... 24 8.3 Recovery of Overpayments........................................................................................... 24 8.4 No Employment Rights................................................................................................. 25 8.5 No Right to Bonus. ....................................................................................................... 25 8.6 Withholding and Employment Taxes. .......................................................................... 25 8.7 Income and Excise Taxes.............................................................................................. 25

8.8 Successors and Assigns................................................................................................. 25 8.9 Governing Law. ............................................................................................................ 25 - ii -

WALMART DEFERRED COMPENSATION MATCHING PLAN ARTICLE I. GENERAL 1.1 Purpose. The purpose of the Walmart Deferred Compensation Matching Plan is to enable certain individuals to defer compensation and to be credited with matching allocations and earnings. The Plan is intended to reward such individuals for their contributions to the success of Walmart and its Related Affiliates. The Plan is also intended to assist such individuals in saving for retirement by providing benefits that are in excess of benefits permitted by applicable law under the 401(k) Plan. 1.2 Effective Date. The effective date of the amended and restated Plan is February 1, 2019. 1.3 Nature of Plan. The Plan is intended to be (and shall be administered as) an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of ERISA. The Plan shall be “unfunded” for tax purposes and for purposes of Title I of ERISA. Any and all payments under the Plan shall be made solely from the general assets of Walmart. A Participant’s interests under the Plan do not represent or create a claim against specific assets of Walmart or any Employer. Nothing herein shall be deemed to create a trust of any kind or create any fiduciary relationship between the Committee, Walmart or any Employer and a Participant, the Participant’s beneficiary or any other person. To the extent any person acquires a right to receive payments from Walmart under this Plan, such right is no greater than the right of any other unsecured general creditor of Walmart. The Plan is intended to be in compliance with Code Section 409A and shall be interpreted, applied and administered at all times in accordance with Code Section 409A and guidance issued thereunder. ARTICLE II. DEFINITIONS 2.1 Definitions. Whenever used in this Plan, the following words and phrases have the meaning set forth below unless the context plainly requires a different meaning: (a) Account means the bookkeeping account maintained under the Plan to reflect a Participant’s Deferral Credits, Matching Contribution Credits, and earnings credited in accordance with Section 4.4. A Participant’s “Account” shall consist of his or her Deferral Account, and his or her Matching Account. A Participant’s Deferral Account may be allocated among one or more Scheduled

In-Service Accounts and one or more Retirement Accounts to the extent authorized hereunder and as elected or deemed elected by the Participant in accordance with Section 3.5. A Participant’s Matching Account will be allocated to either or both of the Participant’s Retirement Accounts as elected or deemed elected by the Participant in accordance with Section 3.5. (b) Code means the Internal Revenue Code of 1986, as amended from time to time. (c) Committee means the Compensation and Management Development Committee of the Board of Directors of Walmart. (d) Compensation means a Participant’s base compensation for a Plan Year with respect to services rendered for an Employer. Compensation includes, but is not limited to, short-term disability payments made by an Employer. Compensation does not include military differential payments. (e) Deferral Account means the bookkeeping account maintained on behalf of a Participant to reflect his or her Deferral Credits. (f) Deferral Credit means the amount of Deferred Compensation credited to a Participant’s Deferral Account in accordance with Section 3.1, the amount of Deferred MIP Bonus credited to a Participant’s Deferral Account in accordance with Section 3.2, and the amount of Deferred Special Bonus credited to a Participant’s Deferral Account in accordance with Section 3.3. (g) Deferred Compensation means the Compensation deferred by a Participant in accordance with Section 3.1. (h) Deferred MIP Bonus means the amount deferred by a Participant in accordance with Section 3.2 from bonuses payable to the Participant under the MIP. (i) Deferred Special Bonus means the amount deferred by a Participant in accordance with Section 3.3 from a Special Bonus payable to the Participant. (j) Disabled means the Participant has incurred a Separation from Service because the Participant, as determined by the Committee or its delegate, is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. (k) Eligible Officer means an individual who is a corporate officer of an Employer, and who holds the title of Vice President or above, Treasurer, Controller, or an officer title of similar rank or other position as determined by the Committee. In no event will any individual constitute an Eligible Officer if he or she is not subject to federal income tax withholding in the United States. Notwithstanding anything in the preceding provisions of this Section 2.1(k), Eligible Officer shall exclude any individual who, pursuant to Walmart’s Global Assignment Policy, is seconded to an Employer and, under the terms of his or her offer or - 2 -

assignment letter, he or she is intended to remain on the home country’s benefit and pension programs. For purposes of this Plan, effective February 1, 2019, an individual shall not become an Eligible Officer prior to the first day of the month immediately following the month in which the individual would otherwise satisfy the requirements of being an Eligible Officer. (l) Eligible Participant means with respect to a Plan Year an individual who either (1) is an Eligible Officer, (2) is an employee of an Employer and who as of the October 31 immediately preceding the Plan Year is in a Senior Director or Senior Director equivalent position in Position Pay Range X8 or X9 or a Market Manager position or Market Manager position equivalent in Position Pay Range 10F, or (3) is an employee of an Employer and who as of the October 31 immediately preceding the Plan Year has an annual rate of base compensation from the Employer that is equal to or greater than the annual compensation limit in effect under Code Section 401(a)(17) (or under a comparable provision of the Internal Revenue Code of the Commonwealth of Puerto Rico if the Participant is an eligible participant under the Walmart Puerto Rico 401(k) Plan) for the calendar year in which the Plan Year begins, or if such limit for such calendar year has not been determined as of such October 31 then such annual compensation limit as in effect for the calendar year that includes such October 31. For purposes of this Plan, effective February 1, 2019, an individual shall not become an Eligible Participant prior to the first day of the month immediately following the month in which the individual would otherwise satisfy the requirements of being an Eligible Participant. (m) Employer means Walmart and any entity, whether or not incorporated, which is a member of a controlled group of corporations, trades or businesses, as defined in Code Sections 414(b) and 414(c), of which Walmart is a member, and which has been designated by the Committee as a participating employer in the Plan. (n) Employer Matching Contribution Credits means the amount credited to a Participant’s Matching Account pursuant to Section 3.4. (o) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. (p) Excess Compensation means for a Plan Year the excess, if any, of (1) the sum of (i) the Participant’s base compensation for the Plan Year for services rendered for an Employer, and (ii) the Participant’s MIP bonus payable with respect to a performance period that coincides with the Plan Year or that ends within the Plan Year, over (2) the annual compensation limit under Code Section 401(a)(17) (or under a comparable provision of the Internal Revenue Code of the Commonwealth of Puerto Rico if the Participant is an eligible participant under the Walmart Puerto Rico 401(k) Plan) in effect for the calendar year in which the Plan Year begins. For purposes of this paragraph, a Participant’s base compensation and a Participant’s MIP bonus shall include the cash amounts of such base compensation and MIP bonus payable to the - 3 -

Participant regardless of whether the payment of any or all of such amounts to the Participant is deferred or not made on account of (1) a deferral election by the Participant under the 401(k) Plan, (2) a deferral election by the Participant under this Plan, (3) a pre-tax contribution by the Participant under Code Section 125, (4) a pre-tax contribution by the Participant under Code Section 132(f)(4), or (5) withholding for the payment of employment taxes or income taxes with respect to the Participant. (q) 401(k) Plan means the Walmart 401(k) Plan and the Walmart Puerto Rico 401(k) Plan, as amended from time to time. (r) Gross Misconduct means conduct engaged in by the Participant which has been deemed by the Committee or its delegate to be detrimental to the best interests of Walmart or any Related Affiliate or any entity in which Walmart has an ownership interest. Examples of such conduct include, without limitation, disclosure of confidential information in violation of Walmart’s Statement of Ethics, theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses. (s) Matching Account means the bookkeeping account maintained on behalf of a Participant to reflect his or her Employer Matching Contribution Credits. (t) MIP means the Walmart Inc. Management Incentive Plan, as amended from time to time, without regard to any non-U.S. subplans. (u) Participant means any individual for whom an Account is maintained. An individual will cease to be a Participant at such time that the Participant’s Account has been fully distributed or forfeited in accordance with the Plan. (v) Plan means the Walmart Deferred Compensation Matching Plan, as set forth herein, and as amended from time to time. (w) Plan Year means the twelve (12)-month period commencing on February 1 and ending on January 31. (x) Related Affiliate means all persons with whom Walmart would be considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses under Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2. (y) Retirement Account means a bookkeeping account maintained on behalf of a Participant to which the Participant’s Deferral Account and Matching Account - 4 -

may be allocated pursuant to the election or deemed election of the Participant in accordance with Section 3.5. The number of Retirement Accounts a Participant may have under the Plan at any time shall be determined by the Committee or its delegate. (z) Scheduled In-Service Account means a bookkeeping account maintained on behalf of a Participant to which the Participant’s Deferral Account may be allocated pursuant to the election of the Participant in accordance with Section 3.5. The number of Scheduled In-Service Accounts a Participant may have under the Plan at any time shall be determined by the Committee or its delegate. (aa) Scheduled Pay Date means, with respect to each Scheduled In-Service Account, the first day of a calendar month designated by the Participant in accordance with Section 3.5. In no event shall such date be earlier than the first day of the second Plan Year beginning after the Plan Year for which Deferral Credits are first allocated to such Scheduled In-Service Account. Once selected, the Scheduled Pay Date with respect to any Scheduled In-Service Account is irrevocable. If a Participant fails to designate a Scheduled Pay Date with respect to a Scheduled In-Service Account, then the Participant is deemed to have designated as the Scheduled Pay Date for such Scheduled In-Service Account the first day of the second Plan Year beginning after the Plan Year for which Deferral Credits are first allocated to such Scheduled In-Service Account. (bb) Separation from Service means the Participant has a termination of employment (other than on account of death) with the Company. For purposes of this paragraph, “Company” means the Employer and any Related Affiliate. Whether a termination of employment has occurred shall be determined based on whether the facts and circumstances indicate the Participant and the Company reasonably anticipate that no further services will be performed by the Participant for the Company; provided, however, that a Participant shall be deemed to have a termination of employment if the level of services he or she actually performs for the Company after a certain date permanently decreases to no more than twenty percent (20%) of the average level of bona fide services performed for the Company by the Participant (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services for the Company if the Participant has been providing services to the Company for less than 36 months). For this purpose, a Participant is not treated as having a Separation from Service while he or she is on a military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant has a right to reemployment with the Company under an applicable statute or by contract. This definition of Separation from Service is intended to be consistent with the separation from service requirements as defined in Code Section 409A. (cc) Separation Pay Date means the last day of the calendar month in which falls the date that is six (6) months after a Participant’s Separation from Service. - 5 -

(dd) Special Bonus means a bonus, other than a bonus payable under the MIP, that is payable to an Eligible Officer with respect to services rendered or to be rendered for an Employer and that is eligible for deferral under the Plan either because (1) the bonus is payable pursuant to an offer letter accepted in writing by the Eligible Officer before commencement of employment and that specifically refers to the deferability of the bonus by explicit reference to this Plan or (2) the bonus is eligible for deferral in accordance with guidelines established by the Committee, or by an officer to whom the Committee has delegated authority to establish such guidelines, and the bonus requires as a condition of receipt of the bonus and to avoid forfeiture of the bonus that the recipient continue to perform services for the Employer for a period of at least thirteen (13) months after the date he or she obtains the legally binding right to the bonus. (ee) Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to subsections (b)(1), (b)(2) and (d)(1)(B)), the loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. (ff) Valuation Date means each day of the Plan Year. (gg) Walmart means Walmart Inc., a Delaware corporation. (hh) Years of Participation means a period of Plan Years which includes the first Plan Year with respect to which an Eligible Participant makes a deferral election in accordance with any one or more of Sections 3.1, 3.2 and 3.3 and an amount is credited to the Participant’s Account with respect to any such deferral election, and each subsequent Plan Year during all or part of which the Participant remains a Participant. In addition to the preceding definition, a Participant’s Years of Participation shall include any period commencing February 1 and ending January 31, whether before or after the effective date of the Plan, during which or with respect to which an account is maintained for the Participant under the Walmart Inc. Officer Deferred Compensation Plan, as such plan may be amended from time to time. ARTICLE III. DEFERRAL CREDITS AND MATCHING CONTRIBUTION CREDITS AND ACCOUNT ALLOCATIONS 3.1 Deferred Compensation. (a) For each Plan Year, each Eligible Officer may elect to defer, as Deferred Compensation, all or a portion of the Eligible Officer’s Compensation to be otherwise paid for such Plan Year by the Employer, provided, however, that no election shall be effective to reduce amounts paid by the Employer to an - 6 -

Eligible Officer to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) or for insurance premiums or other withholdings as allowed by Code Section 409A . The Eligible Officer’s Deferred Compensation will be deferred proratably for each payroll period of the Plan Year. If a payroll period begins in one Plan Year and ends in the following Plan Year, the Deferred Compensation with respect to such payroll period shall be determined by the Eligible Officer’s deferral election made with respect to the Plan Year in which the payroll period ends. All deferral elections made under this Section 3.1 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation. (b) Compensation deferral elections must be filed: (1) With respect to an individual who is an Eligible Officer as of the December 31 preceding the Plan Year for which the deferral election is to be effective, no later than such December 31; or (2) With respect to an individual who first becomes an Eligible Officer during the Plan Year, within thirty (30) days following the first date he or she becomes an Eligible Officer. For purposes of this rule, an Eligible Officer will be treated as first becoming an Eligible Officer during the Plan Year only if: (A) he or she was not eligible to participate in the Plan or any other plan required by Code Section 409A to be aggregated with the Plan at any time during the twenty-four (24)-month period ending on the date during the Plan Year he or she becomes an Eligible Officer; or (B) he or she was paid all amounts previously due under the Plan and any other plan required by Code Section 409A to be aggregated with the Plan and, on and before the date of the last such payment, was not eligible to continue to participate in the Plan and any other plan required by Code Section 409A to be aggregated with the Plan for periods after such payment. A deferral election under this Section 3.1(b)(2) will be effective only with respect to Compensation for payroll periods beginning after the payroll period in which the Eligible Officer’s election form (which may be electronic) is received by Walmart’s Executive Compensation department. In addition, a deferral election under this Section 3.1(b)(2) will be effective only if the deferral election meets the requirements set forth in Code Section 409A(a)(4)(B). - 7 -

(c) The Deferred Compensation of an Eligible Officer who elects to defer all or a portion of the Eligible Officer’s Compensation under this Section 3.1 with respect to a Plan Year shall be credited to the Eligible Officer’s Deferral Account for such Plan Year and shall be allocated to a Retirement Account or to a Scheduled In-Service Account in accordance with Section 3.5. 3.2 Deferred MIP Bonuses. (a) For each Plan Year, each Eligible Participant may elect to defer all or a portion of the Eligible Participant’s bonus (if any) to be otherwise paid to the Eligible Participant under the MIP with respect to a performance period under the MIP that coincides with the Plan Year or that ends within the Plan Year; provided, however, an Eligible Participant who is not an Eligible Officer may elect to defer no more than eighty percent (80%) of the Eligible Participant’s MIP bonus for a Plan Year. No election under this Section 3.2 shall be effective to reduce amounts paid by the Employer to an Eligible Participant to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) or for insurance premiums or other withholdings as allowed by Code Section 409A. All bonus deferral elections made under this Section 3.2 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation. (b) MIP bonus deferral elections must be filed: (1) No later than the December 31 (or such other date as determined by the Committee or its delegate) preceding the first day of the performance period for which the deferral election is to be effective. (2) If authorized by the Committee or its delegate with respect to an Eligible Participant, and if the MIP bonus constitutes “performance-based compensation” within the meaning of Code Section 409A based on services performed over a performance period of at least twelve (12) months, and if the Eligible Participant has been continuously employed by an Employer or a Related Affiliate since the first day of the performance period, then no later than the earlier of (i) the date that is six months prior to the last day of the performance period, or (ii) the date in the performance period as of which the amount of the MIP bonus has become both substantially certain to be paid and calculable. (3) Solely with respect to an Eligible Officer who first becomes an Eligible Participant during the Plan Year, within thirty (30) days following the first date he or she becomes an Eligible Participant, as described in Code Section 409A(a)(4)(B). For purposes of this rule, an Eligible Officer will be treated as first becoming an Eligible Participant during the Plan Year only if: - 8 -

(A) he or she was not eligible to participate in the Plan or any other plan required by Code Section 409A to be aggregated with the Plan at any time during the twenty-four (24)-month period ending on the date during the Plan Year he or she becomes an Eligible Participant; or (B) he or she was paid all amounts previously due under the Plan and any other plan required by Code Section 409A to be aggregated with the Plan and, on and before the date of the last such payment, was not eligible to continue to participate in the Plan and any other plan required by Code Section 409A to be aggregated with the Plan for periods after such payment. An MIP bonus deferral election under this Section 3.2(b)(3) will be effective only with respect to an MIP bonus paid for services performed after such election. For this purpose, the amount of the MIP bonus payable to the Eligible Officer for services rendered subsequent to the Eligible Officer’s election will be determined by multiplying the bonus by a fraction, the numerator of which is the number of calendar days remaining in the performance period after the election and the denominator of which is the total number of calendar days in such performance period. For purposes of this Section 3.2(b)(3), the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Walmart’s Executive Compensation department. (c) The Deferred MIP Bonus of an Eligible Participant who elects to defer all or a portion of the Eligible Participant’s MIP bonus under this Section 3.2 with respect to a performance period that coincides with a Plan Year or that ends within a Plan Year shall be credited to the Eligible Participant’s Deferral Account for such Plan Year and shall be allocated to a Retirement Account or to a Scheduled In-Service Account in accordance with Section 3.5. 3.3 Deferred Special Bonuses. (a) An Eligible Officer may elect to defer all or a portion of the Eligible Officer’s Special Bonus to be otherwise paid to the Eligible Officer in a Plan Year. All Special Bonus deferral elections made under this Section 3.3 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation. No election under this Section 3.3 shall be effective to reduce amounts paid by the Employer to an Eligible Participant to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) for insurance premiums or other withholdings as allowed by Code Section 409A.For purposes of this Section 3.3, the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by - 9 -

Executive Compensation. A deferral election is not permitted with respect to a Special Bonus unless the Special Bonus is a type described in, and the deferral election with respect to the Special Bonus satisfies the applicable conditions of, Section 3.3(b) or Section 3.3(c). (b) A Special Bonus described in this Section 3.3(b) is one that: (1) requires as a condition of receipt of the Special Bonus and to avoid forfeiture of the Special Bonus that the Eligible Officer continue to perform services for a period of at least thirteen (13) months after the date he or she obtains the legally binding right to the Special Bonus; (2) may not have an earlier vesting date for a good reason termination or the Eligible Officer’s retirement; and (3) must otherwise meet the qualifications as described in Code Section 409A. The deferral election with respect to a Special Bonus described in this Section 3.3(b) must be filed within thirty (30) days after the Eligible Officer obtains the legally binding right to the Special Bonus. (c) A Special Bonus described in this Section 3.3(c) is one payable pursuant to an offer letter accepted in writing by an Eligible Officer before commencement of employment and that specifically refers to the deferability of the Special Bonus by explicit reference to the Plan. The deferral election with respect to a Special Bonus described in this Section 3.3(c) must be filed prior to the time the Eligible Officer renders any services to the Employer, regardless of whether the deferral election relates to all of the Special Bonus or a portion of the Special Bonus. (d) The Deferred Special Bonus of an Eligible Officer who elects to defer all or a portion of the Eligible Officer’s Special Bonus under this Section 3.3 otherwise payable in a Plan Year shall be credited to the Eligible Officer’s Deferral Account for such Plan Year and shall be allocated to a Retirement Account or to a Scheduled In-Service Account in accordance with Section 3.5. 3.4 Employer Matching Contribution Credits. (a) If a Participant is employed by the Employer or any Related Affiliate on the last day of the Plan Year and has not incurred a Separation from Service during that Plan Year and if Deferral Credits have been made to the Participant’s Account with respect to the Plan Year, then to the extent applicable under the following provisions of this Section 3.4 an Employer Matching Contribution Credit will be made to the Participant’s Matching Account. The amount of the Employer Matching Contribution Credit, if any, made to a Participant’s Matching Account for the Plan Year will equal the total amount of Deferred Compensation and Deferred MIP Bonus credited to the Participant’s Account for the Plan Year under Section 3.1(c) and Section 3.2(c); provided, however, in no event shall the Employer Matching Contribution Credit made to a Participant’s Matching Account for a Plan Year exceed 6% of the Participant’s Excess Compensation for such Plan Year. Notwithstanding the preceding provisions of this Section 3.4(a), an Employer Matching Contribution Credit for a Plan Year shall not be - 10 -

made with respect to any Deferral Credits for the Plan Year that have been withdrawn in accordance with Section 5.5. (b) A Participant shall become vested in his or her Matching Account, including earnings thereon, if the Participant has completed at least three (3) Years of Participation. If a Participant is not otherwise vested in the Participant’s Matching Account under the preceding sentence of this Section 3.4(b), the Participant will become vested in the Participant’s Matching Contribution Account if the Participant dies prior to the Participant’s Separation from Service, or if the Participant is Disabled. Notwithstanding any provision hereunder to the contrary, a Participant’s Matching Account shall be distributed pursuant to Article V only if the Participant has become vested in the Participant’s Matching Contribution Account under this Section 3.4(b) as of the date of the Participant’s Separation from Service. 3.5 Account Allocation Elections (a) At the same time that an Eligible Participant makes an election to defer Compensation, an MIP bonus, or a Special Bonus in accordance with the provisions of the Plan, the Eligible Participant shall also make an election to allocate the amount or amounts subject to each such deferral election to a Retirement Account or Accounts or to a Scheduled In-Service Account or Accounts. In addition to the preceding requirement, at the same time that an Eligible Participant makes an election to defer Compensation or an MIP bonus in accordance with the provisions of this Plan, the Eligible Participant shall also make an election to allocate the Employer Matching Contribution Credits (if any) with respect to such Deferred Compensation or Deferred MIP Bonus to a Retirement Account or Accounts. (b) At the time of an Eligible Participant’s first election to allocate any amount subject to a deferral election (regardless of whether the amount is Deferred Compensation, Deferred MIP Bonus, Deferred Special Bonus or Employer Matching Contribution Credit) to a Retirement Account, the Eligible Participant shall also designate the form of distribution with respect to such Retirement Account. The form of distribution must be a form permitted under Section 5.4(a). (c) At the time of an Eligible Participant’s first election to allocate any amount subject to a deferral election (regardless of whether the amount is Deferred Compensation, Deferred MIP Bonus or Deferred Special Bonus) to a Scheduled In-Service Account, the Eligible Participant shall also designate the Scheduled Pay Date with respect to such Scheduled In-Service Account. (d) If at the time of an Eligible Participant’s deferral election under the Plan the Eligible Participant fails to make an account allocation election under Section 3.5(a), then the amount subject to such deferral election shall be allocated in the same manner as the same category of deferred amounts (meaning either - 11 -

Deferred Compensation, Deferred MIP Bonus, Deferred Special Bonus or Employer Matching Contribution Credits) were allocated for the most recent preceding Plan Year for which the Eligible Participant made an allocation election, but if none then to the Eligible Participant’s Retirement Account if there is only one, or equally to the Eligible Participant’s Retirement Accounts if the Eligible Participant has more than one Retirement Accounts, but if the Eligible Participant has no Retirement Account then the amount subject to such deferral election shall be allocated to a Retirement Account deemed to be elected by the Participant with a lump sum form of payment, and such Retirement Account shall be one of the Participant’s permitted Retirement Accounts under the Plan. 3.6 Irrevocability of Deferral Elections and Account Allocation Elections. (a) Except as otherwise provided herein, once made for a Plan Year, a deferral election or elections under Sections 3.1(b)(1), 3.2(b)(1) and 3.2(b)(2), and the corresponding account allocation election or elections under Section 3.5, may not be revoked, changed or modified after the applicable deferral election filing deadline specified in Sections 3.1(b)(1), 3.2(b)(1), and 3.2(b)(2), and a deferral election or elections under Sections 3.1(b)(2), 3.2(b)(3), 3.3(b) and 3.3(c), and the corresponding account allocation election or elections under Section 3.5, may not be revoked, changed or modified after the date of each such deferral election as provided in Sections 3.1(b)(2), 3.2(b)(3), 3.3(b) and 3.3(c). A deferral election for one Plan Year will not automatically be given effect for a subsequent Plan Year, so that if a deferral is desired for a subsequent Plan Year, a separate election must be made by the Eligible Participant. (b) In the event an Eligible Officer has a Separation from Service for any reason, then his or her deferral election under Section 3.1 will terminate as of the date of such Separation from Service (but will be effective with respect to the last regular paycheck issued to such Eligible Officer), regardless of whether the Eligible Officer continues to receive Compensation, or other remuneration, from any Employer or Related Affiliate thereafter. If an Eligible Officer has a Separation from Service for any reason and is rehired (whether or not as an Eligible Officer) within the same Plan Year, his or her deferral election, if any, under Section 3.1 shall be automatically reinstated and shall remain in effect for the remainder of such Plan Year. (c) In the event an Eligible Participant has a Separation from Service for any reason, then his or her deferral elections, if any, under Sections 3.2 and 3.3 will remain in effect with respect to the bonus, if any, subject to any such deferral election. If an Eligible Participant has a Separation from Service for any reason and is rehired (whether or not as an Eligible Participant) within the same Plan Year or the same performance period, his or her deferral elections, if any, under Sections 3.2 and 3.3 will remain in effect with respect to the bonus, if any, subject to any such deferral elections. - 12 -

(d) In the event an Eligible Participant who is an Eligible Officer ceases to be an Eligible Officer (other than on account of a Separation from Service) during any Plan Year, then his or her Compensation deferral election, if any, under Section 3.1 will terminate as of the next following January 31. In addition, in the event the Compensation of such individual is reduced as a result of the change in status, his or her deferral election following such loss and through the date of termination of such election as provided in the preceding sentence will be pro rated based on his or her new level of Compensation. (e) In the event an Eligible Officer receives Company-paid short term disability payments and the Compensation of such individual is reduced as a result of the short term disability status, then following such reduction in Compensation his or her Compensation deferral election, if any, under Section 3.1 will be pro rated based on his or her new level of Compensation through the date of termination of such election. (f) In the event an Eligible Participant ceases to be an Eligible Participant (other than on account of a Separation from Service) during any Plan Year, then his or her bonus deferral election, if any, under Section 3.2 will terminate for any performance period beginning in the calendar year following the year of the loss of Eligible Participant status. (e) In the event an Eligible Participant who is an Eligible Officer ceases to be an Eligible Officer (other than on account of Separation from Service) during any Plan Year, then his or her bonus deferral election, if any, under Section 3.3 will remain in effect. (f) Notwithstanding anything herein to the contrary, in the event an Eligible Officer goes on an unpaid leave of absence, his or her Compensation deferral election, if any, under Section 3.1 shall automatically cease when he or she commences the unpaid leave of absence; provided, however, that if he or she returns from the unpaid leave of absence during the same Plan Year, his or her Compensation deferral election under Section 3.1 shall automatically resume immediately upon return from the leave of absence and shall continue in effect for the balance of the Plan Year. An Eligible Officer’s Compensation deferral election under Section 3.1, if any, shall remain in effect with respect to any Compensation to which such election applies that is paid while on a leave of absence. An Eligible Participant’s deferral election under Sections 3.2 or 3.3, if any, shall not be affected by his or her leave of absence. 3.7 Automatic Suspension of Deferral Elections. (a) In the event a Participant receives a distribution from the Walmart 401(k) Plan (or any other plan or successor plan sponsored by Walmart or any Related Affiliate) on account of hardship, which distribution is made pursuant to Treasury Regulations Section 1.401(k)-1(d)(3) and requires suspension of deferrals under other arrangements such as this Plan, the Participant’s deferral - 13 -

elections under Sections 3.1, 3.2 and 3.3, if any, pursuant to which deferrals would otherwise be made during the six (6)-month period following the date of the distribution from the Walmart 401(k) Plan shall be cancelled. (b) In the event a Participant requests a distribution pursuant to Section 5.5 due to an Unforeseeable Emergency, or the Participant requests a cancellation of deferrals under the Plan in order to alleviate his or her Unforeseeable Emergency, and the Committee or its delegate determines that the Participant’s Unforeseeable Emergency may be relieved through the cessation of deferrals under the Plan, some or all the Participant’s deferral elections under Sections 3.1, 3.2 and 3.3, if any, for such Plan Year as determined by the Committee or its delegate, shall be cancelled as soon as administratively practicable following such determination by the Committee or its delegate. ARTICLE IV. ACCOUNTS AND TIMING OF CREDITS TO ACCOUNTS 4.1 Nature of Accounts. Each Participant’s Account will be used solely as a measuring device to determine the amount to be paid a Participant under this Plan. The Accounts do not constitute, nor will they be treated as, property or a trust fund of any kind. All amounts at any time attributable to a Participant’s Account will be, and remain, the sole property of Walmart. A Participant’s rights hereunder are limited to the right to receive Plan benefits as provided herein. The Plan represents an unsecured promise by Walmart to pay the benefits provided by the Plan. 4.2 Deferral Credits and Employer Matching Contribution Credits. Deferral Credits and Employer Matching Contribution Credits will be credited to each Participant’s Account as follows: (a) Deferred Compensation will be credited to the Participant’s Deferral Account as soon as practicable after the date such Compensation would have otherwise been paid in cash. (b) Deferred MIP Bonuses and Deferred Special Bonuses will be credited to the Participant’s Deferral Account as soon as practicable after the date the bonus could have otherwise been paid in cash. (c) Employer Matching Contribution Credits for a Plan Year will be credited to the Participant’s Matching Account as of the last day of the Plan Year. A Participant’s Account, including earnings credited thereto, will be maintained by the Committee until the Participant’s Plan benefits have been paid in full. 4.3 Valuation of Accounts. - 14 -

Each Participant’s Account will be valued daily as of each Valuation Date. 4.4 Credited Earnings. (a) Every Valuation Date during a Plan Year, a Participant’s Account will be credited with an equivalent of a daily rate of simple interest based on the yield on United States Treasury securities (not indexed for inflation) with a constant maturity of ten (10) years, as of the first business day of January preceding such Plan Year, plus two hundred seventy (270) basis points. This rate shall be determined on the basis of Federal Reserve Statistical Release H-15 (or any successor statistical release of the Federal Reserve) and, if there is no such statistical release, on the basis of such other generally recognized source of information concerning the market for United States Treasury securities as the Committee selects. ARTICLE V. PAYMENT OF PLAN BENEFITS 5.1 Scheduled In-Service Benefits. (a) In-Service Benefits. Each of a Participant’s Scheduled In-Service Accounts will be distributed in a lump sum within the 90-day period commencing on the Scheduled Pay Date applicable to such Scheduled In-Service Account. The lump sum amount will be the value of the applicable Participant’s Scheduled In- Service Account as of the Scheduled Pay Date. (b) Intervening Separation or Death. Notwithstanding the preceding, should an event occur prior to the Scheduled Pay Date of any Scheduled In-Service Account that would trigger a distribution under Section 5.2 or 5.3 earlier than the Scheduled Pay Date, such Scheduled In-Service Account or Accounts shall be distributed in accordance with Section 5.2 or 5.3, as applicable, and not in accordance with Section 5.1(a). 5.2 Separation Benefits. (a) Separation Benefits. In the event of a Participant’s Separation from Service, the Participant’s Scheduled In-Service Accounts will be distributed in a lump sum under Section 5.2(b) and the Participant’s Retirement Accounts will be distributed in one of the forms provided in Section 5.2(b) or 5.2(c) below in accordance with the Participant’s distribution election given effect under the provisions of Section 5.4 with respect to each such Retirement Account. (b) Lump Sum Distributions. (1) Any lump sum to be paid under this Section 5.2(b) shall be paid within the 90-day period commencing on the Participant’s Separation Pay Date. - 15 -

(2) The lump sum amount will be the value of the Participant’s Account, or Retirement Account, as applicable, as of the last day of the month preceding the date of the distribution. (c) Installment Distributions. (1) If a Participant’s Retirement Account is to be distributed in the form of annual installments, the first such installment shall be made within the 90- day period commencing on the first January 31 following the Participant’s Separation from Service; provided, however, that if such January 31 is earlier than the Participant’s Separation Pay Date, the first such installment shall be made within the 90-day period commencing on the Participant’s Separation Pay Date. Subsequent installments shall be made within the 90-day period commencing on each successive January 31, until the Participant’s benefits under such Account are distributed in full. (2) The Plan benefits will be paid in equal annual installments in an amount which would fully amortize a loan equal to the lump sum value of the Participant’s Retirement Account determined in accordance with Section 5.2(b)(2) (using as the distribution date the date of the first installment) over the installment period, with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s Separation from Service occurs. 5.3 Death Benefits. (a) General. In the event of the Participant’s death before incurring a Separation from Service or before commencement of benefits, the Participant’s Account will be distributed in one of the forms provided in Section 5.3(b) or 5.3(c) below in accordance with the Participant’s distribution election given effect under the provisions of Section 5.4 below. A Participant may elect only one form of payment under the Plan for all beneficiaries (at any level). If the Participant fails to make an effective election as provided in Section 5.4 below, the Participant will be deemed to have elected distribution in a lump sum under Section 5.3(b) for all beneficiary levels. (b) Lump Sum Distributions. (1) Any lump sum to be paid under this Section 5.3(b) shall be paid within the 90-day period commencing on the last day of the month in which the Participant’s death occurs. (2) The lump sum amount will be the value of the Participant’s Account as of the last day of the month preceding the date of distribution. (c) Installment Distributions. - 16 -

(1) If the Participant’s Account is to be distributed in the form of annual installments, the first such installment shall be made within the 90-day period commencing on the first January 31 coincident with or next following the Participant’s death. Subsequent installments will be made during the 90-day period commencing on each successive January 31, until the Participant’s benefits are distributed in full. (2) The Plan benefits will be paid in equal annual installments in an amount which would fully amortize a loan equal to the lump sum value of the Participant’s Account determined in accordance with Section 5.3(b)(2) (using as the distribution date the date of the first installment) over the installment period, with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s death occurs. (d) Death After Commencement of Installments. Notwithstanding the preceding, in the event of a Participant’s death after installment payments to the Participant have commenced, such installment payments shall continue to be made to the Participant’s designated beneficiary in the same manner as they were being distributed to the Participant prior to his or her death, provided, however, that if the Participant’s distribution election applicable to Section 5.3(a) is a lump sum payment, the Participant’s remaining installments will be distributed in lump sum to the Participant’s designated beneficiary within the 90-day period commencing on the last day of the month in which the Participant’s death occurs. (e) Designation of Beneficiary. A Participant may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries (which may be a trust or trusts) to receive any benefit payments which may be payable under this Plan following the Participant’s death, and may designate the proportions in which such beneficiaries are to receive such payments. A Participant may change such designation from time to time and the last designation filed with the Committee in accordance with its procedures prior to the Participant’s death will control. In the event no beneficiary is designated, or if all designated beneficiaries predecease the Participant, payment shall be payable to the following “default” beneficiaries of the Participant in the following order of priority: (1) the Participant’s surviving spouse known to the Committee, if any; (2) the Participant’s living children known to the Committee in equal shares; (3) the Participant’s living parents known to the Committee in equal shares; (4) the Participant’s surviving siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine. (f) Death of Beneficiary. In the event a beneficiary dies before full payment of the Participant’s benefits under the Plan, benefits that would have been paid to such beneficiary shall continue in the same form in equal shares to the remaining - 17 -

beneficiaries at the same level (i.e., primary, contingent) and, if none, to the next level of beneficiaries. If there are no beneficiaries at the next level, then any remaining benefits shall be paid to the following “default” beneficiaries of the last living beneficiary in the following order of priority: (1) the beneficiary’s surviving spouse known to the Committee, if any; (2) the beneficiary’s living children known to the Committee in equal shares; (3) the beneficiary’s surviving parents known to the Committee in equal shares; (4) the beneficiary’s surviving siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine. 5.4 Form of Distribution. (a) Forms Available. In the event of a Participant’s Separation from Service, or in the event of a Participant’s death if the Participant dies prior to Separation from Service, distribution of his or her Retirement Account or, in the event of death, his or her Account, may be made, at the Participant’s election per this Section 5.4, in one of the following forms: (1) a lump sum; (2) subject to the minimum account value restriction below, substantially equal annual installments over a period not to exceed fifteen (15) years; or (3) solely with respect to distribution of the Participant’s Account in the event of death, partially a lump sum and, subject to the minimum account value restriction below, substantially equal annual installments over a period not to exceed fifteen (15) years; provided, however, that an installment election will be given effect only if, as of the date on which any lump sum payment would be valued, the value of the Participant’s Retirement Account, or, in the event of death, Account, is at least fifty thousand dollars ($50,000). Any Participant whose Retirement Account, or in the event of death, Account, is valued at less than fifty thousand dollars ($50,000) as of the date on which any lump sum payment would be valued shall be defaulted to a lump sum payment. (b) Subsequent Elections. In accordance with the procedures and rules established by the Company, a Participant may change his or her distribution election (or deemed distribution election) with respect to his or her Retirement Account, or, in the event of death, his or her Account, per this Section 5.4 at any time by making a new election (referred to in this subsection as a “subsequent election”) on a form (which may be electronic) approved by Walmart’s Executive Compensation department and filed with Executive Compensation; provided, however, that such subsequent election shall be subject to the following restrictions: - 18 -

(1) A subsequent election may not take effect until at least twelve (12) months after the date on which such subsequent election is made; (2) Payment or initial payment pursuant to a subsequent election may not be made earlier than five (5) years from the date such payment would have been made absent the subsequent election (but, for this purpose, installment payments shall not commence until the first January 31 after such delay), unless the distribution is made on account of the Participant’s death; (3) A subsequent election related to a payment must be made not less than twelve (12) months before the date the payment is scheduled to be paid; (4) Payment of a Participant’s Retirement Account or, in the event of death, Account, pursuant to a subsequent election must be completed by the last day of the Plan Year which contains the twentieth (20th) anniversary of the Participant’s Separation Pay Date or the Participant’s death; (5) For purposes of this Section 5.4(b) and Code Section 409A, the entitlement to annual installment payments is treated as the entitlement to a single payment. If a Participant’s distribution election does not satisfy the requirements of this Section 5.4(b), it will not be recognized or given effect by the Committee. In that event, distribution of the benefit will be made in accordance with the Participant’s most recent distribution election which does satisfy the requirements of this Section 5.4(b). (c) Filing of Election. A Participant’s distribution election applicable to the Participant’s Account in the event of the Participant’s death prior to Separation from Service, and a Participant’s distribution election with respect to the Participant’s Retirement Account or Retirement Accounts, and the Participant’s Scheduled Pay Date with respect to the Participant’s Scheduled In-Service Accounts, must be filed with Executive Compensation on forms (which may be electronic) prescribed by Executive Compensation. 5.5 Distributions for Unforeseeable Emergencies. (a) In the event of an Unforeseeable Emergency, the Committee or its delegate, in its sole and absolute discretion and upon written application of a Participant or, following the Participant’s death, the beneficiary to whom a Participant’s benefits are then being paid, or will be paid, pursuant to Section 5.3, may direct immediate distribution of all or a portion of the Participant’s Account (excluding the Participant’s Matching Account and related earnings if the Participant is not fully vested in his or her Matching Account). The Committee will permit distribution on account of an Unforeseeable Emergency only to the extent reasonably necessary to satisfy the emergency need, plus amounts necessary to pay federal, state or local income taxes and penalties reasonably - 19 -

anticipated to result from the distribution, after taking into account the extent to which such need is or may be relieved through reimbursement or compensation by insurance, by liquidation of the Participant’s or beneficiary’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cessation of deferrals under the Plan. Any distribution under this Section 5.5 shall first be made from the Participant’s Scheduled In-Service Accounts with respect to Deferral Credits made in the same Plan Year as the Distribution under this Section 5.5(a), and then from the Participant’s Retirement Accounts with respect to Deferral Credits made in the same Plan Year as the Distribution under this Section 5.5(a), and then proratably from the remaining amount of the Participant’s Scheduled In-Service Accounts and then proratably from the Participant’s Retirement Accounts. (b) Notwithstanding anything in the Plan to the contrary, if Walmart reasonably anticipates that its deduction with respect to any distribution under this Section 5.5 that occurs prior to January 1, 2021 would not be permitted due to the application of Code Section 162(m); such payment shall be suspended to the extent a deduction would not be permitted until the earliest date at which it reasonably anticipates that the deduction of such distribution would not be barred by application of Code Section 162(m); provided, however, that the conditions of Section 5.5(a) are still satisfied as of such date. 5.6 Distributions for Payment of Taxes Walmart’s Senior Vice President of Global Compensation, or any successor position, may accelerate and pay a portion of a Participant’s Plan benefits in a lump sum equal to (a) the Federal Insurance Contributions Act tax imposed on Plan benefits and any income tax withholding related to such amounts, as well as (b) any state, local or foreign tax obligations arising from participation in the Plan (and related withholding under Code Section 3401) that apply to the amounts deferred under the Plan before such amount is paid or made available to the Participant. 5.7 Reductions Arising from a Participant’s Gross Misconduct. Notwithstanding anything herein to the contrary, a Participant’s Plan benefits are contingent upon the Participant not engaging in Gross Misconduct while employed with any Employer or Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. In the event the Committee determines that the Participant has engaged in Gross Misconduct during the prescribed period, then notwithstanding any provisions hereunder to the contrary: (a) the Participant shall forfeit all Employer Matching Contribution Credits and credited Plan earnings thereon; (b) earnings credited to the Participant’s Deferral Account shall be recalculated for each Plan Year to reflect the amount which would otherwise have been credited if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect for such Plan Year; and (c) if the Participant is then receiving installment payments, any remaining - 20 -

installments shall be recalculated to reflect the amount which would otherwise have been paid if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect with respect to such installment payments. Under no circumstances will a Participant forfeit any portion of the Participant’s Deferred Compensation, Deferred MIP Bonus and Deferred Special Bonus. Any payments received hereunder by a Participant (or the Participant’s beneficiary) are contingent upon the Participant not engaging (or not having engaged) in Gross Misconduct while employed with any Employer or Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. If the Committee determines, after payment of amounts hereunder, that the Participant has engaged in Gross Misconduct during the prescribed period, the Participant (or the Participant’s beneficiary) shall repay to Walmart any amount in excess of that to which the Participant is entitled under this Section 5.7. ARTICLE VI. ADMINISTRATION 6.1 General. The Committee is responsible for the administration of the Plan and is granted the following rights and duties: (a) The Committee shall have the exclusive duty, authority and discretion to interpret and construe the provisions of the Plan, to determine eligibility for and the amount of any benefit payable under the Plan, and to decide any dispute which may arise regarding the rights of Participants (or their beneficiaries) under this Plan; (b) The Committee shall have the authority to adopt, alter, and repeal such administrative rules, regulations, and practices governing the operation of the Plan as it shall from time to time deem advisable; (c) The Committee may appoint a person or persons to act on behalf of, or to assist, the Committee in the administration of the Plan, establishment of forms (including electronic forms) desirable for Plan operation, and such other matters as the Committee deems necessary or appropriate; (d) The decision of the Committee in matters pertaining to this Plan shall be final, binding, and conclusive upon Walmart, any Related Affiliate, the Participant, the Participant’s beneficiary, and upon any person affected by such decision, subject to the claims procedure set forth in Article VII; and - 21 -

(e) In any matter relating solely to a Committee member’s individual rights or benefits under this Plan, such Committee member shall not participate in any Committee proceeding pertaining to, or vote on, such matter. 6.2 Allocation and Delegation of Duties. (a) The Committee shall have the authority to allocate, from time to time, by instrument in writing filed in its records, all or any part of its respective responsibilities under the Plan to one or more of its members as may be deemed advisable, and in the same manner to revoke such allocation of responsibilities. In the exercise of such allocated responsibilities, any action of the member to whom responsibilities are allocated shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of such member. The member to whom responsibilities have been allocated shall periodically report to the Committee concerning the discharge of the allocated responsibilities. (b) The Committee shall have the authority to delegate, from time to time, by written instrument filed in its records, all or any part of its responsibilities under the Plan to such person or persons as the Committee may deem advisable (and may authorize such person to delegate such responsibilities to such other person or persons as the Committee shall authorize) and in the same manner to revoke any such delegation of responsibility. Any action of the delegate in the exercise of such delegated responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of any such delegate. The delegate shall periodically report to the Committee concerning the discharge of the delegated responsibilities. ARTICLE VII. CLAIMS PROCEDURE 7.1 General. Any claim for benefits under the Plan must be filed by the Participant or beneficiary (“claimant”) in writing with the Committee or its delegate within one (1) year of the Participant’s Separation from Service. If the claim is not filed within one (1) year of the Participant’s Separation from Service, neither the Plan nor any Employer nor any Related Affiliate shall have any obligation to pay the benefit and the claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is wholly or partially denied, notice of the decision will be furnished to the claimant by the Committee or its delegate within a reasonable period of time, not to exceed sixty (60) days, after receipt of the claim by the Committee or its delegate, unless special circumstances require an extension of time for processing, in which case a decision will be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt. Any claimant who is denied a claim for benefits will be furnished written notice setting forth: - 22 -

(a) the specific reason or reasons for the denial; (b) specific reference to the pertinent Plan provision upon which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (d) an explanation of the Plan’s claim review procedure, including the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse determination on review. 7.2 Appeals Procedure. To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative: (a) may request a review by written application to the Committee not later than sixty (60) days after receipt by the claimant of the written notification of denial of a claim; (b) may review pertinent documents; and (c) may submit issues and comments in writing. A decision on review of a denied claim will be made by the Committee not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt of a request for review. The decision on review will be in writing and shall include: (a) the specific reason or reasons for the adverse determination; (b) specific reference to pertinent Plan provisions on which the adverse determination is based; (c) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and (d) a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a). 7.3 Disability Claims. Claims for disability benefits shall be determined under DOL Regulation section 2560.503-1 which is hereby incorporated by reference. - 23 -

ARTICLE VIII. MISCELLANEOUS PROVISIONS 8.1 Amendment, Suspension or Termination of Plan. Walmart, by action of the Committee, reserves the right to amend, suspend or to terminate the Plan in any manner that it deems advisable.Notwithstanding the preceding sentence, the Plan may not be amended, suspended or terminated to cause a Participant to forfeit the Participant’s then-existing Account. Notwithstanding the preceding, Walmart may, by action of the Committee within the thirty (30) days preceding or twelve (12) months following a change in control (within the meaning of Code Section 409A) of a relevant affiliate, partially terminate the Plan and distribute benefits to all Participants involved in such change in control within twelve (12) months after such action, provided that all plans sponsored by the service recipient immediately after the change in control (which are required to be aggregated with this Plan pursuant to Code Section 409A) are also terminated and liquidated with respect to each Participant involved in the change in control. Any action taken in this Section 8.1 will be done in accordance with Code Section 409A. 8.2 Non-Alienability. No interest or amounts payable under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment. 8.3 Recovery of Overpayments. In the event any payments under the Plan are made on account of a mistake of fact or law, the recipient shall return such payment or overpayment to Walmart as requested by Walmart. - 24 -

8.4 No Employment Rights. Nothing contained herein shall be construed as conferring upon any Eligible Participant or Participant the right to continue in the employ of any Employer or any Related Affiliate as an officer or in any other capacity. 8.5 No Right to Bonus. Nothing contained herein shall be construed as conferring upon the Participant the right to receive a bonus from the MIP or any other bonus or award from any Employer or a Related Affiliate. A Participant’s entitlement to such a bonus or award is governed solely by the provisions of the MIP or such other plan or arrangement. 8.6 Withholding and Employment Taxes. To the extent required by law, the Employer or a Related Affiliate will withhold from a Participant’s current compensation such taxes as are required to be withheld for employment taxes. To the extent required by law, the Employer or a Related Affiliate will withhold from a Participant’s Plan distributions such taxes as are required to be withheld for federal, Puerto Rican, state or local government income tax purposes. 8.7 Income and Excise Taxes. The Participant (or the Participant’s Beneficiaries) is solely responsible for the payment of all federal, Puerto Rican, state and local income and excise taxes resulting from the Participant’s participation in this Plan. 8.8 Successors and Assigns. The provisions of this Plan are binding upon and inure to the benefit of Walmart and each other Employer, their successors and assigns, and the Participant, the Participant’s beneficiaries, heirs, and legal representatives. 8.9 Governing Law. This Plan shall be subject to and construed in accordance with the laws of the State of Delaware to the extent not preempted by federal law. - 25 -

Exhibit 10(g).1

AMENDED SCHEDULE OF EXECUTIVE OFFICERS WHO HAVE EXECUTED A POST-TERMINATION AGREEMENT AND COVENANT NOT TO COMPETE IN THE FORM FILED AS EXHIBIT 10(p) TO THE ANNUAL REPORT ON FORM 10-K OF THE COMPANY FOR THE FISCAL YEAR ENDED JANUARY 31, 2011 (this "Amended Schedule")

This Amended Schedule amends the Schedule of Executive Officers Who Have Executed a Post-Termination Agreement and Covenant Not to Compete that followed the form of Post- Termination Agreement and Covenant Not to Compete originally filed by Walmart Inc. (formerly Wal-Mart Stores, Inc.) as Exhibit 10(p) to its Annual Report on Form 10-K for the year ended January 31, 2011, as filed on March 30, 2011 (the "Form Agreement"). This Amended Schedule is included pursuant to Instruction 2 of Item 601(a) of Regulation S-K for the purpose of setting forth the details in which the specific agreements executed in the form of the Form Agreement differ from the Form Agreement, in particular to set forth the persons who, with Walmart Inc., were parties to Post- Termination Agreements and Covenants Not to Compete in such form as of January 31, 2019.

Executive Officer Who is a Party to such a Post-Termination Agreement and Covenant Not to Compete Date of Agreement

Value of Restricted Stock Award Granted in Connection with Agreement

Daniel J. Bartlett May 16, 2013 Not Applicable M. Brett Biggs September 21, 2010 $500,000 Rachel L. Brand February 21, 2018 Not Applicable David Chojnowski November 16, 2016 Not Applicable Gregory Foran July 23, 2014 Not Applicable John R. Furner May 7, 2011 Not Applicable C. Douglas McMillon January 19, 2010 $2,000,000 Jacqueline P. Canney June 26, 2015 Not Applicable Judith McKenna May 18, 2015 Not Applicable

Exhibit 21

Significant Subsidiaries of Walmart Inc.

The following list details certain of the subsidiaries of Walmart Inc. Subsidiaries not included in the list are omitted because, in the aggregate, they are not significant as permitted by Item 601(b)(21) of Regulation S-K.

Subsidiary Organized or Incorporated Percent of Equity Securities

Owned Name Under Which Doing Business Other Than Subsidiary's Wal-Mart Stores East, LP Delaware, U.S. 100% Walmart Wal-Mart Stores Texas, LLC Delaware, U.S. 100% Walmart Wal-Mart Property Company Delaware, U.S. 100% NA Wal-Mart Real Estate Business Trust Delaware, U.S. 100% NA Sam's West, Inc. Arkansas, U.S. 100% Sam's Club Sam's East, Inc. Arkansas, U.S. 100% Sam's Club Sam's Property Company Delaware, U.S. 100% NA Sam's Real Estate Business Trust Delaware, U.S. 100% NA ASDA Group Limited England 100% ASDA Wal-Mart de Mexico, S.A.B. de C.V. Mexico 71% Walmex Wal-Mart Canada Corp. Canada 100% Walmart Flipkart Private Limited Singapore 81% Flipkart Wal-Mart Japan Holdings K.K. Japan 100% Seiyu Walmart Chile S.A. (1) Chile 100% Walmart Chile Massmart Holdings Ltd South Africa 52% Massmart (1) The Company owns substantially all of Walmart Chile.

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Stock Option Plan of 1984 of Wal-Mart Stores, Inc., as amended Form S-8 File Nos. 2-94358 and 1-6991 (2) Stock Option Plan of 1994 of Wal-Mart Stores, Inc., as amended Form S-8 File No. 33-55325 (3) Dividend Reinvestment and Stock Purchase Plan of Wal-Mart Stores, Inc. Form S-3 File No. 333-02089 (4) Wal-Mart Stores, Inc. Director Compensation Plan Form S-8 File No. 333-24259 (5) Wal-Mart Stores, Inc. 401(k) Retirement Savings Plan Form S-8 File No. 333-29847 (6) Wal-Mart Puerto Rico, Inc., 401(k) Retirement Savings Plan Form S-8 File No. 333-44659 (7) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996 Form S-8 File No. 333-62965 (8) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and restated the 2010 plan Form S-8 File No. 333-60329 (9) The ASDA Colleague Share Ownership Plan Form S-8 File No. 333-84027

The ASDA Group Long Term Incentive Plan The ASDA Group PLC Sharesave Scheme The ASDA 1984 Executive Share Option Scheme The ASDA 1994 Executive Share Option Scheme

(10) The ASDA Colleague Share Ownership Plan 1999 Form S-8 File No. 333-88501 (11) Wal-Mart Profit Sharing and 401(k) Plan Form S-8 File No. 333-109421 (12) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996 Form S-8 File No. 333-109417 (13) Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan Form S-8 File No. 333-109414 (14) ASDA Sharesave Plan 2000 Form S-8 File No. 333-107439 (15) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and restated the 2010 plan Form S-8 File No. 333-128204 (16) The ASDA Sharesave Plan 2000 Form S-8 File No. 333-168348 (17) Walmart Deferred Compensation Matching Plan Form S-8 File No. 333-178717 (18) Wal-Mart Stores, Inc. Common Stock Form S-3 ASR File No. 333-178385 (19) Walmart 401(k) Plan Form S-8 File No. 333-187577 (20) Wal-Mart Stores, Inc. Associate Stock Purchase Plan Form S-8 File No. 333-214060 (21) Debt Securities of Wal-Mart Stores, Inc. Form S-3 ASR File No. 333-221941 (22) Walmart Inc. 2016 Associate Stock Purchase Plan Form S-8 File No. 333-228631 (23) Walmart Inc. Stock Incentive Plan of 2015 Form S-8 File No. 333-228635

of our reports dated March 28, 2019, with respect to the consolidated financial statements of Walmart Inc. and the effectiveness of internal control over financial reporting of Walmart Inc., included in this Annual Report (Form 10-K) of Walmart Inc. for the year ended January 31, 2019.

/s/ Ernst & Young LLP

Rogers, Arkansas March 28, 2019

Exhibit 31.1

I, C. Douglas McMillon, certify that: 1. I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the

circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations

and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))

and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating

to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and

procedures, as of the end of the period covered by this report, based on such evaluations; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially

affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit

Committee of registrant's Board of Directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the

registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 28, 2019 /s/ C. Douglas McMillon

C. Douglas McMillon President and Chief Executive Officer

Exhibit 31.2

I, M. Brett Biggs, certify that: 1. I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the

Date: March 28, 2019 /s/ M. Brett Biggs

M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon, President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 28, 2019 .

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, M. Brett Biggs, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 28, 2019 .

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 99.1

State Court Prescription Opiate Litigation Case Citations as of March 15, 2019 .

State of New Mexico, ex rel., Hector Balderas, Attorney General v. Purdue Pharma L.P., et al., NM Dist. Ct, 1st Judicial District, Cty. of Santa Fe, 3/6/2019; Cty. of Lewis v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 2/26/2019; City of Sanford v. Purdue Pharma, L.P., et al., Me. Super Ct., York Cty., 2/1/2019; City of Saco v. Purdue Pharma, L.P., et al., Me. Super Ct., York Cty., 2/1/2019; Waldo Cty. v. Purdue Pharma L.P., et al., Me. Super Ct., Waldo Cty., 2/1/2019; Cty. of St. Lawrence v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 1/30/2019; City of New York v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 1/16/2019; Cty. Comm’n of Mason Cty., et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Barbour Cty., et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Mayor Chris Tatum on behalf of the Village of Barboursville, et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Taylor Cty., et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Webster Cty., et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Mayor Don E. McCourt, on Behalf of the Town of Addison aka the Town of Webster Springs, et al. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. of Fulton v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 1/8/2019; Cty. of Cortland v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 1/8/2019; Cty. of Ontario v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 1/8/2019; Bad River Band of Lake Superior Chippewa v. McKesson Corporation, et al., Wis. Cir. Ct., Ashland Cty., 1/7/2019; Bd. of Cty. Comm'rs for San Miguel Cty. v. Purdue Pharma L.P., et al., N.M. St. Ct., San Miguel Cty., 12/28/2018; Cty. of Columbia v. Purdue Pharma L.P., et al. , N.Y. Super. Ct., Suffolk Cty., 12/1/2018; Cty. of Monroe v. Purdue Pharma, L.P., et al., N.Y. Super. Ct., Suffolk Cty., 12/1/2018; Cty. of Wyoming v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/28/2018; Cty. of Greene v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/28/2018; Cty. of Oswego v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/27/2018; Cty. of Schenectady v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/15/2018; Carpenters Health and Welfare Fund v. Purdue Pharma L.P., et al., Pa. Ct. of Comm. Pleas, Del. Cty., 11/14/2018; Cty. of Broome v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Cty. of Erie v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Cty. of Orange v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Cty. of Dutchess v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Cty. of Seneca v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Cty. of Sullivan v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 11/13/2018; Johnson Cty. v. Abbott Labs, et al., Tex. Dist. Ct., 18th Dist. Ct., 11/2/2018; City of Ithaca v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Rensselaer v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Saratoga v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Schoharie v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Westchester v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Genesee v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Niagara v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Hamilton v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Franklin v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Schuyler v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Steuben v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Clinton v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Tompkins v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Suffolk v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Cty. of Nassau v. Purdue Pharma L.P., et al., N.Y. Super. Ct., Suffolk Cty., 10/23/2018; Monongalia Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Upshur Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Marion Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Doddridge Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Randolph Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; City of Belmont v. Purdue Pharma L.P., et al., N.H. Super. Ct., Belknap Cty., 9/19/2018; Cheshire Cty. v. Purdue Pharma L.P., et al., N.H. Super. Ct., Cheshire Cty., 9/19/2018; Strafford Cty. v. Purdue Pharma L.P., et al., N.H. Super. Ct., Strafford Cty., 9/18/2018; City of Claremont v. Purdue Pharma L.P., et al., N.H. Super. Ct., Sullivan Cty., 9/18/2018; Sullivan Cty. v. Purdue Pharma L.P., et al., N.H. Super. Ct., Sullivan Cty., 9/18/2018; Rockingham Cty. v. Purdue Pharma L.P., et al., N.H. Super. Ct., Rockingham Cty., 9/18/2018; Grafton Cty. v. Purdue Pharma, L.P., et al., N.H. Super. Ct., Grafton Cty., 9/18/2018; Belknap Cty. v. Purdue Pharma L.P., et al., N.H. Super. Ct., Belknap Cty., 9/18/2018; Cty. of Bamberg v. Rite Aid of S.C., Inc., et al., S.C. Ct. of Comm. Pleas, Cty. of Bamberg, 9/13/2018; Cty. of Barnwell v. Rite Aid of S.C., Inc., et al., S.C. Ct. of Comm. Pleas, Cty. of Barnwell, 9/13/2018; Cty. of Greenwood v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 8/23/2018; Cty. of York v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, York Cty., 8/15/2018; Cty. of Laurens v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, Laurens Cty., 8/14/2018; Cty. of Union v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, Union Cty., 8/2/2018; Cty. of Cherokee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, Cherokee Cty., 8/2/2018; Cty. of Oconee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, Oconee Cty., 7/26/2018; Chesterfield Cty. v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 4th Jud. Cir., 7/11/2018; Cty. of Fairfield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 6th Jud. Cir., 7/3/2018; Cty. of Lee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 3d Jud. Cir., 7/3/2018; Cty. of Orangeburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 1st Jud. Cir., 7/3/2018; Cty. of Allendale v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 14th Jud.

Cir., 6/25/2018; Cty. of Hampton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 14th Jud. Cir., 6/25/2018; Cty. of Jasper v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 14th Jud. Cir., 6/25/2018; Cty. of Kershaw, et al. v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 5th Jud. Cir., 6/25/2018; Cty. of Colleton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 14th Jud. Cir., 6/20/2018; Cty. of Dorchester v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 1st Jud. Cir., 6/19/2018; Cty. of Williamsburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 3d Jud. Cir.; 6/19/2018; Cty. of Beaufort v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 14th Jud. Cir., 6/18/2018; Pickens Cty. v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, 13th Jud. Cir., 6/14/2018; Cty. of Anderson v. Rite Aid of S.C., Inc., et al., S.C. Ct. Comm. Pleas, Anderson Cty., 6/6/2018; People of the State of Illinois, the People of Union Cty., et al. v. Purdue Pharma L.P., et al., Ill. Cir. Ct., Cook Cty., 4/18/2018; Cty. of Greenville v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 13th Jud. Cir., 3/5/2018; Brooke Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Hancock Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Harrison Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Lewis Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Marshall Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Ohio Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Tyler Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Wetzel Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ___________________________________________

FORM 10-K ___________________________________________

ý Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended January 31, 2018 , or

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-6991. ___________________________________________

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

___________________________________________

Delaware 71-0415188 (State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

702 S.W. 8th Street

Bentonville, Arkansas 72716 (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

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

Title of each class Name of each exchange on which registered

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

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

Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Large Accelerated Filer ý Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company o Emerging Growth Company o

As o f July 31, 2017, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2017, was $114,770,199,895. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common stock are the affiliates of the registrant.

The registrant had 2,950,696,818 shares of common stock outstanding as of March 28, 2018 .

DOCUMENTS INCORPORATED BY REFERENCE

Document Parts Into Which Incorporated

Portions of the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held May 30, 2018 (the "Proxy Statement")

Part III

Walmart Inc. Form 10-K

For the Fiscal Year Ended January 31, 2018

Table of Contents

Page Part I Item 1 Business 7 Item 1A Risk Factors 17 Item 1B Unresolved Staff Comments 26 Item 2 Properties 27 Item 3 Legal Proceedings 29 Item 4 Mine Safety Disclosures 30

Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6 Selected Financial Data 33 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A Quantitative and Qualitative Disclosures About Market Risk 49 Item 8 Financial Statements and Supplementary Data 51 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 85 Item 9A Controls and Procedures 85 Item 9B Other Information 86

Part III Item 10 Directors, Executive Officers and Corporate Governance 87 Item 11 Executive Compensation 87 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 87 Item 13 Certain Relationships and Related Transactions, and Director Independence 87 Item 14 Principal Accounting Fees and Services 87

Part IV Item 15 Exhibits, Financial Statement Schedules 88 Item 16 Form 10-K Summary 88

Signatures 89 Exhibit Index 91

WALMART INC. (formerly "WAL-MART STORES, INC.")

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2018

On February 1, 2018, the legal name of our corporation became "Walmart Inc.," changing from "Wal-Mart Stores, Inc." All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on May 30, 2018 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or the context otherwise requires, that corporation's consolidated subsidiaries.

• the growth of our business or change in our competitive position in the future or in or over particular periods; • the amount, number, growth or increase, in or over certain periods, of or in certain financial items or measures or operating measures, including our

earnings per share, including as adjusted for certain items, net sales, comparable store and club sales, our Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain categories, expense leverage, returns, capital and operating investments or expenditures of particular types, new store openings and investments in particular formats;

• investments and capital expenditures we will make and how certain of those investments and capital expenditures are expected to be financed; • our plans to increase investments in eCommerce, technology, store remodels and other customer initiatives, such as online grocery locations; • volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations; • the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share repurchase authorization over a

certain period or the source of funding of a certain portion of our share repurchases; • our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund and finance our operations, expansion activities, dividends and

share repurchases, to meet our cash needs and to fund our domestic operations without repatriating earnings we hold outside of the United States; • our intention to reinvest the earnings we hold outside of the United States in our foreign operations and certain laws, other limitations and potential taxes

on anticipated future repatriations of such earnings not materially affecting our liquidity, financial condition or results of operations; • the insignificance of ineffective hedges and reclassification of amounts related to our derivatives; • our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of resolutions of tax-related matters; • the effect of adverse decisions in, or settlement of, litigation or other proceedings to which we are subject; or • the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or amendments to existing, accounting

standards. Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations, including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion," "expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"

FCPA matter; • disruptions in Walmart's supply chain; • cybersecurity events affecting Walmart and related costs and impact of any disruption in business; • Walmart's labor costs, including healthcare and other benefit costs; • Walmart's casualty and accident-related costs and insurance costs; • the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that workforce; • the availability of necessary personnel to staff Walmart's stores, clubs and other facilities;

• unexpected changes in Walmart's objectives and plans; • developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party or is subject, and the liabilities,

obligations and expenses, if any, that Walmart may incur in connection therewith; • changes in the credit ratings assigned to the Company's commercial paper and debt securities by credit rating agencies; • Walmart's effective tax rate; and • unanticipated changes in accounting judgments and estimates;

Regulatory and Other Factors • changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the adoption and interpretation of

administrative rules and regulations; • adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the markets in which Walmart operates and

elsewhere and actions with respect to such policies, programs and initiatives; • the possibility of the imposition of new taxes on imports and new tariffs and trade restrictions and changes in tariff rates and trade restrictions; • changes in currency control laws; • changes in the level of public assistance payments; • the timing of federal income tax refunds; • natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and • changes in generally accepted accounting principles in the United States.

Other Risk Factors; No Duty to Update The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forward-looking statements we make or made on our behalf is not exclusive. We are subject to other risks discussed under the caption "Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and Results of Operations and in risks that may be discussed under "Part II, Item 1A. Risk Factors" and "Part I, Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations" appearing in our Quarterly Reports on Form 10-Q or may otherwise be disclosed in our Quarterly Reports on Form 10-Q and other reports filed with the SEC. Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating our forward-looking statements. The forward-looking statements that we make or are made by others on our behalf are based on our knowledge of our business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

ITEM 1. BUSINESS

General Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce. Through innovation, we are striving to create a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni- channel offering that saves time for our customers. Each week, we serve nearly 270 million customers who visit our more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. Leading on price is designed to earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed along to our customers. Our omni-channel presence provides customers access to our broad assortment anytime and anywhere. We strive to give our customers and members a great digital and physical shopping experience. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2018 ("fiscal 2018 "), January 31, 2017 ("fiscal 2017 ") and January 31, 2016 ("fiscal 2016 "). During fiscal 2018 , we generated total revenues of $500.3 billion , which was primarily comprised of net sales of $495.8 billion . We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the New York Stock Exchange under the symbol "WMT."

Information About Our Segments The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products and services. Walmart U.S. is our largest segment and operates retail stores in all 50 states in the U.S., Washington D.C. and Puerto Rico, with three primary store formats, as well as eCommerce. Walmart U.S. generated approximately 64% of our net sales in fiscal 2018 , and of our three segments, Walmart U.S. is the largest and has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income. Walmart International consists of operations in 27 countries outside of the U.S. and is divided into three major categories: retail, wholesale and other. These categories consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry, as well as eCommerce. Walmart International generated

approximately 24% of our fiscal 2018 net sales. The overall gross profit rate for Walmart International is lower than that of Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment. Sam's Club consists of membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as eCommerce. Sam's Club accounted for approximately 12% of our fiscal 2018 net sales. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation.

Walmart U.S. Segment The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the "Walmart," "Wal-Mart" and "Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. The Walmart U.S. segment had net sales of $318.5 billion , $307.8 billion and $298.4 billion for fiscal 2018 , 2017 and 2016 , respectively. During the most recent fiscal year, no single unit accounted for as much as 1% of total Company consolidated net sales.

Physical. Walmart U.S. operates retail stores in the U.S., including in all 50 states, Washington D.C. and Puerto Rico, with supercenters in 49 states, Washington D.C. and Puerto Rico, discount stores in 41 states and Puerto Rico and Neighborhood Markets and other small store formats in 36 states, Washington D.C. and Puerto Rico. The following table provides square footage details on each of our formats as of January 31, 2018 :

Minimum Square

Feet Maximum Square

Feet Average Square

Feet Supercenters (general merchandise and grocery) 69,000 260,000 178,000 Discount stores (general merchandise and limited grocery) 30,000 206,000 105,000 Neighborhood Markets (1) (grocery) 28,000 65,000 42,000 (1) Excludes other small formats.

The following table provides the retail unit count and retail square feet by format for the fiscal years shown:

Supercenters Discount Stores

Fiscal Year Opened Closed Conversions (1) Total (2) Square Feet (2) Opened Closed Conversions (1) Total (2)

Square Feet (2)

Balance forward 3,158 570,409 561 59,098 2014 72 — 58 3,288 589,858 4 — (57) 508 53,496 2015 79 — 40 3,407 607,415 2 — (40) 470 49,327 2016 55 (16) 19 3,465 616,428 — (9) (19) 442 45,991 2017 38 (2) 21 3,522 625,930 — (6) (21) 415 43,347 2018 30 — 9 3,561 632,479 — (6) (9) 400 41,926

Neighborhood Markets and Other Small Formats Total Segment

Fiscal Year Opened Closed Conversions (1) Total (2)

Square Feet (2)

Opened (3) Closed Total (2)

Square Feet (2)

Balance forward 286 11,226 4,005 640,733 2014 122 — (1) 407 15,778 198 — 4,203 659,132 2015 235 (3) — 639 23,370 316 (3) 4,516 680,112 2016 161 (133) — 667 27,228 216 (158) 4,574 689,647 2017 73 (5) — 735 30,012 111 (13) 4,672 699,289 2018 85 (20) — 800 30,111 115 (26) 4,761 704,516 (1) Conversions of discount stores or Neighborhood Markets to supercenters. (2) "Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands. (3) Total opened, net of conversions of discount stores or Neighborhood Markets to supercenters.

Digital. Walmart U.S. provides its customers access to a broad assortment of merchandise, including products not found in our physical stores, and services online through our eCommerce family of brands' websites and third party retail partnership channels, as well as through related mobile commerce and voice-activated commerce applications. Our eCommerce family of brands includes walmart.com, jet.com, hayneedle.com, shoes.com, moosejaw.com, modcloth.com and bonobos.com. Walmart.com offers access to nearly 75 million SKUs, including those carried on Marketplace, a feature of the website that permits third parties to sell merchandise on walmart.com. Walmart.com is also integrated with our physical stores through

services like "Walmart Pickup," "Pickup Today" and in over 1,100 "Online Grocery" pickup locations to provide an omni-channel offering to our customers. Walmart U.S. also offers access to digital content and services including Vudu.

Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below, across several store formats including supercenters, discount stores, Neighborhood Markets and other small store formats, as well as on our eCommerce websites.

• Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other medical products; • General merchandise includes:

◦ Entertainment (e.g., electronics, cameras and supplies, photo processing services, wireless, movies, music, video games and books); ◦ Hardlines (e.g., stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture); ◦ Apparel (e.g., apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories); and ◦ Home/Seasonal (e.g., home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics and crafts and seasonal

merchandise).

Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of merchandise under our private-label store brands, including: "Adventure Force," "AutoDrive," "BlackWeb," "Equate," "Everstart," "Faded Glory," "George," "Great Value," "Holiday Time," "Hyper Tough," "Kid Connection," "Mainstays," "Marketside," "My Life As," "No Boundaries," "Ol' Roy," "Onn," "Ozark Trail," "Parent's Choice," "Prima Della," "Pure Balance," "Sam's Choice," "Special Kitty," "Spring Valley," "Terra & Sky," "Time and Tru," "Way to Celebrate" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware," "Russell" and "SwissTech." The percentage of strategic merchandise unit net sales for Walmart U.S., including online sales, was as follows for fiscal 2018 , 2017 and 2016 :

Fiscal Years Ended January 31, STRATEGIC MERCHANDISE UNITS 2018 2017 2016 Grocery 56% 56% 56% Health and wellness 11% 11% 11% General merchandise 33% 33% 33% Total 100% 100% 100%

Operations. Many supercenters, discount stores and Neighborhood Markets are open 24 hours each day. A variety of payment methods are accepted at our stores and through our eCommerce websites and mobile commerce applications.

Competition. Walmart U.S. competes with both physical retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well as catalog businesses. We also compete with others for desirable sites for new or relocated retail units. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following:

• EDLP: our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity;

• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers;

• Rollbacks: our commitment to pass cost savings on to the customer by lowering prices on selected goods; • Savings Catcher, Save Even More and Ad Match: strategies to meet or be below a competitor's advertised price; • Walmart Pickup: customer places order online and picks it up for free from a store. The merchandise is fulfilled through our distribution facilities; • Pickup Today: customer places order online and picks it up at a store within four hours for free. The order is fulfilled through existing store inventory; • Online Grocery: customer places grocery order online and has it delivered to home or picks it up at one of our participating stores or remote locations; and • Money Back Guarantee: our commitment to ensure the quality and freshness of the fruits and vegetables in our stores by offering our customers a 100

percent money-back guarantee if they are not satisfied. We offer a broad assortment of merchandise that provides one-stop shopping, in-stock levels that give our customers confidence that we will have the products they need and operating hours that allow customers to shop at their convenience. In addition, our eCommerce capabilities, including omni-channel transactions that involve both an eCommerce platform and a physical format, are important factors in our competition with other retailers.

Distribution. For fiscal 2018 , approximately 78% of Walmart U.S.'s purchases of store merchandise were shipped through our 157 distribution facilities, which are located strategically throughout the U.S. The remaining merchandise we purchased was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 30 dedicated eCommerce fulfillment centers. The following table provides further details of our distribution facilities, including return facilities and dedicated eCommerce fulfillment centers, as of January 31, 2018 :

Owned and Operated

Owned and Third Party

Operated Leased and Operated

Third Party Owned and Operated Total

Walmart U.S. distribution facilities 103 2 23 29 157

Walmart International Segment The Walmart International segment consists of operations in 27 countries outside of the U.S. and includes numerous formats divided into three major categories: retail, wholesale and other. These categories, including eCommerce, consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. The segment's net sales for fiscal 2018 , 2017 and 2016 , were $118.1 billion , $116.1 billion and $123.4 billion , respectively, which have been impacted by currency exchange rate fluctuations. During the most recent fiscal year, no single unit accounted for as much as 1% of total Company net sales.

Physical. Walmart International includes physical stores operated by: our wholly-owned subsidiaries operating in Argentina, Brazil, Canada, Chile, China, India, Japan and the United Kingdom; and our majority-owned subsidiaries operating in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) and Mexico. Generally, retail units range in size from 8,900 square feet to 186,000 square feet. Our wholesale stores generally range in size from 35,000 square feet to 185,000 square feet. Other, which includes drugstores and convenience stores operating under various banners in Brazil, Mexico and the United Kingdom, range in size up to 2,400 square feet. Also, on a limited basis, Walmart International operates financial institutions that provide consumer credit.

The following table provides the retail unit count (1) and retail square feet (2) for the fiscal years shown:

Africa Argentina Brazil Canada Central America Chile

Fiscal Year Unit

Count Square Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Balance forward 377 19,775 94 7,531 558 32,494 379 48,354 642 9,873 329 12,671 2014 379 20,513 104 8,062 556 32,501 389 49,914 661 10,427 380 13,697 2015 396 21,223 105 8,119 557 33,028 394 50,927 690 11,094 404 14,762 2016 408 21,869 108 8,280 499 30,675 400 51,784 709 11,410 395 15,407 2017 412 22,542 107 8,264 498 30,642 410 53,088 731 11,770 363 15,260 2018 424 23,134 106 8,305 465 29,824 410 53,082 778 12,448 378 15,990

China India Japan Mexico (3) United

Kingdom Total Segment

Fiscal Year Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Unit

Count Square

Feet Balance forward 393 65,801 20 1,083 438 24,448 1,988 88,833 565 34,810 5,783 345,673 2014 405 67,205 20 1,083 438 24,489 2,199 94,900 576 35,416 6,107 358,207 2015 411 68,269 20 1,083 431 24,429 2,290 98,419 592 36,277 6,290 367,630 2016 432 71,724 21 1,146 346 22,551 2,360 100,308 621 37,044 6,299 372,198 2017 439 73,172 20 1,091 341 21,921 2,411 101,681 631 37,338 6,363 376,769 2018 443 73,615 20 1,091 336 21,181 2,358 97,024 642 37,587 6,360 373,281 (1) "Unit Count" includes retail stores, wholesale clubs and other, which includes drugstores and convenience stores. Walmart International unit counts, with the exception of Canada, are

stated as of December 31, to correspond with the fiscal year end of the related geographic market. Canada unit counts and square footage are stated as of January 31. For the balance forward, all country balances are stated as of the end of fiscal year 2013.

(2) "Square Feet" columns are reported in thousands. (3) All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in fiscal 2015.

Unit counts (1) as of January 31, 2018 for Walmart International are summarized by major category for each geographic market as follows:

Geographic Market Retail Wholesale Other (2) Total Africa (3) 335 89 — 424 Argentina 106 — — 106 Brazil 380 70 15 465 Canada 410 — — 410 Central America (4) 778 — — 778 Chile 373 5 — 378 China 424 19 — 443 India — 20 — 20 Japan 336 — — 336 Mexico 2,186 162 10 2,358 United Kingdom 617 — 25 642 Total 5,945 365 50 6,360

(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017 , to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2018 .

(2) Other includes drug stores and convenience stores. (3) Africa unit counts by country are Botswana ( 11 ), Ghana ( 2 ), Kenya ( 1 ), Lesotho ( 3 ), Malawi ( 2 ), Mozambique ( 5 ), Namibia ( 4 ), Nigeria ( 5 ), South Africa ( 382 ), Swaziland ( 1 ),

Tanzania ( 1 ), Uganda ( 1 ) and Zambia ( 6 ). (4) Central America unit counts by country are Costa Rica ( 247 ), El Salvador ( 95 ), Guatemala ( 238 ), Honduras ( 103 ) and Nicaragua ( 95 ).

Digital. Walmart International operates eCommerce websites in numerous countries. Customers have access through our eCommerce websites and, in countries where available, mobile commerce applications to a broad assortment of merchandise and services, both of which vary by country. Our omni-channel offerings include capabilities like "Click & Collect" in the United Kingdom and our grocery pick-up and delivery business in several other markets.

Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality, lower priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday Time," "Mainstays," "Ol' Roy" and "Parent's Choice," our international markets have developed market specific brands including "Aurrera," "Cambridge," "Chosen by You" and "Extra Special." In addition, we have developed relationships with

regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at low prices.

Competition. Walmart International competes with both physical retailers who operate department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses. We also operate, on a limited basis, consumer credit operations. We compete with others for desirable sites for new or relocated units. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly integrates digital and physical shopping determines, to a large extent, our competitive position in the markets in which Walmart International operates. We believe price leadership is a critical part of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant impact on our competitive position in the markets where we operate. In the markets in which we have eCommerce websites or mobile commerce applications, those websites and applications help differentiate us from our competitors and help us compete with other retailers for customers and their purchases, both in our digital and physical retail operations.

Distribution. We utilize a total of 188 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile, China, Japan, Mexico, South Africa and the United Kingdom. Through these facilities, we process and distribute both imported and domestic products to the operating units of the Walmart International segment. During fiscal 2018 , approximately 83% of Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart International's purchases directly to our stores in the various markets in which we operate. The following table provides further details of our international distribution facilities, including 17 dedicated eCommerce fulfillment centers, as of December 31, 2017, with the exception of distribution facilities in Canada, which are stated as of January 31, 2018 :

Owned and Operated

Owned and Third Party

Operated Leased and Operated

Third Party Owned and Operated Total

International distribution facilities 43 12 87 46 188

We ship merchandise purchased by customers on our eCommerce websites and through our mobile commerce applications by a number of methods from multiple locations including from our dedicated eCommerce fulfillment centers.

Sam's Club Segment The Sam's Club segment operates membership-only warehouse clubs, as well as samsclub.com, in the U.S. and had net sales of $59.2 billion , $57.4 billion and $56.8 billion for fiscal 2018 , 2017 and 2016 , respectively. During the most recent fiscal year, no single club location accounted for as much as 1% of total Company net sales.

Membership. Beginning in the year ending January 31, 2019 ("fiscal 2019"), Sam's Club simplified the membership program. The following two options are available to members:

Membership Type Plus Club Annual Membership Fee $100 $45 Number of Add-on Memberships ($40 each) Up to 16 Up to 8 Eligible for Cash Rewards Yes No Eligible for Free Shipping Yes No

All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is a benefit that provides $10 for every $500 in qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on the vast majority of merchandise available online, with no minimum order size. Free Shipping is yet another example of creating a new Sam's Club for our members.

Physical. As a membership-only warehouse club, Sam's Club facility sizes generally range between 94,000 and 168,000 square feet, with an average size of approximately 134,000 square feet. The following table provides the retail unit count and retail square feet for the fiscal years shown :

Fiscal Year Opened Closed Total (1) Square Feet (1)

Balance forward 620 82,653 2014 12 — 632 84,382 2015 16 (1) 647 86,510 2016 8 — 655 87,552 2017 9 (4) 660 88,376 2018 4 (67) 597 80,068 (1) "Total" and "Square Feet" columns are as of January 31 for the fiscal years shown. Retail square feet are reported in thousands.

Digital. Sam's Club provides its members access to a broad assortment of merchandise, including products not found in our clubs, and services online at samsclub.com and through our mobile commerce applications. Samsclub.com experiences on average 20.4 million unique visitors a month and offers access to approximately 59,000 SKUs providing the member the option of delivery direct-to-home or to the club through services such as "Club Pickup." Digital retail supports our physical clubs with capabilities like "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.

snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies and other consumable items; • Fuel and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery centers; • Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry, housewares, toys, seasonal items, mattresses

and small appliances; • Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music, office supplies, office furniture, photo

processing and third-party gift cards; and • Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.

The Member's Mark brand continues to expand assortment and deliver member value. In fiscal 2018 , Member's Mark sales exceeded $10 billion, driven by growth in grocery, seasonal items and apparel. The percentage of net sales for Sam's Club, including eCommerce sales, by merchandise category, was as follows for fiscal 2018 , 2017 and 2016 :

Fiscal Years Ended January 31, MERCHANDISE CATEGORY 2018 2017 2016 Grocery and consumables 58% 59% 59% Fuel and other categories 21% 20% 20% Home and apparel 9% 9% 9% Technology, office and entertainment 6% 6% 7% Health and wellness 6% 6% 5% Total 100% 100% 100%

Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well as digital retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a quality merchandise assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and mobile commerce

applications have increasingly become important factors in our ability to compete with other membership-only warehouse clubs.

Distribution. During fiscal 2018 , approximately 68% of Sam's Club's non-fuel purchases were shipped from Sam's Club's 22 dedicated distribution facilities located strategically throughout the U.S., or from some of the Walmart U.S. segment's distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club segment's purchases directly to Sam's Club locations. The following table provides further details of our dedicated distribution facilities, including two dedicated eCommerce fulfillment centers and two dedicated import facilities, as of January 31, 2018 :

Owned and Operated

Owned and Third Party

Operated Leased and Operated

Third Party Owned and Operated Total

Sam's Club distribution facilities 3 3 3 13 22

The principal focus of Sam's Club's distribution operations is on cross-docking merchandise, while stored inventory is minimized. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour. Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs. Sam's Club ships merchandise purchased by members on samsclub.com and through its mobile commerce applications by a number of methods from its dedicated eCommerce fulfillment centers and other distribution centers.

Other Segment Information Certain financial information relating to our segments is included in Part II, Item 7 under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in Note 15 to our Consolidated Financial Statements. Note 15 also includes information regarding total revenues and long-lived assets aggregated by our U.S. and non-U.S. operations.

Employees As of the end of fiscal 2018 , Walmart Inc. and our subsidiaries employed approximately 2.3 million employees ("associates") worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good and are continuing to improve. A large number of associates turn over each year, although Walmart U.S. turnover has been improving in fiscal 2018 as a result of our focus on increasing wages and providing improved tools, technology and training to associates.

Certain information relating to retirement-related benefits we provide to our associates is included in Note 12 to our Consolidated Financial Statements. In addition to retirement-related benefits, in the U.S., we offer a broad range of Company-paid benefits to our associates. These include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of purchases of our stock by associates through our Associate Stock Purchase Plan and life insurance. In addition to the health-care benefits for eligible full-time and part-time associates in the U.S., as announced in January 2018, we expanded maternity leave and implemented a new paid parental leave program to all full-time associates. We also introduced a $5,000 benefit to assist eligible associates with adoption. Similarly, in the operations outside the U.S., we provide a variety of associate benefits that vary based on customary local practices and statutory requirements.

Name Business Experience

Current Position

Held Since Age Daniel J. Bartlett

2013

M. Brett Biggs

Executive Vice President and Chief Financial Officer, effective January 1, 2016. From January 2014 to December 2015, he served as Executive Vice President and Chief Financial Officer of Walmart International. From January 2013 to January 2014, he was Executive Vice President and Chief Financial Officer of Walmart U.S.

2016

Jacqueline P. Canney

Executive Vice President, Global People, effective August 3, 2015. From September 2003 to July 2015, she served as the Managing Director of Global Human Resources at Accenture plc., a global management consulting, technology services and outsourcing company.

2015

David M. Chojnowski

Senior Vice President and Controller effective January 1, 2017. From October 2014 to January 2017, he served as Vice President and Controller, Walmart U.S. From January 2013 to October 2014, he served as Vice President, Finance Transformation, of Walmart International.

2017

Gregory Foran

2014

John Furner

Executive Vice President, President and Chief Executive Officer, Sam's Club, effective February 1, 2017. From October 2015 to January 2017, he served as Executive Vice President and Chief Merchandising Officer of Sam's Club. From January 2013 to October 2015, he served as Senior Vice President and Chief Merchandising Officer of Walmart China.

2017

Marc Lore

Executive Vice President, President and Chief Executive Officer, U.S. eCommerce, effective September 2016. From April 2014 to September 2016, he served as President and Chief Executive Officer of Jet.com, Inc. From January 2005 to July 2013, he served as Chief Executive Officer of Quidsi, Inc., an eCommerce retailer that became a wholly-owned subsidiary of Amazon.com, Inc. in April 2011.

2016

Judith McKenna

Executive Vice President, President and Chief Executive Officer, Walmart International, effective February 1, 2018. From February 2015 to January 2018, she served as Executive Vice President and Chief Operating Officer of Walmart U.S. Prior to that position, she served as Executive Vice President and Chief Development Officer for Walmart U.S. from April 2014 to February 2015; as Executive Vice President, Strategy and Development, for Walmart International, from April 2013 to April 2014; and as Chief Operating Officer of Asda Group Limited, the Company's subsidiary in the United Kingdom, from July 2011 to April 2013.

2018

C. Douglas McMillon

President and Chief Executive Officer, effective February 1, 2014. From February 2009 to January 2014, he served as Executive Vice President, President and Chief Executive Officer, Walmart International.

2014

New Executive Officer Effective April 2, 2018, Rachel Brand, age 44, will join the Company as Executive Vice President, Global Governance and Corporate Secretary. From May 2017 to February 2018, she served as Associate Attorney General in the United States Department of Justice. From January 2017 to May 2017, she was an Associate Professor of Law at George Mason University Antonin Scalia Law School. Prior to that position, she served as a Board Member on the Privacy and Civil Liberties Oversight Board of the U.S. government from August 2012 to February 2017.

Our Website and Availability of SEC Reports and Other Information Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, such as the Company, that file electronically with the SEC. The address of that website is www.sec.gov. In addition, the public may read and copy any of the materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings, our Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics can be found on our website at www.stock.walmart.com. These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal offices. A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and Senior Financial Officers or our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such description will be located on our website for a period of 12 months following the amendment or waiver.

ITEM 1A. RISK FACTORS

Strategic Risks General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial performance. General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil, natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation, deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax laws, changes in healthcare laws, other regulatory changes, the imposition of measures that create barriers to or increase the costs associated with international trade, overall economic slowdown and other economic factors in the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products we sell in the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater markdowns of inventory, or otherwise materially adversely affect our operations and operating results. In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially adversely affect our operations and operating results. The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing goods in the volume typically available to us for sale.

We face strong competition from other retailers and wholesale club operators (whether through physical retail, digital retail or the integration of both), which could materially adversely affect our financial performance. Each of our segments competes for customers, employees, store and club sites, digital prominence, products and services and in other important aspects of its business with many other local, regional, national and global physical and digital retailers, wholesale club operators and retail intermediaries. Our Walmart U.S. segment competes with both physical retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well as catalog businesses. Our Sam's Club segment competes with other wholesale club operators, as well as discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations, as well as digital retailers and catalog businesses.

Our Walmart International segment competes with both physical retailers who operate department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses. We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability, services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to customers of merchandise purchased through our digital platforms or through the omni-channel integration of our physical and digital retail operations. A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of our strategy could materially adversely affect our financial performance. See " Item 1. Business " above for additional discussion of the competitive situation of each of our reportable segments.

Certain segments of the retail industry are undergoing consolidation, which could result in increased competition and significantly alter the dynamics of the retail marketplace. Such consolidation, or other business combinations or alliances, may result in competitors with greatly improved financial resources, improved access to merchandise, greater market penetration than they previously enjoyed and other improvements in their competitive positions. Such business combinations or alliances could result in the provision of a wider variety of products and services at competitive prices by such consolidated or aligned companies, which could adversely affect our financial performance.

We may not timely identify or effectively respond to consumer trends or preferences, which could negatively affect our relationship with our customers, demand for the products and services we sell, our market share and the growth of our business. It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of merchandise, the related impact on the demand for existing products and the competitive environment, whether for customers purchasing products at our stores and clubs, through our digital platforms or through the combination of both. Price transparency, assortment of products, customer experience, convenience and the speed and cost of shipping are of primary importance to customers and continue to increase in importance, particularly as a result of digital tools and social media available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively respond to changing consumer tastes, preferences and shopping patterns, or any other failure on our part to timely identify or effectively respond to changing consumer tastes, preferences and shopping patterns could negatively affect our relationship with our customers, the demand for the products we sell, our market share and the growth of our business.

Failure to grow our eCommerce business through the omni-channel integration of physical and digital retail or otherwise, and the cost of our increasing eCommerce investments, may materially adversely affect our market position, net sales and financial performance. The retail business is rapidly evolving and consumers are increasingly embracing shopping online and through mobile commerce applications. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of this increase could accelerate. Our strategy, which includes investments in eCommerce, technology, store remodels and other customer initiatives may not adequately or effectively allow us to grow our eCommerce business, increase comparable store sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club openings. The success of this strategy will depend in large measure on our ability to build and deliver a seamless omni-channel shopping experience and is further subject to the risks we face as outlined in this Item 1A . As a result, our market position, net sales and financial performance could be adversely affected. In addition, a greater concentration of eCommerce sales could result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect the financial performance of the physical retail side of our operations. Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred by acquired eCommerce businesses will adversely impact our financial performance in the short-term and may adversely impact our financial performance over the longer term.

The performance of strategic alliances to support the expansion of our Walmart International segment could materially adversely affect our financial performance. Our Walmart International segment may enter into strategic alliances in the countries in which we have existing operations or in other markets to expand our digital retail operations, physical retail operations or both. Any strategic alliance may not generate the level of eCommerce or other sales we anticipate when entering into that alliance or may otherwise adversely impact our

business and competitive position relative to the results we could have achieved in the absence of such alliance. In addition, any investment we make in connection with a strategic alliance could materially adversely affect our financial performance.

Operational Risks Natural disasters, changes in climate, and geo-political events could materially adversely affect our financial performance. The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons, weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, severe changes in climate and geo-political events, such as war, civil unrest or terrorist attacks in a country in which we operate or in which our suppliers are located could adversely affect our operations and financial performance. Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or more stores, clubs and distribution facilities, the lack of an adequate work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from areas in which our stores, clubs and distribution facilities are located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers and in consumers' disposable income, the temporary or long-term disruption in the supply of products from some local and overseas suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the delivery of goods to our distribution facilities or stores within a country in which we are operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our facilities, and disruption in our communications with our stores. We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our financial performance.

Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial performance. The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an important factor in our financial performance. We expect all of our suppliers to comply with applicable laws, including labor, safety and environmental laws, and to otherwise meet our required supplier standards of conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner, is a significant challenge, especially with respect to suppliers located and goods sourced outside the U.S. Political and economic instability in the countries in which our foreign suppliers and their manufacturers are located, the financial instability of suppliers, suppliers' failure to meet certain of our supplier standards (including our responsible sourcing standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise safety and quality issues, disruption in the transportation of merchandise from the suppliers and manufacturers to our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of merchandise we purchase enters into the U.S., currency exchange rates, transport availability and cost, transport security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, the U.S.'s foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and our access to products could adversely affect our financial performance.

We rely extensively on information systems to process transactions, summarize results and manage our business. Disruptions in our systems could harm our ability to conduct our operations. Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our business-critical information systems. Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations), catastrophic events such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information systems are essential to our business operations, including the processing of transactions, management of our associates, facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully redundant and if our systems are damaged, breached or cease to function properly, we may have to make a significant investment to repair or replace them, and we may suffer interruptions in our business operations in the interim. Any interruption to our information systems may have a material adverse effect on our business or results of operations. In addition, we are constantly updating our information technology processes and systems. The risk of system disruption is increased when significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we may fail to realize the cost savings anticipated to be derived from these initiatives.

If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our eCommerce business globally, could be materially adversely affected. Many of our customers shop with us using our digital platforms, which are a part of our omni-channel sales strategy. Increasingly, customers are using computers, tablets, and smart phones to shop online and through digital platforms with us and with our competitors and to do comparison shopping. We use social media and electronic mail to interact with our customers and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, in addition to home delivery, we offer "Walmart Pickup," "Pickup Today" and "Club Pickup" and, in a growing number of locations, "Online Grocery" programs under which many products available for purchase online can be picked up by the customer at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a rapidly evolving part of the retail industry and of our operations in the U.S. (whether through organic growth or eCommerce acquisitions) and in a number of markets in which our Walmart International segment operates. We must anticipate and meet our customers' changing expectations while adjusting for technology investments and developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and that continually meet the changing expectations of online shoppers and developments in online and digital platform merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally and have a material adverse impact on our business and results of operations. Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the computer and operating systems on which they run, including those applications and systems in our acquired eCommerce businesses, may be subject to cyber-attacks. Those attacks could involve attempts to gain access to one of our eCommerce websites or mobile commerce applications to obtain and make unauthorized use of customers' or members' payment information and related risks discussed below. Such attacks, if successful, can also create denials of service or otherwise disable, degrade or sabotage one or more of our digital platforms and otherwise significantly disrupt our customers' and members' shopping experience. If we are unable to maintain the security of our digital platforms and keep them operating within acceptable parameters, we could suffer loss of sales, reductions in traffic, reputational damage and deterioration of our competitive position and incur liability for any damage to customers whose personal information is unlawfully obtained and used, any of which events could have a material adverse impact on our business and results of operations and impede the execution of our strategy for the growth of our business.

Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated. Cyber threats and cyber-attackers can be sponsored by countries or sophisticated criminal organizations or be the work of single "hackers" or small groups of "hackers." Each year, cyber-attackers make numerous attempts to access the information stored in our information systems. As cyber threats evolve, change and become more difficult to detect and successfully defend against, one or more cyber-attacks might defeat our or a third-party service provider's security measures in the future and obtain the personal information of customers, members, associates and vendors. Associate error or malfeasance, faulty password management or other irregularities may also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. We or our third-party service providers may not discover any security breach and loss of information for a significant period of time after the security breach occurs. Any breach of our security measures or any breach, error or malfeasance of those of our third-party service providers and loss of our confidential information, or any failure by us to comply with applicable privacy and information security laws and regulations, could cause us to incur significant costs to protect any customers, members, associates and vendors whose personal data was compromised and to restore their confidence in us and to make changes to our information systems and administrative processes to address security issues and compliance with applicable laws and regulations. In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers, members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our stores thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and liquidity. Such events could also result in the release to the public of confidential information about our operations and financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures we employ to guard personal information against cyber-attacks and other attempts to access such information and could result in a disruption of our operations, particularly our digital retail operations. We accept payments using a variety of methods, including cash, checks, credit and debit cards, our private label credit cards and gift cards, and we may offer new payment options over time, which may have information security risk implications. As a retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain or detect any cyber-attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed in the future. To the extent that any cyber- attack or incursion in our or one of our third-party service provider's information systems results in the loss, damage or misappropriation of information, we may be materially adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, payment card association rules and obligations to which we are subject under our contracts with payment card processors make us liable to payment card issuers if information in connection with payment cards and payment card transactions that we hold is compromised, which liabilities could be substantial. In addition, the cost of complying with stricter and more complex data privacy, data collection and information security laws and standards could be significant to us.

Changes in the results of our retail pharmacy business could adversely affect our overall results of operations, cash flows and liquidity. Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments and a large majority of the retail pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and pharmacy benefit managers ("PBMs"). Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans and programs toward plans and programs with less favorable reimbursement terms); changes in third party payer drug formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential coverage treatment); growth in, and our participation in or exclusion from, exclusive and preferred pharmacy network arrangements operated by PBMs and/or any insurance plan or program; increases in the prices we pay for brand name and generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement; changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes

in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug programs; increased competition from other retail pharmacy operations; further consolidation among third party payers, PBMs or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for them to the extent the costs are not reimbursed by a third party; failure to meet any performance or incentive thresholds to which our level of third party reimbursement may be subject; and changes in the regulatory environment for the retail pharmacy industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other changes in laws, rules and regulations that affect our retail pharmacy business. If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy customers transferring their prescriptions to other pharmacies. One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations, result in the loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of operations, cash flows and liquidity.

Financial Risks Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported results of operations. Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates that were unfavorable to us coupled with such translations have had a material adverse effect on our reported results of operations. As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may also result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our reported consolidated results of operations. We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding adverse effect on our gross profit. Consequently, fluctuations in currency exchange rates may adversely affect our results of operations.

rates, gross margin, or earnings and earnings per share could cause the market price of our stock to decline, as could changes in our dividend or stock repurchase programs or policies. Additionally, failure of Walmart's performance to match that of other retailers may have a negative effect on the price of our stock.

Legal, Tax, Regulatory, Compliance, Reputational and Other Risks Our operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic risks and conditions specific to the countries or regions in which we operate, which could materially adversely affect our business or financial performance. In addition to our U.S. operations, we operate our retail business principally through wholly-owned subsidiaries in Argentina, Brazil, Canada, Chile, China, India, Japan and the United Kingdom and our majority-owned subsidiaries in Africa, Central America and Mexico. In fiscal 2018, our Walmart U.S. and Sam's Club operating segments generated approximately 76% of our consolidated net sales. The Federal Government has created the potential for significant changes in trade policies, including tariffs and government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in our stores and clubs. Potential changes which have been discussed include the renegotiation or termination of trade agreements and the imposition of higher tariffs on imports into the U.S. A significant portion of the general merchandise we sell in our U.S. stores and clubs is manufactured in other countries. Any such actions could increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers, which could materially adversely affect the financial performance of our U.S. operations and our business. During fiscal 2018, our Walmart International operations generated approximately 24% of our consolidated net sales. Walmart International's operations in various countries also sources goods and services from other countries. Our future operating results in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These factors include political conditions, including political instability, local and global economic conditions, legal and regulatory constraints, local product safety and environmental laws, tax regulations, local labor laws, anti-money laundering laws and regulations, trade policies, currency regulations, and other matters in any of the countries or regions in which we operate, now or in the future. Our business and results of operations in the UK may be negatively affected by fluctuations in currency exchange rates, increases in food costs, changes in trade policies, or changes in labor, immigration, tax or other laws resulting from the UK's anticipated exit from the European Union. Brazilian federal, state and local laws are complex and subject to varying interpretations. Although the Company believes it complies with those laws, the Company's subsidiaries in Brazil are party to a large number of labor claims and non-income tax assessments, which have arisen during the normal course of business in Brazil. These matters are subject to inherent uncertainties and if decided adversely to the Company, could materially adversely affect our financial performance. The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries, laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with having numerous facilities located in countries which have historically been less stable than the U.S. Additional risks inherent in our international operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations. In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act ("FCPA"), or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our reputation. We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being

lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax laws, regulations, or accounting principles. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates new taxes focused on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of January 31, 2018, in accordance with SAB 118. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts during fiscal 2019. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made and could impact our net income and our earnings per share, as well as our consolidated cash flows and liquidity. We are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and settlement is made. We operate in complex regulated environments in the United States and in the other countries in which we operate and could be adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Our pharmacy operations in the United States are subject to numerous federal, state and local regulations including licensing and other requirements for pharmacies and reimbursement arrangements. The regulations to which we are subject include, but are not limited to: federal and state registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act or any successor thereto; laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"), trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws; and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care and nurse practitioner services. For example, in the United States the DEA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal, holding and distribution of controlled substances. The DEA, FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity and other labor and employment matters, as well as employee benefit, competition, anti-money laundering, antitrust matters and health and wellness related regulations for our pharmacy operations outside of the United States. Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the landscape in which we do business and may significantly affect our cost of doing business. The impact of new laws, regulations and policies and the related interpretations and enforcement practices generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs in the United States; loss of licenses; and significant fines or monetary damages and/or penalties. Any failure to comply with applicable regulatory requirements in the United States or in any of the countries in which we operate could result in significant legal and financial

exposure, damage our reputation, and have a material adverse effect on our business operations, financial condition and results of operations.

We are subject to certain legal proceedings that may materially adversely affect our results of operations, financial condition and liquidity. We are involved in a number of legal proceedings, which include consumer, employment, tort and other litigation. In particular, we are currently a defendant in a number of cases containing class-action allegations in which the plaintiffs have brought claims under federal and state wage and hour laws, as well as a number of cases containing class-action allegations in which the plaintiffs have brought claims under federal and state consumer laws. In addition, ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, has been named as a defendant in over 10,000 "equal value" claims pending in the Manchester Employment Tribunal (the "Employment Tribunal") in the United Kingdom. The claimants, who are current and former ASDA store employees, allege that the work performed by female employees in ASDA's retail stores is of equal value in terms of, among other things, the demands of their jobs to that of male employees working in ASDA's warehouses and distribution facilities, and that the disparity in pay between these different job positions is not objectively justified. The claimants are seeking differential back pay based on higher wage rates in the warehouses and distribution facilities and higher wage rates on a prospective basis. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) , and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi, Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have been filed in state courts by various counties and municipalities; by health care providers; and by various Native American Tribes. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from such claims. We discuss these cases and other litigation to which we are party below under the caption " Item 3. Legal Proceedings " and in Note 10 in the " Notes to our Consolidated Financial Statements ," which are part of this Annual Report on Form 10-K.

We could be subject to liability, penalties and other sanctions and other adverse consequences arising out of our on-going FCPA matter. The Audit Committee of our Board of Directors has been conducting an internal investigation into, among other things, alleged violations of the FCPA and other alleged crimes or misconduct in connection with certain of our foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. We have also been conducting a voluntary global review of our policies, practices and internal controls for anti-corruption compliance and are engaged in strengthening our global anti-corruption compliance programs. Since the implementation of the global review and enhanced anti-corruption compliance programs, the Audit Committee and we have identified or been made aware of additional allegations regarding potential violations of the FCPA. Inquiries or investigations regarding allegations of potential FCPA violations have been commenced in a number of foreign markets in which we operate, including, but not limited to, Brazil, China and India. In November 2011, we voluntarily disclosed our investigative activity to the U.S. Department of Justice (the "DOJ") and the SEC. We have been cooperating with those agencies and discussions have been ongoing with them regarding the resolution of these matters. These discussions have progressed to a point that we can now reasonably estimate a probable loss and have recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Furthermore, lawsuits relating to the matters under investigation have been filed by several of our shareholders against us, certain of our current and former directors and officers and certain of Walmex's current and former officers. We could be exposed to a variety of negative consequences as a result of these matters. One or more enforcement actions could be instituted in respect of the matters that are the subject of some or all of the on-going government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or other relief, criminal convictions and/or penalties. The shareholder lawsuits may result in judgments against us and our current and former directors and officers named in those proceedings. We also expect that there will be ongoing media and governmental interest regarding these matters, including additional news articles on these matters that could impact the perception of our role as a corporate citizen among certain audiences. Moreover, we have incurred and expect to continue to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in

connection with the government investigations, in defending the shareholder lawsuits and in conducting our review and investigations. While we have made an Accrual for these matters, because the discussions are continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters. Although we do not presently believe that these matters will have a material adverse effect on our business, given the inherent uncertainties in such situations, we can provide no assurance that these matters will not be material to our business in the future.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

United States The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2018 , unit counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:

Walmart U.S. Sam's Club

State or Territory Supercenters Discount Stores Neighborhood Markets and other small formats Clubs Grand Total

Alabama 101 1 30 13 145 Alaska 7 2 — — 9 Arizona 83 2 31 12 128 Arkansas 76 6 37 9 128 California 141 74 76 29 320 Colorado 70 4 18 17 109 Connecticut 12 21 1 1 35 Delaware 6 3 — 1 10 Florida 231 9 94 46 380 Georgia 154 2 35 24 215 Hawaii — 10 — 2 12 Idaho 23 — 3 1 27 Illinois 139 17 11 25 192 Indiana 97 7 11 13 128 Iowa 58 2 — 9 69 Kansas 58 2 16 9 85 Kentucky 79 8 11 9 107 Louisiana 89 2 34 14 139 Maine 19 3 — 3 25 Maryland 30 18 2 11 61 Massachusetts 27 22 3 — 52 Michigan 91 3 9 23 126 Minnesota 65 4 1 12 82 Mississippi 65 3 10 7 85 Missouri 112 9 18 19 158 Montana 14 — — 2 16 Nebraska 35 — 7 5 47 Nevada 30 2 11 7 50 New Hampshire 19 8 — 2 29 New Jersey 29 34 — 7 70 New Mexico 35 2 9 7 53 New York 80 18 7 12 117 North Carolina 144 6 45 22 217 North Dakota 14 — — 3 17 Ohio 139 6 — 27 172 Oklahoma 81 8 34 13 136 Oregon 28 7 10 — 45 Pennsylvania 116 21 3 24 164 Puerto Rico 13 5 17 7 42 Rhode Island 5 4 — — 9 South Carolina 84 — 27 13 124 South Dakota 15 — — 2 17 Tennessee 117 2 21 14 154 Texas 389 20 111 81 601 Utah 41 — 12 8 61 Vermont 3 3 — — 6 Virginia 109 6 24 15 154

Washington 52 10 6 — 68 Washington D.C. 3 — 2 — 5 West Virginia 38 — 1 5 44 Wisconsin 83 4 2 10 99 Wyoming 12 — — 2 14 U.S. total 3,561 400 800 597 5,358

International The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2018 (1) for Walmart International are summarized by major category for each geographic market as follows:

(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2018 .

Tanzania ( 1 ), Uganda ( 1 ) and Zambia ( 6 ). (4) Central America unit counts by country are Costa Rica ( 247 ), El Salvador ( 95 ), Guatemala ( 238 ), Honduras ( 103 ) and Nicaragua ( 95 ).

Owned and Leased Properties The following table provides further details of our retail units and distribution facilities, including return facilities, as of January 31, 2018 :

Owned and Operated

Owned and Third Party

Operated Leased and Operated

Third Party Owned and Operated Total

U.S. properties Walmart U.S. retail units 4,066 — 695 — 4,761 Sam's Club retail units 512 — 85 — 597 Total U.S. retail units 4,578 — 780 — 5,358 Walmart U.S. distribution facilities 103 2 23 29 157 Sam's Club distribution facilities 3 3 3 13 22 Total U.S. distribution facilities 106 5 26 42 179

Total U.S. properties 4,684 5 806 42 5,537 International properties Africa 39 — 385 — 424 Argentina 66 — 40 — 106 Brazil 209 — 256 — 465 Canada 124 — 286 — 410 Central America 304 — 474 — 778 Chile 228 — 150 — 378 China 3 — 440 — 443 India 2 — 18 — 20 Japan 56 — 280 — 336 Mexico 669 — 1,689 — 2,358 United Kingdom 442 — 200 — 642 Total International retail units 2,142 — 4,218 — 6,360 International distribution facilities 43 12 87 46 188

Total International properties 2,185 12 4,305 46 6,548 Total retail units 6,720 — 4,998 — 11,718 Total distribution facilities 149 17 113 88 367 Total properties 6,869 17 5,111 88 12,085

stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent escalation clauses. For further information on our distribution centers, see the caption "Distribution" provided for each of our segments under " Item 1. Business ."

ITEM 3. LEGAL PROCEEDINGS

I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial Statements, entitled "Contingencies," which is included in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. We refer you to that discussion for important information concerning those legal proceedings, including the basis for such actions and, where known, the relief sought. We provide the following additional information concerning those legal proceedings, including the name of the lawsuit, the court in which the lawsuit is pending, and the date on which the petition commencing the lawsuit was filed. ASDA Equal Value Claims: Ms S Brierley & Others v ASDA Stores Ltd (2406372/2008 & Others - Manchester Employment Tribunal); ASDA Stores Ltd v Brierley & Ors (A2/2016/0973 - United Kingdom Court of Appeal); ASDA Stores Ltd v Ms S Brierley & Others (UKEAT/0059/16/DM - United Kingdom Employment Appeal Tribunal); ASDA Stores Ltd v Ms S Brierley & Others (UKEAT/0009/16/JOJ - United Kingdom Employment Appeal Tribunal). National Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804); Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. McKesson Corp., et al., WI Circuit Court, Sawyer County, 3/16/18; ApolloMD Bus. Servs., LLC v. Attain Med, Inc., et al., GA State Ct., Fulton Cty., 3/8/2018; Center Point, Inc. v. McKesson Corp., et al, CA Superior Ct., San Francisco County, 3/6/2018; Cty. of Greenville v. Rite Aid of S.C., Inc., et al. , SC Ct. of Common Pleas, 13th Judicial Dist., 3/5/2018; Big Sandy Rancheria of W. Mono Indians v. McKesson Corp., et al. , CA Superior Ct., San Francisco County, 3/2/2018; Consolidated Tribal Health Project, Inc. v. McKesson Corp. , et al., CA Superior Ct., San Francisco County, 3/2/2018; Robinson Rancheria v.McKesson Corp., et al. , CA Superior Ct., San Francisco County, 3/2/2018; Round Valley Indian Tribes; Round Valley Indian Health Center, Inc. v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 3/2/2018; Hopland Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 2/21/2018; Redwood Valley or Little River Band of Pomo Indians of Redwood Valley Rancheria v. McKesson Corp., et al. , CA Superior Ct., San Francisco County, 2/21/2018; Scotts Valley Band of Pomo Indians v. McKesson Corp., et al. , CA Superior Ct., San Francisco County, 2/21/2018; Big Valley Band of Pomo Indians of the Big Valley Rancheria v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 2/13/2018; Guidiville Rancheria of Cal. v. McKesson Corp., et al., CA Superior Ct., San Francisco County , 2/13/2018; Odyssey House La., Inc. v. Morris & Dickson Co., et al. , LA Civil Dist. Ct., New Orleans Parish, 2/6/2018; Coyote Valley Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 1/29/2018; Cty. Comm'n of Mingo Cty. v. Purdue Pharma, L.P., et al., WV Circuit Ct., Mingo County, 1/18/2018; Brooke Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Hancock Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Harrison Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Lewis Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Marshall Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Ohio Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County , 12/13/2017; Tyler Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Wetzel Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017.

II. CERTAIN OTHER PROCEEDINGS: The Company is a defendant in several lawsuits in which the complaints closely track the allegations set forth in a news story that appeared in The New York Times ( the " Times " ) on April 21, 2012. One of these is a securities lawsuit that was filed on May 7, 2012, in the United States District Court for the Middle District of Tennessee, and subsequently transferred to the Western District of Arkansas, in which the plaintiff alleges various violations of the U.S. Foreign Corrupt Practices Act (the "FCPA") beginning in 2005, and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. The plaintiff seeks to represent a class of shareholders who purchased or acquired stock of the Company between December 8, 2011, and April 20, 2012, and seeks damages and other relief based on allegations that the defendants' conduct affected the value of such stock. On September 20, 2016, the court granted plaintiff's motion for class certification. On October 6, 2016, the defendants filed a petition to appeal the class certification ruling to the U.S. Court of Appeals for the Eighth Circuit. On November 7, 2016, the U.S. Court of Appeals for the Eighth Circuit denied the Company's petition. In addition, a number of derivative complaints have been filed in Delaware and Arkansas, also tracking the allegations of the Times story, and naming various current and former directors and certain former officers as additional defendants. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants who are or were directors or officers of the Company breached their fiduciary duties in connection with their oversight of FCPA compliance. All of the derivative suits have been combined into two consolidated proceedings, one of which was consolidated

in the United States District Court for the Western District of Arkansas and the other in the Delaware Court of Chancery. On March 31, 2015, the Western District of Arkansas granted the defendants' motion to dismiss the consolidated derivative proceedings in that court. On April 15, 2015, plaintiffs filed their notice of appeal with the United States Court of Appeals for the Eighth Circuit. On July 22, 2016, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of the consolidated derivative proceedings in Arkansas. There was no appeal from that ruling. On May 13, 2016, the Delaware Court of Chancery granted the defendants' motion to dismiss the consolidated derivative proceedings in that court. On June 10, 2016, plaintiffs in the Delaware consolidated derivative proceedings filed their notice of appeal to the Delaware Supreme Court. On January 25, 2018, the Delaware Supreme Court affirmed the dismissal of the consolidated derivative proceedings in Delaware. Management does not believe any possible loss or the range of any possible loss that may be incurred in connection with these proceedings will be material to the Company's financial condition or results of operations. Securities Class Action: City of Pontiac General Employees Retirement System v. Wal-Mart Stores, Inc., USDC, Western Dist. of AR; 5/7/12. Derivative Lawsuits: In re Wal-Mart Stores, Inc. Delaware Derivative Litigation, Delaware Ct. of Chancery, 4/25/12; Delaware Supreme Court, Dover, DE; 6/10/16.

III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters. The following matters are disclosed in accordance with that requirement. For the matters listed below, management does not believe any possible loss or the range of any possible loss that may be incurred in connection with each matter, individually or in the aggregate, will be material to the Company's financial condition or results of operations. On January 25, 2018, the Environmental Prosecutor of the State of Chiapas (Procuraduría Ambiental del Estado de Chiapas) in Mexico imposed a fine of $163,000 for the absence of an Environmental Impact Authorization License related to the store Mi Bodega Las Rosas. The Company plans to challenge the fine before an administrative court. In May 2017, WMS Supermercados do Brasil Ltda ("Walmart Brazil") self-reported to the relevant municipal environmental agency, and proposed a remediation plan for, an oil contamination in the soil and underground water at the Walmart and Sam's Club store location in Barueri, São Paulo (Tamboré), which contamination had been confirmed by an internal investigation in April 2017. Walmart Brazil is cooperating with the agency, including seeking authorization to start a remediation plan. In April 2017, the California Air Resources Board ("ARB") notified the Company that it had taken the position that retailers are required to use unclaimed deposits collected on sales of small containers of automotive refrigerant to fund certain consumer education programs. The ARB alleged that the Company had improperly retained approximately $4.2 million in unclaimed deposits and has sought reimbursement. The Company has denied any wrongdoing. In November and December 2016, the Environmental and Natural History Ministry of Chiapas, Mexico ("Ministry") notified a subsidiary of the Company, Arrendadora de Centros Comerciales, S. de R.L. de C.V. ("Arrendadora"), that it was proposing aggregated penalties approximating $430,000 in respect to four stores which the Ministry believed may have been constructed without first obtaining a required environmental impact license. Arrendadora has challenged the penalties before an administrative court and the trials are in process. The Ministry had previously proposed penalties of approximately $640,000 related to this matter in 2014, but Arrendadora was released by an administrative court from payment of such penalties on the basis that the Ministry had failed to comply with legal formalities in connection with their imposition. On April 6, 2015, representatives for the Brazilian Institute of the Environment alleged that Walmart Brazil had failed to file required reports documenting the number of tires imported, sold and recycled. The agency proposed a penalty of approximately $857,000, which may be doubled and excludes additional amounts in respect of inflation and interest, and prohibited Walmart Brazil from selling or importing tires until the matter is resolved. In October 2015, Walmart Brazil filed its defense with the agency against the imposition of this penalty. In April 2013, a subsidiary of the Company, Corporacion de Compañias Agroindustriales, operating in Costa Rica, became aware that the Municipality of Curridabat is seeking a penalty of approximately $380,000 in connection with the construction of a retaining wall seventeen years ago for a perishables distribution center that is situated along a protected river bank. The subsidiary obtained permits from the Municipality and the Secretaria Técnica Nacional Ambiental at the time of construction, but the Municipality now alleges that the wall is non-conforming. In January 2011, the Environmental Department of Porto Alegre Municipality formally notified Walmart Brazil of soil inspection reports indicating soil contamination due to leakage of oil from power generating equipment at nine store locations in Brazil. Walmart Brazil is cooperating with the agency as well as the District Attorney's Office for the State of Rio Grande do Sul and has filed a mitigation plan to address the situation.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of Common Stock The high market price and low market price per share for the Company's common stock for each fiscal quarter in fiscal 2018 and 2017 were as follows:

2018 2017 High Low High Low 1st Quarter $ 75.77 $ 66.04 $ 70.08 $ 62.35 2nd Quarter 80.47 73.13 74.35 62.72 3rd Quarter 89.11 77.50 75.19 67.07 4th Quarter 109.98 87.00 72.48 65.28

The high market price and low market price per share for the Company's common stock for the first fiscal quarter of fiscal 2019 , were as follows:

2019

High Low 1st Quarter (1) $ 106.56 $ 85.28 (1) Through March 28, 2018.

Holders of Record of Common Stock As of March 28, 2018 , there were 229,858 holders of record of Walmart's common stock.

Dividends Payable Per Share For fiscal 2019 , dividends will be paid based on the following schedule:

April 2, 2018 $ 0.52 June 4, 2018 0.52 September 4, 2018 0.52 January 2, 2019 0.52

Dividends Paid Per Share For fiscal 2018 , dividends were paid based on the following schedule:

April 3, 2017 $ 0.51 June 5, 2017 0.51 September 5, 2017 0.51 January 2, 2018 0.51

For fiscal 2017 , dividends were paid based on the following schedule:

April 4, 2016 $ 0.50 June 6, 2016 0.50 September 6, 2016 0.50 January 3, 2017 0.50

Stock Performance Chart This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending with fiscal 2018 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison assumes $100 was invested on February 1, 2013, in shares of our common stock and in each of the indices shown and assumes that all of the dividends were reinvested.

*Assumes $100 Invested on February 1, 2013 Assumes Dividends Reinvested

Fiscal Year Ending January 31, 2018

Fiscal Years Ended January 31, 2013 2014 2015 2016 2017 2018

Walmart Inc. $ 100.00 $ 109.39 $ 127.58 $ 102.39 $ 105.97 $ 173.61 S&P 500 Index 100.00 121.52 138.80 137.88 165.51 209.22 S&P 500 Retailing Index 100.00 127.72 153.64 184.32 218.76 321.37

Issuer Purchases of Equity Securities From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018 , authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended January 31, 2018 , was as follows:

Fiscal Period Total Number of

Shares Repurchased

Average Price Paid per Share

(in dollars)

Total Number of Shares Purchased as Part of Publicly

Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be

Purchased Under the Plans or Programs (1)

(in billions)

November 1-30, 2017 6,816,775 $ 93.00 6,816,775 $ 19.8 December 1-31, 2017 5,594,137 97.92 5,594,137 19.2 January 1-31, 2018 4,170,041 102.37 4,170,041 18.8 Total 16,580,953 16,580,953

(1) Represents the approximate dollar value of shares that could have been purchased under the current plan at the end of the month. The approximate dollar value of shares that could still have been purchased under the plan in effect at the beginning of fiscal 2018, as of November 17, 2017, when such plan was replaced, was $2.2 billion.

ITEM 6. SELECTED FINANCIAL DATA

Five-Year Financial Summary Walmart Inc.

As of and for the Fiscal Years Ended January 31,

(Amounts in millions, except per share and unit count data) 2018 2017 2016 2015 2014

Operating results

Total revenues $ 500,343 $ 485,873 $ 482,130 $ 485,651 $ 476,294 Percentage change in total revenues from previous fiscal year 3.0% 0.8% (0.7)% 2.0% 1.6 % Net sales $ 495,761 $ 481,317 $ 478,614 $ 482,229 $ 473,076 Percentage change in net sales from previous fiscal year 3.0% 0.6% (0.7)% 1.9% 1.6 % Increase (decrease) in calendar comparable sales (1) in the U.S. 2.2% 1.4% 0.3 % 0.5% (0.5)%

Walmart U.S. 2.1% 1.6% 1.0 % 0.6% (0.6)% Sam's Club 2.8% 0.5% (3.2)% 0.0% 0.3 %

Gross profit margin 24.7% 24.9% 24.6 % 24.3% 24.3 % Operating, selling, general and administrative expenses, as a percentage of net sales 21.5% 21.2% 20.3 % 19.4% 19.3 % Operating income $ 20,437 $ 22,764 $ 24,105 $ 27,147 $ 26,872 Income from continuing operations attributable to Walmart 9,862 13,643 14,694 16,182 15,918 Diluted income per common share from continuing operations attributable to

Walmart $ 3.28 $ 4.38 $ 4.57 $ 4.99 $ 4.85

Dividends declared per common share 2.04 2.00 1.96 1.92 1.88 Financial position Inventories $ 43,783 $ 43,046 $ 44,469 $ 45,141 $ 44,858 Property, equipment, capital lease and financing obligation assets, net 114,818 114,178 116,516 116,655 117,907 Total assets 204,522 198,825 199,581 203,490 204,541 Long-term debt and long-term capital lease and financing obligations (excluding

amounts due within one year) 36,825 42,018 44,030 43,495 44,368

Total Walmart shareholders' equity 77,869 77,798 80,546 81,394 76,255 Unit counts (2) Walmart U.S. segment 4,761 4,672 4,574 4,516 4,203 Walmart International segment 6,360 6,363 6,299 6,290 6,107 Sam's Club segment 597 660 655 647 632 Total units 11,718 11,695 11,528 11,453 10,942

(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as eCommerce sales and sales from eCommerce acquisitions when such acquisitions have been owned for 12 months. Comparable sales include fuel.

(2) Unit counts related to discontinued operations have been removed from all relevant periods.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview Walmart Inc. ("Walmart," the "Company" or "we") is engaged in retail and wholesale operations in various formats around the world. Through our operations, we help people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce. Through innovation, we are striving to create a customer-centric experience that seamlessly integrates digital and physical shopping into an omni-channel offering that saves time for our customers. Physical retail encompasses our brick and mortar presence in each of the markets in which we operate. Digital retail, or eCommerce, is comprised of our eCommerce websites, mobile commerce applications and transactions involving both an eCommerce platform and a physical format, which we refer to as omni- channel. Each week, we serve nearly 270 million customers who visit our more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. By leading on price we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our physical and digital presence, in which we are investing to integrate into a seamless omni-channel, provides customers convenient access to our broad assortment anytime and anywhere. We strive to give our customers and members a great shopping experience through whichever shopping method they prefer. Our operations consist of three reportable segments: Walmart U.S., Walmart International and Sam's Club.

• Walmart U.S. is our largest segment with three primary store formats and eCommerce, as well as an omni-channel offering. Of our three reportable segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, it has historically contributed the greatest amount to the Company's net sales and operating income.

• Walmart International consists of our operations outside of the U.S. and includes retail, wholesale and other businesses. These categories, including eCommerce, consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. Overall gross profit rate for Walmart International is lower than that of Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment and has grown in recent years by adding retail, wholesale and other units, and expanding eCommerce.

• Sam's Club consists of membership-only warehouse clubs as well as eCommerce through samsclub.com. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.

Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. Our fiscal year ends on January 31 for our U.S. and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31 . This discussion, which presents our results for the fiscal years ended January 31, 2018 ("fiscal 2018 "), January 31, 2017 ("fiscal 2017 ") and January 31, 2016 ("fiscal 2016 ") should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of the three segments of our business to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole. Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by our chief operating decision maker. When we do so, the previous period amounts and balances are reclassified to conform to the current period's presentation.

Comparable store and club sales, or comparable sales, is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated online or though mobile applications, including omni-channel transactions which are fulfilled through our stores and clubs. Sales of a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Additionally, sales related to eCommerce acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies. In discussing our operating results, we use the term "currency exchange rates" to refer to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars for financial reporting purposes. We calculate the effect of changes in currency exchange rates from the prior period to the current period as the difference between current period activity translated using the current period's currency exchange rates, and current period activity translated using the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future.

The Retail Industry We operate in the highly competitive retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or international online presence. We compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be found herein under " Item 1A. Risk Factors ," and under " Cautionary Statement Regarding Forward-Looking Statements ."

• strong, efficient growth; • operating discipline; and • strategic capital allocation.

As we execute on this financial framework, we believe our returns on capital will improve over time.

Strong, Efficient Growth Our objective of prioritizing strong, efficient growth means we will focus on increasing comparable sales and eCommerce sales growth while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-term growth of the Company, which may not benefit comparable sales in the near term. Comparable sales is a metric which indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar. As our fiscal calendar differs from the retail calendar, our fiscal calendar comparable sales also differ from the retail calendar comparable sales provided in our quarterly earnings releases.

Calendar comparable sales, as well as the impact of fuel, for fiscal 2018 and 2017 , were as follows:

Fiscal Years Ended January 31, 2018 2017 2018 2017 With Fuel Fuel Impact Walmart U.S. 2.1% 1.6% 0.1% 0.0% Sam's Club 2.8% 0.5% 1.0% (0.9)% Total U.S. 2.2% 1.4% 0.2% (0.1)%

Comparable sales in the U.S., including fuel, increased 2.2% and 1.4% in fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. The fiscal 2018 total U.S. comparable sales were positively impacted by continued traffic improvement, higher eCommerce sales and the impact of higher fuel sales. eCommerce sales positively impacted comparable sales approximately 0.7% for both Walmart U.S. and Sam's Club for fiscal 2018 . The fiscal 2017 total U.S. comparable sales were positively impacted by continued traffic improvement and higher eCommerce sales at the Walmart U.S. segment, partially offset by the negative impact of lower fuel sales primarily due to lower fuel prices at the Sam's Club segment. eCommerce sales positively impacted comparable sales approximately 0.4% and 0.7% for Walmart U.S. and Sam's Club, respectively, for fiscal 2017 . In the past, when we were focused on adding new stores and clubs in the U.S., we did so with an understanding that additional stores and clubs may take sales away from existing units. We reduced the number of new store and club openings in fiscal 2018 and the negative impact on comparable sales as a result of these openings was not significant. We expect this trend to continue in the future as well. In fiscal 2017 , we estimate the negative impact on comparable sales as a result of opening new stores and clubs was approximately 0.7%. Our estimate was calculated primarily by comparing the sales trends of the impacted stores and clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and clubs, in each case, as measured after the new stores and clubs are opened.

Operating Discipline We operate with discipline by managing expenses and optimizing the efficiency of how we work. We measure operating discipline through expense leverage, which we define as net sales growing at a faster rate than operating expenses.

Fiscal Years Ended January 31,

(Amounts in millions, except unit counts) 2018 2017 Net sales $ 495,761 $ 481,317 Percentage change from comparable period 3.0% 0.6% Operating, selling, general and administrative expenses $ 106,510 $ 101,853 Percentage change from comparable period 4.6% 5.0% Operating, selling, general and administrative expenses as a percentage of net sales 21.5% 21.2%

For fiscal 2018 , operating, selling, general and administrative ("operating") expenses as a percentage of net sales increased 32 basis points, when compared to the same period in the previous fiscal year. While our increase in net sales and improving expense management had a positive impact on our operating expenses as a percentage of net sales, we did not leverage expenses as a result of approximately $0.6 billion of charges related to Sam's Club closures and discontinued real estate projects, approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, a legal accrual of $283 million related to the FCPA matter, a charge of $244 million related to Walmart U.S. discontinued real estate projects, and the decisions to exit certain international properties and wind down the first party Brazil eCommerce operations.

Strategic Capital Allocation We are allocating more capital to remodels, eCommerce, technology and supply chain and less to new store and club openings, when compared to prior years. This allocation aligns with our initiatives of improving our customer proposition in stores and clubs and integrating digital and physical shopping. The following table provides additional detail:

(Amounts in millions) Fiscal Years Ended January 31,

Allocation of Capital Expenditures 2018 2017 New stores and clubs, including expansions and relocations $ 914 $ 2,171 Remodels 2,009 1,589 eCommerce, technology, supply chain and other 4,521 4,162 Total U.S. 7,444 7,922 Walmart International 2,607 2,697 Total capital expenditures $ 10,051 $ 10,619

Total U.S. capital expenditures decreased $478 million for fiscal 2018 , when compared to the previous fiscal year. Capital expenditures related to new stores and clubs, including expansions and relocations, decreased $1.3 billion , partially offset by increases to capital expenditures for remodels and for eCommerce, technology, supply chain and other. These changes were a result of our shift in capital allocation strategy to support growth in comparable store and club sales and eCommerce, while slowing the rate at which we open new stores and clubs.

Returns As we execute our financial framework, we believe our returns on capital will improve over time. We measure returns on capital with our return on investment and free cash flow metrics. In addition, we provide returns in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.

Return on Assets and Return on Investment We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic initiatives with possible short-term impacts. ROA was 5.2% and 7.2% for the fiscal years ended January 31, 2018 and 2017 , respectively. The decline in ROA was primarily due to the loss on extinguishment of debt and the decrease in operating income for the fiscal year ended January 31, 2018 . ROI was 14.2% and 15.2% for the fiscal years ended January 31, 2018 and 2017 , respectively. The decline in ROI was primarily due to the decrease in operating income for the fiscal year ended January 31, 2018 . We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the fiscal year or trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average accumulated amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of eight. When we have discontinued operations, we exclude the impact of the discontinued operations. Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable financial measure calculated and presented in accordance with GAAP. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of eight for rent expense that estimates the hypothetical capitalization of our operating leases. As mentioned above, we consider ROA to be the financial measure computed in accordance with GAAP that is the most directly comparable financial measure to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial metric, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.

The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 CALCULATION OF RETURN ON ASSETS Numerator

Consolidated net income $ 10,523 $ 14,293

Denominator Average total assets (1) $ 201,674 $ 199,203

Return on assets (ROA) 5.2% 7.2%

CALCULATION OF RETURN ON INVESTMENT Numerator

Operating income $ 20,437 $ 22,764 + Interest income 152 100 + Depreciation and amortization 10,529 10,080 + Rent 2,932 2,612 = Adjusted operating income $ 34,050 $ 35,556

Denominator

Average total assets (1) $ 201,674 $ 199,203 + Average accumulated depreciation and amortization (1) 79,995 74,245 - Average accounts payable (1) 43,763 39,960 - Average accrued liabilities (1) 21,388 20,131 + Rent x 8 23,456 20,896 = Average invested capital $ 239,974 $ 234,253

Return on investment (ROI) 14.2% 15.2%

As of January 31, 2018 2017 2016 Certain Balance Sheet Data Total assets $ 204,522 $ 198,825 $ 199,581 Accumulated depreciation and amortization 83,039 76,951 71,538 Accounts payable 46,092 41,433 38,487 Accrued liabilities 22,122 20,654 19,607 (1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2.

Free Cash Flow Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities. We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $28.3 billion , $31.7 billion and $27.6 billion for fiscal 2018 , 2017 and 2016 , respectively. We generated free cash flow of $18.3 billion , $21.1 billion and $16.1 billion for fiscal 2018 , 2017 and 2016 , respectively. The decreases in net cash provided by operating activities and free cash flow in fiscal 2018 from fiscal 2017 were primarily due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net cash provided by operating activities and free cash flow in fiscal 2017 from fiscal 2016 was primarily due to improved working capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction of remodels and related expenses. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows .

Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities:

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Net cash provided by operating activities $ 28,337 $ 31,673 $ 27,552 Payments for property and equipment (10,051) (10,619) (11,477) Free cash flow $ 18,286 $ 21,054 $ 16,075

Net cash used in investing activities (1) $ (9,060) $ (13,987) $ (10,675) Net cash used in financing activities (19,875) (19,072) (16,285) (1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

Results of Operations Consolidated Results of Operations

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2018 2017 2016 Total revenues $ 500,343 $ 485,873 $ 482,130 Percentage change from comparable period 3.0% 0.8% (0.7)% Net sales $ 495,761 $ 481,317 $ 478,614 Percentage change from comparable period 3.0% 0.6% (0.7)% Total U.S. calendar comparable sales increase 2.2% 1.4% 0.3 % Gross profit rate 24.7% 24.9% 24.6 % Operating income $ 20,437 $ 22,764 $ 24,105 Operating income as a percentage of net sales 4.1% 4.7% 5.0 % Consolidated net income $ 10,523 $ 14,293 $ 15,080 Unit counts at period end 11,718 11,695 11,528 Retail square feet at period end 1,158 1,164 1,149

Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased $14.5 billion or 3.0% and $3.7 billion or 0.8% for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. Net sales increased $14.4 billion or 3.0% and $2 .7 billion or 0.6% for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. For fiscal 2018 , net sales were positively impacted by overall positive comparable sales, the impact from new store openings and sales generated from eCommerce acquisitions . Additionally, for fiscal 2018 , the increase in net sales was partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and the $0.5 billion of negative impact from fluctuations in currency exchange rates. For fiscal 2017 , net sales were positively impacted by overall positive comparable sales and the 1.3% year-over-year growth in consolidated retail square feet. The positive effect of such factors on our consolidated net sales for fiscal 2017 was partially offset by a negative impact of $11.0 billion or 2.3% as a result of fluctuations in currency exchange rates and a $0.4 billion decrease in fuel sales from lower fuel prices at the Sam's Club segment. Our gross profit rate decreased 26 basis points for fiscal 2018 and increased 36 basis points for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the decrease was primarily due to strategic price investments and the mix impact from eCommerce. For fiscal 2017 , the increase in gross profit rate was primarily due to improved margin in food and consumables, including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs in the Walmart U.S. segment. Additionally, improvement in certain markets' inventory management and cost analytics programs in the Walmart International segment also positively impacted our gross profit rate for fiscal 2017 . Operating expenses as a percentage of net sales increased 32 and 88 basis points for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. For fiscal 2018 , the increase in operating expenses as a percentage of net sales was primarily due to approximately $0.6 billion in charges related to Sam's Club closures and discontinued real estate projects, approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, a legal accrual of $283 million related to the FCPA matter in the third quarter, a charge of $244 million related to discontinued real estate projects in Walmart U.S., and the decisions to exit certain international properties and wind down the first party Brazil eCommerce operations. For fiscal 2017 , the increase in operating expenses as a percentage of net sales was primarily due to an increase in wage expense at the Walmart U.S. and Sam's Club segments resulting from the continued investment in associate wage structure, a $370 million charge related to discontinued domestic real estate projects and severance, and our

continued investments in eCommerce and technology. The increase in operating expenses as a percentage of net sales for fiscal 2017 was partially offset by the impact of store closures in the fourth quarter of fiscal 2016. Membership and other income was relatively flat for fiscal 2018 and increased $1.0 billion for fiscal 2017 , when compared to the same period in the previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia, a $47 million gain from a land sale, higher recycling income from our sustainability efforts and higher membership income from increased Plus Member penetration at Sam's Club, these gains were less than gains recognized in fiscal 2017 . Fiscal 2017 included a $535 million gain from the sale of our Yihaodian business and a $194 million gain from the sale of shopping malls in Chile. For fiscal 2018, loss on extinguishment of debt was $3.1 billion , due to the early extinguishment of long-term debt which allowed us to retire higher rate debt to reduce interest expense in future periods . Our effective income tax rate was 30.4% for fiscal 2018 and 30.3% for both fiscal 2017 and 2016 . Although relatively consistent year-over-year, our effective income tax rate may fluctuate from period to period as a result of factors including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax laws, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. operations and international operations. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2018 , 2017 and 2016 is presented in Note 9 in the " Notes to Consolidated Financial Statements " and describes the impact of the enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act") to the fiscal 2018 effective income tax rate. As a result of the factors discussed above, we reported $10.5 billion and $14.3 billion of consolidated net income for fiscal 2018 and 2017 , respectively, which represents a decrease of $3.8 billion and $0.8 billion for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $3.28 and $4.38 for fiscal 2018 and 2017 , respectively.

Walmart U.S. Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2018 2017 2016 Net sales $ 318,477 $ 307,833 $ 298,378 Percentage change from comparable period 3.5% 3.2% 3.6% Calendar comparable sales increase 2.1% 1.6% 1.0% Operating income $ 17,869 $ 17,745 $ 19,087 Operating income as a percentage of net sales 5.6% 5.8% 6.4% Unit counts at period end 4,761 4,672 4,574 Retail square feet at period end 705 699 690

Net sales for the Walmart U.S. segment increased $10.6 billion or 3.5% and $9.5 billion or 3.2% for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in comparable store sales of 2.1% and 1.6% for fiscal 2018 and 2017 , respectively, and year-over-year growth in retail square feet of 0.7% and 1.4% for fiscal 2018 and 2017 , respectively. Additionally, for fiscal 2018 , sales generated from eCommerce acquisitions further contributed to the year-over-year increase. Gross profit rate decreased 24 basis points for fiscal 2018 and increased 24 basis points for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the decrease was primarily due to strategic price investments and the mix impact from eCommerce. Partially offsetting the negative factors for fiscal 2018 was the positive impact of savings from procuring merchandise. For fiscal 2017 , the increase in gross profit rate was primarily due to improved margin in food and consumables, including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs. Operating expenses as a percentage of segment net sales was relatively flat for fiscal 2018 and increased 101 basis points for fiscal 2017 , when compared to the previous fiscal year. Fiscal 2018 and fiscal 2017 included charges related to discontinued real estate projects of $244 million and $249 million, respectively. For fiscal 2017 , the increase was primarily driven by an increase in wage expense due to the investment in the associate wage structure; the charge related to discontinued real estate projects; and investments in digital retail and technology. The increase in operating expenses as a percentage of segment net sales for fiscal 2017 was partially offset by the impact of store closures in fiscal 2016. As a result of the factors discussed above, segment operating income increased $124 million for fiscal 2018 and decreased $1.3 billion for fiscal 2017 , respectively.

Walmart International Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2018 2017 2016 Net sales $ 118,068 $ 116,119 $ 123,408 Percentage change from comparable period 1.7% (5.9)% (9.4)% Operating income $ 5,352 $ 5,758 $ 5,346 Operating income as a percentage of net sales 4.5% 5.0 % 4.3 % Unit counts at period end 6,360 6,363 6,299 Retail square feet at period end 373 377 372

Net sales for the Walmart International segment increased $1.9 billion or 1.7% for fiscal 2018 and decreased $7.3 billion or 5.9% for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the increase in net sales was due to positive comparable sales in the majority of our markets and the impact of new stores, partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and a $0.5 billion negative impact from fluctuations in currency exchange rates. For fiscal 2017 , the decrease in net sales was due to a $11.0 billion negative impact from fluctuations in currency exchange rates. Additionally, net sales for fiscal 2017 were impacted by positive comparable sales in all of our markets, except in the United Kingdom, and year- over-year growth in retail square feet of 1.2%. Gross profit rate decreased 28 basis points for fiscal 2018 and increased 46 basis points for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the decrease in the gross profit rate was primarily due to strategic price investments in certain markets. For fiscal 2017 , the increase in gross profit rate was primarily due to improvement in certain markets' inventory management and cost analytics programs. Membership and other income decreased 14.0% for fiscal 2018 and increased 69.4% for fiscal 2017 , when compared to the previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia and a $47 million gain from a land sale, these gains were less than gains recognized in fiscal 2017 . Fiscal 2017 included a $535 million gain from the sale of our Yihaodian business and a $194 million gain from the sale of shopping malls in Chile . Operating expenses as a percentage of segment net sales decreased 11 basis points for fiscal 2018 and increased 58 basis points for fiscal 2017 , when compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net sales for fiscal 2018 was primarily due to an increase in net sales partially offset by restructuring and impairment charges in certain markets of approximately $0.5 billion, including charges from decisions to exit certain properties and to wind down the first party Brazil eCommerce operations. The increase in operating expenses as a percentage of segment net sales for fiscal 2017 was primarily due to declining sales on relatively flat fixed costs in the United Kingdom, as well as adjustments to useful lives of certain assets and impairment charges in certain markets. Segment operating income was negatively impacted by fluctuations in currency exchange rates of $68 million and $642 million for fiscal 2018 and 2017 , respectively. As a result of the factors discussed above, segment operating income decreased $406 million for fiscal 2018 and increased $412 million for fiscal 2017 , respectively.

Sam's Club Segment We believe the information in the below table under the caption "Excluding Fuel" is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the future.

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2018 2017 2016 Including Fuel

Net sales $ 59,216 $ 57,365 $ 56,828 Percentage change from comparable period 3.2% 0.9% (2.1)% Calendar comparable sales increase (decrease) 2.8% 0.5% (3.2)% Operating income $ 982 $ 1,671 $ 1,820 Operating income as a percentage of net sales 1.7% 2.9% 3.2 % Unit counts at period end 597 660 655 Retail square feet at period end 80 88 88

Excluding Fuel

Net sales $ 54,456 $ 53,289 $ 52,330 Percentage change from comparable period 2.2% 1.8% 1.4 % Operating income $ 864 $ 1,619 $ 1,746 Operating income as a percentage of net sales 1.6% 3.0% 3.3 %

Net sales for the Sam's Club segment increased $1.9 billion or 3.2% and $0.5 billion or 0.9% for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. For fiscal 2018 , the increase in net sales was primarily due to an increase in comparable sales which were benefited by an increase of $0.7 billion in fuel sales from higher fuel prices in fiscal 2018 . For fiscal 2017 , the increase in net sales was primarily due to an increase in comparable sales without fuel driven by higher eCommerce sales, and a year-over-year increase in retail square feet of 0.9%, partially offset by a decrease of $0.4 billion in fuel sales primarily from lower fuel prices in fiscal 2017 . In the future, net sales will be negatively impacted by our decision to remove tobacco in certain clubs. Gross profit rate decreased 44 basis points for fiscal 2018 and increased 39 basis points for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the decrease in gross profit rate was primarily due to the impact of markdowns to liquidate inventory related to the club closures, a reclassification of certain supply expenses from operating expenses to cost of goods sold, higher inventory shrink, increased shipping costs at samsclub.com and the investment in cash rewards. For fiscal 2017 , the increase in gross profit rate was primarily due to margin rate improvement in home and apparel, health and wellness, and grocery, partially offset by changes in merchandise mix and the growth of the Cash Rewards program. Membership and other income increased 2.3% for fiscal 2018 and decreased 6.5% for fiscal 2017 , when compared to the previous fiscal year. For fiscal 2018 , the increase in membership and other income was primarily due to higher recycling income from our sustainability efforts and an increase of 1.3% in membership income resulting from increased Plus Member penetration. For fiscal 2017 , the decrease was primarily due to a reduction in other income partially offset by an increase of 2.3% in membership income as a result of increased Plus Member renewals. Operating expenses as a percentage of segment net sales increased 80 and 49 basis points for fiscal 2018 and 2017 , respectively, when compared to the previous fiscal year. For fiscal 2018 , the increase in operating expenses as a percentage of segment net sales was primarily due to a charge of approximately $0.6 billion related to club closures and discontinued real estate projects. For fiscal 2017 , the increase in operating expenses as a percentage of segment net sales was primarily due to an increase in wage, benefit and incentive expenses from the investment in the associate wage structure, as well as our investments in eCommerce and technology and an increase in advertising expense. As a result of the factors discussed above, segment operating income decreased $689 million and $149 million f or fiscal 2018 and 2017 , respectively.

Liquidity and Capital Resources Liquidity The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or all of the remaining available cash flow has been used to fund the dividends on our common stock and share repurchases. We believe our sources of liquidity will continue to be adequate to fund operations, finance our global investment and expansion activities, pay dividends and fund our share repurchases for the foreseeable future.

Net Cash Provided by Operating Activities

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Net cash provided by operating activities $ 28,337 $ 31,673 $ 27,552

Net cash provided by operating activities was $28.3 billion , $31.7 billion and $27.6 billion for fiscal 2018 , 2017 and 2016 , respectively. The decrease in net cash provided by operating activities for fiscal 2018 , when compared to the previous fiscal year, was due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net cash provided by operating activities for fiscal 2017 , when compared to the previous fiscal year, was primarily due to improved working capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction of remodels and related expenses.

Cash Equivalents and Working Capital Cash and cash equivalents were $6.8 billion and $6.9 billion at January 31, 2018 and 2017 , respectively. Our working capital deficit was $18.9 billion and $9.2 billion at January 31, 2018 and 2017 , respectively. The increase in our working capital deficit reflects an increase in short-term borrowings as part of our long-term debt extinguishment activity as well as improved procurement and inventory management. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of cash dividends and share repurchases.

We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. We do not believe it will be necessary to repatriate earnings held outside of the U.S. and anticipate our domestic liquidity needs will be met through cash flows provided by domestic operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, we intend, with only certain exceptions, to continue to indefinitely reinvest our earnings held outside of the U.S. in our foreign operations. As part of U.S. tax reform enacted on December 22, 2017, we are currently assessing the impact of the new legislation, which can in turn, impact our assertion regarding any potential future repatriation. If our intentions with respect to reinvestment were to change, most of the amounts held within our foreign operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws could be subject to incremental withholding taxes. We do not expect current local laws, other existing limitations or potential taxes on anticipated future repatriations of cash amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition or results of operations. As of January 31, 2018 and 2017 , cash and cash equivalents of $1.4 billion and $1.0 billion , respectively, may not be freely transferable to the U.S. due to local laws or other restrictions.

Net Cash Used in Investing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Net cash used in investing activities $ (9,060) $ (13,987) $ (10,675)

Net cash used in investing activities was $9.1 billion , $14.0 billion and $10.7 billion for fiscal 2018 , 2017 and 2016 , respectively, and generally consisted of payments to remodel existing stores and clubs, expand our eCommerce capabilities, invest in other technologies and add stores and clubs. Net cash used in investing activities decreased $4.9 billion for fiscal 2018 , when compared to the previous fiscal year. Fiscal 2018 included cash received of $1.0 billion from the sale of Suburbia in Mexico, while fiscal 2017 included our acquisition of Jet.com, Inc. ("jet.com") for approximately $2.4 billion and our purchase of $1.9 billion of available for sale securities in JD.com ("JD"). Net cash used in investing activities increased $3.3 billion for fiscal 2017 , when compared to the previous fiscal year, primarily due to our acquisition of jet.com and investment in JD, partially offset by $0.7 billion in cash received from the sales of shopping malls in Chile. Refer to Note 13 to our Consolidated Financial Statements for further details on our acquisition of jet.com and investment in JD. Additionally, refer to the " Strategic Capital Allocation " section in our Company Performance Metrics for capital expenditure detail for fiscal 2018 and 2017. We continued to focus on eCommerce, including a seamless omni-channel shopping experience, in each of our segments during fiscal 2018 . Our fiscal 2018 accomplishments in this area include growing "Online Grocery" to over 1,100 pickup locations in the U.S., new dedicated eCommerce fulfillment centers, two-day free shipping with no membership fee at Walmart U.S. and one-hour delivery from stores in China.

Growth Activities For the fiscal year ending January 31, 2019 ("fiscal 2019 "), we project capital expenditures will be approximately $11.0 billion and involve:

• in Walmart U.S., continuing to prioritize store remodels and digital experiences, with approximately 1,000 additional online grocery locations; • in Walmart International, investing more in fulfillment capabilities in addition to new stores; and, • eCommerce investments that include enhanced supply chain capabilities.

Globally, in fiscal 2019 , we expect to add approximately 280 new, expanded or relocated stores and clubs, with approximately 255 of those in Walmart International, focusing on key markets such as Mexico and China.

Net Cash Used in Financing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Net cash used in financing activities $ (19,875) $ (19,072) $ (16,285)

Net cash flows used in financing activities generally consist of transactions related to our short-term and long-term debt, financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interests are also classified as cash flows from financing activities. Net cash used in financing activities increased $0.8 billion and $2.8 billion for fiscal 2018 and 2017 , respectively, when compared to the same period in the previous fiscal year. Net cash used in financing activities for fiscal 2018 increased due to premiums paid for early extinguishment of debt. Net cash used in financing

activities for fiscal 2017 increased primarily due to repurchases of Company stock partially offset by lower repayments of long-term debt. Further discussion of financing activities is provided by major category below.

Short-term Borrowings Net cash flows provided by short-term borrowings increased $4.1 billion in fiscal 2018 and decreased $1.7 billion in fiscal 2017 , when compared to the balance at the end of the previous fiscal year. We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. For fiscal 2018 , the additional cash provided by short-term borrowings was primarily due to the timing of our January 2018 debt extinguishment. For fiscal 2017 , the decrease in net cash flows provided by short-term borrowings was due to improved cash flows from operations driven by working capital improvements and changes to tax regulations. The following table includes additional information related to the Company's short-term borrowings for fiscal 2018 , 2017 and 2016 :

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Maximum amount outstanding at any month-end $ 11,386 $ 9,493 $ 10,551 Average daily short-term borrowings 8,131 5,691 4,536 Annual weighted-average interest rate 1.3% 1.8% 1.5%

In addition to our short-term borrowings, we also have various undrawn committed lines of credit in the U.S. that provide $12.5 billion and various undrawn committed lines of credit outside of the U.S. that provide approximately $4.0 billion of additional liquidity, if needed.

Long-term Debt The following table provides the changes in our long-term debt for fiscal 2018 :

(Amounts in millions) Long-term debt due

within one year Long-term debt Total Balances as of February 1, 2017 $ 2,256 $ 36,015 $ 38,271 Proceeds from issuance of long-term debt — 7,476 7,476 Payments of long-term debt (1,789) (11,272) (13,061) Reclassifications of long-term debt 3,224 (3,224) —

Other 47 1,050 1,097 Balances as of January 31, 2018 $ 3,738 $ 30,045 $ 33,783

Our total long-term debt decreased $4.5 billion for fiscal 2018 , primarily due to the extinguishment and maturities of certain long-term debt, partially offset by the issuance of long-term debt. The extinguishment of certain long-term debt allowed us to retire higher rate debt to reduce interest expense in future periods .

Dividends Our total dividend payments were $6.1 billion , $6.2 billion and $6.3 billion for fiscal 2018 , 2017 and 2016 , respectively. On February 20, 2018 , the Board of Directors approved the fiscal 2019 annual dividend of $2.08 per share, an increase over the fiscal 2018 annual dividend of $2.04 per share. For fiscal 2019 , the annual dividend will be paid in four quarterly installments of $0.52 per share, according to the following record and payable dates:

Record Date Payable Date March 9, 2018 April 2, 2018 May 11, 2018 June 4, 2018 August 10, 2018 September 4, 2018 December 7, 2018 January 2, 2019

Company Share Repurchase Program From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect at the beginning of fiscal 2018 . On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018 , authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. We anticipate that a significant majority of the ongoing share repurchase program will be

funded through the Company's free cash flows. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2018 , 2017 and 2016 :

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2018 2017 2016 Total number of shares repurchased 104.9 119.9 62.4 Average price paid per share $ 79.11 $ 69.18 $ 65.90 Total amount paid for share repurchases $ 8,296 $ 8,298 $ 4,112

Share repurchases were flat for fiscal 2018 and increased $4.2 billion for fiscal 2017 , respectively, when compared to the previous fiscal year.

Significant Transactions with Noncontrolling Interests In fiscal 2016, as described in Note 13 to our Consolidated Financial Statements, we completed the purchase of all of the remaining noncontrolling interest in Yihaodian, our eCommerce operations in China, for approximately $760 million, using existing cash to complete the transaction. The Company subsequently sold Yihaodian to JD in fiscal 2017.

Capital Resources We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our capital expenditures, dividend payments and share repurchases. We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. At January 31, 2018 , the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

Rating agency Commercial paper Long-term debt Standard & Poor's A-1+ AA Moody's Investors Service P-1 Aa2 Fitch Ratings F1+ AA

Payments Due During Fiscal Years Ending January 31, (Amounts in millions) Total 2019 2020-2021 2022-2023 Thereafter Recorded contractual obligations:

Long-term debt (1) $ 33,783 $ 3,733 $ 5,250 $ 3,541 $ 21,259 Short-term borrowings 5,257 5,257 — — — Capital lease and financing obligations (2) 9,930 1,039 1,929 1,539 5,423

Unrecorded contractual obligations: Non-cancelable operating leases (3) 15,366 1,933 3,250 2,539 7,644 Estimated interest on long-term debt 17,601 1,291 2,319 2,121 11,870 Trade and stand-by letters of credit 2,626 2,626 — — — Purchase obligations 13,278 6,121 5,094 1,138 925

Total contractual obligations $ 97,841 $ 22,000 $ 17,842 $ 10,878 $ 47,121

(1) "Long-term debt" includes the fair value of our derivatives designated as fair value hedges. (2) "Capital lease and financing obligations" includes executory costs and imputed interest related to capital lease and financing obligations that are not yet recorded. Refer to Note 11 to our

Consolidated Financial Statements for more information. (3) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018 .

Additionally, the Company has $12.5 billion in undrawn committed lines of credit in the U.S. and approximately $4.0 billion of undrawn committed lines of credit outside of the U.S. which, if drawn upon, would be included in the current liabilities section of the Company's Consolidated Balance Sheets. Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31, 2018 , and assumes interest rates remain at current levels for our variable rate debt. Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts. For the purposes of this table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not include a fixed or minimum quantity, are excluded from the table above. Additionally, purchase orders for inventory are not included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for cancellation without significant penalty. The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations. In addition to the amounts shown in the table above, $1.0 billion of unrecognized tax benefits are considered uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.

Off Balance Sheet Arrangements As of January 31, 2018 , we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Other Matters We discuss our existing FCPA investigation and related matters, including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss various legal proceedings related to the FCPA investigation in Item 3 herein under the caption "Part I, Item 3. Legal Proceedings," under the sub-caption "II. Certain Other Proceedings." We discuss the "equal value" claims against our United Kingdom subsidiary, ASDA Stores, Ltd., including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We discuss the national prescription opiate litigation including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein.

Inventories We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. Under the retail method of accounting, inventory is valued at the lower of cost or market, which is determined by applying a cost-to-retail ratio to each merchandise grouping's retail value. The FIFO cost-to-retail ratio is generally based on the fiscal year purchase activity. The cost-to-retail ratio for measuring any LIFO provision is based on the initial margin of the fiscal year purchase activity less the impact of any permanent markdowns. The retail method of accounting requires management to make certain judgments and estimates that may significantly impact the ending inventory valuation at cost, as well as the amount of gross profit recognized. Judgments made include recording markdowns used to sell inventory and shrinkage. When management determines the ability to sell inventory has diminished, markdowns for clearance activity and the related cost impact are recorded. Factors considered in the determination of markdowns include current and anticipated demand, customer preferences and age of merchandise, as well as seasonal and fashion trends. Changes in weather and customer preferences could also cause changes in the amount and timing of markdowns from year to year. When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a decrease to the carrying value of inventory. At January 31, 2018 and 2017 , our inventories valued at LIFO approximated those inventories as if they were valued at FIFO. We provide for estimated inventory losses, or shrinkage, between physical inventory counts on the basis of a historical percentage of sales. Following annual inventory counts, the provision is adjusted to reflect updated historical results. Historically, our estimated inventory losses have been materially accurate when compared to annual inventory counts and we expect that trend to continue.

Impairment of Assets We evaluate long-lived assets, other than goodwill and assets with indefinite lives, for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments regarding the existence of impairment indicators are based on market conditions and financial performance. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level. The variability of these factors depends on a number of conditions, including uncertainty about future events and changes in

demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to conclude that indicators of impairment exist and require impairment tests be performed, which could result in management determining the value of long-lived assets is impaired, resulting in a write- down of the related long-lived assets. Although impairment charges for fiscal 2018 were $1.4 billion , these charges primarily related to restructuring activities described in Note 14 , as well as discontinued real estate projects in the U.S. and decisions to exit certain international properties . Impairment charges not related to restructuring activities or decisions to exit properties for fiscal 2018 were not material and would not change materially with a 10% decrease in the undiscounted cash flows for the stores with indicators of impairment. Additionally, total impairment charges for fiscal 2017 were not material. Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units and other indefinite-lived acquired intangible assets have generated sufficient returns to recover the cost of goodwill and other indefinite-lived acquired intangible assets. Because of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be materially impacted. For approximately $300 million of certain acquired indefinite-lived intangible assets, the fair value approximated the carrying value; any deterioration in the fair value may result in an impairment charge.

Income Taxes Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Accordingly, the determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors, including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and international operations where the statutory rates are generally lower than the U.S. statutory rate, and may fluctuate as a result. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating our tax positions and assessing the timing and amounts of deductible and taxable items. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies heavily on estimates. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates new taxes on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. During the fourth quarter of fiscal 2018, the Company recorded a net tax benefit of $0.2 billion related to the enactment of the Tax Act. The benefit primarily related to the remeasurement of the Company's deferred tax assets and liabilities considering the Tax Act's newly enacted tax rates and is net of the Tax Act's one- time transition tax on previously unremitted earnings of non-U.S. subsidiaries. As discussed in Note 9 to our Consolidated Financial Statements, as the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard- setting bodies, the Company may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act is provisional and will be completed by the measurement period provided in Staff Accounting Bulletin No. 118.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates and fluctuations in currency exchange rates. The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a change in another, which may magnify or negate other sensitivities.

Interest Rate Risk We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2018 , the net fair value of our interest rate swaps decreased approximately $87 million primarily due to fluctuations in market interest rates. The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing market rates at January 31, 2018 .

Expected Maturity Date (Amounts in millions) Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Thereafter Total Liabilities

Short-term borrowings: Variable rate $ 5,257 $ — $ — $ — $ — $ — $ 5,257 Weighted-average interest rate 1.5% —% —% —% —% —% 1.5%

Long-term debt (1) : Fixed rate $ 3,233 $ 1,614 $ 3,336 $ 607 $ 2,934 $ 21,259 $ 32,983 Weighted-average interest rate 3.2% 2.6% 2.8% 5.5% 1.7% 4.6% 3.9% Variable rate $ 500 $ 300 $ — $ — $ — $ — $ 800 Weighted-average interest rate 5.5% 1.7% —% —% —% —% 4.1%

Interest rate derivatives Interest rate swaps:

Fixed to variable $ — $ — $ 750 $ — $ — $ 3,250 $ 4,000 Weighted-average pay rate —% —% 3.2% —% —% 2.5% 2.6% Weighted-average receive rate —% —% 3.3% —% —% 2.9% 3.0%

(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.

As of January 31, 2018 , our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 26% of our total short-term and long-term debt. Based on January 31, 2018 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $96 million .

Foreign Currency Risk We are exposed to fluctuations in foreign currency exchange rates as a result of our net investments and operations in countries other than the U.S. For fiscal 2018 , movements in currency exchange rates and the related impact on the translation of the balance sheets of the Company's subsidiaries in the United Kingdom and Canada were the primary cause of the $2.3 billion gain in the currency translation and other category of accumulated other comprehensive loss. We hedge a portion of our foreign currency risk by entering into currency swaps and designating certain foreign-currency-denominated long-term debt as net investment hedges. We hold currency swaps to hedge the currency exchange component of our net investments and also to hedge the currency exchange rate fluctuation exposure associated with the forecasted payments of principal and interest of non-U.S. denominated debt. The aggregate fair value of these swaps was in an asset position of $413 million at January 31, 2018 and a liability position of $147 million at January 31, 2017 . The change in the fair value of these swaps was due to fluctuations in currency exchange rates, primarily the strengthening of other currencies relative to the U.S. dollar in fiscal 2018 . A hypothetical 10% increase or decrease in the currency exchange rates underlying these swaps from the market rate at January 31, 2018 would have resulted in a loss or gain in the value of the swaps of $560 million . A hypothetical 10% change in interest rates underlying

these swaps from the market rates in effect at January 31, 2018 would have resulted in a loss or gain in the value of the swaps of $22 million . In addition to currency swaps, we have designated foreign-currency-denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion at January 31, 2018 and £2.5 billion at January 31, 2017 that was designated as a hedge of our net investment in the United Kingdom. At January 31, 2018 , a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted in a change in the value of the debt of $217 million . In addition, we had outstanding long-term debt of ¥180 billion at January 31, 2018 and ¥10 billion at January 31, 2017 that was designated as a hedge of our net investment in Japan. At January 31, 2018 , a hypothetical 10% increase or decrease in value of the U.S. dollar relative to the Japanese yen would have resulted in a change in the value of the debt of $150 million . In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of purchase commitments denominated in non-functional currencies.

Investment Risk During fiscal 2018 , the fair value of our available-for-sale investment in JD increased approximately $1.5 billion , due to an increase in the market value of JD.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of Walmart Inc. (formerly "Wal-Mart Stores, Inc.")

For the Fiscal Year Ended January 31, 2018

Table of Contents

Page Management's Report to Our Shareholders 52 Report of Independent Registered Public Accounting Firm 53 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 54 Consolidated Statements of Income 55 Consolidated Statements of Comprehensive Income 56 Consolidated Balance Sheets 57 Consolidated Statements of Shareholders' Equity 58 Consolidated Statements of Cash Flows 59 Notes to Consolidated Financial Statements 60

Management's Report to Our Shareholders Walmart Inc. Management of Walmart Inc. ("Walmart," the "company" or "we") is responsible for the preparation, integrity and objectivity of Walmart's Consolidated Financial Statements and other financial information contained in this Annual Report on Form 10-K. Those Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States. In preparing those Consolidated Financial Statements, management is required to make certain estimates and judgments, which are based upon currently available information and management's view of current conditions and circumstances. The Audit Committee of the Board of Directors oversees our process of reporting financial information and the audit of our Consolidated Financial Statements. The Audit Committee stays informed of the financial condition of Walmart and regularly reviews management's financial policies and procedures, the independence of our independent auditors, our internal control over financial reporting and the objectivity of our financial reporting. Both the independent auditors and the internal auditors have free access to the Audit Committee and meet with the Audit Committee regularly, both with and without management present. Acting through our Audit Committee, we have retained Ernst & Young LLP, an independent registered public accounting firm, to audit our Consolidated Financial Statements appearing below. We have made available to Ernst & Young LLP all of our financial records and related data in connection with their audit of our Consolidated Financial Statements. We have filed with the Securities and Exchange Commission ("SEC") the required certifications related to our Consolidated Financial Statements as of and for the year ended January 31, 2018 . These certifications are attached as exhibits to this Annual Report on Form 10-K. Additionally, we have also provided to the New York Stock Exchange the required annual certification of our Chief Executive Officer regarding our compliance with the New York Stock Exchange's corporate governance listing standards.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2018 and 2017 , the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2018 , and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2018 and 2017 , and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2018 , in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2018 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 30, 2018 expressed an unqualified opinion thereon.

Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP We have served as the Company's auditor since 1969. Rogers, Arkansas March 30, 2018

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on Internal Control over Financial Reporting We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2018 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2018 , based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2018 and 2017 , the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2018 , and the related notes and our report dated March 30, 2018 expressed an unqualified opinion thereon.

Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Rogers, Arkansas March 30, 2018

Walmart Inc. Consolidated Statements of Income

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2018 2017 2016 Revenues:

Net sales $ 495,761 $ 481,317 $ 478,614 Membership and other income 4,582 4,556 3,516

Total revenues 500,343 485,873 482,130 Costs and expenses:

Cost of sales 373,396 361,256 360,984 Operating, selling, general and administrative expenses 106,510 101,853 97,041

Operating income 20,437 22,764 24,105 Interest:

Debt 1,978 2,044 2,027 Capital lease and financing obligations 352 323 521 Interest income (152) (100) (81)

Interest, net 2,178 2,267 2,467 Loss on extinguishment of debt 3,136 — — Income before income taxes 15,123 20,497 21,638 Provision for income taxes 4,600 6,204 6,558 Consolidated net income 10,523 14,293 15,080 Consolidated net income attributable to noncontrolling interest (661) (650) (386) Consolidated net income attributable to Walmart $ 9,862 $ 13,643 $ 14,694

Net income per common share:

Basic net income per common share attributable to Walmart $ 3.29 $ 4.40 $ 4.58 Diluted net income per common share attributable to Walmart 3.28 4.38 4.57

Weighted-average common shares outstanding:

Basic 2,995 3,101 3,207 Diluted 3,010 3,112 3,217

Dividends declared per common share $ 2.04 $ 2.00 $ 1.96

See accompanying notes.

Walmart Inc. Consolidated Statements of Comprehensive Income

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Consolidated net income $ 10,523 $ 14,293 $ 15,080

Consolidated net income attributable to noncontrolling interest (661) (650) (386) Consolidated net income attributable to Walmart 9,862 13,643 14,694 Other comprehensive income (loss), net of income taxes

Currency translation and other 2,540 (3,027) (5,220) Net investment hedges (405) 413 366 Unrealized gain on available-for-sale securities 1,501 145 — Cash flow hedges 437 21 (202) Minimum pension liability 147 (397) 86

Other comprehensive income (loss), net of income taxes 4,220 (2,845) (4,970) Other comprehensive (income) loss attributable to noncontrolling interest (169) 210 541

Other comprehensive income (loss) attributable to Walmart 4,051 (2,635) (4,429) Comprehensive income, net of income taxes 14,743 11,448 10,110

Comprehensive (income) loss attributable to noncontrolling interest (830) (440) 155 Comprehensive income attributable to Walmart $ 13,913 $ 11,008 $ 10,265

See accompanying notes.

Walmart Inc. Consolidated Balance Sheets

As of January 31, (Amounts in millions) 2018 2017 ASSETS Current assets:

Cash and cash equivalents $ 6,756 $ 6,867 Receivables, net 5,614 5,835 Inventories 43,783 43,046 Prepaid expenses and other 3,511 1,941

Total current assets 59,664 57,689 Property and equipment:

Property and equipment 185,154 179,492 Less accumulated depreciation (77,479) (71,782)

Property and equipment, net 107,675 107,710 Property under capital lease and financing obligations:

Property under capital lease and financing obligations 12,703 11,637 Less accumulated amortization (5,560) (5,169)

Property under capital lease and financing obligations, net 7,143 6,468 Goodwill 18,242 17,037 Other assets and deferred charges 11,798 9,921 Total assets $ 204,522 $ 198,825

LIABILITIES AND EQUITY Current liabilities:

Short-term borrowings $ 5,257 $ 1,099 Accounts payable 46,092 41,433 Accrued liabilities 22,122 20,654 Accrued income taxes 645 921 Long-term debt due within one year 3,738 2,256 Capital lease and financing obligations due within one year 667 565

Total current liabilities 78,521 66,928 Long-term debt 30,045 36,015 Long-term capital lease and financing obligations 6,780 6,003 Deferred income taxes and other 8,354 9,344 Commitments and contingencies Equity:

Common stock 295 305 Capital in excess of par value 2,648 2,371 Retained earnings 85,107 89,354 Accumulated other comprehensive loss (10,181) (14,232)

Total Walmart shareholders' equity 77,869 77,798 Noncontrolling interest 2,953 2,737

Total equity 80,822 80,535 Total liabilities and equity $ 204,522 $ 198,825

See accompanying notes.

Walmart Inc. Consolidated Statements of Shareholders' Equity

Accumulated Total Capital in Other Walmart

(Amounts in millions)

Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity

Balances as of February 1, 2015 3,228 $ 323 $ 2,462 $ 85,777 $ (7,168) $ 81,394 $ 4,543 $ 85,937 Consolidated net income — — — 14,694 — 14,694 386 15,080 Other comprehensive income (loss), net of income taxes — — — — (4,429) (4,429) (541) (4,970)

Cash dividends declared ($1.96 per share) — — — (6,294) — (6,294) — (6,294)

Purchase of Company stock (65) (6) (102) (4,148) — (4,256) — (4,256) Cash dividend declared to noncontrolling interest — — — — — — (691) (691)

Other (1) — (555) (8) — (563) (632) (1,195) Balances as of January 31, 2016 3,162 317 1,805 90,021 (11,597) 80,546 3,065 83,611 Consolidated net income — — — 13,643 — 13,643 650 14,293 Other comprehensive income (loss), net of income taxes — — — — (2,635) (2,635) (210) (2,845)

Cash dividends declared ($2.00 per share) — — — (6,216) — (6,216) — (6,216)

Purchase of Company stock (120) (12) (174) (8,090) — (8,276) — (8,276) Cash dividend declared to noncontrolling interest — — — — — — (519) (519)

Other 6 — 740 (4) — 736 (249) 487 Balances as of January 31, 2017 3,048 305 2,371 89,354 (14,232) 77,798 2,737 80,535 Consolidated net income — — — 9,862 — 9,862 661 10,523 Other comprehensive income (loss), net of income taxes — — — — 4,051 4,051 169 4,220

Cash dividends declared ($2.04 per share) — — — (6,124) — (6,124) — (6,124)

Purchase of Company stock (103) (10) (219) (7,975) — (8,204) — (8,204) Cash dividend declared to noncontrolling interest — — — — — — (687) (687) Other 7 — 496 (10) — 486 73 559 Balances as of January 31, 2018 2,952 $ 295 $ 2,648 $ 85,107 $ (10,181) $ 77,869 $ 2,953 $ 80,822

See accompanying notes.

Walmart Inc. Consolidated Statements of Cash Flows

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Cash flows from operating activities:

Consolidated net income $ 10,523 $ 14,293 $ 15,080 Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization 10,529 10,080 9,454 Deferred income taxes (304) 761 (672) Loss on extinguishment of debt 3,136 — — Other operating activities 1,210 206 1,410 Changes in certain assets and liabilities, net of effects of acquisitions:

Receivables, net (1,074) (402) (19) Inventories (140) 1,021 (703) Accounts payable 4,086 3,942 2,008 Accrued liabilities 928 1,280 1,466 Accrued income taxes (557) 492 (472)

Net cash provided by operating activities 28,337 31,673 27,552 Cash flows from investing activities:

Payments for property and equipment (10,051) (10,619) (11,477) Proceeds from the disposal of property and equipment 378 456 635 Proceeds from the disposal of certain operations 1,046 662 246 Purchase of available for sale securities — (1,901) — Business acquisitions, net of cash acquired (375) (2,463) — Other investing activities (58) (122) (79)

Net cash used in investing activities (9,060) (13,987) (10,675) Cash flows from financing activities:

Net change in short-term borrowings 4,148 (1,673) 1,235 Proceeds from issuance of long-term debt 7,476 137 39 Repayments of long-term debt (13,061) (2,055) (4,432) Premiums paid to extinguish debt (3,059) — — Dividends paid (6,124) (6,216) (6,294) Purchase of Company stock (8,296) (8,298) (4,112) Dividends paid to noncontrolling interest (690) (479) (719) Purchase of noncontrolling interest (8) (90) (1,326) Other financing activities (261) (398) (676)

Net cash used in financing activities (19,875) (19,072) (16,285) Effect of exchange rates on cash and cash equivalents 487 (452) (1,022) Net increase (decrease) in cash and cash equivalents (111) (1,838) (430) Cash and cash equivalents at beginning of year 6,867 8,705 9,135 Cash and cash equivalents at end of year $ 6,756 $ 6,867 $ 8,705

Supplemental disclosure of cash flow information: Income taxes paid 6,179 4,507 8,111 Interest paid 2,450 2,351 2,540

See accompanying notes.

Walmart Inc. Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies General Walmart Inc. (formerly "Wal-Mart Stores, Inc.") ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce. Through innovation, the Company is striving to create a customer-centric experience that seamlessly integrates digital and physical shopping into an omni-channel offering that saves time for its customers. Each week, the Company serves nearly 270 million customers who visit its more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. The Company's strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.

Principles of Consolidation The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2018 ("fiscal 2018 "), January 31, 2017 ("fiscal 2017 ") and January 31, 2016 ("fiscal 2016 "). All material intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments in unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are accounted for primarily using the equity method. These equity method investments are immaterial to the Company's Consolidated Financial Statements. The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of January 2018 related to the operations consolidated using a lag that materially affected the Consolidated Financial Statements.

Cash and Cash Equivalents The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $1.6 billion and $1.5 billion at January 31, 2018 and 2017 , respectively. In addition, cash and cash equivalents included restricted cash of $300 million and $265 million at January 31, 2018 and 2017 , respectively, which was primarily related to cash collateral holdings from various counterparties, as required by certain derivative and trust agreements. The Company's cash balances are held in various locations around the world. Substantially all of the Company's $6.8 billion of cash and cash equivalents at January 31, 2018 , was held outside of the U.S. Of the Company's $6.9 billion of cash and cash equivalents at January 31, 2017 , $5.9 billion was held outside of the U.S. Cash and cash equivalents held outside of the U.S. are generally utilized to support liquidity needs in the Company's non-U.S. operations. The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. Management does not believe it will be necessary to repatriate earnings held outside of the U.S. and anticipates the Company's domestic liquidity needs will be met through cash flows provided by domestic operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, the Company intends, with only certain exceptions, to continue to indefinitely reinvest the Company's earnings held outside of the U.S. in its foreign operations. As part of the U.S. tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. If the Company's intentions with respect to reinvestment were to change, most of the amounts held within the Company's foreign operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws could be subject to incremental withholding taxes. The Company does not expect current local laws, other existing limitations or potential taxes on anticipated future repatriations of earnings held outside of the U.S. to have a material effect on the Company's overall liquidity, financial condition or results of operations.

As of January 31, 2018 and 2017 , cash and cash equivalents of approximately $1.4 billion and $1.0 billion , respectively, may not be freely transferable to the U.S. due to local laws or other restrictions.

Receivables Receivables are stated at their carrying values, net of a reserve for doubtful accounts. Receivables consist primarily of amounts due from:

• insurance companies resulting from pharmacy sales; • banks for customer credit and debit cards and electronic bank transfers that take in excess of seven days to process; • suppliers for marketing or incentive programs; and • real estate transactions.

Inventories The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. At January 31, 2018 and January 31, 2017 , the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

Assets Held for Sale Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. The Company reviews all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. As of January 31, 2018 and 2017, immaterial amounts for assets and liabilities held for sale were classified within prepaid expenses and other and accrued liabilities, respectively, in the Consolidated Balance Sheets.

Property and Equipment Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis:

As of January 31, (Amounts in millions) Estimated Useful Lives 2018 2017 Land N/A $ 25,298 $ 24,801 Buildings and improvements 3-40 years 101,155 98,547 Fixtures and equipment 1-30 years 52,695 48,998 Transportation equipment 3-15 years 2,387 2,845 Construction in progress N/A 3,619 4,301 Property and equipment $ 185,154 $ 179,492 Accumulated depreciation (77,479) (71,782) Property and equipment, net $ 107,675 $ 107,710

Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases for fiscal 2018 , 2017 and 2016 was $10.5 billion , $10.1 billion and $9.5 billion , respectively.

Leases The Company estimates the expected term of a lease by assuming the exercise of renewal options where an economic penalty exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such renewal is at the sole discretion of the Company. The expected term is used in the determination of whether a store or club lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant expenditures are made for leasehold improvements late in the expected term of a lease and renewal is reasonably assured, the

useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases. The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the leased assets for accounting purposes. As a result, the payments, regardless of the significance, are automatic indicators of ownership and require the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon completion of the lessor's project, the Company performs a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have "continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated Balance Sheets and are generally amortized over the lease term. At the end of the lease term, including exercise of any renewal options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash gain on sale of the property.

Goodwill and Other Acquired Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill. The following table reflects goodwill activity, by reportable segment, for fiscal 2018 and 2017 :

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Total Balances as of February 1, 2016 $ 461 $ 15,921 $ 313 $ 16,695 Changes in currency translation and other — (1,433) — (1,433) Acquisitions (1) 1,775 — — 1,775 Balances as of January 31, 2017 2,236 14,488 313 17,037 Changes in currency translation and other — 996 — 996 Acquisitions 209 — — 209 Balances as of January 31, 2018 $ 2,445 $ 15,484 $ 313 $ 18,242

(1) Goodwill recorded for fiscal 2017 Walmart U.S. acquisitions primarily relates to Jet.com, Inc. ("jet.com").

Indefinite-lived intangible assets are included in other assets and deferred charges in the Company's Consolidated Balance Sheets. These assets are evaluated for impairment based on their fair values using valuation techniques which are updated annually based on the most recent variables and assumptions. There were no significant impairment charges related to indefinite-lived intangible assets recorded for fiscal 2018 , 2017 and 2016 .

Self Insurance Reserves The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits . Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run- out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations provided by independent third-party actuaries. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.

Income Taxes Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates. In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures.

Revenue Recognition Sales The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Additionally, estimated sales returns are calculated using historical experience of actual returns as a percent of sales.

Membership Fee Revenue The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. The following table summarizes membership fee activity for fiscal 2018 , 2017 and 2016 :

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Deferred membership fee revenue, beginning of year $ 743 $ 744 $ 759 Cash received from members 1,398 1,371 1,333 Membership fee revenue recognized (1,411) (1,372) (1,348) Deferred membership fee revenue, end of year $ 730 $ 743 $ 744

Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. The deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets.

Gift Cards Customer purchases of gift cards, to be utilized in our stores or on our eCommerce websites, are not recognized as revenue until the card is redeemed and the customer purchases merchandise using the gift card. Gift cards in the U.S. and some countries do not carry an expiration date; therefore, customers and members can redeem their gift cards for merchandise indefinitely. Gift cards in some foreign countries where the Company does business have expiration dates. A certain number of gift cards, both with and without expiration dates, will not be fully redeemed. Management estimates unredeemed gift cards and recognizes

revenue for these amounts when it is determined the likelihood of redemption is remote. Management periodically reviews and updates its estimates.

Advertising Costs Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.1 billion , $2.9 billion and $2.5 billion for fiscal 2018 , 2017 and 2016 , respectively.

Pre-Opening Costs The cost of start-up activities, including organization costs, related to new store openings, store remodels, relocations, expansions and conversions are expensed as incurred and included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Pre-opening costs totaled $106 million , $131 million and $271 million for fiscal 2018 , 2017 and 2016 , respectively.

Recent Accounting Pronouncements Pronouncements Adopted in Fiscal 2018 In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation–Stock Compensation (Topic 718) , which is intended to simplify accounting for share-based payment transactions. The ASU changed several aspects of the accounting for share-based payment award transactions, including accounting for income taxes, forfeitures and minimum statutory tax withholding requirements. Management adopted this ASU beginning February 1, 2017, and as a result, reclassified an immaterial amount from operating activities to financing activities in the Company's prior year consolidated cash flows. On December 22, 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), in response to the Tax Cuts and Jobs Act of

2017 ("Tax Act"). The Company has elected to record provisional amounts, as allowed by SAB 118, during a measurement period not to extend beyond one year of the enactment date. Management expects to complete the analysis within the measurement period in accordance with SAB 118.

Pronouncements to Be Adopted in the Year Ending January 31, 2019 ("fiscal 2019") In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU represents a single comprehensive model to recognize revenue to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company adopted this ASU on February 1, 2018, under the modified retrospective approach, which resulted in an immaterial cumulative adjustment to retained earnings. Also, this ASU will require additional disclosures. In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall (Topic 825) , which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This ASU primarily impacts the Company's accounting for its investment in JD.com ("JD"). The Company adopted this ASU on February 1, 2018, which resulted in a cumulative positive adjustment to retained earnings of approximately $2.9 billion based on the market value of our investment in JD at January 31, 2018. The retained earnings adjustment relates to both the available for sale portion and the cost portion of the investment. Beginning February 1, 2018, the adoption requires the remeasurement of our investment in JD due to observable price changes and impairments, if any, to be recorded through the Consolidated Statement of Income, introducing volatility to reported net income. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows–Restricted Cash (Topic 230) , which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The Company adopted this ASU on February 1, 2018, which, while immaterial, will modify the Company's presentation of Consolidated Statements of Cash Flows. At January 31, 2018, the Company had restricted cash recorded in line items other than cash and cash equivalents of $258 million . In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The ASU provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained earnings. The ASU is effective February 1, 2019, with early adoption permitted. Management anticipates early adopting this optional standard and is evaluating the effect on the Company's consolidated financial statements.

Other Pronouncements Being Evaluated In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which requires lease assets and liabilities to be recorded on the balance sheet. Certain qualitative and quantitative disclosures are also required, as well as retrospective recognition and measurement of impacted leases. The Company will adopt this ASU on February 1, 2019 and is implementing new lease systems in connection with the adoption. Management is progressing with implementation and continuing to evaluate the effect to the Company's consolidated financial statements and disclosures. Management expects a material impact to the Company's Consolidated Balance Sheet. In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326) , which modifies the measurement of expected credit losses of certain financial instruments. The Company will adopt this ASU on February 1, 2020. Management is currently evaluating this ASU to determine its impact to the Company's consolidated financial statements.

Note 2. Net Income Per Common Share Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net income per common share attributable to Walmart for fiscal 2018 , 2017 and 2016 . The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2018 2017 2016 Numerator

Consolidated net income $ 10,523 $ 14,293 $ 15,080 Consolidated net income attributable to noncontrolling interest (661) (650) (386) Consolidated net income attributable to Walmart $ 9,862 $ 13,643 $ 14,694

Denominator

Weighted-average common shares outstanding, basic 2,995 3,101 3,207 Dilutive impact of stock options and other share-based awards 15 11 10 Weighted-average common shares outstanding, diluted 3,010 3,112 3,217

Net income per common share attributable to Walmart

Basic $ 3.29 $ 4.40 $ 4.58 Diluted 3.28 4.38 4.57

Note 3. Shareholders' Equity Share-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all plans was $626 million , $596 million and $448 million for fiscal 2018 , 2017 and 2016 , respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share- based compensation was $150 million , $212 million and $151 million for fiscal 2018 , 2017 and 2016 , respectively. The following table summarizes the Company's share-based compensation expense by award type:

Fiscal Years Ended January 31,

(Amounts in millions) 2018 2017 2016 Restricted stock and performance share units $ 234 $ 237 $ 134 Restricted stock units 368 332 292 Other 24 27 22 Share-based compensation expense $ 626 $ 596 $ 448

The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as amended and restated effective February 23, 2016, and as amended further as of February 1, 2017, and as renamed on February 1, 2018, was established to grant stock options, restricted (non-vested) stock, performance share units and other equity compensation awards for which 210 million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933, as amended. The Company believes that such awards serve to align the interests of its associates with those of its shareholders. The Plan's award types are summarized as follows:

• Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance share units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance share units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance share units in fiscal 2018 , 2017 and 2016 was 7.2% , 8.3% and 7.4% , respectively.

• Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period; generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date. The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2018 , 2017 and 2016 was 9.0% , 9.0% and 8.7% , respectively.

In addition to the Plan, the Company's subsidiary in the United Kingdom has stock option plans for certain colleagues which generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table above. The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2018 :

Restricted Stock and Performance Share Units (1) Restricted Stock Units

(Shares in thousands) Shares Weighted-Average Grant- Date Fair Value Per Share Shares

Weighted-Average Grant- Date Fair Value Per Share

Outstanding at February 1, 2017 9,077 $ 68.61 24,276 $ 65.52 Granted 3,598 74.73 8,570 67.54 Vested/exercised (2,525) 71.55 (5,440) 63.02 Forfeited or expired (1,592) 68.59 (3,253) 66.28

Outstanding at January 31, 2018 8,558 $ 70.47 24,153 $ 66.69

(1) Assumes payout rate at 100% for Performance Share Units.

The following table includes additional information related to restricted stock and performance share units and restricted stock units:

Fiscal Years Ended January 31,

(Amounts in millions, except years) 2018 2017 2016

Fair value of restricted stock and performance share units vested $ 181 $ 149 $ 142

Fair value of restricted stock units vested 344 261 237 Unrecognized compensation cost for restricted stock and performance share units 291 211 133 Unrecognized compensation cost for restricted stock units 972 986 628 Weighted average remaining period to expense for restricted stock and performance share units (years) 1.2 1.3 1.3 Weighted average remaining period to expense for restricted stock units (years) 1.8 1.9 1.7

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

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2018 2017 2016 Total number of shares repurchased 104.9 119.9 62.4 Average price paid per share $ 79.11 $ 69.18 $ 65.90 Total cash paid for share repurchases $ 8,296 $ 8,298 $ 4,112

Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2018 , 2017 and 2016 :

(Amounts in millions and net of income taxes)

Currency Translation and Other

Net Investment Hedges

Unrealized Gain on Available-for-Sale

Securities Cash Flow Hedges Minimum

Pension Liability Total Balances as of February 1, 2015 $ (7,011) $ 656 $ — $ (134) $ (679) $ (7,168) Other comprehensive income (loss) before reclassifications, net (4,679) 366 — (217) 96 (4,434)

Amounts reclassified from accumulated other comprehensive loss, net — — — 15 (10) 5

Balances as of January 31, 2016 (11,690) 1,022 — (336) (593) (11,597) Other comprehensive income (loss) before reclassifications, net (2,817) 413 145 (22) (389) (2,670)

Amounts reclassified from accumulated other comprehensive loss, net — — — 43 (8) 35

Balances as of January 31, 2017 (14,507) 1,435 145 (315) (990) (14,232) Other comprehensive income (loss) before reclassifications, net 2,345 (405) 1,501 436 83 3,960

Amounts reclassified from accumulated other comprehensive loss, net 26 — — 1 64 91

Balances as of January 31, 2018 $ (12,136) $ 1,030 $ 1,646 $ 122 $ (843) $ (10,181)

Amounts reclassified from accumulated other comprehensive loss for derivative instruments are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The income tax impact for each of the amounts shown in the table above is immaterial.

Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following:

As of January 31, (Amounts in millions) 2018 2017 Accrued wages and benefits (1) $ 6,998 $ 6,105

Self-insurance (2) 3,737 3,922

Accrued non-income taxes (3) 3,073 2,816

Deferred gift card revenue 2,017 1,856

Other (4) 6,297 5,955 Total accrued liabilities $ 22,122 $ 20,654

Note 6. Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings at January 31, 2018 and 2017 were $5.3 billion and $1.1 billion , respectively, with weighted-average interest rates of 1.5% and 6.2% , respectively. The Company has various committed lines of credit in the U.S., committed with 23 financial institutions, totaling $12.5 billion as of January 31, 2018 and 2017 , respectively. These committed lines of credit are summarized in the following table:

As of January 31, 2018 2017 (Amounts in millions) Available Drawn Undrawn Available Drawn Undrawn Five-year credit facility (1) $ 5,000 $ — $ 5,000 $ 5,000 $ — $ 5,000 364-day revolving credit facility (1) 7,500 — 7,500 7,500 — 7,500 Total $ 12,500 $ — $ 12,500 $ 12,500 $ — $ 12,500

(1) In May 2017, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its commercial paper program.

The committed lines of credit in the table above mature at various times between May 2018 and May 2022 , carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt. Additionally, the Company also maintains other committed lines of credit outside of the U.S. with an available and undrawn amount of approximately $4.0 billion as of January 31, 2018 . Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $2.6 billion and $3.6 billion at January 31, 2018 and 2017 , respectively. These letters of credit are utilized in normal business activities. The Company's long-term debt, which includes the fair value instruments further discussed in Note 8 , consists of the following:

January 31, 2018 January 31, 2017

(Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate (1) Amount Average Rate (1)

Unsecured debt Fixed 2019 - 2048 $ 24,540 3.9% $ 30,500 4.7% Variable 2019 - 2020 800 4.1% 500 5.5%

Total U.S. dollar denominated 25,340 31,000 Fixed 2023 - 2030 3,101 3.3% 2,674 3.3% Variable — —

Total Euro denominated 3,101 2,674 Fixed 2031 - 2039 3,801 5.4% 4,370 5.3% Variable — —

Total Sterling denominated 3,801 4,370 Fixed 2021 - 2028 1,655 0.4% 88 1.6% Variable — —

Total Yen denominated 1,655 88 Total unsecured debt 33,897 38,132

Total other (2) (114) 139 Total debt 33,783 38,271 Less amounts due within one year (3,738) (2,256) Long-term debt $ 30,045 $ 36,015

(2) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. At January 31, 2018 and 2017 the Company had secured debt in the amount of $10 million and $14 million , respectively, which was collateralized by property that had an aggregate carrying amount of approximately $101 million and $82 million , respectively.

At January 31, 2018 and 2017 , the Company had $500 million in debt with embedded put options. The issuance of money market puttable reset securities in the amount of $500 million is structured to be remarketed in connection with the annual reset of the interest rate. If, for any reason, the remarketing of the notes does not occur at the time of any interest rate reset, the holders of the notes must sell and the Company must repurchase the notes at par. Accordingly, this issuance has been classified as long-term debt due within one year in the Company's Consolidated Balance Sheets.

Annual maturities of long-term debt during the next five years and thereafter are as follows:

(Amounts in millions) Annual Fiscal Year Maturities 2019 $ 3,733 2020 1,914 2021 3,336 2022 607 2023 2,934 Thereafter 21,259 Total $ 33,783

Debt Issuances Information on significant long-term debt issued during fiscal 2018 is as follows:

(Amounts in millions)

Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Proceeds July 18, 2017 70,000 JPY July 15, 2022 Fixed 0.183% $ 619 July 18, 2017 40,000 JPY July 18, 2024 Fixed 0.298% 354 July 18, 2017 60,000 JPY July 16, 2027 Fixed 0.520% 530 October 20, 2017 300 USD October 9, 2019 Floating Floating 299 October 20, 2017 1,200 USD October 9, 2019 Fixed 1.750% 1,198 October 20, 2017 1,250 USD December 15, 2020 Fixed 1.900% 1,245 October 20, 2017 1,250 USD December 15, 2022 Fixed 2.350% 1,245 October 20, 2017 1,000 USD December 15, 2024 Fixed 2.650% 996 October 20, 2017 1,000 USD December 15, 2047 Fixed 3.625% 990 Total $ 7,476

As described in Note 8 , the current year issuances of foreign-currency-denominated long-term debt are designated as a hedge of the Company's net investment in Japan.

The Company did not have any significant long-term debt issuances during fiscal 2017, but received some proceeds from a number of small long-term debt issuances by several of its non-U.S. operations.

Maturities and Extinguishments The following table provides details of debt repayments during fiscal 2018 :

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment (1)

April 5, 2017 1,000 USD Fixed 5.375% $ 1,000 April 21, 2017 500 USD Fixed 1.000% 500

Total repayment of matured debt 1,500

December 15, 2018 1,000 USD Fixed 1.950% 276 February 1, 2019 500 USD Fixed 4.125% 136 July 8, 2020 1,500 USD Fixed 3.625% 661 October 25, 2020 1,750 USD Fixed 3.250% 553 April 15, 2021 1,000 USD Fixed 4.250% 491 October 16, 2023 250 USD Fixed 6.750% 98 April 5, 2027 750 USD Fixed 5.875% 267 February 15, 2030 500 USD Fixed 7.550% 412 September 4, 2035 2,500 USD Fixed 5.250% 532 September 28, 2035 1,000 GBP Fixed 5.250% 260 August 17, 2037 3,000 USD Fixed 6.500% 1,700 April 15, 2038 2,000 USD Fixed 6.200% 1,081 January 19, 2039 1,000 GBP Fixed 4.875% 851 April 2, 2040 1,250 USD Fixed 5.625% 499 July 9, 2040 750 USD Fixed 4.875% 372 October 25, 2040 1,250 USD Fixed 5.000% 731 April 15, 2041 2,000 USD Fixed 5.625% 1,082 April 11, 2043 1,000 USD Fixed 4.000% 291 October 2, 2043 750 USD Fixed 4.750% 481 April 22, 2044 1,000 USD Fixed 4.300% 498

Total repayment of extinguished debt 11,272 Total $ 12,772

(1) Represents portion of the principal amount repaid during fiscal 2018 .

In connection with extinguishing debt, the Company paid premiums of approximately $3.1 billion during fiscal 2018 , resulting in a loss on extinguishment of debt of approximately $3.1 billion . During fiscal 2017 , the following long-term debt matured and was repaid:

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment April 11, 2016 1,000 USD Fixed 0.600% $ 1,000 April 15, 2016 1,000 USD Fixed 2.800% 1,000 $ 2,000

During fiscal 2018 and 2017 , the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations.

Note 7. Fair Value Measurements The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

Recurring Fair Value Measurements The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2018 and 2017 , the notional amounts and fair values of these derivatives were as follows:

January 31, 2018 January 31, 2017 (Amounts in millions) Notional Amount Fair Value Notional Amount Fair Value Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges $ 4,000 $ (91) $ 5,000 $ (4) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges 2,250 208 2,250 471 Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges 4,523 205 3,957 (618) Total $ 10,773 $ 322 $ 11,207 $ (151)

Additionally, the Company's available-for-sale securities are measured at fair value on a recurring basis using Level 1 inputs. Changes in fair value are recorded in accumulated other comprehensive loss. The cost basis and fair value of the Company's available-for-sale securities as of January 31, 2018 and 2017 , are as follows:

January 31, 2018 January 31, 2017 (Amounts in millions) Cost Basis Fair Value Cost Basis Fair Value Available-for-sale securities $ 1,901 $ 3,547 $ 1,901 $ 2,046

Other Fair Value Disclosures The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities. The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2018 and 2017 , are as follows:

January 31, 2018 January 31, 2017 (Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including amounts due within one year $ 33,783 $ 38,766 $ 38,271 $ 44,602

Note 8. Derivative Financial Instruments The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company's derivative financial instruments is used to measure interest to be paid or received and does not represent the Company's exposure due to credit risk. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty when appropriate. The Company only enters into derivative transactions with counterparties rated "A-" or better by nationally recognized credit rating agencies. Subsequent to entering into derivative transactions, the Company regularly monitors the credit ratings of its counterparties. In connection with various derivative agreements, including master netting arrangements, the Company held cash collateral from counterparties of $279 million and $242 million at January 31, 2018 and January 31, 2017 , respectively. The Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset. Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties. The Company did not have any cash collateral posted with counterparties at January 31, 2018 and January 31, 2017 , respectively. The Company records cash collateral it posts with counterparties as amounts receivable from those counterparties exclusive of any derivative liability. The Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange rate risks and, accordingly, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative financial instrument is recorded using hedge accounting, depending on the nature of the hedge, changes in the fair value of the instrument will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Any hedge ineffectiveness is immediately recognized in earnings. The Company's net investment and cash flow instruments are highly effective hedges and the ineffective portion has not been, and is not expected to be, significant. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings during the period of the change.

Fair Value Instruments The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value of fixed-rate debt. The notional amounts are used to measure interest to be paid or received and do not represent the Company's exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay variable-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivative instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective hedges. Changes in the fair values of these derivative instruments are recorded in earnings, but are offset by corresponding changes in the fair values of the hedged items, also recorded in earnings, and, accordingly, do not impact the Company's Consolidated Statements of Income. These fair value instruments will mature on dates ranging from October 2020 to April 2024 .

Net Investment Instruments The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The agreements are contracts to exchange fixed- rate payments in one currency for fixed-rate payments in another currency. All changes in the fair value of these instruments are recorded in accumulated other comprehensive loss, offsetting the currency translation adjustment of the related investment that is also recorded in accumulated other comprehensive loss. These instruments will mature on dates ranging from July 2020 to February 2030 . The Company has issued foreign-currency-denominated long-term debt as hedges of net investments of certain of its foreign operations. These foreign-currency- denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive loss, offsetting the foreign currency translation adjustment of the related net investment that is also recorded in accumulated other comprehensive loss. At January 31, 2018 and January 31, 2017 , the Company had ¥180 billion and ¥10 billion , respectively, of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding long-term debt of £1.7 billion and £2.5 billion at January 31, 2018 and January 31, 2017 , respectively, that was designated as a

hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging from July 2020 to January 2039 .

Cash Flow Instruments The Company is a party to receive fixed-rate, pay fixed-rate cross-currency interest rate swaps to hedge the currency exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The swaps are designated as cash flow hedges of the currency risk related to payments on the non-U.S. denominated debt. The effective portion of changes in the fair value of derivatives designated as cash flow hedges of foreign exchange risk is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The hedged items are recognized foreign currency-denominated liabilities that are re-measured at spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's allocable portion of the initial spot-forward difference associated with the hedging instrument. These cash flow instruments will mature on dates ranging from April 2022 to March 2034 .

Financial Statement Presentation Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of the Company's derivative instruments. The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as follows as of January 31, 2018 and 2017 in the Company's Consolidated Balance Sheets:

January 31, 2018 January 31, 2017

(Amounts in millions) Fair Value Instruments

Net Investment Instruments

Cash Flow Instruments

Fair Value Instruments

Net Investment Instruments

Cash Flow Instruments

Derivative instruments Derivative assets: Other assets and deferred charges $ — $ 208 $ 300 $ 8 $ 471 $ — Derivative liabilities: Deferred income taxes and other 91 — 95 12 — 618 Nonderivative hedging instruments Long-term debt — 4,041 — — 3,209 —

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

Note 9. Taxes

Income Before Income Taxes The components of income before income taxes are as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2018 2017 2016 U.S. $ 10,722 $ 15,680 $ 16,685 Non-U.S. 4,401 4,817 4,953 Total income before income taxes $ 15,123 $ 20,497 $ 21,638

A summary of the provision for income taxes is as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2018 2017 2016 Current:

U.S. federal $ 2,998 $ 3,454 $ 5,562 U.S. state and local 405 495 622 International 1,377 1,510 1,400

Total current tax provision 4,780 5,459 7,584 Deferred:

U.S. federal (22) 1,054 (704) U.S. state and local (12) 51 (106) International (146) (360) (216)

Total deferred tax expense (benefit) (180) 745 (1,026) Total provision for income taxes $ 4,600 $ 6,204 $ 6,558

On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes focused on foreign-sourced earnings and related-party payments, including the creation of the base erosion anti- abuse tax and a new tax on global intangible low-taxed income ("GILTI"). By operation of law, the Company will apply a blended U.S. statutory federal income tax rate of 33.8% for fiscal 2018. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The Securities and Exchange Commission (SEC) staff issued SAB 118 on December 22, 2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with SAB 118. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts during fiscal 2019. Those adjustments may materially impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed by the measurement period provided in SAB 118.

Provisional amounts for the following income tax effects of the Tax Act have been recorded as of January 31, 2018, and are subject to change during fiscal 2019. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $0.2 billion . As the Company completes its analysis of the Tax Act and incorporates additional guidance that may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, the Company may identify additional effects not reflected as of January 31, 2018.

One-time Transition Tax The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. The Company recorded a provisional amount of $1.9 billion of additional income tax expense for its one-time transitional tax liability. The Company recorded a provisional amount based on estimates as it completes its analysis of the application of the effects of the Tax Act as well as finalize its calculations surrounding the components of its foreign subsidiaries subject to the transition tax including the potential of any correlative adjustments.

Deferred Tax Effects The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, the Company re-measured its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes

are settled or realized. The Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and other effects of the Tax Act. The benefit associated with the remeasurement of the deferred taxes is provisional as of January 31, 2018, as the Company continues gathering the necessary information to complete the calculations. The Company has no provisional adjustment with respect to the GILTI provision of the Tax Act as the Company is not able to make reasonable estimates of its related effects at this time. The Company has not yet elected an accounting policy to determine whether it will recognize GILTI as a period cost when incurred or to recognize deferred taxes for basis differences expected to reverse.

Effective Income Tax Rate Reconciliation The Company's effective income tax rate is typically lower than the U.S. statutory tax rate primarily because of benefits from lower-taxed global operations, including the use of global funding structures and certain U.S. tax credits as further discussed in the "Cash and Cash Equivalents" section of the Company's significant accounting policies in Note 1 . The Company's non-U.S. income is generally subject to local country tax rates that are below the U.S. statutory tax rate. Certain non-U.S. earnings have been indefinitely reinvested outside the U.S. A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pretax income from continuing operations is as follows:

Fiscal Years Ended January 31,

2018 2017 2016 U.S. statutory tax rate 33.8 % 35.0 % 35.0 % U.S. state income taxes, net of federal income tax benefit 1.8 % 1.7 % 1.8 % Impact of the Tax Act:

One-time transition tax 12.3 % — % — % Deferred tax effects (14.1)% — % — %

Income taxed outside the U.S. (4.1)% (4.5)% (4.0)% Net impact of repatriated international earnings (0.1)% (1.0)% 0.1 % Other, net 0.8 % (0.9)% (2.6)% Effective income tax rate 30.4 % 30.3 % 30.3 %

Deferred Taxes The Company recorded a provisional adjustment to its U.S. deferred income taxes as of January 31, 2018 to reflect the reduction in the U.S. statutory tax rate from 35% to 21% resulting from the Tax Act. The significant components of the Company's deferred tax account balances are as follows:

January 31, (Amounts in millions) 2018 2017 Deferred tax assets:

Loss and tax credit carryforwards $ 1,989 $ 3,633 Accrued liabilities 2,482 3,437 Share-based compensation 217 309 Other 1,251 1,474

Total deferred tax assets 5,939 8,853 Valuation allowances (1,843) (1,494) Deferred tax assets, net of valuation allowance 4,096 7,359 Deferred tax liabilities:

Property and equipment 3,954 6,435 Inventories 1,153 1,808 Other 941 1,884

Total deferred tax liabilities 6,048 10,127 Net deferred tax liabilities $ 1,952 $ 2,768

The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:

January 31, (Amounts in millions) 2018 2017 Balance Sheet classification Assets: Other assets and deferred charges $ 1,879 $ 1,565 Liabilities: Deferred income taxes and other 3,831 4,333 Net deferred tax liabilities $ 1,952 $ 2,768

Unremitted Earnings The Company has previously asserted all of its unremitted earnings offshore were permanently reinvested. Accordingly, the Company did not record any deferred taxes related to any outside basis differences associated with its foreign subsidiaries. As part of the tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. After consideration of the provisional transition tax calculation and deemed repatriation of the previously unremitted earnings, the Company is estimating, on a provisional basis, its outside tax basis exceeds the outside book basis of its foreign subsidiaries by approximately $10.0 billion . Once the calculations are completed regarding the transition tax, taking into account the timeline provided in SAB 118, the Company will provide updated disclosures regarding any potential changes for its previous assertions.

Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances At January 31, 2018 , the Company had net operating loss and capital loss carryforwards totaling approximately $6.7 billion . Of these carryforwards, approximately $3.6 billion will expire, if not utilized, in various years through 2038 . The remaining carryforwards have no expiration. At January 31, 2018 , the Company's provisional transition tax calculation fully utilized all foreign tax credit carryforwards. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. To the extent that a valuation allowance has been established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the valuation allowance will be released. The Company had valuation allowances of approximately $1.8 billion and $1.5 billion as of January 31, 2018 and 2017 , respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Net activity in the valuation allowance during fiscal 2018 related to releases arising from the use of deferred tax assets, changes in judgment regarding the future realization of deferred tax assets, increases from certain net operating losses and deductible temporary differences arising in fiscal 2018 , decreases due to operating loss expirations and fluctuations in currency exchange rates. Management believes that it is more likely than not that the remaining deferred tax assets will be fully realized.

Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2018 and 2017 , the amount of unrecognized tax benefits related to continuing operations was $1.0 billion and $1.1 billion , respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $690 million and $703 million as of January 31, 2018 and 2017 , respectively.

A reconciliation of unrecognized tax benefits from continuing operations is as follows:

Fiscal Years Ended January 31,

(Amounts in millions) 2018 2017 2016 Unrecognized tax benefits, beginning of year $ 1,050 $ 607 $ 838 Increases related to prior year tax positions 130 388 164 Decreases related to prior year tax positions (254) (32) (446) Increases related to current year tax positions 122 145 119 Settlements during the period (23) (46) (25) Lapse in statutes of limitations (15) (12) (43) Unrecognized tax benefits, end of year $ 1,010 $ 1,050 $ 607

The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. During fiscal 2018 , 2017 and 2016 , the Company recognized interest expense related to uncertain tax positions of $32 million , $35 million and $5 million , respectively. As of January 31, 2018 and 2017 , accrued interest related to uncertain tax positions of $96 million and $72 million , respectively, was recorded in the Company's Consolidated Balance Sheets. As of January 31, 2018, accrued penalties related to uncertain tax positions of $12 million were recorded in the Company's Consolidated Balance Sheets. As of January 31, 2017, there were no accrued penalties related to uncertain tax positions recorded in the Company's Consolidated Balance Sheets. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by between $50 million and $400 million , either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2013 through 2018 . The Company also remains subject to income tax examinations for international income taxes for fiscal 2011 through 2018 , and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2018 .

Other Taxes The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements. In particular, Brazil federal, state and local laws are complex and subject to varying interpretations, and the Company's subsidiaries in Brazil are party to a large number of non-income tax assessments. One of these interpretations common to the retail industry in Brazil relates to whether credits received from suppliers should be treated as a reduction of cost for purposes of calculating certain indirect taxes. The Company believes credits received from suppliers are reductions in cost and that it has substantial legal defenses in this matter and intends to defend this matter vigorously. As such, the Company has not accrued for this matter, although the Company may be required to deposit funds in escrow or secure financial guarantees to continue the judicial process in defending this matter in Brazil.

ASDA Equal Value Claims ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, is a defendant in over 10,000 "equal value" claims that are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom ("UK") on behalf of current and former ASDA store employees, and further claims may be asserted in the future. The claimants allege that the work performed by female employees in ASDA's retail stores is of equal value in terms of, among other things, the demands of their jobs compared to that of male employees working in ASDA's warehouse and distribution facilities, and that the disparity in pay between these different job positions is not objectively justified. As a result, claimants are requesting differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a prospective basis. On March 23, 2015, ASDA asked the Employment Tribunal to stay all proceedings and to "strike out" substantially all of the claims because the claimants had not adhered to the Tribunal's procedural rule for including multiple claimants on the same claim form. On July 23, 2015, the Employment Tribunal denied ASDA's requests. Following additional proceedings, on June 20, 2017, the Employment Appeal Tribunal ruled in favor of ASDA on the "strike out" issue and remitted the matter to the Employment Tribunal to determine whether the improperly filed claims should be struck out. On July 12, 2017, claimants sought permission from the Court of Appeals to appeal this ruling, which was granted on October 3, 2017. A hearing before the Court of Appeals is scheduled for October 23, 2018. As to the initial phase of the Equal Value claims, on October 14, 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions in ASDA's retail stores with those of employees in ASDA's warehouse and distribution facilities. On August 31, 2017, the Employment Appeal Tribunal affirmed the Employment Tribunal's ruling. The Employment Appeal Tribunal also granted permission for ASDA to appeal substantially all of its findings on August 31, 2017. ASDA sought permission to appeal the remainder of the Employment Appeal Tribunal's findings to the Court of Appeals on September 21, 2017. A hearing before the Court of Appeals is scheduled for October 10, 2018. Claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work performed by employees in ASDA's warehouse and distribution facilities. At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously.

National Prescription Opiate Litigation In December 2017, the United States Judicial Panel on Multidistrict Litigation ordered consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) , and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi, Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have been filed in state courts by various counties and municipalities; by health care providers; and by various Native American Tribes. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from such claims. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously.

whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. The Audit Committee and the Company have engaged outside counsel from a number of law firms and other advisors who are assisting in the on-going investigation of these matters. The Company has also been conducting a voluntary global review of its policies, practices and internal controls for anti-corruption compliance. The Company is engaged in strengthening its global anti-corruption compliance program through appropriate remedial anti-corruption measures. In November 2011, the Company voluntarily disclosed that investigative activity to the U.S. Department of Justice (the "DOJ") and the Securities and Exchange Commission (the "SEC"). Since the implementation of the global review and the enhanced anti-corruption compliance program, the Audit Committee and the Company have identified or been made aware of additional allegations regarding potential violations of the FCPA. When such allegations have been reported or identified, the Audit Committee and the Company, together with their third party advisors, have conducted inquiries and when warranted based on those inquiries, opened investigations. Inquiries or investigations regarding allegations of potential FCPA violations were commenced in a number of foreign markets where the Company operates, including, but not limited to, Brazil, China and India. As previously disclosed, the Company is under investigation by the DOJ and the SEC regarding possible violations of the FCPA. The Company has been cooperating with the agencies and discussions have been ongoing regarding the resolution of these matters. These discussions have progressed to a point that the Company can now reasonably estimate a probable loss and has recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). As the discussions are continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters. A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Walmex is cooperating with the Mexican governmental agencies conducting these investigations. Furthermore, lawsuits relating to the matters under investigation have been filed by several of the Company's shareholders against it, certain of its current directors, and certain of its former directors, certain of its former officers and certain of Walmex's former officers. The Company could be exposed to a variety of negative consequences as a result of the matters noted above. There could be one or more enforcement actions in respect of the matters that are the subject of some or all of the on-going government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or other relief, criminal convictions and/or penalties and the shareholder lawsuits referenced above may result in judgments against the Company and its current and former directors and officers named in those proceedings. The Company expects that there will be on-going media and governmental interest, including additional news articles from media publications on these matters, which could impact the perception among certain audiences of the Company's role as a corporate citizen. In addition, the Company has incurred and expects to continue to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred. For the fiscal years ended January 31, 2018 , 2017 and 2016 , the Company incurred the following third-party expenses in connection with the FCPA investigation and related matters:

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Ongoing inquiries and investigations $ 26 $ 80 $ 95 Global compliance program and organizational enhancements 14 19 31 Total $ 40 $ 99 $ 126

The Company does not presently believe that these matters, including the Accrual (and the payment of the Accrual at some point-in-time in the future), will have a material adverse effect on its business, although given the inherent uncertainties in such situations, the Company can provide no assurance that these matters will not be material to its business in the future.

Note 11. Commitments The Company has long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $2.9 billion , $2.6 billion and $2.5 billion in fiscal 2018 , 2017 and 2016 , respectively. Aggregate minimum annual rentals at January 31, 2018 , under non-cancelable leases are as follows:

(Amounts in millions)

Fiscal Year Operating Leases (1) Capital Lease and Financing

Obligations 2019 $ 1,933 $ 1,039 2020 1,718 987 2021 1,532 942 2022 1,381 843 2023 1,158 696 Thereafter 7,644 5,423 Total minimum rentals $ 15,366 $ 9,930 Less estimated executory costs 27 Net minimum lease payments 9,903 Noncash gain on future termination of financing obligation 1,111 Less imputed interest (3,567) Present value of minimum lease payments $ 7,447

(1) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018 .

Certain of the Company's leases provide for the payment of contingent rentals based on a percentage of sales. Such contingent rentals were not material for fiscal 2018 , 2017 and 2016 . Substantially all of the Company's store leases have renewal options, some of which may trigger an escalation in rentals.

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Defined contribution plans:

U.S. $ 1,124 $ 1,064 $ 967 International 126 173 179

Total contribution expense for defined contribution plans $ 1,250 $ 1,237 $ 1,146

Additionally, the Company's subsidiaries in the United Kingdom and Japan have sponsored defined benefit pension plans. The plan in the United Kingdom was overfunded by $97 million at January 31, 2018 and underfunded by $129 million at January 31, 2017 . The plan in Japan was underfunded by $184 million and $203 million at January 31, 2018 and 2017 , respectively. Overfunded amounts are recorded as assets in the Company's Consolidated Balance Sheets in other assets and deferred charges. Underfunded amounts are recorded as liabilities in the Company's Consolidated Balance Sheets in deferred income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant.

Note 13. Acquisitions, Disposals and Related Items Other than the jet.com transaction discussed below, the Company completed certain eCommerce acquisitions during fiscal 2018 and 2017 , which were immaterial, individually and in the aggregate, to the Company's Consolidated Financial Statements.

The following significant transaction primarily impacts the operations of the Company's Walmart U.S. segment:

Jet.com, Inc. In September 2016, the Company completed the acquisition of jet.com, a U.S.-based eCommerce company. The integration of jet.com into the Walmart U.S. segment is building upon the current eCommerce foundation, allowing for synergies from talent, logistical operations and access to a broader customer base. The total purchase price for the acquisition was $2.4 billion , net of cash acquired. The allocation of the purchase price includes $1.7 billion in goodwill and $0.6 billion in intangible assets. As part of the transaction, the Company agreed to pay additional compensation of approximately $0.8 billion over a five year period.

The following significant transactions impact the operations of the Company's Walmart International segment:

Suburbia In April 2017, one of the Company's subsidiaries sold Suburbia, the apparel retail division in Mexico, for $1.0 billion . As part of the sales agreement, the Company is also leasing certain real estate to the purchaser. The sale resulted in a pre-tax gain of $0.7 billion , of which $0.4 billion was recognized in the second quarter of fiscal 2018 in membership and other income, and the remainder was deferred and is being recognized over the lease terms of approximately 20 years .

Yihaodian and JD.com, Inc. ("JD") In June 2016, the Company sold certain assets relating to Yihaodian, its eCommerce operations in China, including the Yihaodian brand, website and application, to JD in exchange for Class A ordinary shares of JD representing approximately five percent of JD's outstanding ordinary shares on a fully diluted basis. The $1.5 billion investment in JD is carried at cost and is included in other assets and deferred charges in the accompanying Consolidated Balance Sheets. The sale resulted in the recognition of a $535 million noncash gain, which was included in membership and other income in the accompanying Consolidated Statements of Income. Subsequently, during fiscal 2017, the Company purchased $1.9 billion of additional JD shares classified as available for sale securities, representing an incremental ownership percentage of approximately five percent , for a total ownership of approximately ten percent of JD's outstanding ordinary shares. In fiscal 2016, the Company completed the purchase of all of the remaining noncontrolling interest in Yihaodian for approximately $760 million , using existing cash to complete this transaction.

Note 14. Restructuring Charges In the fourth quarter of fiscal 2018, the Company announced several organizational changes to position the business for more efficient growth going forward. As a result, the Company recorded $1.2 billion in pre-tax restructuring charges in fiscal 2018 as follows:

Fiscal Year Ended January 31, 2018 (Amounts in millions) Asset Impairment Severance Costs Total Walmart International $ 193 $ 43 $ 236

Sam's Club 596 69 665

Corporate and support — 300 300 Total $ 789 $ 412 $ 1,201

The asset impairment charges primarily relate to the real estate of the Sam's Club closures and the wind-down of the Brazil first-party eCommerce business, which were written down to their estimated fair value. Refer to Note 7 for information on fair value measurement. The pre-tax restructuring charges of $1.2 billion are classified in operating, selling, general and administrative expenses in the Company's Consolidated Statement of Income for fiscal 2018. At January 31, 2018, substantially all of the severances costs were recorded in accrued liabilities in the Company's Consolidated Balance Sheet. Almost all of these severance costs are expected to be paid during the first quarter of fiscal 2019.

Note 15. Segments The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products and services. The Walmart U.S. segment includes the Company's mass merchant concept in the U.S. operating under the "Walmart" or "Wal-Mart" brands, as well as eCommerce. The Walmart International segment consists of the Company's operations outside of the U.S., including eCommerce. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as samsclub.com. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by its CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation. Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before income taxes, is provided in the following table:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Corporate and

support Consolidated Fiscal Year Ended January 31, 2018 Net sales $ 318,477 $ 118,068 $ 59,216 $ — $ 495,761 Operating income (loss) 17,869 5,352 982 (3,766) 20,437 Interest, net (2,178) Loss on extinguishment of debt (3,136) Income before income taxes $ 15,123 Total assets $ 104,347 $ 81,549 $ 13,418 $ 5,208 $ 204,522 Depreciation and amortization 3,655 2,601 466 3,807 10,529 Capital expenditures 5,680 2,607 626 1,138 10,051 Fiscal Year Ended January 31, 2017 Net sales $ 307,833 $ 116,119 $ 57,365 $ — $ 481,317 Operating income (loss) 17,745 5,758 1,671 (2,410) 22,764 Interest, net (2,267) Income before income taxes $ 20,497 Total assets $ 104,262 $ 74,508 $ 14,125 $ 5,930 $ 198,825 Depreciation and amortization 3,298 2,629 487 3,666 10,080 Capital expenditures 6,090 2,697 639 1,193 10,619 Fiscal Year Ended January 31, 2016 Net sales $ 298,378 $ 123,408 $ 56,828 $ — $ 478,614 Operating income (loss) 19,087 5,346 1,820 (2,148) 24,105 Interest, net (2,467) Income before income taxes $ 21,638 Total assets $ 103,109 $ 73,720 $ 13,998 $ 8,754 $ 199,581 Depreciation and amortization 2,800 2,549 472 3,633 9,454 Capital expenditures 6,728 2,930 695 1,124 11,477

Fiscal Years Ended January 31, (Amounts in millions) 2018 2017 2016 Revenues U.S. operations $ 380,580 $ 367,784 $ 357,559 Non-U.S. operations 119,763 118,089 124,571 Total revenues $ 500,343 $ 485,873 $ 482,130

Long-lived assets U.S. operations $ 81,478 $ 82,746 $ 82,475 Non-U.S. operations 33,340 31,432 34,041 Total long-lived assets $ 114,818 $ 114,178 $ 116,516

Note 16. Subsequent Event Dividends Declared On February 20, 2018 , the Board of Directors approved the fiscal 2019 annual dividend at $2.08 per share, an increase over the fiscal 2018 dividend of $2.04 per share. For fiscal 2019 , the annual dividend will be paid in four quarterly installments of $0.52 per share, according to the following record and payable dates:

Record Date Payable Date March 9, 2018 April 2, 2018 May 11, 2018 June 4, 2018 August 10, 2018 September 4, 2018 December 7, 2018 January 2, 2019

Note 17. Quarterly Financial Data (Unaudited)

Fiscal Year Ended January 31, 2018 (Amounts in millions, except per share data) Q1 Q2 Q3 Q4 Total Total revenues $ 117,542 $ 123,355 $ 123,179 $ 136,267 $ 500,343 Net sales 116,526 121,949 122,136 135,150 495,761 Cost of sales 87,688 91,521 91,547 102,640 373,396 Consolidated net income 3,152 3,104 1,904 2,363 10,523 Consolidated net income attributable to Walmart 3,039 2,899 1,749 2,175 9,862 Basic net income per common share attributable to Walmart 1.00 0.96 0.59 0.74 3.29 Diluted net income per common share attributable to Walmart (1) 1.00 0.96 0.58 0.73 3.28 Fiscal Year Ended January 31, 2017 Q1 Q2 Q3 Q4 Total Total revenues $ 115,904 $ 120,854 $ 118,179 $ 130,936 $ 485,873 Net sales 114,986 119,405 117,176 129,750 481,317 Cost of sales 86,544 89,485 87,484 97,743 361,256 Consolidated net income 3,216 3,889 3,202 3,986 14,293 Consolidated net income attributable to Walmart 3,079 3,773 3,034 3,757 13,643 Basic net income per common share attributable to Walmart 0.98 1.21 0.98 1.23 4.40 Diluted net income per common share attributable to Walmart (1) 0.98 1.21 0.98 1.22 4.38 (1) The sum of quarterly amounts may not agree to annual amount due to rounding and the impact of a decreasing amount of shares outstanding during the year.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries. In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems, automating manual processes, migrating certain processes to our shared services organizations and increasing monitoring controls. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting and ensure that our internal control environment remains effective. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

Report on Internal Control Over Financial Reporting Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting as of January 31, 2018 . In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013). Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of January 31, 2018 . The Company's internal control over financial reporting as of January 31, 2018 , has been audited by Ernst & Young LLP as stated in their report which appears herein.

Changes in Internal Control Over Financial Reporting There has been no change in the Company's internal control over financial reporting as of January 31, 2018 , that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item with respect to the Company's directors, certain family relationships, and compliance by the Company's directors, executive officers and certain beneficial owners of the Company's common stock with Section 16(a) of the Securities Exchange Act of 1934, as amended, is incorporated by reference to such information under the captions entitled "Proposal No. 1 – Election of Directors" and "Stock Ownership – Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 30, 2018 (our "Proxy Statement"). Please see the information concerning our executive officers contained in Part I, Item 1 herein under the caption " Executive Officers of the Registrant ," which is included there in accordance with Instruction 3 to Item 401(b) of the SEC's Regulation S-K. No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to our board of directors since those procedures were disclosed in our proxy statement relating to our 2017 Annual Shareholders' Meeting as previously filed with the SEC. The information regarding our Audit Committee, including our audit committee financial experts and our Codes of Ethics for the CEO and Senior Financial Officers and our Statement of Ethics applicable to all of our associates, including our Chief Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this item is incorporated herein by reference to the information under the captions "Corporate Governance – Board Committees" and "Proposal No. 3: Ratification of Independent Accountants – Audit Committee Independence and Financial Expert Determination" included in our Proxy Statement. " Item 1. Business " above contains information relating to the availability of a copy of our Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics and the posting of amendments to and any waivers of the Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics on our website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to all information under the captions "Corporate Governance – Director Compensation," "Executive Compensation" and under the sub-captions "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" that appear under the caption "Executive Compensation" included in our Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference to all information under the sub-captions "Holdings of Major Shareholders" and "Holdings of Officers and Directors" that appear under the caption "Stock Ownership" and all information that appears under the caption "Executive Compensation Tables – Equity Compensation Plan Information" included in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference to all information under the caption "Corporate Governance – Fiscal 2018 Review of Related Person Transactions" and under the caption "Corporate Governance – How We Determine Director Independence" included in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference to all information under the caption "Proposal No. 3 – Ratification of Independent Accountants" and the sub-caption thereunder "Audit Committee Pre-Approval Policy" included in our Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report are as follows:

1. Financial Statements: See the Financial Statements in Part II, Item 8 .

ITEM 16. FORM 10-K SUMMARY

None.

Walmart Inc.

Date: March 30, 2018 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Date: March 30, 2018 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer and Director (Principal Executive Officer) Date: March 30, 2018 By /s/ Gregory B. Penner Gregory B. Penner Chairman of the Board and Director Date: March 30, 2018 By /s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 30, 2018 By /s/ David M. Chojnowski David M. Chojnowski Senior Vice President and Controller (Principal Accounting Officer)

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2018

Date: March 30, 2018 By /s/ James I. Cash, Jr. James I. Cash, Jr., Ph.D. Director Date: March 30, 2018 By /s/ Timothy P. Flynn Timothy P. Flynn Director Date: March 30, 2018 By /s/ Sarah Friar Sarah Friar Director Date: March 30, 2018 By /s/ Carla A. Harris Carla A. Harris Director Date: March 30, 2018 By /s/ Thomas W. Horton Thomas W. Horton Director Date: March 30, 2018 By /s/ Marissa A. Mayer Marissa A. Mayer Director Date: March 30, 2018 By /s/ Steven S Reinemund Steven S Reinemund Director Date: March 30, 2018 By /s/ Kevin Y. Systrom Kevin Y. Systrom Director Date: March 30, 2018 By /s/ S. Robson Walton S. Robson Walton Director Date: March 30, 2018 By /s/ Steuart L. Walton Steuart L. Walton Director

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2018

Exhibit Index (1),(2) The following exhibits are filed or furnished as part of this Form 10-K or are incorporated herein by reference.

3(a)

Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K that the Company filed on February 1, 2018 (File No. 001-06991)

3(b)

Amended and Restated Bylaws of the Company are incorporated herein by reference to Exhibit 3.2 to the Report on Form 8-K that the Company filed on February 1, 2018 (File No. 001-06991)

4(a)

Form of Indenture dated as of July 15, 1990, between the Company and Harris Trust and Savings Bank, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-35710) (P)

4(b)

4(c)

4(d)

Indenture dated as of July 5, 2001, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 (File Number 333-64740)

4(e)

4(f)

4(g)

First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post- Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)

4(h)

10(a)* Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2018 10(b)* Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018 10(c)* Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018 10(d)* Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018 10(e)* Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018 10(f)* Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018 10(g)

Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive Officers who have executed a Post- Termination Agreement and Covenant Not to Compete is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2011, filed on March 30, 2011 (1)

10(g).1*

10(h)* Walmart Deferred Compensation Matching Plan, as amended effective February 1, 2018

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10(i)

10(j)

10(k)

Post-Termination Agreement and Covenant Not to Compete between Wal-Mart Canada Corp. and David Cheesewright dated as of January 31, 2014, is incorporated by reference to Exhibit 10(u) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014 (1)

10(l)*

Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award (January 2018 annual award - all executive officers)

10(m)*

Form of Walmart Inc. Global Share-Settled Performance-Based Restricted Stock Unit Award Notification of Award and Terms and Conditions of Award (January 2018 annual award - all executive officers)

10(n)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Performance Unit Notification and Terms and Conditions (Wal- Mart Canada Corp.-related - January 2016 annual award to David B Cheesewright) is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2016, filed on March 30, 2016 (1)

10(o)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award, Notification of Award and Terms and Conditions of Award (January 2016 annual award - executive officers other than David Cheesewright) is incorporated by reference to Exhibit 10(q) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2016, filed on March 30, 2016 (1)

10(p)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Performance-Based Restricted Stock Award, Notification of Award and Terms and Conditions of Award (January 2016 award to Neal Ashe and Greg Foran) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2016, filed on March 30, 2016 (1)

10(q)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Restricted Unit Notification and Terms and Conditions (Wal-Mart Canada Corp.-related - January 2016 annual award to David Cheesewright) is incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2016, filed on March 30, 2016 (1)

10(r)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award and Notification and Terms and Conditions of Award (January 2017 annual award - all executive officers other than David Cheesewright) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017, filed on March 31, 2017 (1)

10(s)

Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share Settled Restricted Stock Unit Notification and Terms and Conditions (January 2017 annual award - David Cheesewright) is incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017, filed on March 31, 2017 (1)

10(t)

10(u)

10(v)

10(w)

10(x)

12.1* Statement regarding computation of the Earnings to Fixed Charges Ratios

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21* List of the Company's Significant Subsidiaries 23* Consent of Independent Registered Public Accounting Firm 31.1* Chief Executive Officer Section 302 Certification 31.2* Chief Financial Officer Section 302 Certification 32.1** Chief Executive Officer Section 906 Certification 32.2** Chief Financial Officer Section 906 Certification 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith as an Exhibit. ** Furnished herewith as an Exhibit. (P) This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.

Notes to Exhibit Index:

1. The exhibits listed in this Exhibit Index and incorporated as exhibits to the Annual Report on Form 10-K of Walmart Inc. (the "Company") for the fiscal year ended January 31, 2018 by reference to an Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K of the Company previously filed with the SEC by the Company are available for review online on the EDGAR system of the SEC at www.sec.gov as exhibits to the Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K referred to above in the description of the exhibit incorporated by reference. The historical filings of the Company may be reviewed and copied at the Public Reference Room of the SEC at 100 F Street, NE Washington, DC 20549-2521 under Commission File No. 001-6991.

2. The Company and its subsidiaries have in the past issued, and may in the future issue from time to time, long-term debt instruments, but the aggregate principal amount of the debt instruments of any one series of such debt instruments has not exceeded or will not exceed 10% of the assets of the Company at any pertinent time. The Company has previously filed with the SEC its agreement to, and hereby agrees to, file copies of the agreements relating to long-term debt instruments and the instruments representing or evidencing such long-term debt instruments with the SEC upon request. As a result, in accordance with the provisions of paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K of the SEC, copies of such long-term debt instruments have not been filed as exhibits to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018. The Company has previously filed the documents and instruments establishing the specific terms of long-term debt instruments offered and sold by the Company pursuant to its effective registration statements filed with the SEC pursuant to the Securities Act of 1933, as amended, as exhibits to the applicable registration statement or as exhibits to a Current Report on Form 8-K filed in connection with the applicable registration statement and the sale and issuance of those long-term debt instruments.

WALMART INC.

OFFICER DEFERRED COMPENSATION PLAN

Amended and Restated Effective February 1, 2012 (except as otherwise provided herein) and

Renamed Effective February 1, 2018

TABLE OF CONTENTS

PAGE

ARTICLE I. GENERAL 1 1.1 Purpose. 1 1.2 Effective Dates; Code Section 409A. 1 1.3 Nature of Plan. 1

ARTICLE II. DEFINITIONS 2

2.1 Definitions. 2 ARTICLE III. DEFERRED COMPENSATION/BONUSES AND 7 EMPLOYER CONTRIBUTION CREDITS -- ESTABLISHMENT OF ACCOUNTS 7

3.1 Deferred Compensation. 7 3.2 Deferred Bonuses. 8 3.3 Deferred Special Bonuses. 9 3.4 Deferred Retention Bonuses. 10 3.5 Incentive Payments. 11 3.6 Irrevocability of Deferral Elections. 11 3.7 Automatic Suspension of Deferral Elections. 13 3.8 Employer Contribution Credits. 13 3.9 Crediting of Deferrals and Employer Contribution Credits. 13 3.10 Nature of Accounts. 14 3.11 Valuation of Accounts. 14

ARTICLE IV. ADDITIONS TO ACCOUNTS -- CREDITED EARNINGS AND INCENTIVE PAYMENTS 14

4.1 Credited Earnings. 14 4.2 Incentive Payments. 14

ARTICLE V. PAYMENT OF PLAN BENEFITS 17

5.1 Scheduled In-Service Benefits. 17 5.2 Separation and Retirement Benefits. 17 5.3 Death Benefits. 18 5.4 Form of Distribution. 20 5.5 Distributions for Unforeseeable Emergencies. 22 5.6 Reductions Arising from a Participant’s Gross Misconduct. 23

ARTICLE VI. ADMINISTRATION 24

6.1 General. 24 6.2 Allocation and Delegation of Duties. 24

ARTICLE VII. CLAIMS PROCEDURE 25

7.1 General. 25 7.2 Appeals Procedure. 25

ARTICLE VIII. MISCELLANEOUS PROVISIONS 26

8.1 Amendment, Suspension or Termination of Plan. 26 8.2 Non-Alienability. 26 8.3 Recovery of Overpayments. 26 8.4 No Employment Rights. 27 8.5 No Right to Bonus. 27

8.6 Withholding and Employment Taxes. 27

8.7 Income and Excise Taxes. 27 8.8 Successors and Assigns. 27 8.9 Governing Law. 27

APPENDIX A

WALMART INC. OFFICER DEFERRED COMPENSATION PLAN

ARTICLE I. GENERAL

1.1 Purpose.

Walmart Inc. (“Walmart”) established the Officer Deferred Compensation Plan. The purpose of the Plan has been to: (a) attract and retain the valuable services of certain officers; (b) recognize, reward, and encourage contributions by such officers to the success of Walmart and its Related Affiliates; (c) enable such officers to defer certain compensation and bonuses, and to be credited with earnings and Incentive Payments with respect to such amounts recognized hereunder for such purposes; and (d) allow certain equity incentive awards deferred under the Walmart Inc. Stock Incentive Plan of 2005 to be credited under this Plan at the election of the grantee and to thereafter be subject to the terms of this Plan.

In Article VIII of the Plan, Walmart reserved the right to amend, suspend or to terminate the Plan in any manner that it deems advisable by action of the Committee. Walmart now desires to amend the Plan in certain respects, including to cease deferral elections as provided herein. Accordingly, the Plan is amended as set forth in this amendment and restatement effective February 1, 2012. The Plan was renamed effective on February 1, 2018.

1.2 Effective Dates; Code Section 409A.

(a) This Plan was initially effective February l, 1996 and was most recently amended and restated as of January 1, 2009 and subsequently amended by an amendment effective June 1, 2009. This amendment and restatement is effective February 1, 2012. This Plan (other than Appendix A) is intended to be in compliance with Code Section 409A and shall be interpreted, applied and administered at all times in accordance with Code Section 409A, and guidance issued thereunder.

(b) Amounts deferred and vested under the Plan on or before December 31, 2004 shall continue to be governed at all times by the Plan as in effect on such date, which Plan is attached hereto as Appendix A. Appendix A shall not be materially modified (within the meaning of Code Section 409A) (formally or informally, including by interpretation), unless such modification expressly provides that it is intended to be a material modification within the meaning of Code Section 409A and guidance issued thereunder.

1.3 Nature of Plan.

any kind or create any fiduciary relationship between the Committee, Walmart or any Employer and a Participant, the Participant’s beneficiary or any other person. To the extent any person acquires a right to receive payments from Walmart under this Plan, such right is no greater than the right of any other unsecured general creditor of Walmart.

ARTICLE II. DEFINITIONS

2.1 Definitions.

Whenever used in this Plan, the following words and phrases have the meaning set forth below unless the context plainly requires a different meaning:

(a) Account means the bookkeeping account established to reflect: (1) a Participant’s Deferred Compensation credited on or after January 1, 2005; (2) Deferred Bonuses credited on or after January 1, 2005; (3) Deferred Special Bonuses credited on or after January 1, 2008; (4) Retention Bonuses credited on or after January 1, 2008; (5) Employer Contribution Credits credited on or after January 1, 2008; (6) Incentive Payments credited on or after January 1, 2005; (7) Deferred Equity credited to this Plan on or after January 1, 2005 pursuant to the terms of the SIP Deferral Procedures; and (8) earnings credited on amounts under (1) through (7) above. A Participant’s “Account” shall consist of his or her Company Account, Retirement Accounts and Scheduled In-Service Accounts. “Account” as used herein, however, shall not include Grandfathered Accounts.

(b) Code means the Internal Revenue Code of 1986, as amended from time to time.

(d) Company Account means the bookkeeping account maintained on behalf of a Participant to reflect his or her Employer Contribution Credits and earnings thereon.

(e) Compensation means a Participant’s federal taxable base compensation for a Plan Year, less employment taxes and bi-weekly deductions as are determined to be in effect on the January 1 preceding such Plan Year.

(f) Deferred Bonuses means the amount deferred pursuant to Section 3.2 from bonuses payable to a Participant under the MIP.

(g) Deferred Compensation means the Compensation deferred by a Participant in accordance with Section 3.1.

(h) Deferred Equity means Performance Shares, PERS or Restricted Stock granted under the Walmart Inc. Stock Incentive Plan of 2005, which the grantee has elected to defer to this Plan in accordance with the SIP Deferral Procedures (to the extent permitted by such Procedures).

(i) Deferred Retention Bonuses means the Retention Bonuses deferred by a Participant in accordance with Section 3.4.

(j) Deferred Special Bonuses means the Special Bonuses deferred by a Participant in accordance with Section 3.3.

(k) Disabled means the Participant has incurred a Separation from Service because the Participant, as determined by the Committee or its delegate, is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

(l) Eligible Officer means an individual who is a corporate officer of Walmart or a Related Affiliate designated by the Committee as a participating employer, and who holds the title of Vice President or above, Treasurer, Controller, or an officer title of similar rank or other position as determined by the Committee. In addition, Eligible Officer shall include a divisional officer of Walmart or a Related Affiliate designated by the Committee as a participating employer, and who holds the title of Vice President or above or an officer title of similar rank as determined by the Committee. In no event will any individual constitute an Eligible Officer if he or she is not subject to federal income tax withholding in the United States. Notwithstanding anything in the preceding provisions of this Section 2.1(l), Eligible Officer shall exclude any individual who, pursuant to Walmart’s Global Assignment Policy, is seconded to Walmart or a Related Affiliate designated by the Committee as a participating employer and, under the terms of his or her offer or assignment letter, he or she is intended to remain on the home country’s benefit and pension programs.

(m) Employer means Walmart and all persons with whom Walmart would be considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses under Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.

(n) Employer Contribution Credits means the amount credited to a Participant’s Company Account pursuant to Section 3.8.

(o) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(p) Fiscal Year means the twelve (12)-month period commencing each February 1 and ending on the following January 31.

(q) Grandfathered Account means the bookkeeping account established to reflect: (1) a Participant’s Deferred Compensation credited prior to January 1, 2005; (2) Deferred Bonuses credited prior to January 1, 2005; (3) Incentive Payments credited prior to January 1, 2005; and (4) earnings credited on amounts under (1) through (3) above. Such amounts shall be governed at all times by the terms of Appendix A.

(r) A Participant is deemed to have engaged in Gross Misconduct if the Committee or its delegate determines that the Participant has engaged in conduct detrimental to the best interests of Walmart or any Employer or any entity in which Walmart has an ownership interest. Examples of such conduct include, without limitation, disclosure of confidential information in violation of Walmart’s Statement of Ethics, theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses.

(s) Incentive Payments mean the amounts credited to a Participant’s Account in accordance with Section 4.2.

(t) MIP means the Walmart Inc. Management Incentive Plan, as amended from time to time.

(u) Participant means any Eligible Officer who defers Compensation or bonuses under the Plan, as well as any Eligible Officer who receives or has received a grant of Performance Shares, PERS or Restricted Stock under the Walmart Inc. Stock Incentive Plan of 2005 and elects, pursuant to the terms of the SIP Deferral Procedures (to the extent permitted by such Procedures), to have such award deferred to this Plan.

(v) Performance Shares means performance shares awarded under the Walmart Inc. Stock Incentive Plan of 2005 (also commonly referred to as performance share units or “PSUs,” performance share plan or “PSPs,” or stock value equivalent awards).

(w) PERS means performance-based restricted stock awarded under the Walmart Inc. Stock Incentive Plan of 2005.

(x) Plan means the Walmart Inc. Officer Deferred Compensation Plan, as set forth herein, and as may hereafter be amended from time to time (subject to Section 1.2(b)).

(y) Plan Year means: (1) for periods before April 1, 2009 (except as otherwise provided in prior Plan documents), the twelve (12)-month period commencing on April 1 and ending on March 31; (2) the period from April 1, 2009 through January 31, 2010; and (3) from and after February 1, 2010, the twelve (12)-month period commencing on February 1 and ending on January 31.

(z) Prior Agreements means those deferred compensation agreements entered into by certain Eligible Officers with Walmart prior to February 1, 1995 and

containing terms similar to those contained in this Plan. Effective February 1, 1996, the Prior Agreements were amended and restated in the form of this Plan.

(aa) Related Affiliate means a trade or business, whether or not incorporated, which is a member of a controlled group of corporations, trades or businesses, as defined in Code Sections 414(b) and 414(c), of which Walmart is a member.

(bb) Restricted Stock means restricted stock awarded under the Walmart Inc. Stock Incentive Plan of 2005.

(cc) Retention Bonus means a retention bonus paid on or after January 1, 2009 under a retention program or individual agreement specifically designated by the Committee, or an officer of the Company in accordance with guidelines established by the Committee, as eligible for deferral under the Plan, and which requires as a condition of receipt that the recipient continue to perform services for a period of at least thirteen (13) months after the date he or she obtains the legally binding right to such bonus.

(dd) Retirement , effective with respect to Separations from Service on or after January 1, 2008, means a Participant’s Separation from Service on or after either: (1) the Participant has been continuously employed with Walmart or any Employer for twenty (20) or more years; or (2) the Participant has attained age fifty (50) and completed at least five (5) years of participation in the Plan. With respect to Separations from Service before January 1, 2008, a Participant’s eligibility for an installment payout is governed by the corresponding terms of Appendix A (other than with respect to the timing of payout elections).

(ee) Retirement Accounts means the bookkeeping accounts maintained on behalf of a Participant to reflect Deferred Equity, Deferred Compensation, Deferred Bonus, Deferred Special Bonus, Deferred Retention Bonus and Incentive Payment amounts allocated to such Accounts pursuant to the Participant’s elections hereunder, and earnings thereon. Each Participant may have up to two (2) Retirement Accounts at any time. All Scheduled In-Service Accounts will be distributed in a lump sum.

(ff) Scheduled In-Service Account means one or more bookkeeping accounts maintained on behalf of a Participant to reflect Deferred Compensation, Deferred Bonus, Deferred Special Bonus and Deferred Retention Bonus amounts credited to such Accounts pursuant to the Participant’s elections hereunder, and earnings thereon.

(gg) Scheduled Pay Date means, with respect to each Scheduled In-Service Account, the first day of a calendar month selected by the Participant in accordance with Article III. In no event shall such date be earlier than the first day of the second Plan Year beginning after the Plan Year for which deferrals are first made to such Account. Once selected, the date with respect to any Scheduled In-Service Account is irrevocable.

(hh) Separation from Service means the Participant has a termination of employment with the Employer (other than on account of death). Whether a termination of employment has occurred shall be determined based on whether the facts and circumstances indicate the Participant and Employer reasonably anticipate that no further services will be performed by the Participant for the Employer; provided, however, that a Participant shall be deemed to have a termination of employment if the level of services he or she would perform for the Employer after a certain date permanently decreases to no more than twenty percent (20%) of the average level of bona fide services performed for the Employer (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer for less than 36 months). For this purpose, a Participant is not treated as having a Separation from Service while he or she is on a military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant has a right to reemployment with the Employer under an applicable statute or by contract.

(ii) Separation Pay Date means the last day of the calendar month in which falls the date that is six (6) months after a Participant’s Separation from Service.

(jj) SIP Deferral Procedures means the Deferral Procedures under the Walmart Inc. Stock Incentive Plan of 2005 (or any predecessor procedures thereof).

(kk) Special Bonus means any bonus payable to a Participant pursuant to the terms of the Participant’s initial offer letter of employment which is dated on or after January 1, 2008. To constitute a Special Bonus hereunder, the offer letter must specifically refer to the deferability of the bonus by explicit reference to this Plan and the offer letter and deferral election must be accepted and elected in writing by the Eligible Officer before his or her commencement of employment.

(ll) Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to subsections (b)(1), (b)(2) and (d)(1)(B)), the loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

(mm) Valuation Date means the last day of each Plan Year or, from and after April 1, 2008, each day of the Plan Year.

(nn) Walmart means Walmart Inc., a Delaware corporation.

ARTICLE III. DEFERRED COMPENSATION/BONUSES AND

EMPLOYER CONTRIBUTION CREDITS -- ESTABLISHMENT OF ACCOUNTS

3.1 Deferred Compensation.

(a) For each Plan Year, each Eligible Officer may elect to defer all or a portion of what would otherwise be the Eligible Officer’s Compensation to be paid for such Plan Year by Walmart or a Related Affiliate designated by the Committee as a participating employer. Amounts deferred will be deferred pro ratably for each payroll period of the Plan Year. All deferral elections made under this Section 3.1 must be filed with Executive Compensation on forms (which may be electronic) approved by Executive Compensation. Notwithstanding any provisions hereunder to the contrary, no deferral election may be made by an Eligible Officer with respect to Compensation that is payable to the Eligible Officer effective with respect to the first payroll period that begins after February 1, 2012 and effective for all payroll periods and Plan Years beginning thereafter.

(b) Compensation deferral elections must be filed:

(1) no later than the December 31 preceding the Plan Year for which the deferral election is to be effective; or

(2) with respect to an Eligible Officer who first becomes a Participant during the Plan Year, within thirty (30) days of the first date he or she becomes eligible to participate in this Plan, the SIP Deferral Procedures, or any other plan required by Code Section 409A to be aggregated with this Plan. For purposes of this rule, an Eligible Officer will not be treated as a participant in any such plan if:

(A) he or she was not eligible to participate in the Plan (or the SIP Deferral Procedures or any other plan required by Code Section 409A to be aggregated with this Plan) at any time during the twenty-four (24)-month period ending on the date he or she again becomes an Eligible Officer, or

(B) he or she was paid all amounts previously due under the Plan (and the SIP Deferral Procedures and any other plan required by Code Section 409A to be aggregated with this Plan) and, on and before the date of the last such payment, was not eligible to continue to participate in the Plan (and the SIP Deferral Procedures and any other plan required by Code Section 409A to be aggregated with this Plan) for periods after such payment.

(c) Effective with respect to Compensation deferrals for Plan Years beginning on or after April 1, 2009, the Eligible Officer shall also make an election each Plan Year within the time prescribed above to allocate his or her Compensation

deferrals for such Plan Year to one or both of his or her Retirement Accounts. If such allocation will be the first allocation to a Retirement Account, the Eligible Officer shall also elect the form of distribution with respect to such Account. Effective with respect to Compensation deferrals for Plan Years beginning on or after February 1, 2010, the Eligible Officer may also elect to allocate his or her Compensation deferrals for the Plan Year to one or more Scheduled In-Service Accounts, in addition to his or her Retirement Accounts. If an Eligible Officer allocates deferrals to a new Scheduled In-Service Account, he or she must also designate the Scheduled Pay Date with respect to such Account.

3.2 Deferred Bonuses

(a) Each Eligible Officer may elect to defer all or a portion of the Eligible Officer’s bonus (if any) for a performance period under the MIP. All bonus deferral elections made under this Section 3.2 must be filed with Executive Compensation on forms (which may be electronic) approved by Executive Compensation. Notwithstanding any provisions hereunder to the contrary, no deferral election may be made by an Eligible Officer with respect to the Eligible Officer’s bonus (if any) for any performance period under the MIP that begins on or after February 1, 2012.

(b) Bonus deferral elections must be filed:

(1) for performance periods under the MIP beginning before January 1, 2009, within the time period provided under applicable prior Plan documents;

(2) for performance periods under the MIP beginning on or after January 1, 2009, the bonus deferral election must be filed:

(A) no later than the December 31 preceding the performance period for which the deferral election is to be effective; or

(B) with respect to an Eligible Officer who first becomes a Participant during the Plan Year, within thirty (30) days of the first date he or she becomes eligible to participate in this Plan, the SIP Deferral Procedures, or any other plan required by Code Section 409A to be aggregated with this Plan. For purposes of this rule, an Eligible Officer will not be treated as a participant in any such plan if:

(i) he or she was not eligible to participate in the Plan (or the SIP Deferral Procedures or any other plan required by Code Section 409A to be aggregated with this Plan) at any time during the twenty-four (24)-month period ending on the date he or she again becomes an Eligible Officer, or

(ii) he or she was paid all amounts previously due under the Plan (and the SIP Deferral Procedures and any other plan required by Code Section 409A to be aggregated with this Plan) and, on and before the date of the last such payment,

was not eligible to continue to participate in the Plan (and the SIP Deferral Procedures and any other plan required by Code Section 409A to be aggregated with this Plan) for periods after such payment.

A bonus deferral election under this Section 3.2(b)(2)(B) will be effective only with respect to bonus paid for services performed after such election. For this purpose, the amount of the bonus payable to the Eligible Officer for services rendered subsequent to the Eligible Officer’s election will be determined by multiplying the bonus by a fraction, the numerator of which is the number of calendar days remaining in the performance period after the election and the denominator of which is the total number of calendar days in such performance period. For purposes of this Section 3.2(b)(2)(B), the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Executive Compensation.

(c) Effective with respect to performance periods under the MIP beginning on or after January 1, 2009, the Eligible Officer shall also make an election within the time prescribed above to allocate his or her bonus deferrals to one or both of his or her Retirement Accounts. If such allocation will be the first allocation to a Retirement Account, the Eligible Officer shall also elect the form of distribution with respect to such Account. Effective with respect to performance periods beginning on or after January 1, 2010, the Eligible Officer may also elect to allocate his or her bonus deferrals to one or more Scheduled In-Service Accounts, in addition to his or her Retirement Accounts. If an Eligible Officer allocates deferrals to a new Scheduled In-Service Account, he or she must also designate the Scheduled Pay Date with respect to such Account.

3.3 Deferred Special Bonuses.

(a) An Eligible Officer may elect to defer all or a portion of any Special Bonuses to be paid by Walmart or a Related Affiliate designated by the Committee as a participating employer. All deferral elections made under this Section 3.3 must be filed with Executive Compensation on forms (which may be electronic) approved by Executive Compensation. For purposes of this Section 3.3, the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Executive Compensation. Notwithstanding any provisions hereunder to the contrary, no deferral election may be made on or after February 1, 2012, by an Eligible Officer with respect to any Special Bonus payable to the Eligible Officer.

(b) Special Bonus deferral elections must be filed:

(1) no later than the Eligible Officer’s commencement of employment as an Eligible Officer with Walmart or a Related Affiliate designated by the Committee as a participating employer; or

(2) if the Eligible Officer is or ever was a participant in this Plan, the SIP Deferral Procedures, or any other plan required by Code Section 409A to be aggregated with this Plan, Section 3.3(b)(1) shall not apply and the Eligible Officer may not make a deferral election with respect to Special Bonuses, unless:

(c) Effective with respect to Special Bonus deferral elections made on or after January 1, 2009, the Eligible Officer shall also make an election within the time prescribed above to allocate his or her Special Bonus deferrals to one or both of his or her Retirement Accounts. If such allocation will be the first allocation to a Retirement Account, the Eligible Officer shall also elect the form of distribution with respect to such Account. Effective with respect to Special Bonus deferral elections made on or after February 1, 2010, the Eligible Officer may also elect to allocate his or her Special Bonus deferrals to one or more Scheduled In-Service Accounts, in addition to his or her Retirement Accounts. If an Eligible Officer allocates deferrals to a new Scheduled In-Service Account, he or she must also designate the Scheduled Pay Date with respect to such Account.

3.4 Deferred Retention Bonuses.

(a) An Eligible Officer may elect to defer all or a portion of any Retention Bonuses to be paid by Walmart or a Related Affiliate designated by the Committee as a participating employer. All deferral elections made under this Section 3.4 must be filed with Executive Compensation on forms (which may be electronic) approved by Executive Compensation. For purposes of this Section 3.4, the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Executive Compensation. Notwithstanding any provisions hereunder to the contrary, no deferral election may be made on or after February 1, 2012, by an Eligible Officer with respect to any Retention Bonus payable to the Eligible Officer.

(b) Retention Bonus deferral elections must be filed within thirty (30) after the Eligible Officer obtains the legally binding right to the Retention Bonus.

(c) Effective with respect to Retention Bonus deferral elections made on or after January 1, 2009, the Eligible Officer shall also make an election within the time prescribed above to allocate his or her Retention Bonus deferrals to one or both of his or her Retirement Accounts. If such allocation will be the first allocation to a Retirement Account, the Eligible Officer shall also elect the form of distribution with respect to such Account. Effective with respect to Retention Bonus deferral elections made on or after January 1, 2010, the Eligible Officer may also elect to allocate his or her Retention Bonus deferrals to one or more Scheduled In-Service Accounts, in addition to his or her Retirement Accounts. If an Eligible Officer allocates deferrals to a new Scheduled In-Service Account, he or she must also designate the Scheduled Pay Date with respect to such Account.

3.5 Incentive Payments.

An Eligible Officer who first becomes a Participant after December 31, 2008 must make an election with respect to the allocation of his or her Incentive Payments, if any, between his or her Retirement Accounts. Such election must be made within the earliest of the time periods applicable under Sections 3.1, 3.2, 3.3. and 3.4 for making an initial deferral election for the first Plan Year of participation. In the event the Participant fails to make a timely election with respect to the allocation of his or her Incentive Payments, the Participant shall be deemed to have elected to have his or her Incentive Payments allocated entirely to his or her Retirement Account #1. Notwithstanding anything herein to the contrary, once made (or deemed made), a Participant’s allocation election under this Section 3.5 is irrevocable.

3.6 Irrevocability of Deferral Elections.

(a) Except as otherwise provided herein, once made for a Plan Year, a deferral election under Sections 3.1(b)(1), 3.1(c), 3.2(b)(1), 3.2(c), 3.3(b)(1), 3.3(c), 3.4(b)and 3.4(c) may not be revoked, changed or modified after the applicable filing deadline specified in such sections, and a deferral election under Sections 3.1(b)(2) and Section 3.2(b)(2) may not be revoked, changed or modified after the date of the election as provided in Sections 3.1(b)(2) and 3.2(b)(2). An election for one Plan Year will not automatically be given effect for a subsequent Plan Year, so that if deferral is desired for a subsequent Plan Year, a separate election must be made by the Eligible Officer for such Plan Year or performance period. Notwithstanding the preceding, if an Eligible Officer makes a deferral election for a Plan Year but fails to make an election as to the allocation of deferrals for such Plan Year among his or her Accounts, such deferrals shall be allocated based on source in the same manner as they were allocated for such source for the last Plan Year for which the Participant made an allocation election or, if none, equally to his or her then effective Retirement Accounts.

(b) In the event an Eligible Officer has a Separation from Service for any reason, then: (1) his or her deferral election under Section 3.1 will terminate as of the date of such Separation from Service (but will be effective with respect to the last regular paycheck issued to such Eligible Officer), regardless of whether the Eligible Officer continues to receive Compensation, or other remuneration, from

Walmart or any Employer thereafter; (2) his or her deferral election under Section 3.2 will remain in effect with respect to the bonus (if any) paid to him or her under the MIP for the performance period in which such Separation from Service occurs; (3) his or her deferral election under Section 3.3 will remain in effect with respect to any Special Bonus (if any) paid to him or her to which such election relates; and (4) his or her deferral election under Section 3.4 will remain in effect with respect to any Retention Bonus (if any) paid to him or her to which such election relates.

(c) If an Eligible Officer has a Separation from Service for any reason and is rehired (whether or not as an Eligible Officer) within the same Plan Year or performance period, as applicable, his or her deferral elections under Sections 3.1, 3.2, 3.3 and 3.4 shall be automatically reinstated and shall remain in effect for the remainder of such Plan Year or performance period, as applicable.

(d) In the event an Eligible Officer ceases to be an Eligible Officer (other than on account of a Separation from Service):

(1) during any Plan Year, then his or her deferral election under Section 3.1 will terminate as of the next following December 31. In addition, in the event the Compensation of such individual is reduced as a result of the change in status, his or her deferral election following such loss and through the date of termination of such election as provided in the preceding sentence will be pro rated based on his or her new level of Compensation;

(2) then his or her deferral election under Section 3.2 will terminate for any performance period beginning in the calendar year following the year of the loss of Eligible Officer status;

(3) then his or her deferral election under Section 3.3 shall continue in effect with respect to any Special Bonuses (if any) paid after such loss of Eligible Officer status; and

(4) then his or her deferral election under Section 3.4 shall continue in effect with respect to any Retention Bonuses (if any) paid after such loss of Eligible Officer status.

(e) Notwithstanding anything herein to the contrary, in the event an Eligible Officer goes on an unpaid leave of absence, his or her deferral election under Section 3.1 shall automatically cease when he or she commences the unpaid leave of absence; provided, however, that if he or she returns from the unpaid leave of absence during the same Plan Year, his or deferral election under Section 3.1 shall automatically resume immediately upon return from the leave of absence and shall continue in effect for the balance of the Plan Year. An Eligible Officer’s deferral election under Section 3.1 shall remain in effect with respect to any Compensation paid while on a leave of Absence. An Eligible Officer’s deferral elections under Sections 3.2, 3.3 and 3.4 shall not be affected by his or her leave of absence.

3.7 Automatic Suspension of Deferral Elections.

(a) In the event a Participant receives a distribution from the Walmart 401(k) Plan (or any other plan or successor plan sponsored by Walmart or any Related Affiliate) on account of hardship, which distribution is made pursuant to Treasury Regulations Section 1.401(k)-1(d)(3) and requires suspension of deferrals under other arrangements such as this Plan, the Participant’s deferral elections under Sections 3.1, 3.2, 3.3 and 3.4, if any, pursuant to which deferrals would otherwise be made during the six (6)-month period following the date of the distribution shall be cancelled.

(b) In the event a Participant requests a distribution pursuant to Section 5.5 due to an Unforeseeable Emergency, or the Participant requests a cancellation of deferrals under the Plan in order to alleviate his or her Unforeseeable Emergency, and the Committee determines that the Participant’s Unforeseeable Emergency may be relieved through the cessation of deferrals under the Plan, some or all the Participant’s deferral elections under Sections 3.1, 3.2, 3.3 and 3.4 for such Plan Year or performance period, as applicable, if any, as determined by the Committee, shall be cancelled as soon as administratively practicable following such determination by the Committee.

3.8 Employer Contribution Credits.

As of any date during a Plan Year, Walmart may credit to a Participant’s Company Account an amount determined in the sole discretion of the Committee, which amount may differ among Participants or categories of Participants designated by the Committee. A Participant shall become vested in his or her Company Account, plus earnings thereon, in accordance with the vesting schedule imposed by the Committee. The Participant’s Company Account shall be distributed pursuant to Article V only to the extent vested as of the applicable distribution date.

3.9 Crediting of Deferrals and Employer Contribution Credits.

Deferred Compensation, Deferred Bonuses, Deferred Special Bonuses, Deferred Retention Bonuses, Deferred Equity, Employer Contribution Credits and Incentive Payments will be credited to each Participant’s Account as follows:

(a) Deferred Compensation will be credited to the Participant’s Account as of the date such Compensation would have otherwise been paid in cash;

(b) Deferred Bonuses, Deferred Special Bonuses and Deferred Retention Bonuses will be credited to the Participant’s Account as of the date the bonus would have otherwise been paid in cash;

(c) Deferred Equity will be credited to the Participant’s Account as of the date the restrictions on such awards lapse or, in the case of Performance Shares, as of the date payment of such award is processed;

(d) Employer Contribution Credits will be credited to the Participant’s Account as of the date specified by the Committee; and

(e) Incentive Payments will be credited to the Participant’s Account as of the last day of the Plan Year specified in Section 4.2 (or as otherwise provided in Sections 4.2(e) and (f)).

A Participant’s Account, including earnings credited thereto, will be maintained by the Committee until the Participant’s Plan benefits have been paid in full.

3.10 Nature of Accounts.

Each Participant’s Account will be used solely as a measuring device to determine the amount to be paid a Participant under this Plan. The Accounts do not constitute, nor will they be treated as, property or a trust fund of any kind. All amounts at any time attributable to a Participant’s Account will be, and remain, the sole property of Walmart. A Participant’s rights hereunder are limited to the right to receive Plan benefits as provided herein. The Plan represents an unsecured promise by Walmart to pay the benefits provided by the Plan.

3.11 Valuation of Accounts.

Effective April 1, 2008, each Participant’s Account will be valued daily as of each Valuation Date.

ARTICLE IV. ADDITIONS TO ACCOUNTS -- CREDITED EARNINGS

AND INCENTIVE PAYMENTS

4.1 Credited Earnings.

Every Valuation Date during a Plan Year, a Participant’s Account will be credited with an equivalent of a daily rate of simple interest based on the annual rate on 10-year Treasury notes determined as of the first business day of January preceding such Plan Year, plus 270 basis points.

4.2 Incentive Payments.

The Incentive Payments described below will be credited to a Participant’s Account. A Participant’s entitlement to an Incentive Payment will be governed by this Section 4.2.

(a) The Incentive Payments provided in this Section apply to a Participant’s recognized Deferred Compensation and Deferred Bonuses for a Plan Year (other than Deferred Compensation and Deferred Bonuses allocated to the Participant’s Scheduled In-Service Accounts) and credited Plan earnings thereon, whether credited to the Participant’s Account or Grandfathered Account. For this purpose, Deferred Bonuses shall be treated as being “for a Plan Year” for the Plan Year to which the Deferred Bonus pertains. Incentive Payments are separately awarded based upon a Participant’s recognized

Deferred Compensation and Deferred Bonuses for a given Plan Year and credited Plan earnings thereon.

(b) The amount of an Incentive Payment is based on the Participant’s recognized Deferred Compensation and Deferred Bonuses for a Plan Year (other than Deferred Compensation and Deferred Bonuses allocated to the Participant’s Scheduled In-Service Accounts), plus credited Plan earnings on such sums through and including the Incentive Payment award date. The amount by which a Participant’s Deferred Compensation and Deferred Bonuses for a Plan Year (other than Deferred Compensation and Deferred Bonuses allocated to the Participant’s Scheduled In-Service Accounts) exceed twenty percent (20%) of the Participant’s base compensation will not be recognized in computing an Incentive Payment. Base compensation for this purpose means the Participant’s annual base rate of compensation for the last full payroll period in such Plan Year. Credited Plan earnings on such nonrecognized Deferred Compensation or Deferred Bonuses are likewise not taken into account in determining the amount of an Incentive Payment. Further, in no event shall Deferred Special Bonuses, Deferred Retention Bonuses, Deferred Equity or any Employer Contribution Credits be taken into account in determining the amount of an Incentive Payment.

(c) If a Participant remains continuously employed with Walmart or any Employer for a period of ten (10) consecutive full Plan Years, beginning with the first day of the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonus election in effect under this Plan or a Prior Agreement, and ending with the last day of the tenth (10 th ) Plan Year of such period, an Incentive Payment will be credited to the Participant’s Account as of the last day of such tenth (10 th ) Plan Year. The Incentive Payment will be equal to twenty percent (20%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for ten (10), but not less than five (5), Plan Years (i.e., the first six (6) Plan Years of such ten (10)-year period), plus credited Plan earnings thereon through the award date. For each full Plan Year thereafter in which the Participant remains continuously employed with Walmart or any Employer, an Incentive Payment will be credited to the Participant’s Account as of the last day of such Plan Year. Such Incentive Payment will be equal to twenty percent (20%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for the first Plan Year of the five (5)-consecutive Plan Year period ending on the award date, plus credited Plan earnings thereon through the award date.

(d) If a Participant remains continuously employed with Walmart or any Employer for a period of fifteen (15) consecutive full Plan Years, beginning with the first day of the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonus election in effect under this Plan or a Prior Agreement, and ending with the last day of the fifteenth (15 th ) Plan Year of such period, an Incentive Payment will be credited to the Participant’s Account as of the last day of such fifteenth (15 th ) Plan Year. The Incentive Payment will be equal to ten percent (10%) of the Participant’s recognized Deferred Compensation and

Deferred Bonuses for fifteen (15), but not less than ten (10), Plan Years (i.e., the first six (6) Plan Years of such fifteen (15)-year period), plus credited Plan earnings thereon through the award date. For each full Plan Year thereafter in which the Participant remains continuously employed with Walmart or any Employer, an Incentive Payment will be credited to the Participant’s Account as of the last day of such Plan Year. Such Incentive Payment will be equal to ten percent (10%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for the first Plan Year of the ten (10)-consecutive Plan Year period ending on the award date, plus credited Plan earnings thereon through the award date. The Incentive Payments provided in this Section 4.2(d) shall not take into account Incentive Payments credited under Section 4.2(c) or credited Plan earnings thereon.

(e) The Incentive Payments provided in this Section 4.2(e) only apply if a Participant has been a Participant under the Plan (or a Prior Agreement) for five (5) or more full Plan Years and if the Participant dies, becomes Disabled, or has a Separation from Service on or after he or she has been continuously employed with Walmart or an Employer for twenty (20) or more years or after attaining age fifty-five (55) before satisfaction of the ten (10)-year or fifteen (15)- year periods described in Sections 4.2(c) and (d) above, after taking into account the application of Section 4.2(f). In that event, only the Incentive Payment next to be credited (i.e., twenty percent (20%) or ten percent (10%)) will be credited to the Participant’s Account as provided in this Section 4.2(e). In the event the Participant had not yet been awarded or credited with a twenty percent (20%) Incentive Payment under Section 4.2(c), the Incentive Payment provided by this Section 4.2(e) will be based upon the ratio of: (1) the number of full Plan Years worked since and including the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonus election in effect under this Plan or a Prior Agreement, to (2) ten (10), multiplied by twenty percent (20%). Such Incentive Payment will be based upon recognized amounts for the Plan Years which would otherwise have been considered in calculating the Participant’s first Incentive Payment under Section 4.2(c). If the Participant has been awarded a twenty percent (20%) Incentive Payment provided in Section 4.2(c), the Incentive Payment provided by this Section 4.2(e) will be based upon the ratio of: (1) the number of full Plan Years worked since the award date of the initial twenty percent (20%) Incentive Payment, to (2) five (5), multiplied by ten percent (10%). Such Incentive Payment will be based upon recognized amounts for the Plan Years which would otherwise have been considered in calculating the Participant’s first Incentive Payment under Section 4.2(d). The Incentive Payment provided under this Section 4.2(e) will be determined and credited to the Participant’s Account as of the date the Participant’s Plan benefits are distributed in a lump sum payment. In addition, the Participant’s Account will also be credited as of such date with interest pursuant to Section 4.1 determined as though the Incentive Payment provided under this Section 4.2(e) had been credited to the Participant’s Account on the last day of the Plan Year preceding the Participant’s death, Disability or Separation from Service. If, however, a Participant’s benefits are to be distributed in installments, the amounts provided under this Section 4.2(e) will be

determined and credited to the Participant’s Account as of the distribution date of the initial installment.

(f) This Section 4.2(f) shall not apply with respect to Plan Years beginning after March 31, 2009. With respect to Plan Years beginning before March 31, 2009, the Incentive Payments provided in this Section 4.2(f) apply only with respect to those Participants who: (1) incur a Separation from Service on or after the last day of a Fiscal Year, but before the immediately following last day of a Plan Year (e.g., on or after January 31, but before the next March 31); and (2) who, but for such Separation from Service before the last day of a Plan Year, would have been credited with an Incentive Payment under Section 4.2(c) and/or 4.2(d). In that event, the Incentive Payments which would have been credited to the Participant’s Account but for such early Separation from Service will be credited to the Participant’s Account as if the Participant had remained employed with Walmart or any Employer through the last day of the Plan Year, with no reduction due to the early Separation from Service. The Incentive Payments provided under this Section 4.2(f) will be determined and credited to the Participant’s Account as of the last day of the Plan Year in which the Participant’s Separation from Service occurs.

ARTICLE V. PAYMENT OF PLAN BENEFITS

5.1 Scheduled In-Service Benefits.

(a) In-Service Benefits . Each of a Participant’s Scheduled In-Service Accounts will be distributed in a lump sum within the 90-day period commencing on the Scheduled Pay Date applicable to such Scheduled In-Service Account. The lump sum amount will be the value of the applicable Participant’s Scheduled In-Service Account as of the Scheduled Pay Date.

(b) Intervening Separation or Death . Notwithstanding the preceding, should an event occur prior to the Scheduled Pay Date of any Scheduled In-Service Account that would trigger a distribution under Section 5.2 or 5.3 earlier than the Scheduled Pay Date, such Scheduled In-Service Account or Accounts shall be distributed in accordance with Section 5.2 or 5.3, as applicable, and not in accordance with Section 5.1(a).

5.2 Separation and Retirement Benefits.

(a) Separation Benefits . In the event of a Participant’s Separation from Service other than on account of Retirement or death, the Participant’s Account will be distributed in a lump sum under Section 5.2(c).

(b) Retirement Benefits. If the Participant’s Separation from Service is on account of Retirement, the Participant’s Scheduled In-Service Accounts will be distributed in a lump sum under Section 5.2(c) and the Participant’s Company Account and Retirement Accounts will be distributed in one of the forms provided in Section 5.2(c) or 5.2(d) below in accordance with the Participant’s

distribution election given effect under the provisions of Section 5.4 with respect to each such Account.

(1) Any lump sum to be paid under this Section 5.2(c) shall be paid within the 90-day period commencing on the Participant’s Separation Pay Date.

(2) The lump sum amount will be the value of the Participant’s Account, Company Account or Retirement Accounts, as applicable, as of the last day of the month preceding the date of the distribution.

(d) Installment Distributions .

(1) If the Participant’s Company Account or Retirement Account, as applicable, is to be distributed in the form of annual installments, the first such installment shall be made within the 90-day period commencing on the first January 31 following the Participant’s Separation from Service; provided, however, that if such January 31 is earlier than the Participant’s Separation Pay Date, the first such installment shall be made within the 90-day period commencing on the Participant’s Separation Pay Date. Subsequent installments shall be made within the 90-day period commencing on each successive January 31, until the Participant’s benefits under such Account are distributed in full.

(2) The Plan benefits will be paid in equal annual installments in an amount which would fully amortize a loan equal to the lump sum value of the Participant’s Company Account or Retirement Account, as applicable, determined in accordance with Section 5.2(c)(2) (using as the distribution date the date of the first installment) over the installment period, with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s Separation from Service occurs.

5.3 Death Benefits.

(a) General . In the event of the Participant’s death before incurring a Separation from Service or before commencement of benefits, the Participant’s Account will be distributed in one of the forms provided in Section 5.3(b) or 5.3(c) below in accordance with the Participant’s distribution election given effect under the provisions of Section 5.4 below.

A Participant may elect only one form of payment for all beneficiaries (at any level.) If the Participant fails to make an effective election as provided in Section 5.4 below, the Participant will be deemed to have elected distribution in a lump sum under Section 5.3(b) for all beneficiary levels.

(b) Lump Sum Distributions .

(1) Any lump sum to be paid under this Section 5.3(b) shall be paid within the 90-day period commencing on the last day of the month in which the Participant’s death occurs.

(2) The lump sum amount will be the value of the Participant’s Account as of the last day of the month preceding the date of distribution.

(2) The Plan benefits will be paid in equal annual installments in an amount which would fully amortize a loan equal to the lump sum value of the Participant’s Account determined in accordance with Section 5.3(b)(2) (using as the distribution date the date of the first installment) over the installment period, with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s death occurs.

(d) Death After Commencement of Installments. Notwithstanding the preceding, in the event of a Participant’s death after installment payments to the Participant have commenced, such installment payments shall continue to be made to the Participant’s designated beneficiary in the same manner as they were being distributed to the Participant prior to his or her death, provided, however, that if the Participant’s distribution election applicable to Section 5.3(a) is a lump sum payment, the Participant’s remaining installments will be distributed in lump sum to the Participant’s designated beneficiary within the 90-day period commencing on the last day of the month in which the Participant’s death occurs.

(e) Designation of Beneficiary. A Participant may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries (which may be a trust or trusts) to receive any benefit payments which may be payable under this Plan following the Participant’s death, and may designate the proportions in which such beneficiaries are to receive such payments. Any such designation will apply to both the Participant’s Account and his or her Grandfathered Account, if any; a Participant may not designate different beneficiaries for his or her Account and Grandfathered Account. A Participant may change such designation from time to time and the last designation filed with the Committee in accordance with its procedures prior to the Participant’s death will control. For this purpose, a Participant’s most recent beneficiary designation properly filed under a Prior Agreement shall continue to be given effect until otherwise modified in accordance with the provisions of this Section. In the event no beneficiary is designated, or if all designated beneficiaries predecease the Participant, payment

shall be payable to the following “default” beneficiaries of the Participant in the following order of priority: (1) the Participant’s surviving spouse known to the Committee, if any; (2) the Participant’s living children known to the Committee in equal shares; (3) the Participant’s living parents known to the Committee in equal shares; (4) the Participant’s surviving siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine.

(f) Death of Beneficiary . In the event a beneficiary dies before full payment of the Participant’s benefits under the Plan, benefits that would have been paid to such beneficiary shall continue in the same form in equal shares to the remaining beneficiaries at the same level (i.e., primary, contingent) and, if none, to the next level of beneficiaries. If there are no beneficiaries at the next level, then any remaining benefits shall be paid to the following “default” beneficiaries of the last living beneficiary in the following order of priority: (1) the beneficiary’s surviving spouse known to the Committee, if any; (2) the beneficiary’s living children known to the Committee in equal shares; (3) the beneficiary’s surviving parents known to the Committee in equal shares; (4) the beneficiary’s surviving siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine.

5.4 Form of Distribution.

(a) Forms Available. If a Participant’s Separation from Service is on account of the Participant’s Retirement or is due to death, distribution of his or her Company Account and Retirement Accounts or, in the event of death, his or her Account, may be made, at the Participant’s election per this Section 5.4, in one of the following forms:

(1) a lump sum;

(2) subject to the minimum account value restriction below, substantially equal annual installments over a period not to exceed fifteen (15) years; or

(3) solely with respect to distribution of the Participant’s Account in the event of death, partially a lump sum and, subject to the minimum account value restriction below, substantially equal annual installments over a period not to exceed fifteen (15) years;

provided, however, that an installment election will be given effect only if, as of the date on which any lump sum payment would be valued, the value of the Participant’s Company Account or Retirement Account, as applicable, or in the event of death, Account, is at least fifty-thousand dollars ($50,000). Any Participant whose Company Account or Retirement Account, as applicable, or in the event of death, Account, is valued at less than fifty-thousand dollars ($50,000) as of the date on which any lump sum payment would be valued shall be defaulted to a lump sum payment.

(b) Retirement Accounts .

(1) The Account balance of a Participant as of December 31, 2008 shall, as of such date, be allocated to his or her Retirement Accounts in a manner determined by Executive Compensation to be consistent with his or her last affirmative form of payment election filed with Executive Compensation on or before December 31, 2008; provided, however, that in no event may any such election made in 2008 defer any amount otherwise payable during 2008 to 2009 or any later year or accelerate any amount otherwise payable during 2009 or any later year into 2008. (Notwithstanding the preceding, in the event a Participant’s affirmative form of payment outstanding on December 31, 2008 is an “account balance-driven” election, the Participant’s Account shall be allocated as of such date in accordance with his or her election, as though distribution would occur on December 31, 2008.) Deferrals (including Employer Contribution Credits and Incentive Payments) credited to the Participant’s Account after December 31, 2008 and through March 31, 2009 shall also be allocated to the Participant’s Retirement Accounts in accordance with such election. Any form of payment election filed during 2008 shall be deemed to have been made under applicable Internal Revenue Service transition relief (and thus shall not be subject to Sections 5.4(d)(1), (d)(2) and (d)(3)), unless the Participant specifically waives such transition relief. Any distribution election made after December 31, 2008 shall be subject to Section 5.4(d).

(2) With respect to any individual who is a Participant as of December 31, 2008, Incentive Payments credited after March 31, 2009, if any, will be allocated to his or her Retirement Accounts in accordance with his or her last affirmative form of payment election filed with Executive Compensation on or before December 31, 2008, which election may be separate from the election provided in Section 5.4(b)(1) above. Such election shall be irrevocable as of December 31, 2008.

(c) Company Account . A Participant’s Company Account shall be paid in the form of a lump sum, unless the Participant makes a subsequent distribution election in accordance with Section 5.4(d).

(d) Subsequent Elections . A Participant may change his or her distribution election (or deemed distribution election) with respect to his or her Company Account or Retirement Account or, in the event of death, his or her Account, per this Section 5.4 at any time by making a new election (referred to in this subsection as a “subsequent election”) on a form (which may be electronic) approved by Executive Compensation and filed with Executive Compensation; provided, however, that each such subsequent election shall be subject to the following restrictions:

(1) A subsequent election made after December 31, 2008 may not take effect until at least twelve (12) months after the date on which such subsequent election is made;

(2) Payment or initial payment pursuant to a subsequent election made after December 31, 2008 may not be made earlier than five (5) years from the date such payment would have been made absent the subsequent election (but, for this purpose, installment payments shall not commence until the first January 31 after such delay), unless the distribution is made on account of the Participant’s death;

(3) A subsequent election made after December 31, 2008 related to a payment must be made not less than twelve (12) months before the date the payment is scheduled to be paid;

(4) Payment of a Participant’s Company Account or Retirement Account or, in the event of death, Account, pursuant to a subsequent election must be completed by the last day of the Plan Year which contains the twentieth (20 th ) anniversary of the Participant’s Separation Pay Date or the Participant’s death;

(5) For purposes of this Section 5.4(d) and Code Section 409A, the entitlement to annual installment payments is treated as the entitlement to a single payment;

(6) A Participant may make more than one subsequent election; provided, however, that any Participant who makes a form of payment election during 2008 and who elects to waive transition relief as provided in Section 5.4(b)(1) shall not be permitted to make a subsequent election after December 31, 2008 with respect to his or her Retirement Accounts.

If a Participant’s distribution election does not satisfy the requirements of this Section 5.4(d), it will not be recognized or given effect by the Committee. In that event, distribution of the benefit will be made in accordance with the Participant’s most recent distribution election which does satisfy the requirements of this Section 5.4(d).

(e) Filing of Election . A Participant’s distribution elections under Section 5.2(b) or 5.3(a) must be filed with Executive Compensation on forms (which may be electronic) prescribed by Executive Compensation.

5.5 Distributions for Unforeseeable Emergencies.

account the extent to which such need is or may be relieved through reimbursement or compensation by insurance, by liquidation of the Participant’s or beneficiary’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cessation of deferrals under the Plan. Any distribution under this Section 5.5 shall first be made from the Participant’s Scheduled In-Service Accounts (including earnings thereon), then from his or her Retirement Accounts (including earnings thereon) in the following order: Deferred Equity, Deferred Special Bonuses and Deferred Retention Bonuses, then pro rata from Deferred Compensation and Deferred Bonus. A Participant’s Incentive Payments under Section 4.2 shall be ratably adjusted consistent with the above.

(b) Notwithstanding anything in the Plan to the contrary, if Walmart reasonably anticipates that its deduction with respect to any distribution under this Section 5.5 would not be permitted due to the application of Code Section 162(m); such payment shall be suspended to the extent a deduction would not be permitted until the earliest date at which it reasonably anticipates that the deduction of such distribution would not be barred by application of Code Section 162(m); provided, however, that the conditions of Section 5.5(a) are still satisfied as of such date.

5.6 Reductions Arising from a Participant’s Gross Misconduct.

Notwithstanding anything herein to the contrary, a Participant’s Plan benefits are contingent upon the Participant not engaging in Gross Misconduct while employed with Walmart or any Employer or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. In the event the Committee determines that the Participant has engaged in Gross Misconduct during the prescribed period, then notwithstanding any provisions hereunder to the contrary: (a) the Participant shall forfeit all Employer Contribution Credits and Incentive Payments, and credited Plan earnings thereon; (b) earnings credited to the Participant’s Account derived from Deferred Compensation, Deferred Bonuses, Deferred Special Bonuses, Deferred Retention Bonuses and Deferred Equity shall be recalculated for each Plan Year to reflect the amount which would otherwise have been credited if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect for such Plan Year; and (c) if the Participant is then receiving installment payments, any remaining installments shall be recalculated to reflect the amount which would otherwise have been paid if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect with respect to such installment payments. Under no circumstances will a Participant forfeit any portion of the Participant’s Deferred Compensation, Deferred Bonuses, Deferred Special Bonuses, Deferred Retention Bonuses or Deferred Equity. Any payments received hereunder by a Participant (or the Participant’s beneficiary) are contingent upon the Participant not engaging (or not having engaged) in Gross Misconduct while employed with Walmart or any Employer or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. If the Committee determines, after payment of amounts hereunder, that the Participant has engaged in Gross Misconduct during the prescribed period, the Participant (or the Participant’s beneficiary) shall repay to Walmart any amount in excess of that to which the Participant is entitled under this Section 5.6.

ARTICLE VI. ADMINISTRATION

6.1 General.

The Committee is responsible for the administration of the Plan and is granted the following rights and duties:

(a) The Committee shall have the exclusive duty, authority and discretion to interpret and construe the provisions of the Plan, to determine eligibility for and the amount of any benefit payable under the Plan, and to decide any dispute which may rise regarding the rights of Participants (or their beneficiaries) under this Plan;

(b) The Committee shall have the authority to adopt, alter, and repeal such administrative rules, regulations, and practices governing the operation of the Plan as it shall from time to time deem advisable;

(c) The Committee may appoint a person or persons to act on behalf of, or to assist, the Committee in the administration of the Plan, establishment of forms (including electronic forms) desirable for Plan operation, and such other matters as the Committee deems necessary or appropriate;

(d) The decision of the Committee in matters pertaining to this Plan shall be final, binding, and conclusive upon Walmart, any Related Affiliate, the Participant, the Participant’s beneficiary, and upon any person affected by such decision, subject to the claims procedure set forth in Article VII; and

6.2 Allocation and Delegation of Duties.

(a) The Committee shall have the authority to allocate, from time to time, by instrument in writing filed in its records, all or any part of its respective responsibilities under the Plan to one or more of its members as may be deemed advisable, and in the same manner to revoke such allocation of responsibilities. In the exercise of such allocated responsibilities, any action of the member to whom responsibilities are allocated shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of such member. The member to whom responsibilities have been allocated shall periodically report to the Committee concerning the discharge of the allocated responsibilities.

(b) The Committee shall have the authority to delegate, from time to time, by written instrument filed in its records, all or any part of its responsibilities under

the Plan to such person or persons as the Committee may deem advisable (and may authorize such person to delegate such responsibilities to such other person or persons as the Committee shall authorize) and in the same manner to revoke any such delegation of responsibility. Any action of the delegate in the exercise of such delegated responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of any such delegate. The delegate shall periodically report to the Committee concerning the discharge of the delegated responsibilities.

ARTICLE VII. CLAIMS PROCEDURE

7.1 General.

Any claim for benefits under the Plan must be filed by the Participant or beneficiary (“claimant”) in writing with the Committee or its delegate within one (1) year of the Participant’s Separation from Service. If the claim is not filed within one (1) year of the Participant’s Separation from Service, neither the Plan nor Walmart or any Related Affiliate shall have any obligation to pay the benefit and the claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is wholly or partially denied, notice of the decision will be furnished to the claimant by the Committee or its delegate within a reasonable period of time, not to exceed sixty (60) days, after receipt of the claim by the Committee or its delegate. Any claimant who is denied a claim for benefits will be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan provision upon which the denial is based;

(d) an explanation of the Plan’s claim review procedure.

7.2 Appeals Procedure.

To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative:

(a) may request a review by written application to the Committee not later than sixty (60) days after receipt by the claimant of the written notification of denial of a claim;

(b) may review pertinent documents; and

period of time, but not later than one hundred twenty (120) days after receipt of a request for review. The decision on review will be in writing and shall include the specific reasons for the denial and the specific references to the pertinent Plan provisions on which the decision is based.

ARTIVLE VIII. MISCELLANEOUS PROVISIONS

8.1 Amendment, Suspension or Termination of Plan.

Walmart, by action of the Committee, reserves the right to amend, suspend or to terminate the Plan in any manner that it deems advisable; provided, however, that in no event shall a Participant’s Account be distributed prior to the Participant’s Separation from Service (except in the event of a Participant’s Unforeseeable Emergency pursuant to Section 5.5). Notwithstanding the preceding sentence, the Plan may not be amended, suspended or terminated to cause a Participant to forfeit the Participant’s then- existing Account.

Notwithstanding the preceding, Walmart may, by action of the Committee within the thirty (30) days preceding or twelve (12) months following a change in control (within the meaning of Code Section 409A) of a relevant affiliate, partially terminate the Plan and distribute benefits to all Participants involved in such change in control within twelve (12) months after such action, provided that all plans sponsored by the service recipient immediately after the change in control (which are required to be aggregated with this Plan pursuant to Code Section 409A) are also terminated and liquidated with respect to each Participant involved in the change in control.

8.2 Non-Alienability.

No interest or amounts payable under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment.

8.3 Recovery of Overpayments. In the event any payments under the Plan are made on account of a mistake of fact or law, the recipient shall return such

payment or overpayment to Walmart as requested by Walmart.

8.4 No Employment Rights. Nothing contained herein shall be construed as conferring upon any Participant the right to continue in the employ of

Walmart or any Related Affiliate.

8.5 No Right to Bonus.

Nothing contained herein shall be construed as conferring upon the Participant the right to receive a bonus from the MIP and any award under the Walmart Inc. Stock Incentive Plan of 2005. A Participant’s entitlement to such a bonus or award is governed solely by the provisions of those plans.

8.6 Withholding and Employment Taxes.

To the extent required by law, Walmart or a Related Affiliate will withhold from a Participant’s current compensation such taxes as are required to be withheld for employment taxes. To the extent required by law, Walmart or a Related Affiliate will withhold from a Participant’s Plan distributions such taxes as are required to be withheld for federal, Puerto Rican, state or local government income tax purposes.

8.7 Income and Excise Taxes.

The Participant (or the Participant’s Beneficiaries) is solely responsible for the payment of all federal, Puerto Rican, state and local income and excise taxes resulting from the Participant’s participation in this Plan.

8.8 Successors and Assigns.

The provisions of this Plan are binding upon and inure to the benefit of Walmart and each Related Affiliate which is a participating employer, their successors and assigns, and the Participant, the Participant’s beneficiaries, heirs, and legal representatives.

8.9 Governing Law.

This Plan shall be subject to and construed in accordance with the laws of the State of Delaware to the extent not preempted by federal law.

APPENDIX A

Amounts deferred and vested on or before December 31, 2004 are subject to the terms of the Plan as it existed as of such date, which Plan is set forth in this Appendix A. The terms of this Appendix A shall not be materially modified (as that

phrase is defined by Code Section 409A and guidance thereunder), either formally or informally, unless such modification specifically provides that it is intended to be a material modification within the meaning of Code Section 409A and guidance

thereunder.

WALMART INC. OFFICER DEFERRED COMPENSATION PLAN

ARTICLE I. GENERAL

1.1 Purpose.

The purpose of the Walmart Inc. Officer Deferred Compensation Plan (“Plan”) is to: (a) attract and retain the valuable services of certain officers; (b) recognize, reward, and encourage contributions by such officers to the success of Walmart Inc. (“Walmart”) and its Related Affiliates; and (c) enable such officers to defer certain compensation and bonuses, and to be credited with earnings and Incentive Payments with respect to such amounts.

1.2 Applicability to Prior Deferred Compensation Agreements; Effective Date.

This Plan was initially effective February l, 1996 with respect to compensation and bonuses deferred (and credited earnings thereon) under the Plan on or after February 1, 1996. In addition, prior to February 1, 1995, certain Eligible Officers entered into deferred compensation agreements (“Prior Agreements”) with Walmart containing terms similar to those contained in this Plan. Except as expressly provided herein, effective February 1, 1996 the Prior Agreements were amended and restated in the form of this Plan.

The Plan as initially adopted effective February 1, 1996, was amended from time-to-time, most recently by Amendment No. Three to the February 1, 1997 amended and restated Plan. The effective date of this amended and restated Plan is March 31, 2003, except as otherwise expressly provided herein.

1.3 Nature of Plan.

The Plan is intended to be (and shall be administered as) an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan shall be “unfunded” for tax purposes and for purposes of Title I of ERISA. Any and all payments

under the Plan shall be made solely from the general assets of Walmart and, to the extent such payments or benefits are attributable to services with a respective Related Affiliate or Related Affiliates, such Related Affiliate or Related Affiliates. For this purpose, payments or benefits under the Plan are deemed to be attributable to services with the last Related Affiliate by whom the Participant was employed at or prior to the time benefits become payable under Article V. A Participant’s interests under the Plan do not represent or create a claim against specific assets of Walmart or any Related Affiliate. Nothing herein shall be deemed to create a trust of any kind or create any fiduciary relationship between Walmart, any Related Affiliate or the Committee, and a Participant, the Participant’s beneficiary or any other person. To the extent any person acquires a right to receive payments from Walmart or a Related Affiliate under this Plan, such right is no greater than the right of any other unsecured general creditor of Walmart or such Related Affiliate.

ARTICLE II. DEFINITIONS

2.1 Definitions.

Whenever used in this Plan, the following words and phrases have the meaning set forth below unless the context plainly requires a different meaning:

(a) Code means the Internal Revenue Code of 1986, as amended from time to time.

(b) Committee means, effective October 1, 2003, the Compensation, Nominating and Governance Committee of the Board of Directors of Walmart Inc.

(c) Deferred Bonuses means the amount deferred from bonuses payable to a Participant under the Walmart Inc. Management Incentive Plan for Officers.

(d) Deferred Compensation means: (1) the compensation deferred by a Participant under Section 3.1 below; and (2) amounts deferred by a Participant under a Prior Agreement(s).

(e) Disability means a Total and Permanent Disability as from time to time defined in the Wal-Mart Stores, Inc. Profit Sharing Plan (or any successor plan thereto). A Participant must establish to the satisfaction of the Committee that a Disability exists. A Participant shall be treated as having a Disability only if such illness or injury results in the Participant’s Termination of Employment.

[ NOTE : The definition of Disability shall be determined in accordance with the following definition in effect under the Wal-Mart Profit Sharing and 401(k) Plan (a successor plan to the Wal-Mart Stores, Inc. Profit Sharing Plan) as of October 3, 2004: a physical or mental disability resulting from a bodily injury or disease or mental disorder which: (a) causes the Participant to be “disabled” within the meaning of Section 223 of the Social Security Act and (b) exists as of the Participant’s termination of employment. For this purpose, a Participant who is covered by the Social Security Act must obtain a determination by the Social Security Administration that the Participant is “disabled” in order to have a

Disability under this Plan. A Participant who is not covered by the Social Security Act will be deemed to have a Disability if the Participant provides a written certification by a licensed doctor (medicine or osteopathy) who is not a member of the Participant’s family that the Participant is “disabled” within the meaning of Section 223 of the Social Security Act. Such definition shall not be modified on or after October 3, 2004.]

(f) Early Retirement means a Participant’s Termination of Employment on or after the date the Participant has been continuously employed with Walmart or a Related Affiliate twenty (20) or more years.

(g) Eligible Officer means an individual who is a corporate officer of Walmart or a Related Affiliate designated by Walmart as a participating employer, and who holds the title of Vice President or above, Treasurer, Controller, or an officer title of similar rank as determined by the Committee. In addition, Eligible Officer shall include a divisional officer of Walmart or a Related Affiliate designated by Walmart as a participating employer, and who holds the title of Vice President or above or an officer title of similar rank as determined by the Committee. Notwithstanding the preceding sentences, the term “Eligible Officer” shall not include an individual who entered into a Prior Agreement with Walmart unless such individual consents to participation in the Plan on the terms and conditions herein set forth.

(h) Fiscal Year means the twelve (12)-month period commencing on February 1 and ending on January 31.

(i) Grandfathered Account means the bookkeeping account established by the Committee to reflect a Participant’s Deferred Compensation, Deferred Bonuses, Incentive Payments, and credited earnings thereon, which are deferred and vested on or before December 31, 2004. Such amount shall be governed at all times by the terms of this Appendix A.

(j) A Participant is deemed to have engaged in Gross Misconduct if the Committee or its delegate determines that the Participant has engaged in conduct detrimental to the best interests of Walmart or any Related Affiliate or any entity in which Walmart has an ownership interest. Examples of such conduct include, without limitation, disclosure of confidential information in violation of Walmart’s Statement of Ethics, theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses.

(k) Incentive Payments means the amounts credited to a Participant’s Grandfathered Account: (1) in accordance with Section 4.2 below; and (2) a Participant’s Prior Agreement(s).

(l) Participant means any Eligible Officer who defers compensation or bonuses under the Plan. An individual remains a Participant in the Plan until the Participant’s Plan benefits have been fully distributed.

(m) Plan Year means: (1) for periods before February 1, 1997, the twelve (12)-month period commencing on February 1 and ending on January 31; (2) the period from February 1, 1997 through March 31, 1997; and (3) from and after April 1, 1997, the twelve (12)-month period commencing on April 1 and ending on March 31. Notwithstanding the above, for purposes of the Incentive Payments under Section 4.2, the February 1, 1996 - January 31, 1997 Plan Year and the short February 1, 1997 - March 31, 1997 Plan Year shall be treated as one Plan Year running from February 1, 1996 - March 31, 1997.

(n) Related Affiliates means a business or entity that is, directly or indirectly, fifty-one percent (51%) or more owned by Walmart.

(o) Retirement means a Participant’s Termination of Employment on or after the Participant’s attainment of age fifty- five (55).

(p) Termination of Employment means a Participant ceasing to be actively employed by Walmart and its Related Affiliates. Termination of Employment does not include the transfer of a Participant from the employ of Walmart to a Related Affiliate or vice versa , a transfer between Walmart’s Related Affiliates, or periods while a Participant is on an approved leave of absence.

(q) Unforeseeable Emergency means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or a Participant’s dependent (as defined in Code Section 152(a)), the loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. An Unforeseeable Emergency does not exist to the extent such hardship is or may be relieved:

(1) through reimbursement or compensation by insurance or otherwise;

(2) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would itself not cause severe financial hardship; or

(3) by cessation of deferrals under this Plan.

The need to send a Participant’s child to college or the desire to purchase a home does not constitute an Unforeseeable Emergency. The existence of an Unforeseeable Emergency will be determined by the Committee, in its sole discretion, based upon the Participant’s facts and circumstance and in accordance with restrictions imposed by the Code or guidance thereunder.

(r) Annual Valuation Date means the last day of each Plan Year.

ARTICLE III. DEFERRED COMPENSATION AND BONUSES--

ESTABLISHMENT OF ACCOUNTS

3.1 Deferred Compensation.

For each Plan Year, each Eligible Officer may elect to defer all or a portion of what would otherwise be the Eligible Officer’s federal taxable base compensation, net of employment taxes and estimated bi-weekly deductions as are determined to be in effect on the first day of the deferral period, to be paid for such Plan Year by Walmart or a Related Affiliate designated by Walmart as a participating employer. Amounts deferred (the “Deferred Compensation”) will be deferred pro ratably for each payroll period of the Plan Year. All deferral elections made under this Section 3.1 must be filed with the Committee on forms approved by the Committee. Deferral elections must be (a) filed no later than the day preceding the Plan Year for which the deferral election is to be effective; or (b) with respect to an Eligible Officer appointed during the Plan Year, within thirty (30) days of such appointment. Individuals appointed as Eligible Officers on or after April 1, 2003 and before October 1, 2003 shall have thirty (30) days from such latter date to file a deferral election for the balance of the Plan Year.

Once made for a Plan Year, a deferral election may not be revoked, changed or modified. Notwithstanding the preceding sentence, in the event an Eligible Officer ceases to be employed as an Eligible Officer, such former Eligible Officer’s deferral election shall automatically cease with respect to compensation earned on or after the individual ceases to be an Eligible Officer. A deferral election for one (1) Plan Year will not automatically be given effect for a subsequent Plan Year, so that if deferrals are desired for a subsequent Plan Year, a separate election must be made by the Eligible Officer for such Plan Year. An Eligible Officer’s deferral election shall remain in effect with respect to any portion of base compensation paid while on a leave of absence, and, if the leave of absence is unpaid, shall resume upon return from the leave of absence during the same Plan Year and shall continue in effect for the balance of such Plan Year.

3.2 Deferred Bonuses.

Each Eligible Officer may elect to defer all or a portion of the Eligible Officer’s bonus (if any) for a Fiscal Year under the Walmart Inc. Management Incentive Plan for Officers. All bonus deferral elections made under this Section 3.2 must be made on forms approved by the Committee, and be filed with the Committee: (a) for the 1996-1997 Fiscal Year, no later than January 31, 1996; (b) for Fiscal Years beginning on or after February 1, 1997, no later than the March 31 of the Fiscal Year for which such bonus (if any) is payable; and (c) within thirty (30) days of the individual’s appointment as an Eligible Officer if the Eligible Officer is newly appointed after March 31 of the Fiscal Year. Individuals appointed as Eligible Officers on or after April 1, 2003 and before October 1, 2003 shall have thirty (30) days from such latter date to file a bonus deferral election with respect to the February 1, 2003 - January 31, 2004 Fiscal Year.

Once made for a Fiscal Year, a bonus deferral election may not be revoked, changed or modified. Notwithstanding the preceding sentence, in the event an Eligible Officer ceases to be employed as an Eligible Officer but remains employed by Walmart or by one of its Related Affiliates, such former Eligible Officer’s bonus deferral election shall automatically cease with respect to that portion of a bonus earned on or after the date the individual ceases to be an

Eligible Officer. For this purpose, the portion of a bonus earned on or after ceasing to be an Eligible Officer shall be determined by multiplying the bonus by a fraction, the numerator of which is the number of calendar days in such Fiscal Year in which the individual ceased to be an Eligible Officer, and the denominator of which is the total calendar days in such Fiscal Year. Effective for those bonuses payable for Fiscal Years beginning on or after February 1, 2003, in the event an Eligible Officer ceases to be employed as an Eligible Officer due to a Termination of Employment, or if an Eligible Officer takes an approved leave of absence, such Eligible Officer’s bonus deferral election shall remain in effect with respect to that portion of a bonus earned while an Eligible Officer, even if such bonus is awarded after a Termination of Employment or while an Eligible Officer is on an approved leave of absence.

With respect to those Eligible Officers appointed on or after the first day of a Plan Year and who elect to defer all or a portion of their bonus (if any) for that initial Fiscal Year, such deferral elections shall apply only to that portion of the bonus earned after the date of such election, by multiplying the bonus by a fraction, the numerator of which is the number of calendar days in such Fiscal Year in which the individual elected to defer all or a portion of their bonus after first becoming appointed as an Eligible Officer, and the denominator of which is the total calendar days in such Fiscal Year. A bonus deferral election for one (1) Fiscal Year will not automatically be given effect for a subsequent Fiscal Year, so that if deferrals are desired for a subsequent Fiscal Year, a separate election must be made by the Eligible Officer for such Fiscal Year.

3.3 Establishment of Grandfathered Accounts.

The Deferred Compensation, Deferred Bonuses, and Incentive Payments will be credited to a bookkeeping account (“Grandfathered Account”) established by the Committee on behalf of each Participant. The Deferred Compensation will be credited to the Participant’s Grandfathered Account as of the last day of the Plan Year during which the Deferred Compensation would otherwise be payable to the Participant. The Deferred Bonus will be credited to the Participant’s Grandfathered Account as of the date the bonus would have otherwise been paid in cash. The Incentive Payments will be credited to the Participant’s Grandfathered Account as of the last day of the Plan Year specified in Section 4.2. A Participant’s Grandfathered Account, including earnings credited thereto, will be maintained by the Committee until the Participant’s Plan benefits have been paid in full.

3.4 Nature of Grandfathered Accounts.

Each Participant’s Grandfathered Account will be used solely as a measuring device to determine the amount to be paid a Participant under this Plan. The Grandfathered Accounts do not constitute, nor will they be treated as, property or a trust fund of any kind. All amounts at any time attributable to a Participant’s Grandfathered Account will be, and remain, the sole property of Walmart and its Related Affiliates. A Participant’s rights hereunder are limited to the right to receive Plan benefits as provided herein. The Plan represents an unsecured promise by Walmart and the applicable Related Affiliate to pay the benefits provided by the Plan.

3.5 Annual Valuation of Grandfathered Accounts.

Each Participant’s Grandfathered Account will be valued annually as of each Annual Valuation Date. The value of an Grandfathered Account as of any applicable Annual Valuation Date is the sum of the Grandfathered Account value as of the immediately preceding Annual Valuation Date, the Deferred Compensation, Deferred Bonuses and Incentive Payments allocated as of the applicable Annual Valuation Date, and the equivalent of interest credited to the Grandfathered Account under Section 4.1 as of the applicable Annual Valuation Date, less any distributions for Unforeseeable Emergencies since the preceding Annual Valuation Date but on or before the applicable Annual Valuation Date.

[Notwithstanding anything herein to the contrary, effective April 1, 2008, Grandfathered Accounts shall be credited with interest on a daily basis. The amount of interest to be credited each day shall be a daily rate of simple interest based on the interest rate in effect for the Plan Year as provided in Section 4.1. Also, effective January 1, 2009, the Plan Year for such purpose shall be the twelve- month period February 1 through January 31, with the period April 1, 2009 through January 31, 2010 being a short Plan Year. This Appendix A shall be construed in accordance with such modifications. It has been determined that these modifications do not constitute “material modifications” for purposes of Code Section 409A.]

ARTICLE IV. ADDITIONS TO ACCOUNTS -- CREDITED EARNINGS

AND INCENTIVE PAYMENTS

4.1 Credited Annual Earnings.

For each Plan Year a Participant’s Grandfathered Account will be credited with the equivalent of interest at the per annum rate established for such Plan Year by the Committee; provided, however, for the February 1, 1997 - March 31, 1997 Plan Year, the equivalent of interest shall be credited at one-sixth (1/6) of the per annum rate so established for such period. The per annum rate may be increased or decreased for any Plan Year to reflect changes in prevailing interest rates, as determined at the sole discretion of the Committee. Except for a Plan Year in which a Participant receives a distribution due to an Unforeseeable Emergency, the amount to be credited to a Participant’s Grandfathered Account as of any Annual Valuation Date is the sum of: (a) the applicable per annum rate multiplied by the Participant’s Grandfathered Account value as of the immediately preceding Annual Valuation Date; (b) fifty percent (50%) of the Participant’s Deferred Compensation for the Plan Year ending on the Annual Valuation Date multiplied by the applicable full annum rate; and (c) effective for Deferred Bonuses attributable to Fiscal Years beginning on or after February 1, 2003, a pro rata amount of interest equivalent at the applicable per annum rate based upon the number of days from the date such bonus would have otherwise been paid in cash through the applicable Annual Valuation Date.

[ NOTE : The annual rate in effect for a Plan Year for this purpose shall be determined in accordance with the following formula in effect as of October 3, 2004: the rate on 10-year Treasury notes determined as of the first business day of January preceding each Plan Year, plus 270 basis points. Such formula shall not be modified on or after October 3, 2004. Notwithstanding the preceding, in light of uncertainty regarding whether adjustment of the

annual rate would constitute a material modification of the Plan for Code Section 409A purposes, the annual rate was not adjusted for 2005. The annual rate for 2006 and future years will be adjusted in accordance with the above formula.]

For a Plan Year in which a Participant receives a distribution due to an Unforeseeable Emergency, the amount to be credited to the Participant’s Grandfathered Account as of the applicable Annual Valuation Date is the sum of: (a) an equivalent amount of pro rata interest on the Participant’s Grandfathered Account value as of the preceding Annual Valuation Date based upon the number of full calendar months in the Plan Year which the Grandfathered Account was not reduced due to the distribution; (b) an equivalent amount of pro rata interest on the Grandfathered Account value immediately after the distribution based upon the number of calendar months in the Plan Year in which the Participant’s Grandfathered Account was reduced; (c) fifty percent (50%) of the Participant’s Deferred Compensation for the Plan Year ending on the Annual Valuation Date multiplied by the applicable full annum rate; and (d) effective for Deferred Bonuses attributable to Fiscal Years beginning on or after February 1, 2003, a pro rata amount of interest equivalent at the applicable per annum rate based upon the number of days from the date such bonus would have otherwise been paid in cash through the applicable Annual Valuation Date.

4.2 Incentive Payments.

The Incentive Payments described below will be credited to a Participant’s Grandfathered Account. Incentive Payments awarded and credited to a Participant’s Grandfathered Account under a Prior Agreement (such Incentive Payments were previously referred to as “incentive bonuses” under the Prior Agreements), and credited interest thereon, will remain credited to a Participant’s Grandfathered Account hereunder as of January 31, 1996. Thereafter, a Participant’s entitlement to an Incentive Payment will be governed by this Section 4.2, including any Incentive Payment which may be awarded with respect to recognized Deferred Compensation (and credited earnings thereon) deferred under a Prior Agreement. Incentive Payments hereunder shall not duplicate any Incentive Payment awarded and credited under a Prior Agreement as of January 31, 1996.

(a) The Incentive Payments provided in this Section apply to a Participant’s recognized Deferred Compensation and Deferred Bonuses for a Plan Year and credited Plan earnings thereon. For this purpose, Deferred Bonuses shall be treated as being “for a Plan Year” for the Plan Year in which Deferred Bonuses are allocated to a Participant’s Grandfathered Account under Section 3.3. Incentive Payments are separately awarded based upon a Participant’s recognized Deferred Compensation and Deferred Bonuses for a given Plan Year and credited Plan earnings thereon. Solely for purposes of this Section 4.2, the February 1, 1996 - January 31, 1997 Plan Year and the short February 1, 1997 - March 31, 1997 Plan Year shall be treated as one Plan Year running from February 1, 1996 - March 31, 1997.

(b) The amount of an Incentive Payment is based on the Participant’s recognized Deferred Compensation and Deferred Bonuses for a Plan Year, plus credited Plan earnings on such sums through and including the Incentive Payment award date. The amount by which a Participant’s Deferred Compensation and Deferred

Bonuses for a Plan Year exceeds twenty percent (20%) of the Participant’s base compensation will not be recognized in computing an Incentive Payment. Base compensation for this purpose means the Participant’s annual base rate of compensation for such Plan Year (proportionately increased for the special Plan Year of February 1, 1996 - March 31, 1997). Credited Plan earnings on such nonrecognized Deferred Compensation or Deferred Bonuses are likewise not taken into account in determining the amount of an Incentive Payment.

(c) If a Participant remains continuously employed with Walmart or its Related Affiliates for a period of ten (10) consecutive full Plan Years, beginning with the first day of the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonus election in effect under this Plan or a Prior Agreement, and ending with the last day of the tenth (10th) Plan Year of such period, an Incentive Payment will be credited to the Participant’s Grandfathered Account as of the last day of such tenth 10th Plan Year. The Incentive Payment will be equal to twenty percent (20%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for ten (10), but not less than five (5), Plan Years (i.e., the first six (6) Plan Years of such ten (10)-year period), plus credited Plan earnings thereon through the award date. For each full Plan Year thereafter in which the Participant remains continuously employed with Walmart or its Related Affiliates, an Incentive Payment will be credited to the Participant’s Grandfathered Account as of the last day of such Plan Year. Such Incentive Payment will be equal to twenty percent (20%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for the first Plan Year of the five (5)-consecutive Plan Year period ending on the award date, plus credited Plan earnings thereon through the award date.

(d) If a Participant remains continuously employed with Walmart or its Related Affiliates for a period of fifteen (15) consecutive full Plan Years, beginning with the first day of the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonuses election in effect under this Plan or a Prior Agreement, and ending with the last day of the fifteenth (15th) Plan Year of such period, an Incentive Payment will be credited to the Participant’s Grandfathered Account as of the last day of such fifteenth (15th) Plan Year. The Incentive Payment will be equal to ten percent (10%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for fifteen (15), but not less than ten (10), Plan Years (i.e., the first six (6) Plan Years of such fifteen (15)-year period), plus credited Plan earnings thereon through the award date. For each full Plan Year thereafter in which the Participant remains continuously employed with Walmart or its Related Affiliates, an Incentive Payment will be credited to the Participant’s Grandfathered Account as of the last day of such Plan Year. Such Incentive Payment will be equal to ten percent (10%) of the Participant’s recognized Deferred Compensation and Deferred Bonuses for the first Plan Year of a ten (10)-consecutive Plan Year period ending on the award date, plus credited Plan earnings thereon through the award date. The Incentive Payments provided in this Section 4.2(d) shall not take into account Incentive Payments credited under Section 4.2(c) or credited Plan earnings thereon.

(e) The Incentive Payments provided in this Section 4.2(e) only apply if a Participant has been a Participant under the Plan (or a Prior Agreement) for five (5) or more full Plan Years and if the Participant incurs a Retirement, Early Retirement, death or Disability before satisfaction of the ten (10)- or fifteen (15)-year periods described in Sections 4.2 (c) and (d) above, after taking into account the application of Section 4.2(f). In that event, only the Incentive Payment next to be credited (i.e., twenty percent (20%) or ten percent (10%)) will be credited to the Participant’s Grandfathered Account as provided in this Section 4.2(e). In the event the Participant had not yet been awarded or credited with a twenty percent (20 %) Incentive Payment under Section 4.2(c), the Incentive Payment provided by this Section 4.2(e) will be based upon the ratio of (1) the number of full Plan Years worked since and including the first Plan Year in which the Participant had a Deferred Compensation or Deferred Bonus election in effect under this Plan or a Prior Agreement, to (2) ten (10), multiplied by twenty percent (20%). Such Incentive Payment will be based upon recognized amounts for the Plan Years which would otherwise have been considered in calculating the Participant’s first Incentive Payment under Section 4.2(c). If the Participant has been awarded a twenty percent (20 %) Incentive Payment provided in Section 4.2 (c), the Incentive Payment . provided by this Section 4.2(e) will be based upon the ratio of (1) the number of full Plan Years worked since the award date of the initial twenty percent (20%) Incentive Payment, to (2) five (5), multiplied by ten percent (10%). Such Incentive Payment will be based upon recognized amounts for the Plan Years which would otherwise have been considered in calculating the Participant’s first Incentive Payment under Section 4.2(d). The Incentive Payment provided under this Section 4.2(e) will be determined and credited to the Participant’s Grandfathered Account as of the date the Participant’s Plan benefits are distributed in a lump sum payment. If, however, a Participant’s benefits are to be distributed in installments, the amounts provided under this Section 4.2(e) will be determined and credited to the Participant’s Grandfathered Account as of the January 31 on which installments are based.

(f) The Incentive Payments provided in this Section 4.2(f) apply only with respect to those Participants who: (1) incur a Termination of Employment on or after the last day of a Fiscal Year, but before the immediately following last day of a Plan Year (e.g., on or after January 31, but before the next March 31); and (2) who, but for such Termination of Employment before the last day of a Plan Year, would have been credited with an Incentive Payment under Section 4.2(c) and/or 4.2(d). In that event, the Incentive Payments which would have been credited to the Participant’s Grandfathered Account but for such early Termination of Employment will be credited to the Participant’s Grandfathered Account as if the Participant had remained employed with Walmart or its Related Affiliates through the last day of the Plan Year, with no reduction due to the early Termination of Employment. The Incentive Payments provided under this Section 4.2(f) will be determined and credited to the Participant’s Grandfathered Account as of the date the Participant’s Plan benefits are distributed in a lump sum payment. If, however, a Participant’s benefits are to be distributed in installments, the amounts provided under this Section 4.2(f) will be determined and credited to the

Participant’s Grandfathered Account as of the January 31 on which installments are based.

[ NOTE : Incentive Payments are frozen under this Appendix A. From and after January 1, 2005, all Incentive Payments shall be made under the Plan, not this Appendix A.

ARTICLE V. PAYMENT OF PLAN BENEFITS

5.1 Distribution Restrictions.

Except in the event of a Participant’s Unforeseeable Emergency, Plan benefits will not be payable to a Participant prior to the earliest occurrence of the Participant’s Retirement, Early Retirement, Termination of Employment, Disability or death.

5.2 Termination Benefits.

(a) General.

In the event of a Participant’s Termination of Employment for reasons other than the Participant’s Retirement, Early Retirement, Disability or death, the Participant’s Plan benefits will be distributed in a lump sum under Section 5.2(b) or Section 5.2(c), as applicable, within sixty (60) days after the end of the calendar month in which the Termination of Employment occurs; provided, however, that if the Participant’s Termination of Employment occurs after the Participant has attained age fifty (50), the Participant’s Plan benefits will be distributed in a lump sum under Section 5.2(b) or Section 5.2(c), as applicable, or, subject to the minimum account value restrictions of Section 5.6 below, in substantially equal annual installments under Section 5.2(e) over a period not to exceed fifteen (15) years, in accordance with the Participant’s distribution election given effect under the provisions of Section 5.6 below.

(b) Termination on Last Business Day of Plan Year.

If the Participant’s Termination of Employment occurs on the last business day (excluding for this purpose, Saturday and Sunday) of a Plan Year, the lump sum amount will be the sum of: (1) the value of the Participant’s Grandfathered Account, as determined under Section 3.5, as of the Annual Valuation Date coincident with or immediately following the Participant’s Termination of Employment and (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for the Plan Year in which distribution occurs) on the amount determined in (1) through the date of distribution based upon the number of calendar days since such Annual Valuation Date.

If the Participant’s Termination of Employment occurs on a date other than the last business day (excluding for this purpose, Saturday and Sunday) of a Plan Year, the lump sum amount will equal the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately preceding Termination of Employment; (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for a Plan Year

under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately preceding Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the date of distribution; (3) the Participant’s Deferred Compensation for the Plan Year in which Termination of Employment occurs; (4) a pro rata amount of interest equivalent (determined by multiplying fifty percent (50%) of the amount determined in (3) by the applicable full annum rate in effect for a Plan Year under Section 4.1) based upon the number of calendar days since the Annual Valuation Date immediately preceding Termination of Employment through the date of distribution; and (5) the Participant’s Incentive Payments (if any) as provided in Section 4.2(f).

(d) Death.

In the event of a Participant’s death before full payment of Plan benefits under this Section 5.2, payment shall be made (or continue to be made) to the Participant’s beneficiary designated under Section 5.5 in accordance with Participant’s separate election for death benefits under Section 5.6, or, with respect to those Participants in pay status who die on or after October 1, 2003, if the Participant did not designate a beneficiary under Section 5.5 or if no such beneficiary survives the Participant, payment shall be made in the form of a lump sum to the Participant’s estate.

(e) Installment Distributions.

If distribution is to be made in the form of annual installments pursuant to Section 5.2(a), the Participant’s installments will be based upon the value of the Participant’s Grandfathered Account as of the January 31 coincident with or immediately following the Participant’s Termination of Employment. For this purpose, the Participant’s Grandfathered Account value as of such January 31 shall be equal to the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately preceding the Participant’s Termination of Employment; (2) a pro rata amount of interest equivalent (determined at the applicable per annum rate in effect for a Plan Year under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately preceding Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the January 31; (3) the Participant’s Deferred Compensation for the Plan Year in which Termination of Employment occurs; (4) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f); and (5) a pro rata amount of interest equivalent (determined by multiplying fifty percent (50%) of the amount determined in (3) by the applicable full annum rate in effect for a Plan Year under Section 4.1) based upon the number of calendar days since the Annual Valuation Date immediately preceding Termination of Employment through such January 31.

Notwithstanding the preceding paragraph, if the Participant’s Termination of Employment occurs on a January 31 (excluding for this purpose, Saturday and Sunday), the Participant’s installments will be based upon the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately following the Participant’s Termination of Employment; (2) a pro rata amount of interest equivalent (determined at the applicable per annum rate in effect for a Plan Year under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately following Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the following

January 31; and (3) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f).

The Plan benefits determined above will be paid in equal annual installments in an amount which would fully amortize a loan equal to such Plan benefits over the period covered by the installment period (such period commencing on the February 1 following the January 31 on which the Participant’s Grandfathered Account is valued under this Section), with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s Termination of Employment occurs. The first installment will be paid as of the January 31 following the Participant’s Termination of Employment, and continue on each successive January 31 until the Participant’s benefits are distributed in full. For purposes of the preceding sentence, it is expressly provided that, if a Participant’s Termination of Employment occurs on a January 31, the first installment will be paid on the next-following January 31.

5.3 Retirement, Early Retirement, and Disability Benefits.

(a) General.

In the event of a Participant’s Termination of Employment due to the Participant’s Retirement, Early Retirement or Disability, the Participant’s Plan benefits will be distributed in a lump sum or in substantially equal annual installments over a period not to exceed fifteen (15) years, subject to the minimum account value restrictions of Section 5.6 below and in accordance with the Participant’s distribution election given effect under the provisions of Section 5.6 below.

(b) Lump Sum Distributions.

If distribution is to be made in the form of a lump sum, the Participant’s Plan benefits will be distributed within sixty (60) days after the end of the calendar month in which the Retirement, Early Retirement or Disability occurs. If the Participant’s Retirement, Early Retirement or Disability occurs on the last business day (excluding for this purpose Saturday and Sunday) of a Plan Year, the lump sum amount will be the sum of: (1) the value of the Participant’s Grandfathered Account, as determined under Section 3.5, as of the Annual Valuation Date coincident with or immediately following the Participant’s Retirement, Early Retirement or Disability; (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for the Plan Year in which distribution occurs) on the amount determined in (1) through the date of distribution based upon the number of calendar days since such Annual Valuation Date; and (3) the Participant’s Incentive Payment (if any) as provided in Section 4.2(e).

If the Participant’s Retirement, Early Retirement or Disability occurs on a date other than the last business day (excluding for this purpose Saturday and Sunday) of a Plan Year, the lump sum amount will equal the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately preceding Retirement, Early Retirement or Disability; (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for a Plan Year under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately preceding Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the date of distribution;

(3) the Participant’s Deferred Compensation for the Plan Year in which Retirement, Early Retirement or Disability occurs; (4) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f); and (5) a pro rata amount of interest equivalent (determined by multiplying fifty percent (50%) of the amount determined in (3) by the applicable full annum rate in effect for a Plan Year under Section 4.1) based upon the number of calendar days since the Annual Valuation Date immediately preceding Retirement, Early Retirement or Disability through the date of distribution.

If distribution is to be made in the form of annual installments, the Participant’s installments will be based upon the value of the Participant’s Grandfathered Account as of the January 31 coincident with or immediately following the Participant’s Retirement, Early Retirement or Disability. For this purpose, the Participant’s Grandfathered Account value as of such January 31 shall be equal to the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately preceding the Participant’s Retirement, Early Retirement or Disability; (2) a pro rata amount of interest equivalent (determined at the applicable per annum rate in effect for a Plan Year under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately preceding Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the January 31; (3) the Participant’s Deferred Compensation for the Plan Year in which Retirement, Early Retirement or Disability occurs; (4) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f); and (5) a pro rata amount of interest equivalent (determined by multiplying fifty percent (50%) of the amount determined in (3) by the applicable full annum rate in effect for a Plan Year under Section 4.1) based upon the number of calendar days since the Annual Valuation Date immediately preceding Retirement, Early Retirement or Disability through such January 31.

Notwithstanding the preceding paragraph, if the Participant’s Retirement, Early Retirement or Disability occurs on a January 31 (excluding for this purpose, Saturday and Sunday), the Participant’s installments will be based upon the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately following the Participant’s Retirement, Early Retirement or Disability; (2) a pro rata amount of interest equivalent (determined at the applicable per annum rate in effect for a Plan Year under Section 4.1) on the Participant’s Grandfathered Account value as of such immediately following Annual Valuation Date based upon the number of calendar days since such Annual Valuation Date through the following January 31; and (3) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f).

The Plan benefits determined above will be paid in equal annual installments in an amount which would fully amortize a loan equal to such Plan benefits over the period covered by the installment period (such period commencing on the February 1 following the January 31 on which the Participant’s Grandfathered Account is valued under this Section), with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s Retirement, Early Retirement or Disability occurs. The first installment will be paid as of the January 31 following the Participant’s Retirement, Early Retirement or Disability, and continue on each successive January 31 until the Participant’s benefits are distributed in full. For purposes of the preceding sentence, it is expressly provided that, if a Participant’s Retirement, Early Retirement

or Disability occurs on a January 31, the first installment will be paid on the next-following January 31.

(d) Death.

In the event of a Participant’s death before full payment of Plan benefits under this Section 5.3, payment shall be made (or continue to be made) to the Participant’s beneficiary designated under Section 5.5 in accordance with Participant’s separate election for death benefits under Section 5.6, or, with respect to those Participants in pay status who die on or after October 1, 2003, if the Participant did not designate a beneficiary under Section 5.5 or if no such beneficiary survives the Participant, payment shall be made in the form of a lump sum to the Participant’s estate.

5.4 Death Benefits.

(a) General.

In the event of a Participant’s Termination of Employment due to the Participant’s death, the Participant’s Plan benefits will be distributed in a lump sum or, subject to the minimum account value restrictions of Section 5.6 below, in substantially equal annual installments over a period not to exceed fifteen (15) years, in accordance with the Participant’s distribution election given effect under the provisions of Section 5.6 below. Amounts will be distributed to the beneficiary designated under 5.5 below.

(b) Lump Sum Distributions.

If distribution is to be made in the form of a lump sum, the Participant’s Plan benefits will be distributed within sixty (60) days after the end of the calendar month in which the Participant’s death occurs. If the Participant’s death occurs on the last business day (excluding for this purpose Saturday and Sunday) of a Plan Year, the lump sum amount will be the sum of: (1) the value of the Participant’s Grandfathered Account, as determined under Section 3.5, as of the Annual Valuation Date coincident with or immediately following the Participant’s death; (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for the Plan Year in which distribution occurs) on the amount determined in (1) through the date of distribution based upon the number of calendar days since such Annual Valuation Date; and (4) the Participant’s Incentive Payment (if any) as provided in Section 4.2(e).

If the Participant’s death occurs on a date other than the last business day (excluding for this purpose Saturday and Sunday) of a Plan Year, the lump sum amount will equal the sum of: (1) the value of the Participant’s Grandfathered Account as of the Annual Valuation Date immediately preceding the Participant’s death; (2) a pro rata amount of interest equivalent (determined at the per annum rate in effect for a Plan Year on the Participant’s Grandfathered Account value as of the immediately preceding Annual Valuation Date based upon the number of full calendar days since such Annual Valuation Date through date of distribution; and (3) the Participant’s Incentive Payments (if any) as provided in Section 4.2(e) or Section 4.2(f).

If distribution is to be made in the form of annual installments, the installments will be based upon the value of the Participant’s Grandfathered Account as of the January 31 coincident with or immediately following the Participant’s death. For this purpose, a Participant’s Grandfathered Account value as of such January 31 shall be determined in accordance with the manner specified in Section 5.3(c). The Plan benefits determined - above will be paid in equal annual installments in an amount which would fully amortize a loan equal to such Plan benefits over the period covered by the installment period (such period commencing on the February 1 following the January 31 on which the Participant’s Grandfathered Account is valued under this Section), with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s death occurs. The first installment will be paid as of the January 31 coincident with or following the Participant’s death; and continue on each successive January 31 until the Participant’s benefits are distributed in full. For purposes of the preceding sentence, it is expressly provided that if a Participant dies on a January 31, the first installment will be paid on the next-following January 31.

5.5 Designation of Beneficiary.

A Participant may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries to receive any benefit payments which may be payable under this Plan following the Participant’s death, and may designate the proportions in which such beneficiaries are to receive such payments. Any such designation will apply to both the Participant’s Account (as defined in the Plan) and his or her Grandfathered Account, if any; a Participant may not designate different beneficiaries for his or her Account and Grandfathered Account. A Participant may change such designations from time to time and the last written designation filed with the Committee prior to the Participant’s death will control. In the event no beneficiary is designated, or if the designated beneficiary predeceases the Participant, payment shall be payable to the Participant’s estate. For this purpose, a Participant’s most recent written beneficiary designation properly filed under a Prior Agreement shall continue to be given effect until otherwise modified in accordance with the provisions of this Section.

5.6 Form of Distribution.

If a Participant’s Termination of Employment is due to the Participant’s Retirement, Early Retirement Disability or death, or occurs after the Participant has attained age fifty (50), distribution may be made, at the Participant’s election, in a lump sum or in substantially equal annual installments over a period not to exceed fifteen (15) years; provided, however, with respect to Terminations of Employment occurring on or after October 1, 2003, an installment election will be given effect only if, as of the date on which any lump sum payment would be valued, the participant’s Grandfathered Account is valued at greater than fifty-thousand dollars ($50,000). Any Participant whose Grandfathered Account is valued at less than fifty-thousand dollars as of the date on which any lump sum payment would be valued shall be defaulted to a lump sum payment. A Participant may file a distribution election with the Committee on forms prescribed by the Committee. A distribution election, once given effect under this Section 5.6, will apply to the Participant’s total Plan benefits. A Participant may, however, file a separate election for death benefits payable under Section 5.2 - 5.4. To be given effect under this Section

5.6, any distribution election for benefits payable under Section 5.2 or Section 5.3 to the Participant must have been filed with the Committee at least six (6) full calendar months before the occurrence of an event entitling the Participant to a distribution thereunder. If a Participant’s distribution election has not been on file with the Committee for the full six (6)-month period, it will not be recognized or given effect by the Plan. In that event, distribution will be made in accordance with the Participant’s most recent distribution election which was filed with the Committee at least six (6) months prior to the Participant’s Retirement, Early Retirement, Disability, or Termination of Employment after age fifty (50). The six (6)- month period provided above shall not apply to death benefits payable under Section 5.2 - 5.4. For purposes of this Section 5.6, a Participant’s last distribution election filed with Walmart under a Prior Agreement will be given effect for the Participant’s total Plan benefits until superseded or amended by the Participant in accordance with the provisions of this Section, except that death benefits under Section 5.4 will be paid in a lump sum unless an affirmative election to the contrary is filed by the Participant. If the Participant has not been a Participant in the Plan for at least six (6) months prior to the Participant’s Retirement, Early Retirement Disability, or Termination of Employment after age fifty (50), the Participant’s initial distribution election filed with Walmart will be given effect. For purposes of this Section 5.6, it is expressly provided that any installment election which would be given effect hereunder for benefits payable under Section 5.3 shall automatically be given effect for Participants who incur a Termination of Employment on or after June 1, 1999 and after attaining age fifty (50), without the consent or ratification of any such Participant.

5.7 Reductions Arising from a Participant’s Gross Misconduct.

A Participant’s Plan benefits are contingent upon the Participant not engaging in Gross Misconduct while employed with Walmart or any Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. Notwithstanding anything herein to the contrary, in the event the Committee determines that the Participant has engaged in Gross Misconduct during the prescribed period: (a) the Participant shall forfeit all Incentive Payments, and credited Plan earnings thereon; and (b) earnings credited to the Participant’s Grandfathered Account derived from Deferred Compensation and Deferred Bonuses shall be recalculated for each Plan Year to reflect the amount which would otherwise have been credited if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect for such Plan Year. Under no circumstances will a Participant forfeit any portion of the Participant’s Deferred Compensation or Deferred Bonuses. Any payments received hereunder by a Participant (or the Participant’s beneficiary) are contingent upon the Participant not engaging (or not having engaged) in Gross Misconduct while employed with Walmart or any Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Business Ethics. If the Committee determines, after payment of amounts hereunder, that the Participant has engaged in Gross Misconduct during the prescribed period, the Participant (or the Participant’s beneficiary) shall repay to Walmart, or the applicable Related Affiliate, any amount in excess of that to which the Participant is entitled under this Section 5.7.

5.8 Distributions for Unforeseeable Emergencies.

In the event of an Unforeseeable Emergency, the Committee, in its sole and absolute discretion and upon written application of such Participant, may direct immediate distribution of

all or a portion of the Participant’s Plan benefits. The Committee will permit distribution because of an Unforeseeable Emergency only to the extent reasonably needed to satisfy the emergency need.

Notwithstanding anything herein to the contrary, the provisions of this paragraph apply in the event a Participant receives a distribution under this Section 5.8, the Participant’s Termination of Employment for any reason occurs on a date other than the last business day of a Fiscal Year (excluding for this purpose Saturday or Sunday), and the Participant’s benefits hereunder for any reason are paid in the same Fiscal Year in which the Participant received a distribution for Unforeseeable Emergencies under this Section 5.8. In that event, the Participant’s lump sum amount calculated under Sections 5.2, 5.3, or 5.4 will be reduced by the amount distributed under this Section 5.8 and the applicable interest equivalent will be calculated in a manner consistent with Section 4.1.

ARTICLE VI. ADMINISTRATION

6.1 General.

The Committee is responsible for the administration of the Plan and is granted the following rights and duties:

ARTICLE VII. CLAIMS PROCEDURE

7.1 General.

Any claim for benefits under the Plan must be filed by the Participant or beneficiary (“claimant”) in writing with the Committee or its delegate. If a claim for a Plan benefit is wholly or partially denied, notice of the decision will be furnished to the claimant by the Committee or its delegate within a reasonable period of time, not to exceed sixty (60) days, after receipt of the claim by the Committee or its delegate. Any claimant who is denied a claim for benefits will be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan provision upon which the denial is based;

(d) an explanation of the Plan’s claim review procedure.

7.2 Appeals Procedure.

To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative:

(a) may request a review by written application to the Committee not later than sixty (60) days after receipt by the claimant of the written notification of denial of a claim;

(b) may review pertinent documents; and

A decision on review of a denied claim will be made by the Committee not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt of a request for review. The decision on review will be in writing and shall include the specific reasons for the denial and the specific references to the pertinent Plan provisions on which the decision is based.

ARTICLE VIII. MISCELLANEOUS PROVISIONS

8.1 Amendment, Suspension or Termination of Plan.

Walmart, by action of the Committee, reserves the right to amend, suspend or to terminate the Plan in any manner that it deems advisable. Notwithstanding the preceding

sentence, the Plan may not be amended, suspended or terminated to cause a Participant to forfeit the Participant’s then-existing Grandfathered Account.

8.2 Non-Alienability.

The rights of a Participant to the payment of benefits as provided in the Plan may not be assigned, transferred, pledged or encumbered or be subject in any manner to alienation or anticipation. No Participant may borrow against the Participant’s interest in the Plan. No interest or amounts payable under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment.

8.3 No Employment Rights.

Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the employ of Walmart or any of its Related Affiliates as an officer or in any other capacity.

8.4 No Right to Bonus.

Nothing contained herein shall be construed as conferring upon the Participant the right to receive a bonus from the Walmart Inc. Management Incentive Plan for Officers. A Participant’s entitlement to such a bonus is governed solely by the provisions of that plan.

8.5 Withholding and Employment Taxes.

To the extent required by law, Walmart, or a Related Affiliate will withhold from a Participant’s current compensation or from Plan distributions, as the case may be, such taxes as are required to be withheld for federal, state or local government purposes.

8.6 Income and Excise Taxes.

The Participant (or the Participant’s beneficiaries or estate) is solely responsible for the payment of all federal, state and local income and excise taxes resulting from the Participant’s participation in this Plan.

8.7 Recovery of Overpayments.

In the event any payments under the Plan are made on account of a mistake of fact or law, the recipient shall return such payment or overpayment to Walmart as requested by Walmart.

8.8 Successors and Assigns.

8.9 Governing Law.

This Plan shall be subject to and construed in accordance with the laws of the State of Delaware to the extent not preempted by federal law.

WALMART INC. MANAGEMENT INCENTIVE PLAN

(As amended effective February 1, 2018)

1. GENERAL

1.1 Purpose . The purpose of the Walmart Inc. Management Incentive Plan (the “MIP”) is to advance the interests of the shareholders of the Company by providing performance-based incentives to eligible associates.

1.2 Effective Date . The MIP, which was originally called the Wal-Mart Stores, Inc. Management Incentive Plan of 1998, was originally effective February 1, 1998. It was amended effective February 1, 2003, February 1, 2008, February 1, 2013, and February 1, 2017. It was renamed on February 1, 2018. The MIP is hereby amended, effective for the Fiscal Year beginning February 1, 2018.

1.3 Compliance with Section 162(m) . The MIP is designed to permit Incentive Plan Awards to qualify for the Section 162(m) Exemption. Whenever the Committee determines that it is advisable, the Committee may make grants or payments of Incentive Plan Awards that do not qualify for the Section 162(m) Exemption.

2. DEFINITIONS

2.1 “ Board ” means the Board of Directors of the Company.

2.2 “ Committee ” means the committee of the Board with responsibilities including executive compensation matters subject to Regulation S-K Item 402, or other committee designated by the Board as the “Committee” under the MIP. The members of the Committee shall be “independent” within the meaning of applicable stock exchange listing requirements. With respect to awards under the MIP intended to qualify for the Section 162(m) Exemption, the Committee must consist of two or more persons each of whom are “outside directors” as defined or interpreted for purposes of the Section 162(m) Exemption. To the extent the Committee delegates authority pursuant to Section 5.2, references to the Committee in the MIP shall, as appropriate, be deemed to refer to the Committee’s delegate.

2.3 “ Company ” means Walmart Inc. and any successor thereto that adopts the MIP.

2.4 “ Covered Employee ” has the meaning of that term under Section 162(m)(3).

2.5 “ Employer ” means the Company and any Related Affiliate that employs a Participant.

2.6 “ Fiscal Year ” means the Company’s fiscal year, which is the 12-month period beginning on each February 1 and ending on the following January 31, or other fiscal year of the Company that the Company may establish. 2.7 “ Incentive Plan Award ” means an incentive compensation award for a Performance Period under the MIP. 2.8 “ MIP ” means this Walmart Inc. Management Incentive Plan, as amended herein, and as it may be amended from time to time.

2.9 “ Participant ” means an associate of an Employer designated by the Committee under Section 3.1 as a participant in the MIP for a Performance Period as provided in Section 3.1.

2.10 “ Performance Goal ” means one or more objective performance goals established by the Committee with respect to an Incentive Plan Award for a Performance Period. Any Performance Goal may be based upon the performance of the Company, of any Related Affiliate, of a division or unit thereof, or of an individual Participant, or groups of individual Participants, or of a store or groups of stores, using one or more of the Performance Measures selected by the Committee. Performance Goals may be absolute, or may be relative to the comparable measure at comparison companies or a defined index. Different Performance Measures may be given different weights.

2.11 “ Performance Measure ” means one or more of the following criteria, on which Performance Goals may be based, subject to Section 4.1(c):

(a) earnings (either in the aggregate or on a per-share basis (“EPS”), reflecting dilution of shares as the Committee deems appropriate and, if the Committee so determines, net of or including dividends or net of or including the after-tax cost of capital) before or after interest and taxes (“EBIT”) or before or after interest, taxes, depreciation and amortization (“EBITDA”); (b) pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items; (c) earnings growth or growth in EPS; (d) EPS from continuing operations, operating earnings, growth in operating earnings; (e) value of assets; (f) economic value added (net operating profit after tax minus the product of capital multiplied by the cost of capital); (g) operating margin, pre-tax operating margin, or operating efficiency; (h) operating profits; (i) operating or administrative expenses; (j) net income or net operating income; (k) operating cost management; (l) gross or net revenue, changes in annual revenues; (m) revenue per associate, revenue per full time employee (“FTE”), revenue per square foot or other real estate measure; (n) same store sales, or comparable store sales, or total sales levels; (o) cash flow(s) (including either operating or net cash flows or free cash flows); (p) cash flow on investment; (q) financial return ratios; (r) total shareholder return, shareholder return based on growth measures or the attainment by the shares of a specified value for a specified period of time, share price or share price appreciation;

(s) dividends; (t) net worth; (u) return measures, including return or net return on assets, net assets, equity, capital, gross sales, committed capital, or invested capital; (v) adjusted pre- tax margin; (w) pre-tax profits or gross profits; (x) volume, market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas; (y) aggregate product price and other product measures; (z) expense or cost levels, in each case, where applicable, determined either on a Company-wide basis or in respect of any one or more specified divisions or products; (aa) reduction of losses, loss ratios, or expense ratios; (bb) reduction in fixed costs; (cc) cost of capital, working capital targets, or change in working capital; (dd) debt reduction; (ee) productivity measures; (ff) average inventory turnover or inventory controls, on-shelf availability, inventory metrics, asset quality; (gg) satisfaction of specified business expansion goals or goals relating to acquisitions or divestitures; (hh) regulatory ratings; (ii) customer satisfaction based on specified objective goals or a Company-sponsored customer survey; (jj) employee diversity goals; (kk) supplier diversity goals; (ll) employee turnover; (mm) attraction of employees; (nn) specified objective social goals; (oo) safety record; or (pp) business integration.

2.12 “ Performance Period ” means a Fiscal Year or other period of time (which may be longer or shorter than a Fiscal Year) set by the Committee.

2.13 “ Potential Covered Employee ” means an associate designated by the Committee at the time an award is granted who, in the Committee’s judgment, may be a Covered Employee at the time the award is paid.

2.14 “ Related Affiliate ” means a business or entity that is, directly or indirectly, controlled by the Company.

2.15 “ Section 162(m) ” means section 162(m) of the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder.

2.16 “ Section 162 (m) Exemption ” means the exemption from the limitation on deductibility imposed by Section 162(m) as set forth in Section 162(m)(4)(c) of the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder.

3. PARTICIPATION

3.1. Eligibility . Associates eligible to participate in the MIP shall consist of those officers and other management associates of an Employer and those select non-management associates whom the Committee determines have the potential to contribute significantly to the success of the Company or its Related Affiliates. For each Performance Period the Committee shall determine which officers, other management associates, and select non-management associate s shall participate in the MIP. At any time, including during a Performance Period, the Committee may add additional classes or delete classes of associates for participation in the MIP as it deems appropriate for the Performance Period.

4. INCENTIVE PLAN AWARDS

4.1. Determination of Incentive Plan Awards .

(a) Committee to Establish Basis for Awards . In connection with the grant of an Incentive Plan Award, for each Performance Period, the Committee shall establish the Performance Goal(s) and the Performance Measure(s) applicable to such Incentive Plan Award, and shall either:

(i) establish the formula for determining the amounts payable based on the level of achievement of the applicable Performance Goal; or

(ii) for any one or more Participants, subject to Section 4.2(a), establish a formula for determining the maximum amount payable (an “umbrella plan”) based on the level of achievement of the applicable Performance Goal, and set a methodology for determining the actual amount payable (a “plan within a plan”) which may, but need not, be based on Performance Measures; or

(iii) for any two or more Participants (“Pool Participants”), establish a performance award pool, which shall be an unfunded pool, the aggregate amount of which shall be based upon the achievement of the Performance

Goal. The Committee may specify the amount of the pool as a percentage of any such Performance Measure, a percentage thereof in excess of a threshold amount, or an another amount that need not bear a mathematical relationship to such Performance Measure(s). The maximum amount payable to any Pool Participant may be a stated percentage of the pool, or a percentage (or multiple) of the Pool Participant’s target Incentive Plan Award, or of the Pool Participant’s compensation or any element(s) thereof; provided the sum of the amounts allocable to Pool Participants as Incentive Plan Awards shall not exceed the aggregate amount of the pool, and shall not exceed the per-person award limit in Section 4.2(a).

(iv) With respect to each Incentive Plan Award, the Committee shall: (A) determine the consequences for the Incentive Plan Award of the Participant’s change in employment status as provided in Section 4.2(b); (B) specify the consequences for the Award of the occurrence of a change in control of the Employer during a Performance Period; and (C) establish such other terms and conditions for the Incentive Plan Award as the Committee deems appropriate.

(v) For Incentive Plan Awards intended to qualify for the Section 162(m) Exemption, each of the foregoing shall be accomplished within the time period required to qualify for the Section 162(m) Exemption. With respect to Participants who are not Potential Covered Employees, and for Incentive Plan Awards not intended to qualify for the Section 162(m) Exemption, the Committee may establish other subjective or objective goals, including individual Performance Goals, as it deems appropriate, which need not be based on Performance Measures.

(b) Certification of Performance Goal Achievement. The Committee shall, promptly after the date on which the necessary financial, individual, or other information for a particular Performance Period becomes available, and in any event prior to the payment of any Incentive Plan Award intended to qualify for the Section 162(m) Exemption to a Covered Employee, determine and certify the degree to which each of the Performance Goals has been attained.

(c) Permitted Adjustments. Except as permitted under Section 4.2, Incentive Plan Awards shall be paid solely in accordance with the applicable formula or umbrella plan or the pool for the Performance Period, based upon the level of achievement of Performance Goals. Performance Goals, to the extent determined based on accounting standards or principles, shall be based upon generally accepted accounting principles, or international financial accounting standards, as applicable. However, unless the Committee specifies otherwise within the time period required to qualify for the Section 162(m) Exemption, Performance Goals shall be adjusted by the Committee to take into account the effect of the following, to the extent the adjustment items exceed thresholds for adjustment established by the Committee when the Performance Goals are established: changes in accounting standards that may be required by the Financial Accounting Standards Board after the Performance

Goal is established; realized investment gains and/or losses; extraordinary, unusual, non-recurring or infrequent items; currency fluctuations; acquisitions; divestitures; litigation losses; financing activities; expenses for restructuring or productivity initiatives; other non-operating items; new laws, cases, or regulatory developments that result in unanticipated items of gain, loss, income, or expense; executive severance arrangements; investment returns relating to investment vehicles which are unaffiliated with a Company or divisional operating strategy; bonus expense; the impact on pre-tax income of interest expense attributable to the repurchase of Company stock; extraordinary dividends or stock dividends; the effect of corporate reorganizations or restructuring, spinoff, or a sale of a business unit; and other items as the Committee determines at the time the Performance Goal is established to be required so that the operating results of the Company, division, or a Related Affiliate shall be computed on a comparative basis from Performance Period to Performance Period; in each case as those terms are defined under generally accepted accounting principles or, if applicable, international financial accounting standards, and provided in each case that such excluded items are objectively determinable by reference to the Company’s financial statements, notes to the Company’s financial statements, and/or management’s discussion and analysis in the Company’s financial statements. Determination by the Committee or its designee shall be final and conclusive on all parties, but shall be based on relevant objective information or financial data.

4.2. Maximum Incentive Plan Award; Committee Discretion .

(a) Maximum Incentive Plan Award. In no event will an Incentive Plan Award for a Covered Employee intended to qualify for the Section 162(m) Exemption exceed $20,000,000 for a 12-month Performance Period (or in the case of a Performance Period other than 12 months long, an amount that bears the same ratio to $20,000,000 as the length of the Performance Period bears to 12 months).

(b) Change in Employment Status. The Committee shall have the discretion and authority to determine the consequences for the Incentive Plan Award of a Participant’s: (i) termination of employment for various reasons or the Participant’s disability, or the Participant’s demotion or promotion during the Performance Period; (ii) leaving the Employer and being rehired as a Participant; (iii) being hired, promoted, or transferred into a position eligible for MIP participation; (iv) transferring between eligible MIP positions with different incentive percentages or Performance Goals; (v) transferring to a position not eligible to participate in the MIP; (vi) becoming eligible for an incentive from another incentive plan maintained by the Company or Related Affiliate; (vii) being on a leave of absence; and (viii) similar circumstances deemed appropriate by the Committee, consistent with the purpose and terms of the MIP; provided however , that the Committee shall not be authorized to increase the amount of the Incentive Plan Award payable to a Covered Employee that is intended to qualify for the Section 162(m) Exemption. If a Participant is on administrative suspension at the time payment would otherwise be made, no payment shall be made until the matter is resolved by the Employer, and it is determined whether the Incentive Plan Award shall be paid or forfeited.

(c) Committee Discretion. The Committee shall have the discretion to reduce, eliminate, or increase any Incentive Plan Award for any individual or group, to reflect individual performance and/or unanticipated factors, including but not limited to those described in Section 4.1(c), or in the case of a plan within a plan, to implement the methodology for determining the actual amount of a Participant’s Incentive Plan Award. Notwithstanding the foregoing, and subject to the following sentence, with respect to the Incentive Plan Awards of Potential Covered Employees intended to qualify for the Section 162(m) Exemption, the Committee shall not increase such awards above the amount determined under the applicable formula, umbrella plan, or pool for the Performance Period, or (except in case of death or a change in control) waive the achievement of applicable Performance Goals. In the event a Potential Covered Employee is determined at the end of the Performance Period not to be a Covered Employee, and to the extent it would not cause the Potential Covered Employee to become a Covered Employee, the Committee may exercise its discretion to increase the amount of such Potential Covered Employee’s Incentive Plan Award above the amount generated under the applicable formula for the Performance Period.

4.3. Payment of Award .

(a) Usual Timing . For any recipient subject to U. S. federal income tax, unless payment of the Incentive Plan Award is duly deferred by the Participant under an applicable deferred compensation arrangement, Incentive Plan Awards will be paid by the Participant’s Employer in cash or cash equivalent no later than two and one-half months after the later of (a) the end of the calendar year in which the applicable Performance Period ends or (b) the end of the Fiscal Year in which the Performance Period ends. The Committee may establish different payment schedules for different Participants. Notwithstanding the foregoing, it is contemplated that for any Performance Period ending on January 31, payment to recipients subject to U. S. federal income tax will be made by the following April 15. If any portion of an Incentive Plan Award payable to a Covered Employee that is intended to qualify for the 162(m) Exemption for any reason is not deductible under Section 162(m), payment of that portion shall, in the Committee’s discretion, be deferred until the earliest date it may be paid and deducted.

Unless otherwise provided by the Committee, Incentive Plan Awards will be paid without interest.

(b) Certain Participants not Eligible. To be eligible for payment of any Incentive Plan Award, the Participant must (i) be employed by the Company or a Related Affiliate on the last day of the Performance Period to which the Incentive Plan Award pertains, except that in the event of a Participant’s death, the Incentive Plan Award shall be prorated based upon the number of full payroll periods worked as a Participant during the Performance Period prior to death, (ii) have performed the Participant’s duties to the satisfaction of the Committee, (iii) have not engaged in any act deemed by the Committee to be inimical to the best interest of the Company or a Related Affiliate, (iv) have not breached any restrictive covenant or confidentiality requirement to which the Participant is subject, and (v ) otherwise have complied with Company and

Employer policies at all times prior to the actual payment of the Incentive Plan Award.

(c) Recoupment. If the Committee determines within twelve months following the date an Incentive Plan Award is paid (i) that the Participant, prior to the date of payment of such Incentive Plan Award, (A) engaged in any act the Committee deems inimical to the best interest of the Company or a Related Affiliate, or (B) violated any of the requirements of Section 4.3(b), or (ii) that the Participant, whether before or after payment of such Incentive Plan Award failed to comply with Company and Employer policies, the recipient of the Incentive Plan Award shall be obligated, upon demand, to return the amount of such Incentive Plan Award to the Employer that paid it. In addition, all Incentive Plan Awards, whether or not previously paid, and whether or not previously deferred, shall be subject to the Company’s policies or requirements or applicable law (including regulations and other applicable guidance) regarding clawbacks (recoupment) as in effect from time to time.

5. ADMINISTRATION

5.1. Administration . The MIP shall be administered by the Committee. Subject to the provisions of the MIP, the Committee shall have full discretionary authority to administer and interpret the MIP, to exercise all powers either specifically granted to it under the MIP or as are necessary or advisable in the administration of the MIP, to decide the facts in any case arising under the MIP, to prescribe, amend and rescind rules and regulations relating to the MIP, to correct errors or omissions, to require performance reports on which it can base its determinations under Section 4.1, and to make all other determinations necessary or advisable for the administration of the MIP (including but not limited to determinations with respect to whether and under what circumstances or conditions a Participant has had a termination of employment for purposes of the MIP), all of which shall be binding on all persons, including the Company, Related Affiliates, the Participants (or any person claiming any rights under the MIP from or through any Participant), and any shareholder of the Company. The Committee’s administration of the MIP, including all rules and regulations, interpretations, selections, determinations, approvals, decisions, delegations, amendments, terminations, and other actions, shall be final and binding on the Company and its shareholders, Related Affiliates, and all associates of any Employer, including Participants and their beneficiaries. A majority of the Committee shall constitute a quorum, and, provided a quorum is present, the Committee shall act pursuant to a majority vote of those present or by unanimous written consent. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the MIP or any Incentive Plan Award.

5.2. Allocation and Delegation; Sub-Plans .

(a) Allocation. Except to the extent prohibited by applicable law (including regulations and other applicable guidance) or the applicable listing standards of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members.

(b) Delegation; Sub-Plans. Provided that the Committee shall not delegate authority or responsibility for Incentive Plan Awards of Potential Covered Employees intended to

qualify for the Section 162(m) Exemption, the Committee may delegate all or any part of its responsibilities and powers under the MIP to one or more persons as the Committee deems appropriate. Delegates need not meet the independence or outside director requirements applicable to the Committee. The Committee may establish and administer sub-plans for such groups or classes of eligible associates as the Committee may specify, and may establish different Performance Periods, Performance Measures, and Performance Goals and payment schedules thereunder, which may be modified as deemed appropriate to conform to foreign law or practice. The Committee may also delegate responsibility and authority to such persons as it deems appropriate for establishing and administering any such sub-plans, including with respect to such sub-plans, authority to exercise upward or downward discretion in determining the final amount of an Incentive Plan Award thereunder.

6. MISCELLANEOUS

6.1. Amendment and Termination .

(a) Amendment and Termination. The Board may at any time amend or terminate the MIP (in whole or in part) without the approval of the shareholders of the Company, except as otherwise provided in this Section 6.1. Neither the Company nor any Related Affiliate is obligated to continue this MIP.

(b) Shareholder Approval. Any amendment to the MIP that changes the class of associates of an Employer eligible to participate, changes the Performance Goals, Performance Measures, or increases the maximum dollar amount that may be paid to a Participant for a Performance Period shall not be effective with respect to Incentive Plan Awards to Covered Employees intended to qualify for the Section 162(m) Exemption unless the amendment is approved by shareholders as provided in Section 1.3 before the Incentive Plan Award is paid.

6.2. Effect of Incentive Plan Awards on Other Compensation .

(a) Not Taken into Account Under Other Plans. Awards shall not be considered eligible pay under other plans, benefit arrangements, or fringe benefit arrangements of the Company or a Related Affiliate, unless otherwise provided under the terms of other plans.

(b) Compensation Reduction and Compensation Deferral Elections Apply to Incentive Plan Awards. To the extent provided in the applicable benefit or deferred compensation plan or arrangement of the Company or a Related Affiliate, amounts payable as Incentive Plan Awards will be reduced or deferred in accordance with the Participant’s compensation reduction election or compensation deferral election, if any, in effect under other plans and arrangements at the time the Incentive Plan Award is paid.

(c) Sole Incentive Plan. Unless determined otherwise by the Committee, associates shall not be eligible to participate in the MIP for any period they are participating in any other incentive program maintained by the Company or any Related Affiliate.

6.3. No Guarantee, No Funding . The payment of an Incentive Plan Award for any Performance Period does not guarantee any person eligibility for or payment of an Incentive Plan Award for any other Performance Period. Incentive Plan Awards shall be paid solely from the general assets of the Participant’s Employer, to the extent the payments are attributable to services for the Employer. To the extent any person acquires a right to receive payments from an Employer under the MIP, the right is no greater than the right of any other unsecured general creditor. No absolute right to any Incentive Plan Award shall be considered as having accrued to any Participant prior to the payment of the Incentive Plan Award.

6.4. Taxes .

(a) Withholding. The Participant’s Employer shall have the right to deduct from all payments made under the MIP any federal, state, or local taxes required by law to be withheld with respect to the payments.

(b) Section 409A. The MIP is intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986 (“Section 409A”) and, accordingly, to the maximum extent permitted, the MIP shall be construed and interpreted in accordance with such intent. If payment of any amount of “deferred compensation” (as defined under Section 409A, after giving effect to the exemptions thereunder) is triggered by a separation from service (as defined under Section 409A) that occurs while the Participant is a “specified employee” with respect to the Company (as defined under Section 409A), and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six- month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Participant’s estate following the Participant’s death.

(c) Participant Solely Responsible. Notwithstanding the foregoing, the Participant shall be solely responsible for the satisfaction of any federal, state, local, or foreign taxes on payments under the MIP. By way of example and not limitation, in no event whatsoever shall the Company be liable for any additional tax, interest, or penalties that may be imposed on the Participant by Code Section 4999 (golden parachute payments) or by Code Section 409A or any damages for failing to comply with Code Section 409A

6.5. Governing Law . The MIP and all rights to an Incentive Plan Award hereunder shall be construed in accordance with and governed by the laws of the State of Delaware to the extent not preempted by federal law.

6.6. Awards Not Transferable . Subject to Section 6.8, a Participant’s rights and interest under the MIP may not be assigned or transferred. Any attempted assignment or transfer shall

be null and void and shall extinguish, in the Committee’s sole discretion, the Employer’s obligation under the MIP to pay Incentive Plan Awards with respect to the Participant.

6.7. Employment . Neither the adoption of the MIP nor its operation shall in any way affect the rights and power of the Company or any Related Affiliate to dismiss or discharge any Participants. The MIP is not a contract between the Company or any Related Affiliate and any associate of the Company or Related Affiliate or Participant.

6.8. Beneficiary . In the event of a Participant’s death prior to the payment of any Incentive Plan Award to which the Participant is otherwise entitled, payment shall be made to the Participant’s then-effective beneficiary or beneficiaries under the Employer-paid group term life insurance arrangement.

Walmart Inc. 2016 Associate Stock Purchase Plan (As amended effective February 1, 2018)

Table of Contents

I. DEFINITIONS B-3 1.1 Account B-3 1.2 Account Administrator B-3 1.3 Account Closure B-3 1.4 Affiliate B-3 1.5 Associate B-3 1.6 Award Program B-3 1.7 Board B-3 1.8 Committee B-3 1.9 Company B-3 1.10 Contribution B-3 1.11 Employer B-3 1.12 Participant B-3 1.13 Participating Employer B-3 1.14 Payroll Deduction B-3 1.15 Plan B-3 1.16 Plan Year B-3 1.17 Section 16 Officers B-3 1.18 Stock B-3 II. ELIGIBILITY B-3 2.1 In General B-3 2.2 Leaves of Absence B-4 III. PLAN CONTRIBUTIONS B-4 3.1 Shares Available for Contributions B-4 3.2 Plan Contributions B-4 3.3 Maximum Limits on Contributions B-4 3.4 Payroll Deductions B-4 3.5 Matching Contributions B-4 3.6 Award Contributions B-4 3.7 Voluntary Contributions B-5 3.8 Remittance of Contributions B-5

IV. ACCOUNT PURCHASES, MAINTENANCE & SALES B-5 4.1 Account Establishment B-5 4.2 Share Purchases B-5 4.3 Share Purchases for Non-U.S. Participants B-5 4.4 Allocation to Accounts B-6 4.5 Share Ownership B-6 4.6 Account Statements B-6 4.7 Risk of Loss B-6 4.8 Commission & Maintenance Charges B-6 4.9 Account Sales B-7 V. ACCOUNT CLOSURE & TERMINATION OF EMPLOYMENT B-7 5.1 Account Closure B-7 5.2 By Termination of Employment Other Than Due to Death of Participant B-7 5.3 By Transferring Employment from the Company or a Participating Employer to an Affiliate B-7 5.4 Termination Due to Death of Participant B-8 VI. AWARD PROGRAM B-8 6.1 Scope of the Award Program B-8 6.2 Outstanding Performance Component B-8 6.3 Former Great Job Component B-8 VII. ADMINISTRATION B-8 7.1 Committee B-8 7.2 Powers of the Committee B-8 VIII. AMENDMENT & TERMINATION B-9 8.1 Right to Amend or Terminate B-9 8.2 Limitation on Right to Amend or Terminate B-9 IX. MISCELLANEOUS PROVISIONS B-9 9.1 Successors B-9 9.2 Severability B-9 9.3 Requirements of Law B-9 9.4 Securities Law Compliance B-9 9.5 No Rights as a Stockholder B-10 9.6 Nature of Payments B-10 9.7 Non-Exclusivity of the Plan B-10 9.8 Military Service B-10 9.9 Construction B-10 9.10 Headings B-10 9.11 Stockholder Approval B-10 9.12 Taxes B-10 9.13 Company-Associate Relationships B-10 9.14 Governing Law B-10

Walmart Inc. 2016 Associate Stock Purchase Plan

I. Definitions

1.1 “Account” shall mean a Participant’s account which holds his or her shares of Stock pursuant to the Plan.

1.2 “Account Administrator” shall mean the third party administrator for the Accounts as may be from time to time appointed by the Committee.

1.3 “Account Closure” shall mean the closing of a Participant’s Account by one of the following means:

(a) “Automatic Account Closure” shall mean the closure of a Participant’s Account by the Committee (or the Account Administrator if applicable) at the time such Participant’s Account balance contains no shares (or fractional shares) of Stock on or after his or her termination of employment with the Employer.

(b) “Participant Account Closure” shall mean the closure of a Participant’s Account pursuant to a request by the Participant to have his or her Account closed and to have all Stock or proceeds from the sale thereof distributed.

1.4 “Affiliate” shall mean any entity that is more than 50% owned or controlled, directly or indirectly, by the Company.

1.5 “Associate” shall mean any common law employee of an Employer, but shall not include independent contractors. An individual classified by the Employer as either an independent contractor or an individual who provides services to the Employer through another entity shall not be eligible to participate in this Plan during the period that the individual is so classified, even if such individual is later retroactively reclassified as an Associate during all or any part of such period pursuant to applicable law or otherwise.

1.6 “Award Program” shall mean a program established by the Company or a Participating Employer that results in its Associates receiving shares of Stock as an award for job performance.

1.7 “Board” shall mean the Board of Directors of the Company.

1.8 “Committee” shall mean the Global Compensation Committee of the Board, or such other committee as may be appointed by the Board.

1.9 “Company” shall mean Walmart Inc., a Delaware corporation.

1.10 “Contribution” shall mean any of the types of contributions that may be made to a Participant’s Account under the Plan, either by the Company, a Participating Employer or a Participant as set forth in Section III.

1.11 “Employer” shall mean the Company and its Affiliates.

1.12 “Participant” shall mean any Associate of the Company or a Participating Employer who satisfies the eligibility requirements in Section II and who has an Account established under the Plan, and Participant shall also include any former Associate of the Company or a Participating Employer who was a Participant in the Plan at the time of his or her termination of employment until such time as an Account Closure occurs.

1.13 “Participating Employer” shall mean an Affiliate whose participation in the Plan has been approved by the Committee. The Committee may require the Participating Employer to make corresponding contributions under the Plan in accordance with rules and procedures established by the Committee. The Committee, in its sole discretion, may terminate any such Affiliate’s Participating Employer status at any time and the Accounts of those Participants who are Associates of such Affiliate will be treated as if such Participants had transferred employment to an Affiliate that is not a Participating Employer as described in Section 5.3 of the Plan.

1.14 “Payroll Deduction” shall mean the payroll deduction from a Participant’s biweekly or weekly regular compensation (including from vacation pay and pay from any paid leave of absence) of an amount authorized by the Participant as a Payroll Deduction Contribution.

1.15 “Plan” shall mean the Walmart Inc. 2016 Associate Stock Purchase Plan (formerly known as the Wal-Mart Stores, Inc. 2016 Associate Stock Incentive Plan, and the Wal-Mart Stores, Inc. 2004 Associate Stock Purchase Plan), as amended, restated and renamed herein, or as it may be further amended from time to time.

1.16 “Plan Year” shall mean April 1 of a calendar year to March 31 of the following calendar year, or such other period as set by the Committee.

1.17 “Section 16 Officers” shall mean those officers of the Company who are subject to subsection 16(a) of

the Securities Exchange Act of 1934, as amended.

1.18 “Stock” shall mean the common stock, $.10 par value per share, of the Company.

II. Eligibility

2.1 In General. All Associates (including Section 16 Officers) of the Company or a Participating Employer are eligible to participate in the Plan, subject to the following limitations:

(a) Associates who are restricted or prohibited from participating in the Plan under the applicable law of their state or country of residence may not participate in the Plan, except as may be provided in accordance with rules and procedures established by the Committee.

(b) Associates of the Company and its Affiliates who are members of a collective bargaining unit whose benefits were the subject of good faith collective bargaining are excluded from participation in the Plan.

(c) Participation by Associates of non-U.S. Participating Employers shall only be permitted upon approval by the Committee, which approval may be limited to groups or categories of Associates designated by the non-U.S. Participating Employer.

(d) Section 16 Officers may be restricted in their ability to acquire or sell shares of Stock in order to comply with Section 16 of the Securities Exchange Act of 1934, as amended, in accordance with rules and procedures adopted by the Company’s Audit Committee.

2.2 Leaves of Absence. Participants continue to be eligible to participate in the Plan while on a bona fide leave of absence from the Company or a Participating Employer in accordance with applicable policies of the Company or Participating Employer, or under such other circumstances with the approval of the Committee.

III. Plan Contributions

3.1 Shares Available for Contributions. Subject to stockholder approval of this Plan: (i) 10,943,171 shares of Stock shall be available for purchase from the Company under the Plan for credit to Accounts or for purchase in open market transactions over a national securities exchange under the Plan for credit to Accounts; (ii) 20,000,000 shares of Stock shall be available for purchase from the Company under the Plan for credit to Accounts; and (iii) 100,000,000 shares of Stock shall be available for purchase in open market transactions over a national securities exchange under the Plan for credit to Accounts.

3.2 Plan Contributions. The definitions of the types of Contributions which may be made pursuant to the Plan are as follows (subject to the limits provided in Section 3.3 as applicable):

(a) “Award Contribution” means a contribution under the Plan on behalf of a Participant by the Company or a Participating Employer, as applicable, made pursuant to the Award Program in the sole discretion of the Committee.

(b) “Matching Contribution” means a cash contribution to the Plan on behalf of a Participant by the Company or a Participating Employer, as applicable, which is equal to fifteen percent (15%) of the amount of the Participant’s Payroll Deduction (up to a maximum dollar limit).

(c) “Payroll Deduction Contribution” means a contribution to the Plan by a Participant pursuant to a valid authorization for a Payroll Deduction.

(d) “Voluntary Contribution” means a contribution, if and to the extent permitted by the Committee from time to time, of shares of Stock or cash by the Participant to the Participant’s Account which is not made by Payroll Deduction.

3.3 Maximum Limits on Contributions.

(a) Matching Contributions and “Outstanding Performance” awards under the Award Program are subject to a maximum dollar limit for the Plan Year as set by the Committee from time to time in its discretion.

(b) During any Plan Year, the combination of Payroll Deduction Contributions and Voluntary Contributions made in cash (not Stock) by a Participant shall not exceed $125,000.

3.4 Payroll Deductions.

(a) Subject to the Committee’s authority to adjust the following amounts, a Participant’s authorization for Payroll Deduction shall be for a minimum amount of $2.00 per biweekly pay period or $1.00 per weekly pay period, as applicable to the Participant, and such Payroll Deduction shall be in even multiples of $.50.

(b) A Participant’s request for Payroll Deduction (or a request for a revision thereto) will become effective as soon as practicable after receipt of such request by the Company or the Participating Employer, as

applicable.

(c) A Participant’s Payroll Deduction authorization may be revised or terminated at any time by the Participant’s request to the Company or the Participating Employer, as applicable.

(d) A Participant’s authorization for Payroll Deduction shall remain effective until the earlier of the Participant’s (1) request to revise or terminate the Payroll Deduction authorization or (2) termination of employment with the Company or a Participating Employer, subject to Section 8 of the Plan.

(e) All requests to initiate, revise or terminate an authorization for Payroll Deduction as described in this Section 3.4 shall be made in writing or in such other form acceptable to the Committee or its delegate from time to time.

(f) The Senior Vice President, Benefits, or any successor position, in his or her discretion, may prohibit a Payroll Deduction from the final paycheck of a Participant. This Section applies to the Participant’s final paycheck even if the Participant made a valid Payroll Deduction election applicable to prior paychecks. If a Payroll Deduction is prohibited from a Participant’s final paycheck, any corresponding Matching Contributions shall also be prohibited.

3.5 Matching Contributions. The Company or Participating Employer, as applicable, shall make Matching Contributions as provided under the Plan and subject to the limits set forth in Section 3.3.

3.6 Award Contributions. Award Contributions shall be made, in the Committee’s sole discretion, by either (1) the Company or the Participating Employer, as applicable, remitting to the Account Administrator on behalf of the Participant funds sufficient to purchase any shares or fractional shares of Stock that have been granted to such Participant under the Award Program or (2) the Participant receiving the Award Contribution directly as a certificate for a share or shares (as applicable) of Stock.

3.7 Voluntary Contributions. Participants may make Voluntary Contributions to the Plan subject to the terms and limitations described herein or that may be prescribed by the Committee from time to time.

3.8 Remittance of Contributions.

(a) The Company or a Participating Employer, as applicable, will forward the total of all Payroll Deductions for the applicable payroll period along with the corresponding Matching Contributions, a list of Participants for whom the Contributions are being made and the amount allocable to each such Participant’s Account to the Account Administrator as soon as practicable.

(b) Voluntary Contributions, whether made in cash or shares of Stock, shall be remitted to the Account Administrator directly by the Participant.

(c) As soon as practicable following a grant of an Award Contribution, an Award Contribution shall be made in the Committee’s sole discretion as described in Section 3.6 of the Plan.

(d) Prior to the time a Participant’s Payroll Deduction and corresponding Matching Contribution is distributed to the Account Administrator, such amounts are considered general assets of the Company or Participating Employer (as applicable) and, as such, are subject to the claims of the Company’s or Participating Employer’s (as applicable) creditors in the event of insolvency or bankruptcy. In addition, no interest shall be paid on such amounts and all Participants assume the risk of fluctuations in the value or market price of Stock.

IV. Account Purchases, Maintenance & Sales

4.1 Account Establishment. The Account Administrator shall establish an Account in accordance with the Plan for any Associate who becomes a Participant. Upon the Committee’s (or its delegate’s) request, the Account Administrator shall establish an Account for an Associate who is to be awarded shares under an Award Program and who is not then a Participant.

4.2 Share Purchases. No later than five business days after the Account Administrator receives the remittance of funds for Contributions (including Voluntary Contributions made in cash) made to the Plan, the Account Administrator shall purchase shares of Stock from the Company, which may be purchases from the Company of authorized, but unissued, shares of Stock, shares of Stock held as treasury shares of Stock, in open market transactions over a national securities exchange, or in a combination of the foregoing. Notwithstanding the foregoing, the Committee may from time to time provide instructions to the Account Administrator with respect to the purchase of such shares of Stock but, absent such instructions, the Account Administrator shall determine the source of such Stock purchases in its discretion.

(a) In the case of purchases from the Company of authorized but unissued or treasury shares of Stock, the

price of such shares is equal to the Volume Weighted Average Price (VWAP) as reported on the New York Stock Exchange - Composite Transactions on the relevant date of purchase; provided, however, that the Committee may, in its discretion, designate some other methodology for determining the fair market value of such shares of Stock purchased from the Company.

(b) The Account Administrator’s purchase of shares of Stock in open market transactions over a national securities exchange and the price per share shall be in accordance with rules and procedures established by the Committee from time to time, the rules of the national securities exchange over which the shares of Stock are purchased and the rules of the Financial Industry Regulatory Authority.

(c) As determined in the discretion of the Account Administrator (in accordance with any applicable rules and procedures of the Committee), funds received as Voluntary Contributions may be bundled into a group for the purpose of purchasing shares of Stock and such shares may be purchased over a time period that is greater than one day. If such shares of Stock are purchased as part of a bundled group, a Participant’s purchase price for each share of Stock shall be the average price of all shares of Stock purchased within that group as determined by the Account Administrator.

(d) No provision of this Plan shall limit the ability of the Committee to implement a real-time trading (or other) mechanism for the purchase or sale of shares of Stock under the Plan and, to the extent determined by the Committee, shall replace any other methodology for valuing and allocating shares of Stock purchased or sold under the Plan.

4.3 Share Purchases for Non-U.S. Participants. With respect to non-U.S. Participants, the amounts (1) withheld from such a Participant’s compensation pursuant to an authorization for Payroll Deduction or (2) contributed as either a Matching Contribution or an Award Contribution made directly to a Participant’s Account shall be converted from the applicable foreign currency to U.S. dollars for the purpose of purchasing shares of Stock, and such conversion shall be pursuant to the exchange rate published in The Wall Street Journal (or other similar source) on a date as soon as practicable prior to the effective date of the cash transfer from the Company or the Participating Employer, as applicable, to the Account Administrator. All such Participants assume the risk of fluctuations in the value or market price of shares of Stock and applicable currency exchange rates. With respect to non-U.S. Participants making Voluntary Contributions in cash, such amounts must be tendered to the Account Administrator in U.S. dollars unless otherwise determined by the Committee.

Notwithstanding anything to the contrary contained in the terms of this Plan, at the discretion of the Committee, purchases of shares of Stock for, or the participation in the Plan by, non-U.S. Participants may be suspended or discontinued if the applicable laws of a country or another governmental authority (such as the European Union) governing such purchases of shares of Stock or participation in the Plan would require the Company to register or qualify such shares of Stock, or its deemed offer or sale of shares of Stock under the Plan to, or to otherwise comply with procedures under such laws with respect to any deemed offer and sale of shares of Stock by the Company under the Plan to, such non-U.S. Participants or the Company would otherwise become subject to the laws of such country or other governmental authority as a result of such purchases of shares of Stock by or on behalf of a non-U.S. Participant unless the Company is already subject in all respects to the jurisdiction of such country or governmental authority.

4.4 Allocation to Accounts. The number of shares (whole and fractional shares) of Stock shall depend upon the purchase price as described in Section 4.2 at the time such purchases are made. Purchases of Stock will be allocated by the Account Administrator based upon the applicable purchase price to each applicable Participant’s Account in proportion to the respective amount of Contributions received for each Participant’s Account. Allocations of Stock will be made in full shares and in fractional interests in shares to the thousandths of a share.

4.5 Share Ownership. At the time shares of Stock are credited to a Participant’s Account, he or she will acquire full ownership of all such shares (as well as any fractional interests) of Stock.

(a) All shares of Stock will be registered in the name of the Account Administrator and will remain so registered until delivery is requested by the Participant. The Participant may request from the Account Administrator that a certificate for any or all full shares of Stock be delivered to the Participant or that the Participant be reflected as the record owner of such shares of Stock in the Direct Registration System of the Depository Trust Company, if the Company participates in that system, at no cost to such Participant at any time.

(b) The Account Administrator shall cause to be delivered at no cost to each Participant as promptly as practicable, by mail, electronic mail, or otherwise, all notices of shareholders’ meetings, proxy statements

and other material distributed by the Company to its stockholders. The full shares of Stock in each Participant’s Account shall be voted in accordance with the Participant’s signed proxy voting instructions timely delivered to the Account Administrator. In the event that a Participant does not timely provide the Account Administrator with proxy voting instructions, the Account Administrator may direct the voting of such shares of Stock held in an Account to the extent such action or direction would comply with applicable law and any applicable listing standards of a national securities exchange.

(c) A Participant may not assign or hypothecate any interest in the Plan; provided, however, that upon purchase of shares under the Plan, such shares may be sold, assigned, pledged, hypothecated or otherwise dealt with as would be the case with respect to any other shares of Stock the Participant might otherwise own, subject to the Participant’s compliance with the Walmart Inc. Insider Trading Policy.

(d) Neither the Company nor any Participating Employer may make any deductions from amounts properly credited to a Participant’s Account. Neither the Company nor any Participating Employer shall have any security interest on the shares of Stock held in a Participant’s Account. Notwithstanding the foregoing, a lender may have a security interest on the shares of Stock held in a Participant’s Account if the Participant has pledged such Stock as collateral in connection with a line of credit that may be obtained by certain Participants (other than Section 16 Officers) through the Account Administrator’s Stock Secured Line of Credit Program, if any.

4.6 Account Statements. Each Participant will be sent at least an annual statement reflecting all Account activity during the period covered by the statement.

4.7 Risk of Loss. There is no guarantee of the value or market price of shares of Stock acquired pursuant to the Plan. In seeking potential benefits of Stock ownership, each Participant bears the risks associated with Plan participation and ownership of Stock, including the risk of any decrease in the value of market price of shares of Stock acquired pursuant to the Plan.

4.8 Commission & Maintenance Charges.

(a) No brokerage commissions are charged to Participants for purchases of Stock under the Plan, however, brokerage commissions and other applicable fees shall be charged to the Participant for all sales of Stock from his or her Account. Such commissions and other applicable fees for sales of Stock held in a Participant’s Account shall be at the rates posted by the Account Administrator, which may be changed from time to time by the Account Administrator with approval of the Committee (or its delegate).

(b) The Company or Participating Employer, as applicable, shall pay the applicable periodic maintenance fees (if any) for the Participant’s Account until the earlier of (1) a Participant Account Closure occurs or (2) the Participant incurs a termination of employment with the Company or Participating Employer, as applicable, subject to Section 5.3. Any services requested of the Account Administrator by the Participant that are not covered by the Company’s arrangement with the Account Administrator shall be paid for solely by the Participant.

(c) At such time as the Company or Participating Employer, as applicable, ceases to pay the applicable Account maintenance fees as set forth subsection (b) above, the Participant shall become responsible for any applicable Account maintenance fees. In this case, periodic maintenance fees and other applicable charges to the Account shall be paid from time to time to the Account Administrator automatically from the proceeds of a sale of a sufficient number of shares of Stock held in the Participant’s Account to cover such fees and charges until the earlier of a Participant Account Closure or an Automatic Account Closure occurring.

4.9 Account Sales. The Participant may instruct the Account Administrator in writing (or any other method acceptable to the Committee or its delegate) at any time to sell any portion or all of his or her full shares of Stock and the fractional interest in any shares of Stock allocable to his or her Account, and the timing for such sale of Stock shall be in accordance with rules and procedures established by the Committee from time to time. Any account sales shall be subject to the Walmart Inc. Insider Trading Policy, including, but not limited to, the Trading Windows and trading restrictions on Section 16 Officers.

(a) The sale price for a share of Stock under the Plan shall be the average price of all shares of Stock sold by the Account Administrator on the date of the Participant’s sale transaction; provided, however, that the Committee reserves the right to implement a real-time trading or similar mechanism for Participants’ sales of shares of Stock from their respective Accounts under the Plan and the valuation of shares of

Stock would be in accordance with any such mechanism.

(b) Upon such sale, the Account Administrator shall mail to the Participant a check (or such method of payment as approved by the Committee or its delegate) for the proceeds, less the brokerage commission, and other normal charges such as sales fees, which are payable by the Participant.

(c) Such instruction to the Account Administrator, or a request for delivery of Stock certificates held in the Participant’s Account, will not affect the Participant’s status as a Participant under the Plan unless the delivery of such certificates results in an Account Closure.

(d) With respect to non-U.S. Participants, shares of Stock are sold or traded in U.S. dollars and such amounts can be converted for the purpose of remitting the proceeds to the non-U.S. Participant. If the proceeds from the sale of shares of Stock held in the Participant’s Account are converted to a currency other than U.S. dollars, such conversion shall be made pursuant to the applicable exchange rate published in The Wall Street Journa l (or other similar source) on the date such transaction is executed. All such Participants assume the risk of fluctuations in the value or market price of shares of Stock and applicable currency exchange rates.

V. Account Closure & Termination of Employment

5.1 Account Closure. A Participant who elects to discontinue Payroll Deductions under the Plan shall continue to be a Participant until the earlier of a Participant Account Closure or an Automatic Account Closure occurring. In connection with a Participant Account Closure, the Participant must elect to have his or her Account fully distributed in either (1) Stock (except that the value of any fractional shares of Stock will be distributed in cash) less any applicable fees or (2) cash by directing all full shares (and fractional interests) of Stock to be sold with the proceeds, less applicable brokerage commissions and other applicable fees, being distributed in accordance with the terms, provisions, and conditions of the Plan.

5.2 By Termination of Employment Other Than Due to Death of Participant. The Account of a Participant who incurs a termination of employment (other than by reason of death) with the Company or a Participating Employer will continue to be maintained with the periodic fees and any other applicable charges being paid by the Participant in accordance with Section 4.8(c) of the Plan.

5.3 By Transferring Employment from the Company or a Participating Employer to an Affiliate. A Participant who transfers employment from the Company or a Participating Employer to an Affiliate who does not sponsor or participate in the Plan may continue to have his or her Account maintained at the expense of the Company while still employed with an Affiliate until the earlier of a Participant Account Closure or an Automatic Account Closure occurring (provided that such Automatic Account Closure can only occur following termination of employment with such Affiliate). In connection with a Participant Account Closure, the Participant must elect to have his or her Account fully distributed in either (1) Stock (except that the value of any fractional shares of Stock will be distributed in cash less any applicable fees) or (2) cash by directing all full shares (and fractional interests) of Stock to be sold with the proceeds, less applicable brokerage commissions and other applicable fees, being distributed, in accordance with the terms, provisions, and conditions of the Plan. Unless and until such Participant re-establishes eligibility to participate in the Plan, such Participant shall no longer be eligible to make or receive Contributions to the Plan (including by Payroll Deduction or Voluntary Contribution).

5.4 Termination Due to Death of Participant. Following a Participant’s death, the Company or Participating Employer, as applicable, shall cease making Payroll Deductions and Matching Contributions to such Participant’s Account as soon as practicable. In addition, as soon as practicable following the Participant’s death, the Account Administrator will distribute the proceeds of the deceased Participant’s Account less applicable brokerage commissions and other applicable fees in accordance with rules and procedures established by the Committee (which may include a designation by a Participant of a beneficiary or a joint tenant with respect to a Participant’s Account) and, in the absence of applicable rules and procedures (or such designations), to the Participant’s estate.

VI. Award Program

6.1 Scope of the Award Program. The Award Program is designed to provide an incentive to Associates of the Company and Participating Employers who provide exceptional customer service and job performance. Awards under the Award Program are not intended to be given to those who satisfy, but do not exceed, expectations. The Award Program includes an “Outstanding Performance” component.

6.2 Outstanding Performance Component. An “Outstanding Performance” award is an award of Stock to an

Associate in recognition of the individual’s consistently outstanding performance in his or her specific job-related roles over a month, a quarter, or a year.

(a) Associates who receive “Outstanding Performance” awards may either be issued certificates for shares of Stock or, at the discretion of the Committee, the Company (or Participating Employer) may have the Account Administrator purchase shares of Stock to be credited to the Participant’s Account as described in Section 3.6 of the Plan.

(b) “Outstanding Performance” awards are either approved directly by the Committee or by its delegate in accordance with rules and procedures established by the Committee, and are subject to individual maximum dollar limitations as set by the Committee from time to time.

6.3 Former Great Job Component. This component of the Plan was discontinued in 2007 and all outstanding Great Job buttons were cancelled on September 1, 2008.

VII. Administration

7.1 Committee.

(a) Subject to Section 7.2, the Plan shall be administered by the Committee.

(b) The Committee may delegate to officers or managers of the Company or any Affiliate the authority, subject to such terms as the Committee shall determine, to perform specified functions under the Plan. The Committee also may revoke any such delegation of authority at any time.

7.2 Powers of the Committee. Subject to and consistent with the provisions of the Plan, the Committee has full and final authority and sole discretion as follows:

(a) to determine when, to whom and in what types and amounts Contributions should be made;

(b) to make Contributions to eligible Associates in any number, and to determine the terms and conditions applicable to each Contribution;

(d) to set minimum and maximum dollar, share or other limitations on the various types of Contributions under the Plan;

(e) to determine whether an Affiliate should be designated as a Participating Employer and whether an Affiliate’s Participating Employer status should be terminated;

(f) to determine whether Associates of non-U.S. Participating Employers should be eligible to participate in the Plan;

(g) to construe and interpret the Plan and to make all determinations, including factual determinations, necessary or advisable for the administration of the Plan;

(h) to make, amend, suspend, waive and rescind rules and regulations relating to the Plan (including, but not limited to, such rules and regulations that would allow designations for beneficiaries and/or joint tenants to be made by Participants in connection with Accounts under the Plan);

(i) to appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

(j) to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and regulations, and award agreements or any other instrument entered into or relating to a Contribution under the Plan; and

(k) to take any other action with respect to any matters relating to the Plan for which it is responsible and to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all persons, including the Company, its Affiliates, any Associate, any person claiming any rights under the Plan from or through any Participant, and stockholders, except to the extent the Committee may subsequently modify, or take further action not consistent with, its prior action. If not specified in the Plan, the time at which the Committee must or may make any determination shall be determined by the Committee, and any such determination may thereafter be modified by the Committee. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.

VIII. Amendment & Termination

8.1 Right to Amend or Terminate. The Board, or a duly authorized committee thereof, reserves the right to amend, modify, suspend or discontinue the Plan at any time in its sole discretion without the approval of the Company’s stockholders, except that (a) any amendment or modification shall be subject to the approval of the Company’s stockholders if such stockholder approval is required by any federal or state law or regulation or the rules of any securities exchange or automated quotation system on which the shares of Stock may then be listed or quoted, and (b) the Board may otherwise, in its discretion, determine to submit other such amendments or modifications to stockholders for approval.

8.2 Limitation on Right to Amend or Terminate. Any such amendment, modification, suspension or termination will not result in the forfeiture of (1) subject to Section 3.8(d), any funds contributed but not yet invested in the Participant’s Account, (2) any shares (or fractional interests) of Stock purchased on behalf of the Participant under the Plan, or (3) subject to Section 3.8(d), any dividends or other distributions in respect of such shares that are declared subsequent to a Participant’s Contribution but prior to the effective date of the amendment, modification, suspension or termination of the Plan.

IX. Miscellaneous Provisions

9.1 Successors. All obligations of the Company under the Plan with respect to Contributions made hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business and/or assets of the Company.

9.2 Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

9.3 Requirements of Law. The granting of awards, the making of Contributions, and the delivery of shares of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any provision of the Plan, Participants shall not be entitled to receive benefits under the Plan, and the Company (and any Affiliate) shall not be obligated to deliver any shares of Stock or deliver benefits to a Participant, if such delivery would constitute a violation by the Participant or the Company or any of its Affiliates of any applicable law or regulation.

9.4 Securities Law Compliance.

(a) If the Committee deems it necessary to comply with any applicable securities law or the requirements of any securities exchange upon which shares of Stock may be listed, the Committee may impose any restriction on Contributions, shares of Stock acquired pursuant to Contributions or purchases of shares of Stock under the Plan as it may deem advisable. Shares of Stock credited to the Account of a Participant, delivered to a Participant in certificated form or registered to a Participant in the Direct Registration System that may not be reoffered and resold by such Participant under applicable securities laws except pursuant to an effective registration statement covering or with respect to, or a qualification of, such shares of Stock or of such reoffer and resale of such shares of Stock or in accordance with another compliance procedure permitting a public reoffer and resale of such shares of Stock, in each case, in accordance with applicable securities laws, shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under applicable securities laws and the listing requirements and rules for listed companies of any securities exchange upon which shares of Stock are then listed and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions and, if so requested by the Company, such Participant shall make a written representation to the Company that he or she will not reoffer or resell any shares of Stock held by him or her except in compliance with all applicable requirements for the registration or qualification of such shares of Stock or of such reoffer and resale of such shares of Stock or in accordance with such other compliance procedure permitting the public reoffer and resale of such shares of Stock unless he or she shall have furnished to the Company an opinion of an experienced securities attorney licensed in the jurisdiction whose securities laws govern such reoffer and resale that such registration, qualification or other compliance actions regarding such reoffer and resale are not required for such reoffer and resale of such shares of Stock to be effected in compliance with the applicable securities laws, which opinion shall be in form and substance satisfactory to the Company in its sole discretion.

(b) If the Committee determines that the nonforfeitability of, or delivery of benefits pursuant to, any Contribution or any purchase of shares of Stock, either from the Company or in an open market purchase over a national securities exchange, would result in a violation of any provision of any applicable securities laws or the listing requirements or rules for listed companies of any securities exchange on which the Stock is listed for trading, then the Committee may postpone any such nonforfeitability or delivery, as applicable, and may suspend the purchase of shares of Stock under the Plan, but the Company shall use all reasonable efforts to cause such nonforfeitability or delivery to comply with all such provisions at the earliest practicable date and to permit the Account Administrator to make purchases of shares of Stock in accordance with the Plan at the earliest practicable date; provided that the Company may, in its sole discretion, suspend the participation in the Plan of any Participant or any or all Participants to the extent necessary for the Company to comply or remain in compliance with the securities laws of any jurisdiction, including the United States, and may suspend purchases of shares of Stock that would be deemed to be the offer and sale of shares of Stock by the Company in a transaction that is not registered pursuant to, or exempt from registration under, Section 5 of the Securities Act of 1933, as amended, or is not qualified or otherwise permitted to be made under the securities laws of any jurisdiction outside of the United States, for such period as the Company deems appropriate in order for the Company to file a registration statement with the U.S. Securities and Exchange Commission with respect to the offer and sale of shares of Stock under the Plan and to have such registration statement declared effective by the U.S. Securities and Exchange Commission and to effect all necessary qualifications and to comply with any other compliance procedures required to be adhered to in order for such purchases of such shares of Stock on behalf of Participants to comply with all applicable securities laws, rules, and regulations.

9.5 No Rights as a Stockholder. No Participant shall have any rights as a stockholder of the Company with respect to the shares of Stock which may be deliverable to the Participant’s Account in connection with a Contribution (other than a Voluntary Contribution of previously-owned shares of Stock) under the Plan until such shares of Stock have been credited to his or her Account or have been delivered to him or her.

9.6 Nature of Payments. Matching Contributions and Award Contributions shall be special incentive payments to the Participant and shall not be taken into account in computing the amount of salary or compensation of the Participant for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company or any Affiliate, except as such plan shall otherwise expressly provide, or (b) any agreement between (i) the Company or any Affiliate and (ii) the Participant, except as such agreement shall otherwise expressly provide.

9.7 Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements for Associates as it may deem desirable.

9.8 Military Service. The Plan shall be administered in accordance with Section 414(u) of the Internal Revenue Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.

9.9 Construction. The following rules of construction will apply to the Plan: (a) the word “or” is disjunctive but not necessarily exclusive, and (b) words in the singular include the plural, words in the plural include the singular, and words in the neuter gender include the masculine and feminine genders and words in the masculine or feminine gender include the other neuter genders.

9.10 Headings. The headings of articles and sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

9.11 Stockholder Approval. All Contributions made on or after the effective date of the amended and restated Plan and prior to the date the Company’s stockholders approve the amended and restated Plan are expressly conditioned upon and subject to approval of the amended and restated Plan by the Company’s stockholders.

9.12 Taxes. All Payroll Deduction Contributions, Matching Contributions and Award Contributions are subject to withholding for applicable federal, state and local income taxes and will be reported as wage income by the Company. When a Participant authorizes a Payroll Deduction of a specific amount, more than that amount will actually be withheld from his or her compensation to cover the withholding taxes due on the Payroll Deduction Contribution and Matching Contribution. Unless set forth otherwise by applicable law, rule, or regulation, the distribution of shares of Stock from a Participant’s Account to a Participant, or cash in lieu of fractional shares, will not be a taxable event.

9.13 Company-Associate Relationships. Nothing contained in this Plan shall in any way affect the rights of the Company (including any of its Affiliates) in its relationship with any Associate or affect the Company’s (including any of its Affiliates’) right to discharge any Associate or increase or reduce any Associate’s compensation.

9.14 Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, except to the extent it is governed by the federal securities laws or the choice of laws provision contained in the Company’s agreement with the Account Administrator.

WALMART INC. STOCK INCENTIVE PLAN OF 2015 (As amended effective February 1, 2018)

1.1 Purpose and Effective Date. Walmart Inc. (“Walmart”) believes it is important to provide incentives to Walmart’s Associates, and Non-Management Directors, through participation in the ownership of Walmart and otherwise. The Walmart Inc. Stock Incentive Plan of 2015 was originally established under the name Wal-Mart Stores, Inc. Stock Incentive Plan of 1998 (“1998 Plan”). The 1998 Plan was amended, restated and renamed from time to time, and approved and re-approved by Walmart stockholders, as the Wal-Mart Stores, Inc. Stock Incentive Plan of 2005 (“2005 Plan”) and the Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 (“2010 Plan”), as amended and restated in 2013 (“2013 Restatement”), and most recently on June 5, 2015, as the Wal- Mart Stores, Inc. Stock Incentive Plan of 2015 (“Plan”). The Plan, as heretofore amended, was further amended on February 23, 2016 and February 1, 2017. The plan was renamed effective on February 1, 2018. The purpose of the Plan is to provide incentives to certain Associates and Non-Management Directors to enhance their job performance, to motivate them to remain or become associated with Walmart and its Affiliates, and to increase the success of Walmart. The Plan is not limited to Associates who are executive officers of Walmart, but will be available to provide incentives to any Associate or Non-Management Director that the Committee believes has made or may make a significant contribution to Walmart or an Affiliate of Walmart.

DEFINITIONS

2.1 “Affiliate” means any corporation, partnership, limited liability company, business trust, other entity or other business association that is now or hereafter controlled by Walmart; provided that if a Plan Award provides for the deferral of compensation within the meaning of Code Section 409A, and if the applicable Notice of Plan Award does not contain a definition of “Affiliate” that satisfies the requirements of Code Section 409A, then for purposes of such Plan Award, “Affiliate” means the entity for which the Recipient performs services and with respect to which the legally binding right to deferred compensation arises, and all persons that would be considered a single employer with such entity under section 414(b) of the Code (employees of controlled group of corporations), or section 414(c) of the Code (employees of partnerships, etc. under common control); provided that the applicable standard of control for purposes of such determination shall be “at least 50 percent”; and provided further that the entity is one with respect to which Shares will qualify as “service recipient stock” under Code Section 409A.

2.2 “Associate” means any person employed by Walmart or any Affiliate.

2.3 “Board” means the Board of Directors of Walmart.

2.4 “Cause” means a Recipient’s commission of any act deemed inimical to the best interest of Walmart or any Affiliate, as determined in the sole discretion of the Committee.

2.5 “Code ” means the Internal Revenue Code of 1986, as amended.

2.6 “Committee ” means the committee of the Board with responsibilities including

executive compensation matters subject to Regulation S-K Item 402, or other committee designated by the Board as the “Committee” under the Plan. Where such committee of the Board has delegated duties, powers or authority hereunder, the term “Committee” shall refer to the delegate. 2.7 “Continuous Status” means the absence of any interruption or termination of the employment relationship between an Associate and Walmart or an Affiliate or the absence of any termination of services as a Non-Management Director. Continuous Status shall not be considered interrupted in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence approved by Walmart or an Affiliate; provided that leave does not exceed one year, unless re-employment upon the expiration of that leave is guaranteed by contract or law or unless provided otherwise by a policy of Walmart or an Affiliate. Notwithstanding the preceding definition, if a Plan Award provides for the deferral of compensation within the meaning of Code Section 409A, and if the applicable Notice of Plan Award does not define a term that is a “separation from service” within the meaning of Code Section 409A, then for purposes of such Plan Award the Recipient’s Continuous Status will terminate if it is reasonably anticipated that no further services would be performed by the Recipient after a certain date or that the level of bona fide services the Recipient would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an Associate or Non-Management Director, or in any other capacity) over the immediately preceding 36-month period (or the full period of services to the Walmart or an Affiliate if the Recipient has been providing services to the Walmart or an Affiliate less than 36 months). 2.8 “Covered Employee” has the meaning set forth in Code Section 162(m)(3). 2.9 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations adopted thereunder. 2.10 “Fair Market Value” means, as of any date, the closing sales price for a Share (a) on the NYSE (or if no trading in Shares occurred on that date, on the last day on which Shares were traded) or (b) if the Shares are not listed for trading on the NYSE, but if there is a public market for the Shares, the closing sales price of the Shares on such other national exchange on which the Shares are principally traded (or if no trading in Shares occurred on that date, on the last day on which Shares were traded), or (c) as reported by the National Market System, or similar organization, or (d) if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organizations; or (e) in the event that there is no public market for the Shares, the value of a Share as determined by the reasonable application of a reasonable valuation method, determined good faith by the Committee; provided that for purposes of tax withholding, for purposes of a “net exercise” procedure for Options, and for such other purposes as the Committee deems appropriate, the Committee may apply a different method for calculating Fair Market Value determined in good faith by the Committee for such purpose. 2.11 “Fiscal Year” means the 12-month period beginning on each February 1 and ending on the following January 31. 2.12 “Gross Misconduct” is conduct that the Committee determines is detrimental to the best interests of Walmart or any Affiliate. Examples of conduct detrimental to the best interests of Walmart or any Affiliate include, without limitation, violation of Walmart’s Statement of Ethics or other Walmart policy governing behavior while providing services to Walmart or an Affiliate,

or applicable period thereafter, or theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses while providing services to Walmart or an Affiliate. 2.13 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Code Section 422. 2.14 “Non-Management Director” means a member of the Board who is not employed by Walmart or a consolidated subsidiary of Walmart. 2.15 “Nonqualified Option” means an Option not intended to be treated as an Incentive Stock Option or that in fact does not qualify as an Incentive Stock Option. 2.16 “Notice of Plan Award” means the agreement or other document evidencing and governing any Plan Award. 2.17 “NYSE” means the New York Stock Exchange or any successor organization thereto. 2.18 “Option” means a stock option to acquire a certain number of the Subject Shares granted pursuant to the Plan. 2.19 “Parent/Subsidiary Corporation” means a “parent corporation” (within the meaning of Code Section 424(e)) or a “subsidiary corporation” (within the meaning of Code Section 424(f)) of Walmart, in each case determined as of the date of grant. 2.20 “Performance Goals” means the pre-established objective performance goals established by the Committee for each Performance Period. The Performance Goals may be based upon the performance of Walmart, of any Affiliate, or a division or unit thereof, or of an individual Recipient, or groups of Recipients, or of a store or groups of stores, using one or more of the Performance Measures selected by the Committee. Separate Performance Goals may be established by the Committee for Walmart or any Affiliate, or division or unit thereof, or an individual Recipient, or groups of Recipients, or of a store or groups of stores, using one or more of the Performance Measures selected by the Committee and different Performance Measures may be given different weights. The Performance Goals shall include one or more threshold Performance Goals under which no portion of the Plan Award shall become vested, be transferred, retained, or the value of which is to be paid as provided by the Plan and Notice of Plan Award, if the threshold goal or goals are not achieved. With respect to Recipients who are not Covered Employees, the Committee may establish other subjective or objective goals, including individual Performance Goals, which it deems appropriate. The preceding sentence shall also apply to Covered Employees with respect to any Plan Awards not intended at the time of grant to be Qualified Performance Based Awards. Performance Goals may be set at a specific level, or may be expressed as a relative percentage to the comparable measure at comparison companies, business units, divisions or individuals or a defined index. Performance Goals shall, to the extent applicable, be based upon generally accepted accounting principles, but shall be adjusted by the Committee to take into account the effect of the following, to the extent determined by the Committee prior to the grant: changes in applicable accounting standards after the Performance Goal is established; realized investment gains and/or losses; extraordinary, unusual, non-recurring or infrequent items; currency fluctuations; acquisitions; divestitures; litigation losses; financing activities; expenses for restructuring or productivity initiatives; other non-operating items; new laws, cases or regulatory developments that result in unanticipated items of gain, loss, income or expense; executive severance arrangements; investment returns relating to investment vehicles which are

unaffiliated with a corporate or divisional operating strategy; bonus expense; the impact on pre-tax income of interest expense attributable to the repurchase of Shares; extraordinary dividends or stock dividends; the effect of corporate reorganizations or restructuring, spinoff, or a sale of a business unit; and other items as the Committee determines to be required so that the operating results of Walmart, a division, or an Affiliate shall be computed on a comparative basis from Performance Period to Performance Period; in each case as those terms are defined under generally accepted accounting principles and provided in each case that such excluded items are objectively determinable by reference to Walmart’s financial statements, notes to Walmart’s financial statements, and/or management’s discussion and analysis in Walmart’s financial statements. Determination by the Committee or its designee shall be final and conclusive on all parties, but shall be based on relevant objective information or financial data. 2.21 “Performance Measures” means one or more of the following criteria, on which Performance Goals may be based, each a “Performance Measure”: (a) earnings (either in the aggregate or on a per-Share basis, reflecting dilution of Shares as the Committee deems appropriate and, if the Committee so determines, net of or including dividends or net of or including the after-tax cost of capital) before or after interest and taxes (“EBIT”) or before or after interest, taxes, depreciation and amortization (“EBITDA”); (b) gross or net revenue, or changes in annual revenues, same store sales, or comparable store sales, average ticket sales; (c) cash flow(s) (including either operating or net cash flows or free cash flows); (d) economic value added; (e) total stockholder return, stockholder return based on growth measures or the attainment by the Shares of a specified value for a specified period of time, (f) Share price or Share price appreciation; (g) market capitalization or changes in market capitalization; (h) earnings growth or growth in earnings per Share; (i) return measures, including financial return ratios, return or net return on assets, net assets, equity, investment, capital or gross sales, sales per square foot; (j) adjusted pre-tax margin; (k) pre-tax profits; (l) operating and gross margins; (m) operating profits; (n) operating or administrative expenses; (o) dividends; (p) net income or net operating income; (q) growth in operating earnings or growth in earnings per Share; (r) value of assets; (s) volume, unit volume, market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas, market capitalization or changes in market capitalization; (t) aggregate product price, including markdown goals, and other product measures; (u) expense or cost levels, in each case, where applicable, determined either on a company-wide basis or in respect of any one or more specified divisions; (v) reduction of losses, loss ratios or expense ratios; (w) reduction in fixed costs; (x) operating cost management and budget comparisons; (y) cost of capital; (z) debt reduction; (aa) balance sheet measures and financial ratings (including maintenance of specified credit availability levels, compliance with credit covenants, inventory measurements and receivables/payables metrics, credit rating, capital expenditures, debt, debt reduction, working capital, average invested capital, leverage ratio, coverage ratio); (bb) productivity improvements and store payroll goals (including stocking and other labor hours goals); (cc) average inventory turnover or inventory controls and net asset turnover; (dd) satisfaction of specified business expansion goals or goals relating to acquisitions or divestitures, including implementation or completion of strategic initiatives or critical projects; (ee) customer satisfaction based on specified objective goals or a Walmart-sponsored customer survey designed and administered by an independent surveyor, and customer growth, number of customers; (ff) employee diversity goals; (gg) employee engagement; (hh) employee turnover; (ii) specified objective social goals, including specified goals in corporate ethics and integrity; (jj) compliance objectives; (kk)

environmental and health and safety goals and record; (ll) workers’ compensation goals; (mm) business integration; or (nn) succession plan development and implementation; (oo) store constructions, openings, remodels, and/or closings. Performance Measures may be applied on a pre-tax or post-tax basis, and based upon the performance of Walmart, of any Affiliate, of a division thereof, or other business unit, or of an individual Recipient. The Committee may, at time of grant, in the case of a Plan Award intended to be a Qualified Performance Based Award, and in the case of other grants, at any time, provide that the Performance Goals for such Plan Award shall include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts and any unusual nonrecurring gain or loss. 2.22 “ Performance Period ” means that period established by the Committee during which the attainment of Performance Goals specified by the Committee with respect to a Plan Award are to be measured. A Performance Period may be a 12-month period or a longer or shorter period. 2.23 “Performance Share Unit,” “Performance Unit” or “PSU” means the right to receive the value of a Share, whether settled in Shares or in cash, upon attainment of specified Performance Goals. For Plan Awards granted prior to the 2013 Restatement, the term “Performance Share” referred to a Performance Share Unit (as defined above) payable in Shares, and “Performance Share Unit” referred to a Performance Share Unit (as defined above) to be settled in cash. To the extent that Notices of Plan Award granted prior to the 2013 Restatement use the term “Performance Share,” the term “Performance Share” as used in such Notices of Plan Award shall, without formal amendment, be deemed to refer to Performance Share Units (as defined above) payable in Shares. To the extent that Notices of Plan Award granted prior to the 2013 Restatement use the term “Performance Share Unit,” the term “Performance Share Unit” as used in such Notices of Plan Award shall, without formal amendment, be deemed to refer to Performance Share Units (as defined above) to be settled in cash. 2.24 “Plan” means this Walmart Inc. Stock Incentive Plan of 2015, as amended from time to time. 2.25 “Plan Award” means an award or right granted under the Plan consisting of an Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right, Performance Unit, or Stock. The terms and conditions applicable to a Plan Award shall be set forth in the applicable Notice of Plan Award. 2.26 “Qualified Performance Based Award” means a Plan Award to a Covered Employee or to an Associate that the Committee determines may be a Covered Employee at the time Walmart or an Affiliate would be entitled to a deduction for such Plan Award, which is intended to provide “qualified performance-based compensation” within the meaning of Code Section 162(m). For any Performance Period for which a Plan Award is intended to be a Qualified Performance Based Award, Performance Goals shall be established by the Committee no later than 90 days after the beginning of the Performance Period to which the Performance Goals pertain and while the attainment of the Performance Goals is substantially uncertain, and in any event no later than the date 25% of the Performance Period has elapsed. 2.27 “Recipient” means an Associate or Non-Management Director who has received a Plan Award that has not yet been settled.

2.28 “Restricted Stock,” or “Restricted Shares” means Shares awarded to a Recipient pursuant to a Plan Award of Restricted Stock that are subject to a Restriction and all non-cash proceeds of those Shares that are subject to a Restriction. 2.29 “Restricted Stock Unit” or “RSU” means a right denominated in Shares, awarded under the Plan that, subject to Section 8.2, may result in payment to the Recipient in Shares or cash upon, but not before, the lapse of Restrictions related thereto. To the extent that Notices of Plan Award granted prior to the 2013 Restatement use the term “Restricted Stock Right,” the term “Restricted Stock Right” as used in such Notices of Plan Award shall, without formal amendment, be deemed to refer to Restricted Stock Units (as defined above) payable in Shares. To the extent that Notices of Plan Award granted prior to the 2013 Restatement use the term “Restricted Stock Unit,” the term “Restricted Stock Unit” as used in such Notices of Plan Award shall, without formal amendment, be deemed to refer to Restricted Stock Units (as defined above) to be settled in cash. 2.30 “ Restriction” means any restriction on a Recipient’s free enjoyment of the Shares or other rights underlying a Plan Award. Restrictions may be based on the passage of time or the satisfaction of performance criteria or the occurrence of one or more events or conditions, and shall lapse separately or in combination upon such conditions and at such time or times, in installments or otherwise, as the Committee shall specify. Plan Awards subject to a Restriction shall be forfeited if the Restriction does not lapse prior to such date or the occurrence of such event or the satisfaction of such other criteria as the Committee shall determine. 2.31 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, as amended from time to time, together with any successor rule, as in effect from time to time. 2.32 “SEC” means the United States Securities and Exchange Commission, or any successor thereto. 2.33 “Section 16 Person” means any individual who is required to file reports under Section 16 of the Exchange Act. 2.34 “Securities Act” means the Securities Act of 1933, as amended and the rules and regulations adopted thereunder. 2.35 “Share” means a share of the common stock, $.10 par value per share, of Walmart. 2.36 “Stock Appreciation Right” means a right granted to a Recipient pursuant to the Stock Appreciation Rights feature of the Plan. 2.37 “Subject Shares” means such term as defined in Section 3.1.

SHARES SUBJECT TO THE PLAN 3.1 Shares Subject to the Plan. Subject to Section 11.9, the sum of (a) 50,000,000 Shares plus (b) the number of remaining Shares under the 2005 Plan (not subject to outstanding Plan Awards and not delivered out of Shares reserved thereunder) as of the date of stockholder approval of the Plan (collectively, the “Subject Shares”) are reserved for delivery under the Plan. The Subject Shares may be authorized, but unissued Shares, treasury Shares held by Walmart or an Affiliate, or Shares acquired on the open market, including shares acquired on the open market by forwarding cash to an independent broker who will purchase Shares on behalf, and in the name of the Recipient. Shares reserved for delivery pursuant to a Plan Award or any rights

thereto that expire, are forfeited or otherwise are no longer exercisable may be the subject of a new Plan Award. Notwithstanding the foregoing, (a) Shares already owned by a Recipient and used to pay all or a portion of the exercise price of Shares subject to an Option, and (b) any other Shares reacquired by Walmart after such Shares have been issued (or, in the case of Open Market Shares, have been delivered), other than Restricted Stock that is forfeited or reacquired by Walmart without lapse of the Restrictions, shall not become Subject Shares to the extent such Shares are withheld, tendered, or reacquired by Walmart, or are otherwise no longer exercisable. For avoidance of doubt, pursuant to the preceding sentence, (i) when Stock Appreciation Rights are settled in shares, the full number exercised shall cease to be Subject Shares, (ii) when Options are “net exercised,” the full number exercised shall cease to be Subject Shares, and (iii) shares withheld to satisfy tax withholding obligations shall cease to be Subject Shares. 3.2 Limits on Shares. No Recipient may be granted a Plan Award denominated in Shares with respect to a number of Shares in any one Fiscal Year which when added to the Shares subject to any other Plan Award denominated in Shares granted to such Recipient in the same Fiscal Year would exceed 2,000,000 Shares; provided, however, that if the Performance Period applicable to a Plan Award exceeds twelve months, the 2,000,000 Share limit shall apply to each 12-month period in the Performance Period. If a Plan Award denominated in Shares is cancelled, the cancelled Plan Award continues to count against the maximum number of Shares for which a Plan Award denominated in Shares may be granted to a Recipient in any Fiscal Year. The Share limit shall be adjusted to the extent necessary to reflect adjustments to Shares required by Section 11.9. Notwithstanding the foregoing, no Non-Management Director may be granted a Plan Award denominated in Shares with respect to a number of Shares in any one Fiscal Year which when added to the Shares subject to any other Plan Award denominated in Shares granted to such Non-Management Director in the same Fiscal Year would exceed a Share value of $500,000; provided, however, that if the Performance Period applicable to a Plan Award granted to a Non-Management Director exceeds twelve months, the $500,000 limit shall apply to each 12-month period in the Performance Period. For sake of clarity, the $500,000 annual limit on Shares subject to any Plan Award granted to a Non-Management Director applies to Options granted under Section 6.1, Stock granted under Section 7.1, Restricted Stock granted under Section 7.2, Restricted Stock Units granted under Section 8.1, Stock Appreciation Rights granted under Section 9.1, and Performance Units granted under Section 10.1, but shall not include any Shares granted in lieu of cash compensation earned by a Non-Management Director or any Shares received by a Non-Management Director in settlement a Plan Award pursuant to Sections 6.3, 7.4, 8.3, 9.5, and 10.6.

ADMINISTRATION 4.1 Administration. The Committee will administer the Plan and will grant all Plan Awards; provided that solely for purposes of granting Plan Awards to Non-Management Directors, “Committee” shall mean the full Board. The Plan and Plan Awards to Section 16 Persons shall be administered by the Committee in compliance with Rule 16b-3. 4.2 Duties and Powers. The Committee shall have these duties and powers as to the Plan: (a) to establish rules, procedures, and forms governing the Plan;

(b) to interpret and apply the provisions of the Plan and any Plan Award; (c) to recommend amendments of the Plan to the Board; (d) to determine those individuals who will be Recipients and what Plan Awards will be made to them; (e) to set the terms and conditions of any Plan Award and to determine and certify whether, and the extent to which, any such

terms and conditions have been satisfied; (f) to determine the Fair Market Value of the Shares for any purpose; (g) to amend the terms of any Plan Award without the consent of the Recipient or any other person or to waive any conditions or

obligations of a Recipient under or with respect to any Plan Award; provided that no amendment that, in the judgment of the Committee would materially adversely affect the Recipient shall be made without the Recipient’s consent; provided further that no amendment that changes the timing of taxation of the Plan Award shall be deemed to materially adversely affect the Recipient;

(h) to make such adjustments or modifications to Plan Awards to Recipients who are working outside the United States as are advisable to fulfill the purposes of the Plan or to comply with applicable local law and to establish, amend and terminate sub- plans for individuals outside the United States with such provisions as are consistent with the Plan as may be suitable in other jurisdictions to the extent permitted under local law;

(i) to correct any defect or supply any omission; and (j) take any other action it deems necessary or advisable. Notwithstanding the authority of the Committee under this Section 4.2 and notwithstanding any other discretionary power granted to the Committee under the Plan, except in connection with any corporate transaction involving Walmart, the terms of outstanding Plan Awards may not be amended to reduce the exercise price of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Plan Awards or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options or Stock Appreciation Rights without the prior approval of Walmart stockholders. 4.3 Delegation. Except for the administration of Qualified Performance Based Awards and matters under the Plan affected by Section 16 of the Exchange Act and the rules adopted thereunder, the Committee may delegate ministerial duties under the Plan (including but not limited to the duties described in Section 4.2(h)) to one or more administrators, who may be Associates of Walmart, and may delegate non-ministerial duties to an officer of Walmart; provided that the delegate of non-ministerial duties shall not be authorized to make Plan Awards to himself or herself. The Committee has delegated its powers, duties, and authority under the Plan (including the power to delegate, but not including the power to recommend amendments under Section 4.2(c)) with respect to Associates who are not Section 16 Persons, and other than Covered Employees whose awards are intended to be Qualified Performance Based Awards, to the Global Compensation Committee of the Board. The Board may also delegate administration of the Plan or a particular feature of the Plan to another Committee of the Board. Any delegated authority, duty or power may be revoked at any time by the delegator as it deems

appropriate. Any delegated authority, duty or power may be exercised by the delegator as well as the delegate; provided, however, that in the event of any conflict between the exercise of any authority, duty or power by the delegator and the exercise of any authority, duty or power by the delegate, the exercise by the delegator shall govern. 4.4 Determinations Binding. All actions taken or determinations made by the Committee, in good faith, with respect to the Plan, a Plan Award or any Notice of Plan Award shall not be subject to review by anyone, but shall be final, binding and conclusive upon all persons interested in the Plan or any Plan Award.

PARTICIPATION 5.1 All Associates and Non-Management Directors who the Committee determines have the potential to contribute significantly to the success of Walmart or an Affiliate, are eligible to participate in the Plan, except that Non-Management Directors may not receive Incentive Stock Options. An Associate may be granted one or more Plan Awards, unless prohibited by applicable law and subject to the limitations under Code Section 422 with respect to Incentive Stock Options. For any Performance Period for which Plan Awards are intended to be Qualified Performance Based Awards, the Committee shall designate the Associates eligible to be granted Plan Awards no later than the 90th day of the Fiscal Year (or in the case of a Performance Period other than a Fiscal Year, after not later than the date 25% of the Performance Period has elapsed).

STOCK OPTIONS 6.1 Term of Options. Walmart may grant Options covering Subject Shares to Associates and Non-Management Directors. The term of each Option shall be the term stated in the Notice of Plan Award; provided, however, that in the case of an Incentive Stock Option, the term shall be no more than 10 years from the date of grant unless the Incentive Stock Option is granted to a Recipient who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of Walmart or any Parent/Subsidiary Corporation, in which case the term may not exceed 5 years from the date of grant. Each Option shall be a Nonqualified Option unless designated otherwise in the Notice of Plan Award. Notwithstanding the designation of an Option, if the aggregate Fair Market Value of Shares subject to Incentive Stock Options that are exercisable for the first time by a Recipient during a calendar year exceeds $100,000 (whether due to the terms of the Plan Award, acceleration of exercisability, miscalculation or error), or if such Option for any other reason fails to qualify as an Incentive Stock Option, the excess Options shall be treated as Nonqualified Options. 6.2 Option Exercise Price and Consideration. The per Share exercise price of an Option shall be determined by the Committee in its discretion, except that the per Share exercise price for an Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant except that, with respect to an Incentive Stock Option granted to an Associate who owns stock representing more than 10% of the voting power of all classes of stock of Walmart or any Parent/Subsidiary Corporation at the time of the grant, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. The type of consideration in which the exercise price of an Option is to be paid shall be determined by the Committee in its discretion, and, in the case of an Incentive Stock Option, shall be determined at

the time of grant. 6.3 Exercise of Options. An Option shall be deemed to be exercised when the person entitled to exercise the Option gives notice of exercise to Walmart in accordance with the Option’s terms and Walmart receives full payment for the Shares as to which the Option is exercised or other provision for such payment is made in accordance with rules and procedures established by the Committee from time to time. Except with respect to Incentive Stock Options, such rules and procedures may include procedures for a “net-share settlement” method of exercise, under which, subject to the method requirements in the rules and procedures, the Recipient provides an irrevocable notice of exercise of the Option and Walmart retains a number of Shares sufficient to cover the exercise price and the minimum required withholding, and delivers the net number of Shares to the Recipient. In addition, if determined by the Committee in its discretion, which may be applied differently among Recipients or Plan Awards, an Option will be deemed exercised by the Recipient (or in the event of the death of the Recipient then by the person authorized to exercise the Recipient’s Option under Section 11.6) on the expiration date of the Option, or if the NYSE is not open on the expiration date, on the last day prior to the expiration date on which the NYSE is open, using a net share settlement method of exercise to the extent that as of such expiration date the Option is vested and exercisable and the per Share exercise price of the Option is below the Fair Market Value of a Share on such expiration date. 6.4 Termination of Employment. If a Recipient’s Continuous Status is terminated for any reason other than Cause, the Recipient may exercise Options that are not subject to Restrictions as of the termination date to the extent set out in the Recipient’s Notice of Plan Award. Incentive Stock Options may be exercised only within 60 days (or other period of time determined by the Committee at the time of grant of the Option and not exceeding 3 months) after the date of the termination (but in no event later than the expiration date of the term of that Option as set forth in the Notice of Plan Award), and only to the extent that Recipient was entitled to exercise the Incentive Stock Option at the date of that termination. To the extent the Recipient is not entitled to or does not exercise an Option at the date of that termination or within the time specified herein or in the Notice of Plan Award, the Option shall terminate. In addition, the Recipient’s right to exercise Options will be tolled pending any period initiated by the Committee to determine the existence of Cause with respect to the Recipient regardless of whether the commencement of such period is prior to, coincident with, or subsequent to the termination of the Recipient’s Continuous Status. If the Committee determines there is no Cause, then the tolling period will end and the Recipient’s right to exercise Options will be reinstated; provided, however, in no event will the exercise date of an Option be later than the earlier of (a) 90 days following the termination of the Recipient’s Continuous Status plus the tolling period, or (b) the expiration date of the Option as set forth in the Notice of Plan Award. Notwithstanding any provision in the Plan to the contrary, an Associate’s Continuous Status is not terminated for purposes of the Associate’s Options if immediately upon the termination of the Associate’s employment relationship with Walmart or an Affiliate the Associate becomes a Non-Management Director. 6.5 Administrative Suspension from Employment. During a period for which the Recipient is subject to administrative suspension from employment, the Recipient’s right to exercise Options will be suspended. If upon the conclusion of the administrative suspension the Recipient returns to employment, then the Recipient’s right to exercise Options will be reinstated subject to Restrictions set forth in the Notice of Plan Award; provided, however, in no event will

the exercise date of an Option be later than the expiration date of the term of that Option as set forth in the Notice of Plan Award. 6.6 Disability of Recipient. Notwithstanding the provisions of Section 6.4, in the case of an Associate’s Incentive Stock Option, if the Recipient’s Continuous Status is terminated as a result of his or her total and permanent disability (as defined in Code Section 22(e)(3)), the Recipient may, but only within 12 months from the date of that termination (but in no event later than the expiration date of the term of that Option as set forth in the Notice of Plan Award), exercise an Incentive Stock Option to the extent otherwise entitled to exercise it at the date of that termination. To the extent the Recipient is not entitled to exercise an Incentive Stock Option at the date of termination, or if Recipient does not exercise that Incentive Stock Option to the extent so entitled within the time specified herein, the Incentive Stock Option shall terminate. 6.7 Non-transferability of Options . An Option may not be sold, pledged, hedged, assigned, hypothecated, transferred or disposed of in any manner except by testamentary devise or by the laws of descent or distribution or, in those circumstances expressly permitted by the Committee, to a Permitted Transferee. For this purpose, a “Permitted Transferee” means any member of the Immediate Family of the Recipient, any trust of which all of the primary beneficiaries are the Recipient or members of his or her Immediate Family or any partnership of which all of the partners or members are the Recipient or members of his or her Immediate Family. The “Immediate Family” of a Recipient means the Recipient’s spouse, children, stepchildren, grandchildren, parents, stepparents, siblings, grandparents, nieces and nephews, or the spouse of any of the foregoing individuals. 6.8 Withholding. The Committee may withhold, or provide for the payment of, any amounts necessary to collect any withholding taxes upon any taxable event relating to an Option in accordance with Section 11.10 except to the extent otherwise provided under Section 6.3.

SHARES AND RESTRICTED STOCK 7.1 Grant of Shares. Walmart may grant Shares without Restrictions or payment to those Non-Management Directors as the full Board may determine in its sole discretion. 7.2 Grant of Restricted Stock. Walmart may grant Restricted Stock to those Associates and Non-Management Directors as the Committee may select in its sole discretion. Each Plan Award of Restricted Stock shall have those terms and conditions that are expressly set forth in, or are required by, the Plan and any other terms and conditions as the Committee may determine in its discretion. 7.3 Dividends; Voting. While any Restriction applies to any Recipient’s Restricted Stock, (a) unless the Committee provides otherwise, the Recipient shall receive the dividends paid on the Restricted Stock and shall not be required to return those dividends to Walmart in the event of the forfeiture of the Restricted Stock, (b) the Recipient shall have the right to, subject to all Restrictions then existing as to the Recipient’s Restricted Stock, receive the proceeds of the Restricted Stock in any stock split, reverse stock split, recapitalization, or other change in the capital structure of Walmart, which proceeds shall automatically and without need for any other action become Restricted Stock and be delivered as provided in Section 7.4, and (c) the Recipient shall be entitled to vote the Restricted Stock during the Restriction period. 7.4 Delivery of Shares. Subject to any deferral election under Section 7.8, a Share will be delivered to the Recipient upon, or as soon as practicable after, the lapse of the Restrictions on a

Share of Restricted Stock. Shares awarded under Section 7.1 shall be delivered immediately upon issuance of any such Plan Award. During the period of Restriction applicable to Restricted Stock, the Recipient shall not have the right to sell, transfer, assign, convey, pledge, hypothecate, grant any security interest in or mortgage on, or otherwise dispose of or encumber the Restricted Stock or any interest therein. As a result of the retention of rights in the Restricted Stock by Walmart, except as required by any law, neither any Shares of the Restricted Stock nor any interest therein shall be subject in any manner to any forced or involuntary sale, transfer, conveyance, pledge, hedge, hypothecation, encumbrance, or other disposition or to any charge, liability, debt, or obligation of the Recipient, whether as the direct or indirect result of any action of the Recipient or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any action attempting to effect any transaction of that type shall be void. 7.5 Forfeiture. Unless expressly provided for in the Plan Award, any Restricted Stock held by the Recipient at the time the Recipient ceases to be an Associate or Non-Management Director for any reason shall be forfeited by the Recipient to Walmart and automatically re-conveyed to Walmart. 7.6 Withholding. The Committee may withhold in accordance with Section 11.10 any amounts necessary to collect any withholding taxes upon any taxable event relating to a Plan Award or the exercise or settlement thereof. 7.7 Evidence of Share Ownership. The Restricted Stock will be book-entry Shares held for the benefit of the Recipient with stop transfer instructions on Walmart’s stop transfer records until the Restrictions lapse, at which time Walmart will remove stop transfer instructions from the Shares on its stock transfer records. 7.8 Deferral of Shares or Restricted Stock. At the time of grant of Shares or Restricted Stock (or at such earlier or later time as the Committee determines to be appropriate in light of the provisions of Code Section 409A) the Committee may permit a Recipient of a Plan Award of Shares or a Plan Award of Restricted Stock to defer his or her Stock or Restricted Stock in accordance with rules and procedures established by the Committee. Alternatively, the Committee may, in its discretion and at the times provided above, permit an individual who would have been a Recipient of a Plan Award of Shares or a Plan Award of Restricted Stock to elect instead to receive an equivalent Plan Award of Restricted Stock Units to be settled in Shares and may permit the Recipient to elect to defer receipt of Shares under such Plan Award of Restricted Stock Units in accordance with Section 8.7.

RESTRICTED STOCK UNITS 8.1 Grant of Restricted Stock Units. Walmart may grant Restricted Stock Units to those Associates and Non-Management Directors as the Committee may select in its sole discretion. Each Plan Award of Restricted Stock Units shall have those terms and conditions that are expressly set forth in, or are required by, the Plan and the Notice of Plan Award, as the Committee may determine in its discretion. The Restrictions imposed shall take into account potential tax treatment under Code Section 409A. 8.2 Beneficial Ownership. Until the Restricted Stock Unit is released from Restrictions and settled in Shares or cash, the Recipient shall not have any beneficial ownership in any Shares subject to the Restricted Stock Unit, nor shall the Recipient have the right to sell, transfer, assign,

convey, pledge, hypothecate, grant any security interest in or mortgage on, or otherwise dispose of or encumber any Restricted Stock Unit or any interest therein. Except as required by any law, no Restricted Stock Unit nor any interest therein shall be subject in any manner to any forced or involuntary sale, transfer, conveyance, pledge, hedge, hypothecation, encumbrance, or other disposition or to any charge, liability, debt, or obligation of the Recipient, whether as the direct or indirect result of any action of the Recipient or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any action attempting to effect any transaction of that type shall be void. 8.3 Settlement of Restricted Stock Units. Upon the lapse of the Restrictions, the Recipient of Restricted Stock Units shall, except as noted below, be entitled to receive, as soon as administratively practical, (a) that number of Shares subject to the Plan Award that are no longer subject to Restrictions, (b) in cash in an amount equal to the Fair Market Value of the number of Shares subject to the Plan Award that are no longer subject to Restrictions, or (c) any combination of cash and Shares, as the Committee shall determine in its sole discretion and specify at the time the Plan Award is granted. Where in the judgment of the Committee, it is in the interests of Walmart to do so, a grant of Restricted Stock Units may provide that Walmart or an Affiliate may purchase Shares on the open market on behalf of a Recipient in accordance with Section 11.1 (“Open Market Shares”). 8.4 Forfeiture. Restricted Stock Units and the entitlement to Shares, cash, or any combination thereunder will be forfeited and all rights of an Associate or Non-Management Director to such Restricted Stock Units and the Shares thereunder will terminate if the applicable Restrictions are not satisfied. 8.5 Limitation of Rights. A Recipient of Restricted Stock Units is not entitled to any rights of a holder of the Shares (e.g. voting rights and dividend rights), prior to the receipt of such Shares pursuant to the Plan. The Committee may, however, provide in the Notice of Plan Award that the Recipient shall be entitled to receive dividend equivalent payments on Restricted Stock Units, on such terms and conditions as the Notice of Plan Award shall specify. 8.6 Withholding. The Committee may withhold in accordance with Section 11.10 any amounts necessary to collect any withholding taxes upon any taxable event relating to Restricted Stock Units. 8.7 Deferral of Restricted Stock Units . At the time of grant of Restricted Stock Units (or at such earlier or later time as the Committee determines to be appropriate in light of the provisions of Code Section 409A) the Committee may permit the Recipient to elect to defer receipt of the Shares or cash to be delivered upon lapse of the Restrictions applicable to the Restricted Stock Units in accordance with rules and procedures established by the Committee. Such rules and procedures shall take into account potential tax treatment under Code Section 409A, and may provide for payment in Shares or cash.

STOCK APPRECIATION RIGHTS 9.1 Grant. Walmart may grant Stock Appreciation Rights to those Associates and Non-Management Directors as the Committee selects in its sole discretion, on any terms and conditions the Committee deems desirable. A Recipient granted a Stock Appreciation Right will be entitled to receive payment as set forth in the Notice of Plan Award in an amount equal to (a) the excess of the Fair Market Value of a Share on the date on which the Recipient properly exercises Stock Appreciation Rights that are no longer subject to Restrictions over the Fair

Market Value of a Share on the date of grant of the Recipient’s Stock Appreciation Rights, (b) a predetermined amount that is less than that excess, or (c) with respect to Recipients who are exempt from U.S. taxation and who are expected to remain exempt from U.S. taxation until the Plan Award is settled, any other amount as may be set by the Committee, multiplied by the number of Stock Appreciation Rights as to which the Recipient exercises the Stock Appreciation Right. The Committee may provide that payment with respect to an exercised Stock Appreciation Right may occur on a date which is different than the exercise date, and may provide for additional payment in recognition of the time value of money and any delay between the exercise date and the payment date. 9.2 Award Vesting and Forfeiture. The Committee shall establish the Restrictions, if any, applicable to Stock Appreciation Rights. Stock Appreciation Rights and the entitlement to Shares thereunder will be forfeited and all rights of the Recipient to such Stock Appreciation Rights and the Shares thereunder will terminate if any applicable Restrictions in the Plan or Notice of Plan Award are not satisfied. 9.3 Beneficial Ownership. The Recipient of any Stock Appreciation Rights shall not have any beneficial ownership in any Shares subject to such Plan Awards until Shares are delivered in satisfaction of the Plan Award nor shall the Recipient have the right to sell, transfer, assign, convey, pledge, hypothecate, grant any security interest in or mortgage on, or otherwise dispose of or encumber any Stock Appreciation Rights or any interest therein. Except as required by any law, neither the Stock Appreciation Rights nor any interest therein shall be subject in any manner to any forced or involuntary sale, transfer, conveyance, pledge, hedge, hypothecation, encumbrance, or other disposition or to any charge, liability, debt, or obligation of the Recipient, whether as the direct or indirect result of any action of the Recipient or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any action attempting to effect any transaction of that type shall be void. 9.4 Election to Receive Payments. A Recipient of a Stock Appreciation Right may elect to receive a payment to which the Recipient is entitled under the Plan Award by giving notice of such election to the Committee in accordance with the rules established by the Committee. In addition, if determined by the Committee in its discretion, which may be applied differently among Recipients or Plan Awards, a Stock Appreciation Right will be deemed exercised by the Recipient (or in the event of the death of the Recipient then by the person authorized to exercise the Recipient’s Stock Appreciation Right under Section 11.6) on the expiration date of the Stock Appreciation Right, or if the NYSE is not open on the expiration date, on the last day prior to the expiration date on which the NYSE is open, to the extent that as of such expiration date the Stock Appreciation Right is vested and exercisable and to the extent that, if the Recipient exercised such Stock Appreciation Right, the Recipient would receive a payment under Section 9.5. 9.5 Payments to Recipients. Subject to the terms and conditions of the Notice of Plan Award granting the Stock Appreciation Rights, a payment to a Recipient with respect to Stock Appreciation Rights may be made (a) in cash, (b) in Shares having an aggregate Fair Market Value on the date on which the Stock Appreciation Rights are settled equal to the amount of the payment to be made under the Plan Award, or (c) any combination of cash and Shares, as the Committee shall determine in its sole discretion and specify at the time the Plan Award is granted. The Committee shall not make any payment in Shares if such payment would result in any adverse tax or other legal effect as to this Plan or Walmart.

9.6 Termination of Continuous Status. If a Recipient’s Continuous Status is terminated for any reason other than Cause, then, Recipient may elect payment with respect to Stock Appreciation Rights that are not subject to Restrictions as of the termination date to the extent set out in the Recipient’s Notice of Plan Award. To the extent the Recipient is not entitled to or does not elect payment with respect to a Stock Appreciation Right at the date of termination or within the time specified herein or in the Notice of Plan Award, the Stock Appreciation Right shall terminate. In addition, the Recipient’s right to exercise Stock Appreciation Rights will be tolled pending any period initiated by the Committee to determine the existence of Cause with respect to the Recipient regardless of whether the commencement of such period is prior to, coincident with, or subsequent to the termination of the Recipient’s Continuous Status. If the Committee determines there is no Cause, then the tolling period will end and the Recipient’s right to elect payment of Stock Appreciation Rights will be reinstated; provided, however, in no event will the exercise date of a Stock Appreciation Right be later than the earlier of (a) 90 days following the termination of the Recipient’s Continuous Status plus the tolling period, or (b) the expiration date of the Stock Appreciation Right as set forth in the Notice of Plan Award. Notwithstanding any provision in the Plan to the contrary, an Associate’s Continuous Status is not terminated for purposes of the Associate’s Stock Appreciation Rights if immediately upon the termination of the Associate’s employment relationship with Walmart or an Affiliate the Associate becomes a Non-Management Director. 9.7 Administrative Suspension from Employment. During a period for which the Recipient is subject to administrative suspension from employment, the Recipient’s right to elect payment of Stock Appreciation Rights will be suspended. If upon the conclusion of the administrative suspension the Recipient returns to employment, then the Recipient’s right to elect payment of Stock Appreciation Rights will be reinstated subject to Restrictions set forth in the Notice of Plan Award; provided, however, in no event will the date of the payment election be later than the expiration date of the term of the Stock Appreciation Right as set forth in the Notice of Plan Award. 9.8 Limitation of Rights. A Recipient of Stock Appreciation Rights is not entitled to any rights of a holder of the Shares (e.g., voting rights and dividend rights), prior to the receipt of such Shares pursuant to the Plan. 9.9 Withholding. The Committee may withhold in accordance with Section 11.10 any amounts necessary to collect any withholding taxes upon any taxable event relating to the Stock Appreciation Rights. 9.10 Deferral of Stock Appreciation Rights. At the time of grant of a Plan Award of Stock Appreciation Rights the Committee may permit a Recipient who is exempt from U.S. taxation and who is expected to remain exempt from U.S. taxation until the Plan Award is settled to elect to defer the Shares or cash to be delivered in settlement of a Stock Appreciation Right in accordance with rules and procedures established by the Committee.

PERFORMANCE UNITS 10.1 Grant. Walmart may grant Performance Units to those Associates and Non-Management Directors as it may select in its sole discretion, on any terms and conditions the Committee deems desirable. Each Plan Award of Performance Units shall have those terms and conditions that are expressly set forth in, or are required by, the Plan and Notice of Plan Award.

10.2 Performance Goals. The Committee shall set Performance Goals which, depending on the extent to which they are met during a Performance Period, will determine the number of Performance Units that will be earned by the Recipient at the end of the Performance Period. The Performance Goals shall be set at threshold, target and maximum performance levels, with the number of Performance Units to be earned tied to the degree of attainment of the various performance levels under the various Performance Goals during the Performance Period. No Performance Units will be earned if the threshold performance level is not attained. 10.3 Beneficial Ownership. The Recipient of Performance Units shall not have any beneficial ownership in any Shares subject to the Performance Units unless and until Shares are delivered in satisfaction of the Performance Units nor shall the Recipient have the right to sell, transfer, assign, convey, pledge, hedge, hypothecate, grant any security interest in or mortgage on, or otherwise dispose of or encumber any Performance Units or any interest therein. Except as required by any law, neither the Performance Units nor any interest therein shall be subject in any manner to any forced or involuntary sale, transfer, conveyance, pledge, hypothecation, encumbrance, or other disposition or to any charge, liability, debt, or obligation of the Recipient, whether as the direct or indirect result of any action of the Recipient or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any action attempting to effect any transaction of that type shall be void. 10.4 Determination of Achievement of Performance Goals. The Committee shall, promptly after the date on which the necessary financial, individual or other information for a particular Performance Period becomes available, determine and certify the degree to which each of the Performance Goals have been attained. 10.5 Settlement of Performance Units. After the applicable Performance Period has ended, the Recipient of Performance Units shall be entitled to payment based on the performance level attained with respect to the Performance Goals applicable to the Performance Units. The Committee may, in its sole discretion, reduce, eliminate or increase any amount of Shares or cash earned under Performance Units for any individual or group, except that such amount of Shares or cash intended to be a Qualified Performance Based Award may not be increased above the amount provided in the Notice of Plan Award. Unless deferred in accordance with Section 10.9, Performance Units shall be settled as soon as practicable after the Committee determines and certifies the degree of attainment of Performance Goals for the Performance Period. The Committee shall have the discretion and authority to make adjustments to any Performance Units in circumstances where, during the Performance Period: (a) a Recipient leaves Walmart or an Affiliate and is subsequently rehired; (b) a Recipient transfers between positions with different incentive percentages or Performance Goals; (c) a Recipient transfers to a position not eligible to participate in the Plan; (d) a Recipient becomes eligible, or ceases to be eligible, for an incentive from another incentive plan maintained by Walmart or an Affiliate; (e) a Recipient is on a leave of absence; and (f) similar circumstances deemed appropriate by the Committee, consistent with the purpose and terms of the Plan; provided however, that the Committee shall not be authorized to increase the amount of Performance Units payable to a Covered Employee that would otherwise be payable if the amount was intended to be Qualified Performance Based Award. 10.6 Payments to Recipients. Subject to the terms and conditions of the Notice of Plan Award, payment to a Recipient with respect to Performance Units may be made (a) in Shares, (b)

in cash or by check equal to the Shares’ Fair Market Value on the date the Performance Units are settled, or (c) any combination of cash and Shares, as the Committee shall determine at any time in its sole discretion. 10.7 Limitation of Rights. A Recipient of Performance Units is not entitled to any rights of a holder of the Shares (e.g. voting rights and dividend rights), prior to the receipt of Shares pursuant to the settlement of the Plan Award (if the Plan Award is settled in Shares). No dividend equivalents will be paid with respect to Performance Units. 10.8 Withholding. The Committee may withhold in accordance with Section 11.10 any amounts necessary to collect any withholding taxes upon any taxable event relating to Performance Units. 10.9 Deferral of Shares or Cash Payout. At the time of grant of Performance Units (or at such earlier or later time as the Committee determines to be appropriate in light of Code Section 409A) the Committee may permit the Recipient to elect to defer delivery of Shares (or payment of cash) with respect to the Plan Award in accordance with such rules and procedures established by the Committee. Such rules and procedures shall take into account potential tax treatment under Code Section 409A.

MISCELLANEOUS 11.1 Issuance of Stock Certificates; Book-Entry; or Purchase of Shares. (a) If a Recipient has the right to the delivery of any Shares pursuant to any Plan Award, Walmart shall issue or cause to be

issued a stock certificate or a book-entry crediting Shares to the Recipient’s account promptly upon the exercise of the Plan Award or the right arising under the Plan Award.

(b) A Recipient’s right to Open Market Shares pursuant to settlement of a Plan Award of Restricted Stock Units or Performance Units shall not be satisfied by Walmart’s delivery of Shares but rather Walmart or an Affiliate shall purchase the Shares on the open market on behalf of the Recipient by forwarding cash to an independent broker who will in turn purchase the Shares on the open market on behalf of the Recipient.

11.2 Compliance with Code Section 162(m). (a) To the extent awards to Covered Employees are intended to be Qualified Performance Based Awards, the material terms of

the Performance Goals under which awards are paid (and any material changes in material terms) shall be disclosed to and approved by Walmart’s stockholders in a separate vote. Material terms include the eligible Recipients specified in Section 5.1, the Performance Measures pursuant to which the Performance Goals are set, and the maximum amount of compensation that could be paid to any Covered Employee or the formula used to calculate the amount of compensation to be paid to the Covered Employee if the Performance Goal is attained.

(b) Performance Measures must be disclosed to and reapproved by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders previously approved the Performance Measures. If applicable laws change to permit Committee discretion to alter the governing Performance Measures without conditioning deductibility on obtaining stockholder approval (or reapproval) of any changes, the Committee shall have sole discretion to make changes without obtaining

stockholder approval or reapproval. (c) Whenever the Committee determines that it is advisable to grant or pay awards that do not qualify as Qualified Performance

Based Awards, the Committee may make grants or payments without satisfying the requirements of Code Section 162(m). (d) The Committee may, but shall not be required to, establish rules and procedures providing for the automatic deferral of

Shares or other Plan payouts of Recipients who are Covered Employees as necessary to avoid a loss of deduction under Code Section 162(m)(1).

11.3 Termination of Employment or Interruption or Termination of Continuous Status. Except as otherwise expressly set forth in the Plan, the Committee shall determine the effect of the termination of an Associate’s employment, or a Recipient’s disability or death, or any other interruption or termination of Continuous Status, on the lapse of any Restrictions contained in a Plan Award made to the Recipient. During a period for which the Recipient is subject to administrative suspension, a Recipient’s right to exercise or receive payment for any rights under any Plan Award or the vesting of any rights under any Plan Award shall be suspended to the extent permitted under local law. 11.4 Forfeiture for Cause. Notwithstanding anything to the contrary contained in the Plan, any Recipient upon a finding of “Cause” by the Committee shall forfeit all Plan Awards (and rights thereunder) granted under the Plan, whether or not vested or otherwise exercisable. 11.5 Repayment Obligation. (a) Notwithstanding anything to the contrary contained in the Plan, in the event the Committee or its delegate (which expressly

may include any officer of Walmart or a non-Associate third party (such as counsel to Walmart)) determines that a Recipient has engaged in Gross Misconduct, then the Recipient shall forfeit all Plan Awards then outstanding, and the Recipient shall repay to Walmart any payments received from Walmart with respect to any Plan Awards subsequent to the date which is twenty-four (24) months prior to the date of the behavior serving as the basis for the finding of Gross Misconduct. Any amount to be repaid by a Recipient pursuant to this Section 11.5 shall be held by the Recipient in constructive trust for the benefit of Walmart and shall be paid by the Recipient to Walmart with interest at the prime rate (as published in The Wall Street Journal ) as of the date the Committee or its delegate determines the Recipient engaged in Gross Misconduct. The amount to be repaid pursuant to this Section 11.5 shall be determined on a gross basis, without reduction for any taxes incurred, as of the date of payment to the Recipient, and without regard to any subsequent change in the Fair Market Value of a Share.

(b) If the Committee determines at any time that the Recipient of a Plan Award, prior to or within one year after the date of settlement of such Plan Award, (A) engaged in any act the Committee deems inimical to the best interest of Walmart or an Affiliate, (B) breached any restrictive covenant or confidentiality requirement to which the Recipient was subject; or (C) otherwise failed to comply with applicable policies of Walmart or an Affiliate at all times prior to the settlement of the Plan Award, the Recipient shall be obligated, upon demand, to return the amount paid or distributed in settlement of such Plan Award to Walmart. In addition, all Plan Awards, whether or not previously settled, and whether or not previously deferred, shall be subject to Walmart’s policies, including

Walmart’s Statement of Ethics or requirements of applicable law (including regulations and other applicable guidance) regarding clawbacks (recoupment) as in effect from time to time.

11.6 Death of Recipient. To the extent permitted in the Notice of Plan Award or under Committee rules and procedures, a Recipient may name a beneficiary or beneficiaries to whom the Recipient’s Plan Award may be paid, or who is authorized to exercise the Recipient’s Plan Award, in the event of the death of the Recipient, subject to Committee rules and procedures. If no such beneficiary is effectively named by the Recipient for any reason, then except to the extent otherwise provided in the Notice of Plan Award or Committee rules and procedures, if the Recipient dies, the Recipient’s Plan Award may be paid to the Recipient’s estate or may be exercised, in accordance with its terms or as allowed by law, by the Recipient’s estate or by the beneficiary or person to whom the award devolves by bequest or inheritance. Unless otherwise provided in the Notice of Plan Award, (a) Plan Awards may be exercised after death only to the extent the Recipient was otherwise entitled to exercise the Plan Award at the date of the Recipient’s death and only if exercised within 12 months after the Recipient’s death, and (b) to the extent a Plan Award was unvested at the date of death, the Plan Award shall terminate. 11.7 Limitations on Liability and Award Obligations. Receiving a Plan Award or being the owner of any Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right, or Performance Unit shall not: (a) give a Recipient any rights except as expressly set forth in the Plan or in the Plan Award and except as a stockholder of

Walmart as set forth herein as to the Restricted Stock only; (b) as to Shares deliverable on the exercise of Options or Stock Appreciation Rights, or in settlement of Performance Units or

Restricted Stock Units, until the delivery (as evidenced by the appropriate entry on the books of Walmart of a duly authorized transfer agent of Walmart) of such Shares, give the Recipient the right to vote, or receive dividends on, or exercise any other rights as a stockholder with respect to such Shares, notwithstanding the exercise (in the case of Options or Stock Appreciation Rights) of the related Plan Award;

(c) be considered a contract of employment or give the Recipient any right to continued employment, or to hold any position, with Walmart or any Affiliate;

(d) create any fiduciary or other obligation of Walmart or any Affiliate to take any action or provide to the Recipient any assistance or dedicate or permit the use of any assets of Walmart or any Affiliate that would permit the Recipient to be able to attain any performance criteria stated in the Recipient’s Plan Award;

(e) create any trust, fiduciary or other duty or obligation of Walmart or any Affiliate to engage in any particular business, continue to engage in any particular business, engage in any particular business practices or sell any particular product or products;

(f) create any obligation of Walmart or any Affiliate that shall be greater than the obligations of Walmart or that Affiliate to any general unsecured creditor of Walmart or the Affiliate; or

(g) give a Recipient any right to receive any additional Plan Award of any type. If Walmart or an Affiliate terminates a Recipient’s employment with Walmart or the Affiliate,

the potential value of any Plan Award that must be returned to Walmart will not be an element of any damages that the Recipient may have for any termination of employment or other relationship in violation of any contractual or other rights the Recipient may have. 11.8 No Liability of Committee Members. Walmart shall indemnify and hold harmless each member of the Committee and each other officer and director of Walmart or any Affiliate that has any duty or power relating to the administration of the Plan against any liability, obligation, cost or expense incurred by that person arising out of any act or omission to act in connection with the Plan or any Plan Award if he or she acted in good faith and in a manner reasonably believed to be in or not opposed to the best interest of Walmart. Indemnification of Associates, directors, and agents shall be determined pursuant to the requirements of Article VI of Walmart’s Amended and Restated Bylaws. 11.9 Adjustments upon Changes in Capitalization or Merger. Subject to any required action by the Walmart stockholders, the number and type of Shares (or other securities or property) covered by each Plan Award, and the number and type of Shares (or other securities or property) which have been authorized for delivery under the Plan but as to which no Plan Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Plan Award, the price per Share covered by any outstanding Plan Award that includes in its terms a price per Share, and the number of Shares with respect to which Plan Awards may be granted to an individual shall be proportionately adjusted to reflect an extraordinary dividend or other distribution (whether in the form of cash, Shares or other securities or property), stock split, reverse stock split, merger, reorganization, subdivision, consolidation or reduction of capital, recapitalization, consolidation, split-up, spin-off, combination or reclassification of the Shares, or any other increase or decrease in the number of outstanding Shares effected without receipt of consideration by Walmart, issuance or warrants or other rights to purchase Shares or other securities of Walmart or other similar corporate transaction or event that affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. That adjustment shall be made by the Committee, whose determination shall be final, binding and conclusive as to every person interested under the Plan. Except as expressly provided herein, no issuance by Walmart of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to a Plan Award. 11.10 Tax Withholding. Whenever taxes are to be withheld in connection with the grant, vesting, lapse of restrictions, exercise or settlement of a Plan Award or for any other reason in connection with a Plan Award (the date on which such withholding obligation arises being hereinafter referred to as the “Tax Date”), the Committee may decide, in its sole discretion, to provide for the payment for the withholding of federal, state and local taxes (including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods and may (but need not) permit the Recipient to elect the method or methods: (a) payment in cash of the amount to be withheld, (b) requesting Walmart to withhold from Shares that would otherwise be delivered in settlement of a Plan Award payable in Shares (or upon the lapse of Restrictions on a Plan Award) a number of Shares having a Fair Market Value on the Tax Date or the last NYSE trading day prior to the Tax Date no greater than the amount to be withheld, (c) transfer of unencumbered Shares owned by the Recipient in circumstances permitted by the Committee

valued at their Fair Market Value on the Tax Date or the last NYSE trading day prior to the Tax Date, (d) withholding from any cash compensation otherwise due to the Recipient; or (e) such other method as authorized by the Committee in its discretion. The Committee may set limits on the amount of withholding to be satisfied through withholding of Shares; e.g., the Committee may require that only the minimum withholding be satisfied in Shares, and may prohibit withholding from Open Market Shares or using a particular method if necessary or advisable in a particular country. Any fractional share amount must be paid in cash or withheld from compensation otherwise due to the Recipient. 11.11 Amendment and Termination of the Plan. The Board may amend or terminate the Plan at any time without the approval of the Recipients or any other person, except to the extent any action of that type is required to be approved by the stockholders of Walmart under applicable law, listing standards, or in connection with any outstanding Qualified Performance Based Awards. Notwithstanding the foregoing, no amendment that, in the judgment of the Board would materially adversely affect a Recipient holding an Award shall be made without the Recipient’s consent; provided that no amendment that changes the timing of taxation of a Plan Award shall be deemed to materially adversely affect the Recipient. 11.12 Compliance with Law. The making of any Plan Award or delivery of any Shares is subject to compliance by Walmart with all applicable laws as determined by Walmart’s legal counsel. Walmart need not issue or transfer any Plan Award or Shares pursuant to the Plan unless Walmart’s legal counsel has approved all legal matters in connection with the delivery of any Plan Award or Shares. 11.13 No Representation or Warranty Regarding Tax Treatment. Notwithstanding any language contained in the Plan or any Plan Award, Walmart does not represent or warrant that any particular tax treatment will be achieved. 11.14 Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware. 11.15 Superseding Existing Plans, Effective Date, and Transition. The Plan, as set forth herein, was approved by the Board on February 6, 2015, to be effective on June 5, 2015, subject to the approval of Walmart’s stockholders. The 2013 Restatement was approved by the Board on April 12, 2013, to be effective August 12, 2013. The 2010 Plan was effective January 1, 2010, and approved by Walmart’s stockholders on June 4, 2010. The 2005 Plan was effective January 1, 2005, and was approved by Walmart’s stockholders on June 3, 2005. The 1998 Plan was effective as of March 5, 1998, and was approved by Walmart’s stockholders on June 5, 1998. Shares made available for delivery in settlement of Plan Awards shall also be available for delivery in settlement of amounts payable under the provisions of the Walmart Inc. Director Compensation Deferral Plan. 11.16 Funding. To the extent the Plan is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), it is intended to be (and will be administered as) an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of ERISA. It is intended that the Plan be unfunded for federal tax purposes and for purposes of Title I of ERISA. 11.17 Code Section 409A. Plan Awards are intended to be exempt from the definition of “nonqualified deferred compensation” within the meaning of Code Section 409A, or to the extent

not so exempt, to satisfy the requirements of Code Section 409A, and the Plan and Plan Awards shall be interpreted accordingly.

WALMART INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(February 1, 2011)

Renamed effective February 1, 2018

TABLE OF CONTENTS

PAGE

ARTICLE I - GENERAL 1 1.1 Purpose 1 1.2 Effective Date 1 1.3 Nature of Plan 1

ARTICLE II - DEFINITIONS 1

2.1 Definitions 1 ARTICLE III - PARTICIPATION 3

3.1 Eligibility 3 3.2 Participation 4

ARTICLE IV - PLAN ACCOUNTS AND CREDITS 4

4.1 Nature of Plan Accounts 4 4.2 Contribution Credits 5 4.3 Income or Loss Adjustment on Plan Accounts 5

ARTICLE V - PAYMENT OF PLAN BENEFITS 6

5.1 Benefits in the Event of Retirement, Disability or Death 6 5.2 Benefits Due to Separation from Service 7 5.3 Beneficiary Designations 8 5.4 In-Service Withdrawals 8

ARTICLE VI - GROSS MISCONDUCT -- REDUCTION IN PLAN BENEFITS 8

6.1 Impact of Gross Misconduct 8 ARTICLE VII - ADMINISTRATION 9

7.1 Administration 9 7.2 Allocation and Delegation of Duties 9

ARTICLE VIII - CLAIMS AND APPEAL PROCEDURES 10

8.1 General 10 8.2 Appeals Procedure 11

ARTILE IX - MISCELLANEOUS PROVISIONS 11 9.1 Amendment, Suspension or Termination of Plan 11 9.2 Non-Alienability 12 9.3 No Employment Rights 12 9.4 Withholding and Employment Taxes 12 9.5 Income and Excise Taxes 12 9.6 Successors and Assigns 12 9.7 Governing Law 12 9.8 Recovery of Overpayments 12

WALMART INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I GENERAL

1.1 Purpose.

The purpose of this Supplemental Executive Retirement Plan is to supplement the Walmart 401(k) Plan and the Walmart Puerto Rico 401(k) Plan. This Plan is intended to be in compliance with Code Section 409A and shall be interpreted, applied and administered at all times in accordance with Code Section 409A and guidance issued thereunder.

1.2 Effective Date.

This Plan was initially effective January 31, 1990. The Plan has been amended from time to time, most recently effective January 1, 2009. The Plan is hereby further amended and restated as of February 1, 2011 (except as otherwise specifically stated herein).

1.3 Nature of Plan.

The Plan is intended to be (and shall be administered as) an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of ERISA. The Plan shall be “unfunded” for tax purposes and for purposes of Title I of ERISA. Any and all payments under the Plan shall be made solely from the general assets of Walmart. A Participant’s interests under the Plan do not represent or create a claim against specific assets of Walmart or any Employer. Nothing herein shall be deemed to create a trust of any kind or create any fiduciary relationship between the Committee, Walmart or any Employer and a Participant, a Participant’s Beneficiary or any other person. To the extent any person acquires a right to receive payments from Walmart under this Plan, such right is no greater than the right of any other unsecured general creditor of Walmart.

ARTICLE II DEFINITIONS

2.1 Definitions. Except as otherwise expressly provided below, capitalized terms used in the Plan shall have the same meanings as set forth for such terms in the 401(k) Plan, and such 401(k) Plan definitions and operative terms are incorporated herein by reference. Should there be any conflict between the meanings of terms used in the Plan and the meaning of terms used in the 401(k) Plan, the meaning as set forth in the Plan shall prevail.

(a) Account means the bookkeeping account established by the Committee to reflect a Participant’s contribution credits pursuant to Section 4.2, if any, and credited earnings thereon in accordance with Section 4.3.

(b) Beneficiary means a person to whom all or a portion of a deceased Participant’s Account is payable, as determined in Section 5.3.

(d) Committee means the Compensation, Nominating and Governance Committee of the Board of Directors of Walmart, or any successor committee of the Board of Directors granted responsibility and authority for recommending associate compensation.

(e) Disability means, as determined by the Committee or its delegate, the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

(f) Employer means Walmart and all persons with whom Walmart would be considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses under Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.

(g) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(h) 401(k) Plan means, collectively, the Walmart 401(k) Plan and the Walmart Puerto Rico 401(k) Plan.

(i) A Participant is deemed to have engaged in Gross Misconduct if the Committee or its delegate determines that the Participant has engaged in conduct detrimental to the best interests of Walmart or any Employer or any entity in which Walmart has an ownership interest. Examples of such conduct include, without limitation, disclosure of confidential information in violation of Walmart’s Statement of Ethics, theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses.

(j) Normal Retirement Age shall mean age sixty-five (65).

(k) Participant means any eligible individual who becomes a participant of the Plan in accordance with Section 3.2. An individual remains a Participant until the Participant’s Account has been fully distributed.

(l) Pay Date means the last day of the calendar month in which falls the date that is six (6) months after a Participant’s Separation from Service.

(m) Plan means the Walmart Inc. Supplemental Executive Retirement Plan, as herein set forth, and as may be amended from time to time.

(n) PR Code means the Internal Revenue Code of Puerto Rico, as amended from time to time.

(o) Retirement means Separation from Service after the Participant attains Normal Retirement Age.

(p) Separation from Service means the Participant has a termination of employment with the Employer. Whether a termination of employment has occurred shall be determined based on whether the facts and circumstances indicate the Participant and Employer reasonably anticipate that no further services will be performed by the Participant for the Employer; provided, however, that a Participant shall be deemed to have a termination of employment if the level of services he or she would perform for the Employer after a certain date permanently decreases to no more than twenty percent (20%) of the average level of bona fide services performed for the Employer (whether as an employee or independent contractor) over the immediately preceding thirty-six (36)-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer for less than thirty-six (36) months). For this purpose, a Participant is not treated as having a Separation from Service while he or she is on a military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant has a right to reemployment with the Employer under an applicable statute or by contract.

(q) Valuation Date means the last day of each Plan Year quarter and, solely for purposes of valuing a Participant’s Account under Article V, the date specified therein as a Valuation Date. Valuation Date shall also include such other dates as the Committee may designate from time to time.

(r) Vested Percentage means the percentage determined as of the Participant’s Separation from Service in accordance with the schedule then effective with respect to Profit Sharing Contributions under the Walmart 401(k) Plan or the Walmart Puerto Rico 401(k) Plan, as applicable, and based on the Participant’s Years of Service with the Employer (as defined herein) as of such date. For this purpose, a Participant’s Vested Percentage shall be one hundred percent (100%) upon his or her Normal Retirement Age, Disability or death if he or she is employed by Walmart or an Employer upon the occurrence of such event.

(s) Walmart means Walmart Inc.

ARTICLE III PARTICIPATION

3.1 Eligibility.

The following individuals shall be eligible to participate in the Plan:

(a) 401(k) Plan participants whose allocation of Profit Sharing Contributions to their Profit Sharing Contribution Account in the 401(k) Plan, had Walmart made such contributions for such Plan Year, would have been limited due to the application of Code Section 415 and/or Code Section 401(a)(17), or any like provision of the PR Code; and/or

(b) 401(k) Plan participants who have elected to defer salary and/or bonuses under the. Officer Deferred Compensation Plan or successor plan (and expressly excluding any 401(k) Plan participant who has been credited with incentive payments under the Walmart Inc. Officer Deferred Compensation Plan or successor plan, but who have not made a voluntary election to defer salary or bonuses under such Plan).

Notwithstanding the above, Participants shall not include 401(k) Plan participants who are primarily compensated on a commission basis.

3.2 Participation.

An eligible individual under Section 3.1 shall become a Plan Participant on the later of:

(a) January 31, 1990; or

(b) January 31 of the Plan Year in which the individual satisfies the requirements of Section 3.1;

provided, however, that no new Participant shall be added to the Plan on or after February 1, 2013.

Once amounts are credited to a Participant’s Account under Section 4.2, such individual shall remain a Participant until his or her Account is distributed in full in accordance with Article V; provided, however, in order for the Participant’s Account to be credited with employer contributions credits for a Plan Year, the Participant must satisfy the requirements of Section 4.2 for such Plan Year.

ARTICLE IV PLAN ACCOUNTS AND CREDITS

4.1 Nature of Plan Accounts.

A Participant’s Account shall be used solely as a measuring device to determine the amount (if any) to be paid to a Participant. No amounts shall actually be set aside with respect to any Account. All amounts at any time attributable to an Account shall be, and remain, the sole property of Walmart. A Participant’s rights hereunder are limited to the right to receive Plan benefits as provided herein. An Account represents an unsecured promise by Walmart to pay the benefits provided by the Plan.

4.2 Contribution Credits.

(a) For the Plan Year ending January 31, 2012, Walmart shall credit as of the last day of such Plan Year to each Participant’s Account:

(1) the amount of Profit Sharing Contributions which would have been (but were not) allocated to such Participant’s Profit Sharing Contribution Account in the 401(k) Plan for such Plan Year had such contributions not been limited by application of Code Section 415 and/or Code Section 401(a)(17), or like Sections (if any) of the PR Code, calculated as if Walmart had made a four percent (4%) Profit Sharing Contribution to the 401(k) Plan for such Plan Year;

(2) with respect to Participants who during the Plan Year elected to defer salary and/or bonuses under the Walmart Inc. Officer Deferred Compensation Plan or successor plan, the amount of Profit Sharing Contributions which would have been (but were not) allocated to such Participant’s Profit Sharing Contribution Account in the 401(k) Plan for the Plan Year but for such Participant’s deferral election in the Walmart Inc. Officer Deferred Compensation Plan or successor plan, calculated as if Walmart had made a four percent (4%) Profit Sharing Contribution to the 401(k) Plan for such Plan Year; and

(3) an amount determined in the sole discretion of the Committee, which may differ among Participants or categories of Participants designated by the Committee.

(b) For the Plan Year ending January 31, 2013, Walmart shall credit as of the last day of such Plan Year to the Account of each Participant who receives a bonus under the Walmart Inc. Management Incentive Plan for the fiscal year ending January 31, 2013 and who would have been entitled to receive a Profit Sharing Contribution in the 401(k) Plan for such year had one been made, an amount equal to four percent (4%) of such bonus to the extent such bonus when added to the Participant’s Compensation for such Plan Year exceeds the Code Section 401(a)(17) or like Section (if any) of the PR Code.

(c) No contribution credits shall be made to any Participant’s Account under this Section 4.2 with respect to any Plan Year beginning on or after February 1, 2013.

Notwithstanding anything in this Section 4.2 to the contrary, in no event will an initial contribution be made to a Participant’s Account unless the aggregate of such initial contributions is at least one hundred dollars ($100).

4.3 Income or Loss Adjustment on Plan Accounts.

Except as otherwise provided in Article V, each Account shall be adjusted as of each Valuation Date as follows:

(a) for the Plan Year ending on January 31, 2012, based on the overall rate of return on the Participant’s accounts in the 401(k) Plan since the preceding Valuation Date or, if the Participant did not have any accounts in the 401(k) Plan for any portion of the period since the preceding Valuation Date, based on the rate of return of the default investment option as in effect under the 401(k) Plan since the preceding Valuation Date; and

(b) for Plan Years beginning on or after February 1, 2012, by the equivalent of the yield on United States Treasury securities (not indexed for inflation) with a constant maturity of ten (10) years, as of the the first Business Day of January preceding such Plan Year, plus two-hundred seventy (270) basis points. This rate shall be determined on the basis of Federal Reserve Statistical Release H-15 (or any successor statistical release of the Federal Reserve) and, if there is no such statistical release, on the basis of such other generally recognized source of information concerning the market for United States Treasury securities as the Committee selects.

ARTICLE V PAYMENT OF PLAN BENEFITS

5.1 Benefits in the Event of Retirement, Disability or Death.

(a) Upon a Participant’s Separation from Service due to Retirement or Disability, the Participant’s Account shall be distributed to the Participant in a lump sum cash payment during the ninety (90)-day period commencing on the Participant’s Pay Date. The lump sum amount distributed shall equal:

(1) if the Participant’s Separation from Service occurs on or before January 31, 2012, the sum of:

(i) the value of the Participant’s Account as of the Participant’s Separation from Service, valued in accordance with Section 4.3, but using such date as the last Valuation Date, and

(ii) interest on the amount determined in subsection (i) above at the mid-term applicable federal rate (defined pursuant to Code Section 1274(d) for January 1 of the calendar year, compounded annually) during the period from the Participant’s Separation from Service through the date of distribution; or

(2) if the Participant’s Separation from Service occurs on or after February 1, 2012, the value of the Participant’s Account through the date of distribution, valued in accordance with Section 4.3, but using such date as the last Valuation Date.

(b) Upon a Participant’s death (whether before or after the Participant’s Separation from Service), the Participant’s Account shall be distributed to the Participant’s Beneficiary in a lump sum cash payment during the ninety (90)-day period following the last day of the calendar month in which such death occurs.

(1) If the Participant’s death occurs prior to his or her Separation from Service, the lump sum amount distributed shall be:

(i) if the Participant’s death occurs on or before January 31, 2012, the sum of: (i) the value of the Participant’s Account as of the date of the Participant’s death, valued in accordance with Section 4.3, but using the date of the Participant’s death as the last Valuation Date, and (2) interest on the amount determined in (1) above at the mid-term applicable federal rate (defined pursuant to Code Section 1274(d) for January 1 of the calendar year, compounded annually) during the period from the Participant’s death through the date of distribution.

(ii) if the Participant’s death occurs on or after February 1, 2012, the lump sum amount distributed shall be the value of the Participant’s Account through the date of distribution, valued in accordance with Section 4.3, but using such date as the last Valuation Date.

(2) If the Participant’s death occurs after his or her Separation from Service, the lump sum amount distributed shall be:

(i) if the Participant’s Separation from Service occurs on or before January 31, 2012, the sum of: (i) the value of the Participant’s Account as of the Participant’s death, valued in accordance with Section 5.1(a) or 5.2, as applicable, but using such date as the last Valuation Date, and (ii) interest on the amount determined in (i) above at the mid-term applicable federal rate (defined pursuant to Code Section 1274(d) for January 1 of the calendar year, compounded annually) during the period from the date of the Participant’s death through the date of distribution.

(ii) if the Participant’s Separation from Service occurs on or after February 1, 2012, the value of the Participant’s Account as of the date of distribution, valued in accordance with Section 4.3, but using such date as the last Valuation Date.

5.2 Benefits Due to Separation from Service.

Upon a Participant’s Separation from Service for reasons other than Retirement, Disability or death, the Participant’s Account shall be distributed to the Participant in a lump sum cash payment during the ninety (90)-day period commencing on the Participant’s Pay Date. The lump sum amount distributed shall equal:

(a) if the Participant’s Separation from Service occurs on or before January 31, 2012, the sum of:

(1) the value of the Participant’s Account as of the Participant’s Separation from Service, valued in accordance with Section 4.3, but using such date

as the last Valuation Date, multiplied by the Participant’s Vested Percentage, and

(2) interest on the amount determined in subsection (1) above at the mid-term applicable federal rate (defined pursuant to Code Section 1274(d) for January 1 of the calendar year, compounded annually) during the period from the Participant’s Separation from Service through the date of distribution; or

(b) if the Participant’s Separation from Service occurs on or after February 1, 2012, the value of the Participant’s Account through the date of distribution, valued in accordance with Section 4.3, but using such date as the last Valuation Date, multiplied by the Participant’s Vested Percentage.

5.3 Beneficiary Designations.

A Participant may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries to receive any benefit payments which may be payable under this Plan following the Participant’s death, and may designate the proportions in which such beneficiaries are to receive such payments. A Participant may change such designation from time to time and the last written designation filed with the Committee prior to the Participant’s death will control. In the event no beneficiaries are designated, or if the designated beneficiaries die before the Participant’s Account is distributed, the Account shall be paid to the Participant’s beneficiary given effect with respect to the Participant’s Profit Sharing Contribution Account under the 401(k) Plan, whether an affirmative or default election. In the event the Participant has a beneficiary designation in effect with respect to a Profit Sharing Contribution Account under both the Walmart 401(k) Plan and the Walmart Puerto Rico 401(k) Plan, the beneficiary designation for the Plan in which the Participant was a participant immediately preceding his or her death shall apply.

5.4 In-Service Withdrawals. In no event shall benefits hereunder be payable to a Participant prior to the Participant’s Separation from Service.

ARTICLE VI GROSS MISCONDUCT -- REDUCTION IN PLAN BENEFITS

6.1 Impact of Gross Misconduct. Notwithstanding anything herein to the contrary, a Participant’s Plan benefits are contingent upon the Participant not engaging in Gross Misconduct while employed with Walmart, any Employer, or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. In the event the Committee determines that a Participant has engaged in Gross Misconduct during the prescribed period, then notwithstanding anything herein to the contrary, the Participant’s Account shall be recalculated as if no employer contributions were credited to the Participant’s Account under Section 4.2 (including adjustments for earnings or losses thereon under Section 4.3) on or after January 31, 1996. Notwithstanding anything herein to the contrary, such a Participant’s Plan benefits (if any)

shall be based upon the amount recalculated under the preceding sentence. Any payments received hereunder by a Participant (or the Participant’s Beneficiary) are contingent upon the Participant not engaging (or not having engaged) in Gross Misconduct while employed with Walmart or any Employer, or during such additional period as provided in Walmart’s Statement of Ethics. If the Committee determines, after payment of amounts hereunder, that the Participant has engaged in Gross Misconduct during the prescribed period, the Participant (or the Participant’s Beneficiary) shall repay to Walmart any amount in excess of that to which the Participant is entitled under this Section 6.1.

ARTICLE VII ADMINISTRATION

7.1 Administration.

The Committee is responsible for the management, interpretation and administration of the Plan. The Committee shall have discretionary authority with respect to the determination of benefits under the Plan and the construction and interpretation of Plan provisions. In such capacity, the Committee is granted the following rights and duties:

(a) The Committee shall have the exclusive duty, authority and discretion to interpret and construe the provisions of the Plan, to determine eligibility for and the amount (including the vested percentage) of any benefit payable under the Plan, and to decide any dispute which may rise regarding the rights of Participants (or their Beneficiaries) under this Plan;

(b) The Committee shall have the sole and complete authority to adopt, alter, and repeal such administrative rules, regulations, and practices governing the operation of the Plan as it shall from time to time deem advisable;

(d) The decision of the Committee in matters pertaining to this Plan shall be final, binding, and conclusive upon Walmart and any Employer, and the Participant, such Participant’s Beneficiary, and upon any person affected by such decision, subject to the claims procedure set forth in Article VIII; and

7.2 Allocation and Delegation of Duties.

purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of such member. The member to whom responsibilities have been allocated shall periodically report to the Committee concerning the discharge of the allocated responsibilities.

(b) The Committee shall have the authority to delegate, from time to time, by written instrument filed in its records, all or any part of its responsibilities under the Plan to such person or persons as the Committee may deem advisable (and may authorize such person to delegate such responsibilities to such other person or persons as the Committee shall authorize) and in the same manner to revoke any such delegation of responsibility. Any action of the delegate in the exercise of such delegated responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of any such delegate. The delegate shall periodically report to the Committee concerning the discharge of the delegated responsibilities.

ARTICLE VII CLAIMS AND APPEALS PROCEDURES

8.1 General.

A Participant or Beneficiary (“claimant”) who believes he or she is entitled to Plan benefits which have not been paid may file a written claim for benefits with the Committee within one (1) year of the Participant’s Separation from Service. If any such claim is not filed within one (1) year of the Participant’s Separation from Service, neither the Plan nor Walmart or any Employer shall have any obligation to pay the disputed benefit and the claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is wholly or partially denied, notice of the decision will be furnished to the claimant by the Committee within a reasonable period of time, not to exceed sixty (60) days (or forty-five (45) days in the event of a claim involving a Disability determination), after receipt of the claim by the Committee. The Committee may extend the initial period up to any additional sixty (60) days (or thirty (30) days, in the case of a claim involving a Disability determination), provided the Committee determines that the extension is necessary due to matters beyond the Plan’s control and the claimant is notified of the extension before the end of the initial sixty (60)-day (or, as applicable, forty-five (45)-day) period and the date by which the Committee expects to render a decision. (In the case of a claim involving a Disability determination, the Committee may extend this period for an additional thirty (30) days if the claimant is notified of the extension before the end of the initial thirty (30)-day extension.) Any claimant who is denied a claim for benefits will be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan provision upon which the denial is based;

(d) an explanation of the Plan’s appeals procedure.

8.2 Appeals Procedure.

To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative:

(a) may request a review by written application to the Committee not later than sixty (60) days (or one-hundred eighty (180) days in the case of a claim involving a Disability determination) after receipt by the claimant of the written notification of denial of a claim;

(b) may review pertinent documents; and

A decision on review of a denied claim will be made by the Committee not later than sixty (60) days (or forty-five (45) days in the event of a claim involving a Disability determination) after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered within a reasonable period of time, but not later than one hundred twenty (120) days (or ninety (90) days in the event of a claim involving a Disability determination) after receipt of a request for review. The decision on review will be in writing and shall include the specific reasons for the denial and the specific references to the pertinent Plan provisions on which the decision is based.

ARTICLE IX MISCELLANEOUS PROVISIONS

9.1 Amendment, Suspension or Termination of Plan.

Walmart, by action of the Committee, reserves the right to amend, suspend or to terminate the Plan in any manner that it deems advisable. Notwithstanding the preceding sentence, the Plan may not be amended, suspended or terminated to cause a Participant to forfeit his or her then-existing Account. In the event of a complete or partial termination of the Plan, the Vested Percentage applicable to the Accounts of the Participants affected by such complete or partial termination shall be one hundred percent (100%), and such Accounts shall be paid at the time and in the manner provided in Article V (subject to the provisions of Article VI). No amendment or termination of the Plan may accelerate the date of payment of a Participant’s benefit as provided herein except as permitted by law.

Notwithstanding the preceding, Walmart may, by action of the Committee within the thirty (30) days preceding or twelve (12) months following a change in control (within the meaning of Code Section 409A) of a relevant affiliate, partially terminate the Plan and distribute benefits to all Participants involved in such change in control within twelve (12) months after such action, provided that all plans sponsored by the service recipient immediately after the change in control which are required to be aggregated with this Plan pursuant to Code Section 409A are also terminated and liquidated with respect to each Participant involved in the change in control.

9.2 Non-Alienability.

The rights of a Participant to the payment of benefits as provided in the Plan may not be assigned, transferred, pledged or encumbered or be subject in any manner to alienation or anticipation. No Participant may borrow against his or her interest in the Plan. No interest or amounts payable under the Plan may be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment.

9.3 No Employment Rights.

Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of Walmart or any Employer in the Participant’s current position or in any other capacity.

9.4 Withholding and Employment Taxes.

To the extent required by law, Walmart or an Employer shall withhold from a Participant’s current compensation such taxes as are required to be withheld for employment taxes. To the extent required by law, Walmart or an Employer shall withhold from a Participant’s Plan distributions such taxes as are required to be withheld for federal, Puerto Rican, state or local government income or employment tax purposes.

9.5 Income and Excise Taxes.

Each Participant (or the Participant’s Beneficiaries or estate) is solely responsible for the payment of all federal, Puerto Rican, state, and local income and excise taxes resulting from the Participant’s participation in this Plan.

9.6 Successors and Assigns.

The provisions of this Plan are binding upon and inure to the benefit of Walmart, each Employer which then has a Participant in the Plan, their successors and assigns, and each Participant, such Participant’s Beneficiaries, heirs, and legal representatives.

9.7 Governing Law.

This Plan shall be subject to and construed in accordance with the laws of the State of Delaware to the extent not preempted by federal law.

9.8 Recovery of Overpayments.

In the event any payments under the Plan are made on account of a mistake of fact or law, the recipient shall return such payment or overpayment to Walmart as requested by Walmart.

WALMART INC.

DIRECTOR COMPENSATION DEFERRAL PLAN

(Amended and Restated Effective June 4, 2010 and Renamed as of February 1, 2018)

TABLE OF CONTENTS

PAGE

ARTICLE I GENERAL 1 1.1 Purpose and History of Plan. 1 1.2 Background; Effective Dates 1 1.3 Nature of Accounts. 2 ARTICLE II DEFINITIONS 2 2.1 Definitions. 2 ARTICLE III DEFERRAL ELECTIONS 5 3.1 Deferral Election. 5 ARTICLE IV DEFERRAL ACCOUNTS 6 4.1 Share Deferral Accounts. 6 4.2 Cash Deferral Accounts. 6 4.3 Interest on Cash Deferral Accounts. 7 ARTICLE V PAYMENT OF DEFERRED FEES 7 5.1 Form of Payment. 7 5.2 Timing of Payment. 8 5.3 Amount of Lump Sum Payments. 8 5.4 Amount of Installment Payments. 9 5.5 Distribution Upon Death. 9 5.6 Gross Misconduct. 9 ARTICLE VI ADMINISTRATION 10 6.1 Administration. 10 ARTICLE VII 11 7.1 General. 11 7.2 Appeals Procedure. 11 7.3 Calculation of Days. 12 ARTICLE VIII MISCELLANEOUS PROVISIONS 12 8.1 Amendment or Termination of Plan. 12 8.2 Non-Alienability. 12 8.3 Withholding for Taxes. 12 8.4 Income and Excise Taxes. 12 8.5 Successors and Assigns. 13 8.6 Governing Law. 13

WALMART INC. DIRECTOR COMPENSATION DEFERRAL PLAN

ARTICLE I GENERAL

1.1 Purpose of Plan.

Prior to June 4, 2010, the purpose of the Walmart Inc. Director Compensation Plan was to: (a) provide a structure for determining the amount and form of fees (whether paid in cash or Shares); (b) allow Directors to participate in the ownership of Walmart through equity for their services as Walmart Directors; and (c) allow Directors to defer all or a portion of their Fees (whether paid in cash or Shares). Effective June 4, 2010, the purpose of this Plan is simply to allow Directors to defer all or a portion of their Fees (whether paid in cash or Shares), whether awarded or determined by the Board under the Stock Incentive Plan or otherwise.

1.2 Background; Effective Dates.

(a) This Plan was initially adopted on March 7, 1991 and ratified by the stockholders of Walmart on June 5, 1992. The Plan was subsequently amended and restated effective January 1, 1997 and approved by stockholders at Walmart’s 1997 Annual Shareholders’ Meeting. The Plan was most recently amended and restated as of January 1, 2009. Walmart reserved and authorized for issuance pursuant to the terms and conditions of the Plan 1,000,000 shares of Common Stock (which number shall be proportionately adjusted to reflect any stock split, reverse stock split, merger, reorganization, spin-off or other similar transaction).

(b) At its meeting on March 3, 2010, the Committee approved the amendment of this Plan to provide that no further Fees shall be paid or Shares awarded under this Plan on or after June 4, 2010. From and after that date, cash Fees will be paid to Directors as approved by the Board from time to time and Share grants to Directors will be awarded by the Board under the Stock Incentive Plan (subject to approval of an amendment to the Stock Incentive Plan by stockholders).

(c) The Committee has authority pursuant to Section 7.8 of the Stock Incentive Plan to adopt procedures as it deems appropriate to allow Directors to defer their Fees (whether in cash or Shares) paid or awarded on or after June 4, 2010, in accordance with Code Section 409A. Pursuant to such authority, the Committee amended and restated this Plan to provide for deferral of Fees paid or awarded on or after June 4, 2010 and renamed the Plan the Wal-Mart Stores, Inc. Director Compensation Deferral Plan. This Plan was renamed the Walmart Inc. Director Compensation Deferral Plan effective February 1, 2018.

(d) The terms of the Plan as stated herein (other than Appendix A) shall apply to all Fees deferred under the Plan on or after January 1, 2005 (whether paid or awarded pursuant to this Plan prior to June 4, 2010 or paid or awarded by the Board under the Stock Incentive Plan or otherwise on or after June 4, 2010). This Plan (other than Appendix A) shall be interpreted and applied at all times in accordance with Code Section 409A, and guidance issued thereunder.

(e) Fees deferred under the Plan on or before December 31, 2004, and earnings thereon, shall continue to be governed at all times by the Plan as in effect on such date, which Plan is attached hereto as Appendix A. Appendix A shall not be materially modified (as that phrase is defined by Code Section 409A and guidance thereunder), formally or informally (including by interpretation), unless such modification expressly provides that it is intended to be a material modification within the meaning of Code Section 409A and guidance issued thereunder.

(f) To the extent Shares are distributed pursuant to this Plan on or after June 4, 2010, such Shares shall be treated as being authorized from the plan under which they were awarded, that is, for Shares awarded prior to June 4, 2010, the Director Compensation Plan prior to this amendment and restatement, and for Shares awarded on or after June 4, 2010, the Stock Incentive Plan. In the event there are insufficient Shares under the Plan (including Appendix A), Shares from the Stock Incentive Plan shall be used to pay any benefits under the Plan to be paid in Shares.

1.3 Nature of Accounts.

This Plan is intended to be (and shall be administered as) an unfunded program for federal tax purposes. Cash Deferral Accounts and Share Deferral Accounts are entries in the Special Ledger only and are merely a promise to make payments in the future. Walmart’s obligations under this Plan are unsecured, general contractual obligations of Walmart.

ARTICLE II DEFINITIONS

2.1 Definitions.

Whenever used in this Plan, the following words and phrases have the meaning set forth below unless the context plainly requires a different meaning:

(a) Affiliate means any corporation, company limited by shares, partnership, limited liability company, business trust, other entity, or other business association with whom Walmart would be considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses under Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.

(b) Board means the Board of Directors of Walmart.

(d) Cash Deferral Account means an account maintained in the Special Ledger for a Director to which cash equivalent amounts allocable to the Director under this Plan are credited.

(e) Code means the Internal Revenue Code of 1986, as amended from time to time. References to Code sections hereunder shall also include regulations and other guidance issued under such section.

(f) Committee means the Compensation, Nominating and Governance Committee of the Board, or any successor committee of the Board granted responsibility and authority for recommending director compensation.

(g) Common Stock means the common stock, $0.10 par value per share, of Walmart.

(h) Fees means the amount credited to the Special Ledger for a Director at any particular time

(i) Director means any director of Walmart who is not an employee of Walmart or an Affiliate at the time of service as a director.

(j) Disability means, as determined by the Committee, the Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

(k) Distribution Date means the last day of the month in which the Director’s Separation from Service occurs.

(l) Fair Market Value means, as of any date, the closing sales price for a Share: (1) on the New York Stock Exchange (or if no trading in Shares occurred on that date, on the last day on which Shares were traded) or (2) if the Shares are not listed for trading on the New York Stock Exchange, the value of a Share as determined in good faith by the Committee.

On or before March 31, 2006, Fair Market Value means, as of any date: (A) for purposes of determining the number of Units to be credited to a Share Deferral Account upon a Director’s election to defer all or any portion of his or her Retainer to such account, the average of the highest and lowest prices quoted for a Share on the New York Stock Exchange on that day, or if no such prices were quoted for Shares on the New York Stock Exchange for that day for any reason, the average of the highest and lowest prices quoted on the last Business Day on which prices were quoted, and (B) for purposes of determining the number of Units to be credited to a Share Deferral Account as a dividend equivalent, the closing price for a Share on the New York Stock Exchange on that day, or if no such prices were quoted for the Shares on the New York Stock Exchange for that day for any reason, the closing price on the last Business Day on which prices were quoted. The highest and lowest prices for Shares shall be those published in the edition of The Wall Street Journal or any successor publication for the next Business Day.

(m) Fees means the annual or quarterly retainer (including annual or quarterly retainers for service as the chairperson of a Board committee or as a member of a Board committee) and per-meeting fees that would, but for an election made under this Plan, be payable to a Director in Shares or in cash.

(o) A Director is deemed to have engaged in Gross Misconduct if it is determined that the Director has engaged in conduct detrimental to the best interests of Walmart or any Affiliate. Examples of conduct detrimental to the best interests of Walmart or any Affiliate include, without limitation, violation of Walmart’s Statement of Ethics or other Walmart policy governing a Director’s behavior while serving as a Director or applicable period thereafter, or theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses while serving as a Director or otherwise performing services related to Walmart.

(p) Interest Rate means, for each Plan Year, the yield on United States Treasury securities (not indexed for inflation) with a constant maturity of ten (10) years, as of the first Business Day of January of such Plan Year, plus 270 basis points. The Interest Rate shall be determined on the basis of Federal Reserve Statistical Release H-15 (or any successor statistical release of the Federal Reserve) and, if there is no such statistical release, on the basis of such other generally recognized source of information concerning the market for United States Treasury securities as the Committee selects.

(q) Plan means the Walmart Inc. Director Compensation Deferral Plan (formerly the Wal-Mart Stores, Inc. Director Compensation Deferral Plan and the Wal-Mart Stores, Inc. Director Compensation Plan), as set forth herein, and as may hereafter be amended from time to time.

(r) Plan Year means the twelve (12)-month period beginning on each January 1 and ending on each following December 31.

(s) Separation from Service means a Director ceases to be a director of Walmart or any Affiliate, unless immediately upon such cessation the Director enters into a relationship with Walmart or any Affiliate which would not be a Separation from Service under Code Section 409A, in which case a Separation from Service will be deemed to occur upon the cessation of such relationship as provided in Code Section 409A.

(t) Share Deferral Account shall mean the account maintained in the Special Ledger for a Director to which Units allocable to the Director under this Plan are credited.

(u) Shares means shares of the Common Stock.

(v) Special Ledger means a record established and maintained by Walmart in which Cash Deferral Accounts and Share Deferral Accounts, and all amounts credited thereto and transferred or paid therefrom, are noted.

(w) Stock Incentive Plan means the Walmart Inc. Stock Incentive Plan of 2015, as amended from time to time.

(x) Unit means a credit to a Share Deferral Account representing one Share.

(y) Walmart means Walmart Inc., a Delaware corporation.

ARTICLE III DEFERRAL ELECTIONS

3.1 Deferral Election.

(a) For each Plan Year, each Director may elect to defer all or any portion of his or her Fees to be paid during the Plan Year. Fees that would have been paid in Shares but for the Director’s election hereunder shall be credited to the Director’s Share Deferral Account. Fees that would have been paid in cash but for the Director’s election hereunder shall be credited to the Director’s Share Deferral Account or Cash Deferral Account, as elected by the Director.

(b) The Director’s election to defer Fees under this Plan (and the election as to which Account such Fees shall be credited, if applicable) must be made and filed in accordance with procedures established by the Committee no later than the December 31 preceding the Plan Year for which the election is to be effective. Notwithstanding the preceding, with respect to an individual who becomes a new Director during a Plan Year (either by election or appointment), the Director’s election must be made and filed:

(1) with respect to Fees to be paid as an annual retainer, prior to the date the individual becomes a Director (either by election or appointment), and

(2) with respect to per-meeting Fees or Fees to be paid on a quarterly basis, within thirty (30) days of the date the individual becomes a Director (either by election or appointment), but such election shall only apply, in the case of a-per-meeting Fees, with respect to meetings which occur after the date of such deferral election).

For purposes of the preceding sentence, an individual who at one point was a Director, ceased being a Director, and again becomes a Director (either by election or appointment), shall be considered a new Director only if:

(A) he or she was not eligible to participate in the Plan (or any other plan or arrangement required by Code Section 409A to be aggregated with the Plan) at any time during the twenty-four (24)-month period ending on the date he or she again becomes a Director, or

(B) he or she was paid all amounts previously due under the Plan (and any other plan or arrangement required by Code Section 409A to

be aggregated with the Plan) and, on and before the date of the last such payment, was not eligible to continue to participate in this Plan (or any other plan or arrangement required by Code Section 409A to be aggregated with the Plan) for periods after such payment.

(c) An election may not be revoked, changed or modified after the applicable filing deadline specified in subsection (b) above, including with respect to Fees paid after the individual ceases to be a Director (but the amount deferred from such former Director’s last Fees shall be reduced pro rata if the Director elected a whole dollar amount and the Fees are reduced, for example, due to the Director not completing the full period of service to which the Fees relate). An election for one Plan Year shall not automatically be given effect for a subsequent Plan Year, so that if deferral is desired for a subsequent Plan Year, a separate election must be made by the Director for such Plan Year. If no election is made for a Plan Year, the Director shall be deemed to have elected not to defer any of his or her Fees paid during such Plan Year.

The deferral election filed by a new Director under subsection (b)(2) above with respect to Fees paid on a quarterly basis shall apply only to the Fees payable to such Director for services rendered as a Director subsequent to the date of the Director’s election. For this purpose, the amount of Fees payable to such Director for services rendered subsequent to the Director’s election shall be determined by multiplying the amount payable on the first quarterly payment date following the date of the Director’s election by a fraction, the numerator of which is the number of calendar days beginning on the date of the election and ending on the quarterly payment date, and the denominator of which is the total number of calendar days that the Director served as a Director in the quarter ending on the quarterly payment date.

(d) For purposes of this Section 3.1, the date of a Director’s election is the date the executed election form is received by the Committee.

ARTICLE IV DEFERRAL ACCOUNTS

4.1 Share Deferral Accounts.

To the extent Fees deferred under this Plan are to be credited to the Director’s Share Deferral Account, Walmart shall credit to the Director’s Share Deferral Account on the date such Fees would otherwise have been paid to the Director a number of Units equal to the dollar amount of such Fees divided by the Fair Market Value on such date. If Common Stock is the subject of a stock dividend, stock split, or a reverse stock split, the number of Units then credited to the Director’s Share Deferral Account shall be increased or decreased, as the case may be, in the same proportion as the outstanding shares of Common Stock. With respect to any record date for which any cash dividend is paid on Common Stock, Walmart shall credit to the Director’s Share Deferral Account on the applicable dividend payment date an additional number of Units equal to: (a) the aggregate dollar amount of the dividend that would be paid on a number of Shares equal to the number of Units credited to the Director’s Share Deferral Account on the

applicable dividend payment date, divided by (b) the Fair Market Value on the applicable dividend payment date. A Director is not entitled to any voting rights with respect to Units credited to his or her Share Deferral Account, nor shall the Director have any other beneficial shareholder rights with respect to such Units.

4.2 Cash Deferral Accounts.

To the extent Fees deferred under this Plan are to be credited to the Director’s Cash Deferral Account, Walmart shall credit to the Director’s Cash Deferral Account on the date such Fees would otherwise have been paid to the Director a cash equivalent amount equal to the dollar amount of such Fees. In addition, Walmart shall credit a Director’s Cash Deferral Account with interest as provided in Section 4.3.

4.3 Interest on Cash Deferral Accounts.

Each day during a Plan Year, Walmart shall credit a Director’s Cash Deferral Account with a daily rate of simple interest based on the Interest Rate in effect for such Plan Year. This Section 4.3 shall be applicable only through the last day of the month preceding distribution of the Director’s Cash Deferral Account in a single lump sum payment pursuant to Section 5.3 or the last day of the month preceding distribution of the initial installment payment of the Director’s Cash Deferral Account pursuant to Section 5.4.

ARTICLE V PAYMENT OF DEFERRED FEES

5.1 Form of Payment.

(a) A Director may elect to receive payment of the Director’s Deferred Fees in a single lump sum distribution or in substantially equal annual installments over a period of up to ten (10) years. A Director’s form of payment election must be made in accordance with procedures established by the Committee at the time of such Director’s initial deferral election under Section 3.1 and shall apply to all of the Director’s Deferred Fees. In the event a Director does not make a timely form of payment election, the Director shall be deemed to have elected payment of all of his or her Deferred Fees in a single lump sum distribution.

Notwithstanding the preceding, the form of payment of any Director who had Deferred Fees under the Plan as of December 31, 2007 is the last affirmative election made by such Director on or before such date (in accordance with the rules of the Plan in effect at such date). Any such Director who failed to make an affirmative election on or before December 31, 2007 was deemed to have elected payment of all of his or her Deferred Fees in a single lump sum distribution.

(b) A Director may change his or her form of payment election (or deemed payment election) at any time by making a new election (also referred to in this subsection as a “subsequent election”) on a form approved by and filed with the Committee; provided, however, that such subsequent election shall be subject to the following restrictions:

(1) A subsequent election may not take effect until at least twelve (12) months after the date on which such subsequent election is made;

(2) Payment of the Director’s Deferred Fees may not be made or commence earlier than five (5) years from the date such payment would have been made or commenced absent the subsequent election, unless the distribution is made on account of the Director’s Disability or death;

(3) Payment of a Director’s Deferred Fees pursuant to a subsequent election must be completed by the last day of the Plan Year which contains the fifteenth (15 th ) anniversary of the Director’s Distribution Date; and

(4) For purposes of this Section 5.1(b) and Code Section 409A, the entitlement to annual installment payments is treated as the entitlement to a single payment.

5.2 Timing of Payment.

(a) If payment of a Director’s Deferred Fees is to be made in a single lump sum payment, such payment shall be made within the 90-day period commencing on the Director’s Distribution Date.

(b) If payment of a Director’s Deferred Fees is to be made in annual installments, the first such installment shall be made within the 90-day period commencing on the Director’s Distribution Date, and subsequent installment payments shall be made within the 90-day period commencing on each applicable anniversary of the Director’s Distribution Date.

(c) Notwithstanding anything herein to the contrary, any payment to be made hereunder may be delayed by the Committee in the event the Committee reasonably anticipates that the making of such payment will violate federal securities laws or other applicable law. In such event, payment shall be made at the earliest date on which the Committee reasonably anticipates that the making of such payment will not cause such a violation.

(d) In no event shall any payment due hereunder be accelerated earlier than, or delayed past, the date otherwise provided herein, except as permitted by Code Section 409A.

5.3 Amount of Lump Sum Payments.

If payment of the Director’s Deferred Fees is to be made in a single lump sum distribution, the amount distributed shall be:

(a) cash equal to the total cash equivalent amount credited to the Director’s Cash Deferral Account as of the last day of the month preceding distribution (including interest credited through such date as provided in Section 4.3); and

(b) Shares equal to the number of whole Units credited to the Director’s Share Deferral Account as of the distribution, plus cash equal to the Fair Market Value of any fractional Share as of the distribution.

5.4 Amount of Installment Payments.

If payment of the Director’s Deferred Fees is to be made in installments:

(a) the Director’s Cash Deferral Account will be paid in equal annual installments in an amount which would fully amortize a loan equal to such Cash Deferral Account as of the last day of the month preceding distribution of the initial installment payment (including interest credited through such date as provided in Section 4.3) over the installment period, with interest calculated at the Interest Rate in effect for the Plan Year in which the Director’s Distribution Date occurs; and

(b) a pro rata number of whole Shares credited to the Director’s Share Deferral Account as of the applicable distribution date will be paid in equal annual installments, with the Fair Market Value of any fractional Share paid in cash with each installment.

5.5 Distribution Upon Death.

(a) A Director may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries to receive any benefit payments which may be payable under this Plan following the Director’s death, and may designate the proportions in which such beneficiaries are to receive such payments. Any such designation shall be applicable to both Deferred Fees under this Plan and under Appendix A. A Director may change such designation from time to time and the last designation filed with the Committee prior to the Director’s death shall control. In the event no beneficiaries are designated, or if all of the designated beneficiaries die before all of the Director’s Deferred Fees is distributed, the Deferred Fees (or balance thereof) shall be paid to the Director’s estate.

(b) Any unpaid Deferred Fees upon a Director’s death shall be paid in a single lump sum distribution in the manner provided herein for payment in a single lump sum distribution to the Director within ninety (90) days of the Director’s death; provided, however, that in the event a Director’s death occurs after installment payments with respect to his or her Cash Deferral Account have commenced pursuant to Section 5.4, the remaining Cash Deferral Account will be credited with pro rata interest from the date of the installment payment immediately preceding the Director’s death through the lump sum distribution date at the Interest Rate applicable to the installment payout.

5.6 Gross Misconduct.

This Section 5.6 is effective only with respect to Fees paid or deferred under this Plan on or after April 1, 2006. Notwithstanding anything herein to the contrary, benefits under this Plan are contingent upon the Director not engaging in Gross Misconduct. In the event the Committee or its delegate (which expressly may include any officer of Walmart or a non-employee third party (such as a law firm)) determines that a Director has engaged in Gross Misconduct:

(a) the Director shall repay to Walmart all Fees received by the Director under this Plan from and after the date which is twenty-four (24) months prior to the date of the behavior serving as the basis for the finding of Gross Misconduct;

(b) the Director’s Deferred Fees shall be recalculated as if no amounts (including interest and dividend equivalents under Sections 4.1 and 4.3) were credited to the Director’s Deferred Fees from and after the date which is twenty-four (24) months prior to the date of the behavior serving as the basis for the finding of Gross Misconduct; and

(c) if the Committee or its delegate determines, after payment of amounts hereunder, that the Director has engaged in Gross Misconduct during the prescribed period, the Director (or the Director’s beneficiary) shall repay to Walmart any amount in excess of that to which the Director is entitled under Section 5.6.

Any amount to be repaid pursuant to this Section 5.6 shall be held by the Director or beneficiary in constructive trust for the benefit of Walmart and shall be paid by the Director or beneficiary to Walmart with interest at the prime rate (as published in The Wall Street Journal ) as of the date the Committee or its delegate determines the Director engaged in Gross Misconduct. The amount to be repaid pursuant to this Section 5.6 shall be determined on a gross basis, without reduction for any taxes incurred, as of the date of the realization event, and without regard to any subsequent change in the fair market value of a Share. Walmart shall have the right to offset such gain against any amounts otherwise owed to Director by Walmart (whether hereunder, pursuant to any benefit plan or other compensatory arrangement). A Director may appeal a Gross Misconduct determination by the Committee or its delegate as provided in Article VII.

With respect to any Fees granted by the Board under another plan or Board resolution, the impact of the Director’s misconduct on such portion of the Director’s Fees which have not yet been deferred shall be determined under the terms of plan or resolution.

ARTICLE VI ADMINISTRATION

6.1 Administration.

(a) The Committee shall have the exclusive duty, authority and discretion to interpret and construe the provisions of the Plan, to determine eligibility for and the amount of any benefit payable under the Plan, and to decide any dispute which may rise regarding the rights of Directors (or their beneficiaries) under this Plan;

(d) The decision of the Committee in matters pertaining to this Plan shall be final, binding, and conclusive upon Walmart, the Director, such Director’s beneficiary, and upon any person affected by such decision, subject to the claims procedure set forth in Article VII; and

ARTICLE VII CLAIMS PROCEDURE

7.1 General.

Any Director or beneficiary (“claimant”) who believes he or she is entitled to Plan benefits which have not been paid may file a written claim for benefits with the Committee within one (1) year of the Director’s Distribution Date. If any such claim is not filed within one (1) year of the Director’s Distribution Date, neither the Plan nor Walmart shall have any obligation to pay the disputed benefit and the claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is wholly or partially denied, notice of the decision shall be furnished to the claimant by the Committee or its delegate within a reasonable period of time, not to exceed sixty (60) days, after receipt of the claim by the Committee. Any claimant who is denied a claim for benefits shall be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan provision upon which the denial is based;

(d) an explanation of the Plan’s claim review procedure.

7.2 Appeals Procedure.

To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative:

(a) may request a review by written application to the Committee not later than sixty (60) days after receipt by the claimant of the written notification of denial of a claim;

(b) may review pertinent documents; and

A decision on review of a denied claim shall be made by the Committee or its delegate not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt of a request for review. The decision on review shall be in writing and shall include the specific reasons for the denial and the specific references to the pertinent Plan provisions on which the decision is based.

7.3 Calculation of Days. Any reference in this Article VII to a number of days shall include holidays and weekends.

ARTICLE VII MISCELLANEOUS PROVISIONS

8.1 Amendment or Termination of Plan.

The Board or the Committee may amend or terminate this Plan at any time. An amendment or the termination of this Plan shall not adversely impact the right of a Director or beneficiary to receive Shares issuable or cash payable at the effective date of the amendment or termination or any rights that a Director or a beneficiary has in any Cash Deferral Account or Share Deferral Account at the effective date of the amendment or termination. No amendment or termination of the Plan may accelerate the date of payment of a Director’s Deferred Fees, except as otherwise permitted by Code Section 409A.

8.2 Non-Alienability.

A Director shall not have the right to transfer, grant any security interest in or otherwise encumber rights he or she may have under the Plan, or to any Cash Deferral Account or any Share Deferral Account maintained for the Director hereunder or any interest therein. No right or interest of a Director in a Cash Deferral Account or a Share Deferral Account shall be subject to any forced or involuntary disposition or to any charge, liability, or obligation of the Director, whether as the direct or indirect result of any action of the Director or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any

action attempting to effect any transaction of that type shall be null, void, and without effect. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment.

8.3 Withholding for Taxes.

To the extent required by law, Walmart shall withhold the amount of cash and Shares necessary to satisfy Walmart’s obligation to withhold federal, state, and local income and other taxes on any benefits payable to a Director or beneficiary under this Plan.

8.4 Income and Excise Taxes.

The Director (or the Director’s beneficiary) is solely responsible for the payment of all federal, state, local income and excise taxes resulting from the Director’s participation in this Plan.

8.5 Successors and Assigns. The provisions of this Plan are binding upon and inure to the benefit of Walmart and its successors and assigns, and a Director, the Director’s beneficiaries, heirs, and legal representatives.

8.6 Governing Law.

This Plan shall be governed by the laws of the State of Arkansas, except that any matters relating to the internal governance of Walmart shall be governed by the General Corporation Law of Delaware.

APPENDIX A

Retainers deferred on or before December 31, 2004 are subject to the terms of the Plan as it existed as of such date, which Plan is set forth in this Appendix A. The terms of this Appendix A shall not be

materially modified (as that phrase is defined by Code Section 409A and guidance thereunder), either formally or informally, unless such modification specifically provides that it is intended to be a

material modification within the meaning of Code Section 409A and guidance thereunder.

WALMART INC. DIRECTOR COMPENSATION PLAN

Purpose. This Director Compensation Plan is established to allow the outside directors of Walmart Inc. (“Walmart”) to participate in the ownership of Walmart through ownership of shares of the Walmart common stock or deferred stock units. In addition, the Plan is intended to allow Walmart’s outside directors to defer all or a portion of their compensation for their service as directors.

Definitions. The following words have the definitions given them below.

“Affiliate” means any corporation, company limited by shares, partnership, limited liability company, business trust, other entity, or other business association that is controlled by Walmart.

“Board” means the board of directors of Walmart.

“Business Day” means a day on which Walmart’s executive offices in Bentonville, Arkansas are open for business and on which trading is conducted on the Exchange.

“Common Stock” means the Common Stock, $0.10 par value per share, of Walmart.

“Compensation Date” means the last Business Day of each calendar quarter.

“Deferral Account” means an account maintained in the Special Ledger for a Director to which cash equivalent amounts allocable to the Director under this Plan are credited.

“Director” means any director of Walmart who is not an employee of Walmart or an Affiliate.

“Distribution Date” means the date on which a Director ceases to be a director of Walmart or on which a Director becomes employed by Walmart or an Affiliate.

“Fair Market Value” means, as to any particular day, the average of the highest and lowest prices quoted for a share of Common Stock trading on the New York Stock Exchange on that day, or if no such prices were quoted for the shares of Common Stock on the New York Stock Exchange for that day for any reason, the average of the highest and lowest prices quoted on the last Business Day on which prices were quoted. The highest and lowest prices for the shares of Common Stock shall be those published in the edition of The Wall Street Journal or any successor publication for the next Business Day.

“First Component” means the portion of the Retainer payable to a Director that accounts for at least one-half of the Retainer and that is payable in Shares and may be deferred by crediting Units to a Unit Account maintained for the Director.

“Interest Rate” means the annual rate at which interest is deemed to accrue on the amounts credited in a Deferral Account for a Director. The annual rate shall be set by the Board or a committee of the Board and may be changed from time to time as necessary to reflect prevailing interest rates. [NOTE: The annual rate in effect for a Plan Year for this purpose shall be determined in accordance with the following formula in effect as of October 3, 2004: the rate on 10-year Treasury notes determined as of the first Business Day of January of each Plan Year, plus 270 basis points. Such formula shall not be modified on or after October 3, 2004. Notwithstanding the preceding, in light of uncertainty regarding whether adjustment of the annual rate would constitute a material modification of the Plan for Code Section 409A purposes, the annual rate was not adjusted for 2005. The annual rate for 2006 and future years will be adjusted in accordance with the above formula.]

“Plan Year” means each 12-month period beginning on each January 1 and ending on each December 31.

“Retainer” means the amount of compensation set by the Board from time to time as payable to a Director in each Plan Year on the terms and subject to conditions stated in this Plan, subject to reduction for any portion thereof that a Director elects to defer as provided in this Plan.

“Second Component” means the balance of the Retainer payable to a Director (after reduction for the First Component) and that is (1) payable in cash or (2) by crediting an amount to a Deferral Account maintained for the Director.

“Shares” means shares of the Common Stock.

“Special Ledger” means a record established and maintained by Walmart in which the Deferral Accounts and Units Accounts for the Directors, if any, and the Units and/or amounts credited to the accounts are noted.

“Unit Account” shall mean the account maintained in the Special Ledger for a Director to which Units allocable to the Director under this Plan are credited.

“Unit” means a credit in a Unit Account representing one Share.

Annual Retainer. During each Plan Year in which a person is a Director during the existence of this Plan, the Director be eligible to receive the Retainer payable as follows:

At least one-half of the Retainer shall be and, at the Director’s option, up to the full amount of the Retainer (defined above as the “First Component”) will be (1) payable to the Director in Shares or (2) at the Director’s option, deferred by Walmart crediting Units to a Unit Account maintained for the Director as provided in this Plan.

The balance of the Retainer (defined above as the “Second Component”) shall be (1) payable in cash or (2) at the Director’s option, deferred by Walmart crediting a Deferral Account maintained for the Director as provided in this Plan with an amount that would be otherwise payable to the Director in cash.

The Retainer will be payable in arrears in equal quarterly installments on each Compensation Date unless deferred as provided below. Each quarterly installment will consist of one-fourth of the First Component and one-fourth of the Second Component, if any, for each Director.

Elections. Each Director who was a Director during the prior Plan Year must elect by no later than December 31 of the prior Plan Year how he or she will receive the Retainer. Each Director who becomes a Director during a Plan Year must elect within 30 days after becoming a Director how he or she will receive the Retainer. Each election must be made by the Director filing an election form with the Secretary of Walmart. If a Director does not file an election form for each Plan Year by the specified date, the Director will be deemed to have elected to receive and defer the Retainer in the manner elected by the Director in his or her last valid election. Any person who becomes a Director during a Plan Year and does not file the required election within 30 days will be deemed to have elected to receive all of the Retainer in Shares. Any election to defer a portion of the Retainer made by a person who becomes a Director during a Plan Year will be valid as to the portion of the Retainer received after the election is filed with the Secretary of Walmart. When an election is made for a Plan Year, the Director may not revoke or change that election.

The Shares. If a Director elects to receive Shares in payment of all or any part of the Director’s Retainer, the number of Shares to be issued on any Compensation Date shall equal one-fourth of the amount of the Retainer to be paid in Shares for the Plan Year divided by the Fair Market Value of a Share on the Compensation Date. Any Shares issued under this Plan will be registered under the Securities Act of 1933, as amended, and, so long as shares of the Common Stock are listed for trading on the New, York Stock Exchange, will be listed for trading on the New York Stock Exchange.

The Units. If a Director defers any portion of the Retainer in the form of Units, then on each Compensation Date, Walmart will credit a Unit Account maintained for the Director with a number of Units equal to (1) one-fourth of the dollar amount of the Retainer that the Director has elected to defer in the form of Units for the Plan Year divided by (2) the Fair Market Value on the Compensation Date. If the Common Stock is the subject of a stock dividend, stock split, or a reverse stock split, the number of Units will be increased or decreased, as the case may be, in the same proportion as the outstanding shares of Common Stock. Walmart will credit to the Director’s Unit Account on the date any dividend is paid on the Common Stock, an additional

number of Units equal to (I) the aggregate amount of the dividend that would be paid on a number of Shares equal to the number of Units credited to the Director’s Unit Account on the date the dividend is paid divided by (II) the Fair Market Value on that date.

Deferral Account. If a Director defers receipt of any portion of the Retainer by having an amount credited to a Deferral Account, then on each Compensation Date, Walmart will credit to the Director’s Deferral Account an amount equal to one-fourth of the dollar amount of the Retainer deferred for the Plan Year. On the last day of each Plan Year, Walmart will also credit the Deferral Account with interest, calculated at the Interest Rate, on the aggregate amount credited to the Deferral Account.

[Effective January 1, 2009, Deferral Accounts shall be credited with interest on a daily basis. The amount of interest to be credited each day shall be a daily rate of simple interest based on the Interest Rate in effect for the Plan Year. It has been determined that this modification does not constitute a “material modification” for purposes of Code Section 409A.]

Distribution of the Amounts in a Unit Account. After the Distribution Date for a former Director, Walmart will issue to the former Director that number of Shares equal to the number of Units with which the former Director’s Unit Account is credited. The former Director may elect to receive all of the Shares at one time or in up to 10 annual installments as described below. If the Director has elected to receive all of the Shares at one time, Walmart will issue the Shares as soon as practicable after the Distribution Date.

If the former Director has elected to receive the Shares in installments, a pro rata number of Shares will be issued for each installment plus additional Shares equal to the Units credited to the Unit Account respecting dividends paid on the Common Stock since the last installment was made. Walmart will issue the first installment of Shares as soon as practicable after the former Director’s Distribution Date. The remaining installments of Shares will be issued on or about each anniversary of the Director’s Distribution Date.

Distribution of the Amounts in a Deferral Account. After the Distribution Date for a former Director, Walmart will pay the former Director cash equal to the amount with which the former Director’s Deferral Account is credited. The former Director may elect to receive all of the cash at one time or in up to 10 annual installments as described below. If the former Director has elected to receive all of the cash at one time, Walmart will pay the cash to the former Director as soon as practicable after the Distribution Date.

If the former Director has elected to be paid the cash in installments, a pro rata portion of the amount credited to the Deferral Account on the Distribution Date will be paid in each installment, along with the additional amount credited to the Deferral Account as interest since the last installment was paid. Walmart will pay to the former Director the cash to be paid in the first installment as soon as practicable after the Distribution Date. The remaining installments of cash shall be paid on or about each anniversary of the Director’s Distribution Date.

Conversion of Accounts. At any time prior to the Distribution Date, a Director who has a Deferral Account may convert all or any portion of the Deferral Account into Units credited to a Unit Account. The number of Units to be credited to the Director’s Unit Account upon the

conversion shall equal (1) the amount credited to the Director’s Deferral Account so converted divided by (2) the Fair Market Value on the date of the Director’s election to convert.

At any time prior to the Distribution Date, a Director who has a Unit Account may convert all or any portion of the Unit Account into a Deferral Account. The cash amount to be credited to the Director’s Deferral Account upon the conversion shall equal (1) the number of Units credited to his or her Unit Account so converted multiplied by (2) the Fair Market Value on the date of the Director’s election to convert.

Any election to convert must be made on a form prescribed by Walmart and filed with its Secretary. The conversion of a Unit Account or a Deferral Account shall be deemed to occur on the date of the Director’s election.

Distribution in the Event of a Director’s Death. Each Director who defers any part of the Retainer payable to him or her in any Plan Year must designate one or more beneficiaries of the Director’s Deferral Account and Unit Account, who may be changed from time to time. The designation of a beneficiary must be made by filing with Walmart’s Secretary a form prescribed by Walmart. If no designation of a beneficiary is made, any deferred benefits under this Plan will be paid to the Director’s or former Director’s estate. If a Director dies while in office or a former Director dies during the installment payment period, Walmart will issue the Shares and pay the amounts of cash that are issuable and payable to the Director or former Director at one time as soon as practicable after the death of the Director or the former Director.

Timing of Election to Receive Deferred Benefits in Installments. If the Director wants the benefits distributed in installments, the election to receive payments in installments must be on file for a period of at least 12 full months prior to the Director ceasing to be a director of Walmart. The last valid election on file with Walmart’s Secretary for at least 12 full months will be given effect by Walmart in distributing the benefits.

Withholding for Taxes. Walmart will withhold the amount of cash and Shares necessary to satisfy Walmart’s obligation to withhold federal, state, and local income and other taxes on any benefits received by the Director, the former Director or a beneficiary under this Plan.

No Transfer of Rights under this Plan. A Director or former Director shall not have the right to transfer, grant any security interest in or otherwise encumber rights he or she may have under this Plan, any Deferral Account or any Unit Account maintained for the Director or former Director or any interest therein. No right or interest of a Director or a former Director in a Deferral Account or a Unit Account shall be subject to any forced or involuntary disposition or to any charge, liability, or obligation of the Director or former Director, whether as the direct or indirect result of any action of the Director or former Director or any action taken in any proceeding, including any proceeding under any bankruptcy or other creditors’ rights law. Any action attempting to effect any transaction of that type shall be null, void, and without effect. Notwithstanding the preceding, distribution may be made to the extent necessary to fulfill a domestic relations order as defined in Code Section 414(p)(1)(B) and in accordance with procedures established by the Committee from time to time; provided, however, that all such distributions shall be made in a single lump sum payment.

Unfunded Plan. This Plan will be unfunded for federal tax purposes. The Deferral Accounts and the Unit Accounts are entries in the Special Ledger only and are merely a promise to make payments in the future. Walmart’s obligations under this Plan are unsecured, general contractual obligations of Walmart.

Amendment and Termination of the Plan. The Board or the Compensation and Nominating Committee of the Board may amend or terminate this Plan at any time. An amendment or the termination of this Plan will not adversely affect the right of a Director, former Director, or Beneficiary to receive Shares issuable or cash payable at the effective date of the amendment or termination or any rights that a Director, former Director, or a Beneficiary has in any Deferral Account or Unit Account at the effective date of the amendment or termination. If the Plan is terminated, however, Walmart may, at its option, accelerate the payment of all deferred and other benefits payable under this Plan.

Governing Law. This Plan shall be governed by the laws of the State of Arkansas, except that any matters relating to the internal governance of Walmart shall be governed by the General Corporation Law of Delaware. Walmart has right to interpret this Plan, and any interpretation by Walmart shall be conclusive as to the meaning of this Plan.

Effective Date and Transition. This Plan amends and restates in full the Wal-Mart Stores, Inc. Directors Deferred Compensation Plan adopted on March 7, 1991 and as ratified by the stockholders of Wal-Mart on June 5, 1992. The effective date of this amendment and restatement of that Plan shall be January 1, 1997, and the Plan became operative and in effect on the date, subject only to the ratification of the Plan by the stockholders of Walmart at Walmart’s 1997 annual stockholders’ meeting. The Board has reserved and authorized for issuance pursuant to the terms and conditions of this Plan 1,000,000 shares of Common Stock.

WALMART DEFERRED COMPENSATION MATCHING PLAN

Amended and Restated Effective February 1, 2016 Further Minor Amendments Effective February 1, 2018 regarding legal name of Walmart

TABLE OF CONTENTS

PAGE

ARTICLE I. GENERAL 1 1.1 Purpose. 1 1.2 Effective Date. 1 1.3 Nature of Plan. 1 ARTICLE II. DEFINITIONS 1 2.1 Definitions. 1 ARTICLE III. DEFERRAL CREDITS AND MATCHING CONTRIBUTION CREDITS AND ACCOUNT ALLOCATIONS 6 3.1 Deferred Compensation. 6 3.2 Deferred MIP Bonuses. 8 3.3 Deferred Special Bonuses. 9 3.4 Employer Matching Contribution Credits. 10 3.5 Account Allocation Elections 11 3.6 Irrevocability of Deferral Elections and Account Allocation Elections. 12 3.7 Automatic Suspension of Deferral Elections. 13 ARTICLE IV. ACCOUNTS AND TIMING OF CREDITS TO ACCOUNTS 14 4.1 Nature of Accounts. 14 4.2 Deferral Credits and Employer Matching Contribution Credits. 14 4.3 Valuation of Accounts. 14 4.4 Credited Earnings. 14 ARTICLE V. PAYMENT OF PLAN BENEFITS 15 5.1 Scheduled In-Service Benefits. 15 5.2 Separation Benefits. 15 5.3 Death Benefits. 16 5.4 Form of Distribution. 18 5.5 Distributions for Unforeseeable Emergencies. 19 5.6 Distributions for Payment of Taxes 20 5.7 Reductions Arising from a Participant’s Gross Misconduct. 20 ARTICLE VI. ADMINISTRATION 21 6.1 General. 21 6.2 Allocation and Delegation of Duties. 21 ARTICLE VII. CLAIMS PROCEDURE 22 7.1 General. 22 7.2 Appeals Procedure. 23 ARTICLE VIII. MISCELLANEOUS PROVISIONS 23 8.1 Amendment, Suspension or Termination of Plan. 23 8.2 Non-Alienability. 24 8.3 Recovery of Overpayments. 24 8.4 No Employment Rights. 25 8.5 No Right to Bonus. 25 8.6 Withholding and Employment Taxes. 25 8.7 Income and Excise Taxes. 25

8.8 Successors and Assigns. 25 8.9 Governing Law. 25

iii

WALMART DEFERRED COMPENSATION MATCHING PLAN

ARTICLE I. GENERAL

1.1 Purpose.

The purpose of the Walmart Deferred Compensation Matching Plan is to enable certain individuals to defer compensation and to be credited with matching allocations and earnings. The Plan is intended to reward such individuals for their contributions to the success of Walmart and its Related Affiliates. The Plan is also intended to assist such individuals in saving for retirement by providing benefits that are in excess of benefits permitted by applicable law under the 401(k) Plan.

1.2 Effective Date.

The effective date of the amended and restated Plan is February 1, 2016.

1.3 Nature of Plan.

The Plan is intended to be (and shall be administered as) an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of ERISA. The Plan shall be “unfunded” for tax purposes and for purposes of Title I of ERISA. Any and all payments under the Plan shall be made solely from the general assets of Walmart. A Participant’s interests under the Plan do not represent or create a claim against specific assets of Walmart or any Employer. Nothing herein shall be deemed to create a trust of any kind or create any fiduciary relationship between the Committee, Walmart or any Employer and a Participant, the Participant’s beneficiary or any other person. To the extent any person acquires a right to receive payments from Walmart under this Plan, such right is no greater than the right of any other unsecured general creditor of Walmart. The Plan is intended to be in compliance with Code Section 409A and shall be interpreted, applied and administered at all times in accordance with Code Section 409A and guidance issued thereunder.

ARTICLE II. DEFINITIONS

2.1 Definitions.

Whenever used in this Plan, the following words and phrases have the meaning set forth below unless the context plainly requires a different meaning:

(a) Account means the bookkeeping account maintained under the Plan to reflect a Participant’s Deferral Credits, Matching Contribution Credits, and earnings credited in accordance with Section 4.4. A Participant’s “Account” shall consist of his or her Deferral Account, and his or her Matching Account. A Participant’s Deferral Account may be allocated among one or more Scheduled

(b) Code means the Internal Revenue Code of 1986, as amended from time to time.

(d) Compensation means a Participant’s base compensation for a Plan Year with respect to services rendered for an Employer. Compensation includes, but is not limited to, short-term disability payments made by an Employer. Compensation does not include military differential payments.

(e) Deferral Account means the bookkeeping account maintained on behalf of a Participant to reflect his or her Deferral Credits.

(f) Deferral Credit means the amount of Deferred Compensation credited to a Participant’s Deferral Account in accordance with Section 3.1, the amount of Deferred MIP Bonus credited to a Participant’s Deferral Account in accordance with Section 3.2, and the amount of Deferred Special Bonus credited to a Participant’s Deferral Account in accordance with Section 3.3.

(g) Deferred Compensation means the Compensation deferred by a Participant in accordance with Section 3.1.

(h) Deferred MIP Bonus means the amount deferred by a Participant in accordance with Section 3.2 from bonuses payable to the Participant under the MIP.

(i) Deferred Special Bonus means the amount deferred by a Participant in accordance with Section 3.3 from a Special Bonus payable to the Participant.

(j) Disabled means the Participant has incurred a Separation from Service because the Participant, as determined by the Committee or its delegate, is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

(k) Eligible Officer means an individual who is a corporate officer of an Employer, and who holds the title of Vice President or above, Treasurer, Controller, or an officer title of similar rank or other position as determined by the Committee. In no event will any individual constitute an Eligible Officer if he or she is not subject to federal income tax withholding in the United States. Notwithstanding anything in the preceding provisions of this Section 2.1(k), Eligible Officer shall exclude any individual who, pursuant to Walmart’s Global Assignment Policy, is seconded to an Employer and, under the terms of his or her offer or

assignment letter, he or she is intended to remain on the home country’s benefit and pension programs.

(l) Eligible Participant means with respect to a Plan Year an individual who either (1) is an Eligible Officer, (2) is an employee of an Employer and who as of the October 31 immediately preceding the Plan Year is in a Senior Director or Senior Director equivalent position in Position Pay Range X8 or X9 or a Market Manager position or Market Manager position equivalent in Position Pay Range 10F, or (3) is an employee of an Employer and who as of the October 31 immediately preceding the Plan Year has an annual rate of base compensation from the Employer that is equal to or greater than the annual compensation limit in effect under Code Section 401(a)(17) (or under a comparable provision of the Internal Revenue Code of the Commonwealth of Puerto Rico if the Participant is an eligible participant under the Walmart Puerto Rico 401(k) Plan) for the calendar year in which the Plan Year begins, or if such limit for such calendar year has not been determined as of such October 31 then such annual compensation limit as in effect for the calendar year that includes such October 31.

(m) Employer means Walmart and any entity, whether or not incorporated, which is a member of a controlled group of corporations, trades or businesses, as defined in Code Sections 414(b) and 414(c), of which Walmart is a member, and which has been designated by the Committee as a participating employer in the Plan.

(n) Employer Matching Contribution Credits means the amount credited to a Participant’s Matching Account pursuant to Section 3.4.

(o) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(p) Excess Compensation means for a Plan Year the excess, if any, of (1) the sum of (i) the Participant’s base compensation for the Plan Year for services rendered for an Employer, and (ii) the Participant’s MIP bonus payable with respect to a performance period that coincides with the Plan Year or that ends within the Plan Year, over (2) the annual compensation limit under Code Section 401(a)(17) (or under a comparable provision of the Internal Revenue Code of the Commonwealth of Puerto Rico if the Participant is an eligible participant under the Walmart Puerto Rico 401(k) Plan) in effect for the calendar year in which the Plan Year begins. For purposes of this paragraph, a Participant’s base compensation and a Participant’s MIP bonus shall include the cash amounts of such base compensation and MIP bonus payable to the Participant regardless of whether the payment of any or all of such amounts to the Participant is deferred or not made on account of (1) a deferral election by the Participant under the 401(k) Plan, (2) a deferral election by the Participant under this Plan, (3) a pre-tax contribution by the Participant under Code Section 125, (4) a pre-tax contribution by the Participant under Code Section 132(f)(4),

or (5) withholding for the payment of employment taxes or income taxes with respect to the Participant.

(q) 401(k) Plan means the Walmart 401(k) Plan and the Walmart Puerto Rico 401(k) Plan, as amended from time to time.

(r) Gross Misconduct means conduct engaged in by the Participant which has been deemed by the Committee or its delegate to be detrimental to the best interests of Walmart or any Related Affiliate or any entity in which Walmart has an ownership interest. Examples of such conduct include, without limitation, disclosure of confidential information in violation of Walmart’s Statement of Ethics, theft, the commission of a felony or a crime involving moral turpitude, gross misconduct or similar serious offenses.

(s) Matching Account means the bookkeeping account maintained on behalf of a Participant to reflect his or her Employer Matching Contribution Credits.

(t) MIP means the Walmart Inc. Management Incentive Plan, as amended from time to time, without regard to any non- U.S. subplans.

(u) Participant means any individual for whom an Account is maintained. An individual will cease to be a Participant at such time that the Participant’s Account has been fully distributed or forfeited in accordance with the Plan.

(v) Plan means the Walmart Deferred Compensation Matching Plan, as set forth herein, and as amended from time to time.

(w) Plan Year means the twelve (12)-month period commencing on February 1 and ending on January 31.

(x) Related Affiliate means all persons with whom Walmart would be considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses under Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.

(y) Retirement Account means a bookkeeping account maintained on behalf of a Participant to which the Participant’s Deferral Account and Matching Account may be allocated pursuant to the election or deemed election of the Participant in accordance with Section 3.5. The number of Retirement Accounts a Participant may have under the Plan at any time shall be determined by the Committee or its delegate.

(z) Scheduled In-Service Account means a bookkeeping account maintained on behalf of a Participant to which the Participant’s Deferral Account may be allocated pursuant to the election of the Participant in accordance with Section 3.5. The number of Scheduled In-Service Accounts a Participant may have under the Plan at any time shall be determined by the Committee or its delegate.

(aa) Scheduled Pay Date means, with respect to each Scheduled In-Service Account, the first day of a calendar month designated by the Participant in accordance with Section 3.5. In no event shall such date be earlier than the first day of the second Plan Year beginning after the Plan Year for which Deferral Credits are first allocated to such Scheduled In-Service Account. Once selected, the Scheduled Pay Date with respect to any Scheduled In-Service Account is irrevocable. If a Participant fails to designate a Scheduled Pay Date with respect to a Scheduled In-Service Account, then the Participant is deemed to have designated as the Scheduled Pay Date for such Scheduled In-Service Account the first day of the second Plan Year beginning after the Plan Year for which Deferral Credits are first allocated to such Scheduled In-Service Account.

(bb) Separation from Service means the Participant has a termination of employment (other than on account of death) with the Company. For purposes of this paragraph, “Company” means the Employer and any Related Affiliate. Whether a termination of employment has occurred shall be determined based on whether the facts and circumstances indicate the Participant and the Company reasonably anticipate that no further services will be performed by the Participant for the Company; provided, however, that a Participant shall be deemed to have a termination of employment if the level of services he or she actually performs for the Company after a certain date permanently decreases to no more than twenty percent (20%) of the average level of bona fide services performed for the Company by the Participant (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services for the Company if the Participant has been providing services to the Company for less than 36 months). For this purpose, a Participant is not treated as having a Separation from Service while he or she is on a military leave, sick leave, or other bona fide leave of absence, if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant has a right to reemployment with the Company under an applicable statute or by contract. This definition of Separation from Service is intended to be consistent with the separation from service requirements as defined in Code Section 409A.

(cc) Separation Pay Date means the last day of the calendar month in which falls the date that is six (6) months after a Participant’s Separation from Service.

Eligible Officer before commencement of employment and that specifically refers to the deferability of the bonus by explicit reference to this Plan or (2) the bonus is eligible for deferral in accordance with guidelines established by the Committee, or by an officer to whom the Committee has delegated authority to establish such guidelines, and the bonus requires as a condition of receipt of the bonus and to avoid forfeiture of the bonus that the recipient continue to perform services for the Employer for a period of at least thirteen (13) months after the date he or she obtains the legally binding right to the bonus.

(ee) Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to subsections (b)(1), (b)(2) and (d)(1)(B)), the loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

(ff) Valuation Date means each day of the Plan Year.

(gg) Walmart means Walmart Inc., a Delaware corporation.

(hh) Years of Participation means a period of Plan Years which includes the first Plan Year with respect to which an Eligible Participant makes a deferral election in accordance with any one or more of Sections 3.1, 3.2 and 3.3 and an amount is credited to the Participant’s Account with respect to any such deferral election, and each subsequent Plan Year during all or part of which the Participant remains a Participant. In addition to the preceding definition, a Participant’s Years of Participation shall include any period commencing February 1 and ending January 31, whether before or after the effective date of the Plan, during which or with respect to which an account is maintained for the Participant under the Walmart Inc. Officer Deferred Compensation Plan, as such plan may be amended from time to time.

ARTICLE III. DEFERRAL CREDITS AND MATCHING CONTRIBUTION CREDITS AND

ACCOUNT ALLOCATIONS

3.1 Deferred Compensation.

(a) For each Plan Year, each Eligible Officer may elect to defer, as Deferred Compensation, all or a portion of the Eligible Officer’s Compensation to be otherwise paid for such Plan Year by the Employer, provided, however, that no election shall be effective to reduce amounts paid by the Employer to an Eligible Officer to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) or for insurance premiums or other withholdings as allowed by Code Section 409A.

The Eligible Officer’s Deferred Compensation will be deferred proratably for each payroll period of the Plan Year. If a payroll period begins in one Plan Year and ends in the following Plan Year, the Deferred Compensation with respect to such payroll period shall be determined by the Eligible Officer’s deferral election made with respect to the Plan Year in which the payroll period ends. All deferral elections made under this Section 3.1 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation.

(b) Compensation deferral elections must be filed:

(1) With respect to an individual who is an Eligible Officer as of the December 31 preceding the Plan Year for which the deferral election is to be effective, no later than such December 31; or

(2) With respect to an individual who first becomes an Eligible Officer during the Plan Year, within thirty (30) days following the first date he or she becomes an Eligible Officer. For purposes of this rule, an Eligible Officer will be treated as first becoming an Eligible Officer during the Plan Year only if:

(B) he or she was paid all amounts previously due under the Plan and any other plan required by Code Section 409A to be aggregated with the Plan and, on and before the date of the last such payment, was not eligible to continue to participate in the Plan and any other plan required by Code Section 409A to be aggregated with the Plan for periods after such payment.

A deferral election under this Section 3.1(b)(2) will be effective only with respect to Compensation for payroll periods beginning after the payroll period in which the Eligible Officer’s election form (which may be electronic) is received by Walmart’s Executive Compensation department. In addition, a deferral election under this Section 3.1(b)(2) will be effective only if the deferral election meets the requirements set forth in Code Section 409A(a)(4)(B).

3.2 Deferred MIP Bonuses.

(a) For each Plan Year, each Eligible Participant may elect to defer all or a portion of the Eligible Participant’s bonus (if any) to be otherwise paid to the Eligible Participant under the MIP with respect to a performance period under the MIP that coincides with the Plan Year or that ends within the Plan Year; provided, however, an Eligible Participant who is not an Eligible Officer may elect to defer no more than eighty percent (80%) of the Eligible Participant’s MIP bonus for a Plan Year. No election under this Section 3.2 shall be effective to reduce amounts paid by the Employer to an Eligible Participant to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) or for insurance premiums or other withholdings as allowed by Code Section 409A. All bonus deferral elections made under this Section 3.2 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation.

(b) MIP bonus deferral elections must be filed:

(1) No later than the December 31 (or such other date as determined by the Committee or its delegate) preceding the first day of the performance period for which the deferral election is to be effective.

(2) If authorized by the Committee or its delegate with respect to an Eligible Participant, and if the MIP bonus constitutes “performance-based compensation” within the meaning of Code Section 409A based on services performed over a performance period of at least twelve (12) months, and if the Eligible Participant has been continuously employed by an Employer or a Related Affiliate since the first day of the performance period, then no later than the earlier of (i) the date that is six months prior to the last day of the performance period, or (ii) the date in the performance period as of which the amount of the MIP bonus has become both substantially certain to be paid and calculable.

(3) Solely with respect to an Eligible Officer who first becomes an Eligible Participant during the Plan Year, within thirty (30) days following the first date he or she becomes an Eligible Participant, as described in Code Section 409A(a)(4)(B). For purposes of this rule, an Eligible Officer will be treated as first becoming an Eligible Participant during the Plan Year only if:

An MIP bonus deferral election under this Section 3.2(b)(3) will be effective only with respect to an MIP bonus paid for services performed after such election. For this purpose, the amount of the MIP bonus payable to the Eligible Officer for services rendered subsequent to the Eligible Officer’s election will be determined by multiplying the bonus by a fraction, the numerator of which is the number of calendar days remaining in the performance period after the election and the denominator of which is the total number of calendar days in such performance period. For purposes of this Section 3.2(b)(3), the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Walmart’s Executive Compensation department.

(c) The Deferred MIP Bonus of an Eligible Participant who elects to defer all or a portion of the Eligible Participant’s MIP bonus under this Section 3.2 with respect to a performance period that coincides with a Plan Year or that ends within a Plan Year shall be credited to the Eligible Participant’s Deferral Account for such Plan Year and shall be allocated to a Retirement Account or to a Scheduled In-Service Account in accordance with Section 3.5.

3.3 Deferred Special Bonuses.

(a) An Eligible Officer may elect to defer all or a portion of the Eligible Officer’s Special Bonus to be otherwise paid to the Eligible Officer in a Plan Year. All Special Bonus deferral elections made under this Section 3.3 must be filed with Walmart’s Executive Compensation department on forms (which may be electronic) approved by Executive Compensation. No election under this Section 3.3 shall be effective to reduce amounts paid by the Employer to an Eligible Participant to an amount which is less than the sum of the amount the Employer is required to withhold for a Plan Year for purposes of federal, state, or local taxes (including, but not limited to, income and FICA withholding) for insurance premiums or other withholdings as allowed by Code Section 409A.For purposes of this Section 3.3, the date of an Eligible Officer’s election is the date the executed election form (which may be electronic) is received by Executive Compensation. A deferral election is not permitted with respect to a Special Bonus unless the Special Bonus is a type described in, and the deferral election with respect to the Special Bonus satisfies the applicable conditions of, Section 3.3(b) or Section 3.3(c).

(b) A Special Bonus described in this Section 3.3(b) is one that: (1) requires as a condition of receipt of the Special Bonus and to avoid forfeiture of the Special Bonus that the Eligible Officer continue to perform services for a period of at least thirteen (13) months after the date he or she obtains the legally binding right to the Special Bonus; (2) may not have an earlier vesting date for a good reason termination or the Eligible Officer’s retirement; and (3) must otherwise meet the qualifications as described in Code Section 409A. The deferral election with respect to a Special Bonus described in this Section 3.3(b) must be filed within thirty (30) days after the Eligible Officer obtains the legally binding right to the Special Bonus.

(c) A Special Bonus described in this Section 3.3(c) is one payable pursuant to an offer letter accepted in writing by an Eligible Officer before commencement of employment and that specifically refers to the deferability of the Special Bonus by explicit reference to the Plan. The deferral election with respect to a Special Bonus described in this Section 3.3(c) must be filed prior to the time the Eligible Officer renders any services to the Employer, regardless of whether the deferral election relates to all of the Special Bonus or a portion of the Special Bonus.

(d) The Deferred Special Bonus of an Eligible Officer who elects to defer all or a portion of the Eligible Officer’s Special Bonus under this Section 3.3 otherwise payable in a Plan Year shall be credited to the Eligible Officer’s Deferral Account for such Plan Year and shall be allocated to a Retirement Account or to a Scheduled In-Service Account in accordance with Section 3.5.

3.4 Employer Matching Contribution Credits.

(a) If a Participant is employed by the Employer or any Related Affiliate on the last day of the Plan Year and if Deferral Credits have been made to the Participant’s Account with respect to the Plan Year, then to the extent applicable under the following provisions of this Section 3.4 an Employer Matching Contribution Credit will be made to the Participant’s Matching Account. The amount of the Employer Matching Contribution Credit, if any, made to a Participant’s Matching Account for the Plan Year will equal the total amount of Deferred Compensation and Deferred MIP Bonus credited to the Participant’s Account for the Plan Year under Section 3.1(c) and Section 3.2(c); provided, however, in no event shall the Employer Matching Contribution Credit made to a Participant’s Matching Account for a Plan Year exceed 6% of the Participant’s Excess Compensation for such Plan Year. Notwithstanding the preceding provisions of this Section 3.4(a), an Employer Matching Contribution Credit for a Plan Year shall not be made with respect to any Deferral Credits for the Plan Year that have been withdrawn in accordance with Section 5.5.

(b) A Participant shall become vested in his or her Matching Account, including earnings thereon, if the Participant has completed at least three (3) Years of Participation. If a Participant is not otherwise vested in the Participant’s Matching Account under the preceding sentence of this Section 3.4(b), the

Participant will become vested in the Participant’s Matching Contribution Account if the Participant dies prior to the Participant’s Separation from Service, or if the Participant is Disabled. Notwithstanding any provision hereunder to the contrary, a Participant’s Matching Account shall be distributed pursuant to Article V only if the Participant has become vested in the Participant’s Matching Contribution Account under this Section 3.4(b) as of the date of the Participant’s Separation from Service.

3.5 Account Allocation Elections

(a) At the same time that an Eligible Participant makes an election to defer Compensation, an MIP bonus, or a Special Bonus in accordance with the provisions of the Plan, the Eligible Participant shall also make an election to allocate the amount or amounts subject to each such deferral election to a Retirement Account or Accounts or to a Scheduled In- Service Account or Accounts. In addition to the preceding requirement, at the same time that an Eligible Participant makes an election to defer Compensation or an MIP bonus in accordance with the provisions of this Plan, the Eligible Participant shall also make an election to allocate the Employer Matching Contribution Credits (if any) with respect to such Deferred Compensation or Deferred MIP Bonus to a Retirement Account or Accounts.

(b) At the time of an Eligible Participant’s first election to allocate any amount subject to a deferral election (regardless of whether the amount is Deferred Compensation, Deferred MIP Bonus, Deferred Special Bonus or Employer Matching Contribution Credit) to a Retirement Account, the Eligible Participant shall also designate the form of distribution with respect to such Retirement Account. The form of distribution must be a form permitted under Section 5.4(a).

(c) At the time of an Eligible Participant’s first election to allocate any amount subject to a deferral election (regardless of whether the amount is Deferred Compensation, Deferred MIP Bonus or Deferred Special Bonus) to a Scheduled In- Service Account, the Eligible Participant shall also designate the Scheduled Pay Date with respect to such Scheduled In-Service Account.

(d) If at the time of an Eligible Participant’s deferral election under the Plan the Eligible Participant fails to make an account allocation election under Section 3.5(a), then the amount subject to such deferral election shall be allocated in the same manner as the same category of deferred amounts (meaning either Deferred Compensation, Deferred MIP Bonus, Deferred Special Bonus or Employer Matching Contribution Credits) were allocated for the most recent preceding Plan Year for which the Eligible Participant made an allocation election, but if none then to the Eligible Participant’s Retirement Account if there is only one, or equally to the Eligible Participant’s Retirement Accounts if the Eligible Participant has more than one Retirement Accounts, but if the Eligible Participant has no Retirement Account then the amount subject to such

deferral election shall be allocated to a Retirement Account deemed to be elected by the Participant with a lump sum form of payment, and such Retirement Account shall be one of the Participant’s permitted Retirement Accounts under the Plan.

3.6 Irrevocability of Deferral Elections and Account Allocation Elections.

(a) Except as otherwise provided herein, once made for a Plan Year, a deferral election or elections under Sections 3.1(b) (1), 3.2(b)(1) and 3.2(b)(2), and the corresponding account allocation election or elections under Section 3.5, may not be revoked, changed or modified after the applicable deferral election filing deadline specified in Sections 3.1(b)(1), 3.2(b)(1), and 3.2(b)(2), and a deferral election or elections under Sections 3.1(b)(2), 3.2(b)(3), 3.3(b) and 3.3(c), and the corresponding account allocation election or elections under Section 3.5, may not be revoked, changed or modified after the date of each such deferral election as provided in Sections 3.1(b)(2), 3.2(b)(3), 3.3(b) and 3.3(c). A deferral election for one Plan Year will not automatically be given effect for a subsequent Plan Year, so that if a deferral is desired for a subsequent Plan Year, a separate election must be made by the Eligible Participant.

(b) In the event an Eligible Officer has a Separation from Service for any reason, then his or her deferral election under Section 3.1 will terminate as of the date of such Separation from Service (but will be effective with respect to the last regular paycheck issued to such Eligible Officer), regardless of whether the Eligible Officer continues to receive Compensation, or other remuneration, from any Employer or Related Affiliate thereafter. If an Eligible Officer has a Separation from Service for any reason and is rehired (whether or not as an Eligible Officer) within the same Plan Year, his or her deferral election, if any, under Section 3.1 shall be automatically reinstated and shall remain in effect for the remainder of such Plan Year.

(c) In the event an Eligible Participant has a Separation from Service for any reason, then his or her deferral elections, if any, under Sections 3.2 and 3.3 will remain in effect with respect to the bonus, if any, subject to any such deferral election. If an Eligible Participant has a Separation from Service for any reason and is rehired (whether or not as an Eligible Participant) within the same Plan Year or the same performance period, his or her deferral elections, if any, under Sections 3.2 and 3.3 will remain in effect with respect to the bonus, if any, subject to any such deferral elections.

termination of such election as provided in the preceding sentence will be pro rated based on his or her new level of Compensation.

(e) In the event an Eligible Officer receives Company-paid short term disability payments and the Compensation of such individual is reduced as a result of the short term disability status, then following such reduction in Compensation his or her Compensation deferral election, if any, under Section 3.1 will be pro rated based on his or her new level of Compensation through the date of termination of such election.

(f) n the event an Eligible Participant ceases to be an Eligible Participant (other than on account of a Separation from Service) during any Plan Year, then his or her bonus deferral election, if any, under Section 3.2 will terminate for any performance period beginning in the calendar year following the year of the loss of Eligible Participant status.

(g) In the event an Eligible Participant who is an Eligible Officer ceases to be an Eligible Officer (other than on account of Separation from Service) during any Plan Year, then his or her bonus deferral election, if any, under Section 3.3 will remain in effect.

(h) Notwithstanding anything herein to the contrary, in the event an Eligible Officer goes on an unpaid leave of absence, his or her Compensation deferral election, if any, under Section 3.1 shall automatically cease when he or she commences the unpaid leave of absence; provided, however, that if he or she returns from the unpaid leave of absence during the same Plan Year, his or her Compensation deferral election under Section 3.1 shall automatically resume immediately upon return from the leave of absence and shall continue in effect for the balance of the Plan Year. An Eligible Officer’s Compensation deferral election under Section 3.1, if any, shall remain in effect with respect to any Compensation to which such election applies that is paid while on a leave of absence. An Eligible Participant’s deferral election under Sections 3.2 or 3.3, if any, shall not be affected by his or her leave of absence.

3.7 Automatic Suspension of Deferral Elections.

(a) In the event a Participant receives a distribution from the Walmart 401(k) Plan (or any other plan or successor plan sponsored by Walmart or any Related Affiliate) on account of hardship, which distribution is made pursuant to Treasury Regulations Section 1.401(k)-1(d)(3) and requires suspension of deferrals under other arrangements such as this Plan, the Participant’s deferral elections under Sections 3.1, 3.2 and 3.3, if any, pursuant to which deferrals would otherwise be made during the six (6)-month period following the date of the distribution from the Walmart 401(k) Plan shall be cancelled.

Unforeseeable Emergency, and the Committee or its delegate determines that the Participant’s Unforeseeable Emergency may be relieved through the cessation of deferrals under the Plan, some or all the Participant’s deferral elections under Sections 3.1, 3.2 and 3.3, if any, for such Plan Year as determined by the Committee or its delegate, shall be cancelled as soon as administratively practicable following such determination by the Committee or its delegate.

ARTICLE IV. ACCOUNTS AND TIMING OF CREDITS TO ACCOUNTS

4.1 Nature of Accounts.

4.2 Deferral Credits and Employer Matching Contribution Credits.

Deferral Credits and Employer Matching Contribution Credits will be credited to each Participant’s Account as follows:

(a) Deferred Compensation will be credited to the Participant’s Deferral Account as soon as practicable after the date such Compensation would have otherwise been paid in cash.

(b) Deferred MIP Bonuses and Deferred Special Bonuses will be credited to the Participant’s Deferral Account as soon as practicable after the date the bonus could have otherwise been paid in cash.

(c) Employer Matching Contribution Credits for a Plan Year will be credited to the Participant’s Matching Account as of the last day of the Plan Year.

A Participant’s Account, including earnings credited thereto, will be maintained by the Committee until the Participant’s Plan benefits have been paid in full.

4.3 Valuation of Accounts.

Each Participant’s Account will be valued daily as of each Valuation Date.

4.4 Credited Earnings.

(a) Every Valuation Date during a Plan Year, a Participant’s Account will be credited with an equivalent of a daily rate of simple interest based on the yield on United States Treasury securities (not indexed for inflation) with a constant

maturity of ten (10) years, as of the first business day of January preceding such Plan Year, plus two hundred seventy (270) basis points. This rate shall be determined on the basis of Federal Reserve Statistical Release H-15 (or any successor statistical release of the Federal Reserve) and, if there is no such statistical release, on the basis of such other generally recognized source of information concerning the market for United States Treasury securities as the Committee selects.

ARTICLE V. PAYMENT OF PLAN BENEFITS

5.1 Scheduled In-Service Benefits.

(a) In-Service Benefits. Each of a Participant’s Scheduled In-Service Accounts will be distributed in a lump sum within the 90-day period commencing on the Scheduled Pay Date applicable to such Scheduled In-Service Account. The lump sum amount will be the value of the applicable Participant’s Scheduled In-Service Account as of the Scheduled Pay Date.

(b) Intervening Separation or Death. Notwithstanding the preceding, should an event occur prior to the Scheduled Pay Date of any Scheduled In-Service Account that would trigger a distribution under Section 5.2 or 5.3 earlier than the Scheduled Pay Date, such Scheduled In-Service Account or Accounts shall be distributed in accordance with Section 5.2 or 5.3, as applicable, and not in accordance with Section 5.1(a).

5.2 Separation Benefits.

(a) Separation Benefits. In the event of a Participant’s Separation from Service, the Participant’s Scheduled In-Service Accounts will be distributed in a lump sum under Section 5.2(b) and the Participant’s Retirement Accounts will be distributed in one of the forms provided in Section 5.2(b) or 5.2(c) below in accordance with the Participant’s distribution election given effect under the provisions of Section 5.4 with respect to each such Retirement Account.

(b) Lump Sum Distributions.

(1) Any lump sum to be paid under this Section 5.2(b) shall be paid within the 90-day period commencing on the Participant’s Separation Pay Date.

(2) The lump sum amount will be the value of the Participant’s Account, or Retirement Account, as applicable, as of the last day of the month preceding the date of the distribution.

(1) If a Participant’s Retirement Account is to be distributed in the form of annual installments, the first such installment shall be made within the 90-

day period commencing on the first January 31 following the Participant’s Separation from Service; provided, however, that if such January 31 is earlier than the Participant’s Separation Pay Date, the first such installment shall be made within the 90-day period commencing on the Participant’s Separation Pay Date. Subsequent installments shall be made within the 90-day period commencing on each successive January 31, until the Participant’s benefits under such Account are distributed in full.

(2) The Plan benefits will be paid in equal annual installments in an amount which would fully amortize a loan equal to the lump sum value of the Participant’s Retirement Account determined in accordance with Section 5.2(b)(2) (using as the distribution date the date of the first installment) over the installment period, with interest calculated at the per annum rate in effect for the Plan Year in which the Participant’s Separation from Service occurs.

5.3 Death Benefits.

(a) General. In the event of the Participant’s death before incurring a Separation from Service or before commencement of benefits, the Participant’s Account will be distributed in one of the forms provided in Section 5.3(b) or 5.3(c) below in accordance with the Participant’s distribution election given effect under the provisions of Section 5.4 below.

A Participant may elect only one form of payment under the Plan for all beneficiaries (at any level). If the Participant fails to make an effective election as provided in Section 5.4 below, the Participant will be deemed to have elected distribution in a lump sum under Section 5.3(b) for all beneficiary levels.

(b) Lump Sum Distributions.

(1) Any lump sum to be paid under this Section 5.3(b) shall be paid within the 90-day period commencing on the last day of the month in which the Participant’s death occurs.

(2) The lump sum amount will be the value of the Participant’s Account as of the last day of the month preceding the date of distribution.

(e) Designation of Beneficiary. A Participant may, by written or electronic instrument delivered to the Committee in the form prescribed by the Committee, designate primary and contingent beneficiaries (which may be a trust or trusts) to receive any benefit payments which may be payable under this Plan following the Participant’s death, and may designate the proportions in which such beneficiaries are to receive such payments. A Participant may change such designation from time to time and the last designation filed with the Committee in accordance with its procedures prior to the Participant’s death will control. In the event no beneficiary is designated, or if all designated beneficiaries predecease the Participant, payment shall be payable to the following “default” beneficiaries of the Participant in the following order of priority: (1) the Participant’s surviving spouse known to the Committee, if any; (2) the Participant’s living children known to the Committee in equal shares; (3) the Participant’s living parents known to the Committee in equal shares; (4) the Participant’s surviving siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine.

(f) Death of Beneficiary. In the event a beneficiary dies before full payment of the Participant’s benefits under the Plan, benefits that would have been paid to such beneficiary shall continue in the same form in equal shares to the remaining beneficiaries at the same level (i.e., primary, contingent) and, if none, to the next level of beneficiaries. If there are no beneficiaries at the next level, then any remaining benefits shall be paid to the following “default” beneficiaries of the last living beneficiary in the following order of priority: (1) the beneficiary’s surviving spouse known to the Committee, if any; (2) the beneficiary’s living children known to the Committee in equal shares; (3) the beneficiary’s surviving parents known to the Committee in equal shares; (4) the beneficiary’s surviving

siblings known to the Committee in equal shares; or (5) the beneficiary’s estate for distribution in accordance with the terms of the beneficiary’s last will and testament or as a court of competent jurisdiction shall determine.

5.4 Form of Distribution.

(a) Forms Available. In the event of a Participant’s Separation from Service, or in the event of a Participant’s death if the Participant dies prior to Separation from Service, distribution of his or her Retirement Account or, in the event of death, his or her Account, may be made, at the Participant’s election per this Section 5.4, in one of the following forms:

(1) a lump sum;

(2) subject to the minimum account value restriction below, substantially equal annual installments over a period not to exceed fifteen (15) years; or

provided, however, that an installment election will be given effect only if, as of the date on which any lump sum payment would be valued, the value of the Participant’s Retirement Account, or, in the event of death, Account, is at least fifty thousand dollars ($50,000). Any Participant whose Retirement Account, or in the event of death, Account, is valued at less than fifty thousand dollars ($50,000) as of the date on which any lump sum payment would be valued shall be defaulted to a lump sum payment.

(b) Subsequent Elections. A Participant may change his or her distribution election (or deemed distribution election) with respect to his or her Retirement Account, or, in the event of death, his or her Account, per this Section 5.4 at any time by making a new election (referred to in this subsection as a “subsequent election”) on a form (which may be electronic) approved by Executive Compensation and filed with Executive Compensation; provided, however, that such subsequent election shall be subject to the following restrictions:

(1) A subsequent election may not take effect until at least twelve (12) months after the date on which such subsequent election is made;

(2) Payment or initial payment pursuant to a subsequent election may not be made earlier than five (5) years from the date such payment would have been made absent the subsequent election (but, for this purpose, installment payments shall not commence until the first January 31 after such delay), unless the distribution is made on account of the Participant’s death;

(3) A subsequent election related to a payment must be made not less than twelve (12) months before the date the payment is scheduled to be paid;

(4) Payment of a Participant’s Retirement Account or, in the event of death, Account, pursuant to a subsequent election must be completed by the last day of the Plan Year which contains the twentieth (20 th ) anniversary of the Participant’s Separation Pay Date or the Participant’s death;

(5) For purposes of this Section 5.4(b) and Code Section 409A, the entitlement to annual installment payments is treated as the entitlement to a single payment.

If a Participant’s distribution election does not satisfy the requirements of this Section 5.4(b), it will not be recognized or given effect by the Committee. In that event, distribution of the benefit will be made in accordance with the Participant’s most recent distribution election which does satisfy the requirements of this Section 5.4(b).

(c) Filing of Election. A Participant’s distribution election applicable to the Participant’s Account in the event of the Participant’s death prior to Separation from Service, and a Participant’s distribution election with respect to the Participant’s Retirement Account or Retirement Accounts, and the Participant’s Scheduled Pay Date with respect to the Participant’s Scheduled In-Service Accounts, must be filed with Executive Compensation on forms (which may be electronic) prescribed by Executive Compensation.

5.5 Distributions for Unforeseeable Emergencies.

(a) In the event of an Unforeseeable Emergency, the Committee or its delegate, in its sole and absolute discretion and upon written application of a Participant or, following the Participant’s death, the beneficiary to whom a Participant’s benefits are then being paid, or will be paid, pursuant to Section 5.3, may direct immediate distribution of all or a portion of the Participant’s Account (excluding the Participant’s Matching Account and related earnings if the Participant is not fully vested in his or her Matching Account). The Committee will permit distribution on account of an Unforeseeable Emergency only to the extent reasonably necessary to satisfy the emergency need, plus amounts necessary to pay federal, state or local income taxes and penalties reasonably anticipated to result from the distribution, after taking into account the extent to which such need is or may be relieved through reimbursement or compensation by insurance, by liquidation of the Participant’s or beneficiary’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cessation of deferrals under the Plan. Any distribution under this Section 5.5 shall first be made from the Participant’s Scheduled In-Service Accounts with respect to Deferral Credits made in the same Plan Year as the Distribution under this Section 5.5(a), and then from the Participant’s Retirement Accounts with respect to Deferral Credits made in the same Plan

Year as the Distribution under this Section 5.5(a), and then proratably from the remaining amount of the Participant’s Scheduled In-Service Accounts and then proratably from the Participant’s Retirement Accounts.

5.6 Distributions for Payment of Taxes

Walmart’s Senior Vice President of Global Compensation, or any successor position, may accelerate and pay a portion of a Participant’s Plan benefits in a lump sum equal to (a) the Federal Insurance Contributions Act tax imposed on Plan benefits and any income tax withholding related to such amounts, as well as (b) any state, local or foreign tax obligations arising from participation in the Plan (and related withholding under Code Section 3401) that apply to the amounts deferred under the Plan before such amount is paid or made available to the Participant.

5.7 Reductions Arising from a Participant’s Gross Misconduct.

Notwithstanding anything herein to the contrary, a Participant’s Plan benefits are contingent upon the Participant not engaging in Gross Misconduct while employed with any Employer or Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. In the event the Committee determines that the Participant has engaged in Gross Misconduct during the prescribed period, then notwithstanding any provisions hereunder to the contrary: (a) the Participant shall forfeit all Employer Matching Contribution Credits and credited Plan earnings thereon; (b) earnings credited to the Participant’s Deferral Account shall be recalculated for each Plan Year to reflect the amount which would otherwise have been credited if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect for such Plan Year; and (c) if the Participant is then receiving installment payments, any remaining installments shall be recalculated to reflect the amount which would otherwise have been paid if the applicable per annum rate were fifty percent (50%) of the per annum rate in effect with respect to such installment payments. Under no circumstances will a Participant forfeit any portion of the Participant’s Deferred Compensation, Deferred MIP Bonus and Deferred Special Bonus. Any payments received hereunder by a Participant (or the Participant’s beneficiary) are contingent upon the Participant not engaging (or not having engaged) in Gross Misconduct while employed with any Employer or Related Affiliate or any entity in which Walmart has an ownership interest, or during such additional period as provided in Walmart’s Statement of Ethics. If the Committee determines, after payment of amounts hereunder, that the Participant

has engaged in Gross Misconduct during the prescribed period, the Participant (or the Participant’s beneficiary) shall repay to Walmart any amount in excess of that to which the Participant is entitled under this Section 5.7.

ARTICLE VI. ADMINISTRATION

6.1 General.

The Committee is responsible for the administration of the Plan and is granted the following rights and duties:

(a) The Committee shall have the exclusive duty, authority and discretion to interpret and construe the provisions of the Plan, to determine eligibility for and the amount of any benefit payable under the Plan, and to decide any dispute which may arise regarding the rights of Participants (or their beneficiaries) under this Plan;

6.2 Allocation and Delegation of Duties.

In the exercise of such allocated responsibilities, any action of the member to whom responsibilities are allocated shall have the same force and effect for all purposes hereunder as if such action had been taken by the Committee. The Committee shall not be liable for any acts or omissions of such member. The member to whom responsibilities have been allocated shall periodically report to the Committee concerning the discharge of the allocated responsibilities.

ARTICLE VII. CLAIMS PROCEDURE

7.1 General.

Any claim for benefits under the Plan must be filed by the Participant or beneficiary (“claimant”) in writing with the Committee or its delegate within one (1) year of the Participant’s Separation from Service. If the claim is not filed within one (1) year of the Participant’s Separation from Service, neither the Plan nor any Employer nor any Related Affiliate shall have any obligation to pay the benefit and the claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is wholly or partially denied, notice of the decision will be furnished to the claimant by the Committee or its delegate within a reasonable period of time, not to exceed sixty (60) days, after receipt of the claim by the Committee or its delegate, unless special circumstances require an extension of time for processing, in which case a decision will be rendered within a reasonable period of time, but not later than one hundred twenty (120) days after receipt. Any claimant who is denied a claim for benefits will be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan provision upon which the denial is based;

(c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(d) an explanation of the Plan’s claim review procedure, including the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse determination on review.

7.2 Appeals Procedure.

To appeal a denial of a claim, a claimant or the claimant’s duly authorized representative:

(a) may request a review by written application to the Committee not later than sixty (60) days after receipt by the claimant of the written notification of denial of a claim;

(b) may review pertinent documents; and

(a) the specific reason or reasons for the adverse determination;

(b) specific reference to pertinent Plan provisions on which the adverse determination is based;

(c) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and

(d) a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a).

ARTICLE VIII. MISCELLANEOUS PROVISIONS

8.1 Amendment, Suspension or Termination of Plan.

Notwithstanding the preceding, Walmart may, by action of the Committee within the thirty (30) days preceding or twelve (12) months following a change in control (within the

meaning of Code Section 409A) of a relevant affiliate, partially terminate the Plan and distribute benefits to all Participants involved in such change in control within twelve (12) months after such action, provided that all plans sponsored by the service recipient immediately after the change in control (which are required to be aggregated with this Plan pursuant to Code Section 409A) are also terminated and liquidated with respect to each Participant involved in the change in control. Any action taken in this Section 8.1 will be done in accordance with Code Section 409A.

8.2 Non-Alienability.

8.3 Recovery of Overpayments. In the event any payments under the Plan are made on account of a mistake of fact or law, the recipient shall return such

payment or overpayment to Walmart as requested by Walmart.

8.4 No Employment Rights.

Nothing contained herein shall be construed as conferring upon any Eligible Participant or Participant the right to continue in the employ of any Employer or any Related Affiliate as an officer or in any other capacity.

8.5 No Right to Bonus.

Nothing contained herein shall be construed as conferring upon the Participant the right to receive a bonus from the MIP or any other bonus or award from any Employer or a Related Affiliate. A Participant’s entitlement to such a bonus or award is governed solely by the provisions of the MIP or such other plan or arrangement.

8.6 Withholding and Employment Taxes.

To the extent required by law, the Employer or a Related Affiliate will withhold from a Participant’s current compensation such taxes as are required to be withheld for employment taxes. To the extent required by law, the Employer or a Related Affiliate will withhold from a Participant’s Plan distributions such taxes as are required to be withheld for federal, Puerto Rican, state or local government income tax purposes.

8.7 Income and Excise Taxes.

8.8 Successors and Assigns.

The provisions of this Plan are binding upon and inure to the benefit of Walmart and each other Employer, their successors and assigns, and the Participant, the Participant’s beneficiaries, heirs, and legal representatives.

8.9 Governing Law.

This Plan shall be subject to and construed in accordance with the laws of the State of Delaware to the extent not preempted by federal law.

Name of Grantee: Grant Date:

Number of Shares: Dollar Value of Award

as of Grant Date: Walmart Identification Number:

WALMART INC. STOCK INCENTIVE PLAN OF 2015

RESTRICTED STOCK AWARD NOTIFICATION OF AWARD AND TERMS AND CONDITIONS OF AWARD

These Restricted Stock Award Notification of Award and Terms and Conditions of Award, including any applicable special terms and conditions for your specific country set forth in the appendix attached hereto (jointly, the “Agreement”), contains the terms and conditions of the Restricted Stock (as defined in the Walmart Inc. Stock Incentive Plan of 2015, as may be amended from time to time (the “Plan”)) granted to you by Walmart Inc., a Delaware corporation (“Walmart”), under the Plan.

All the terms and conditions of the Plan are incorporated into this Agreement by reference. All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Plan.

BY SIGNING OR ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU HEREBY ACKNOWLEDGE, UNDERSTAND, AGREE TO, AND ACCEPT THE FOLLOWING:

1. Grant of Restricted Stock . Walmart has granted to you, effective on the Grant Date, the right to receive the number of Shares set forth above on the Vesting Date as further set forth in Paragraph 5 below, subject to forfeiture if certain vesting conditions are not satisfied. Before the Shares vest and are delivered to you, they are referred to in this Agreement as “Restricted Stock.”

2. Plan Governs . The Restricted Stock and this Agreement are subject to the terms and conditions of the Plan. You are accepting the Restricted Stock, acknowledging receipt of a copy of the Plan and the prospectus covering the Plan, and acknowledging that the Restricted Stock and your participation in the Plan are subject to all the terms and conditions of the Plan and of this Agreement. You further agree to accept as binding, conclusive and final all decisions and interpretations by the Committee of the Plan upon any disputes or questions arising under the Plan.

3. Payment . You are not required to pay for the Restricted Stock or the Shares underlying the Resticted Stock granted to you pursuant to this Agreement.

4. Stockholder Rights . Your Restricted Stock will be held for you by Walmart until the applicable delivery date described in Paragraph 5. You shall have all the rights of a stockholder of Shares of Restricted Stock that vest. With respect to your unvested Restricted Stock:

A. you shall have the right to vote the Shares underlying your Restricted Stock on any matter as to which Shares have voting rights at any meeting of shareholders of Walmart;

B. you shall have the right to receive, free of vesting restrictions (but subject to applicable withholding taxes) all cash dividends paid with respect to such Shares underlying your Restricted Stock; and

C. any non-cash dividends and other non-cash proceeds of such Shares underlying your Restricted Stock, including stock dividends and any other securities issued or distributed in respect of such Shares underlying your Restricted Stock shall be subject to the same vesting and forfeiture conditions as are applicable to your Restricted Stock, and the term “Restricted Stock,” as used in this Agreement, shall also include any related stock dividends and other securities issued or distributed in respect of such Shares underlying your Restricted Stock.

5. Vesting of Restricted Stock and Delivery of Shares .

A. Vesting . Your Restricted Stock will vest as follows, provided you have not incurred a Forfeiture Condition described below:

Percentage of Restricted Stock Vesting Vesting Date

B. Delivery of Shares . Upon the vesting of your Restricted Stock, subject to Paragraph 9 below, you shall be entitled to receive a number of Shares equal to the number of underlying the vested Restricted Stock, less any Shares withheld or sold to satisfy tax withholding obligations as set forth in Paragraph 10 below. The Shares shall be delivered to you as soon as administratively feasible, but in any event within 74 days of the Vesting Date. Such Shares will be deposited into an account in your name with a broker or other third party designated by Walmart. You will be responsible for all fees imposed by such designated broker or other third party designated by Walmart.

6. Forfeiture Conditions . Subject to Paragraph 8 below, the Shares underlying your Restricted Stock that would otherwise vest in whole or in part on a Vesting Date will not vest and will be immediately forfeited if, prior to the Vesting Date:

A. your Continuous Status terminates for any reason (other than death or Disability, to the extent provided in Paragraph 8 below); or

B. you have not executed and delivered to Walmart a Non-Disclosure and Restricted Use Agreement, in a form to be provided to you by Walmart.

Each of the events described in Paragraphs 6.A and 6.B above shall be referred to as a “Forfeiture Condition” for purposes of this Agreement. Furthermore, if applicable, you shall be advised if the Committee has determined that your acceptance of this Plan Award is further conditioned upon your execution and delivery to Walmart of a Post Termination Agreement and Covenant Not to Compete, in a form to be provided to you by Walmart. If applicable, the failure to execute and deliver such Post Termination Agreement and Covenant Not to Compete prior to the vesting date shall also be deemed a “Forfeiture Condition” for purposes of this Agreement. Upon the occurrence of a Forfeiture Condition, you shall have no further rights with respect to such Restricted Stock (including any cash dividends and non-cash proceeds related to the Restricted Stock for which the record date occurs on or after the occurrence of a Forfeiture Condition) or the underlying Shares.

7. Administrative Suspension . If you are subject to an administrative suspension, vesting of your Restricted Stock may be suspended as of the date you are placed on administrative suspension. If you are not reinstated as an Associate in good standing at the end of the administrative suspension period, your Restricted Stock may be immediately forfeited and you shall have no further rights with respect to such Restricted Stock (including any cash dividends and non-cash proceeds related to the Restricted Stock for which the record date occurs on or after the date of the forfeiture) or the underlying Shares. If you are reinstated as an Associate in good standing at the end of the administrative suspension period, then the vesting of your Restricted Stock will resume as provided in Paragraph 5, and any Restricted Stock that would have vested while you were on administrative suspension will vest and the corresponding number of Shares will be delivered to you as soon as administratively feasible, but in any event within 74 days of the end of the administrative suspension period which shall be considered the Vesting Date for purposes of this Paragraph 7.

8. Accelerated Vesting; Vesting Notwithstanding Termination of Continuous Status by Death or Disability .

A. Notwithstanding Paragraph 5 above, your Restricted Stock that would have become vested on a Vesting Date which occurs not more than 90 days after the date your Continuous Status is so terminated by reason of your death or Disability will become vested earlier than described in Paragraph 5 above, and such earlier vesting date shall be considered a Vesting Date for purposes of this Agreement. For purposes of this Paragraph 8, your Continuous Status will be considered terminated on the date of your death or the date on which your employment or other service relationship has been legally terminated by reason of your Disability.

B. If your Continuous Status is terminated due to your Disability, you agree to promptly notify the Walmart Global Equity team. For purposes of this Agreement, “Disability” shall mean that you would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of Walmart or, if different, the Affiliate that employs you (the “Employer”), regardless of whether you are covered by such policy. If Walmart or, if different, the Employer does not have a long-term disability policy, for purposes of this Agreement, “Disability” means that you are unable to carry out the responsibilities and functions of the position held by you by reason of any medically determined physical or mental impairment for a period of not less than one hundred and eighty (180) consecutive days. You shall not be

considered to have incurred a Disability for purpose of this Paragraph 8 unless you furnish proof of such impairment sufficient to satisfy Walmart in its sole discretion.

C. Notwithstanding any provision of this Agreement, Walmart will not accelerate your Plan Award if Walmart has not received notification of your termination within such period of time that it determines, in its sole discretion, to be necessary to process the settlement of your Plan Award to avoid adverse tax consequences under Section 409A of the Code.

9. Elective Deferral of Restricted Stock. If you are eligible to defer delivery of the Shares underlying your Restricted Stock award to a future date in accordance with Section 7.8 of the Plan and rules and procedures relating thereto, you will be advised as to when any such deferral election must be made and the rules and procedures applicable to such deferral election.

10. Taxes and Tax Withholding .

A. You agree to consult with any tax advisors you think necessary in connection with your Restricted Stock and acknowledge that you are not relying, and will not rely, on Walmart or any Affiliate for any tax advice. Please see Paragraph 10.F regarding Section 83(b) elections.

B. You acknowledge that, regardless of any action taken by Walmart or, if different, the Employer, the ultimate liability for all income tax, social insurance, pension, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), is and remains your responsibility and may exceed the amount actually withheld by Walmart or the Employer. You further acknowledge that Walmart and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock, including, but not limited to, the grant, vesting or settlement of the Restricted Stock, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Walmart and/or the Employer (or your former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

C. Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Walmart and the Employer to satisfy all Tax-Related Items. In this regard, you authorize Walmart and/or the Employer or their respective agents, at their sole discretion, to satisfy any applicable withholding obligations with regard to all Tax- Related Items by withholding of Shares to be issued upon settlement of the vested Restricted Stock. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by your acceptance of the Restricted Stock and this Agreement, you authorize and direct: (a) Walmart and any broker or other third party designated by Walmart to sell on your behalf a whole number of Shares corresponding to the vested Restricted Stock that Walmart or the Employer determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items;

and (b) Walmart and/or the Employer, or their respective agents, at their sole discretion, to satisfy the Tax-Related Items by any other method of withholding, including through withholding from your wages or other cash compensation paid to you by Walmart or any Affiliate.

D. Depending on the withholding method, Walmart or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. Further, if the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Tax-Related Items. If as a result of withholding whole Shares, an excess amount of tax is withheld, such excess tax will be reported and paid to the applicable tax authorities or regulatory body. In the event that any excess amounts are withheld to satisfy the obligation for Tax-Related Items, you may be entitled to receive a refund of any over-withheld amount in the form of cash and will have no entitlement to the Share equivalent.

E. Finally, you agree to pay to Walmart or the Employer any amount of Tax-Related Items that Walmart or the Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means previously described. Walmart may refuse to deliver the Shares or the proceeds of the sale of Shares, if you fail to comply with your obligations in connection with the Tax-Related Items.

F. By accepting this Agreement, you agree not to make a Code Section 83(b) election with respect to this award of Restricted Stock.

11. Restricted Stock Not Transferable . During the applicable periods of restriction determined in accordance with Paragraph 5 above, the Restricted Stock may not be sold, conveyed, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to vesting of the Restricted Stock and the issuance of the underlying Shares. Any attempted action in violation of this Paragraph 11 shall be null, void, and without effect.

12. Country-Specific Appendix . Notwithstanding any provision in these Restricted Stock Award Notification of Award and Terms and Conditions of Award to the contrary, the grant of Restricted Stock also shall be subject to any special terms and conditions as set forth in any appendix attached hereto (the “Appendix”) with respect to certain laws, rules, and regulations specific to your country. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Walmart determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix is incorporated by reference into these Restricted Stock Award Notification of Award and Terms and Conditions of Award and, together, these documents constitute this Agreement.

13. Nature of Plan Award . You further acknowledge, understand and agree that:

A. the Plan is established voluntarily by Walmart and is discretionary in nature;

B. the grant of Restricted Stock is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock or other awards, or benefits in lieu of Restricted Stock, even if restricted stock has been granted in the past;

C. all decisions with respect to future grants of Restricted Stock or other awards, if any, will be at the sole discretion of the Committee;

D. neither this Agreement nor the Plan creates any contract of employment with any entity involved in the management or administration of the Plan or this Agreement, and nothing in this Agreement or the Plan shall interfere with or limit in any way the right of Walmart or the Employer, if different, to terminate your Continuous Status at any time, nor confer upon you the right to continue in the employ of Walmart or any Affiliate;

E. the Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, relate exclusively to your Continuous Status during the vesting period applicable to your Restricted Stock;

F. nothing in this Agreement or the Plan creates any fiduciary or other duty owed to you by Walmart, any Affiliate, or any member of the Committee, except as expressly stated in this Agreement or the Plan;

G. you are voluntarily participating in the Plan;

H. the Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, are not intended to replace any pension rights or compensation;

I. the Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

J. unless otherwise agreed with Walmart, the Restricted Stock and the Shares underlying the Restricted Stock, and the income and the value of same, are not granted as consideration for, or in connection with, the service (if any) you may provide as a director of any Affiliate;

K. the future value of the Shares underlying the Restricted Stock is unknown, indeterminable and cannot be predicted with certainty;

L. no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock resulting from the termination of your Continuous Status (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any);

your right to vest in the Restricted Stock under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and may not be extended by any notice period under local law ( e.g. , your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence);

N. unless otherwise provided in the Plan or by Walmart in its discretion, the Restricted Stock and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock, the Shares underlying the Restricted Stock, or any such benefits transferred to, or assumed by, another company nor to be exchanged, or substituted for, in connection with any corporate transaction affecting the Shares underlying the Restricted Stock; and

O. if you are providing services outside the United States: neither Walmart nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Restricted Stock or of any amounts due to you pursuant to the settlement of the Restricted Stock or the subsequent sale of any Shares acquired upon settlement.

14. No Advice Regarding Award . Walmart and/or its Affiliates are not providing any tax, legal or financial advice, nor are Walmart or any Affiliate making any recommendation regarding your participation in the Plan or the Shares acquired upon vesting. You are advised to consult with your personal tax, legal, and financial advisors regarding the decision to participate in the Plan and before taking any action related to the Plan.

15. Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other grant materials by and among, as applicable, Walmart and any Affiliate for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that Walmart and its Affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance identification number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in Walmart or an Affiliate, details of all Restricted Stock or any other awards granted, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. You understand that Data may be transferred to Merrill Lynch, Pierce, Fenner & Smith and its affiliates or such other stock plan service provider as may be selected by Walmart in the future, which is assisting Walmart in the implementation, administration and management of the Plan. You understand that the recipients of the Data may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative. You authorize Walmart, Merrill Lynch, Pierce, Fenner & Smith and any other possible recipients which may assist Walmart (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in

electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of Data as may be required to Walmart’s designated broker or other third party. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your Continuous Status with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that Walmart would not be able to grant Restricted Stock or other Plan Awards to you or administer or maintain such Plan Awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative. Finally, upon request of Walmart or the Employer, you agree to provide an executed separate data privacy consent form (or any other agreements or consents that may be required by Walmart and/or the Employer) that Walmart and/or the Employer may deem necessary to obtain from you for the purpose of administering your participation in the Plan in compliance with the data privacy laws in your country, either now or in the future. You understand and agree that you will not be able to participate in the Plan if you fail to provide any such consent or agreement requested by Walmart and/or the Employer.

16. Other Provisions .

A. Determinations regarding this Agreement (including, but not limited to, whether an event has occurred resulting in the forfeiture of or accelerated vesting of the Restricted Stock) shall be made by the Committee in its sole and exclusive discretion and in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive and binding on you and your successors and heirs.

B. Walmart reserves the right to amend, abandon or terminate the Plan, including this Agreement, at any time subject to Committee approval. Nothing in the Plan should be construed as to create any expectations that the Plan will be in force and effect for an indefinite period of time nor shall give rise to any claims to acquired rights or similar legal theories.

C. The Committee will administer the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among recipients and eligible Associates, whether or not such persons are similarly situated.

D. By accepting this Agreement, you agree to provide any information reasonably requested from time to time.

E. This Agreement shall be construed under the laws of the State of Delaware, without regard to its conflict of law provisions.

F. The provisions of this Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

G. If you receive this Agreement or any other documents related to your Plan Award or the Plan translated into a language other than English, and if the meaning of the translated version is different than the English version, the English language version of such document will control.

H. Walmart may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Walmart or a third party designated by Walmart.

I. Walmart reserves the right to impose other requirements on your participation in the Plan, on your Plan Award, and the Shares underlying the Restricted Stock, to the extent Walmart determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

J. You acknowledge that a waiver by Walmart or an Affiliate of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provisions of the Plan or this Agreement, or of any subsequent breach by you or any other Associate.

K. You understand that your country may have insider trading and/or market abuse laws which may affect your ability to accept, acquire, sell, or otherwise dispose of Shares, rights to Shares or rights linked to the value of Shares under the Plan during such times you are considered to have “inside information” (as defined in the laws in your country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed insider information. Furthermore, you could be prohibited from (i) disclosing inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. The restrictions applicable under these laws may be the same or different from Walmart’s insider trading policy. You acknowledge that it is your responsibility to be informed of and compliant with such regulations, and any applicable Walmart insider trading policy, and are advised to speak to your personal legal advisor on this matter.

L. You understand that you may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from your participation in the Plan in, to and/or from a brokerage/bank account or legal entity located outside your country. The applicable laws of the your country may require that you report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. You acknowledge that you are responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements, and you are advised to consult your personal legal advisor on this matter.

M. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Walmart shall not be required to deliver any Shares issuable upon vesting of the Restricted Stock prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Walmart shall, in its absolute discretion, deem necessary or advisable. You understand that Walmart is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Walmart may, without liability for its good faith actions, place legend restrictions upon Shares underlying your vested Restricted Stock and issue “stop transfer” instructions requiring compliance with applicable U.S. or other securities laws and the terms of the Agreement and Plan. Further, you agree that Walmart shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws, rules or regulations applicable to issuance of Shares.

WALMART INC. STOCK INCENTIVE PLAN OF 2015

RESTRICTED STOCK AWARD NOTIFICATION OF AWARD AND TERMS AND CONDITIONS

COUNTRY-SPECIFIC APPENDIX

Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Restricted Stock Award Notification of Award and Terms and Conditions (the “T&C’s”).

Terms and Conditions . This Appendix includes additional terms and conditions that govern the Restricted Stock granted to you under the Plan if you work and/or reside in one of the countries listed below.

If you are a citizen or resident of a country other than the one in which you are currently working and/or residing, transfer Continuous Status after the Grant Date, or are considered a resident of another country for local law purposes, Walmart shall, in its discretion, determine to what extent the terms and conditions contained herein shall be applicable to you .

Notifications . This Appendix also includes information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2017. Such laws are often complex and change frequently. As a result, Walmart strongly recommends that you not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that the Restricted Stock vests or you receive Shares under the Plan.

In addition, the information contained herein is general in nature and may not apply to your particular situation, and Walmart is not in a position to assure you of a particular result. Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.

Finally, if you are a citizen or resident of a country other than the one in which you are currently working and/or residing, transfer Continuous Status after the Grant Date, or are considered a resident of another country for local law purposes, the notifications contained herein may not be applicable to you in the same manner.

ARGENTINA

Notifications

Securities Law Information . Neither the Restricted Stock nor any Shares underlying the Restricted Stock are publicly offered or listed on any stock exchange in Argentina and, as a result, have not

been and will not be registered with the Argentina Securities Commission ( Comisión Nacional de Valores ). The offer is private and not subject to the supervision of any Argentine governmental authority. Neither this Agreement nor any other materials related to the Restricted Stock nor any Shares underlying the Restricted Stock, may be utilized in connection with any general offering to the public in Argentina. Argentine residents who acquire Restricted Stock under the Plan do so according to the terms of a private offering made outside Argentina.

Exchange Control Information . You understand that you must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the Restricted Stock and your participation in the Plan. You should consult with your personal legal advisor to ensure compliance with the applicable requirements.

Foreign Asset/Account Reporting Information . If you are an Argentine tax resident, you must report any Shares acquired under the Plan and held by you on December 31st of each year on your annual tax return for that year.

BRAZIL

Terms and Conditions

Compliance with the Law . By accepting the Restricted Stock, you acknowledge your agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the Restricted Stock and the sale of any Shares acquired under the Plan.

Labor Law Acknowledgement . By accepting the Restricted Stock, you agree that you are (i) making an investment decision, (ii) the Shares will be issued to you only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.

Notifications

Foreign Asset/Account Reporting Information . If you hold assets and rights outside Brazil with an aggregate value exceeding US$100,000, you will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights, including: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) other investments, including real estate and other assets. Quarterly reporting obligations apply if the value of the assets and rights exceeds US$100,000,000. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil. Individuals holding assets and rights outside Brazil valued at less than US$100,000 are not required to submit a declaration. Please note that the US$100,000 threshold may be changed annually.

Tax on Financial Transactions (IOF) .

Repatriation of funds ( e.g. , sale proceeds) into Brazil and the conversion of USD into BRL associated with such fund transfers may be subject to the Tax on Financial Transactions. It is your responsibility to comply with any applicable Tax on Financial Transactions arising from your participation in the Plan. You should consult with your personal advisor for additional details.

CANADA

Terms and Conditions

Termination of Continuous Status . This provision replaces Paragraph 13(M) of the T&C’s:

In the event of the termination of your Continuous Status (whether or not later found to be invalid for any reason, including for breaching either applicable employment laws or your employment agreement, if any), unless otherwise set forth in this Agreement, your right to vest in the Restricted Stock under the Plan, if any, will terminate effective as the earlier of (i) the date on which your Continuous Status is terminated, (ii) the date on which you receive notice of termination, or (iii) the date you no longer actively provide service to Walmart or any Affiliate, regardless of any notice period or period of pay in lieu of such notice required under local law. The Committee shall have the exclusive discretion to determine when you are no longer employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).

Vesting and Delivery of Shares . This provision supplements Paragraph 5 of the T&C's:

Instead of delivering Shares upon vesting of your Restricted Stock to you as set forth in Paragraph 5 of the T&C's, Walmart or Wal- Mart Canada Corp. or an Affiliate (“WM Canada”), in their sole discretion, also may settle your vested Restricted Stock in cash, Shares, or a combination of cash and Shares. To the extent your Plan Award will be settled in Shares, you hereby acknowledge and agree that such settlement may be satisfied by WM Canada by forwarding a cash settlement amount in respect of the vested Restricted Stock to an independent broker who will in turn purchase the Shares on the open market on your behalf. Any Shares so purchased on the open market shall be delivered to you as set forth in Paragraph 5 of the T&C’s.

The Following Provisions Apply to Associates and Non-Management Directors Resident in Quebec:

Language Consent . The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée . Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires,

exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy . This provision supplements Paragraph 15 of the T&C’s:

You hereby authorize Walmart, any Affiliate and their representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. You further authorize Walmart, any Affiliate and any stock plan service provider that may be selected by Walmart to assist with the Plan to disclose and discuss the Plan with their respective advisors. You further authorize Walmart or an Affiliate to record such information and to keep such information in your employee file.

Notifications

Securities Law Information . You are permitted to sell the Shares acquired through the Plan through the designated broker, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the Shares are listed ( i.e. , the NYSE).

Foreign Asset/ Account Reporting Information . Foreign property, including shares of stock (i.e., Shares) and other rights to receive Shares ( e.g. , Restricted Stock) of a non-Canadian company held by a Canadian resident employee must generally be reported annually on a Form T1135 (Foreign Income Verification Statement), if the total cost of your specified foreign property exceeds C$100,000 at any time during the year. Thus, Restricted Stock must be reported (generally at a nil cost) if the C$100,000 cost threshold is exceeded because of other specified foreign property that you hold. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily is equal to the fair market value of the Shares at the time of acquisition, but if you own other Shares (acquired separately), this ACB may have to be averaged with the ACB of the other Shares.

CHILE

Terms and Conditions

Labor Law Acknowledgement . The Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, shall not be considered as part of your remuneration for purposes of determining the calculation base of future indemnities, whether statutory or contractual, for years of service (severance) or in lieu of prior notice, pursuant to Article 172 of the Chilean Labor Code.

Notifications

(“SVS”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the SVS, and, therefore, such securities are not subject to oversight of the SVS. Given that the Restricted Stock are not registered in Chile, Walmart is not required to provide public information about the Restricted Stock or the Shares in Chile. Unless the Restricted Stock and/or the Shares are registered with the SVS, a public offering of such securities cannot be made in Chile.

Esta Oferta de acciones restringidas constituye una oferta privada de valores en Chile y se inicia en la Fecha de la Oferta. Esta oferta de acciones restringidas se acoge a las disposiciones de la Norma de Carácter General Nº 336 (“NCG 336”) de la Superintendencia de Valores y Seguros de Chile (“SVS”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse de valores no inscritos en Chile no existe la obligación por parte de Walmart de entregar en Chile información pública respecto de los mismos. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.

Exchange Control Information . You are not required to repatriate any funds you receive with respect to the Restricted Stock ( e.g. , any proceeds from the sale of any Shares issued upon vesting of the Restricted Stock) to Chile. However, if you decide to repatriate such funds, you acknowledge that you will be required to effect such repatriation through the Formal Exchange Market ( i.e. , a commercial bank or registered foreign exchange office) if the amount of the funds repatriated exceeds US$10,000. Further, if the value of your aggregate investments held outside Chile exceeds US$5,000,000 (including Shares and any other cash proceeds acquired under the Plan) at any time in a calendar year, you must report the status of such investments to the Central Bank of Chile.

You will also be required to provide certain information to the Chilean Internal Revenue Service (“CIRS”) regarding the results of investments held abroad and the taxes you have paid abroad (if you will be seeking a credit against Chilean income tax owed). This information must be submitted on certain electronic sworn statements before March 19 or June 30 of each year, depending on the assets or taxes being reported. The statements may be found at the CIRS website at www.sii.cl .

You may be ineligible to receive certain foreign tax credits if you fail to meet the applicable reporting requirements. Exchange control and tax reporting requirements in Chile are subject to change, and you should consult with your personal legal and tax advisor regarding any reporting obligations that you may have in connection with the Restricted Stock.

COSTA RICA

There are no country-specific provisions.

GUATEMALA

There are no country-specific provisions.

HONG KONG

Terms and Conditions

Form of Settlement . The grant of Restricted Stock does not provide any right for you to receive a cash payment, and the Restricted Stock are payable only in Shares.

Warning : The Restricted Stock and any Shares acquired under the Plan do not constitute a public offering of securities under Hong Kong law and are available only to employees of Walmart or an Affiliate. The Agreement, including this Appendix, the Plan and any other incidental communication materials related to the Restricted Stock (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, (ii) have not been reviewed by any regulatory authority in Hong Kong, and (iii) are intended only for the personal use of each eligible Associate or Non-Management Director of Walmart or an Affiliate and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, you should obtain independent professional advice.

Notifications

Nature of Scheme . Walmart specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.

INDIA

Terms and Conditions

Labor Law Acknowledgement . The Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, are extraordinary items that are not part of your annual gross salary.

Notifications

Exchange Control Information . If you are a resident of India for exchange control purposes, you will be required to repatriate the cash proceeds from the sale of Shares issued upon vesting of Restricted Stock to India within 90 days of receipt and any proceeds from the receipt of dividends within 180 days of receipt, or within such time as prescribed under applicable Indian exchange control laws as may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds

in the event the Reserve Bank of India, Walmart or any Affiliate requests proof of repatriation.

Foreign Asset/ Account Reporting Information . If you are a tax resident of India, you will be required to declare foreign bank accounts and any foreign financial assets in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult with your personal tax advisor in this regard.

JAPAN

Notifications

Foreign Asset/ Account Reporting Information . If you are a Japanese tax resident, you will be required to report details of any assets held outside Japan as of December 31st (including any Shares or cash acquired under the Plan) to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15th each year. You should consult with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include details of any outstanding Shares, Restricted Stock or cash held by you in the report.

LUXEMBOURG

There are no country-specific provisions.

MEXICO

Terms and Conditions

No Entitlement for Claims or Compensation . The following sections supplement Paragraph 13 of the T&C’s:

Modification . By accepting the Restricted Stock, you acknowledge and agree that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of your Continuous Status.

Policy Statement . The grant of Restricted Stock is unilateral and discretionary and, therefore, Walmart reserves the absolute right to amend it and discontinue the award at any time without any liability.

Walmart, with registered offices at 702 Southwest 8th Street, Bentonville, Arkansas 72716, U.S.A., is solely responsible for the administration of the Plan, and participation in the Plan and the Restricted Stock does not, in any way, establish an employment relationship between you and Walmart or any Affiliate since you are participating in the Plan on a wholly commercial basis.

Plan Document Acknowledgment . By accepting the Restricted Stock, you acknowledge that you have received copies of the Plan, have reviewed the Plan and the Agreement in their entirety and fully understand and accept all provisions of the Plan and the Agreement.

In addition, by accepting the Agreement, you acknowledge that you have read and specifically and expressly approve the terms and conditions set forth in Paragraph 13 of the Agreement, in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by Walmart on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) Walmart and its Affiliates are not responsible for any decrease in the value of any Shares (or the cash equivalent) underlying the Restricted Stock under the Plan.

Finally, you hereby declare that you do not reserve any action or right to bring any claim against Walmart for any compensation or damages as a result of your participation in the Plan and therefore grant a full and broad release to Walmart and any Affiliate with respect to any claim that may arise under the Plan.

Spanish Translation

Sin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el Párrafo 13 del Contrato:

Modificación . Al aceptar las acciones restringidas, usted entiende y acuerda que cualquier modificación al Plan o al Contrato o su terminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.

Declaración de Política . El otorgamiento de acciones restringidas que Walmart está haciendo de conformidad con el Plan es unilateral y discrecional y, por lo tanto, Walmart se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento, sin responsabilidad alguna.

Walmart, con oficinas registradas ubicadas en 720 Southwest 8th Street, Bentonville, Arkansas 72716, EE.UU. es únicamente responsable de la administración del Plan y la participación en el Plan y la adquisición de acciones restringidas no establece, de forma alguna, una relación de trabajo entre usted y Walmart o alguna compañía afiliada, ya que usted participa en el Plan de una forma totalmente comercial.

Reconocimiento del Documento del Plan . Al aceptar las acciones restringidas, usted reconoce que ha recibido copias del Plan, ha revisado el Plan y el Contrato en su totalidad y entiende y acepta completamente todas las disposiciones contenidas en el Plan y en el Contrato.

Adicionalmente, al aceptar el Contrato, usted reconoce que ha leído y específica y expresamente ha aprobado los términos y condiciones en el Párrafo 13 del Contrato, en lo que claramente se ha descrito y establecido que: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el Plan es ofrecida por Walmart de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) Walmart y cualquier compañía afiliada no son responsables por cualquier disminución en el valor de las Acciones (o su equivalente en efectivo) subyacentes a las acciones restringidas bajo el Plan.

Finalmente, usted declara que no se reserva ninguna acción o derecho para interponer una demanda o reclamación en contra de Walmart por compensación, daño o perjuicio alguno como resultado de su participación en el Plan y, por lo tanto, otorga el más amplio finiquito a Walmart y compañía afiliada con respecto a cualquier demanda o reclamación que pudiera surgir en virtud del Plan.

NIGERIA

There are no country-specific provisions.

PERU

Terms and Conditions

Labor Law Acknowledgement . By accepting the Restricted Stock, you acknowledge that the Restricted Stock are being granted ex gratia to you with the purpose of rewarding you.

Notifications

Securities Law Information . The offer of the Restricted Stock is considered a private offering in Peru; therefore, it is not subject to registration. For more information concerning this offer, please refer to the Plan, the Agreement and any other grant documents made available by Walmart.

SOUTH AFRICA

Term and Conditions

Securities Law Information and Deemed Acceptance of Restricted Stock . Neither the Restricted Stock nor the underlying Shares shall be publicly offered or listed on any stock exchange in South Africa. The offer is intended to be private pursuant to Section 96 of the Companies Act and is not subject to the supervision of any South African governmental authority. Pursuant to Section 96 of the Companies Act, the Restricted Stock offer must be finalized on or before the 60th day following the Grant Date. If you do not want to accept the Restricted Stock, you are required to decline your Restricted Stock no later than the 60th day following the Grant Date. If you do not reject your Restricted Stock on or before the 60th day following the Grant Date, you will be deemed to accept the Restricted Stock.

Tax Reporting Information . By accepting the Restricted Stock, you agree to notify Walmart or your Employer, if different, of the amount of income realized at vesting of the Restricted Stock. If you fail to advise Walmart or your Employer, if different, of the income at vesting, you may be liable for a fine. You will be responsible for paying any difference between the actual tax liability and the amount withheld.

Notifications

Exchange Control Information . You should consult with your personal advisor to ensure compliance with applicable exchange control regulations in South Africa as such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in South Africa.

UNITED KINGDOM

Terms and Conditions

Taxes and Tax Withholding . This section supplements Paragraph 10 of the T&C’s:

Without limitation to Paragraph 10 of the T&C’s, you agree that you are liable for all Tax-Related Items and hereby covenant to pay all such Tax-Related Items as and when requested by Walmart or any Affiliate or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified Walmart and its Affiliates against any Tax-Related Items that they are required to pay or withhold on your behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority). Notwithstanding the foregoing, if you are a director or executive officer of Walmart (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), you understand that you may not be able to indemnify Walmart for the amount of any income tax not collected from or paid by you, in case the indemnification could be considered a loan. In this case, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing Walmart or an Affiliate, as applicable, for the value of any national insurance contributions due on this additional benefit, which Walmart or an Affiliate may recover from you at any time thereafter by the means referred to in Paragraph 10 of the T&C’s.

UNITED STATES

Military Leave . If you were on military leave on the Grant Date, and you are on the same military leave on a Vesting Date, your Continuous Status must be maintained for not less than six months after your return from the military leave before your Plan Award shall vest. In such circumstances, for purposes of Paragraph 5, your “Vesting Date” shall be deemed to be the date that is six months after your return from military leave, and the number of Shares corresponding to any vested Restricted Stock will be delivered to you as soon as administratively feasible but in any event within 74 days of vesting.

Name of Grantee: Grant Date: Number of Performance-Based Restricted Stock Units at Target Performance: Performance Period: Vesting Date: Walmart Identification Number:

WALMART INC. STOCK INCENTIVE PLAN OF 2015

GLOBAL SHARE-SETTLED PERFORMANCE-BASED RESTRICTED STOCK UNIT NOTIFICATION AND TERMS AND CONDITIONS

These Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions, including any applicable special terms and conditions for your specific country set forth in the appendix attached hereto (jointly, the “Agreement”), contain the terms and conditions of the performance-based restricted stock units (“PRSUs”) granted to you by Walmart Inc. (“Walmart”), a Delaware corporation, under the Walmart Inc. Stock Incentive Plan of 2015, as may be amended from time to time (the “Plan”).

BY SIGNING OR ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU HEREBY ACKNOWLEDGE, UNDERSTAND, AGREE TO, AND ACCEPT THE FOLLOWING:

1. Grant of Performance-Based Restricted Stock Units . Walmart has granted to you, effective on the Grant Date, the PRSUs, which consist of the right to receive a number of Shares underlying the PRSUs set forth above (as further determined in Paragraph 5 below), subject to certain vesting conditions.

2. Plan Governs . The PRSUs and this Agreement are subject to the terms and conditions of the Plan. You are accepting the PRSUs, acknowledging receipt of a copy of the Plan and the prospectus covering the Plan, and acknowledging that the PRSUs and your participation in the Plan are subject to all the terms and conditions of the Plan and of this Agreement. You further agree to accept as binding, conclusive and final all decisions and interpretations by the Committee upon any disputes or questions arising under the Plan, including whether, and the extent to which, the Performance Measures, Performance Goals, and time-based vesting restrictions referred to in Paragraph 5 have been satisfied.

3. Payment . You are not required to pay for the PRSUs or the Shares underlying the PRSUs granted to you pursuant to this Agreement.

4. Stockholder Rights . Unless and until your PRSUs vest and the underlying Shares have been delivered to you:

A. You do not have the right to vote the Shares underlying your PRSUs;

B. You will not receive, nor be entitled to receive, cash or any non-cash dividends on the PRSUs or the Shares underlying the PRSUs; and

C. You will not have any other beneficial rights as a shareholder of Walmart due to the PRSUs. Upon receipt of the Shares, however, you will be accorded the same rights and responsibilities as any shareholder of Walmart, and will be provided with information regarding Walmart that is provided to all other shareholders of Walmart.

5. Adjustment and Vesting of the PRSUs and Delivery of Shares .

A. Performance Period and Achievement Rates . The Committee establishes the Performance Goals and Performance Measures applicable to your PRSUs. You will receive by separate writing a notification of the performance criteria applicable to your PRSUs in respect of the Performance Period set forth above which reflects the fiscal year of Walmart or, if different, the Affiliate that employs you (the “Employer”). The Performance Measures (including any applicable weightings thereof) and Performance Goals as set forth in such separate writing are hereby incorporated by reference into this Agreement.

The number of PRSUs that ultimately may vest and, accordingly, the Shares that ultimately may be delivered to you shall depend upon the degree to which the Performance Goals have been achieved, as determined by the Committee in accordance with the Plan, for each Performance Measure during the Performance Period. With respect to each applicable Performance Measure during the Performance Period:

1. “Threshold” performance means the achievement of the lowest possible Performance Goal established by the Committee; 2. “Target” performance means the achievement of the Performance Goal established by the Committee; and 3. “Maximum” performance means the highest possible achievement of the Performance Goal established by the Committee.

An achievement rate is determined for each Performance Measure applicable to your Plan Award in respect of the Performance Period. The achievement rate value applied to each weighted Performance Measure during the Performance Period is expressed as a percentage and may range from 0% (for achieving less than Threshold Performance), 50% (for achieving at least, but no less than, Threshold performance), 100% (for achieving Target performance), or up to 150% (for achieving Maximum performance). A percentage of 0% shall be applied to a Performance Measure during the Performance Period if Threshold performance is not achieved. The weighted average of all applicable

achievement rates during the Performance Period is referred to herein as the “Performance Achievement Rate.”

At the end of the Performance Period, the number of PRSUs that were granted to you shall be adjusted to reflect the degree to which applicable Performance Goals have been attained by multiplying : (x) the Performance Achievement Rate and (y) the number of PRSUs granted by this Agreement. Subject to Paragraph 10 below, and provided you have not incurred a Forfeiture Condition before the Vesting Date, the adjusted number of PRSUs (the “Adjusted PRSUs”) represent the number of Shares you shall receive, as described in Paragraph 5.C below.

B. Vesting of the Adjusted PRSUs . Subject to Paragraph 7 and provided you have not incurred a Forfeiture Condition, your Adjusted PRSUs will vest on the Vesting Date set forth above.

C. Delivery of Shares . Upon the vesting of your Plan Award, you shall be entitled to receive a number of Shares equal to the number of Adjusted PRSUs as calculated in Paragraph 5.A. above less any Shares withheld or sold to satisfy tax withholding obligations as set forth in Paragraph 10 below. The Shares shall be delivered to you as soon as administratively feasible following the later of: (x) the Vesting Date set forth above; and (y) the date the Committee has determined the degree of attainment of the Performance Goals applicable to your Plan Award, but in any event:

1. within 150 days of the Vesting Date; or 2. within 74 days of an Accelerated Vesting pursuant to Paragraph 8 below.

Such Shares will be deposited into an account in your name with a broker or other third party designated by Walmart. You will be responsible for all fees imposed by such designated broker or other third party designated by Walmart.

D. Elective Deferral of Shares . If you are eligible to defer delivery of the Shares upon vesting of Adjusted PRSUs to a future date in accordance with Section 10.9 of the Plan and rules and procedures relating thereto, you will be advised as to when any such deferral election must be made and the rules and procedures applicable to such deferral election.

6. Forfeiture Condition . Subject to Paragraph 8 below, any PRSUs that would otherwise vest in whole or in part on the Vesting Date, if any, will not vest and will be immediately forfeited if, prior to the Vesting Date:

A. your Continuous Status terminates for any reason (other than death or Disability, to the extent provided in Paragraph 8 below); or

B. you have not executed and delivered to Walmart a Non-Disclosure and Restricted Use Agreement, in a form to be provided to you by Walmart.

upon your execution and delivery to Walmart of a Post Termination Agreement and Covenant Not to Compete, in a form to be provided to you by Walmart. If applicable, the failure to execute and deliver such Post Termination Agreement and Covenant Not to Compete prior to the Vesting Date shall also be deemed a “Forfeiture Condition” for purposes of this Agreement. Upon the occurrence of a Forfeiture Condition, you shall have no further rights with respect to such PRSUs or the underlying Shares.

7. Administrative Suspension . If you are subject to an administrative suspension, vesting of your PRSUs may be suspended as of the date you are placed on administrative suspension. If you are not reinstated as an Associate in good standing at the end of the administrative suspension period, your PRSUs may be immediately forfeited and you shall have no further rights with respect to such PRSUs or the underlying Shares. If you are reinstated as an Associate in good standing at the end of the administrative suspension period, then the vesting of your PRSUs will resume as provided in Paragraph 5, and any PRSUs that would have vested while you were on administrative suspension will vest and the corresponding number of Shares will be delivered to you as soon as administratively feasible, but in any event within 74 days of the end of the administrative suspension period which shall be considered the Vesting Date for purposes of this Paragraph 7.

8. Accelerated Vesting; Vesting Notwithstanding Termination of Continuous Status by Death or Disability . Your PRSUs will vest earlier than described in Paragraph 5.B. above, and such earlier vesting date shall also be considered a Vesting Date, if your Continuous Status is terminated by your death or Disability prior to the Vesting Date and you have not incurred a Forfeiture Condition. The number of Shares you will become vested in under this Paragraph 8 shall be determined as follows:

A. Any PRSUs that are scheduled to vest within 90 days of the date that your Continuous Status is terminated by reason of your death or Disability will become immediately vested; provided, however , that if the determination of attainment of Performance Goals has not yet been determined for your Plan Award, then achievement of Target performance for all applicable Performance Goals shall be assumed for purposes of this Paragraph 8.A; and

B. Any PRSUs that are scheduled to vest more than 90 days but within the same fiscal year as the date on which your Continuous Status was terminated by reason of your death or Disability shall vest and the number of Shares you shall receive will be prorated by dividing: (x) the number of calendar days from the Grant Date to the date your Continuous Status was terminated by (y) the number of calendar days from the Grant Date through the Vesting Date set forth above; provided, however , that if the determination of attainment of Performance Goals has not yet occurred for your Plan Award, then achievement of Target performance for all applicable Performance Goals shall be assumed for purposes of this Paragraph 8.B.

For purposes of this Paragraph 8, your Continuous Status will be considered terminated on the date of your death or the date on which your employment or other service relationship has been legally terminated by reason of your Disability. For purposes of this Agreement, “Disability” shall mean that you would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of Walmart or, if different, the Employer, regardless of whether you are covered by such policy. If Walmart or, if different, the

Employer does not have a long-term disability policy, for purposes of this Agreement, “Disability” means that you are unable to carry out the responsibilities and functions of the position held by you by reason of any medically determined physical or mental impairment for a period of not less than one hundred and eighty (180) consecutive days. You shall not be considered to have incurred a Disability unless you furnish proof of such impairment sufficient to satisfy Walmart in its sole discretion. If your Continuous Status is terminated due to a Disability, you agree to promptly notify the Walmart Global Equity team. Notwithstanding any provision of this Agreement, Walmart will not accelerate your Plan Award if Walmart has not received notification of your termination within such period of time that it determines, in its sole discretion, to be necessary to process the settlement of your Plan Award to avoid adverse tax consequences under Section 409A of the Code.

9. Permanent Transfers Between Walmart and Walmart Affiliates .

A. Permanent Transfers and Continuous Status . For the avoidance of doubt, a permanent transfer of Continuous Status from Walmart, or the Employer (if different), to another Affiliate or from an Affiliate to Walmart does not constitute a termination of your Continuous Status.

B. Applicable Performance Measures and Goals Upon Permanent Transfer . If you permanently transfer your Continuous Status during the Performance Period, then the performance criteria and the resulting adjustment will be prorated and/or adjusted to reflect the proportion of the Performance Period during which you provided service to Walmart, or, if different, the Affiliate that initially employed you (the “Initial Employer”) and the proportion of the Performance Period during which you provided service to Walmart or, if different, the Affiliate to which you permanently transferred (the “Subsequent Employer”).

C. Permanent Transfers to Affiliate or Position where Performance-Based Awards are Not Granted . If you permanently transfer your Continuous Status to an Affiliate or into a position where performance-based Plan Awards are not granted, the performance criteria applicable for the remaining portion of your Performance Period shall be communicated to you, and your PRSUs will be prorated and adjusted using the methodology described in Paragraph 9.B above.

D. Transfers to New Position with Same Employer . If you transfer to a position with the same Employer (as defined herein) but your new position is subject to different applicable Performance Measures (including any applicable weightings thereof) and Performance Goals, then the performance criteria applicable for the remaining portion of your Performance Period shall be communicated to you, and your PRSUs will be prorated and adjusted using the methodology described in Paragraph 9.B above.

10. Taxes and Tax Withholding .

A. You agree to consult with any tax advisors you think necessary in connection with your PRSUs and acknowledge that you are not relying, and will not rely, on Walmart or any Affiliate for any tax advice.

B. You acknowledge that, regardless of any action taken by Walmart (or if different, the Employer), the ultimate liability for all income tax, social insurance, pension, payroll

tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”) is and remains your responsibility and may exceed the amount actually withheld by Walmart or the Employer. You further acknowledge that Walmart and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PRSUs, including, but not limited to, the grant, vesting or settlement of the PRSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the PRSUs or any aspect of the PRSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Walmart and/or the Employer (or your former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

C. Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Walmart and the Employer to satisfy all Tax-Related Items. In this regard, you authorize Walmart, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding of Shares to be issued upon settlement of the Adjusted PRSUs. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by your acceptance of the PRSUs and this Agreement, you authorize and direct (a) Walmart and any broker or other third party designated by Walmart to sell on your behalf a whole number of Shares corresponding to the Adjusted PRSUs that Walmart or the Employer determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items and (b) Walmart and/or the Employer, or their respective agents, at their sole discretion to satisfy the Tax-Related Items by any other method of withholding, including through withholding from your wages or other cash compensation paid to you by Walmart or any Affiliate.

D. Depending on the withholding method, Walmart or the Employer may withhold or account for the Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. Further, if the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the Adjusted PRSUs, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Tax-Related Items. In the event that any excess amounts are withheld to satisfy the obligation for Tax-Related Items, you may be entitled to receive a refund of any over withheld amount in the form of cash and will have no entitlement to the Share equivalent.

E. Finally, you agree to pay to Walmart or the Employer any amount of Tax-Related Items that Walmart or the Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means previously described. Walmart may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if you fail to comply with your obligations in connection with the Tax-Related Items.

11. PRSUs Not Transferable . The PRSUs may not be sold, conveyed, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to vesting of the Adjusted PRSUs and the issuance of the underlying Shares. Any attempted action in violation of this Paragraph 11 shall be null, void, and without effect.

12. Country-Specific Appendix . Notwithstanding any provision in these Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions to the contrary, the grant of PRSUs also shall be subject to any special terms and conditions set forth in any appendix attached hereto (the “Appendix”) with respect to certain laws, rules and regulations specific to your country. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Walmart determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix is incorporated by reference into these Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions and, together, these documents constitute this Agreement.

13. Nature of Plan Award . You further acknowledge, understand and agree that:

A. the Plan is established voluntarily by Walmart and is discretionary in nature;

B. the grant of PRSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of PRSUs or other awards, or benefits in lieu of PRSUs, even if PRSUs have been granted in the past;

C. all decisions with respect to future grants of PRSUs or other awards, if any, will be at the sole discretion of the Committee;

D. neither this Agreement nor the Plan creates any contract of employment with any entity involved in the management or administration of the Plan or this Agreement, and nothing in this Agreement or the Plan shall interfere with or limit in any way the right of Walmart or, if different, the Employer to terminate your Continuous Status at any time, nor confer upon you the right to continue in the employ of Walmart or any Affiliate;

E. the PRSUs and the Shares underlying the PRSUs, and the income and value of same, relate exclusively to your Continuous Status during the vesting period applicable to your PRSUs;

G. you are voluntarily participating in the Plan;

H. the PRSUs and the Shares underlying the PRSUs, and the income and value of same, are not intended to replace any pension rights or compensation;

I. the PRSUs and the Shares underlying the PRSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination,

redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

J. unless otherwise agreed with Walmart, the PRSUs and the Shares underlying the PRSUs, and the income and the value of same, are not granted as consideration for, or in connection with, the service (if any) you may provide as a director of any Affiliate;

K. the future value of the Shares underlying the PRSUs is unknown, indeterminable and cannot be predicted with certainty;

L. no claim or entitlement to compensation or damages shall arise from forfeiture of the PRSUs resulting from the termination of your Continuous Status (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any);

M. in the event of the termination of your Continuous Status (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), unless otherwise set forth in this Agreement your right to vest in the PRSUs under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and may not be extended by any notice period under local law ( e.g. , your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence);

N. unless otherwise provided in the Plan or by Walmart in its discretion, the PRSUs and the benefits evidenced by this Agreement do not create any entitlement to have the PRSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, or substituted for, in connection with any corporate transaction affecting the Shares underlying the PRSUs; and

O. if you are providing services outside the United States: neither Walmart nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the PRSUs or of any amounts due to you pursuant to the settlement of the PRSUs or the subsequent sale of any Shares acquired upon settlement.

14. No Advice Regarding Award . Walmart and/or its Affiliates are not providing any tax, legal or financial advice, nor are Walmart or any Affiliate making any recommendation regarding your participation in the Plan or the Shares underlying the PRSUs acquired upon vesting. You are advised to consult with your personal tax, legal, and financial advisors regarding the decision to participate in the Plan and before taking any action related to the Plan.

exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that Walmart and its Affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance identification number, passport number or other identification number, salary, nationality, job title, any Shares or directorships held in Walmart or an Affiliate, details of all PRSUs or any other awards granted, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. You understand that Data may be transferred to Merrill Lynch, Pierce, Fenner & Smith and its affiliates or such other stock plan service provider as may be selected by Walmart in the future, which is assisting Walmart in the implementation, administration and management of the Plan. You understand that the recipients of the Data may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative. You authorize Walmart, Merrill Lynch, Pierce, Fenner & Smith and any other possible recipients which may assist Walmart (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of Data as may be required to Walmart’s designated broker or other third party. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your Continuous Status with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that Walmart would not be able to grant PRSUs or other Plan Awards to you or administer or maintain such Plan Awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative. Finally, upon request of Walmart or the Employer, you agree to provide an executed separate data privacy consent form (or any other agreements or consents that may be required by Walmart and/or the Employer) that Walmart and/or the Employer may deem necessary to obtain from you for the purpose of administering your participation in the Plan in compliance with the data privacy laws in your country, either now or in the future. You understand and agree that you will not be able to participate in the Plan if you fail to provide any such consent or agreement requested by Walmart and/or the Employer.

16. Other Provisions .

A. Determinations regarding this Agreement (including, but not limited to, whether, and the extent to which, the Performance Measures and Performance Goals referred to in Paragraph 5 have been satisfied, and whether an event has occurred resulting in the forfeiture of or accelerated vesting of an Adjusted PRSU) shall be made by the Committee in its sole and exclusive discretion and in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive and binding on you and your successors and heirs.

D. Walmart reserves the right to amend any applicable Performance Measures (including any weightings thereof) and/or Performance Goals for any Plan Award under this Agreement. In such a case, any amendments will be communicated to you in writing (which may include a communication transmitted by electronic means, such as an e-mail communication or a communication posted online for your review).

E. By accepting this Agreement, you agree to provide any information reasonably requested from time to time.

F. This Agreement shall be construed under the laws of the State of Delaware, without regard to its conflict of law provisions.

G. The provisions of this Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

H. If you receive this Agreement or any other documents related to your Plan Award or the Plan translated into a language other than English, and if the meaning of the translated version is different than the English version, the English language version of such document will control.

I. Walmart may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Walmart or a third party designated by Walmart.

J. Walmart reserves the right to impose other requirements on your participation in the Plan, on your Plan Award and the Shares underlying the PRSUs awarded pursuant to this Agreement, to the extent Walmart determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

K. You acknowledge that a waiver by Walmart or an Affiliate of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provisions of the Plan or this Agreement, or of any subsequent breach by you or any other Associate.

L. You understand that your country may have insider trading and/or market abuse laws which may affect your ability to accept, acquire, sell or otherwise dispose of Shares,

rights to Shares or rights linked to the value of Shares under the Plan during such times you are considered to have “inside information” (as defined in the laws in your country). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed insider information. Furthermore, you could be prohibited from (i) disclosing inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. The restrictions applicable under these laws may be the same or different from Walmart’s insider trading policy. You acknowledge that it is your responsibility to be informed of and compliant with such regulations and any applicable Walmart insider trading policy, and are advised to speak to your personal legal advisor on this matter.

M. You understand that you may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from your participation in the Plan in, to and/or from a brokerage/bank account or legal entity located outside your country. The applicable laws of the your country may require that you report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. You acknowledge that you are responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements, and you are advised to consult your personal legal advisor on this matter.

N. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Walmart shall not be required to deliver any Shares issuable upon vesting of the PRSUs prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Walmart shall, in its absolute discretion, deem necessary or advisable. You understand that Walmart is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Walmart may, without liability for its good faith actions, place legend restrictions upon Shares underlying your Adjusted PRSUs and issue “stop transfer” instructions requiring compliance with applicable U.S. or other securities laws and the terms of the Agreement and Plan. Further, you agree that Walmart shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws, rules or regulations applicable to issuance of Shares.

WALMART INC. STOCK INCENTIVE PLAN OF 2015

GLOBAL SHARE-SETTLED PERFORMANCE-BASED RESTRICTED STOCK UNIT NOTIFICATION AND TERMS AND CONDITIONS

COUNTRY-SPECIFIC APPENDIX

Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions (the “T&C’s”).

Terms and Conditions . This Appendix includes additional terms and conditions that govern the PRSUs granted to you under the Plan if you work and/or reside in one of the countries listed below.

ARGENTINA

Notifications

Securities Law Information . Neither the PRSUs nor any Shares subject to the PRSUs are publicly offered or listed on any stock exchange in Argentina. The offer is private and not subject to the supervision of any Argentine governmental authority.

Exchange Control Information . You understand that you must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the PRSUs and your participation in the Plan. You should consult with your personal legal advisor to ensure compliance with the applicable requirements.

BRAZIL

Terms and Conditions

Compliance with the Law . By accepting the PRSUs, you acknowledge your agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the PRSUs and the sale of any Shares acquired under the Plan.

Labor Law Acknowledgement . By accepting the PRSUs, you agree that you are (i) making an investment decision, (ii) the Shares will be issued to you only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.

Notifications

Tax on Financial Transactions (IOF) . Repatriation of funds ( e.g. , sale proceeds) into Brazil and the conversion of USD into BRL associated with such fund transfers may be subject to the Tax on Financial Transactions. It is your responsibility to comply with any applicable Tax on Financial Transactions arising from your participation in the Plan. You should consult with your personal advisor for additional details.

CANADA

Terms and Conditions

Termination of Continuous Status . This provision replaces Paragraph 13(M) of the T&C’s:

In the event of the termination of your Continuous Status (whether or not later found to be invalid for any reason, including for breaching either applicable employment laws or your employment agreement, if any), unless otherwise set forth in this Agreement, your right to receive and vest in the PRSUs under the Plan, if any, will terminate effective as the earlier of (i) the date on which your Continuous Status is terminated, (ii) the date on which you receive a notice of termination, or (iii) the date you no longer actively provide service to Walmart or any Affiliate, regardless of any notice period or period of pay in lieu of such notice required under local law. The Committee shall have the exclusive discretion to determine when you are no longer employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).

Vesting and Delivery of Shares . This provision supplements Paragraph 5 of the T&C's:

Instead of delivering Shares upon vesting of your PRSUs to you as set forth in Paragraph 5 of the T&C's, Walmart or Wal-Mart Canada Corp. or an Affiliate (“WM Canada”), in their sole discretion, also may settle your Adjusted PRSUs in cash, Shares, or a combination of cash and Shares. To the extent your Plan Award will be settled in Shares, you hereby acknowledge and agree that such settlement may be satisfied by WM Canada by forwarding a cash settlement amount in respect of the Adjusted PRSUs to an independent broker who may in turn purchase the Shares on the open market on your behalf. Any Shares so purchased on the open market shall be delivered to you as set forth in Paragraph 5 of the T&C’s.

The Following Provisions Apply to Associates and Non-Management Directors Resident in Quebec:

Consentement relatif à la langue utilisée . Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy . This provision supplements Paragraph 15 of the T&C’s:

Notifications

Securities Law Information . You are permitted to sell the Shares acquired through the Plan through the designated broker, if any, provided the resale of Shares acquired under the Plan takes

place outside of Canada through the facilities of a stock exchange on which the Shares are listed ( i.e. , the NYSE).

Foreign Asset/ Account Reporting Information . Foreign property, including shares of stock (i.e., Shares) and other rights to receive Shares ( e.g. , PRSUs) of a non-Canadian company held by a Canadian resident employee must generally be reported annually on a Form T1135 (Foreign Income Verification Statement), if the total cost of your specified foreign property exceeds C$100,000 at any time during the year. Thus, PRSUs likely must be reported (generally at a nil cost) if the C$100,000 cost threshold is exceeded because of other specified foreign property that you hold. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily is equal to the fair market value of the Shares at the time of acquisition, but if you own other Shares (acquired separately), this ACB may have to be averaged with the ACB of the other Shares.

CHILE

Terms and Conditions

Labor Law Acknowledgement . The PRSUs and the Shares underlying the PRSUs, and the income and value of same, shall not be considered as part of your remuneration for purposes of determining the calculation base of future indemnities, whether statutory or contractual, for years of service (severance) or in lieu of prior notice, pursuant to Article 172 of the Chilean Labor Code.

Notifications

Securities Law Information . This grant of PRSUs constitutes a private offering of securities in Chile effective as of the Grant Date. This offer of PRSUs is made subject to general ruling n° 336 of the Chilean Superintendence of Securities and Insurance (“SVS”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the SVS, and, therefore, such securities are not subject to oversight of the SVS. Given that the RSUs are not registered in Chile, Walmart is not required to provide public information about the PRSUs or the Shares in Chile. Unless the PRSUs and/or the Shares are registered with the SVS, a public offering of such securities cannot be made in Chile.

Esta Oferta de PRSUs (“Unidades”) constituye una oferta privada de valores en Chile y se inicia en la Fecha de la Oferta. Esta oferta de Unidades se acoge a las disposiciones de la Norma de Carácter General Nº 336 (“NCG 336”) de la Superintendencia de Valores y Seguros de Chile (“SVS”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse de valores no inscritos en Chile no existe la obligación por parte de Walmart de entregar en Chile información pública respecto de los mismos. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.

commercial bank or registered foreign exchange office) if the amount of the funds repatriated exceeds US$10,000. Further, if the value of your aggregate investments held outside Chile exceeds US$5,000,000 at any time in a calendar year, you must report the status of such investments to the Central Bank of Chile.

You will also be required to provide certain information to the Chilean Internal Revenue Service (“CIRS”) regarding the results of investments held abroad and the taxes you have paid abroad (if you will be seeking a credit against Chilean income tax owed). This information must be submitted on an electronic sworn statement, Formulario 1851 (for investments held abroad) and Formulario 1853 (for taxes paid abroad) before March 15 of each year. The formularios may be found at the CIRS website at www.sii.cl .

Exchange control and tax reporting requirements in Chile are subject to change; you should consult with your personal legal and tax advisor regarding any obligations that you may have in connection with the PRSUs.

COSTA RICA

There are no country-specific provisions.

GUATEMALA

There are no country-specific provisions.

HONG KONG

Terms and Conditions

Warning : The PRSUs and any Shares acquired under the Plan do not constitute a public offering of securities under Hong Kong law and are available only to employees of Walmart or an Affiliate. The Agreement, including this Appendix, the Plan and any other incidental communication materials related to the PRSUs (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, (ii) have not been reviewed by any regulatory authority in Hong Kong, and (iii) are intended only for the personal use of each eligible Associate or Non-Management Director of Walmart or an Affiliate and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, you should obtain independent professional advice.

Notifications

Nature of Scheme . Walmart specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.

INDIA

Terms and Conditions

Labor Law Acknowledgement . The PRSUs and the Shares underlying the PRSUs, and the income and value of same, are extraordinary items that are not part of your annual gross salary.

Notifications

Exchange Control Information . If you are a resident of India for exchange control purposes, you will be required to repatriate the cash proceeds from the sale of Shares issued upon vesting of PRSUs to India within 90 days of receipt and any proceeds from the receipt of dividends within 180 days of receipt. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, Walmart or any Affiliate requests proof of repatriation.

JAPAN

Notifications

LUXEMBOURG

There are no country-specific provisions.

MEXICO

Terms and Conditions

No Entitlement for Claims or Compensation . The following sections supplement Paragraph 13 of the T&C’s:

Modification . By accepting the PRSUs, you acknowledge and agree that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of your Continuous Status.

Policy Statement . The grant of PRSUs is unilateral and discretionary and, therefore, Walmart reserves the absolute right to amend it and discontinue the award at any time without any liability.

Walmart, with registered offices at 702 Southwest 8th Street, Bentonville, Arkansas 72716, U.S.A., is solely responsible for the administration of the Plan, and participation in the Plan and the PRSUs does not, in any way, establish an employment relationship between you and Walmart or any Affiliate since you are participating in the Plan on a wholly commercial basis.

Plan Document Acknowledgment . By accepting the PRSUs, you acknowledge that you have received copies of the Plan, have reviewed the Plan and the Agreement in their entirety and fully understand and accept all provisions of the Plan and the Agreement.

Spanish Translation

Sin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el Párrafo 13 del Contrato:

Modificación . Al aceptar las PRSUs (“Unidades”), usted entiende y acuerda que cualquier modificación al Plan o al Contrato o su terminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.

Declaración de Política . El otorgamiento de Unidades que Walmart está haciendo de conformidad con el Plan es unilateral y discrecional y, por lo tanto, Walmart se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento, sin responsabilidad alguna.

Walmart, con oficinas registradas ubicadas en 720 Southwest 8th Street, Bentonville, Arkansas 72716, EE.UU. es únicamente responsable de la administración del Plan y la participación en el Plan y la adquisición de Unidades no establece, de forma alguna, una relación de trabajo entre usted y Walmart o alguna compañía afiliada, ya que usted participa en el Plan de una forma totalmente comercial.

Reconocimiento del Documento del Plan . Al aceptar las Unidades, usted reconoce que ha recibido copias del Plan, ha revisado el Plan y el Contrato en su totalidad y entiende y acepta completamente todas las disposiciones contenidas en el Plan y en el Contrato.

NIGERIA

There are no country-specific provisions.

PERU

Terms and Conditions

Labor Law Acknowledgement . By accepting the PRSUs, you acknowledge that the PRSUs are being granted ex gratia to you with the purpose of rewarding you.

Notifications

Securities Law Information . The offer of the PRSUs is considered a private offering in Peru; therefore, it is not subject to registration.

SOUTH AFRICA

Term and Conditions

Securities Law Information and Deemed Acceptance of PRSUs . Neither the PRSUs nor the underlying Shares shall be publicly offered or listed on any stock exchange in South Africa. The offer is intended to be private pursuant to Section 96 of the Companies Act and is not subject to the supervision of any South African governmental authority. Pursuant to Section 96 of the Companies Act, the PRSUs offer must be finalized on or before the 60th day following the Grant Date. If you do not want to accept the PRSUs, you are required to decline your PRSUs no later than the 60th day following the Grant Date. If you do not reject your PRSUs on or before the 60th day following the Grant Date, you will be deemed to accept the PRSUs.

Tax Reporting Information . By accepting the PRSUs, you agree to notify Walmart or your Employer, if different, of the amount of income realized at vesting of the PRSUs. If you fail to advise Walmart or your Employer, if different, of the income at vesting, you may be liable for a fine. You will be responsible for paying any difference between the actual tax liability and the amount withheld.

Notifications

UNITED KINGDOM

Terms and Conditions

Taxes and Tax Withholding . This section supplements Paragraph 10 of the T&C’s:

UNITED STATES

Military Leave . If you were on military leave on the Grant Date, and you are on the same military leave on a Vesting Date, your Continuous Status must be maintained for not less than six months after your return from the military leave before your Plan Award shall vest. In such circumstances, for purposes of Paragraph 5, your “Vesting Date” shall be deemed to be the date that is six months after your return from military leave, and the number of Shares corresponding to any Adjusted PRSUs will be delivered to you as soon as administratively feasible but in any event within 74 days of vesting.

AMENDED SCHEDULE OF EXECUTIVE OFFICERS WHO HAVE EXECUTED A POST-TERMINATION AGREEMENT AND COVENANT NOT TO COMPETE IN THE FORM FILED AS EXHIBIT 10(p) TO THE ANNUAL

REPORT ON FORM 10-K OF THE COMPANY FOR THE FISCAL YEAR ENDED JANUARY 31, 2011 (this "Amended Schedule")

This Amended Schedule amends the Schedule of Executive Officers Who Have Executed a Post-Termination Agreement and Covenant Not to Compete that followed the form of Post-Termination Agreement and Covenant Not to Compete originally filed by Walmart Inc. (formerly Wal-Mart Stores, Inc.) as Exhibit 10(p) to its Annual Report on Form 10-K for the year ended January 31, 2011, as filed on March 30, 2011 (the "Form Agreement"). This Amended Schedule is included pursuant to Instruction 2 of Item 601(a) of Regulation S-K for the purpose of setting forth the details in which the specific agreements executed in the form of the Form Agreement differ from the Form Agreement, in particular to set forth the persons who, with Walmart Inc. (formerly Wal-Mart Stores, Inc.), were parties to Post-Termination Agreements and Covenants Not to Compete in such form as of January 31, 2018.

Executive Officer Who is a Party to such a Post-Termination Agreement and Covenant Not to Compete Date of Agreement

Value of Restricted Stock Award Granted in Connection with Agreement

Daniel J. Bartlett May 16, 2013 Not Applicable M. Brett Biggs September 21, 2010 $500,000 David Chojnowski November 16, 2016 Not Applicable Gregory Foran July 23, 2014 Not Applicable John R. Furner May 7, 2011 Not Applicable Jeffrey J. Gearhart June 11, 2013 $1,500,000 C. Douglas McMillon January 19, 2010 $2,000,000 Jacqueline P. Canney June 26, 2015 Not Applicable Judith McKenna May 18, 2015 Not Applicable

Exhibit 12.1

Walmart Inc. Ratio of Earnings to Fixed Charges

January 31, (Amounts in millions) 2018 2017 2016 2015 2014 Income from continuing operations before income taxes $ 15,123 $ 20,497 $ 21,638 $ 24,799 $ 24,656

Capitalized interest (17) (36) (39) (59) (78) Consolidated net income attributable to the noncontrolling interest (661) (650) (386) (736) (673)

Adjusted income before income taxes 14,445 19,811 21,213 24,004 23,905

Fixed charges:

Interest (1) 2,347 2,403 2,587 2,520 2,413 Interest component of rent 890 862 836 916 933

Total fixed charges 3,237 3,265 3,423 3,436 3,346 Income before income taxes and fixed charges $ 17,682 $ 23,076 $ 24,636 $ 27,440 $ 27,251 Ratio of earnings to fixed charges 5.5 7.1 7.2 8.0 8.1

(1) Includes interest on debt, capital leases and financing obligations, amortization of debt issuance costs and capitalized interest; excludes loss on extinguishment of debt.

Exhibit 21

Significant Subsidiaries of Walmart Inc.

Subsidiary Organized or Incorporated Percent of Equity Securities

Owned Name Under Which Doing Business Other Than

Subsidiary's Wal-Mart Stores East, LP Delaware, U.S. 100% Walmart Wal-Mart Stores Texas, LLC Delaware, U.S. 100% Walmart Wal-Mart Property Company Delaware, U.S. 100% NA Wal-Mart Real Estate Business Trust Delaware, U.S. 100% NA Sam's West, Inc. Arkansas, U.S. 100% Sam's Club Sam's East, Inc. Arkansas, U.S. 100% Sam's Club Sam's Property Company Delaware, U.S. 100% NA Sam's Real Estate Business Trust Delaware, U.S. 100% NA ASDA Group Limited England 100% ASDA Wal-Mart de Mexico, S.A.B. de C.V. Mexico 71% Walmex Wal-Mart Canada Corp. Canada 100% Walmart Wal-Mart Japan Holdings K.K. Japan 100% Seiyu Walmart Chile S.A. (1) Chile 100% Walmart Chile Massmart Holdings Ltd South Africa 52% Massmart (1) The Company owns substantially all of Walmart Chile.

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Stock Option Plan of 1984 of Wal-Mart Stores, Inc., as amended Form S-8 File Nos. 2-94358 and 1-6991 (2) Stock Option Plan of 1994 of Wal-Mart Stores, Inc., as amended Form S-8 File No. 33-55325 (3) Dividend Reinvestment and Stock Purchase Plan of Wal-Mart Stores, Inc. Form S-3 File No. 333-02089 (4) Wal-Mart Stores, Inc. Director Compensation Plan Form S-8 File No. 333-24259 (5) Wal-Mart Stores, Inc. 401 (k) Retirement Savings Plan Form S-8 File No. 333-29847 (6) Wal-Mart Puerto Rico, Inc., 401 (k) Retirement Savings Plan Form S-8 File No. 333-44659 (7) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996 Form S-8 File No. 333-62965 (8) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and restated the 2010 plan Form S-8 File No. 333-60329 (9) The ASDA Colleague Share Ownership Plan Form S-8 File No. 333-84027

The ASDA Group Long Term Incentive Plan The ASDA Group PLC Sharesave Scheme The ASDA 1984 Executive Share Option Scheme The ASDA 1994 Executive Share Option Scheme

of our reports dated March 30, 2018 , with respect to the consolidated financial statements of Walmart Inc. and the effectiveness of internal control over financial reporting of Walmart Inc., included in this Annual Report (Form 10-K) of Walmart Inc. for the year ended January 31, 2018.

/s/ Ernst & Young LLP

Rogers, Arkansas March 30, 2018

Exhibit 31.1

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluations; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of registrant's Board of Directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2018 /s/ C. Douglas McMillon

C. Douglas McMillon President and Chief Executive Officer

Exhibit 31.2

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2018 /s/ M. Brett Biggs

M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon, President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 30, 2018 .

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, M. Brett Biggs, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 30, 2018 .

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ___________________________________________

FORM 10-K ___________________________________________

☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 31, 2020, or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-6991. ___________________________________________

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

___________________________________________

DE 71-0415188 (State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

702 S.W. 8th Street

72716Bentonville, AR (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

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

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.10 per share WMT NYSE

1.900% Notes Due 2022 WMT22 NYSE 2.550% Notes Due 2026 WMT26 NYSE

Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

Large Accelerated Filer ☒ Accelerated Filer ☐☐ Non-Accelerated Filer ☐☐ Smaller Reporting Company ☐☐ Emerging Growth Company ☐

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

As of July 31, 2019, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2019, was $155,125,468,742. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common stock are the affiliates of the registrant.

The registrant had 2,832,277,220 shares of common stock outstanding as of March 18, 2020.

DOCUMENTS INCORPORATED BY REFERENCE

Document Parts Into Which Incorporated

Portions of the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held June 3, 2020 (the "Proxy Statement")

Part III

Walmart Inc. Form 10-K

For the Fiscal Year Ended January 31, 2020

Table of Contents

Page Part I Item 1 Business 7 Item 1A Risk Factors 14 Item 1B Unresolved Staff Comments 23 Item 2 Properties 24 Item 3 Legal Proceedings 26 Item 4 Mine Safety Disclosures 27

Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6 Selected Financial Data 29 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A Quantitative and Qualitative Disclosures About Market Risk 44 Item 8 Financial Statements and Supplementary Data 46 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 78 Item 9A Controls and Procedures 78 Item 9B Other Information 78

Part III Item 10 Directors, Executive Officers and Corporate Governance 79 Item 11 Executive Compensation 79 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 79 Item 13 Certain Relationships and Related Transactions, and Director Independence 79 Item 14 Principal Accounting Fees and Services 79

Part IV Item 15 Exhibits, Financial Statement Schedules 80 Item 16 Form 10-K Summary 82

Signatures 83

WALMART INC.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2020

All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on June 3, 2020 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or the context otherwise requires, that corporation's consolidated subsidiaries.

including our earnings per share, net sales, comparable store and club sales, our Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain categories, expense leverage, returns, capital and operating investments or expenditures of particular types and new store openings;

pickup and delivery; • volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations; • the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share repurchase authorization over a

share repurchases, to meet our cash needs and to fund our operations; • the insignificance of ineffective hedges; and reclassification of amounts related to our derivatives; • our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of resolutions of tax-related matters; • the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are subject; • the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or amendments to existing, accounting

standards; or • our commitments, intentions, plans or goals related to the sustainability of our environment and supply chains, the promotion of economic opportunity or

other societal initiatives. Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations, including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion," "expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected," "may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy," "to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue," "will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"

"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.

Operating Factors • the amount of Walmart's net sales and operating expenses denominated in U.S. dollar and various foreign currencies; • the financial performance of Walmart and each of its segments, including the amounts of Walmart's cash flow during various periods; • customer transaction and average ticket in Walmart's stores and clubs and on its eCommerce platforms; • the mix of merchandise Walmart sells and its customers purchase; • the availability of goods from suppliers and the cost of goods acquired from suppliers; • the effectiveness of the implementation and operation of Walmart's strategies, plans, programs and initiatives; • the impact of acquisitions, divestitures, store or club closures and other strategic decisions; • Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space; • unexpected changes in Walmart's objectives and plans; • the amount of shrinkage Walmart experiences; • consumer acceptance of and response to Walmart's stores and clubs, eCommerce platforms, programs, merchandise offerings and delivery methods; • Walmart's gross profit margins, including pharmacy margins and margins of other product categories; • the selling prices of gasoline and diesel fuel; • disruption of seasonal buying patterns in Walmart's markets; • disruptions in Walmart's supply chain; • cybersecurity events affecting Walmart and related costs and impact of any disruption in business; • Walmart's labor costs, including healthcare and other benefit costs; • Walmart's casualty and accident-related costs and insurance costs; • the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that workforce; • the availability of necessary personnel to staff Walmart's stores, clubs and other facilities; • delays in the opening of new, expanded, relocated or remodeled units; • developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party or is subject, and the liabilities,

Regulatory and Other Factors • changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the adoption and interpretation of

administrative rules and regulations; • the imposition of new taxes on imports and new tariffs and changes in existing tariff rates; • the imposition of new trade restrictions and changes in existing trade restrictions; • adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the markets in which Walmart operates and

elsewhere and actions with respect to such policies, programs and initiatives; • changes in currency control laws; • changes in the level of public assistance payments; • one or more prolonged federal government shutdowns; • the timing and amount of federal income tax refunds; • natural disasters, changes in climate, catastrophic events and global health epidemics or pandemics such as the recent coronavirus outbreak; and • changes in generally accepted accounting principles in the United States.

ITEM 1. BUSINESS

General Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our customers. Each week, we serve over 265 million customers who visit approximately 11,500 stores and numerous eCommerce websites under 56 banners in 27 countries. Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2020 ("fiscal 2020"), January 31, 2019 ("fiscal 2019") and January 31, 2018 ("fiscal 2018"). During fiscal 2020, we generated total revenues of $524.0 billion, which primarily comprised net sales of $519.9 billion. We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the New York Stock Exchange under the symbol "WMT."

The Development of Our Company Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In 1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first Walmart Neighborhood Market. In 1991, we began our first international initiative when we entered into a joint venture in Mexico. Since then, our international presence has expanded and, as of January 31, 2020, our Walmart International segment conducted business in 26 countries. In 2000, we began our first eCommerce initiative by creating walmart.com and then later that year, adding samsclub.com. Since then, our eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores. Since 2016, we have made several eCommerce acquisitions which have enabled us to leverage technology, talent and expertise, as well as incubate digitally-native brands and expand our assortment on walmart.com and in stores. In fiscal 2017, walmart.com launched free two-day shipping and we created Store No 8, a technology incubator with a focus to drive eCommerce innovation. Then in fiscal 2019, we continued to enhance our eCommerce initiatives with the acquisition of a majority stake of Flipkart Private Limited ("Flipkart"), an Indian-based eCommerce marketplace, with an ecosystem that includes eCommerce platforms of Flipkart and Myntra as well as PhonePe, a digital transaction platform. In fiscal 2020, we launched NextDay Delivery to more than 75 percent of the U.S. population, launched Delivery Unlimited from 1,600 locations in the U.S. and expanded Same Day Pickup to nearly 3,200 locations. Our eCommerce efforts and innovation have also led to omni-channel offerings in many of our markets including grocery pick up and/or delivery in nearly a dozen countries outside the U.S. To date, we now have more than 6,100 grocery pick up and delivery locations globally. We are enhancing our ecosystem with our omni-channel capabilities, stores, services, eCommerce sites, supply chain combined with our more than 2.2 million associates to better serve our customers. Together, we believe these elements produce a flywheel effect which creates customer relationships where customers view Walmart as their primary destination.

Information About Our Segments We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. Our operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. We define our segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. We sell similar individual products and services in each of our segments. It is impracticable to segregate and identify revenues for each of these individual products and services. We measure the results of our segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation.

Walmart U.S. Segment Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $341.0 billion for fiscal 2020, representing 66% of our fiscal 2020 consolidated net sales, and had net sales of $331.7 billion and $318.5 billion for fiscal 2019 and 2018, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income.

Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce, through services such as "Same Day Pickup," "Same Day Delivery," "Delivery Unlimited," "NextDay Delivery," and "Endless Aisle." As of January 31, 2020, we had nearly 3,200 grocery pickup locations and over 1,600 delivery locations. We have several eCommerce websites, the largest of which is walmart.com. We define eCommerce sales as sales initiated online through our websites or through a mobile app. eCommerce sales may be fulfilled by a number of methods including our dedicated eCommerce fulfillment centers or our stores. The following table provides the approximate size of our retail stores as of January 31, 2020:

Minimum Square

Feet Maximum Square

Feet Average Square

Feet Supercenters (general merchandise and grocery) 69,000 260,000 178,000 Discount stores (general merchandise and limited grocery) 30,000 206,000 105,000 Neighborhood markets(1) (grocery) 28,000 65,000 42,000 (1) Excludes other small formats.

Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below:

• Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other medical products; • General merchandise includes:

merchandise).

Walmart U.S. recently launched Walmart Media Group, an in-house advertising offering, to work with brands to influence shoppers. Walmart U.S. also offers fuel and financial services and related products, including money orders, prepaid cards, money (wire) transfers, check cashing and bill payment. Combined, these offerings total less than 1% of annual net sales.

Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of merchandise under our private-label brands, including brands such as: "Allswell," "Athletic Works," "Bonobos," "Equate," "EV1," "Everstart," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "No Boundaries," "Onn," "Ozark Trail," "Parent's Choice," "Scoop," "SwissTech," "Time and Tru" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware" and "Russell."

Operations. Many supercenters, discount stores and neighborhood markets are open 24 hours each day. A variety of payment methods are accepted. Consistent with its strategy, Walmart U.S. continues to develop technology tools that help better serve customers and be more efficient in stores, such as shelf-scanning robots, autonomous floor scrubbers, and automated unloading conveyor systems.

Competition. Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce retailers. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following:

• EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our prices will not change under frequent promotional activity;

• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers; and • Omni-channel offerings such as Same Day Pickup and Same Day Delivery, where a customer places an order online and picks it up for free from a store

or has it delivered; Delivery Unlimited, where a customer can receive unlimited grocery delivery for an annual fee; as well as free two-day shipping without an annual membership fee and free NextDay Delivery on an assortment of best-selling items.

Distribution. For fiscal 2020, approximately 79% of Walmart U.S.'s purchases of store merchandise were shipped through our 162 distribution facilities, which are located strategically throughout the U.S. The remaining store merchandise we purchased was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 40 dedicated eCommerce fulfillment centers which includes eight temporary fulfillment centers.

Walmart International Segment Walmart International is our second largest segment and operates in 26 countries outside of the U.S. Walmart International operates through our wholly-owned subsidiaries in Argentina, Canada, Chile, China, India, Japan and the United Kingdom, and our majority-owned subsidiaries in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua), India and Mexico. Walmart International previously operated in Brazil prior to the sale of the majority stake of Walmart Brazil in fiscal 2019, as discussed in Note 12 to our Consolidated Financial Statements. Walmart International includes numerous formats divided into three major categories: retail, wholesale and other. These categories consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry, as well as eCommerce through walmart.com.mx, asda.com, walmart.ca, flipkart.com and other sites. Walmart International had net sales of $120.1 billion for fiscal 2020, representing 23% of our fiscal 2020 consolidated net sales, and had net sales of $120.8 billion and $118.1 billion for fiscal 2019 and 2018, respectively. The segment's net sales were negatively impacted by currency exchange rate fluctuations for all years presented. The gross profit rate is lower than that of Walmart U.S. primarily because of its merchandise mix.

Walmart International's strategy is to create strong local businesses powered by Walmart which means being locally relevant and customer-focused in each of the markets it operates. We are being deliberate about where and how we choose to operate and continue to re-shape the portfolio to best enable long-term, sustainable and profitable growth. As such, we have taken certain strategic actions to strengthen our Walmart International portfolio for the long-term, including:

• Acquisition of a majority stake of Flipkart in August 2018. • Divestiture of 80 percent of Walmart Brazil to Advent International (“Advent”) in August 2018. • Divestiture of the Walmart Chile banking operations in December 2018 and the divestiture of the Walmart Canada banking operations in April 2019.

Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and eCommerce, such as through services like "Click & Collect" in the United Kingdom, our grocery pick-up and delivery business in several other markets, our marketplaces, such as Flipkart in India, and a digital transaction platform anchored in payments such as PhonePe in India. Generally, retail units' selling area range in size from 1,400 square feet to 186,000 square feet. Our wholesale stores' selling area generally range in size from 25,000 square feet to 156,000 square feet. As of January 31, 2020, Walmart International had nearly 3,200 grocery pickup and/or delivery locations across its markets.

Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality, low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside" and "Parent's Choice," our international markets have developed market specific brands including "Aurrera," "Cambridge," "Lider," "Myntra," "PhonePe" and "Extra Special." In addition, we have developed relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at low prices.

Competition. Walmart International competes with omni-channel retailers who operate department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and eCommerce retailers, as well as catalog businesses. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni- channel experience largely determines our competitive position within the retail industry. We believe price leadership is a critical part of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant impact on our competitive position in the markets where we operate.

Distribution. We utilize a total of 221 distribution facilities located in Argentina, Canada, Central America, Chile, China, Japan, Mexico, South Africa, India and the United Kingdom. Certain of these facilities are used to ship merchandise to both our stores and customers on our eCommerce platforms. Through these facilities, we process and distribute both imported and domestic products to the operating units of the Walmart International segment. During fiscal 2020, approximately 85% of Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart International's purchases directly to our stores in the various markets in which we operate. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 88 dedicated eCommerce fulfillment centers, as well as more than 2,500 eCommerce sort centers in India.

Sam's Club Segment Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also operates samsclub.com. Sam's Club had net sales of $58.8 billion for fiscal 2020, representing 11% of our consolidated fiscal 2020 net sales, and had net sales of $57.8 billion and $59.2 billion for fiscal 2019 and 2018, respectively. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.

Membership. The following two options are available to members:

Plus Membership Club Membership Annual Membership Fee $100 $45 Number of Add-on Memberships ($40 each) Up to 16 Up to 8 Eligible for Cash Rewards Yes No

All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is a benefit that provides 2% back on qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on the majority of merchandise, with no minimum order size, and receive discounts on prescriptions and glasses.

Omni-channel. While Sam's Club is a membership-only warehouse club, it provides an omni-channel experience to customers, integrating retail stores and eCommerce. The warehouse facility sizes generally range between 32,000 and 168,000 square feet, with an average size of approximately 134,000 square feet.

snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies and other consumable items; • Fuel, tobacco and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery centers; • Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry, housewares, toys, seasonal items, mattresses

and small appliances; • Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music, office supplies, office furniture, photo

processing and third-party gift cards; and • Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.

In addition, the Member's Mark private label brand continues to expand assortment and deliver member value.

Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:30 p.m., Saturday from 9:00 a.m. to 8:30 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, most club locations offer Plus Members the ability to shop before the regular operating hours Monday through Saturday, starting at 7:00 a.m. A variety of payment methods are accepted. Consistent with its strategy, Sam's Club continues to develop technology tools to drive a great member experience in club. For example, Sam's Garage, a new application in its tire and battery business, is leveraging technology in new ways to provide a personalized and efficient shopping experience. Sam's Club also offers "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.

Distribution. During fiscal 2020, approximately 73% of Sam's Club's non-fuel club purchases were shipped from Sam's Club's 25 dedicated distribution facilities, located strategically throughout the U.S., or from some of the Walmart U.S. segment's distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club segment's club purchases directly to Sam's Club locations. Sam's Club ships merchandise purchased on samsclub.com and through its mobile commerce applications by a number of methods including shipments made directly from Clubs, nine dedicated eCommerce fulfillment centers, two dedicated import facilities and other distribution centers.

Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs.

Suppliers and Supply Chain As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around the world, including in the U.S., from whom we purchase the merchandise that we sell in our stores, clubs and online. In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of the annual sales for a number of our suppliers, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the attractiveness of our merchandise assortment we offer to our customers and members.

Employees As of the end of fiscal 2020, Walmart Inc. and our subsidiaries employed more than 2.2 million employees ("associates") worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good. A large number of associates turn over each year, although Walmart U.S. turnover has improved in recent years as a result of our focus on increasing wages and providing improved tools, technology and training to associates. Certain information relating to retirement-related benefits we provide to our associates is included in Note 11 to our Consolidated Financial Statements. In addition to retirement-related benefits, in the U.S. we offer a broad range of Company-paid benefits to our associates. These include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of associate purchases of our stock through our Associate Stock Purchase Plan and life insurance. In addition to the health-care benefits for eligible full-time and part-time associates in the U.S., we offer maternity leave and a paid parental leave program to all full-time associates. We also offer a $5,000 benefit to assist eligible associates with adoption. Additionally, we offer eligible associates tuition assistance towards earning a college degree through "Live Better U," which allows associates to earn a college degree or certificate for the equivalent of $1 per day. Similarly, in our operations outside the U.S., we provide a variety of associate benefits that vary based on customary local practices and statutory requirements.

Information About Our Executive Officers The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.

Name Business Experience

Current Position

Held Since Age Daniel J. Bartlett

2013

M. Brett Biggs

2016

Rachel Brand

Executive Vice President, Global Governance, Chief Legal Officer and Corporate Secretary, effective April 2018. From May 2017 to February 2018, she served as Associate Attorney General in the United States Department of Justice. From January 2017 to May 2017, Ms. Brand was an Associate Professor of Law at George Mason University Antonin Scalia Law School. From August 2012 to February 2017, she served as a Board Member on the Privacy and Civil Liberties Oversight Board of the U.S. government.

2018

David M. Chojnowski

Senior Vice President and Controller effective January 2017. From October 2014 to January 2017, he served as Vice President and Controller, Walmart U.S.

2017

John Furner

Executive Vice President, President and Chief Executive Officer, Walmart U.S. effective November 2019. From February 2017 until November 2019, he served as President and Chief Executive Officer, Sam's Club. From October 2015 to January 2017, he served as Executive Vice President and Chief Merchandising Officer of Sam's Club.

2019

Suresh Kumar

Executive Vice President, Global Chief Technology Officer and Chief Development Officer effective July 2019. From February 2018 until June 2019, Mr. Kumar was Vice President and General Manager at Google LLC. From May 2014 until February 2018, he was Corporate Vice President at Microsoft Corporation.

2019

Marc Lore

2016

Judith McKenna

2018

Kathryn McLay

Executive Vice President, President and Chief Executive Officer, Sam's Club effective November 15, 2019. From February 2019 to November 2019, she served as Executive Vice President, Walmart U.S. Neighborhood Markets. From December 2015 until February 2019, she served as Senior Vice President, U.S. Supply Chain. Ms. McLay originally joined the Company in April 2015 as Vice President of U.S. Finance and Strategy.

2019

C. Douglas McMillon

2014

Donna Morris

Executive Vice President, Global People and Chief People Officer, effective February 2020. From April 2002 to January 2020, she served at Adobe Inc. in various roles, including most recently, Chief Human Resources Officer and Executive Vice President, Employee Experience.

2020

ITEM 1A. RISK FACTORS

The risks described below could, in ways we may or may not be able to accurately predict, materially and adversely affect our business, results of operations, financial condition and liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally. The following risk factors do not identify all risks that we may face.

Failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology may materially adversely affect our market position, net sales and financial performance.

The retail business continues to rapidly evolve and consumers increasingly embrace digital shopping. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of this increase could accelerate.

Our strategy, which includes investments in eCommerce, technology, acquisitions, joint ventures, store remodels and other customer initiatives may not adequately or effectively allow us to grow our eCommerce business, increase comparable store sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club openings. The success of this strategy will depend in large measure on our ability to continue building and delivering a seamless omni-channel shopping experience for our customers and is further subject to the related risks discussed in this Item 1A. Failure to successfully execute this strategy may adversely affect our market position, net sales and financial performance which could also result in impairment charges to intangible assets or other long-lived assets. In addition, a greater concentration of eCommerce sales, including increasing online grocery sales, could result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect our financial performance.

Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred, will adversely impact our financial performance in the short-term and failure to realize the benefits of these investments may adversely impact our financial performance over the longer term.

The performance of strategic alliances and other business relationships to support the expansion of our business could materially adversely affect our financial performance.

Operational Risks Natural disasters, changes in climate, and geo-political events and catastrophic events could materially adversely affect our financial performance.

The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise; severe changes in climate; geo-political events; global health epidemics or pandemics or other contagious outbreaks such as the recent coronavirus (COVID-19) outbreak; and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence, including active shooter situations (such as those that have occurred in our U.S. stores), in countries in which we operate or in which our suppliers are located, could adversely affect our operations and financial performance.

Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or more stores, clubs and distribution facilities, limitations on store or club operating hours, the lack of an adequate work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from areas in which our stores, clubs and distribution facilities are located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers (including the frequency of visits by consumers to physical retail locations, whether as a result of limitations on large gatherings, travel and movement limitations or otherwise) and in consumers' disposable income, the temporary or long-term disruption in the supply of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the delivery of goods to our distribution facilities or stores within a country in which we are operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our facilities, and the disruption in our communications with our stores. For example, our results for the fourth quarter of fiscal 2020 were negatively impacted by riots and looting in Chile which resulted in us closing a number of our stores until the disruption abated.

We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our financial performance.

Risks associated with our suppliers could materially adversely affect our financial performance. The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws, including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner, is a significant challenge, especially with respect to suppliers located and goods sourced outside the U.S. Political and economic instability, as well as other impactful events and circumstances in the countries in which our suppliers and their manufacturers are located (such as the recent coronavirus outbreak which could result in potential disruptions or delays to our global supply chain), the financial instability of suppliers, suppliers' failure to meet our terms and conditions or our supplier standards (including our responsible sourcing standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise safety and quality issues, disruption or delay in the transportation of merchandise from the suppliers and manufacturers to our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of merchandise we purchase enters into the markets in which we operate, currency exchange rates, transport availability and cost, transport security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, the U.S. foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and our access to products could adversely affect our financial performance.

third-parties sell goods on some of our digital platforms, which we refer to as marketplace transactions. Whether laws related to such sales apply to us is currently unsettled and any unfavorable changes could expose us to loss of sales, reduction in transactions and deterioration of our competitive position. In addition, we may face reputational, financial and other risks, including liability, for third-party sales of goods that are controversial, counterfeit or otherwise fail to comply with applicable law. Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements. Any of these events could have a material adverse impact on our business and results of operations and impede the execution of our eCommerce growth strategy. We rely extensively on information systems to process transactions, summarize results and manage our business. Disruptions in our systems could harm our ability to conduct our operations. Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our business-critical information systems. Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations including nation states), catastrophic events such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information systems are essential to our business operations, including the processing of transactions, management of our associates, facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully redundant and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, breached or cease to function properly, we may have to make a significant investment to repair or replace them, and may experience loss or corruption of critical data as well as suffer interruptions in our business operations in the interim. Any interruption to our information systems may have a material adverse effect on our business or results of operations. In addition, we are constantly updating our information technology processes and systems. The risk of system disruption is increased when significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we may fail to realize the cost savings or operational benefits anticipated to be derived from these initiatives.

If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our omni-channel business globally, could be materially adversely affected. Increasingly, customers are using computers, tablets, and smart phones to shop with us and with our competitors and to do comparison shopping. We use social media, online advertising, and email to interact with our customers and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, in addition to home delivery, we offer various pickup and delivery programs under which many products available for purchase online can be picked up by the customer or member at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a rapidly evolving part of the retail industry and of our operations around the world. We must anticipate and meet our customers' changing expectations while adjusting for technology investments and developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and that continually meet the changing expectations of online shoppers and developments in online and digital platform merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally and have a material adverse impact on our business and results of operations. Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the systems on which they run, including those applications and systems in our acquired eCommerce businesses, are regularly subject to cyber-attacks. Those attacks involve attempts to gain unauthorized access to our eCommerce websites (including marketplace platforms) or mobile commerce applications to obtain and misuse customers' or members' information including payment information and related risks discussed in this Item 1A. Such attacks, if successful, in addition to potential data misuse, may also create denials of service or otherwise disable, degrade or sabotage one or more of our digital platforms or otherwise significantly disrupt our customers' and members' shopping experience. If we are unable to maintain the security of our digital platforms and keep them operating within acceptable parameters, we could suffer loss of sales, reductions in transactions, reputational damage and deterioration of our competitive position and incur liability for any damage to customers or others whose personal or confidential information is unlawfully obtained and misused, any of which events could have a material adverse impact on our business and results of operations and impede the execution of our strategy for the growth of our business.

Any failure to maintain the security of the information relating to our company, customers, members, associates and vendors, whether as a result of cybersecurity attacks on our information systems or otherwise, could damage our reputation, result in litigation or other legal actions against us, cause us to incur substantial additional costs, and materially adversely affect our business and operating results. Like most retailers, we receive and store in our information systems personal information about our customers and members, and we receive and store personal information concerning our associates and vendors. Some of that information is stored digitally in connection with our digital platforms. We also utilize third-party service providers for a variety of reasons, including, without limitation, for digital storage technology, content delivery to customers and members, back-office support, and other functions. Such providers may have access to information we hold about our customers, members, associates or vendors. In addition, our eCommerce operations depend upon the secure transmission of confidential information over public networks, including information permitting cashless payments. Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated. Cyber threats and cyber-attackers can be sponsored by countries or sophisticated criminal organizations or be the work of hackers with a wide range of motives and expertise. We and the businesses with which we interact have experienced and continue to experience threats to data and systems, including by perpetrators of random or targeted malicious cyber-attacks, computer viruses, worms, bot attacks or other destructive or disruptive software and attempts to misappropriate customer information, including credit card information, and cause system failures and disruptions. Some of our systems have experienced limited security breaches and although they did not have a material adverse effect on our operating results, there can be no assurance of a similar result in the future. Associate error or malfeasance, faulty password management, social engineering or other irregularities may also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. Any compromise of our data security systems or of those of businesses with which we interact, which results in confidential information being accessed, obtained, damaged, modified, lost or used by unauthorized or improper persons, could harm our reputation and expose us to regulatory actions, customer attrition, remediation expenses, and claims from customers, members, associates, vendors, financial institutions, payment card networks and other persons, any of which could materially and adversely affect our business operations, financial condition and results of operations. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of a compromise, we may be unable to anticipate these techniques or to implement adequate preventative measures and we or our third-party service providers may not discover any security breach, vulnerability or compromise of information for a significant period of time after the security incident occurs. In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers, members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our stores thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and liquidity. Such events could also result in the release to the public of confidential information about our operations and financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security compromise could require us to devote significant management resources to address the problems created by the issue and to expend significant additional resources to upgrade further the security measures we employ to guard personal and confidential information against cyber-attacks and other attempts to access or otherwise compromise such information and could result in a disruption of our operations, particularly our digital operations. We accept payments using a variety of methods, including cash, checks, credit and debit cards, and our private label credit cards and gift cards, and we may offer new payment options over time, which may have information security risk implications. As a retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain or detect cyber-attacks, cyber terrorism, security breaches or other compromises from known malware or other threats that may be developed in the future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider's information systems results in the loss, damage, misappropriation or other compromise of information, we may be materially adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial.

Additionally, we offer money (wire) transfer services, digital payment platforms, bill payment, money orders and check cashing and we sell prepaid cards and gift cards. We further offer co-branded credit cards and installment loans through financial services partners. These products and services require us to comply with legal and regulatory requirements, including global anti-money laundering and sanctions laws and regulations as well as international, federal and state consumer financial laws and regulations. Failure to comply with these laws and regulations could result in fines, sanctions, penalties and harm to our reputation. The Company also has compliance obligations associated with new privacy laws enacted to protect personal information. The California Consumer Privacy Act of 2018, (CCPA), grants California consumers certain rights over their personal information and imposes stringent requirements on the collection, use and sharing of “personal information” of California consumers. Other U.S. states are proposing similar laws related to the protection of personal information and the U.S. federal government is also considering federal privacy legislation. Outside the U.S., the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) greatly increases the jurisdictional reach of EU law and adds a broad array of requirements related to personal data. Complying with changing regulatory requirements requires us to incur additional costs and expenses. If we fail to comply with CCPA, GDPR or other privacy related regulations, or if regulators assert we have failed to comply with them, it could lead to regulatory enforcement action, monetary fines or penalties (up to 4% of worldwide revenue in the case of GDPR), lawsuits or reputational damage and could materially and adversely affect our results of operations.

Changes in the results of our retail pharmacy business could adversely affect our overall results of operations, cash flows and liquidity. Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments, as well as the recent addition of Walmart Health Centers to some of our U.S. stores. A large majority of our retail pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and pharmacy benefit managers ("PBMs"). Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans and programs toward plans and programs with less favorable reimbursement terms); changes in third-party payer drug formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential coverage treatment); growth in, and our participation in or exclusion from, exclusive and preferred pharmacy network arrangements operated by PBMs and/or any insurance plan or program; increases in the prices we pay for brand name and generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement; changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug programs; increased competition from other retail pharmacy operations; further consolidation and strategic alliances among third-party payers, PBMs or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for them to the extent the costs are not reimbursed by a third-party; failure to meet any performance or incentive thresholds to which our level of third-party reimbursement may be subject; and changes in the regulatory environment for the retail pharmacy industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other changes in laws, rules and regulations that affect our retail pharmacy business. If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy customers transferring their prescriptions to other pharmacies. One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations or result in the loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of operations, cash flows and liquidity.

employment and labor laws and regulations. Additionally, our ability to successfully execute organizational changes, including management transitions within the Company's senior leadership, such as our recent leadership changes, and to effectively motivate and retain associates are critical to our business success. If we are unable to locate, attract or retain qualified personnel, or manage leadership transition successfully, the quality of service we provide to our customers may decrease and our financial performance may be adversely affected. In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected.

Financial Risks Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported results of operations. Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates that were unfavorable have had adverse effects on our reported results of operations. As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may also result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our reported consolidated results of operations. We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding adverse effect on our gross profit. Consequently, unfavorable fluctuations in currency exchange rates have and may continue to adversely affect our results of operations.

The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries, laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with having numerous facilities located in countries that have historically been less stable than the U.S.. Additional risks inherent in our international operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S.. The various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations. In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act ("FCPA"), or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our reputation.

Changes in tax and trade laws and regulations could materially adversely affect our financial performance. In fiscal 2020, our Walmart U.S. and Sam's Club operating segments generated approximately 77% of our consolidated net sales. The federal government has created the potential for significant changes in trade policies, including tariffs and government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in our stores and clubs. Potential changes which have been discussed include the renegotiation or termination of trade agreements and the imposition of higher tariffs on imports into the U.S. A significant portion of the general merchandise we sell in our U.S. stores and clubs is manufactured in other countries. Any such actions including the imposition of further tariffs on imports could increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers, which could materially adversely affect the financial performance of our U.S. operations and our business. We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax laws, tax rates, regulations or accounting principles. For example, in December 2019, India enacted a bill which significantly reduced the corporate income tax for certain companies with operations in India. In the U.S., the Tax Cuts and Jobs Act of 2017 (the "Tax Act") significantly changed income tax laws that affect U.S. corporations with additional guidance from the U.S. tax authority still pending. As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, any resulting changes in our estimates will be treated in accordance with the relevant accounting guidance. Compliance with the Tax Act, including collecting information not regularly produced by the Company or unexpected changes in our estimates, may require us to incur additional costs and could affect our results of operations. In addition, we are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and settlement is made.

Changes in and/or failure to comply with other laws and regulations specific to the environments in which we operate could materially adversely affect our reputation, market position, or our business and financial performance. We operate in complex regulated environments in the U.S. and in the other countries in which we operate and could be adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Our pharmacy and other healthcare operations in the U.S. are subject to numerous federal, state and local regulations including licensing and other requirements and reimbursement arrangements. The regulations to which we are subject include, but are not limited to: federal and state registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act, laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"), trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws; and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care and nurse practitioner services. For example, in the U.S. the DEA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal and holding of controlled substances. The DEA, the FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and state laws and regulations of general applicability, including laws and regulations related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and employment matters, laws and regulations related to competition, and antitrust matters, and health and wellness related regulations for our pharmacy operations outside of the U.S. In addition, certain financial services we offer or make available, such as our money transfer agent services, are subject to legal and regulatory requirements, including those intended to help detect and prevent money laundering, sanctions, fraud and other illicit activity as well as consumer financial protection. The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services we offer. Untimely compliance or noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs in the U.S.; loss of licenses; and significant fines or monetary damages and/or penalties. In addition, failure to comply with applicable legal or regulatory requirements in the U.S. or in any of the countries in which we operate could result in significant legal and financial exposure, damage to our reputation, and have a material adverse effect on our business operations, financial condition and results of operations.

We are subject to certain legal proceedings that may materially adversely affect our results of operations, financial condition and liquidity. We are involved in a number of legal proceedings, which include consumer, employment, tort and other litigation. In particular, we are currently a defendant in a number of cases containing class-action allegations in which the plaintiffs have brought claims under federal and state wage and hour laws, as well as a number of cases containing class-action allegations in which the plaintiffs have brought claims under federal and state consumer laws. In addition, ASDA Stores, Ltd. ("Asda"), a wholly-owned subsidiary of the Company, has been named as a defendant in numerous "equal value" claims pending in the Manchester Employment Tribunal (the "Employment Tribunal") in the United Kingdom. The claimants, who are current and former Asda store employees, allege that the work performed by employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs to that of employees working in Asda's warehouses and distribution facilities, and that the difference in pay between these job positions disparately impacts women because more women work in retail stores while more men work in warehouses and distribution facilities, and that the pay difference is not objectively justified. The claimants are seeking differential back pay based on higher wage rates in the warehouses and distribution facilities and higher wage rates on a prospective basis. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these matters. The Company has been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids and is also a defendant in numerous litigation proceedings related to opioids including the consolidated multidistrict litigation entitled In re National Prescription Opiate Litigation (MDL No. 2804), currently pending in the U.S. District Court for the Northern District of Ohio. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from such claims and the related opioid matters. We discuss these cases and other litigation to which we are party below under the caption "Item 3. Legal Proceedings" and in Note 10 in the "Notes to our Consolidated Financial Statements," which are part of this Annual Report on Form 10-K.

Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or shareholders in such capacity. Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for claims, including derivative claims that are based upon a violation of a duty by a current or former director, officer, employee or shareholder in such capacity or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable for disputes with us or our directors, officers, employees or shareholders in such capacity, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

United States The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2020, unit counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:

Walmart U.S. Sam's Club

State or Territory Supercenters Discount Stores

Neighborhood Markets and other

small formats Clubs Grand Total Alabama 101 1 29 13 144 Alaska 7 2 — — 9 Arizona 83 2 28 12 125 Arkansas 76 5 37 9 127 California 142 71 78 29 320 Colorado 70 4 18 17 109 Connecticut 12 21 1 1 35 Delaware 6 3 — 1 10 Florida 232 9 99 46 386 Georgia 154 2 36 24 216 Hawaii — 10 — 2 12 Idaho 23 — 3 1 27 Illinois 139 15 12 25 191 Indiana 97 6 11 13 127 Iowa 58 2 — 9 69 Kansas 58 2 15 9 84 Kentucky 78 7 9 9 103 Louisiana 88 2 34 14 138 Maine 19 3 — 3 25 Maryland 30 18 3 11 62 Massachusetts 27 21 4 — 52 Michigan 91 3 11 23 128 Minnesota 65 3 1 12 81 Mississippi 65 3 11 7 86 Missouri 112 9 18 19 158 Montana 14 — — 2 16 Nebraska 35 — 7 5 47 Nevada 30 2 11 7 50 New Hampshire 19 7 — 2 28 New Jersey 34 28 1 8 71 New Mexico 35 2 9 7 53 New York 80 17 10 12 119 North Carolina 144 6 46 22 218 North Dakota 14 — — 3 17 Ohio 139 6 4 27 176 Oklahoma 81 8 35 13 137 Oregon 29 7 10 — 46 Pennsylvania 116 20 4 24 164 Puerto Rico 13 5 12 7 37 Rhode Island 5 4 — — 9 South Carolina 84 — 26 13 123 South Dakota 15 — — 2 17 Tennessee 117 1 20 14 152 Texas 392 18 111 82 603 Utah 41 — 13 8 62 Vermont 3 3 — — 6

Virginia 110 4 22 15 151 Washington 52 10 5 — 67 Washington D.C. 3 — 2 — 5 West Virginia 38 — 1 5 44 Wisconsin 83 4 2 10 99 Wyoming 12 — — 2 14 U.S. total 3,571 376 809 599 5,355 Square feet (in thousands) 634,287 39,557 29,474 80,239 783,557

International The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2020(1) for Walmart International are summarized by major category for each geographic market as follows:

Geographic Market Retail Wholesale Other(2) Total Square feet(3)

Africa(4) 351 91 — 442 24,754 Argentina 92 — — 92 8,095 Canada 408 — — 408 52,936 Central America(5) 836 — — 836 13,460 Chile 362 5 — 367 15,992 China 412 26 — 438 70,163 India — 28 — 28 1,514 Japan 333 — — 333 19,832 Mexico 2,408 163 — 2,571 100,643 United Kingdom 613 — 18 631 37,560 International total 5,815 313 18 6,146 344,949

(1) Walmart International unit counts, with the exception of Canada, are as of December 31, 2019, to correspond with the balance sheet date of the related geographic market. Canada unit counts are as of January 31, 2020.

(2) Other includes stand-alone gas stations. (3) Square feet reported in thousands. (4) Africa unit counts primarily reside in South Africa, with other locations in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania,

Uganda and Zambia. (5) Central America unit counts reside in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

Owned and Leased Properties

The following table provides further details of our retail units and distribution facilities, including return facilities and dedicated eCommerce fulfillment centers, as of January 31, 2020:

Owned Leased(1) Total U.S. properties Walmart U.S. retail units 4,069 687 4,756 Sam's Club retail units 513 86 599 Total U.S. retail units 4,582 773 5,355 Walmart U.S. distribution facilities 108 54 162 Sam's Club distribution facilities 11 14 25 Total U.S. distribution facilities 119 68 187

Total U.S. properties 4,701 841 5,542 International properties Africa 37 405 442 Argentina 67 25 92 Canada 124 284 408 Central America 346 490 836 Chile 196 171 367 China 2 436 438 India 2 26 28 Japan 54 279 333 Mexico 693 1,878 2,571 United Kingdom 432 199 631 Total International retail units 1,953 4,193 6,146 International distribution facilities 34 187 221

Total International properties 1,987 4,380 6,367 Total properties 6,688 5,221 11,909

Total retail units 6,535 4,966 11,501 Total distribution facilities 153 255 408 Total properties 6,688 5,221 11,909 (1) Also includes U.S. and international distribution facilities which are third-party owned and operated.

ITEM 3. LEGAL PROCEEDINGS

II. CERTAIN OTHER MATTERS: The Company has received grand jury subpoenas issued by the United States Attorney’s Office for the Middle District of Pennsylvania seeking documents regarding the Company’s consumer fraud program and anti-money laundering compliance related to the Company’s money transfer services, where Walmart is an agent. The most recent subpoena was issued in January 2020. The Company has been responding to these subpoenas. The Company has also been responding to civil investigative demands from the United States Federal Trade Commission related to money transfers and the Company’s anti-fraud program. Due to the investigative stage of these matters, the Company is unable to predict the outcome of the investigations by the governmental entities. While the Company does not currently believe that the outcome of these matters will have a material adverse effect on its business, financial condition, results of operations or cash flows, the Company can provide no assurance as to the scope and outcome of these matters and whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

In September 2018, the United States Environmental Protection Agency (the “EPA”) notified the Company that it had initiated an administrative penalty action by issuing a Draft Consent Agreement and Final Order. The letter accompanying the Draft Consent Agreement and Final Order alleges that the Company distributed and/or sold three unregistered pesticide products from March to June, 2017. The EPA is seeking a penalty of $960,000. The manufacturer of the product is responsible for ensuring that a FIFRA-regulated product is properly registered prior to its sale. The Company is cooperating with the EPA.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Holders of Record of Common Stock As of March 18, 2020, there were 217,840 holders of record of Walmart's common stock.

Stock Performance Chart This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending through fiscal 2020 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison assumes $100 was invested on February 1, 2015, in shares of our common stock and in each of the indices shown and assumes that all of the dividends were reinvested.

*Assumes $100 Invested on February 1, 2015 Assumes Dividends Reinvested

Fiscal Year Ending January 31, 2020

Fiscal Years Ended January 31, 2015 2016 2017 2018 2019 2020

Walmart Inc. $ 100.00 $ 80.25 $ 83.06 $ 136.08 $ 125.24 $ 152.65 S&P 500 Index 100.00 99.33 119.24 150.73 147.24 179.17 S&P 500 Retailing Index 100.00 118.07 140.38 203.32 216.05 253.36

Issuer Repurchases of Equity Securities From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2020 were made under the current $20.0 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2020, authorization for $5.7 billion of share repurchases remained. Any repurchased shares are constructively retired and returned to an unissued status.

Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended January 31, 2020, was as follows:

Fiscal Period Total Number of

Shares Repurchased

Average Price Paid per Share (in dollars)

Total Number of Shares Repurchased as Part of Publicly

Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Repurchased Under the

Plans or Programs(1) (in billions)

November 1-30, 2019 2,396,857 $ 119.37 2,396,857 $ 6.3 December 1-31, 2019 2,494,584 119.52 2,494,584 6.0 January 1-31, 2020 2,627,813 116.14 2,627,813 5.7 Total 7,519,254 7,519,254

(1) Represents the approximate dollar value of shares that could have been repurchased at the end of the month.

ITEM 6. SELECTED FINANCIAL DATA

Five-Year Financial Summary Walmart Inc.

As of and for the Fiscal Years Ended January 31,

(Amounts in millions, except per share and unit count data) 2020 2019 2018 2017 2016

Operating results

Total revenues $ 523,964 $ 514,405 $ 500,343 $ 485,873 $ 482,130 Percentage change in total revenues from previous fiscal year 1.9% 2.8% 3.0% 0.8% (0.7)% Net sales $ 519,926 $ 510,329 $ 495,761 $ 481,317 $ 478,614 Percentage change in net sales from previous fiscal year 1.9% 2.9% 3.0% 0.6% (0.7)% Increase (decrease) in calendar comparable sales(1) in the U.S. 2.7% 4.0% 2.2% 1.4% 0.3 %

Walmart U.S. 2.9% 3.7% 2.1% 1.6% 1.0 % Sam's Club 1.6% 5.4% 2.8% 0.5% (3.2)%

Gross profit margin 24.1% 24.5% 24.7% 24.9% 24.6 % Operating, selling, general and administrative expenses, as a percentage of net sales 20.9% 21.0% 21.5% 21.2% 20.3 % Operating income $ 20,568 $ 21,957 $ 20,437 $ 22,764 $ 24,105 Interest, net 2,410 2,129 2,178 2,267 2,467 Loss on extinguishment of debt — — 3,136 — — Other (gains) and losses (1,958) 8,368 — — — Consolidated net income attributable to Walmart 14,881 6,670 9,862 13,643 14,694 Diluted net income per common share attributable to Walmart $ 5.19 $ 2.26 $ 3.28 $ 4.38 $ 4.57 Dividends declared per common share 2.12 2.08 2.04 2.00 1.96 Financial position(2) Total assets $ 236,495 $ 219,295 $ 204,522 $ 198,825 $ 199,581 Long-term debt and long-term lease obligations (excluding amounts due within one

year) 64,192 50,203 36,825 42,018 44,030

Total Walmart shareholders' equity 74,669 72,496 77,869 77,798 80,546 Unit counts Walmart U.S. segment 4,756 4,769 4,761 4,672 4,574 Walmart International segment 6,146 5,993 6,360 6,363 6,299 Sam's Club segment 599 599 597 660 655 Total units 11,501 11,361 11,718 11,695 11,528

(2) As described in Note 1 to our Consolidated Financial Statements, on February 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) under the modified retrospective approach, and thus financial statements prior to fiscal 2020 were not recast for the adoption of this standard.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview This discussion, which presents our results for the fiscal years ended January 31, 2020 ("fiscal 2020"), January 31, 2019 ("fiscal 2019") and January 31, 2018 ("fiscal 2018") should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of each of the three segments to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole. Throughout this Item 7, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income and other measures as determined by the information regularly reviewed by our chief operating decision maker. Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated online or through mobile applications, including omni-channel transactions which are fulfilled through our stores and clubs. Sales at a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Additionally, sales related to acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies. Beginning with the first quarter of fiscal 2020, we updated our definition of what was previously referred to as traffic (a component, along with ticket, of comparable sales). Traffic is now referred to as "transactions" and measures a percentage change in the number of sales transactions in our comparable stores, as well as for comparable eCommerce activity. In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars or for countries experiencing hyperinflation. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31. We have taken strategic actions to strengthen our portfolio for the long-term, including:

• Acquisition of 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart Private Limited ("Flipkart") in August 2018, which negatively impacted fiscal 2020 and 2019 net income. Refer to Note 12 for additional information on the transaction.

• Divestiture of 80 percent of Walmart Brazil to Advent International ("Advent") in August 2018, for which we recorded a pre-tax loss of $4.8 billion in fiscal 2019. Refer to Note 12 for additional information on the transaction.

• Divestiture of banking operations in Walmart Chile and Walmart Canada in December 2018 and April 2019, respectively. • Asda made a $1.0 billion cash contribution to the Asda Group Pension Scheme (the "Plan") in October 2019 which enabled the Plan to purchase a bulk

insurance annuity contract for the benefit of Plan participants in anticipation that each Plan participant will be issued an individual annuity contract. The issuer of the individual annuity insurance contracts will be solely responsible for paying each participant’s benefits in full and will release the Plan and Asda from any future obligations. Once all Plan participants have been issued individual annuity contracts, we currently

estimate that we will recognize a total, pre-tax charge of approximately $2.2 billion related to the pension settlement in late fiscal 2021 or early fiscal 2022. Refer to Note 11 for additional information on the transaction.

We operate in the highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or international omni-channel or eCommerce presence. We compete with a number of companies for attracting and retaining quality employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, global health epidemics, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, the imposition of tariffs, cybersecurity attacks and unemployment. Additionally, we are monitoring the potential impact of the recent coronavirus outbreak to our global business. Its financial impact is unknown at this time. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be found herein under "Item 1A. Risk Factors," and under "Cautionary Statement Regarding Forward-Looking Statements."

• strong, efficient growth; • consistent operating discipline; and • strategic capital allocation.

As we execute on this financial framework, we believe our returns on capital will improve over time.

Strong, Efficient Growth Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities, increasing comparable store and club sales, accelerating eCommerce sales growth and expanding omni-channel initiatives while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-term growth of the Company. Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar. Calendar comparable sales, as well as the impact of fuel, for fiscal 2020 and 2019, were as follows:

Fiscal Years Ended January 31, 2020 2019 2020 2019 With Fuel Fuel Impact Walmart U.S. 2.9% 3.7% 0.0% 0.1% Sam's Club 1.6% 5.4% 0.8% 1.6% Total U.S. 2.7% 4.0% 0.1% 0.4%

Walmart U.S. comparable sales increased 2.9% and 3.7% in fiscal 2020 and 2019, respectively, driven by ticket and transactions growth. Walmart U.S. eCommerce sales positively contributed approximately 1.7% and 1.3% to comparable sales for fiscal 2020 and 2019, respectively, as we continue to focus on a seamless omni-channel experience for our customers. Sam's Club comparable sales increased 1.6% and 5.4% in fiscal 2020 and 2019, respectively. Sam's Club comparable sales for both fiscal 2020 and 2019 benefited from growth in transactions and higher fuel sales, which were partially offset by lower ticket due to our decision to remove tobacco from certain club locations. Sam's Club fiscal 2019 comparable sales were further aided by transfers of sales from our closed clubs to our existing clubs. Sam's Club eCommerce sales positively contributed approximately 1.5% and 0.9% to comparable sales for fiscal 2020 and 2019, respectively.

Fiscal Years Ended January 31,

(Amounts in millions, except unit counts) 2020 2019 Net sales $ 519,926 $ 510,329 Percentage change from comparable period 1.9% 2.9% Operating, selling, general and administrative expenses $ 108,791 $ 107,147 Percentage change from comparable period 1.5% 0.6% Operating, selling, general and administrative expenses as a percentage of net sales 20.9% 21.0%

For fiscal 2020, operating, selling, general and administrative ("operating") expenses as a percentage of net sales decreased 8 basis points, when compared to the previous fiscal year due to our focus on expense management combined with our growth in comparable store sales. These improvements were partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in the write down of certain assets in the Walmart U.S. and Walmart International segments.

For fiscal 2019, operating expenses as a percentage of net sales decreased 48 basis points, when compared to the previous fiscal year. The primary drivers of the expense leverage were strong sales performance in conjunction with productivity improvements and lapping of certain fiscal 2018 charges. The improvements in fiscal 2019 were partially offset by additional investments in eCommerce and technology, as well as a $160 million charge related to a securities class action lawsuit.

Strategic Capital Allocation Our strategy includes improving our customer-facing initiatives in stores and clubs and creating a seamless omni-channel experience for our customers. As such, we are allocating more capital to eCommerce, technology, supply chain, and store remodels and less to new store and club openings, when compared to prior years. Total fiscal 2020 capital expenditures increased slightly compared to the prior year; the following table provides additional detail:

(Amounts in millions) Fiscal Years Ended January 31,

Allocation of Capital Expenditures 2020 2019 eCommerce, technology, supply chain and other $ 5,643 $ 5,218 Remodels 2,184 2,152 New stores and clubs, including expansions and relocations 77 313 Total U.S. $ 7,904 $ 7,683 Walmart International 2,801 2,661 Total capital expenditures $ 10,705 $ 10,344

We define ROI as operating income plus interest income, depreciation and amortization, and rent expense for the trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period. Upon adoption of ASU 2016-02, rent for the trailing 12 months multiplied by a factor of 8 is no longer included in the calculation of ROI on a prospective basis as operating lease assets are now capitalized. For fiscal 2020, lease related assets and associated accumulated amortization are included in the denominator at their carrying amount as of the current balance sheet date, rather than averaged, because they are no longer directly comparable to the prior year calculation which included rent for the trailing 12 months multiplied by a factor of 8. A two-point average will be used for leased assets beginning in fiscal 2021, after one full year from the date of adoption of the new lease standard. Further, beginning prospectively in fiscal 2020, rent expense in the numerator excludes short-term and variable lease costs as these costs are not included in the operating lease right of use asset balance. Prior to adoption of ASU 2016-02, we defined ROI as operating income plus interest income, depreciation and amortization, and rent expense for the trailing 12 months divided by average invested capital during that period. We considered average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of 8, which estimated the hypothetical capitalization of our operating leases. Because the new lease standard was adopted under the modified retrospective approach as of February 1, 2019, our calculation of ROI for fiscal 2019 was not revised. Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in accordance with generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; and adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI. The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 CALCULATION OF RETURN ON ASSETS Numerator

Consolidated net income $ 15,201 $ 7,179

Denominator Average total assets(1) $ 227,895 $ 211,909

Return on assets (ROA) 6.7% 3.4%

CALCULATION OF RETURN ON INVESTMENT Numerator

Operating income $ 20,568 $ 21,957 + Interest income 189 217 + Depreciation and amortization 10,987 10,678 + Rent 2,670 3,004 ROI operating income $ 34,414 $ 35,856

Denominator

Average total assets(1), (2) $ 235,277 $ 211,909 + Average accumulated depreciation and amortization(1), (2) 90,351 85,107 - Average accounts payable(1) 47,017 46,576 - Average accrued liabilities(1) 22,228 22,141 + Rent x 8 N/A 24,032 Average invested capital $ 256,383 $ 252,331

Return on investment (ROI) 13.4% 14.2%

As of January 31, 2020 2019 2018 Certain Balance Sheet Data Total assets $ 236,495 $ 219,295 $ 204,522

Leased assets, net 21,841 7,078 NP Total assets without leased assets, net 214,654 212,217 NP

Accumulated depreciation and amortization 94,514 87,175 83,039 Accumulated amortization on leased assets 4,694 5,682 NP

Accumulated depreciation and amortization, without leased assets 89,820 81,493 NP Accounts payable 46,973 47,060 46,092 Accrued liabilities 22,296 22,159 22,122 (1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the corresponding prior period and dividing by 2. Average

total assets as used in ROA includes the average impact of the adoption of ASU 2016-02 (2) For fiscal 2020, as a result of adopting ASU 2016-02, average total assets is based on the average of total assets without leased assets, net plus leased assets, net as of January 31, 2020.

Average accumulated depreciation and amortization is based on the average of accumulated depreciation and amortization, without leased assets plus accumulated amortization on leased assets as of January 31, 2020.

NP = Not provided.

Free Cash Flow Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities. We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $25.3 billion, $27.8 billion and $28.3 billion for fiscal 2020, 2019 and 2018, respectively. We generated free cash flow of $14.6 billion, $17.4 billion and $18.3 billion for fiscal 2020, 2019 and 2018, respectively. Net cash provided by operating activities for fiscal 2020 declined when compared to fiscal 2019 primarily due to the contribution to our Asda pension plan in anticipation of its future settlement, the inclusion of a full year of Flipkart operations, and the timing of vendor payments. Free cash flow for fiscal 2020 declined when compared to fiscal 2019 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.4 billion in increased capital expenditures. Net cash provided by operating activities for fiscal 2019 declined when compared to fiscal 2018 was primarily due to timing of vendor payments, partially offset by lower tax payments mainly resulting from the Tax Act and the timing of tax payments. Free cash flow for fiscal 2019 declined when compared to fiscal 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.3 billion in increased capital expenditures. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Net cash provided by operating activities $ 25,255 $ 27,753 $ 28,337 Payments for property and equipment (10,705) (10,344) (10,051) Free cash flow $ 14,550 $ 17,409 $ 18,286

Net cash used in investing activities(1) $ (9,128) $ (24,036) $ (9,079) Net cash used in financing activities (14,299) (2,537) (19,875) (1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

Results of Operations Consolidated Results of Operations

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2020 2019 2018 Total revenues $ 523,964 $ 514,405 $ 500,343 Percentage change from comparable period 1.9% 2.8% 3.0% Net sales $ 519,926 $ 510,329 $ 495,761 Percentage change from comparable period 1.9% 2.9% 3.0% Total U.S. calendar comparable sales increase 2.7% 4.0% 2.2% Gross profit rate 24.1% 24.5% 24.7% Operating income $ 20,568 $ 21,957 $ 20,437 Operating income as a percentage of net sales 4.0% 4.3% 4.1% Consolidated net income $ 15,201 $ 7,179 $ 10,523 Unit counts at period end(1) 11,501 11,361 11,718 Retail square feet at period end(1) 1,129 1,129 1,158 (1) Unit counts and associated retail square feet are presented for stores and clubs generally open as of period end. Permanently closed locations are not included.

Our total revenues, which includes net sales and membership and other income, increased $9.6 billion or 1.9% and $14.1 billion or 2.8% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. These increases in revenues were due to increases in net sales, which increased $9.6 billion or 1.9% and $14.6 billion or 2.9% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, net sales were positively impacted by overall positive comparable sales for Walmart U.S. and Sam's Club segments, along with the addition of net sales from Flipkart, which we acquired in August 2018, and positive comparable sales in the majority of our international markets. These increases were partially offset by $4.1 billion of negative impact from fluctuations in currency exchange rates in fiscal 2020 and our sale of the majority stake in Walmart Brazil in August 2018. For fiscal 2019, net sales were positively impacted by overall positive comparable sales for Walmart U.S. and Sam's Club segments, along with positive comparable sales in the majority of our International markets and net sales from Flipkart, which we acquired in the third quarter of fiscal 2019. Additionally, for fiscal 2019, the increase in net sales was partially offset by a $4.5 billion decrease in net sales due to club closures in the Sam's Club segment during fiscal 2018, a $3.1 billion reduction in net sales due to the sale of the majority stake in Walmart Brazil in the International segment, and $0.7 billion of negative impact from fluctuations in currency exchange rates. Our gross profit rate decreased 40 and 18 basis points for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, these decreases were primarily due to price investment in the Walmart U.S. segment and the addition of Flipkart in the Walmart International segment, partially offset by favorable merchandise mix including strength in private brands and less pressure from transportation costs in the Walmart U.S. segment. For fiscal 2019, the decrease was due to the mix effects from our growing eCommerce business, the acquisition of Flipkart, our planned pricing strategy and increased transportation expenses. For fiscal 2020, operating expenses as a percentage of net sales decreased 8 basis points, when compared to the same period in the previous fiscal year due to our focus on expense management combined with our growth in comparable store sales. These improvements were partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in the write down of certain assets in the Walmart U.S. and Walmart International segments. For fiscal 2019, operating expenses as a percentage of net sales decreased 48 basis points, when compared to the previous fiscal year. The primary drivers of the expense leverage were strong sales performance in conjunction with productivity improvements and lapping approximately $1.8 billion in certain charges in fiscal 2018. The improvements in fiscal 2019 were partially offset by additional investments in eCommerce and technology, as well as a $0.2 billion charge related to a securities class action lawsuit. Other gains and losses consisted of a gain of $2.0 billion for fiscal 2020 and a loss of $8.4 billion for fiscal 2019. The gain in fiscal 2020 was primarily the result of a $1.9 billion increase in the market value of our investment in JD.com. The loss in fiscal 2019 is primarily the result of the $4.8 billion pre-tax loss on the sale of the majority stake in Walmart Brazil and a $3.5 billion decrease in the market value of our investment in JD.com. Fiscal 2018 results included loss on extinguishment of debt of $3.1 billion.

Our effective income tax rate was 24.4% for fiscal 2020, 37.4% for fiscal 2019, and 30.4% for fiscal 2018. The decrease in our effective tax rate for fiscal 2020 is primarily due to the fiscal 2019 loss on sale of a majority stake in Walmart Brazil, which increased the comparative period's effective tax rate, as it provided minimal realizable tax benefit. The increase in our effective tax rate for fiscal 2019 is primarily due to the aforementioned loss on sale of a majority stake in Walmart Brazil and Flipkart's results. Additionally, our effective income tax rate may also fluctuate as a result of various factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix and size of earnings among our U.S. operations and international operations, which are subject to statutory rates that, beginning in fiscal 2019, are generally higher than the U.S. statutory rate. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2020, 2019 and 2018 is presented in Note 9 to our Notes to Consolidated Financial Statements. As a result of the factors discussed above, we reported $15.2 billion and $7.2 billion of consolidated net income for fiscal 2020 and 2019, respectively, which represents an increase of $8.0 billion and a decrease of $3.3 billion for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $5.19, $2.26 and $3.28 for fiscal 2020, 2019 and 2018, respectively.

Walmart U.S. Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2020 2019 2018 Net sales $ 341,004 $ 331,666 $ 318,477 Percentage change from comparable period 2.8% 4.1% 3.5% Calendar comparable sales increase 2.9% 3.7% 2.1% Operating income $ 17,380 $ 17,386 $ 16,995 Operating income as a percentage of net sales 5.1% 5.2% 5.3% Unit counts at period end 4,756 4,769 4,761 Retail square feet at period end 703 705 705

Net sales for the Walmart U.S. segment increased $9.3 billion or 2.8% and $13.2 billion or 4.1% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in comparable store sales of 2.9% and 3.7% for fiscal 2020 and 2019, respectively, driven by ticket and transaction growth. Walmart U.S. eCommerce sales positively contributed approximately 1.7% and 1.3% to comparable sales for fiscal 2020 and 2019. Gross profit rate decreased 14 and 28 basis points for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, the decreases were primarily the result of continued price investments which were partially offset by better merchandise mix, including strength in private brands, and less pressure from transportation costs. For fiscal 2019, the decrease was primarily due to our planned pricing strategy, increased transportation expenses, and the mix effects from our growing eCommerce business. Operating expenses as a percentage of segment net sales decreased 4 basis points for fiscal 2020 and decreased 23 basis points for fiscal 2019, when compared to the previous fiscal year. We leveraged operating expenses in fiscal 2020 as a result of strong sales and productivity improvements which were mostly offset by business restructuring charges of $0.5 billion consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology and other business restructuring charges due to decisions that resulted in the write down of certain eCommerce assets. The decrease in fiscal 2019 was primarily due to strong sales performance in conjunction with productivity improvements and the prior year comparable period including charges related to discontinued real estate projects of $0.2 billion. These improvements more than offset investments in eCommerce, technology and omni-channel initiatives and raising the starting wage rate at the beginning of fiscal 2019. As a result of the factors discussed above, segment operating income decreased $6 million and increased $391 million for fiscal 2020 and 2019, respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2020 2019 2018 Net sales $ 120,130 $ 120,824 $ 118,068 Percentage change from comparable period (0.6)% 2.3% 1.7% Operating income $ 3,370 $ 4,883 $ 5,229 Operating income as a percentage of net sales 2.8 % 4.0% 4.4% Unit counts at period end 6,146 5,993 6,360 Retail square feet at period end 345 344 373

Net sales for the Walmart International segment decreased $0.7 billion or 0.6% and increased $2.8 billion or 2.3% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, the decrease was primarily due to negative fluctuations in currency exchange rates of $4.1 billion as well as a reduction in sales due to our sale of the majority stake in Walmart Brazil in August 2018, offset by a full year of net sales from Flipkart and positive comparable sales growth in the majority of our markets. For fiscal 2019, the increase was primarily due to positive comparable sales in the majority of our markets and net sales from Flipkart, which we acquired in the third quarter of fiscal 2019. These increases were partially offset by a $3.1 billion reduction in net sales due to our sale of the majority stake in Walmart Brazil, a $0.7 billion negative impact from fluctuations in currency exchange rates, the continued wind down of our first party Brazil eCommerce operations and a reduction in net sales of $140 million due to divesting our Suburbia business in the second quarter of fiscal 2018. Gross profit rate decreased 136 and 41 basis points for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, the decrease was primarily due to Flipkart, as well as a change in merchandise mix. For fiscal 2019, the decrease was due to Flipkart and strategic price investments in certain markets. Membership and other income decreased 1.1% and 22.4% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. The decrease in fiscal 2020 was primarily due to currency while fiscal 2019 decreased due to the prior year recognition of a $387 million gain from the sale of Suburbia. Operating expenses as a percentage of segment net sales decreased 13 basis points for fiscal 2020 and 37 basis points for 2019, when compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net sales for fiscal 2020 was primarily due to positive comparable sales in the majority of our markets and cost discipline across multiple markets, partially offset by $0.4 billion in impairment charges which was due primarily to the write-off of the carrying value of one of Flipkart's two fashion trade names, Jabong.com, as a result of a strategic decision to focus our efforts on a single fashion platform in order to simplify the business and customer proposition. Fiscal 2019 decreased primarily due to impairment charges in the previous fiscal year of approximately $0.5 billion, which included charges from decisions to exit certain properties and wind down the first party Brazil eCommerce operations; this decrease in operating expenses was partially offset by the addition of operating expenses from Flipkart in fiscal 2019. As a result of the factors discussed above, segment operating income decreased $1.5 billion and $0.3 billion for fiscal 2020 and 2019, respectively.

Sam's Club Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2020 2019 2018 Including Fuel

Net sales $ 58,792 $ 57,839 $ 59,216 Percentage change from comparable period 1.6% (2.3)% 3.2% Calendar comparable sales increase 1.6% 5.4 % 2.8% Operating income $ 1,642 $ 1,520 $ 915 Operating income as a percentage of net sales 2.8% 2.6 % 1.5% Unit counts at period end 599 599 597 Retail square feet at period end 80 80 80

Excluding Fuel (1)

Net sales $ 52,792 $ 52,332 $ 54,456 Percentage change from comparable period 0.9% (3.9)% 2.2% Operating income $ 1,486 $ 1,383 $ 797 Operating income as a percentage of net sales 2.8% 2.6 % 1.5%

Net sales for the Sam's Club segment increased $1.0 billion or 1.6% for fiscal 2020 and decreased $1.4 billion or 2.3% for fiscal 2019, when compared to the previous fiscal year. For fiscal 2020, the increases were primarily due to comparable sales, including fuel, of 1.6%. Comparable sales benefited from growth in transactions and higher fuel sales, which were partially offset by lower ticket due to our decision to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed approximately 1.5% to comparable sales. For fiscal 2019, the decrease was primarily due to a $4.5 billion decrease in net sales resulting from the net closure of 63 clubs during fiscal 2018, as well as reduced tobacco sales due to our decision to remove tobacco from certain locations. These decreases were partially offset by increases in comparable sales, which were benefited by transfers of sales from our closed clubs to our existing clubs. Sam's Club eCommerce sales positively contributed approximately 0.9% to comparable sales for fiscal 2019. Additional fuel sales of $0.7 billion partially offset the decreases in net sales for fiscal 2019. Gross profit rate decreased 11 basis points for fiscal 2020 and remained relatively flat for fiscal 2019, when compared to the previous fiscal year. The gross profit rate decreased due to investments in price and higher eCommerce fulfillment costs, partially offset by reduced tobacco sales, which have lower margins. For fiscal 2019, gross profit rate was benefited by lapping the impact of markdowns to liquidate inventory related to club closures in fiscal 2018 and decreased tobacco sales in fiscal 2019. This benefit to the gross profit rate was offset by higher transportation costs and eCommerce shipping costs, investments in price and increased shrink in fiscal 2019. Membership and other income increased 4.7% and 2.6% for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, the increase was primarily due to growth in total members, which benefited from higher overall renewal rates and higher Plus Member penetration along with gains on property sales and other income. For fiscal 2019, the increase was due to an increase of 1.5% in membership income resulting from increased Plus Member penetration and gains on property sales. These increases were partially offset by lower recycling income when compared to the previous fiscal year. Operating expenses as a percentage of segment net sales decreased 19 and 99 basis points for fiscal 2020 and 2019, respectively, when compared to the previous fiscal year. For fiscal 2020, the decrease was primarily the result of lower labor-related costs and a charge of approximately $50 million related to lease exit costs in the prior comparable period. These benefits were partially offset by a reduction in sales of tobacco and a higher level of technology investment. For fiscal 2019, the decrease in operating expenses as a percentage of segment net sales was primarily due to a charge of approximately $0.6 billion in the prior year's comparable period related to club closures and discontinued real estate projects. As a result of the factors discussed above, segment operating income increased $122 million for fiscal 2020 and increased $605 million for fiscal 2019, when compared to the previous fiscal year.

Net Cash Provided by Operating Activities

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Net cash provided by operating activities $ 25,255 $ 27,753 $ 28,337

Net cash provided by operating activities was $25.3 billion, $27.8 billion and $28.3 billion for fiscal 2020, 2019 and 2018, respectively. Net cash provided by operating activities for fiscal 2020 decreased when compared to the previous fiscal year primarily due to the contribution to our Asda pension plan in anticipation of its future settlement, the inclusion of a full year of Flipkart operations, and the timing of vendor payments. The decrease in net cash provided by operating activities for fiscal 2019, when compared to the previous fiscal year, was primarily due to timing of vendor payments, partially offset by lower tax payments mainly resulting from Tax Reform and the timing of tax payments.

Cash Equivalents and Working Capital Deficit Cash and cash equivalents were $9.5 billion and $7.7 billion as of January 31, 2020 and 2019, respectively. Our working capital deficit, defined as total current assets less total current liabilities, was $16.0 billion and $15.6 billion as of January 31, 2020 and 2019, respectively. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of cash dividends and share repurchases.

We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. Additionally, from time-to-time, we repatriate earnings and related cash from jurisdictions outside of the U.S. Historically, U.S. taxes were due upon repatriation of foreign earnings. Due to the enactment of U.S. tax reform, repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. While we are awaiting anticipated technical guidance from the IRS and the U.S. Treasury department, we do not expect current local laws, other existing limitations or potential taxes on anticipated future repatriations of cash amounts held outside the U.S. to have a material effect on our overall liquidity, financial condition or results of operations. As of January 31, 2020 and 2019, cash and cash equivalents of $2.3 billion and $2.8 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions. Of the $2.3 billion as of January 31, 2020, approximately $0.6 billion can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart minority shareholders; however, this cash is expected to be utilized to fund the operations of Flipkart.

Net Cash Used in Investing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Net cash used in investing activities $ (9,128) $ (24,036) $ (9,079)

Net cash used in investing activities was $9.1 billion, $24.0 billion and $9.1 billion for fiscal 2020, 2019 and 2018, respectively, and generally consisted of payments for business acquisitions and to expand our eCommerce capabilities, invest in other technologies, remodel existing stores and club and add new stores and clubs. Net cash used in investing activities decreased $14.9 billion for fiscal 2020 when compared to the previous fiscal year primarily as a result of the $13.8 billion payment for the acquisition of Flipkart, net of cash acquired, as well as payments for other, smaller acquisitions in fiscal 2019. Net cash used in investing activities increased $15.0 billion for fiscal 2019 when compared to the previous fiscal year, primarily due to the previously mentioned fiscal 2019 acquisitions. Additionally, refer to the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure detail for fiscal 2020 and 2019.

Growth Activities For the fiscal year ending January 31, 2021 ("fiscal 2021"), we project capital expenditures will be approximately $11 billion, with a focus on store remodels and customer initiatives, eCommerce, technology, and supply chain. We also expect to add approximately 250 new stores in Walmart International, primarily in Mexico and China.

Net Cash Used in Financing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Net cash used in financing activities $ (14,299) $ (2,537) $ (19,875)

Net cash used in financing activities generally consists of transactions related to our short-term and long-term debt, financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interest shareholders are also classified as cash flows from financing activities. Fiscal 2020 net cash used in financing activities increased $11.8 billion when compared to the same period in the previous fiscal year. The increase was primarily due to the $15.9 billion of net proceeds received in the prior year from the issuance of long-term debt to fund a portion of the purchase price for Flipkart partially offset by $5.5 billion of additional long-term debt in the current year to fund general business operations. Fiscal 2019 net cash used in financing activities decreased $17.3 billion for fiscal 2019 when compared to the same period in the previous fiscal year. The decrease was primarily due to the $15.9 billion of net proceeds received from the issuance of long-term debt to fund a portion of the purchase price for Flipkart and for general corporate purposes, as well as a decrease in share repurchases due to the suspension of repurchases in anticipation of the Flipkart announcement.

Short-term Borrowings Net cash flows used in short-term borrowings increased in fiscal 2020 and were relatively flat in fiscal 2019. We generally utilize the liquidity provided by short- term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. For fiscal 2020, the additional cash used in short-term borrowings was primarily due to long-term debt issuances being used to pay down short-term borrowings. The following table includes additional information related to the Company's short-term borrowings for fiscal 2020, 2019 and 2018:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Maximum amount outstanding at any month-end $ 13,315 $ 13,389 $ 11,386 Average daily short-term borrowings 7,120 10,625 8,131 Annual weighted-average interest rate 2.5% 2.4% 1.3%

In addition to our short-term borrowings, we have $15.0 billion of various undrawn committed lines of credit in the U.S. and approximately $2.9 billion of various undrawn committed lines of credit outside of the U.S., as of January 31, 2020, that provide additional liquidity, if needed.

Long-term Debt The following table provides the changes in our long-term debt for fiscal 2020:

(Amounts in millions) Long-term debt due

within one year Long-term debt Total Balances as of February 1, 2019 $ 1,876 $ 43,520 $ 45,396 Proceeds from issuance of long-term debt — 5,492 5,492 Payments of long-term debt (1,907) — (1,907) Reclassifications of long-term debt 5,378 (5,378) —

Other 15 80 95 Balances as of January 31, 2020 $ 5,362 $ 43,714 $ 49,076

Our total long-term debt increased $3.7 billion for fiscal 2020, primarily due to the net proceeds from issuance of long-term debt in both April 2019 and September 2019 to fund general business operations, partially offset by repayments of long-term debt.

Dividends Our total dividend payments were $6.0 billion, $6.1 billion and $6.1 billion for fiscal 2020, 2019 and 2018, respectively. The Board of Directors approved, effective February 18, 2020, the fiscal 2021 annual dividend of $2.16 per share, an increase over the fiscal 2020 annual dividend of $2.12 per share. For fiscal 2021, the annual dividend will be paid in four quarterly installments of $0.54 per share, according to the following record and payable dates:

Record Date Payable Date March 20, 2020 April 6, 2020 May 8, 2020 June 1, 2020 August 14, 2020 September 8, 2020 December 11, 2020 January 4, 2021

Company Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2020 were made under the current $20 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2020, authorization for $5.7 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded through the Company's free cash flow. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2020, 2019 and 2018:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Total number of shares repurchased 53.9 79.5 104.9 Average price paid per share $ 105.98 $ 93.18 $ 79.11 Total amount paid for share repurchases $ 5,717 $ 7,410 $ 8,296

Capital Resources

We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. As of January 31, 2020, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

Rating agency Commercial paper Long-term debt Standard & Poor's A-1+ AA Moody's Investors Service P-1 Aa2 Fitch Ratings F1+ AA

Payments Due During Fiscal Years Ending January 31, (Amounts in millions) Total 2021 2022-2023 2024-2025 Thereafter Recorded contractual obligations(3):

Long-term debt(1) $ 49,180 $ 5,362 $ 5,839 $ 9,019 $ 28,960 Short-term borrowings 575 575 — — — Operating lease obligations(2) 26,257 2,587 4,496 3,660 15,514 Finance lease obligations and other(2)(3) 10,254 1,000 1,729 1,298 6,227

Unrecorded contractual obligations: Estimated interest on long-term debt 22,957 1,780 3,268 2,872 15,037 Syndicated and other letters of credit 1,987 1,987 — — — Purchase obligations 12,782 5,912 4,318 1,480 1,072

Total contractual obligations $ 123,992 $ 19,203 $ 19,650 $ 18,329 $ 66,810

(1) Long-term debt includes the fair value of our derivatives designated as fair value hedges. (2) Represents our contractual obligations to make future payments under non-cancelable operating leases and finance lease agreements, both of which are recorded on the balance sheet at

Under the terms of the sale of the majority stake of Walmart Brazil, we agreed to indemnify Advent for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian interbank deposit rate. As of January 31, 2020, the indemnification liability recorded was $0.7 billion and included in deferred income taxes and other in the Company's Consolidated Balance Sheet.

Additionally, we have $15.0 billion of various undrawn committed lines of credit in the U.S. and approximately $2.9 billion of various undrawn committed lines of credit outside of the U.S. which, if drawn upon, would be included in the current liabilities section of the Company's Consolidated Balance Sheets. Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding as of January 31, 2020, and assumes interest rates remain at current levels for our variable rate debt. Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts. For the purposes of the above table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not include a fixed or minimum quantity, are excluded from the table above. Accordingly, purchase orders for inventory are not included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time

periods. We also enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for cancellation without significant penalty. The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations. In addition to the amounts shown in the table above, $1.8 billion of unrecognized tax benefits are considered uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.

Off Balance Sheet Arrangements As of January 31, 2020, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Other Matters

We discuss our recently resolved FCPA investigation in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We discuss our "Asda Equal Value Claims" which includes certain existing employment claims against our United Kingdom subsidiary, ASDA Stores, Ltd., including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss the National Prescription Opiate Litigation and related matters including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss various legal proceedings related to the Asda Equal Value Claims and National Prescription Opiate Litigation in Part I, Item 3 herein under the caption "Legal Proceedings." The foregoing matters and other matters described elsewhere in this Annual Report on Form 10-K represent contingencies of the Company that may or may not result in the Company incurring a material liability upon their final resolution.

Inventories

We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a decrease to the carrying value of inventory. As of January 31, 2020 and 2019, our inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

immaterial. As a measure of sensitivity, fiscal 2020 impairment would not change materially with a 10% decrease in the undiscounted cash flows for the stores or clubs with indicators of impairment. While fiscal 2019 included a pre-tax loss of $4.8 billion related to the sale of the majority stake in Walmart Brazil, which included full impairment of all related-assets, there were no other material impairment charges for fiscal 2019.

Business Combinations, Goodwill, and Acquired Intangible Assets

We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques when market value is not readily available. For intangible assets acquired in a business combination, we typically use the income method. Significant estimates in valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2020, our reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units have generated sufficient returns to recover the cost of goodwill, as the fair value significantly exceeded the carrying value. Our indefinite-lived acquired intangible assets have also historically generated sufficient returns to recover their cost; however, due to certain strategic restructuring decisions in fiscal 2020, we recorded approximately $0.7 billion in impairment related to acquired trade names and acquired developed software. Because of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be materially impacted.

Contingencies

We are involved in a number of legal proceedings. We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We also perform an assessment of the materiality of loss contingencies where a loss is either not probable or it is reasonably possible that a loss could be incurred in excess of amounts accrued. If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, we provide disclosure of the loss contingency in the footnotes to our financial statements. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the loss can be made. Although we are not able to predict the outcome or reasonably estimate a range of possible losses in certain matters described in Note 10 in the Notes to our Consolidated Financial Statements, and have not recorded an associated accrual related to these matters, an adverse judgment or negotiated resolution in any of these matters could have a material adverse effect on our business, financial position, results of operations or cash flows.

operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies on estimates. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S. income tax law. Effective beginning January 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on foreign-sourced earnings and related-party payments. As discussed in Note 9 to our Consolidated Financial Statements, we completed our accounting for the tax effects of the Tax Act in fiscal 2019. As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard–setting bodies, any resulting changes to our estimates will be treated in accordance with the relevant accounting guidance.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt. We hedge a portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2020, the net fair value of our interest rate swaps increased $175 million primarily due to fluctuations in market interest rates. The table below provides information about our financial instruments that are sensitive to changes in interest rates. For long-term debt, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing market rates as of January 31, 2020.

Expected Maturity Date (Amounts in millions) Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Fiscal 2025 Thereafter Total Liabilities

Short-term borrowings: Variable rate $ 575 $ — $ — $ — $ — $ — $ 575 Weighted-average interest rate 5.0% —% —% —% —% —% 5.0%

Long-term debt(1): Fixed rate $ 4,612 $ 2,366 $ 2,802 $ 4,670 $ 4,400 $ 28,726 $ 47,576 Weighted-average interest rate 2.8% 3.8% 1.7% 3.2% 2.7% 4.4% 3.8% Variable rate $ 750 $ 750 $ — $ — $ — $ — $ 1,500 Weighted-average interest rate 2.0% 2.2% —% —% —% —% 2.1%

Interest rate derivatives Interest rate swaps:

Fixed to variable $ 750 $ — $ — $ 1,750 $ 1,500 $ — $ 4,000 Weighted-average pay rate 3.2% —% —% 2.2% 2.8% —% 2.6% Weighted-average receive rate 3.3% —% —% 2.6% 3.3% —% 3.0%

(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.

As of January 31, 2020, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 12% of our total short-term and long-term debt. Based on January 31, 2020 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $61 million.

Foreign Currency Risk We are exposed to fluctuations in currency exchange rates as a result of our net investments and operations in countries other than the U.S, as well our foreign- currency-denominated long-term debt. For fiscal 2020, movements in currency exchange rates and the related impact on the translation of the balance sheets of the Company's subsidiaries in the UK and Mexico were the primary cause of the $0.3 billion gain in the currency translation and other category of accumulated other comprehensive loss. We hedge a portion of our foreign currency risk by entering into currency swaps. The aggregate fair value of these swaps was in a liability position of $241 million and asset position of $62 million as of January 31, 2020 and January 31, 2019, respectively. The change in the fair value of these swaps was due to fluctuations in currency exchange rates, primarily the strengthening of the U.S. dollar relative to other currencies in fiscal 2020. The hypothetical result of a uniform 10% weakening in the value of the U.S. dollar relative to other currencies underlying these swaps would have resulted in a change in the value of the swaps of $173 million. A hypothetical 10% change in interest rates underlying these swaps from the market rates in effect as of January 31, 2020 would have resulted in a change in the value of the swaps of $42 million. In addition to currency swaps, we also hedge a portion of our foreign currency risk by designating foreign-currency-denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion as of January 31, 2020 and January 31, 2019 that was designated as a hedge of our net investment in the UK. As of January 31, 2020, a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted in a change in the value of the debt of $201 million. In addition, we had outstanding long-term debt of ¥180 billion as of January 31, 2020 and January 31, 2019 that was designated as a hedge of our net investment in Japan. As of January 31, 2020, a hypothetical 10% change in value of the U.S. dollar relative to the Japanese yen would have resulted in a change in the value of the debt of $150 million. In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of purchase commitments denominated in non-functional currencies.

Investment Risk

We are exposed to changes in the JD.com ("JD") stock price as a result of our equity investment in JD. The change in fair value is recorded within other gains and losses resulted in a gain of $1.9 billion in fiscal 2020 due to an increase in the stock price of JD. As of January 31, 2020, the fair value of our equity investment in JD was $5.4 billion. As of January 31, 2020, a hypothetical 10% change in the stock price of JD would have changed our investment in JD by approximately $550 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of Walmart Inc. For the Fiscal Year Ended January 31, 2020

Table of Contents

Page Report of Independent Registered Public Accounting Firm 47 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 49 Consolidated Statements of Income 50 Consolidated Statements of Comprehensive Income 51 Consolidated Balance Sheets 52 Consolidated Statements of Shareholders' Equity 53 Consolidated Statements of Cash Flows 54 Notes to Consolidated Financial Statements 55

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2020, and the related notes (collectively referred to as the "Consolidated Financial Statements"). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at January 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 20, 2020 expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-02

As discussed in Note 1 to the Consolidated Financial Statements, the Company changed its method of accounting for leases effective February 1, 2019, due to the adoption of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842).

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Contingencies

Description of the Matter

As described in Note 10 to the Consolidated Financial Statements, at January 31, 2020, the Company is involved in a number of legal proceedings and has made accruals with respect to certain of these matters. For other matters, a liability is not probable, or the amount cannot be reasonably estimated and therefore an accrual has not been made. Where a liability is reasonably possible and may be material, such matters have been disclosed. Management assessed the probability of occurrence and the estimation of any potential loss based on the ability to predict the number of claims that may be filed or whether any loss or range of loss can be reasonably estimated. For example, in assessing the probability of occurrence in a particular legal proceeding, management exercises judgment to determine if it can predict the number of claims that may be filed and whether it can reasonably estimate any loss or range of loss that may arise from that proceeding.

Auditing management’s accounting for, and disclosure of, loss contingencies was complex and highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of occurrence or when determining whether an estimate of the loss or range of loss could be made.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of contingencies. For example, we tested controls over the Company’s assessment of the likelihood of loss and the Company’s determinations regarding the measurement of loss.

To test the Company’s assessment of the probability of occurrence or determination of an estimate of loss, or range of loss, among other procedures, we read the minutes of the meetings of the board of directors and committees of the board of directors, reviewed opinions provided to the Company by certain outside legal counsel, read letters received directly by us from internal and external counsel, and evaluated the current status of contingencies based on discussions with internal legal counsel. We also evaluated the appropriateness of the related disclosures.

Valuation of Indefinite-Lived Intangible Assets

Description of the Matter

At January 31, 2020, the Company has $5.2 billion of indefinite-lived intangible assets. As disclosed in Notes 1, 8 and 12 to the Consolidated Financial Statements, these assets are evaluated for impairment at least annually using valuation techniques to estimate fair value. These fair value estimates are sensitive to certain significant assumptions including revenue growth rates, discount rates, and royalty rates.

Auditing management’s annual indefinite-lived intangible assets impairment tests was complex and highly judgmental due to the significant measurement uncertainty in determining the fair values of the indefinite-lived intangibles. For example, the fair value estimates are sensitive to significant assumptions identified above that are affected by future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s indefinite- lived intangible asset impairment review process. Our procedures included testing controls over management’s review of the significant assumptions described above used to estimate the fair values of the indefinite-lived intangible assets.

To test the estimated fair values of the indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing methodologies used to determine the fair value, testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company. For example, we evaluated management’s forecasted revenue growth rates used in the fair value estimates by comparing those assumptions to the historical results of the Company and current industry, market and economic forecasts. We involved a valuation specialist to assist in evaluating the valuation methodologies and the significant assumptions such as discount rates and royalty rates. Additionally, we performed sensitivity analyses of significant assumptions to evaluate the effect on the fair value estimates of the indefinite-lived intangible assets.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1969.

Rogers, Arkansas March 20, 2020

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on Internal Control over Financial Reporting We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2020, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2020, and the related notes and our report dated March 20, 2020 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Rogers, Arkansas March 20, 2020

Walmart Inc. Consolidated Statements of Income

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Revenues:

Net sales $ 519,926 $ 510,329 $ 495,761 Membership and other income 4,038 4,076 4,582

Total revenues 523,964 514,405 500,343 Costs and expenses:

Cost of sales 394,605 385,301 373,396 Operating, selling, general and administrative expenses 108,791 107,147 106,510

Operating income 20,568 21,957 20,437 Interest:

Debt 2,262 1,975 1,978 Finance, capital lease and financing obligations 337 371 352 Interest income (189) (217) (152)

Interest, net 2,410 2,129 2,178 Loss on extinguishment of debt — — 3,136 Other (gains) and losses (1,958) 8,368 — Income before income taxes 20,116 11,460 15,123 Provision for income taxes 4,915 4,281 4,600 Consolidated net income 15,201 7,179 10,523 Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart $ 14,881 $ 6,670 $ 9,862

Net income per common share:

Basic net income per common share attributable to Walmart $ 5.22 $ 2.28 $ 3.29 Diluted net income per common share attributable to Walmart 5.19 2.26 3.28

Weighted-average common shares outstanding:

Basic 2,850 2,929 2,995 Diluted 2,868 2,945 3,010

Dividends declared per common share $ 2.12 $ 2.08 $ 2.04

See accompanying notes.

Walmart Inc. Consolidated Statements of Comprehensive Income

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Consolidated net income $ 15,201 $ 7,179 $ 10,523

Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart 14,881 6,670 9,862 Other comprehensive income (loss), net of income taxes

Currency translation and other 286 (226) 2,540 Net investment hedges 122 272 (405) Cash flow hedges (399) (290) 437 Minimum pension liability (1,244) 131 147 Unrealized gain on available-for-sale securities — — 1,501

Other comprehensive income (loss), net of income taxes (1,235) (113) 4,220 Other comprehensive (income) loss attributable to noncontrolling interest (28) 188 (169)

Other comprehensive income (loss) attributable to Walmart (1,263) 75 4,051 Comprehensive income, net of income taxes 13,966 7,066 14,743

Comprehensive income attributable to noncontrolling interest (348) (321) (830) Comprehensive income attributable to Walmart $ 13,618 $ 6,745 $ 13,913

See accompanying notes.

Walmart Inc. Consolidated Balance Sheets

As of January 31, (Amounts in millions) 2020 2019 ASSETS Current assets:

Cash and cash equivalents $ 9,465 $ 7,722 Receivables, net 6,284 6,283 Inventories 44,435 44,269 Prepaid expenses and other 1,622 3,623

Total current assets 61,806 61,897 Property and equipment, net 105,208 104,317 Operating lease right-of-use assets 17,424 — Finance lease right-of-use assets, net 4,417 — Property under capital lease and financing obligations, net — 7,078 Goodwill 31,073 31,181 Other long-term assets 16,567 14,822 Total assets $ 236,495 $ 219,295

LIABILITIES AND EQUITY Current liabilities:

Short-term borrowings $ 575 $ 5,225 Accounts payable 46,973 47,060 Accrued liabilities 22,296 22,159 Accrued income taxes 280 428 Long-term debt due within one year 5,362 1,876 Operating lease obligations due within one year 1,793 — Finance lease obligations due within one year 511 — Capital lease and financing obligations due within one year — 729

Total current liabilities 77,790 77,477 Long-term debt 43,714 43,520 Long-term operating lease obligations 16,171 — Long-term finance lease obligations 4,307 — Long-term capital lease and financing obligations — 6,683 Deferred income taxes and other 12,961 11,981 Commitments and contingencies Equity:

Common stock 284 288 Capital in excess of par value 3,247 2,965 Retained earnings 83,943 80,785 Accumulated other comprehensive loss (12,805) (11,542)

Total Walmart shareholders' equity 74,669 72,496 Noncontrolling interest 6,883 7,138

Total equity 81,552 79,634 Total liabilities and equity $ 236,495 $ 219,295

See accompanying notes.

Walmart Inc. Consolidated Statements of Shareholders' Equity

Accumulated Total Capital in Other Walmart

(Amounts in millions)

Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity

Balances as of February 1, 2017 3,048 $ 305 $ 2,371 $ 89,354 $ (14,232) $ 77,798 $ 2,737 $ 80,535 Consolidated net income — — — 9,862 — 9,862 661 10,523 Other comprehensive income (loss), net of income taxes — — — — 4,051 4,051 169 4,220 Cash dividends declared ($2.04 per share) — — — (6,124) — (6,124) — (6,124) Purchase of Company stock (103) (10) (219) (7,975) — (8,204) — (8,204) Cash dividend declared to noncontrolling interest — — — — — — (687) (687) Other 7 — 496 (10) — 486 73 559 Balances as of January 31, 2018 2,952 295 2,648 85,107 (10,181) 77,869 2,953 80,822 Adoption of new accounting standards on February 1, 2018, net of income taxes —

—

2,361

(1,436)

925

(1)

924

Consolidated net income — — — 6,670 — 6,670 509 7,179 Other comprehensive income (loss), net of income taxes — — — — 75 75 (188) (113) Cash dividends declared ($2.08 per share) — — — (6,102) — (6,102) — (6,102) Purchase of Company stock (80) (8) (245) (7,234) — (7,487) — (7,487) Cash dividend declared to noncontrolling interest — — — — — — (488) (488) Noncontrolling interest of acquired entity — — — — — — 4,345 4,345 Other 6 1 562 (17) — 546 8 554 Balances as of January 31, 2019 2,878 288 2,965 80,785 (11,542) 72,496 7,138 79,634 Adoption of new accounting standards on February 1, 2019, net of income taxes —

—

(266)

—

(266)

(34)

(300)

See accompanying notes.

Walmart Inc. Consolidated Statements of Cash Flows

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Cash flows from operating activities:

Consolidated net income $ 15,201 $ 7,179 $ 10,523 Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization 10,987 10,678 10,529 Unrealized (gains) and losses (1,886) 3,516 — (Gains) and losses for disposal of business operations 15 4,850 — Asda pension contribution (1,036) — — Deferred income taxes 320 (499) (304) Loss on extinguishment of debt — — 3,136 Other operating activities 1,981 1,734 1,210 Changes in certain assets and liabilities, net of effects of acquisitions:

Receivables, net 154 (368) (1,074) Inventories (300) (1,311) (140) Accounts payable (274) 1,831 4,086 Accrued liabilities 186 183 928 Accrued income taxes (93) (40) (557)

Net cash provided by operating activities 25,255 27,753 28,337 Cash flows from investing activities:

Payments for property and equipment (10,705) (10,344) (10,051) Proceeds from the disposal of property and equipment 321 519 378 Proceeds from the disposal of certain operations 833 876 1,046 Payments for business acquisitions, net of cash acquired (56) (14,656) (375) Other investing activities 479 (431) (77)

Net cash used in investing activities (9,128) (24,036) (9,079) Cash flows from financing activities:

Net change in short-term borrowings (4,656) (53) 4,148 Proceeds from issuance of long-term debt 5,492 15,872 7,476 Repayments of long-term debt (1,907) (3,784) (13,061) Premiums paid to extinguish debt — — (3,059) Dividends paid (6,048) (6,102) (6,124) Purchase of Company stock (5,717) (7,410) (8,296) Dividends paid to noncontrolling interest (555) (431) (690) Purchase of noncontrolling interest — — (8) Other financing activities (908) (629) (261)

Net cash used in financing activities (14,299) (2,537) (19,875) Effect of exchange rates on cash, cash equivalents and restricted cash (69) (438) 487 Net increase (decrease) in cash, cash equivalents and restricted cash 1,759 742 (130) Cash, cash equivalents and restricted cash at beginning of year 7,756 7,014 7,144 Cash, cash equivalents and restricted cash at end of year $ 9,515 $ 7,756 $ 7,014

Supplemental disclosure of cash flow information: Income taxes paid $ 3,616 $ 3,982 $ 6,179 Interest paid 2,464 2,348 2,450

See accompanying notes.

Walmart Inc. Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies General Walmart Inc. ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers. Each week, the Company serves over 265 million customers who visit approximately 11,500 stores and numerous eCommerce websites under 56 banners in 27 countries. The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.

Principles of Consolidation The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2020 ("fiscal 2020"), January 31, 2019 ("fiscal 2019") and January 31, 2018 ("fiscal 2018"). Intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. These variable interest entities and equity method investments are immaterial to the Company's Consolidated Financial Statements. The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of January 2020 related to the operations consolidated using a lag that materially affected the Consolidated Financial Statements.

Receivables Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following: customers, which also includes insurance companies resulting from pharmacy sales, banks for customer credit, debit cards and electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs; governments for income taxes; and real estate transactions. As of January 31, 2020 and January 31, 2019, receivables from transactions with customers, net were $2.9 billion and $2.5 billion, respectively.

Inventories

The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for the Walmart U.S. segment's inventories. The inventory for the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. As of January 31, 2020 and January 31, 2019, the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

Assets Held for Sale Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. The Company reviews all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. As of January 31, 2020 and January 31, 2019, immaterial amounts for assets and liabilities held for sale were classified in prepaid expenses and other and accrued liabilities, respectively, in the Consolidated Balance Sheets.

As of January 31, (Amounts in millions) Estimated Useful Lives 2020 2019 Land N/A $ 24,619 $ 24,526 Buildings and improvements 3-40 years 105,674 101,006 Fixtures and equipment 1-30 years 58,607 54,488 Transportation equipment 3-15 years 2,377 2,316 Construction in progress N/A 3,751 3,474 Property and equipment 195,028 185,810 Accumulated depreciation (89,820) (81,493) Property and equipment, net $ 105,208 $ 104,317

Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under finance leases and financing obligations, property under capital leases and intangible assets for fiscal 2020, 2019 and 2018 was $11.0 billion, $10.7 billion and $10.5 billion, respectively.

Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded on the balance sheet. The Company adopted this ASU and related amendments as of February 1, 2019 under the modified retrospective approach and elected certain practical expedients permitted under the transition guidance, including to retain the historical lease classification as well as relief from reviewing expired or existing contracts to determine if they contain leases. For leases subject to index or rate adjustments, the most current index or rate adjustments were included in the measurement of operating lease obligations at adoption. The adoption of this ASU and related amendments resulted in a $14.8 billion increase to total assets and a $15.1 billion increase to total liabilities in the first quarter of fiscal 2020. In the first quarter of fiscal 2020, the Company recognized $16.8 billion and $17.5 billion of operating lease right-of-use assets and operating lease obligations, respectively, and removed $2.2 billion and $1.7 billion, respectively, of assets and liabilities related to financial obligations connected with the construction of leased stores. Several other asset and liability line items in the Company's Consolidated Balance Sheet were also impacted by immaterial amounts. Additionally, the adoption resulted in a cumulative-effect adjustment to retained earnings of approximately $0.3 billion, net of tax, which primarily consisted of the recognition of impairment. The Company’s Consolidated Statement of Income and Consolidated Statement of Cash Flows were immaterially impacted. Accounting policies as a result of the adoption of this ASU are described below. Refer to Note 7 for additional lease disclosures. For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a lease. The Company records right-of- use ("ROU") assets and lease obligations for its finance and operating leases, which are

initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less. For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components. For leases in which the lease and non- lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance.

Impairment of Long-Lived Assets Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows, which is at the individual store or club level. Undiscounted cash flows expected to be generated by the related assets are estimated over the assets' useful lives based on updated projections. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.

Goodwill and Other Acquired Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2020, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair value of each reporting unit is significantly greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill. The following table reflects goodwill activity, by reportable segment, for fiscal 2020 and 2019:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Total Balances as of February 1, 2018 $ 2,445 $ 15,484 $ 313 $ 18,242 Changes in currency translation and other — (743) — (743) Acquisitions (1) 107 13,575 — 13,682 Balances as of January 31, 2019 2,552 28,316 313 31,181 Changes in currency translation and other — (149) — (149) Acquisitions 41 — — 41 Balances as of January 31, 2020 $ 2,593 $ 28,167 $ 313 $ 31,073

(1) Goodwill recorded in fiscal 2019 for Walmart International relates to Flipkart.

Intangible assets are included in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2020 and 2019, the Company had $5.2 billion and $5.8 billion, respectively, in indefinite-lived intangible assets which is primarily made up of acquired trade names. Refer to Note 12 for additional information related to acquired intangible assets for the Flipkart acquisition. During fiscal 2020, the Company incurred approximately $0.7 billion in impairment charges related to its intangible assets. There were no significant impairment charges related to intangible assets for fiscal 2019 and 2018. Refer to Note 8 for additional information.

Fair Value Measurement

In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-01, Financial Instruments– Overall (Topic 825), which updated certain aspects of recognition, measurement, presentation and disclosure of financial instruments ("ASU 2016-01"). The Company adopted this ASU on February 1, 2018, which primarily impacted the Company's accounting for its investment in JD.com, Inc. ("JD") and resulted in a positive adjustment to retained earnings of approximately $2.6 billion, net of tax, in fiscal 2019 based on the market value of the Company's investment in JD as of January 31, 2018. The adoption required prospective changes in fair value of the Company's investment in JD to be recorded in the Consolidated Statement of Income, which the Company classifies in other gains and losses.

Self Insurance Reserves The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.

Derivatives The Company uses derivatives for hedging purposes to manage its exposure to changes in interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivatives in hedging programs subjects the Company to certain risks, such as market and credit risks. The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty. The Company enters into derivatives with counterparties rated only "A-" or better by nationally recognized credit rating agencies. The Company is subject to master netting arrangements which provides set-off and close out netting of exposures with counterparties, but the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. The Company’s collateral arrangements requires the counterparty in a net liability position in excess of pre-determined thresholds, after considering the effects of netting arrangements, to pledge cash collateral. Cash collateral received under these arrangements was not significant as of January 31, 2020 and 2019. The Company was not required to provide any cash collateral to counterparties as of January 31, 2020 and 2019. In order to qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. If a derivative is recorded using hedge accounting, depending on the nature of the hedge, derivative gains and losses are recorded through the same financial statement line item in earnings or are recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Derivatives that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings. Derivatives with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and derivatives with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 8 for the presentation of the Company's derivative assets and liabilities.

Fair Value Hedges The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value of fixed-rate debt. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of these interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. These derivatives will mature on dates ranging from October 2020 to April 2024.

reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives will mature on dates ranging from April 2022 to March 2034.

Net Investment Hedges The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure associated with net investments of certain of its foreign operations. The Company records changes in fair value attributable to the hedged risk in accumulated other comprehensive loss. These derivatives will mature on dates ranging from July 2020 to February 2030. The Company also designated certain foreign currency denominated long-term debt as a hedge of currency exposure associated with the net investment of these operations. The Company records foreign currency gain or loss associated with designated long-term debt in accumulated other comprehensive loss. As of January 31, 2020 and 2019, the Company had $3.9 billion, respectively, of outstanding long-term debt designated as net investment hedges.

These derivative and non-derivative gains or losses continue to defer in accumulated other comprehensive loss until the sale or substantial liquidation of these foreign operations.

Income Taxes

Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely on estimates. The Tax Cuts and Jobs Act contains a provision which subjects a U.S. parent of a foreign subsidiary to current U.S. tax on its global intangible low–taxed income (“GILTI”). The GILTI income is eligible for a deduction, which lowers the effective tax rate to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. The Company will report the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis differences expected to reverse as GILTI. In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures.

Revenue Recognition

Net Sales The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise or services to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Estimated sales returns are calculated based on expected returns.

Membership Fee Revenue The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. Membership fee revenue was $1.5 billion for fiscal 2020 and $1.4 billion for each of fiscal 2019 and 2018, respectively. Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. Deferred membership fee revenue is included in accrued liabilities in the Company's Consolidated Balance Sheets.

can redeem their gift cards for merchandise and services indefinitely. Gift cards in some countries where the Company does business have expiration dates. While gift cards are generally redeemed within 12 months, a certain number of gift cards, both with and without expiration dates, will not be fully redeemed. Management estimates unredeemed balances and recognizes revenue for these amounts in membership and other income in the Company's Consolidated Statements of Income over the expected redemption period.

Advertising Costs Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.7 billion, $3.5 billion and $3.1 billion for fiscal 2020, 2019 and 2018, respectively.

Recent Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326), which modifies the measurement of expected credit losses of certain financial instruments. The Company adopted this ASU on February 1, 2020 with no material impact to the Company's Consolidated Financial Statements.

Note 2. Net Income Per Common Share Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net income per common share attributable to Walmart for fiscal 2020, 2019 and 2018.

The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Numerator

Consolidated net income $ 15,201 $ 7,179 $ 10,523 Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart $ 14,881 $ 6,670 $ 9,862

Denominator

Weighted-average common shares outstanding, basic 2,850 2,929 2,995 Dilutive impact of stock options and other share-based awards 18 16 15 Weighted-average common shares outstanding, diluted 2,868 2,945 3,010

Net income per common share attributable to Walmart

Basic $ 5.22 $ 2.28 $ 3.29 Diluted 5.19 2.26 3.28

Note 3. Shareholders' Equity The total authorized shares of $0.10 par value common stock is 11.0 billion, of which 2.8 billion and 2.9 billion were issued and outstanding as of January 31, 2020 and 2019, respectively. Share-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's consolidated subsidiaries granted in the subsidiaries' respective stock, was $854 million, $773 million and $626 million for fiscal 2020, 2019 and 2018, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $202 million, $181 million and $150 million for fiscal 2020, 2019 and 2018, respectively. The following table summarizes the Company's share-based compensation expense by award type for all plans:

Fiscal Years Ended January 31,

(Amounts in millions) 2020 2019 2018 Restricted stock and performance share units $ 270 $ 293 $ 234 Restricted stock units 553 456 368 Other 31 24 24 Share-based compensation expense $ 854 $ 773 $ 626

• Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance share units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance share units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance share units in fiscal 2020, 2019 and 2018 was 5.1%, 6.2% and 7.2%, respectively.

• Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period. Beginning in fiscal 2020, restricted stock units generally vest at a rate of 25% each year over a four year period from the date of the grant. Prior to fiscal 2020, 50% of restricted stock units generally vested three years from the grant date and the remaining 50% were vested five years from the grant date. The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected dividend yield is based on the anticipated

dividends over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2020, 2019 and 2018 was 4.9%, 7.2% and 9.0%, respectively.

In addition to the Plan, the Company's United Kingdom subsidiary has stock option plans for certain colleagues which generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table above. Flipkart also maintains a stock option plan primarily for the benefit of employees and nonemployee directors under which options to acquire Flipkart common shares may be issued. The grants have no exercise price and no compensation expense was recognized during fiscal 2020 or fiscal 2019 where a performance condition was not deemed probable of occurring. The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2020:

Restricted Stock and Performance Share Units Restricted Stock Units

(Shares in thousands) Shares Weighted-Average Grant- Date Fair Value Per Share Shares

Weighted-Average Grant- Date Fair Value Per Share

Outstanding as of February 1, 2019 8,799 $ 75.39 23,955 $ 70.47 Granted 3,354 100.38 8,504 95.92 Adjustment for performance achievement(1) 898 64.50 — — Vested/exercised (5,365) 67.96 (6,496) 68.13 Forfeited (1,641) 82.77 (2,702) 78.86

Outstanding as of January 31, 2020 6,045 $ 93.04 23,261 $ 79.51

(1) Represents the adjustment to previously granted performance share units for performance achievement.

The following table includes additional information related to restricted stock and performance share units and restricted stock units:

Fiscal Years Ended January 31, (Amounts in millions, except years) 2020 2019 2018 Fair value of restricted stock and performance share units vested $ 365 $ 183 $ 181 Fair value of restricted stock units vested 442 386 344 Unrecognized compensation cost for restricted stock and performance share units 326 362 291 Unrecognized compensation cost for restricted stock units 1,096 1,002 972 Weighted average remaining period to expense for restricted stock and performance share units (years) 1.4 1.1 1.2 Weighted average remaining period to expense for restricted stock units (years) 1.3 1.6 1.8

Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2020 were made under the current $20.0 billion share repurchase program approved in October 2017, which has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. As of January 31, 2020, authorization for 5.7 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations and the market price of the Company's common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2020, 2019 and 2018:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Total number of shares repurchased 53.9 79.5 104.9 Average price paid per share $ 105.98 $ 93.18 $ 79.11 Total cash paid for share repurchases $ 5,717 $ 7,410 $ 8,296

Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2020, 2019, and 2018:

(Amounts in millions and net of immaterial income taxes)

Currency Translation and Other

Net Investment Hedges

Unrealized Gain on Available-for-Sale

Securities Cash Flow

Hedges Minimum

Pension Liability Total Balances as of February 1, 2017 $ (14,507) $ 1,435 $ 145 $ (315) $ (990) $ (14,232) Other comprehensive income (loss) before reclassifications, net 2,345 (405) 1,501 436 83 3,960

Amounts reclassified from accumulated other comprehensive loss, net 26 — — 1 64 91

Balances as of January 31, 2018 (12,136) 1,030 1,646 122 (843) (10,181) Adoption of new accounting standards on February 1, 2018(1) 89 93 (1,646) 28 — (1,436) Other comprehensive income (loss) before reclassifications, net (2,093) 272 — (339) 93 (2,067)

Reclassifications to income, net(2) 2,055 — — 49 38 2,142 Balances as of January 31, 2019 (12,085) 1,395 — (140) (712) (11,542) Other comprehensive income (loss) before reclassifications, net(3) 281 122 — (399) (1,283) (1,279)

Reclassifications to income, net (23) — — — 39 16 Balances as of January 31, 2020 $ (11,827) $ 1,517 $ — $ (539) $ (1,956) $ (12,805)

(1) Primarily relates to the adoption of ASU 2016-01 and ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

(2) Includes a cumulative foreign currency translation loss of $2.0 billion, for which there was no related income taxes, upon sale of the majority stake in Walmart Brazil (see Note 12).

(3) Primarily includes the remeasurement of Asda's pension benefit obligation subsequent to the cash contribution made by Asda, as described more fully in Note 11.

Amounts reclassified from accumulated other comprehensive loss for derivatives are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business, are recorded in other gains and losses in the Company's Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant.

Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following as of January 31, 2020 and 2019:

January 31, (Amounts in millions) 2020 2019 Accrued wages and benefits(1) $ 6,093 $ 6,504

Self-insurance(2) 4,469 3,979

Accrued non-income taxes(3) 3,039 2,979

Deferred gift card revenue 1,990 1,932

Other(4) 6,705 6,765 Total accrued liabilities $ 22,296 $ 22,159

(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans. (2) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. (3) Accrued non-income taxes include accrued payroll, property, value-added, sales and miscellaneous other taxes. (4) Other accrued liabilities consist of various items such as interest, maintenance, utilities, legal contingencies, and advertising.

Note 6. Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2020 and 2019 were $0.6 billion and $5.2 billion, respectively, with weighted-average interest rates of 5.0% and 2.7%, respectively. Short-term borrowings as of January 31, 2020 were primarily outside of the U.S. The Company has various committed lines of credit in the U.S. totaling $15.0 billion as of January 31, 2020 and 2019, respectively. These committed lines of credit are summarized in the following table:

January 31, 2020 January 31, 2019 (Amounts in millions) Available Drawn Undrawn Available Drawn Undrawn Five-year credit facility(1) $ 5,000 $ — $ 5,000 $ 5,000 $ — $ 5,000 364-day revolving credit facility(1) 10,000 — 10,000 10,000 — 10,000 Total $ 15,000 $ — $ 15,000 $ 15,000 $ — $ 15,000

(1) In May 2019, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its commercial paper program.

The committed lines of credit in the table above mature at various times between May 2020 and May 2024, carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt. Additionally, the Company also maintains other committed lines of credit outside of the U.S., with available amounts of approximately $3.0 billion as of each of January 31, 2020 and 2019, respectively, of which approximately $0.1 billion and $0.2 billion was drawn as of January 31, 2020 and 2019, respectively. Apart from the committed lines of credit, the Company has syndicated and fronted letters of credit available totaling $1.8 billion as of each of January 31, 2020 and 2019, respectively, of which $1.6 billion was drawn as of each of January 31, 2020 and 2019, respectively. The Company also has trade letters of credit, without stated limits, of which $0.2 billion and $0.4 billion was drawn as of January 31, 2020 and 2019, respectively. The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following as of January 31, 2020 and 2019:

January 31, 2020 January 31, 2019

(Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate(1) Amount Average Rate(1)

Unsecured debt Fixed 2021 - 2050 $ 39,752 3.8% $ 35,816 3.9% Variable 2021 - 2022 1,500 2.1% 1,800 2.9%

Total U.S. dollar denominated 41,252 37,616 Fixed 2023 - 2030 2,758 3.3% 2,870 3.3% Variable — —

Total Euro denominated 2,758 2,870 Fixed 2031 - 2039 3,518 5.4% 3,524 5.4% Variable — —

Total Sterling denominated 3,518 3,524 Fixed 2021 - 2028 1,652 0.4% 1,651 0.4% Variable — —

Total Yen denominated 1,652 1,651 Total unsecured debt 49,180 45,661

Total other(2) (104) (265) Total debt 49,076 45,396 Less amounts due within one year (5,362) (1,876) Long-term debt $ 43,714 $ 43,520

(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. (2) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.

Annual maturities of long-term debt during the next five years and thereafter are as follows:

(Amounts in millions) Annual Fiscal Year Maturities 2021 $ 5,362 2022 3,009 2023 2,830 2024 4,652 2025 4,367 Thereafter 28,960 Total $ 49,180

Debt Issuances Information on long-term debt issued during fiscal 2020, for general corporate purposes, is as follows:

(Amounts in millions)

Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds April 23, 2019 $1,500 July 8, 2024 Fixed 2.850% $ 1,493 April 23, 2019 $1,250 July 8, 2026 Fixed 3.050% 1,242 April 23, 2019 $1,250 July 8, 2029 Fixed 3.250% 1,243 September 24, 2019 $500 September 24, 2029 Fixed 2.375% 497 September 24, 2019 $1,000 September 24, 2049 Fixed 2.950% 975 Various $42 Various Various Various 42 Total $ 5,492

Information on long-term debt issued during fiscal 2019, to fund a portion of the purchase price for the Flipkart acquisition and for general corporate purposes, is as follows:

(Amounts in millions)

Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds June 27, 2018 $750 June 23, 2020 Floating Floating $ 748 June 27, 2018 $1,250 June 23, 2020 Fixed 2.850% 1,247 June 27, 2018 $750 June 23, 2021 Floating Floating 748 June 27, 2018 $1,750 June 23, 2021 Fixed 3.125% 1,745 June 27, 2018 $2,750 June 26, 2023 Fixed 3.400% 2,740 June 27, 2018 $1,500 June 26, 2025 Fixed 3.550% 1,490 June 27, 2018 $2,750 June 26, 2028 Fixed 3.700% 2,725 June 27, 2018 $1,500 June 28, 2038 Fixed 3.950% 1,473 June 27, 2018 $3,000 June 29, 2048 Fixed 4.050% 2,935 Various $21 Various Various Various 21 Total $ 15,872

The fiscal 2020 and fiscal 2019 issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants which restrict the Company's ability to pay dividends or repurchase company stock.

Repayments The following table provides details of debt repayments during fiscal 2020:

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment February 1, 2019 $500 Fixed 4.125% $ 364 October 20, 2019 $300 Floating Floating 300 October 20, 2019 $1,200 Fixed 1.750% 1,200 Various(1) $43 Various Various 43

Total repayment of matured debt $ 1,907

(1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations.

The following table provides details of debt repayments during fiscal 2019:

(Amounts in millions)

Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment February 15, 2018 $1,250 Fixed 5.800% $ 1,250 April 11, 2018 $1,250 Fixed 1.125% 1,250 June 1, 2018 $500 Floating Floating 500 December 15, 2018 $724 Fixed 1.950% 724 Various(1) $60 Various Various 60

Total repayment of matured debt $ 3,784 (1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations.

Note 7. Leases The Company leases certain retail locations, distribution and fulfillment centers, warehouses, office spaces, land and equipment throughout the U.S. and internationally. The Company's lease costs recognized in the Consolidated Statement of Income consist of the following:

(Amounts in millions) Fiscal Year Ended January

31, 2020

Operating lease cost(1) $ 2,670

Finance lease cost:

Amortization of right-of-use assets 480

Interest on lease obligations 306

Variable lease cost 691

(1) Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $3.0 billion and $2.9 billion in fiscal 2019 and 2018, respectively.

Other lease information is as follows:

(Dollar amounts in millions) Fiscal Year Ended January

31, 2020

Cash paid for amounts included in measurement of lease obligations:

Operating cash flows from operating leases $ 2,614

Operating cash flows from finance leases 278

Financing cash flows from finance leases 485

Assets obtained in exchange for operating lease obligations 2,151

Assets obtained in exchange for finance lease obligations 1,081

Weighted-average remaining lease term - operating leases 15.6 years

Weighted-average remaining lease term - finance leases 14.4 years

Weighted-average discount rate - operating leases 5.4 %

Weighted-average discount rate - finance leases 8.6 %

The aggregate annual lease obligations at January 31, 2020 are as follows:

(Amounts in millions)

Fiscal Year Operating Leases Finance Leases 2021 $ 2,587 $ 797 2022 2,358 757 2023 2,138 640 2024 1,932 552 2025 1,728 492 Thereafter 15,514 5,612 Total undiscounted lease obligations 26,257 8,850 Less imputed interest (8,293) (4,032) Net lease obligations $ 17,964 $ 4,818

Upon adoption of ASU 2016-02, Leases (Topic 842), the Company's aggregate annual lease obligations includes leases with reasonably assured renewals. The aggregate minimum annual lease rentals as of January 31, 2019 for the remaining contractual term of non-cancelable leases under ASC 840 were as follows:

(Amounts in millions)

Fiscal Year Operating Leases(1) Capital Lease and Financing

Obligations 2020 $ 1,856 $ 917 2021 1,655 856 2022 1,420 794 2023 1,233 667 2024 1,063 593 Thereafter 6,891 6,069 Total minimum rentals 14,118 9,896 Less estimated executory costs 23 Net minimum lease payments 9,873 Financing obligation noncash gains and other 2,278 Less imputed interest (4,739) Present value of minimum lease payments $ 7,412

(1) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2019.

Note 8. Fair Value Measurements Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

• The purchased portion of the investment in JD is measured using Level 1 inputs. • The portion of the investment in JD received in exchange for selling certain assets related to Yihaodian, the Company's former eCommerce operation in

China, measured using Level 2 inputs. Fair value is determined primarily using quoted prices in active markets for similar assets. The fair value of the Company's investment in JD is as follows:

(Amounts in millions) Fair Value as of

January 31, 2020 Fair Value as of

January 31, 2019

Investment in JD measured using Level 1 inputs $ 2,715 $ 1,791 Investment in JD measured using Level 2 inputs 2,723 1,792 Total $ 5,438 $ 3,583

Derivatives

The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2020 and January 31, 2019, the notional amounts and fair values of these derivatives were as follows:

January 31, 2020 January 31, 2019

(Amounts in millions) Notional Amount Fair Value

Notional Amount Fair Value

Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges $ 4,000 $ 97 (1) $ 4,000 $ (78) (2) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges 3,750 455 (1) 2,250 334 (1) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges 4,067 (696) (2) 4,173 (272) (3) Total $ 11,817 $ (144) $ 10,423 $ (16)

(1) Classified in Other long-term assets within the Company's Consolidated Balance Sheets. (2) Classified in Deferred income taxes and other within the Company's Consolidated Balance Sheets. (3) Approximately $350 million of cash flow hedges were classified in Deferred income taxes and other and $78 million of cash flow were classified in Other long-term assets in the Company's

Consolidated Balance Sheets.

• in the Walmart U.S. segment, $0.5 billion in impairment charges for impaired assets consisting primarily of trade names and acquired developed software due to strategic decisions that resulted in the write-down of certain eCommerce assets; and

• in the Walmart International segment, $0.4 billion in impairment charges consisting primarily of the write-off of the carrying value of one of Flipkart's two fashion trade names, Jabong.com, as a result of a strategic decision to focus on the Myntra.com fashion platform.

These impairment charges were classified in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Other impairment charges for assets measured at fair value on a nonrecurring basis during fiscal 2020 were immaterial. As discussed in Note 12, the Company sold the majority stake in Walmart Brazil during fiscal 2019. The assets of the disposal group totaled $3.3 billion and were comprised of $1.0 billion in current assets, $1.6 billion in property and equipment and property under capital lease and financing obligations, net, and $0.7 billion of other long-term assets. When measured as held for sale, these assets were fully impaired as the carrying value of the disposal group exceeded the fair value, less costs to sell and contributed to a pre-tax net loss of $4.8 billion in the Walmart International segment, which was recorded in other gains and losses in the Company's Consolidated Statement of Income. Other impairment charges to assets measured at fair value on a nonrecurring basis during fiscal 2019 were immaterial.

January 31, 2020 January 31, 2019 (Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including amounts due within one year $ 49,076 $ 57,769 $ 45,396 $ 49,570

Note 9. Taxes The components of income (loss) before income taxes are as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 U.S. $ 17,098 $ 15,875 $ 10,722 Non-U.S. 3,018 (4,415) 4,401 Total income before income taxes $ 20,116 $ 11,460 $ 15,123

A summary of the provision for income taxes is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Current:

U.S. federal $ 2,794 $ 2,763 $ 2,998 U.S. state and local 587 493 405 International 1,205 1,495 1,377

Total current tax provision 4,586 4,751 4,780 Deferred:

U.S. federal 663 (361) (22) U.S. state and local 35 (16) (12) International (369) (93) (146)

Total deferred tax expense (benefit) 329 (470) (180) Total provision for income taxes $ 4,915 $ 4,281 $ 4,600

In December 2017, the Tax Act was enacted and significantly changed U.S. income tax law. Beginning January 2018, the Tax Act reduced the U.S. statutory tax rate and created new taxes focused on foreign-sourced earnings and related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed income ("GILTI"). In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with SAB 118. The Company elected to apply the measurement period provisions of this guidance to certain income tax effects of the Tax Act when it became effective. The provisional measurement period ended in the fourth quarter of fiscal 2019. Management completed the Company's accounting for Tax Reform in fiscal 2019 based on prevailing regulations and currently available information, and any additional guidance issued by the IRS could impact the aforementioned amounts in future periods. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $207 million, and in fiscal 2019, the Company recorded $442 million of additional tax expense related to the Tax Act, included as a component of provision for income taxes.

One-time Transition Tax The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. In fiscal 2018, the Company recorded a provisional amount of $1.9 billion of additional income tax expense for its one-time transitional tax liability. The Company calculated the Transition Tax liability and increased the provisional amount by $413 million, with the increase included as a component of provision for income taxes in fiscal 2019.

Deferred Tax Effects The Tax Act reduced the U.S. statutory tax rate from 35.0% to 21.0%, beginning January 2018. Accordingly, the Company re-measured its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized. In fiscal 2018, the Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and other effects of the Tax Act. In fiscal 2018, the Company made no provisional adjustment with respect to the GILTI provision of the Tax Act. Upon finalizing the provisional accounting for the remeasurement of U.S. deferred tax assets and liabilities in fiscal 2019, the Company recorded an additional tax benefit of $75 million, which is included as a component of provision for income taxes.

Effective Income Tax Rate Reconciliation In the past, the Company's effective income tax rate was typically lower than the U.S. statutory tax rate primarily because of benefits from lower-taxed global operations partially offset by a valuation allowance. However, beginning January 2018, the U.S. statutory rate of 21.0% generally falls below statutory rates in international jurisdictions. A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pretax income from continuing operations is as follows:

Fiscal Years Ended January 31, 2020 2019 2018 U.S. statutory tax rate 21.0 % 21.0 % 33.8 % U.S. state income taxes, net of federal income tax benefit 2.2 % 3.0 % 1.7 % Impact of the Tax Act:

One-time transition tax — % 3.6 % 12.3 % Deferred tax effects — % (0.7)% (14.1)%

Income taxed outside the U.S. (1.0)% (3.4)% (6.3)% Disposition of Walmart Brazil — % 6.7 % — % Valuation allowance 2.3 % 6.3 % 2.1 % Net impact of repatriated international earnings 0.4 % 0.8 % (0.1)% Federal tax credits (0.8)% (1.3)% (0.9)% Enacted change in tax laws (1.9)% — % — % Change in reserve for tax contingencies 2.5 % 0.6 % (0.1)% Other, net (0.3)% 0.8 % 2.0 % Effective income tax rate 24.4 % 37.4 % 30.4 %

Deferred Taxes The significant components of the Company's deferred tax account balances are as follows:

January 31, (Amounts in millions) 2020 2019 Deferred tax assets:

Loss and tax credit carryforwards $ 9,056 $ 2,964 Accrued liabilities 2,483 2,135 Share-based compensation 250 245 Lease obligations 4,098 — Other 1,020 1,131

Total deferred tax assets 16,907 6,475 Valuation allowances (8,588) (2,448) Deferred tax assets, net of valuation allowances 8,319 4,027 Deferred tax liabilities:

Property and equipment 4,621 4,175 Acquired intangibles 1,152 2,099 Inventory 1,414 1,354 Lease right of use assets 3,998 — Mark-to-market investments 724 335 Other 700 564

Total deferred tax liabilities 12,609 8,527 Net deferred tax liabilities $ 4,290 $ 4,500

The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:

January 31, (Amounts in millions) 2020 2019 Balance Sheet classification Assets: Other long-term assets $ 1,914 $ 1,796

Liabilities: Deferred income taxes and other 6,204 6,296 Net deferred tax liabilities $ 4,290 $ 4,500

Unremitted Earnings Prior to the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings and repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. As of January 31, 2020, the Company has not recorded approximately $3 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation.

Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances As of January 31, 2020, the Company's net operating loss and capital loss carryforwards totaled approximately $37.8 billion. Of these carryforwards, approximately $25.2 billion will expire, if not utilized, in various years through 2040. The remaining carryforwards have no expiration. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the consolidated statements of income. The Company had valuation allowances of $8.6 billion and $2.4 billion as of January 31, 2020 and 2019, respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has determined it is more likely than not that the deferred tax assets will not be realized. Due to tax law changes in Luxembourg enacted in December 2019 the Company recognized additional deferred tax assets, and related valuation allowances, of $6.2 billion associated with existing net operating loss carryforwards. Other activity in the valuation allowance during fiscal 2020 related to valuation allowance increases in other markets, as well as releases due to the expiration of underlying deferred tax assets.

Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2020 and 2019, the amount of unrecognized tax benefits related to continuing operations was $1.8 billion and $1.3 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $1.6 billion and $1.1 billion as of January 31, 2020 and 2019, respectively. A reconciliation of unrecognized tax benefits from continuing operations is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Unrecognized tax benefits, beginning of year $ 1,305 $ 1,010 $ 1,050 Increases related to prior year tax positions 516 620 130 Decreases related to prior year tax positions (15) (107) (254) Increases related to current year tax positions 66 203 122 Settlements during the period (29) (390) (23) Lapse in statutes of limitations (26) (31) (15) Unrecognized tax benefits, end of year $ 1,817 $ 1,305 $ 1,010

The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for fiscal 2020, 2019 and 2018. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2014, and 2017 through 2020. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through 2020, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2020. With few exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before fiscal 2012.

Note 10. Contingencies Legal Proceedings The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders. Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the aggregate, may result in a liability material to the Company's financial condition, results of operations or cash flows. Asda Equal Value Claims Asda Stores, Ltd. ("Asda"), a wholly-owned subsidiary of the Company, is a defendant in over 35,000 "equal value" claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom ("UK") on behalf of current and former Asda store employees, and further claims may be asserted in the future. The claimants allege that the work performed by employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs compared to that of employees working in Asda's warehouse and distribution facilities, and that the difference in pay between these job positions disparately impacts women because more women work in retail stores while more men work in warehouses and distribution facilities, and that the pay difference is not objectively justified. The claimants are requesting differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a prospective basis. In October 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions in Asda's retail stores with those of employees in Asda's warehouse and distribution facilities. Asda appealed the ruling and the appeal is scheduled to be heard by the Supreme Court of the United Kingdom on July 14-15, 2020. Notwithstanding the appeal, claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work performed by employees in Asda's warehouse and distribution facilities. At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. Accordingly, the Company can provide no assurance as to the scope and outcomes of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. National Prescription Opiate Litigation and Related Matters In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, but believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. The Company has also been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids. The Company cannot reasonably estimate any loss or range of loss that may arise from these matters. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

FCPA Investigation and Related Matters As previously disclosed, the Company was under investigation by the U.S. Department of Justice (the "DOJ") and the Securities and Exchange Commission (the "SEC") regarding possible violations of the U.S. Foreign Corrupt Practices Act (the "FCPA"). Throughout the investigative process, the Company cooperated with the DOJ and the SEC, and on June 20, 2019, the Company announced the resolution of the investigations with the DOJ and the SEC and paid $283 million in June 2019 consisting of a combination of penalties, disgorgement and interest as further described below (the "Settlement Amount"). The Company previously recorded the Settlement Amount in the Company's fiscal 2018 consolidated financial statements in anticipated settlement of these matters. The resolution of the investigations with the DOJ and SEC included:

1. A non-prosecution agreement (the "NPA") between the DOJ and the Company for a three-year term. Pursuant to the NPA, the Company paid a $138 million penalty and agreed to maintain the Company's anti-corruption compliance program for three years, certain reporting obligations for three years, and a limited monitorship with a third-party for two years regarding the Company's anti-corruption compliance program, with the possibility of a third year pending the results of the monitorship during the initial two-year period. The DOJ agreed that it will not prosecute the Company for any conduct described in the NPA provided that the Company performs its obligations under the NPA for the three-year term.

2. A plea agreement (the "Plea Agreement") entered into for a three-year term by the DOJ and WMT Brasilia S.a.r.l., an indirect wholly-owned foreign subsidiary of the Company ("WMT Brasilia") that previously owned a majority stake of the Company's Brazilian business. Through the Plea Agreement, entered in the United States District Court for the Eastern District of Virginia, WMT Brasilia pled guilty to one count of causing a books and records violation of the FCPA. The Company on behalf of WMT Brasilia was assessed a $4 million penalty, including forfeiture, that was deducted from the amount paid by the Company under the NPA.

3. A Cease-and-Desist Order entered into by the SEC in a civil administrative proceeding (the "SEC Order"), the entry of which the Company consented to with respect to certain violations of the books and records and internal controls provisions of the FCPA. The Company paid $145 million in disgorgement and interest, and agreed to make certain reports to the SEC on its anti-corruption compliance and remediation efforts for two years, and cease and desist any violations of the books and records and internal controls provisions of the FCPA.

On June 20, 2019, the Company also entered into an Administrative Agreement with the U.S. Environmental Protection Agency (the "EPA") for a three-year term, which replaces the interim administrative agreement between the Company and the EPA dated May 28, 2013. The May 28, 2013 agreement arose as part of a settlement by the Company regarding certain hazardous waste materials matters with several governmental authorities. The new EPA agreement, among other things, resolved any debarment or suspension as to participation in federal government programs by the Company due to the NPA, the Plea Agreement, and the SEC Order, provided that the Company fulfills the terms and conditions of the new EPA agreement, which requires reporting by the Company to the EPA periodically during the three-year term, and requires a new, limited two-year monitorship. The monitor referenced above that has been engaged by the Company under the NPA will also monitor compliance with the new EPA agreement. If the DOJ monitorship is extended as referenced above, the EPA monitorship may also be extended for an additional year. In addition, the Company expects to incur costs in implementing the settlement and may incur costs in responding to any new civil or regulatory actions. The Company does not presently believe that these matters will have a material adverse effect on its business, financial position, results of operations, or cash flows.

Note 11. Retirement-Related Benefits The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest at 100% for each associate. Participants can contribute up to 50% of their pretax earnings, but not more than the statutory limits. Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which they are established.

The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2020, 2019 and 2018:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Defined contribution plans:

U.S. $ 1,184 $ 1,165 $ 1,124 International 177 126 126

Total contribution expense for defined contribution plans $ 1,361 $ 1,291 $ 1,250

Additionally, the Company's subsidiaries in the United Kingdom and Japan have sponsored defined benefit pension plans. In October 2019, Asda, Walmart and the Trustee of the Asda Group Pension Scheme (the "Plan") entered into an agreement pursuant to which Asda made a cash contribution of $1.0 billion to the Plan (the "Asda Pension Contribution") which enabled the Plan to purchase a bulk annuity insurance contract for the benefit of Plan participants. The agreement between Asda, Walmart and the Trustee of the Plan contemplates that subsequent to the purchase of the bulk annuity insurance contract by the Plan, each of the Plan participants will be issued an individual annuity contract. The issuer of the individual annuity insurance contracts will be solely responsible for paying each participant’s benefits in full and will release the Plan and Asda from any future obligations. The Company expects the issuance of individual annuity contracts to the Plan participants to take place in late fiscal 2021 or early fiscal 2022, which will trigger a pension settlement that will result in all Plan balances, including accumulated pension components within other comprehensive income, being charged to expense.

The defined benefit pension plan in Japan was underfunded by $140 million and $175 million as of January 31, 2020 and 2019, respectively and recorded as a liability in the Company's Consolidated Balance Sheets in deferred income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant.

Note 12. Disposals, Acquisitions and Related Items

The following material disposals, acquisitions and other items impact the Company's Walmart International segment. Other immaterial transactions have also occurred or been announced. Walmart Brazil In August 2018, the Company sold an 80 percent stake of Walmart Brazil to Advent International ("Advent"). Under the terms of the sale, Advent agreed to contribute additional capital to the business over a three-year period and Walmart agreed to indemnify Advent for certain matters. As a result, the Company recorded a pre-tax net loss of $4.8 billion during fiscal 2019 in other gains and losses in the Company's Consolidated Statement of Income. Substantially all of this charge was recorded during the second quarter of fiscal 2019 upon meeting the held for sale criteria. In calculating the loss, the fair value of the disposal group was reduced by $0.8 billion related to an indemnity, for which a liability was recognized upon closing and is recorded in deferred income taxes and other in the Company's Consolidated Balance Sheets. Under the indemnity, the Company will indemnify Advent for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian interbank deposit rate. The Company deconsolidated the financial statements of Walmart Brazil during the third quarter of fiscal 2019 and began accounting for its remaining 20 percent ownership interest using the equity method of accounting. This equity method investment was determined to have no fair value and continues to have no carrying value. Flipkart In August 2018, the Company acquired 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart, an Indian-based eCommerce marketplace, for cash consideration of approximately $16 billion. The acquisition increases the Company's investment in India, a large, growing economy. In the second quarter of fiscal 2020, the Company finalized the valuation of assets acquired and liabilities assumed for the Flipkart acquisition as follows:

• Assets of $24.1 billion, which comprise primarily of $2.2 billion in cash and cash equivalents, $2.8 billion in other current assets, $5.0 billion in intangible assets and $13.5 billion in goodwill. Of the intangible assets, $4.7 billion represents the fair value of trade names, each with an indefinite life, which were estimated using the income approach based on Level 3 unobservable inputs. The remaining $0.3 billion of intangible assets primarily relate to acquired technology with a life of 3 years. The goodwill arising from the acquisition consists largely of anticipated synergies and economies of scale primarily related to procurement and logistics and is not expected to be deductible for tax purposes;

• Liabilities of $3.7 billion, which comprise primarily of $1.8 billion of current liabilities and $1.7 billion of deferred income taxes; and

• Noncontrolling interest of $4.3 billion, for which the fair value was estimated using the income approach based on Level 3 unobservable inputs. The Company began consolidating the financial statements of Flipkart in the third quarter of fiscal 2019, using a one-month lag. To finance the acquisition, the Company used a combination of cash provided by long-term debt as discussed in Note 6 and cash on hand. The Flipkart results of operations since acquisition and the pro forma financial information are immaterial.

Note 13. Segments and Disaggregated Revenue

Segments The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. The Company previously operated in Brazil prior to the sale of the majority stake of Walmart Brazil in fiscal 2019 discussed in Note 12. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impracticable to segregate and identify revenues for each of these individual products and services. The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce and omni-channel initiatives. The Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by its CODM. Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before income taxes, is provided in the following table:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Corporate and

support Consolidated Fiscal Year Ended January 31, 2020 Net sales $ 341,004 $ 120,130 $ 58,792 $ — $ 519,926 Operating income (loss) 17,380 3,370 1,642 (1,824) 20,568 Interest, net (2,410) Other gains and (losses) 1,958 Income before income taxes $ 20,116 Total assets $ 110,353 $ 105,811 $ 13,494 $ 6,837 $ 236,495 Depreciation and amortization 6,408 2,682 605 1,292 10,987 Capital expenditures 6,315 2,801 525 1,064 10,705 Fiscal Year Ended January 31, 2019 Net sales $ 331,666 $ 120,824 $ 57,839 $ — $ 510,329 Operating income (loss) 17,386 4,883 1,520 (1,832) 21,957 Interest, net (2,129) Other gains and (losses) (8,368) Income before income taxes $ 11,460 Total assets $ 105,114 $ 97,066 $ 12,893 $ 4,222 $ 219,295 Depreciation and amortization 6,201 2,590 639 1,248 10,678 Capital expenditures 6,034 2,661 450 1,199 10,344 Fiscal Year Ended January 31, 2018 Net sales $ 318,477 $ 118,068 $ 59,216 $ — $ 495,761 Operating income (loss) 16,995 5,229 915 (2,702) 20,437 Interest, net (2,178) Loss on extinguishment of debt (3,136) Income before income taxes $ 15,123 Total assets $ 104,347 $ 81,549 $ 13,418 $ 5,208 $ 204,522 Depreciation and amortization 6,005 2,601 698 1,225 10,529 Capital expenditures 5,680 2,607 626 1,138 10,051

Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of property and equipment, net and lease right-of-use assets, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2020, 2019 and 2018, are as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Revenues U.S. operations $ 402,532 $ 392,265 $ 380,580 Non-U.S. operations 121,432 122,140 119,763 Total revenues $ 523,964 $ 514,405 $ 500,343

Long-lived assets U.S. operations $ 86,944 $ 81,144 $ 81,478 Non-U.S. operations 40,105 30,251 33,340 Total long-lived assets $ 127,049 $ 111,395 $ 114,818

Disaggregated Revenues In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales related to eCommerce are provided for each segment, which include omni-channel sales, where a customer initiates an order online and the order is fulfilled through a store or club.

(Amounts in millions) Fiscal Years Ended January 31, Walmart U.S. net sales by merchandise category 2020 2019

Grocery $ 190,550 $ 184,202 General merchandise 109,600 108,739 Health and wellness 37,507 35,788 Other categories 3,347 2,937

Total $ 341,004 $ 331,666

Of Walmart U.S.'s total net sales, approximately $21.5 billion and $15.7 billion related to eCommerce for fiscal 2020 and fiscal 2019, respectively.

(Amounts in millions) Fiscal Years Ended January 31, Walmart International net sales by market 2020 2019

Mexico and Central America $ 33,350 $ 31,790 United Kingdom 29,243 30,547 Canada 18,420 18,613 China 10,671 10,702 Other 28,446 29,172

Total $ 120,130 $ 120,824

Of International's total net sales, approximately $11.8 billion and $6.7 billion related to eCommerce for fiscal 2020 and fiscal 2019, respectively.

(Amounts in millions) Fiscal Year Ended January 31, 2020 Sam’s Club net sales by merchandise category 2020 2019

Grocery and consumables $ 35,328 $ 33,708 Fuel, tobacco and other categories 11,296 12,110 Home and apparel 5,478 5,452 Health and wellness 3,371 3,181 Technology, office and entertainment 3,319 3,388

Total $ 58,792 $ 57,839

Of Sam's Club's total net sales, approximately $3.6 billion and $2.7 billion related to eCommerce for fiscal 2020 and fiscal 2019, respectively.

Note 14. Subsequent Event Dividends Declared The Board of Directors approved, effective February 18, 2020, the fiscal 2021 annual dividend of $2.16 per share, an increase over the fiscal 2020 dividend of $2.12 per share. For fiscal 2021, the annual dividend will be paid in four quarterly installments of $0.54 per share, according to the following record and payable dates:

Record Date Payable Date March 20, 2020 April 6, 2020 May 8, 2020 June 1, 2020 August 14, 2020 September 8, 2020 December 11, 2020 January 4, 2021

Note 15. Quarterly Financial Data (Unaudited)

Fiscal Year Ended January 31, 2020 (Amounts in millions, except per share data) Q1 Q2 Q3 Q4 Total Total revenues $ 123,925 $ 130,377 $ 127,991 $ 141,671 $ 523,964 Net sales 122,949 129,388 126,981 140,608 519,926 Cost of sales 93,034 97,923 95,900 107,748 394,605 Consolidated net income 3,906 3,680 3,321 4,294 15,201 Consolidated net income attributable to Walmart 3,842 3,610 3,288 4,141 14,881 Basic net income per common share attributable to Walmart(1) 1.34 1.27 1.16 1.46 5.22 Diluted net income per common share attributable to Walmart(1) 1.33 1.26 1.15 1.45 5.19 Fiscal Year Ended January 31, 2019 Q1 Q2 Q3 Q4 Total Total revenues $ 122,690 $ 128,028 $ 124,894 $ 138,793 $ 514,405 Net sales 121,630 127,059 123,897 137,743 510,329 Cost of sales 91,707 95,571 93,116 104,907 385,301 Consolidated net income (loss) 2,276 (727) 1,817 3,813 7,179 Consolidated net income (loss) attributable to Walmart 2,134 (861) 1,710 3,687 6,670 Basic net income (loss) per common share attributable to Walmart(1) 0.72 (0.29) 0.58 1.27 2.28 Diluted net income (loss) per common share attributable to Walmart(1) 0.72 (0.29) 0.58 1.27 2.26

(1) The sum of quarterly amounts may not agree to annual amount due to rounding and the impact of a decreasing amount of shares outstanding during the year.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries. In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems, automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations and increasing monitoring controls. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting and ensure that our internal control environment remains effective. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

Report on Internal Control Over Financial Reporting Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting as of January 31, 2020. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013). Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of January 31, 2020. The Company's internal control over financial reporting as of January 31, 2020, has been audited by Ernst & Young LLP as stated in their report which appears herein.

Changes in Internal Control Over Financial Reporting There has been no change in the Company's internal control over financial reporting as of January 31, 2020, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Please see the information concerning our executive officers contained in Part I, Item 1 herein under the caption "Information About Our Executive Officers," which is included there in accordance with Instruction 3 to Item 401(b) of the SEC's Regulation S-K. Information required by this Item 10 with respect to the Company's directors and certain family relationships is incorporated by reference to such information under the caption "Proposal No. 1 – Election of Directors" included in our Proxy Statement relating to our 2020 Annual Meeting of Shareholders (our "Proxy Statement"). No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to our board of directors since those procedures were disclosed in our proxy statement relating to our 2020 Annual Shareholders' Meeting as previously filed with the SEC. The information regarding our Audit Committee, including our audit committee financial experts and our Codes of Ethics for the CEO and senior financial officers and our Statement of Ethics applicable to all of our associates, including our Chief Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this Item is incorporated herein by reference to the information under the captions "Corporate Governance" and "Proposal No. 3: Ratification of Independent Accountants" included in our Proxy Statement. "Item 1. Business" above contains information relating to the availability of a copy of our Code of Ethics for our CEO and senior financial officers and our Statement of Ethics and the posting of amendments to and any waivers of the Code of Ethics for our CEO and senior financial officers and our Statement of Ethics on our website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item 11 is incorporated herein by reference to the information under the captions "Corporate Governance – Director Compensation" and "Executive Compensation" included in our Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is incorporated herein by reference to the information that appears under the caption "Stock Ownership" included in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 is incorporated herein by reference to the information under the caption "Corporate Governance – Board Processes and Practices" included in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report are as follows:

1. Financial Statements: See the Financial Statements in Part II, Item 8.

3. Exhibits: See exhibits listed under part (b) below.

(b) The required exhibits are filed as part of this Form 10-K or are incorporated by reference herein.(1)

3.1

Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on February 1, 2018

3.2

Amended and Restated Bylaws of the Company dated July 23, 2019 are incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on July 26, 2019

4.1

4.2

4.3

4.4

4.5

First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post- Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)

4.6

4.7

Third Supplemental Indenture, dated June 26, 2018, between the Company and The Bank of New York Trust Company, N.A., as successor-in- interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4(S) to Current Report on Form 8-K filed on June 26, 2018.

4.8* Description of Registrant's Securities

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10.1

Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2019 is incorporated by reference to Exhibit 10(a) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2019, filed on March 30, 2019 (C)

10.2

10.3

10.4

10.5

10.6

10.7

Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive Officers who have executed a Post- Termination Agreement and Covenant Not to Compete is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2011, filed on March 30, 2011(C)

10.7(a)*

10.8* Form of Walmart Inc. Stock Incentive Plan of 2010 Restricted Stock Award, Notification of Award and Terms and Conditions of Award (C)

10.9*

Form of Walmart Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions (January 2020 annual award - all executive officers) (C)

10.10

10.11

10.12

10.13

10.14

Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award (Suresh Kumar) dated July 9, 2019 is incorporated by reference to Exhibit 10.1 to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019 (C)

10.15

Form of Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Suresh Kumar on July 9, 2019 is incorporated by reference to Exhibit 10.2 to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019 (C)

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10.16* Post Termination Agreement and Covenant Not to Compete between the Company and Suresh Kumar dated June 6, 2019 (C)

10.17* Separation Agreement between the Company and Gregory S. Foran dated December 3, 2019 (C)

10.18

Share Issuance and Acquisition Agreement by and Between Flipkart Private Limited and Walmart Inc. dated as of May 9, 2018. is incorporated herein by reference to Exhibit 10.1. to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)

10.19

21* List of the Company's Significant Subsidiaries 23* Consent of Independent Registered Public Accounting Firm 31.1* Chief Executive Officer Section 302 Certification 31.2* Chief Financial Officer Section 302 Certification 32.1** Chief Executive Officer Section 906 Certification 32.2** Chief Financial Officer Section 906 Certification 99.1* State Court Prescription Opiate Litigation Cases 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

Certain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item601(b)(4)(iii) of Regulation S-K. The Company hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.

ITEM 16. FORM 10-K SUMMARY

None.

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Walmart Inc.

Date: March 20, 2020 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Date: March 20, 2020 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer and Director (Principal Executive Officer) Date: March 20, 2020 By /s/ Gregory B. Penner Gregory B. Penner Chairman of the Board and Director Date: March 20, 2020 By /s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: March 20, 2020 By /s/ David M. Chojnowski David M. Chojnowski Senior Vice President and Controller (Principal Accounting Officer)

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2020

Date: March 20, 2020 By /s/ Cesar Conde Cesar Conde Director Date: March 20, 2020 By /s/ Timothy P. Flynn Timothy P. Flynn Director Date: March 20, 2020 By /s/ Sarah Friar Sarah Friar Director Date: March 20, 2020 By /s/ Carla A. Harris Carla A. Harris Director Date: March 20, 2020 By /s/ Thomas W. Horton Thomas W. Horton Director Date: March 20, 2020 By /s/ Marissa A. Mayer Marissa A. Mayer Director Date: March 20, 2020 By /s/ Steven S Reinemund Steven S Reinemund Director Date: March 20, 2020 By /s/ S. Robson Walton S. Robson Walton Director Date: March 20, 2020 By /s/ Steuart L. Walton Steuart L. Walton Director

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2020

Exhibit 4.8

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

As of January 31, 2020, Walmart Inc. (“Walmart” or the “Company”) had three classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) Common Stock, $0.10 par value per share (“Common Stock”); (ii) 1.900% Notes due 2022 (the “2022 Notes”); and (iii) 2.550% Notes due 2026 (the “2026 Notes” and, together with the 2022 Notes, the “Notes”). Each of the Company’s securities registered under Section 12 of the Exchange Act are listed on The New York Stock Exchange (the “NYSE”). References in this Exhibit to the “Company,” “us,” “we” and “our” are solely to Walmart Inc. (parent company only) and not to any of its subsidiaries, unless the context requires otherwise.

DESCRIPTION OF COMMON STOCK

The following is a description of the rights of holders of the Company’s Common Stock and related provisions of the Company’s Restated Certificate of Incorporation (the “Certificate”) and Amended and Restated Bylaws (the “Bylaws”) and applicable Delaware law, including the General Corporation Law of Delaware, as amended (the “DGCL”). This description is qualified in its entirety by, and should be read in conjunction with, the Certificate, Bylaws and applicable Delaware law.

Authorized Capital Stock

Pursuant to our Certificate, our authorized capital stock consists of 11,100,000,000 shares, with a par value of $0.10 per share, of which 11,000,000,000 shares are designated as Common Stock and 100,000,000 shares are designated as preferred stock. At January 31, 2020, we had 2,832,492,881 shares of the Common Stock issued and outstanding and no shares of our preferred stock issued and outstanding. The number of shares of the Common Stock issued and outstanding varies from time to time.

Common Stock

Fully Paid and Non-Assessable Shares; No Liability for Corporate Obligations

All of the outstanding shares of Common Stock are fully paid and non-assessable. A share of Common Stock is fully paid and non- assessable if such share has been issued for consideration legally permissible under the DGCL with a value at least equal to the par value per share of Common Stock. Holders of fully paid and non-assessable shares of the Common Stock will not be liable for any obligations or liabilities of the Company that the Company may fail to discharge.

Voting Rights

Each holder of shares of Common Stock is entitled to one vote for each share owned of record on all matters submitted to a vote of shareholders. Except as noted below or as otherwise required by the DGCL, the vote of shareholders required to decide any matter brought before a shareholder meeting at which a quorum is present is a majority of the outstanding shares present in person or represented by proxy at that meeting and entitled to vote on the question subject to the shareholder

vote. In a contested election of directors, which is an election in which there are more nominees for election than board positions to be filled, directors are elected by the vote of a plurality of the outstanding shares present in person or represented by proxy at that meeting and entitled to vote on the election of directors. The holders of a majority of the outstanding shares of our stock must approve any amendments to our Certificate, any merger or consolidation to which we are a party (other than parent-subsidiary mergers), any sale of all or substantially all of our assets or our dissolution as a corporation. In addition, the DGCL requires the holders of a majority of the outstanding shares of our stock to approve any conversion of our corporation to another type of entity, such as a limited liability company. Our shareholders do not have cumulative voting rights as to the election of directors.

Dividends

Subject to the preferential rights of any holders of any series of our preferred stock that may be issued in the future, the holders of shares of Common Stock are entitled to such dividends and distributions, whether payable in cash or otherwise, as may be declared from time to time by our board of directors from legally available funds.

Liquidation Distributions

Subject to the preferential rights of any holders of any series of our preferred stock that may be issued in the future, upon our liquidation, dissolution or winding-up and after payment of all prior claims against our assets and our outstanding obligations, the holders shares of Common Stock will be entitled to receive, pro rata, all of our remaining assets.

Preemptive, Conversion, Redemption or Similar Rights

The holders of shares of Common Stock are not entitled to any preemptive or other similar rights to subscribe for or acquire additional shares of Common Stock or any other securities of the Company. The shares of Common Stock are not subject to conversion or redemption by the Company and the holders of shares of Common Stock do not have any right or option to convert such shares into any other security or property of the Company or to cause the Company to redeem such shares of Common Stock. There are no sinking fund provisions applicable to the Common Stock.

Certificate, Bylaws and DGCL

Provisions of the Certificate and Bylaws may delay or discourage transactions involving an actual or potential change in control of the Company or change in the Company’s management, including transactions in which shareholders might otherwise receive a premium for their shares, or transactions that its shareholders might otherwise deem to be in their best interests. Among other things, the Certificate and Bylaws include the following provisions:

i. vacancies on our board of directors, and any new director positions created by the expansion of our board of directors, may be filled only by a majority of the directors then in office, subject to certain exceptions;

ii. our Bylaws establish an advance notice procedure for shareholders to submit proposed nominations of persons for election to our board of directors and other proposals for business to be brought before an annual meeting of our shareholders;

iii. our board of directors may issue up to 100,000,000 shares of preferred stock, with designations, rights and preferences as may be determined from time to time by our board of directors; and

iv. our Bylaws may be amended by our shareholders or our board of directors.

Anti-Takeover Provisions of Delaware Law, Our Certificate and Our Bylaws

In addition, as a Delaware corporation, the Company is subject to the provisions of Section 203 of the DGCL, which prohibits the Company, subject to certain exceptions described below, from engaging in a “business combination” with:

• a stockholder who owns 15% or more of the Company’s outstanding voting stock (otherwise known as an “interested stockholder”);

• an affiliate of an interested stockholder; or

• an associate of an interested stockholder,

in each case, for three years following the date that the stockholder became an interested stockholder.

A “business combination” includes a merger or sale of more than 10% of the Company’s assets. However, the above provisions of Section 203 do not apply if:

• the board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;

• after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of the Company’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of Common Stock; or

• on or subsequent to the date of the transaction, the business combination is approved by the board of directors and authorized at a meeting of the Company’s stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

Exclusive Forum Provision

Our Certificate provides that, unless we select or consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, be the sole and exclusive forum for any current or former stockholder (including any current or former beneficial owner) to bring claim, including claims in the right of the corporation (a) that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity; or (b) as to which the DGCL confers jurisdiction upon the Court of Chancery.

Listing

Shares of the Common Stock are listed for trading on the NYSE under the symbol “WMT.”

Transfer Agent and Registrar

The transfer agent and registrar for the Common Stock is Computershare Trust Company, N.A.

DESCRIPTION OF DEBT SECURITIES

The following description of the Notes is a summary and does not purport to be complete. This description is qualified in its entirety by reference to the Indenture, dated as of July 19, 2005, as supplemented, between the Company and The Bank of New York Mellon Trust Company, N.A. (“BNYM”), as trustee (the “Indenture”).

The Notes

The Notes were issued under the Indenture, which provides that debt securities may be issued under the Indenture from time to time in one or more series. The Indenture and the Notes are governed by, and construed in accordance with, the laws of the State of New York. The Indenture does not limit the amount of debt securities that we may issue under the Indenture. We may, without the consent of the holders of the debt securities of any series, issue additional debt securities ranking equally with, and otherwise similar in all respects to, the debt securities of the series (except for the public offering price and the issue date) so that those additional debt securities will be consolidated and form a single series with the debt securities of the series previously offered and sold.

The 2022 Notes

We issued €850,000,000 aggregate principal amount of the 2022 Notes on April 8, 2014. The maturity date of the 2022 Notes is April 8, 2022, and interest at a rate of 1.900% per annum is paid annually on April 8 of each year and on the maturity date. As of January 31, 2020, €850,000,000 aggregate principal amount of the 2022 Notes was outstanding.

The 2026 Notes

We issued €650,000,000 aggregate principal amount of the 2026 Notes on April 8, 2014. The maturity date of the 2026 Notes is April 8, 2026, and interest at a rate of 2.550% per annum is paid annually on April 8 of each year and on the maturity date. As of January 31, 2020, €650,000,000 aggregate principal amount of the 2026 Notes was outstanding.

Ranking

The Notes are our senior unsecured debt obligations and rank equally among themselves and with all of our existing and future unsecured and unsubordinated debt obligations. Consequently, the holders of the Notes have a right to payment equal to that of our other unsecured creditors. None of our subsidiaries have any obligation as to any of the Notes or will guarantee the payment of amounts owing with respect to any of the Notes. The Indenture does not restrict the ability of our subsidiaries to incur indebtedness.

Payment on the Notes

All payments of principal of, including payments made upon any redemption of the Notes, and accrued interest on, and the payment of any additional amounts payable with respect to, the Notes will be payable in euro; provided, however, if the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the Notes will be made in U.S. dollars until the euro is again available to us or so used. The amount payable on any date in euro will be converted

into U.S. dollars at the rate mandated by the Board of Governors of the U.S. Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, in the event the Board of Governors of the U.S. Federal Reserve System has not mandated a rate of conversion on such date, on the basis of the most recent U.S. dollar/euro exchange rate published in The Wall Street Journal on or most recently prior to the second Business Day prior to the relevant payment date. Any payment in respect of the Notes so made in U.S. dollars will not constitute an event of default under such Notes or the Indenture.

“Business Day” means any day, other than a Saturday or a Sunday, (1) which is not a day on which banking institutions are authorized or obligated by law or executive order to close in New York City or London and (2) on which the Trans-European Automated Real-time Gross Settlement Express Transfer system (the TARGET2 system), or any successor thereto, is open.

Payment of Additional Amounts

All payments of principal and interest in respect of the Notes will be made free and clear of, and without deduction or withholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature required to be deducted or withheld by the United States or any political subdivision or taxing authority of or in the United States, unless such withholding or deduction is required by law.

In the event any withholding or deduction on payments in respect of the Notes for or on account of any present or future tax, assessment or other governmental charge is required to be deducted or withheld by the United States or any taxing authority thereof or therein, we will pay such additional amounts on the Notes as will result in receipt by each beneficial owner of a Note that is not a U.S. Person (as defined below) of such amounts (after all such withholding or deduction, including on any additional amounts) as would have been received by such beneficial owner had no such withholding or deduction been required. We will not be required, however, to make any payment of additional amounts for or on account of:

i. any tax, assessment or other governmental charge that would not have been imposed but for (A) the existence of any present or former connection (other than a connection arising solely from the ownership of those Notes or the receipt of payments in respect of those Notes) between that beneficial owner, or between a fiduciary, settlor, beneficiary of, member or shareholder of, or possessor of a power over, that beneficial owner, if that beneficial owner is an estate, trust, partnership or corporation, and the United States, including that beneficial owner, or that fiduciary, settlor, beneficiary, member, shareholder or possessor, being or having been a citizen or resident or treated as a resident of the United States or being or having been engaged in trade or business or present in the United States or (B) the presentation of a Note for payment on a date more than 30 days after the later of the date on which that payment becomes due and payable and the date on which payment is duly provided for;

ii. any estate, inheritance, gift, sales, transfer, excise, personal property or similar tax, assessment or other governmental charge;

iii. any tax, assessment or other governmental charge imposed by reason of that beneficial owner’s past or present status as a passive foreign investment company, a controlled

foreign corporation or a personal holding company with respect to the United States or as a corporation that accumulates earnings to avoid U.S. federal income tax;

iv. any tax, assessment or other governmental charge which is payable otherwise than by withholding from payment of principal of or premium, if any, or interest on such holder’s Notes;

v. any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of and premium, if any, or interest on any Note if that payment can be made without withholding by any other paying agent;

vi. any tax, assessment or other governmental charge which would not have been imposed but for the failure of a beneficial owner or any holder of Notes to comply with our request to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of the beneficial owner or any holder of the Notes, if such compliance is required by statute or by regulation of the U.S. Treasury Department as a precondition to relief or exemption from such tax, assessment or other governmental charge, including, without limitation, any withholding required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”);

vii. any tax, assessment or other governmental charge imposed on interest received by (A) a 10% shareholder (as defined in Section 871(h)(3)(B) of the Code and the regulations that may be promulgated thereunder) of our Company or (B) a controlled foreign corporation that is related to us within the meaning of Section 864(d)(4) of the Code;

viii. any withholding or deduction that is imposed on a payment to an individual and is required to be made pursuant to that European Union Directive relating to the taxation of savings adopted on June 3, 2003 by the European Union’s Economic and Financial Affairs Council, or any law implementing or complying with, or introduced in order to conform to, such Directive; or

ix. any combination of items (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii).

In addition, we will not pay any additional amounts to any beneficial owner or holder of Notes who is a fiduciary or partnership to the extent that a beneficiary or settlor with respect to that fiduciary or a member of that partnership or a beneficial owner thereof would not have been entitled to the payment of those additional amounts had that beneficiary, settlor, member or beneficial owner been the beneficial owner of those Notes.

As used in the preceding paragraph, “Non-U.S. Person” means any corporation, partnership, individual or fiduciary that is, as to the United States, a foreign corporation, a non-resident alien individual who has not made a valid election to be treated as a United States resident, a non-resident fiduciary of a foreign estate or trust or a foreign partnership, one or more of the members of which is, as to the United States, a foreign corporation, a non-resident alien individual or a non-resident fiduciary of a foreign estate or trust.

Redemption for Tax Reasons

If, as a result of any change or amendment to the laws, treaties, regulations or rulings of the United States or any political subdivision or taxing authority thereof, any proposed change in such laws,

treaties, regulations or rulings, or any change in the official application, enforcement or interpretation of those laws, treaties, regulations or rulings, we become, or based upon a written opinion of independent counsel selected by us, will become obligated to pay additional amounts as described above under the heading “Payments of Additional Amounts” with respect to a series of the Notes, then we may at our option redeem, in whole, but not in part, the Notes of such series on not more than 60 days’ and not less than 30 days’ prior notice, at a redemption price equal to 100% of the principal amount of the Notes of such series, plus accrued but unpaid interest, if any, on the Notes of such series to the date fixed for redemption.

Optional Redemption

We may redeem the Notes of each series, in whole or in part, at our option, at any time in whole or from time to time in part. If the Notes are redeemed before January 8, 2022, in the case of the 2022 Notes, and before January 8, 2026, in the case of the 2026 Notes, the Notes will be redeemed at a redemption price equal to the greater of:

• 100% of the principal amount of the Notes to be redeemed; or

• the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on an annual basis (Actual/Actual (ICMA)) at the applicable Comparable Government Bond Rate (as defined below), plus 12.5 basis points, in the case of the 2022 Notes, or 15 basis points, in the case of the 2026 Notes,

plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date fixed for redemption.

Any 2022 Notes redeemed on or after January 8, 2022, and any 2026 Notes redeemed on or after January 8, 2026, will be redeemed at a redemption price equal to 100% of the principal amount of the Notes then outstanding to be redeemed, plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date fixed for redemption.

Installments of interest on Notes being redeemed that are due and payable on interest payment dates falling on or prior to a redemption date shall be payable on the interest payment date to the holders as of the close of business on the relevant regular record date according to the Notes and the Indenture.

“Comparable Government Bond” means, in relation to any Comparable Government Bond Rate calculation for the Notes, at the discretion of an independent investment bank selected by us, a German government bond whose maturity is closest to the maturity of the Notes, or if such independent investment bank in its discretion determines that such similar bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by us, determine to be appropriate for determining the Comparable Government Bond Rate.

“Comparable Government Bond Rate” means the price, expressed as a percentage (rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the Notes being redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption, would be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined by

an independent investment bank selected by us. Such independent bank will calculate such gross redemption yield on the Notes to be redeemed and the Comparable Government Bond in accordance with generally accepted market practices at the time of such calculations.

Covenants

The Indenture sets forth limited covenants that apply to the Notes. However, these covenants do not, among other things:

• limit the amount of indebtedness or lease obligations that may be incurred by us and our subsidiaries;

• limit our ability or that of our subsidiaries to issue, assume or guarantee debt secured by liens; or

• restrict us from paying dividends or making distributions on our capital stock or purchasing or redeeming our capital stock.

Consolidation, Merger and Sale of Assets

The Indenture provides that we may amalgamate, consolidate with, merge into or transfer our assets substantially as an entirety to any person; provided that the following conditions are satisfied:

• any successor to us (a “Successor”) assumes our obligations on the Notes and under the Indenture;

• any Successor be an entity incorporated or organized under the laws of the United States;

• after giving effect to such transaction, no event of default, as described below under “-Events of Default,” has occurred and is continuing; and

• certain other conditions under the Indenture are met.

Upon any amalgamation, consolidation, merger, reorganization or arrangement or any conveyance or transfer of the properties and assets of the Company substantially as an entirety, the Successor will succeed to, and be substituted for, and may exercise every right and power of, the Company, as the case may be, under the Indenture with the same effect as if such Successor had been named as the Company therein.

Any such amalgamation, consolidation, merger or transfer of assets substantially as an entirety that meets the conditions described above would not constitute a default or event of default that would entitle holders of the Notes or the trustee, on their behalf, to take any of the actions described below under “-Events of Default.”

Events of Default

Each of the following events are defined in the Indenture as an “event of default” with respect to the debt securities of any series:

i. we fail to pay interest on any outstanding debt securities of that series when that interest is due and payable and that failure continues for 30 days;

ii. we fail to pay principal of or premium, if any, on any outstanding debt securities of that series when that principal or premium, if any, is due and payable;

iii. we fail to perform or we breach any covenant or warranty in the Indenture with respect to any outstanding debt securities of that series and that failure continues for 90 days after we receive written notice of that default;

iv. certain events of bankruptcy, insolvency or reorganization occur with respect to us; or

v. any other event occurs that is designated as an event of default with respect to the particular series of debt securities when that particular series of debt security is established.

An event of default with respect to a particular series of Notes issued under the Indenture does not necessarily constitute an event of default with respect to any other series of Notes issued under the Indenture.

If an event of default with respect to any series of outstanding debt securities occurs and is continuing (other than an event of default relating to certain events of bankruptcy, insolvency or reorganization with respect to us), the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding debt securities of that series may declare the principal amount of the outstanding debt securities of that series to be immediately due and payable. If an event of default relating to certain events of bankruptcy, insolvency or reorganization with respect to us occurs and is continuing, the principal of and accrued and unpaid interest on the then outstanding debt securities of all series issued under the Indenture will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holders.

The holders of not less than a majority in aggregate principal amount of the outstanding debt securities of any series may rescind a declaration of acceleration and its consequences, if we have deposited certain sums with the trustee and all events of default with respect to the debt securities of such series, other than the nonpayment of the principal which have become due solely by such acceleration, have been cured or waived, as provided in the Indenture.

An event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of debt securities issued under the Indenture.

We are required to file annually with the trustee a written statement as to the existence or non-existence of defaults under the Indenture or any series of Notes.

No holder of any debt securities of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy, unless:

i. such holder has previously given written notice to the trustee of a continuing event of default with respect to the debt securities of such series;

ii. the holders of not less than 25% in principal amount of the outstanding debt securities of such series have made a written request to the trustee to institute proceedings in respect of such event of default in its own name as trustee;

iii. such holder or holders have offered to the trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

iv. the trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

v. no direction inconsistent with such written request has been given to the trustee during such 60-day period by the holders of a majority in principal amount of the outstanding debt securities of such series;

it being understood and intended that no one or more holders of the debt securities of such series has any right in any manner whatever by virtue of, or by availing of, any provision of the Indenture to affect, disturb or prejudice the rights of any other holders of the debt securities of such series or to obtain or to seek to obtain priority or preference over any other such holders or to enforce any right under the Indenture, except in the manner herein provided and for the equal and ratable benefit of all the holders of the debt securities of such series.

The holders of a majority in aggregate principal amount of outstanding debt securities of a series will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the trustee with respect to the debt securities of that series or exercising any trust or power conferred on the trustee, and to waive certain defaults. The Indenture provides that if an event of default occurs and is continuing, the trustee will exercise such of its rights and powers under the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs.

Notwithstanding the foregoing, the holder of any debt security will have the right to institute suit for the enforcement of any payment of principal of and premium, if any, and interest on that debt security or any redemption price or repurchase price when due and that that right will not be impaired without the consent of that holder.

Modification and Waivers

We and the trustee may execute a supplemental indenture to add provisions to or to eliminate or change provisions of the Indenture or to modify otherwise the rights of the holders of the Notes if we have the consent of the holders of not less than a majority in aggregate principal amount of the Notes affected by that supplemental indenture. However, we and the trustee may not execute a supplemental indenture without the consent of each holder of the Notes affected by that supplemental indenture if that supplement indenture would, among other things:

• change the maturity of the principal of, or the stated maturity of any installment of interest or premium, if any, on, any Note, reduce the principal amount of or the premium, if any, or rate of interest on any Note, change any method for determining the rate of interest on any Note, change the obligation to pay any additional amounts with respect to any Note, reduce the amount due and payable on a Note upon the acceleration of its maturity or upon its repurchase or redemption if the amount payable upon acceleration, repurchase or redemption is otherwise less than the stated principal amount of that Note, change the method of calculating interest on a Note, change the currency in which the principal of or the premium, if any, or interest on a Note is payable, reduce the minimum rate of interest on any Note or impair the right to institute suit for the enforcement of any such payment on or with respect to any such holder’s Notes;

• reduce the percentage in principal amount of outstanding Notes described above as being required to consent to entry into a particular supplemental indenture or for the waiver of certain defaults under the Indenture and their consequences; or

• modify the provisions of the Indenture relating to modification of the Indenture, except in certain specified respects.

The trustee and we, without the consent of any holders, may execute a supplemental indenture to, among other things:

• evidence the succession of another corporation to us and the Successor’s assumption to our covenants with respect to the Notes and the Indenture;

• add to our covenants further restrictions or conditions for the benefit of holders of all or any series of the Notes;

• cure ambiguities or correct or supplement any provision contained in the Indenture or any supplemental indenture that may be inconsistent with another provision;

• add additional events of default with respect to all or any series of the Notes;

• add to, change or eliminate any provision of the Indenture, provided that the addition, change or elimination will not affect any outstanding Notes;

• establish new series of Notes and the form or terms of such series of Notes and to provide for the issuance of securities of any series so established;

• evidence and provide for the acceptance of appointment of a successor trustee with respect to one or more series of Notes and to add or change any provision to or of the Indenture as necessary to have more than one trustee under the Indenture; and

• comply with the requirements of the U.S. Securities and Exchange Commission in order to maintain the qualification of the Indenture under the Trust Indenture Act of 1939.

The holders of a majority in aggregate principal amount of the outstanding Notes of a series may waive an event of default resulting in acceleration of the Notes of that series and rescind and annul that acceleration, but only if all other events of default with respect to the Notes of that series have been remedied or waived and all payments due with respect to the Notes of that series, other than those becoming due as a result of acceleration, have been made. If an event of default occurs and is continuing with respect to the Notes of a series, the trustee may, in its discretion, and will, at the written request of holders of not less than a majority in aggregate principal amount of the outstanding Notes of that series and upon reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request and subject to certain other conditions set forth in the Indenture, proceed to protect the rights of the holders of the Notes of that series. The holders of a majority in aggregate principal amount of the Notes of that series may waive any past default under the Indenture and its consequences except an uncured default in the payment of principal of and premium, if any, or interest on those Notes or with respect to any covenant or provision of the Indenture that the Indenture or the Notes specifically provide cannot be waived without the consent of each holder of Notes of that series. Upon such a waiver, the default and any event of default arising out of the default will be deemed cured for all purposes of the Notes of that series.

Discharge, Legal Defeasance and Covenant Defeasance

We may, at our option, elect to have all of the obligations discharged with respect to the outstanding Notes of any series, except for:

• the rights of holders of the Notes to receive payments of principal, premium, if any, interest and additional amounts, if any, from the trust referred to below when those payments are due;

• our obligations respecting the Notes concerning issuing temporary debt securities, registration of transfers of debt securities, mutilated, destroyed, lost or stolen debt securities, the maintenance of an office or agency for payment and money for payments with respect to the Notes being held in trust;

• the rights, powers, trusts, duties and immunities of the trustee and our obligations in connection therewith; and

• the provisions of the Indenture relating to such a discharge of obligations.

We refer to a discharge of this type as “legal defeasance.”

In addition, other than our covenant to pay the amounts due and owing with respect to the Notes of each series, we may elect to have our obligations as the issuer of the Notes of any series released with respect to covenants relating to the Notes of such series. Thereafter, any failure to comply with those obligations will not constitute a default or event of default with respect to the Notes of such series. If such a release of our covenants occurs, our failure to perform or our breach of the covenants or warranties defeased will no longer constitute an event of default with respect to the Notes of such series. We refer to a discharge of this type as “covenant defeasance.”

To exercise either of the defeasance rights described above as to the outstanding Notes of a series, certain conditions must be met, including:

• we must irrevocably deposit with the trustee, in trust for the benefit of the holders of the outstanding Notes of the series, moneys in the currency in which the Notes of such series are denominated, securities issued by a government, governmental agency or central bank of the country in whose currency the Notes of such series are denominated or a combination of cash and such securities, in amounts sufficient to pay the principal of and premium, if any, and interest on all of the then outstanding Notes of such series to be affected by the defeasance at their stated maturity;

• no default or event of default exists on the date of such deposit, subject to certain exceptions;

• the trustee must receive an opinion of counsel confirming that the holders of the outstanding Notes of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of that legal defeasance or covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if that defeasance had not occurred, which opinion, only in the case of the legal defeasance of the Notes of a series, will be based on a ruling of the Internal Revenue Service or a change in United States federal income tax law to that effect occurring after the date of the Indenture; and

• the trustee must receive an opinion of counsel to the effect that, after the 91st day following the deposit, the trust funds will not be part of any “estate” formed by the bankruptcy of the party depositing those funds with the trustee or subject to the “automatic stay” under the United States Bankruptcy Code or, in the case of covenant defeasance, will be subject to a first priority lien in favor of the trustee for the benefit of the holders of the outstanding Notes of the series.

We may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option.

Book-Entry and Settlement

The Notes were issued in book-entry form and are represented by global notes deposited with, or on behalf of, a common depositary on behalf of Clearstream Banking, société anonyme (“Clearstream”) and Euroclear Bank SA/NV, as the operator of the Euroclear System (“Euroclear”), and are registered in the name of the common depositary or its nominee. Beneficial interests in the global notes will be shown on, and transfers of beneficial interests in the global notes will be made only through, records maintained by Euroclear and Clearstream. Except as described below, certificated notes will not be issued in exchange for beneficial interests in the global notes.

Certificated Notes

Subject to certain conditions, the Notes represented by the global notes are exchangeable for certificated debt securities with the same terms in authorized denominations only if:

• The Depository Trust Company, Euroclear or Clearstream, as the case may be, is unwilling or unable to continue as depositary or ceases to be a clearing agency registered under applicable law, and a successor is not appointed by us within 90 days; or

• we decide to discontinue the book-entry system; or

• an event of default has occurred and is continuing with respect to the Notes.

Any Note that is exchangeable as above is exchangeable for certificated notes issuable in authorized denominations and registered in such names as the common depositary shall direct. Subject to the foregoing, a global note is not exchangeable, except for a global note of the same aggregate denomination to be registered in the name of the common depositary or its nominee.

The Trustee for the Notes

BNYM is the trustee under the Indenture. We have commercial deposits and custodial arrangements with BNYM and its affiliates. We may enter into similar or other banking relationships with BNYM in the future in the normal course of business. In addition, BNYM acts as trustee and as paying agent with respect to other debt securities issued by us, and may do so for future issuances of debt securities by us as well.

Exhibit 10.8

Name of Grantee: Grant Date:

Number of Shares:

Dollar Value of Award as of Grant Date:

Walmart Identification Number:

WALMART INC.

STOCK INCENTIVE PLAN OF 2015

RESTRICTED STOCK

NOTIFICATION OF AWARD AND TERMS AND CONDITIONS OF AWARD

This Restricted Stock Notification of Award and Terms and Conditions of Award, including any applicable special terms and conditions for your specific country set forth in the appendix attached hereto (jointly, the “Agreement”), contains the terms and conditions of the Restricted Stock (as defined in the Walmart Inc. Stock Incentive Plan of 2015, as may be amended from time to time (the “Plan”)) granted to you by Walmart Inc., a Delaware corporation (“Walmart”), under the Plan.

By signing or electronically accepting this Agreement, you hereby acknowledge, UNDERSTAND, agree to, and accept the following:

1. Grant of Restricted Stock. Walmart has granted to you, effective on the Grant Date, the right to receive the number of Shares set forth above on the Vesting Date as further set forth in Paragraph 5 below, subject to forfeiture if certain vesting conditions are not satisfied. Before the Shares vest and are delivered to you, they are referred to in this Agreement as “Restricted Stock.”

2. Plan Governs. The Restricted Stock and this Agreement are subject to the terms and conditions of the Plan. You are accepting the Restricted Stock, acknowledging receipt of a copy of the Plan and the prospectus covering the Plan, and acknowledging that the Restricted Stock and your participation in the Plan are subject to all the terms and conditions of the Plan and of this Agreement. You further agree to accept as binding, conclusive and final all decisions and interpretations by the Committee of the Plan upon any disputes or questions arising under the Plan.

3. Payment. You are not required to pay for the Restricted Stock or the Shares underlying the Restricted Stock granted to you pursuant to this Agreement.

4. Stockholder Rights. Your Restricted Stock will be held for you by Walmart until the applicable delivery date described in Paragraph 5. From the Grant Date until the Vesting Date, you shall have only the following stockholder rights with respect to the Shares underlying your unvested Restricted Stock:

A. you shall have the right to vote the Shares underlying your Restricted Stock on any matter as to which Shares have voting rights at any meeting of shareholders of Walmart;

5. Vesting of Restricted Stock and Delivery of Shares.

A. Vesting. Your Restricted Stock will vest as follows, provided you have not incurred a Forfeiture Condition described below:

Percentage of Restricted Stock Vesting Vesting Date

B. Delivery of Shares. Upon the vesting of your Restricted Stock, subject to Paragraph 9 below, you shall be entitled to receive a number of Shares equal to the number of Shares underlying the vested Restricted Stock, less any Shares withheld or sold to satisfy tax withholding obligations as set forth in Paragraph 10 below. The Shares shall be delivered to you as soon as administratively feasible, but in any event within 74 days of the Vesting Date. Such Shares will be deposited into an account in your name with a broker or other third party designated by Walmart. You will be responsible for all fees imposed by such designated broker or other third party designated by Walmart.

6. Forfeiture Conditions. Subject to Paragraph 8 below, the Shares underlying your Restricted Stock that would otherwise vest in whole or in part on a Vesting Date will not vest and will be immediately forfeited if, prior to the Vesting Date:

A. your Continuous Status terminates for any reason (other than death or Disability, to the extent provided in Paragraph 8 below); or

B. you have not executed and delivered to Walmart a Non-Disclosure and Restricted Use Agreement, in a form to be provided to you by Walmart.

Each of the events described in Paragraphs 6.A and 6.B above shall be referred to as a “Forfeiture Condition” for purposes of this Agreement. Furthermore, if applicable, you shall be advised if the Committee has determined that the grant and your acceptance of this Plan Award is further conditioned upon your execution and delivery to Walmart of a Post Termination Agreement and Covenant Not to Compete, in a form to be provided to you by Walmart. If applicable, the failure to execute and deliver such Post Termination Agreement and Covenant Not to Compete prior to the Vesting Date shall also be deemed a “Forfeiture Condition” for purposes of this Agreement. Upon the occurrence of a Forfeiture Condition, you shall have no further rights with respect to such Restricted Stock (including any cash dividends and non-cash proceeds related to the Restricted Stock for which the record date occurs on or after the occurrence of a Forfeiture Condition) or the underlying Shares.

7. Administrative Suspension. If you are subject to an administrative suspension, vesting of your Restricted Stock may be suspended as of the date you are placed on administrative suspension. If you are not reinstated as an Associate in good standing at the end of the administrative suspension period, your Restricted Stock may be immediately forfeited and you shall have no further rights with respect to such Restricted Stock (including any cash dividends and non-cash proceeds related to the Restricted Stock for which the record date occurs on or after the date of the forfeiture) or the underlying Shares. If you are reinstated as an Associate in good standing at the end of the administrative suspension period, then the vesting of your Restricted Stock will resume as provided in Paragraph 5, and any Restricted Stock that would have vested while you were on administrative suspension will vest and the corresponding number of Shares will be delivered to you as soon as administratively feasible, but in any event within 74 days of the end of the administrative suspension period which shall be considered the Vesting Date for purposes of this Paragraph 7.

8. Accelerated Vesting; Vesting Notwithstanding Termination of Continuous Status by Death or Disability.

A. Notwithstanding Paragraph 5 above, your Restricted Stock that would have become vested on a Vesting Date which occurs not more than one year after the date your Continuous Status is so terminated by reason of your death or Disability will become vested earlier than described in Paragraph 5 above, and such earlier vesting date (as determined by Paragraph 8.B below) shall be considered a Vesting Date for purposes of this Agreement. For purposes of this Paragraph 8, your Continuous Status will be considered terminated on the date of your death or the date on which your employment or other service relationship has been legally terminated by reason of your Disability.

B. If your Continuous Status is terminated due to your Disability, you agree to promptly notify the Walmart Global Equity team. For purposes of this Agreement, “Disability” shall

mean that you would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of Walmart or, if different, the Affiliate that employs you (the “Employer”), regardless of whether you are covered by such policy. If Walmart or, if different, the Employer does not have a long-term disability policy, for purposes of this Agreement, “Disability” means that you are unable to carry out the responsibilities and functions of the position held by you by reason of any medically determined physical or mental impairment for a period of not less than one hundred and eighty (180) consecutive days. You shall not be considered to have incurred a Disability for purpose of this Paragraph 8 unless you furnish proof of such impairment sufficient to satisfy Walmart in its sole discretion. If your Continuous Status is terminated due to Disability, you agree to promptly notify the Walmart Global Equity team.

9. Elective Deferral of Restricted Stock. If you are eligible to defer delivery of the Shares underlying your Restricted Stock award to a future date in accordance with Section 7.8 of the Plan and the rules and procedures relating thereto, you will be advised as to when any such deferral election must be made and the rules and procedures applicable to such deferral election.

10. Taxes and Tax Withholding.

B. You acknowledge that, regardless of any action taken by Walmart or, if different, the Employer, the ultimate liability for all income tax, social insurance, pension, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), is and remains your responsibility and may exceed the amount actually withheld by Walmart or the Employer. You further acknowledge that Walmart and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock, including, but not limited to, the grant, vesting or settlement of the Restricted Stock, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax- Related Items in more than one jurisdiction, you acknowledge that Walmart and/or the Employer (or your former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

C. Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Walmart and the Employer to satisfy all Tax-Related Items. In this regard, you authorize Walmart and/or the Employer or their respective agents, at their sole discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding of Shares to be issued upon settlement of the vested Restricted Stock. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by your acceptance of the Restricted Stock and this Agreement, you authorize and direct: (a) Walmart and any broker or other third party designated by Walmart to sell on your behalf a whole number of Shares corresponding to the vested Restricted Stock that Walmart or the Employer determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items; and (b) Walmart and/or the Employer, or their respective agents, at their sole discretion, to satisfy the Tax-Related Items by any other method of withholding, including through withholding from your wages or other cash compensation paid to you by Walmart or any Affiliate.

D. Depending on the withholding method, Walmart or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates. Further, if the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Tax-Related Items. In the event that any excess amounts are withheld to satisfy the obligation for Tax-Related Items, you may be entitled to receive a refund of any over- withheld amount in the form of cash and will have no entitlement to the Share equivalent.

F. By accepting this Agreement, you agree not to make a Code Section 83(b) election with respect to this award of Restricted Stock.

11. Restricted Stock Not Transferable. During the applicable periods of restriction determined in accordance with Paragraph 5 above, the Restricted Stock may not be sold, conveyed, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to vesting of the Restricted Stock and the issuance of the underlying Shares. Any attempted action in violation of this Paragraph 11 shall be null, void, and without effect.

Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Walmart determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix is incorporated by reference into these Restricted Stock Award Notification of Award and Terms and Conditions of Award and, together, these documents constitute this Agreement.

13. Nature of Plan Award. You further acknowledge, understand and agree that:

A. the Plan is established voluntarily by Walmart and is discretionary in nature;

C. all decisions with respect to future grants of Restricted Stock or other awards, if any, will be at the sole discretion of the Committee;

G. you are voluntarily participating in the Plan;

H. the Restricted Stock and the Shares underlying the Restricted Stock, and the income and value of same, are not intended to replace any pension rights or compensation;

J. unless otherwise agreed with Walmart, the Restricted Stock and the Shares underlying the Restricted Stock, and the income and the value of same, are not granted as

consideration for, or in connection with, the service (if any) you may provide as a director of any Affiliate;

K. the future value of the Shares underlying the Restricted Stock is unknown, indeterminable and cannot be predicted with certainty;

M. n the event of the termination of your Continuous Status (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), unless otherwise set forth in this Agreement, your right to vest in the Restricted Stock under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and may not be extended by any notice period under local law (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence);

14. No Advice Regarding Award. Walmart and/or its Affiliates are not providing any tax, legal or financial advice, nor are Walmart or any Affiliate making any recommendation regarding your participation in the Plan or the Shares acquired upon vesting. You are advised to consult with your personal tax, legal, and financial advisors regarding the decision to participate in the Plan and before taking any action related to the Plan.

15. Data Privacy. You hereby explicitly and unambiguously acknowledge that your personal data will be collected, used and transferred, in electronic or other form, as described in this

Agreement and any other grant materials by and among, as applicable, Walmart and any Affiliate for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that Walmart and its Affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance identification number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in Walmart or an Affiliate, details of all Restricted Stock or any other awards granted, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. You understand that Data may be transferred to Merrill Lynch, Pierce, Fenner & Smith and its affiliates or such other stock plan service provider as may be selected by Walmart in the future, which is assisting Walmart in the implementation, administration and management of the Plan. You acknowledge that you understand that the recipients of the Data may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You acknowledge and understand that you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative. You authorize Walmart, Merrill Lynch, Pierce, Fenner & Smith and any other possible recipients which may assist Walmart (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of Data as may be required to Walmart’s designated broker or other third party. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your Continuous Status with the Employer will not be affected; the only consequence of refusing or withdrawing your consent is that Walmart would not be able to grant Restricted Stock or other Plan Awards to you or administer or maintain such Plan Awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative. Finally, you acknowledge that no other agreements or consent shall be required to be given to Walmart and/or the Employer for the legitimate purposes of administering your participation in the Plan in compliance with the data privacy laws in your country, either now or in the future. You understand and acknowledge that you will not be able to participate in the Plan if you later communicate any limitation on this acknowledgement to Walmart and/or the Employer.

16. Other Provisions.

with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive and binding on you and your successors and heirs.

D. This Agreement shall be construed under the laws of the State of Delaware, without regard to its conflict of law provisions.

E. The provisions of this Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

F. You acknowledge that you are sufficiently proficient in English, or have consulted with an advisor who is sufficiently proficient in English, so as to allow you to understand the terms and conditions of this Agreement. Furthermore, if you have received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

G. Walmart may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Walmart or a third party designated by Walmart.

H. Walmart reserves the right to impose other requirements on your participation in the Plan, on your Plan Award, and the Shares underlying the Restricted Stock, to the extent Walmart determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

I. You acknowledge that a waiver by Walmart or an Affiliate of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provisions of the Plan or this Agreement, or of any subsequent breach by you or any other Associate.

J. You understand that, depending on your or your broker’s country or the country in which the Shares are listed, you may be subject to insider trading and/or market abuse laws which may affect your ability to accept, acquire, sell, or otherwise dispose of Shares, rights

to Shares or rights linked to the value of Shares under the Plan during such times you are considered to have “inside information” (as defined in the laws in the applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed insider information. Furthermore, you could be prohibited from (i) disclosing inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. The restrictions applicable under these laws may be the same or different from Walmart’s insider trading policy. You acknowledge that it is your responsibility to be informed of and compliant with such regulations, and any applicable Walmart insider trading policy, and are advised to speak to your personal legal advisor on this matter.

K. You understand that you may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from your participation in the Plan in, to and/or from a brokerage/bank account or legal entity located outside your country. The applicable laws of your country may require that you report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. You acknowledge that you are responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements, and you are advised to consult your personal legal advisor on this matter.

L. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Walmart shall not be required to deliver any Shares issuable upon vesting of the Restricted Stock prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Walmart shall, in its absolute discretion, deem necessary or advisable. You understand that Walmart is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Walmart may, without liability for its good faith actions, place legend restrictions upon Shares underlying your vested Restricted Stock and issue “stop transfer” instructions requiring compliance with applicable U.S. or other securities laws and the terms of the Agreement and Plan. Further, you agree that Walmart shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws, rules or regulations applicable to issuance of Shares.

WALMART INC. Stock incentive plan of 2015

RESTRICTED STOCK NOTIFICATION OF AWARD AND TERMS AND CONDITIONS OF AWARD

COUNTRY-SPECIFIC APPENDIX

Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Restricted Stock Award Notification of Award and Terms and Conditions of Award (the “T&C’s”).

Terms and Conditions. This Appendix includes additional terms and conditions that govern the Restricted Stock granted to you under the Plan if you work and/or reside in one of the countries listed below.

Notifications. This Appendix also includes information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of December 2019. Such laws are often complex and change frequently. As a result, Walmart strongly recommends that you not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that the Restricted Stock is granted to you or vests.

ARGENTINA

Notifications

Securities Law Information. Neither the Restricted Stock nor any Shares underlying the Restricted Stock are publicly offered or listed on any stock exchange in Argentina and, as a result, have not been and will not be registered with the Argentina Securities Commission (Comisión Nacional de Valores). Neither this Agreement nor any other materials related to the

Restricted Stock may be utilized in connection with any general offering to the public in Argentina. Argentine residents who acquire Restricted Stock under the Plan do so according to the terms of a private offering made outside Argentina.

Exchange Control Information. You understand that you must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the Restricted Stock and your participation in the Plan. You should consult with your personal legal advisor to ensure compliance with the applicable requirements.

Foreign Asset/Account Reporting Information. If you are an Argentine tax resident, you must report any Shares acquired under the Plan and held by you in a foreign bank account on December 31st of each year on your annual tax return for that year.

BRAZIL

Terms and Conditions

Compliance with the Law. By accepting the Restricted Stock, you acknowledge your agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the Restricted Stock, the sale of any Shares acquired under the Plan, and any dividends paid on such Shares.

Labor Law Acknowledgement. By accepting the Restricted Stock, you agree that you are (i) making an investment decision, (ii) the restrictions on the Restricted Stock will be lifted only if the vesting conditions are met, and (iii) the value of the Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.

Notifications

Foreign Asset/Account Reporting Information. If you hold assets and rights outside Brazil with an aggregate value exceeding US$100,000, you will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights, including: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) other investments, including real estate and other assets. Quarterly reporting obligations apply if the value of the assets and rights exceeds US$100,000,000. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil. Individuals holding assets and rights outside Brazil valued at less than US$100,000 are not required to submit a declaration. Please note that the US$100,000 threshold may be changed annually. You must also report income recognized in connection with the Restricted Stock on the annual Natural Person Income Tax Return (“DIRPF”).

Tax on Financial Transactions (IOF).

Repatriation of funds (e.g., sale proceeds) into Brazil and the conversion of USD into BRL associated with such fund transfers may be subject to the Tax on Financial Transactions. It is your responsibility to comply with any applicable Tax on Financial Transactions arising from your participation in the Plan. You should consult with your personal advisor for additional details.

CANADA

Terms and Conditions

Termination of Continuous Status. This provision replaces Paragraph 13(M) of the T&C’s:

Vesting and Delivery of Shares. This provision supplements Paragraph 5 of the T&C's:

Instead of delivering Shares upon vesting of your Restricted Stock to you as set forth in Paragraph 5 of the T&C's, Walmart or Wal- Mart Canada Corp. or an Affiliate (Wal-Mart Canada Corp. and any Affiliate of Walmart that is controlled by Wal-Mart Canada Corp. being referred to collectively as “WM Canada”), in their sole discretion, also may settle your vested Restricted Stock in cash, Shares, or a combination of cash and Shares. To the extent your Plan Award will be settled in Shares, you hereby acknowledge and agree that such settlement may be satisfied by WM Canada by forwarding a cash settlement amount in respect of the vested Restricted Stock to an independent broker who will in turn purchase the Shares on the open market on your behalf. Any Shares so purchased on the open market shall be delivered to you as set forth in Paragraph 5 of the T&C’s.

The Following Provisions Apply to Associates and Non-Management Directors Resident in Quebec:

Language Consent. The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée. Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires,

exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy. This provision supplements Paragraph 15 of the T&C’s:

Notifications

Securities Law Information. You are permitted to sell the Shares acquired through the Plan through the designated broker, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the Shares are listed (i.e., the NYSE).

Foreign Asset/ Account Reporting Information. Foreign property, including shares of stock (i.e., Shares) of a non-Canadian company held by a Canadian resident employee must generally be reported annually on a Form T1135 (Foreign Income Verification Statement), if the total cost of your specified foreign property exceeds C$100,000 at any time during the year. Thus, Restricted Stock must be reported if the C$100,000 cost threshold is exceeded because of other specified foreign property that you hold. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily is equal to the fair market value of the Shares at the time of acquisition, but if you own other Shares (acquired separately), this ACB may have to be averaged with the ACB of the other Shares.

CHILE

Terms and Conditions

Labor Law Acknowledgement. The Restricted Stock, and the income from and value of same, shall not be considered as part of your remuneration for purposes of determining the calculation base of future indemnities, whether statutory or contractual, for years of service (severance) or in lieu of prior notice, pursuant to Article 172 of the Chilean Labor Code.

Notifications

Securities Law Information. This grant of Restricted Stock constitutes a private offering of securities in Chile effective as of the Grant Date. This offer of Restricted Stock is made subject to general ruling n° 336 of the Chilean Commission of the Financial Market (“CMF”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the CMF, and, therefore, such securities are not subject to oversight of the CMF. Given that the Restricted Stock is not registered in Chile, Walmart is not required to provide

public information about the Restricted Stock in Chile. Unless the Restricted Stock is registered with the CMF, a public offering of such securities cannot be made in Chile.

Esta Oferta de Acciones Restringidas constituye una oferta privada de valores en Chile y se inicia en la Fecha de la Oferta. Esta oferta de Acciones Restringidas se acoge a las disposiciones de la Norma de Carácter General Nº 336 (“NCG 336”) de la Comisión para el Mercado Financiero de Chile (“CMF”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la CMF, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse de valores no inscritos en Chile no existe la obligación por parte de Walmart de entregar en Chile información pública respecto de los mismos. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.

Exchange Control Information. You are not required to repatriate any funds you receive with respect to the Restricted Stock (e.g., any sale proceeds) to Chile. However, if you decide to repatriate such funds, you acknowledge that you will be required to affect such repatriation through the Formal Exchange Market (i.e., a commercial bank or registered foreign exchange office) if the amount of the funds repatriated exceeds US$10,000. Further, if the value of your aggregate investments held outside Chile exceeds US$5,000,000 (including Shares and any other cash proceeds acquired under the Plan) at any time in a calendar year, you must report the status of such investments to the Central Bank of Chile.

You will also be required to provide certain information to the Chilean Internal Revenue Service (“CIRS”) regarding the results of investments held abroad and the taxes you have paid abroad (if you will be seeking a credit against Chilean income tax owed). This information must be submitted on certain electronic sworn statements before June 29 of each year, depending on the assets or taxes being reported. The statements may be found at the CIRS website at www.sii.cl.

COSTA RICA

There are no country-specific provisions.

GUATEMALA

There are no country-specific provisions.

HONG KONG

Terms and Conditions

Warning: The Restricted Stock and any Shares acquired under the Plan do not constitute a public offering of securities under Hong Kong law and are available only to employees of Walmart or an Affiliate. The Agreement, including this Appendix, the Plan and any other incidental communication materials related to the Restricted Stock (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, (ii) have not been reviewed by any regulatory authority in Hong Kong, and (iii) are intended only for the personal use of each eligible Associate or Non-Management Director of Walmart or an Affiliate and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, you should obtain independent professional advice.

Notifications

Nature of Scheme. Walmart specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.

INDIA

Terms and Conditions

Labor Law Acknowledgement. The Restricted Stock, and the income and value of same, is an extraordinary item that is not part of your annual gross salary.

Notifications

Exchange Control Information. If you are a resident of India for exchange control purposes, you will be required to repatriate the cash proceeds from the sale of Shares acquired under the Plan to India within such time as prescribed under applicable Indian exchange control laws as may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, Walmart or any Affiliate requests proof of repatriation.

Foreign Asset/ Account Reporting Information. If you are a tax resident of India, you will be required to declare foreign bank accounts and any foreign financial assets in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult with your personal tax advisor in this regard.

JAPAN

Notifications

with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include details of any outstanding Restricted Stock held by you in the report.

LUXEMBOURG

There are no country-specific provisions.

MEXICO

Terms and Conditions

No Entitlement for Claims or Compensation. The following sections supplement Paragraph 13 of the T&C’s:

Modification. By accepting the Restricted Stock, you acknowledge and agree that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of your Continuous Status.

Policy Statement. The grant of Restricted Stock is unilateral and discretionary and, therefore, Walmart reserves the absolute right to amend it and discontinue the award at any time without any liability.

Plan Document Acknowledgment. By accepting the Restricted Stock, you acknowledge that you have received copies of the Plan, have reviewed the Plan and the Agreement in their entirety and fully understand and accept all provisions of the Plan and the Agreement.

Spanish Translation

Sin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el Párrafo 13 del Contrato:

Modificación. Al aceptar las Acciones Restringidas, usted entiende y acuerda que cualquier modificación al Plan o al Contrato o su terminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.

Declaración de Política. El otorgamiento de las Acciones Restringidas que Walmart está haciendo de conformidad con el Plan es unilateral y discrecional y, por lo tanto, Walmart se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento, sin responsabilidad alguna.

Reconocimiento del Documento del Plan. Al aceptar las Acciones Restringidas, usted reconoce que ha recibido copias del Plan, ha revisado el Plan y el Contrato en su totalidad y entiende y acepta completamente todas las disposiciones contenidas en el Plan y en el Contrato.

NIGERIA

There are no country-specific provisions.

PERU

Terms and Conditions

Labor Law Acknowledgement. By accepting the Restricted Stock, you acknowledge that the Restricted Stock is being granted ex gratia to you with the purpose of rewarding you.

Notifications

Securities Law Information. The offer of the Restricted Stock is considered a private offering in Peru; therefore, it is not subject to registration. For more information concerning this offer, please refer to the Plan, the Agreement and any other grant documents made available by Walmart.

SOUTH AFRICA

Term and Conditions

Securities Law Information and Deemed Acceptance of Restricted Stock. The Restricted Stock shall not be publicly offered or listed on any stock exchange in South Africa. The offer is intended to be private pursuant to Section 96 of the Companies Act and is not subject to the supervision of any South African governmental authority. Pursuant to Section 96 of the Companies Act, the Restricted Stock offer must be finalized on or before the 60th day following the Grant Date. If you do not want to accept the Restricted Stock, you are required to decline your Restricted Stock no later than the 60th day following the Grant Date. If you do not reject your Restricted Stock on or before the 60th day following the Grant Date, you will be deemed to accept the Restricted Stock.

Tax Reporting Information. By accepting the Restricted Stock, you agree to notify Walmart or your Employer, if different, of the amount of income realized at vesting of the Restricted Stock. If you do not inform Walmart or the Employer, if different, of the income at vesting, and the Employer is subject to penalties and interest as a result of not being able to withhold Tax-Related Items, the Employer may recover any such penalty and interest amounts from you. In addition, if you fail to advise Walmart or your Employer, if different, of the income at vesting, you may be liable for a fine.

Notifications

Exchange Control Information. You should consult with your personal advisor to ensure compliance with applicable exchange control regulations in South Africa as such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in South Africa.

UNITED KINGDOM

Terms and Conditions

Taxes and Tax Withholding. This section supplements Paragraph 10 of the T&C’s:

indemnified Walmart and its Affiliates against any Tax-Related Items that they are required to pay or withhold on your behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority). Notwithstanding the foregoing, if you are a director or executive officer of Walmart (within the meaning of Section 13(k) of the Exchange Act), you understand that you may not be able to indemnify Walmart for the amount of any income tax not collected from or paid by you, in case the indemnification could be considered a loan. In this case, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and employee national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing Walmart or the Employer, as applicable, for the value of any national insurance contributions due on this additional benefit, which Walmart or the Employer may recover from you at any time thereafter by the means referred to in Paragraph 10 of the T&C’s.

UNITED STATES

Terms and Conditions

Military Leave. If you were on military leave on the Grant Date, and you are on the same military leave on a Vesting Date, your Continuous Status must be maintained for not less than six months after your return from the military leave before your Plan Award shall vest. In such circumstances, for purposes of Paragraph 5, your Vesting Date shall be deemed to be the date that is six months after your return from military leave, and the number of Shares corresponding to any vested Restricted Stock will be delivered to you as soon as administratively feasible but in any event within 74 days of vesting.

Exhibit 10.9

Name of Grantee: Grant Date: Number of Performance-Based Restricted Stock Units at Target Performance: Performance Period: Vesting Date: Walmart Identification Number:

WALMART INC. STOCK INCENTIVE PLAN OF 2015

GLOBAL SHARE-SETTLED PERFORMANCE-BASED RESTRICTED STOCK UNIT NOTIFICATION AND TERMS AND CONDITIONS

BY SIGNING OR ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU HEREBY ACKNOWLEDGE, UNDERSTAND, AGREE TO, AND ACCEPT THE FOLLOWING:

1. Grant of Performance-Based Restricted Stock Units. Walmart has granted to you, effective on the Grant Date, the PRSUs, which consist of the right to receive a number of Shares underlying the PRSUs set forth above (as further determined in Paragraph 5 below), subject to certain vesting conditions.

2. Plan Governs. The PRSUs and this Agreement are subject to the terms and conditions of the Plan. You are accepting the PRSUs, acknowledging receipt of a copy of the Plan and the prospectus covering the Plan, and acknowledging that the PRSUs and your participation in the Plan are subject to all the terms and conditions of the Plan and of this Agreement. You further agree to accept as binding, conclusive and final all decisions and interpretations by the Committee upon any disputes or questions arising under the Plan, including whether, and the extent to which, the Performance Measures, Performance Goals, and time-based vesting restrictions referred to in Paragraph 5 have been satisfied.

3. Payment. You are not required to pay for the PRSUs or the Shares underlying the PRSUs granted to you pursuant to this Agreement.

4. Stockholder Rights. Unless and until your PRSUs vest and the underlying Shares have been delivered to you:

A. You do not have the right to vote the Shares underlying your PRSUs;

B. You will not receive, nor be entitled to receive, cash or any non-cash dividends on the PRSUs or the Shares underlying the PRSUs; and

5. Adjustment and Vesting of the PRSUs and Delivery of Shares.

A. Performance Period and Achievement Rates. The Committee establishes the Performance Goals and Performance Measures applicable to your PRSUs. You will receive by separate writing a notification of the performance criteria applicable to your PRSUs in respect of the Performance Period set forth above which reflects the fiscal year of Walmart or, if different, the Affiliate that employs you (the “Employer”). The Performance Measures (including any applicable weightings thereof) and Performance Goals as set forth in such separate writing are hereby incorporated by reference into this Agreement.

1. “Threshold” performance means the achievement of the lowest possible Performance Goal established by the Committee;

2. “Target” performance means the achievement of the Performance Goal established by the Committee; and

3. “Maximum” performance means the highest possible achievement of the Performance Goal established by the Committee.

An achievement rate is determined for each Performance Measure applicable to your Plan Award in respect of the Performance Period. The achievement rate value applied

to each weighted Performance Measure during the Performance Period is expressed as a percentage and may range from 0% (for achieving less than Threshold Performance), 50% (for achieving at least, but no less than, Threshold performance), 100% (for achieving Target performance), or up to 150% (for achieving Maximum performance). A percentage of 0% shall be applied to a Performance Measure during the Performance Period if Threshold performance is not achieved. The weighted average of all applicable achievement rates during the Performance Period is referred to herein as the “Performance Achievement Rate.”

At the end of the Performance Period, the number of PRSUs that were granted to you shall be adjusted to reflect the degree to which applicable Performance Goals have been attained by multiplying: (x) the Performance Achievement Rate and (y) the number of PRSUs granted by this Agreement. Subject to Paragraph 10 below, and provided you have not incurred a Forfeiture Condition before the Vesting Date, the adjusted number of PRSUs (the “Adjusted PRSUs”) represent the number of Shares you shall receive, as described in Paragraph 5.C below.

B. Vesting of the Adjusted PRSUs. Subject to Paragraph 7 and provided you have not incurred a Forfeiture Condition, your Adjusted PRSUs will vest on the Vesting Date set forth above.

C. Delivery of Shares. Upon the vesting of your Plan Award, you shall be entitled to receive a number of Shares equal to the number of Adjusted PRSUs as calculated in Paragraph 5.A. above less any Shares withheld or sold to satisfy tax withholding obligations as set forth in Paragraph 10 below. The Shares shall be delivered to you as soon as administratively feasible following the later of: (x) the Vesting Date set forth above; and (y) the date the Committee has determined the degree of attainment of the Performance Goals applicable to your Plan Award, but in any event:

1. within 150 days of the Vesting Date; or

2. within 74 days of an Accelerated Vesting pursuant to Paragraph 8 below.

D. Elective Deferral of Shares. If you are eligible to defer delivery of the Shares upon vesting of Adjusted PRSUs to a future date in accordance with Section 10.9 of the Plan and rules and procedures relating thereto, you will be advised as to when any such deferral election must be made and the rules and procedures applicable to such deferral election.

6. Forfeiture Condition. Subject to Paragraph 8 below, any PRSUs that would otherwise vest in whole or in part on the Vesting Date, if any, will not vest and will be immediately forfeited if, prior to the Vesting Date:

A. your Continuous Status terminates for any reason (other than death or Disability, to the extent provided in Paragraph 8 below); or

B. you have not executed and delivered to Walmart a Non-Disclosure and Restricted Use Agreement, in a form to be provided to you by Walmart.

Each of the events described in Paragraphs 6.A and 6.B above shall be referred to as a “Forfeiture Condition” for purposes of this Agreement. Furthermore, if applicable, you shall be advised if the Committee has determined that vesting of this Plan Award is further conditioned upon your execution and delivery to Walmart of a Post Termination Agreement and Covenant Not to Compete, in a form to be provided to you by Walmart. If applicable, the failure to execute and deliver such Post Termination Agreement and Covenant Not to Compete prior to the Vesting Date shall also be deemed a “Forfeiture Condition” for purposes of this Agreement. Upon the occurrence of a Forfeiture Condition, you shall have no further rights with respect to such PRSUs, any Adjusted PRSUs, or the underlying Shares.

7. Administrative Suspension. If you are subject to an administrative suspension, vesting of your PRSUs may be suspended as of the date you are placed on administrative suspension. If you are not reinstated as an Associate in good standing at the end of the administrative suspension period, your PRSUs may be immediately forfeited and you shall have no further rights with respect to such PRSUs or the underlying Shares. If you are reinstated as an Associate in good standing at the end of the administrative suspension period, then the vesting of your PRSUs will resume as provided in Paragraph 5, and any PRSUs that would have vested while you were on administrative suspension will vest and the corresponding number of Shares will be delivered to you as soon as administratively feasible, but in any event within 74 days of the end of the administrative suspension period which shall be considered the Vesting Date for purposes of this Paragraph 7.

8. Accelerated Vesting; Vesting Notwithstanding Termination of Continuous Status by Death or Disability. If your Continuous Status is terminated by reason of your death or Disability prior to the Vesting Date and you have not incurred a Forfeiture Condition, any PRSUs that are scheduled to vest within one year of the date your Continuous Status is terminated by reason of your death or Disability will become immediately vested and such earlier vesting date shall be considered a Vesting Date for purposes of this Agreement; provided, however, that if, as of such date the determination of attainment of Performance Goals for any such PRSUs has not yet been determined for your Plan Award, then achievement of Target performance for all applicable Performance Goals shall be assumed for purpose of this Paragraph 8.

For purposes of this Paragraph 8, your Continuous Status will be considered terminated on the date of your death or the date on which your employment or other service relationship

has been legally terminated by reason of your Disability. For purposes of this Agreement, “Disability” shall mean that you would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of Walmart or, if different, the Employer, regardless of whether you are covered by such policy. If Walmart or, if different, the Employer does not have a long-term disability policy, for purposes of this Agreement, “Disability” means that you are unable to carry out the responsibilities and functions of the position held by you by reason of any medically determined physical or mental impairment for a period of not less than one hundred and eighty (180) consecutive days. You shall not be considered to have incurred a Disability unless you furnish proof of such impairment sufficient to satisfy Walmart in its sole discretion. If your Continuous Status is terminated due to a Disability, you agree to promptly notify the Walmart Global Equity team. Notwithstanding any provision of this Agreement, Walmart will not accelerate your Plan Award if Walmart has not received notification of your termination within such period of time that it determines, in its sole discretion, to be necessary to process the settlement of your Plan Award to avoid adverse tax consequences under Section 409A of the Code.

9. Permanent Transfers Between Walmart and Walmart Affiliates.

A. Permanent Transfers and Continuous Status. For the avoidance of doubt, a permanent transfer of Continuous Status from Walmart, or the Employer (if different), to another Affiliate or from an Affiliate to Walmart does not constitute a termination of your Continuous Status.

B. Applicable Performance Measures and Goals Upon Permanent Transfer. If you permanently transfer your Continuous Status during the Performance Period, then the performance criteria and the resulting adjustment will be prorated and/or adjusted to reflect the proportion of the Performance Period during which you provided service to Walmart, or, if different, the Affiliate that initially employed you (the “Initial Employer”) and the proportion of the Performance Period during which you provided service to Walmart or, if different, the Affiliate to which you permanently transferred (the “Subsequent Employer”).

C. Permanent Transfers to Affiliate or Position where Performance-Based Awards are Not Granted. If you permanently transfer your Continuous Status to an Affiliate or into a position where performance-based Plan Awards are not granted, the performance criteria applicable for the remaining portion of your Performance Period shall be communicated to you, and your PRSUs will be prorated and adjusted using the methodology described in Paragraph 9.B above.

D. Transfers to New Position with Same Employer. If you transfer to a position with the same Employer (as defined herein) but your new position is subject to different applicable Performance Measures (including any applicable weightings thereof) and Performance Goals, then the performance criteria applicable for the remaining portion of your Performance Period shall be communicated to you, and your PRSUs will be prorated and adjusted using the methodology described in Paragraph 9.B above.

10. Taxes and Tax Withholding.

B. You acknowledge that, regardless of any action taken by Walmart (or if different, the Employer), the ultimate liability for all income tax, social insurance, pension, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”) is and remains your responsibility and may exceed the amount actually withheld by Walmart or the Employer. You further acknowledge that Walmart and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PRSUs, including, but not limited to, the grant, vesting or settlement of the PRSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the PRSUs or any aspect of the PRSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Walmart and/or the Employer (or your former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

C. Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to Walmart and the Employer to satisfy all Tax-Related Items. In this regard, you authorize Walmart, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding of Shares to be issued upon settlement of the Adjusted PRSUs. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by your acceptance of the PRSUs and this Agreement, you authorize and direct (a) Walmart and any broker or other third party designated by Walmart to sell on your behalf a whole number of Shares corresponding to the Adjusted PRSUs that Walmart or the Employer determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items and (b) Walmart and/or the Employer, or their respective agents, at their sole discretion to satisfy the Tax-Related Items by any other method of withholding, including through withholding from your wages or other cash compensation paid to you by Walmart or any Affiliate.

D. Depending on the withholding method, Walmart or the Employer may withhold or account for the Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates in the relevant jurisdictions. Further, if the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the Adjusted PRSUs, notwithstanding that a number of the Shares are withheld solely for the purpose of paying the Tax-

Related Items. In the event that any excess amounts are withheld to satisfy the obligation for Tax-Related Items, you may be entitled to receive a refund of any over withheld amount in the form of cash and will have no entitlement to the Share equivalent.

E. Finally, you agree to pay to Walmart or the Employer any amount of Tax-Related Items that Walmart or the Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means previously described. Walmart may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if you fail to comply with your obligations in connection with the Tax-Related Items.

11. PRSUs Not Transferable. The PRSUs may not be sold, conveyed, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to vesting of the Adjusted PRSUs and the issuance of the underlying Shares. Any attempted action in violation of this Paragraph 11 shall be null, void, and without effect.

12. Country-Specific Appendix. Notwithstanding any provision in these Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions to the contrary, the grant of PRSUs also shall be subject to any special terms and conditions set forth in any appendix attached hereto (the “Appendix”) with respect to certain laws, rules and regulations specific to your country. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Walmart determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix is incorporated by reference into these Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions and, together, these documents constitute this Agreement.

13. Nature of Plan Award. You further acknowledge, understand and agree that:

A. the Plan is established voluntarily by Walmart and is discretionary in nature;

C. all decisions with respect to future grants of PRSUs or other awards, if any, will be at the sole discretion of the Committee;

D. neither this Agreement nor the Plan creates or amends any contract of employment with any entity involved in the management or administration of the Plan or this Agreement, and nothing in this Agreement or the Plan shall interfere with or limit in any way the right of Walmart or, if different, the Employer to terminate your Continuous Status at any time, nor confer upon you the right to continue in the employ of Walmart or any Affiliate;

E. the PRSUs and the Shares underlying the PRSUs, and the income from and value of same, relate exclusively to your Continuous Status during the vesting period applicable to your PRSUs;

G. you are voluntarily participating in the Plan;

H. the PRSUs and the Shares underlying the PRSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;

I. the PRSUs and the Shares underlying the PRSUs, and the income from and value of same, are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;

J. unless otherwise agreed with Walmart in writing, the PRSUs and the Shares underlying the PRSUs, and the income from and the value of same, are not granted as consideration for, or in connection with, the service (if any) you may provide as a director of any Affiliate;

K. the future value of the Shares underlying the PRSUs is unknown, indeterminable and cannot be predicted with certainty;

M. in the event of the termination of your Continuous Status (whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), including as a result of the closing of any transaction or other agreement that results in the Employer ceasing to be an Affiliate of Walmart, unless otherwise set forth in this Agreement your right to vest in the PRSUs under the Plan, if any, will terminate effective as of the date that you are no longer actively providing services and may not be extended by any notice period under local law (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to

determine when you are no longer actively employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence or whether the Employer has ceased to be an Affiliate of Walmart);

N. unless otherwise provided in the Plan or by Walmart in its discretion, the PRSUs and the benefits evidenced by this Agreement do not create any entitlement to have the PRSUs, the Shares underlying the PRSUs or any Adjusted PRSUs, or any such benefits transferred to, or assumed by, another company nor to be exchanged, or substituted for, in connection with any corporate transaction affecting the Shares underlying the PRSUs and any Adjusted PRSUs; and

O. if you are providing services outside the United States: neither Walmart nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the PRSUs or of any amounts due to you pursuant to the settlement of the PRSUs or the subsequent sale of any Shares acquired upon settlement.

14. No Advice Regarding Award. Walmart and/or its Affiliates are not providing any tax, legal or financial advice, nor are Walmart or any Affiliate making any recommendation regarding your participation in the Plan or the Shares underlying the PRSUs acquired upon vesting. You are advised to consult with your personal tax, legal, and financial advisors regarding the decision to participate in the Plan and before taking any action related to the Plan.

15. Data Privacy. You hereby explicitly and unambiguously acknowledge that your personal data will be collected, used and transferred, in electronic or other form, as described in this Agreement and any other grant materials by and among, as applicable, Walmart and any Affiliate for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that Walmart and its Affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, email address, date of birth, social insurance identification number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in Walmart or an Affiliate, details of all PRSUs or any other awards granted, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. You acknowledge that you understand that Data may be transferred to Merrill Lynch, Pierce, Fenner & Smith and its affiliates or such other stock plan service provider as may be selected by Walmart in the future, which is assisting Walmart in the implementation, administration and management of the Plan. You acknowledge that you understand that the recipients of the Data may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You acknowledge and understand that you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative. You authorize Walmart, Merrill Lynch, Pierce, Fenner & Smith and any other possible recipients which may assist Walmart (presently or in the future) with implementing, administering and managing the Plan

to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of Data as may be required to Walmart’s designated broker or other third party. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your Continuous Status with the Employer will not be affected; the only consequence of refusing or withdrawing your consent is that Walmart would not be able to grant PRSUs or other Plan Awards to you or administer or maintain such Plan Awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative. Finally, you acknowledge that no other agreements or consent shall be required to be given to Walmart and/or the Employer for the legitimate purposes of administering your participation in the Plan in compliance with the data privacy laws in your country, either now or in the future. You understand and acknowledge that you will not be able to participate in the Plan if you later communicate any limitation on this acknowledgment to Walmart and/or the Employer.

16. Other Provisions.

E. This Agreement shall be construed under the laws of the State of Delaware, without regard to its conflict of law provisions.

G. You acknowledge that you are sufficiently proficient in English, or have consulted with an advisor who is sufficiently proficient in English, so as to allow you to understand the terms and conditions of this Agreement. Furthermore, if you have received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

H. Walmart may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Walmart or a third party designated by Walmart.

I. Walmart reserves the right to impose other requirements on your participation in the Plan, on your Plan Award and the Shares underlying the PRSUs awarded pursuant to this Agreement, to the extent Walmart determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

K. You understand that depending on your or your broker’s country or the country in which the Shares are listed, you may be subject to insider trading and/or market abuse laws which may affect your ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., PRSUs and Adjusted PRSUs) or rights linked to the value of Shares under the Plan during such times you are considered to have “inside information” (as defined in the laws in the applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before you possessed insider information. Furthermore, you could be

prohibited from (i) disclosing inside information to any third party, which may include fellow employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. The restrictions applicable under these laws may be the same or different from Walmart’s insider trading policy. You acknowledge that it is your responsibility to be informed of and compliant with such regulations and any applicable Walmart insider trading policy, and are advised to speak to your personal legal advisor on this matter.

L. You understand that you may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holding and/or transfer of Shares or cash (including dividends and the proceeds arising from the sale of Shares) derived from your participation in the Plan in, to and/or from a brokerage/bank account or legal entity located outside your country. The applicable laws of your country may require that you report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the applicable authorities in such country. You acknowledge that you are responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting requirements, and you are advised to consult your personal legal advisor on this matter.

M. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, Walmart shall not be required to deliver any Shares issuable upon vesting of the PRSUs prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Walmart shall, in its absolute discretion, deem necessary or advisable. You understand that Walmart is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Walmart may, without liability for its good faith actions, place legend restrictions upon Shares underlying your Adjusted PRSUs and issue “stop transfer” instructions requiring compliance with applicable U.S. or other securities laws and the terms of the Agreement and Plan. Further, you agree that Walmart shall have unilateral authority to amend the Plan and the Agreement without your consent to the extent necessary to comply with securities or other laws, rules or regulations applicable to issuance of Shares.

WALMART INC. Stock incentive plan of 2015

GLOBAL SHARE-SETTLED PERFORMANCE-BASED RESTRICTED STOCK UNIT NOTIFICATION AND TERMS AND CONDITIONS

COUNTRY-SPECIFIC APPENDIX

Terms and Conditions. This Appendix includes additional terms and conditions that govern the PRSUs granted to you under the Plan if you work and/or reside in one of the countries listed below.

Notifications. This Appendix also includes information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of December 2019. Such laws are often complex and change frequently. As a result, Walmart strongly recommends that you not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that the PRSUs vest or you receive Shares under the Plan.

ARGENTINA

Notifications

Securities Law Information. Neither the PRSUs nor any Shares subject to the PRSUs are publicly offered or listed on any stock exchange in Argentina, as a result, have not been and will not be registered with the Argentina Securities Commission (Comisión Nacional de Valores). Neither this Agreement nor any other materials related to the PRSUs, nor the underlying Shares, may be utilized in connection with any general offering to the public in Argentina. Argentine residents who acquire PRSUs under the Plan do so according to the terms of a private offering made outside Argentina.

Exchange Control Information. You understand that you must comply with any and all Argentine currency exchange restrictions, approvals and reporting requirements in connection with the PRSUs and your participation in the Plan. You should consult with your personal legal advisor to ensure compliance with the applicable requirements.

BRAZIL

Terms and Conditions

Compliance with the Law. By accepting the PRSUs, you acknowledge your agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the PRSUs, the sale of any Shares acquired under the Plan, and any dividends paid on such Shares.

Labor Law Acknowledgement. By accepting the PRSUs, you agree that you are (i) making an investment decision, (ii) the Shares will be issued to you only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to you.

Notifications

Foreign Asset/Account Reporting Information. If you hold assets and rights outside Brazil with an aggregate value exceeding US$100,000, you will be required to prepare and submit to the Central Bank of Brazil an annual declaration of such assets and rights, including: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) other investments, including real estate and other assets. Quarterly reporting obligations apply if the value of the assets and rights exceeds US$100,000,000. Please note that foreign individuals holding Brazilian visas are considered Brazilian residents for purposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date of admittance as a resident of Brazil. Individuals holding assets and rights outside Brazil valued at less than US$100,000 are not required to submit a declaration. Please note that the US$100,000 threshold may be changed annually. You must

also report income recognized in connection with the PRSUs on the annual Natural Person Income Tax Return (“DIRPF”).

Tax on Financial Transactions (IOF). Repatriation of funds (e.g., sale proceeds) into Brazil and the conversion of USD into BRL associated with such fund transfers may be subject to the Tax on Financial Transactions. It is your responsibility to comply with any applicable Tax on Financial Transactions arising from your participation in the Plan. You should consult with your personal advisor for additional details.

CANADA

Terms and Conditions

Termination of Continuous Status. This provision replaces Paragraph 13(M) of the T&C’s:

In the event of the termination of your Continuous Status (whether or not later found to be invalid for any reason, including for breaching either applicable employment laws or your employment agreement, if any), unless otherwise set forth in this Agreement, your right to vest in the PRSUs under the Plan, if any, will terminate effective as the earlier of (i) the date on which your Continuous Status is terminated, (ii) the date on which you receive a notice of termination, or (iii) the date you no longer actively provide service to Walmart or any Affiliate, regardless of any notice period or period of pay in lieu of such notice required under local law. The Committee shall have the exclusive discretion to determine when you are no longer employed for purposes of this Agreement (including whether you may still be considered to be providing services while on a leave of absence).

Vesting and Delivery of Shares. This provision supplements Paragraph 5 of the T&C's:

Instead of delivering Shares upon vesting of your PRSUs to you as set forth in Paragraph 5 of the T&C's, Walmart or Wal-Mart Canada Corp. or an Affiliate (Wal-Mart Canada Corp. and any Affiliate of Walmart that is controlled by Wal-Mart Canada Corp. being referred to collectively as “WM Canada”), in their sole discretion, also may settle your Adjusted PRSUs in cash, Shares, or a combination of cash and Shares. To the extent your Plan Award will be settled in Shares, you hereby acknowledge and agree that such settlement may be satisfied by WM Canada by forwarding a cash settlement amount in respect of the Adjusted PRSUs to an independent broker who will in turn purchase the Shares on the open market on your behalf. Any Shares so purchased on the open market shall be delivered to you as set forth in Paragraph 5 of the T&C’s.

The Following Provisions Apply to Associates and Non-Management Directors Resident in Quebec:

Language Consent. The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée. Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy. This provision supplements Paragraph 15 of the T&C’s:

Notifications

Securities Law Information. You are permitted to sell the Shares acquired through the Plan through the designated broker, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the Shares are listed (i.e., the NYSE).

Foreign Asset/ Account Reporting Information. Foreign property, including shares of stock (i.e., Shares) and other rights to receive Shares (e.g., PRSUs) of a non-Canadian company held by a Canadian resident employee must generally be reported annually on a Form T1135 (Foreign Income Verification Statement), if the total cost of your specified foreign property exceeds C$100,000 at any time during the year. Thus, PRSUs must be reported (generally at a nil cost) if the C$100,000 cost threshold is exceeded because of other specified foreign property that you hold. When Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB ordinarily is equal to the fair market value of the Shares at the time of acquisition, but if you own other Shares (acquired separately), this ACB may have to be averaged with the ACB of the other Shares.

CHILE

Terms and Conditions

Labor Law Acknowledgement. The PRSUs and the Shares underlying the PRSUs, and the income from and value of same, shall not be considered as part of your remuneration for purposes of determining the calculation base of future indemnities, whether statutory or contractual, for years of service (severance) or in lieu of prior notice, pursuant to Article 172 of the Chilean Labor Code.

Notifications

Securities Law Information. This grant of PRSUs constitutes a private offering of securities in Chile effective as of the Grant Date. This offer of PRSUs is made subject to general ruling n° 336 of the Chilean Commission of Financial Market (“CMF”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the CMF, and, therefore, such securities are not subject to oversight of the CMF. Given that the PRSUs are not registered in Chile, Walmart is not required to provide public information about the PRSUs or the Shares in Chile. Unless the PRSUs and/or the Shares are registered with the CMF, a public offering of such securities cannot be made in Chile.

Esta Oferta de PRSUs (“Unidades”) constituye una oferta privada de valores en Chile y se inicia en la Fecha de la Oferta. Esta oferta de Unidades se acoge a las disposiciones de la Norma de Carácter General Nº 336 (“NCG 336”) de la Comisión para el Mercado Financiero de Chile (“CMF”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la CMF, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse de valores no inscritos en Chile no existe la obligación por parte de Walmart de entregar en Chile información pública respecto de los mismos. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.

Exchange Control Information. You are not required to repatriate any funds you receive with respect to the PRSUs (e.g., any proceeds from the sale of any Shares issued upon vesting of the PRSUs) to Chile. However, if you decide to repatriate such funds, you acknowledge that you will be required to affect such repatriation through the Formal Exchange Market (i.e., a commercial bank or registered foreign exchange office) if the amount of the funds repatriated exceeds US$10,000. Further, if the value of your aggregate investments held outside Chile exceeds US$5,000,000 (including Shares and any other cash proceeds acquired under the Plan) at any time in a calendar year, you must report the status of such investments to the Central Bank of Chile.

You will also be required to provide certain information to the Chilean Internal Revenue Service (“CIRS”) regarding the results of investments held abroad and the taxes you have paid abroad (if you will be seeking a credit against Chilean income tax owed). This information must be submitted on certain electronic sworn statements before June 29 of each year, depending on the assets or taxes being reported. Those statements may be found at the CIRS website at www.sii.cl.

You may be ineligible to receive certain foreign tax credits if you fail to meet the applicable reporting requirements. Exchange control and tax reporting requirements in Chile are subject to change and you should consult with your personal legal and tax advisor regarding any reporting obligations that you may have in connection with the PRSUs.

COSTA RICA

There are no country-specific provisions.

GUATEMALA

There are no country-specific provisions.

HONG KONG

Terms and Conditions

Form of Settlement. The grant of PRSUs does not provide any right for you to receive a cash payment, and the PRSUs are payable only in Shares.

Warning: The PRSUs and any Shares acquired under the Plan do not constitute a public offering of securities under Hong Kong law and are available only to employees of Walmart or an Affiliate. The Agreement, including this Appendix, the Plan and any other incidental communication materials related to the PRSUs (i) have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, (ii) have not been reviewed by any regulatory authority in Hong Kong, and (iii) are intended only for the personal use of each eligible Associate or Non-Management Director of Walmart or an Affiliate and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, you should obtain independent professional advice.

Notifications

Nature of Scheme. Walmart specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.

INDIA

Terms and Conditions

Labor Law Acknowledgement. The PRSUs and the Shares underlying the PRSUs, and the income and value of same, are extraordinary items that are not part of your annual gross salary.

Notifications

Exchange Control Information. If you are a resident of India for exchange control purposes, you will be required to repatriate the cash proceeds from the sale of Shares issued upon vesting of PRSUs to India within such time as prescribed under applicable Indian exchange control laws, as may be amended from time to time. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should

maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, Walmart or any Affiliate requests proof of repatriation.

Foreign Asset/ Account Reporting Information. If you are a tax resident of India, you will be required to declare foreign bank accounts and any foreign financial assets in your annual tax return. It is your responsibility to comply with this reporting obligation and you should consult with your personal tax advisor in this regard.

JAPAN

Notifications

Foreign Asset/ Account Reporting Information. If you are a Japanese tax resident, you will be required to report details of any assets held outside Japan as of December 31st (including any Shares or cash acquired under the Plan) to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15th each year. You should consult with your personal tax advisor as to whether the reporting obligation applies to you and whether you will be required to include details of any outstanding Shares, PRSUs or cash held by you in the report.

LUXEMBOURG

There are no country-specific provisions.

MEXICO

Terms and Conditions

No Entitlement for Claims or Compensation. The following sections supplement Paragraph 13 of the T&C’s:

Modification. By accepting the PRSUs, you acknowledge and agree that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of your Continuous Status.

Policy Statement. The grant of PRSUs is unilateral and discretionary and, therefore, Walmart reserves the absolute right to amend it and discontinue the award at any time without any liability.

Walmart, with registered offices at 702 Southwest 8th Street, Bentonville, Arkansas 72716, U.S.A., is solely responsible for the administration of the Plan, and participation in the Plan and the PRSUs does not, in any way, establish an employment relationship between you and Walmart or any Affiliate since you are participating in the Plan on a wholly commercial basis.

Plan Document Acknowledgment. By accepting the PRSUs, you acknowledge that you have received copies of the Plan, have reviewed the Plan and the Agreement in their entirety and fully understand and accept all provisions of the Plan and the Agreement.

Spanish Translation

Sin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el Párrafo 13 del Contrato:

Modificación. Al aceptar las PRSUs (“Unidades”), usted entiende y acuerda que cualquier modificación al Plan o al Contrato o su terminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.

Declaración de Política. El otorgamiento de Unidades que Walmart está haciendo de conformidad con el Plan es unilateral y discrecional y, por lo tanto, Walmart se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento, sin responsabilidad alguna.

Walmart, con oficinas registradas ubicadas en 720 Southwest 8th Street, Bentonville, Arkansas 72716, EE.UU. es únicamente responsable de la administración del Plan y la participación en el Plan y la adquisición de Unidades no establece, de forma alguna, una relación de trabajo entre usted y Walmart o alguna compañía afiliada, ya que usted participa en el Plan de una forma totalmente comercial.

Reconocimiento del Documento del Plan. Al aceptar las Unidades, usted reconoce que ha recibido copias del Plan, ha revisado el Plan y el Contrato en su totalidad y entiende y acepta completamente todas las disposiciones contenidas en el Plan y en el Contrato.

y cualquier compañía afiliada no son responsables por cualquier disminución en el valor de las Acciones (o su equivalente en efectivo) subyacentes a las Unidades bajo el Plan.

NIGERIA

There are no country-specific provisions.

PERU

Terms and Conditions

Labor Law Acknowledgement. By accepting the PRSUs, you acknowledge that the PRSUs are being granted ex gratia to you with the purpose of rewarding you.

Notifications

Securities Law Information. The offer of the PRSUs is considered a private offering in Peru; therefore, it is not subject to registration. For more information concerning this offer, please refer to the Plan, the Agreement, and any other grant documents made available by Walmart.

SOUTH AFRICA

Term and Conditions

Securities Law Information and Deemed Acceptance of PRSUs. Neither the PRSUs nor the underlying Shares shall be publicly offered or listed on any stock exchange in South Africa. The offer is intended to be private pursuant to Section 96 of the Companies Act and is not subject to the supervision of any South African governmental authority. Pursuant to Section 96 of the Companies Act, the PRSUs offer must be finalized on or before the 60th day following the Grant Date. If you do not want to accept the PRSUs, you are required to decline your PRSUs no later than the 60th day following the Grant Date. If you do not reject your PRSUs on or before the 60th day following the Grant Date, you will be deemed to accept the PRSUs.

Tax Reporting Information. By accepting the PRSUs, you agree to notify Walmart or your Employer, if different, of the amount of income realized at vesting of the PRSUs. If you do not inform Walmart or the Employer, if different, of the income at vesting, and the Employer is subject to penalties or interest as a result of not being able to withhold Tax-Related Items, the Employer may recover any such penalty and interest amounts from you. In addition, if

you fail to advise Walmart or your Employer, if different, of the income at vesting, you may be liable for a fine.

Notifications

Exchange Control Information. You should consult with your personal advisor to ensure compliance with applicable exchange control regulations in South Africa as such regulations are subject to frequent change. You are responsible for ensuring compliance with all exchange control laws in South Africa.

UNITED KINGDOM

Terms and Conditions

Taxes and Tax Withholding. This section supplements Paragraph 10 of the T&C’s:

Without limitation to Paragraph 10 of the T&C’s, you agree that you are liable for all Tax-Related Items and hereby covenant to pay all such Tax-Related Items as and when requested by Walmart or any Affiliate or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). You also agree to indemnify and keep indemnified Walmart and its Affiliates against any Tax-Related Items that they are required to pay or withhold on your behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority). Notwithstanding the foregoing, if you are a director or executive officer of Walmart (within the meaning of Section 13(k) of the Exchange Act), you understand that you may not be able to indemnify Walmart for the amount of any income tax not collected from or paid by you, in case the indemnification could be considered a loan. In this case, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and employee national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing Walmart or the Employer, as applicable, for the value of any national insurance contributions due on this additional benefit, which Walmart or the Employer may recover from you at any time thereafter by the means referred to in Paragraph 10 of the T&C’s.

UNITED STATES

Terms and Conditions

Military Leave. If you were on military leave on the Grant Date, and you are on the same military leave on a Vesting Date, your Continuous Status must be maintained for not less than six months after your return from the military leave before your Plan Award shall vest. In such circumstances, for purposes of Paragraph 5, your Vesting Date shall be deemed to be the date that is six months after your return from military leave, and the number of Shares corresponding to any Adjusted PRSUs will be delivered to you as soon as administratively feasible but in any event within 74 days of vesting.

Exhibit 10.16

Post-Termination Agreement and Covenant Not to Compete This Post-Termination Agreement and Covenant Not to Compete (this “Agreement”) is entered into as of June 6, 2019 by and between Walmart Inc., a Delaware Corporation and its subsidiaries and affiliates (collectively, “Walmart”) and Suresh Kumar (“Associate”).

Recitals

WHEREAS, Associate has accepted an offer letter from Walmart dated April 26, 2019 (the “Offer Letter”) whereby Associate has agreed to become Global Chief Technology Officer and Chief Development Officer (the “Initial Employment”); and

WHEREAS, as a material condition of Associate’s Initial Employment with Walmart and to receiving the compensation detailed in the Offer Letter including, specifically, the Sign-On Bonus and certain special equity awards (which are detailed in the Offer Letter), Associate is required to execute and deliver this Agreement to be attached as Exhibit A to the Offer Letter. Associate hereby executes this Agreement in Bentonville, Arkansas, where Walmart maintains its principal corporate offices ("Corporate").

Agreement

NOW, THEREFORE, in consideration of the premises and acknowledgments, covenants, representations, warranties and agreements contained herein and for other good and valuable consideration, including but not limited to, Associate’s Initial Employment with Walmart, the opportunity to receive the compensation and Sign-On Bonus detailed in the Offer Letter, and the promise of payments under this Agreement, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

I. Acknowledgements As part of this Agreement, the parties specifically acknowledge that:

a) Walmart is a major retail operation, with stores located throughout the United States, territories of the United States and in certain foreign countries;

b) Associate will become Global Chief Technology Officer and Chief Development Officer, which is a key executive officer position appointed by the Walmart Board of Directors and Associate will report to the President and Chief Executive Officer of Walmart, who is located at Corporate;

c) As an essential part of its business, Walmart has cultivated, established and maintained long-term customer and vendor relationships and goodwill, and competitive advantages which are difficult to develop and maintain, have required and continue to require a significant investment of time, effort and expense, and that can suffer significantly and irreparably upon the departure of key officers, regardless of whether the officer has been personally involved in developing or maintaining the relationships, goodwill or competitive advantages;

d) In the development of its business, Walmart has expended a significant amount of time, money and effort in developing, maintaining and protecting private, sensitive, confidential, proprietary and trade secret information including but not limited to, information regarding Walmart’s products or services, strategies, research and development efforts, logistics, transportation, selling and delivery plans, geographic markets, developing or potential geographic markets, developing or potential product markets, mergers, acquisitions, divestitures, data, business methods, computer programs and related source and object code, supplier and customer relationships, contacts and information, methods or sources of product manufacture, know-how, product or service cost or pricing, personnel allocation or organizational structure, business, marketing, development and expansion or contraction plans, information concerning the legal or financial affairs of Walmart, any other non-public information, and any other information protected by the Nondisclosure and Restricted Use Agreement executed by

Associate (collectively, “Confidential Information”), the disclosure or misuse of which could cause irreparable harm to Walmart’s business, anticipated business, and its competitive position in the retail marketplace;

e) As Global Chief Technology Officer and Chief Development Officer, Associate will have access to Confidential Information that would be of considerable value to Walmart’s global and domestic competitors and potential competitors; and

f) Associate acknowledges that Walmart is entitled to take appropriate steps to ensure: i. That its associates do not misappropriate or make any other improper use of Confidential Information; ii. That no individual associate, competitor or potential competitor gains an unfair, competitive advantage over Walmart; and iii. That its competitors and potential competitors do not improperly gain access to or make any use of Confidential Information in

their efforts to compete against, or cause harm to, Walmart.

II. Transition Payments For purposes of this Agreement, the term "Separation Date" means the effective date of Associate’s termination of employment with Walmart. If Walmart terminates Associate’s employment, Walmart will pay Associate certain transition payment(s) as detailed below based upon Associate’s base salary at the rate in effect on the Separation Date (“Transition Payments”), subject to such withholding as may be required by law and subject to the conditions set forth in this Section II. Transition Payments will commence and be paid at the times and in the amounts provided in Section II (f).

a) Transition Payments will not be paid if Associate is terminated as the result of Associate’s violation of any Walmart policy. b) No Transition Payments will be paid if Associate voluntarily resigns or retires from employment with Walmart. c) Receipt of Transition Payments is contingent on Associate executing a waiver and release of claims at the time of Associate’s

separation from employment with Walmart in a form that is satisfactory to Walmart. d) Given the availability of other programs designed to provide financial protection in such circumstances, Transition Payments will not

be paid under this Agreement if Associate dies or becomes disabled on or before the Separation Date. If Associate dies during the period when Transition Payments are being made, Transition Payments will cease, and Associate’s heirs will not be entitled to the continuation of such payments. Transition Payments will not be affected should Associate become disabled after the Separation Date.

e) Associate’s violation of the obligations under Sections IV, V or VI, below, or any other act that is materially harmful to Walmart’s business interests while the Agreement remains in effect, will result in the immediate termination of the Transition Payments, the recovery of the Transition Payments already made, and any other remedies that may be available to Walmart. In such event, Associate acknowledges that this Agreement and Associate's obligations hereunder shall continue per their terms and that Associate shall not claim that the Agreement fails for lack of consideration in light of the Sign-On Bonus and Initial Employment specifically referenced and incorporated above.

f) Transition Payments will be paid on the following schedule based on length of service: i. Should Associate's Separation Date be on or before January 31, 2020, the Transition Payment will be equivalent to three (3)

months of base salary, and will be paid within thirty (30) days of the Separation Date; ii. Should Associate's Separation Date be anytime between February 1, 2020 through January 31, 2021, the Transition Payment

will be one (1) year of base salary. 50% of such Transition Payment will be paid within thirty (30) days of the Separation Date and the remainder will be paid in accordance with subsection iv below; and

iii. Should Associate's Separation Date be on or after February 1, 2021, the Transition Payment will be two (2) years of base salary. 25% of such Transition Payment will be paid within thirty (30) days of the Separation Date and the remainder will be paid in accordance with subsection iv below.

iv. The remainder of the Transition Payments per subsection ii and iii above shall commence on the first regularly scheduled pay period six (6) months after Associate’s termination and

shall be made during each regularly scheduled pay period thereafter until paid in full. Each Transition Payment shall be the amount which would have continued as part of Associate’s regular base salary, less applicable withholding, and shall be made in the regularly scheduled payroll cycle, subject to the terms and conditions of this Agreement.

g) Receipt of Transition Payments will not entitle Associate to participate during the Transition Period in any other incentive, restricted stock, performance share, stock option, stock incentive, profit sharing, management incentive or other associate benefit plan or program maintained by Walmart; except that, Associate will be entitled to participate in such plans or programs to the extent that the terms of the plan or program provide for participation by former associates. Such participation, if any, shall be governed by the terms of the applicable plan or program.

III. Benefits Associate will be eligible for all other payments and benefits accrued and owing at the time of termination. Participation in all other benefits programs available to current associates will end on the effective date of Associate’s termination, subject to Associate’s rights under COBRA to continue group medical and dental coverage for eighteen (18) months, pursuant to the terms of COBRA, which are currently extended to terminating Walmart associates.

IV. Covenant Not to Compete and Non-Solicitation of Associates Due to the strategic, sensitive and far-reaching nature of the Associate’s position at Walmart and the Confidential Information to which the Associate will be exposed, Associate agrees, promises, and covenants that:

a) For a period of two (2) years from the date on which Associate’s employment with Walmart terminates, and regardless of the cause or reason for such termination, Associate will not directly or indirectly: i. Own, manage, operate, finance, join, control, advise, consult, render services to, have a current or future interest in, or

participate in the ownership, management, operation, financing or control of, or be employed by or connected in any manner with, any Competing Business as defined below in Section IV (b) (i) and/or any Global Retail Business as defined below in Section IV (b) (ii); and/or

ii. Participate in any other activity that risks the use or disclosure of Confidential Information either overtly by the Associate or inevitably through the performance of such activity by the Associate; and/or

iii. Solicit for employment, hire or offer employment to, or otherwise aid or assist any person or entity other than Walmart in soliciting for employment, hiring, or offering employment to, any officer, officer equivalent or management associate of Walmart, or any of its subsidiaries or affiliates.

b) i. For purposes of this Agreement, the term “Competing Business” shall include any general or specialty retail, grocery, wholesale membership club or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates that: 1. Sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet

or combined) or has plans to sell goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined) within twelve (12) months following Associate’s last day of employment with Walmart in the United States; and

2. Has gross annual consolidated sales volume or revenues attributable to its retail operations (whether through physical locations, via the internet or combined) equal to or in excess of U.S. $7 billion.

ii. For purposes of this Agreement, the term “Global Retail Business” shall include any general or specialty retail, grocery, wholesale membership club or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates, that: 1. In any country or countries outside of the United States in which Walmart conducts business or intends to conduct business

in the twelve (12) months following Associate’s last day of employment with Walmart, sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined); and

3. (b) (ii) (1) or in the aggregate equal to or in excess of U.S. $7 billion in any countries taken together pursuant to (b) (ii) (1) when no business in any one country has annual consolidated sales volume or revenues attributable to its retail operations equal to or in excess of U.S. $7 billion.

iii. For purposes of this Agreement, the term “Management Associate” shall mean any domestic or international associate holding the title of “manager” or above.

iv. For purposes of this Agreement, the term “Officer” shall mean any domestic Walmart associate who holds a title of Vice President or above.

v. For purposes of this Agreement, the term “Officer Equivalent” shall mean any non-U.S. Walmart associate who Walmart views as holding a position equivalent to an officer position, such as managers and directors in international markets, irrespective of whether such managers and directors are on assignment in the U.S.

c) Ownership of an investment of less than the greater of $25,000 or 1% of any class of equity or debt security of a Competing Business and/or a Global Retail Business will not be deemed ownership or participation in ownership of a Competing Business and/or a Global Retail Business for purposes of this Agreement.

d) The covenant not to compete contained in this Section IV shall bind Associate, and shall remain in full force and effect, regardless of whether Associate qualifies or continues to remain eligible, for the Transition Payments described in Section II above. Termination of the Transition Payments pursuant to Section II will not release Associate from Associate’s obligations under this Section IV or Section V and VI.

V. Future Assistance Associate agrees to provide reasonable assistance and cooperation to Walmart in connection with any agency investigation, litigation or similar proceedings that may exist or may arise regarding events as to which Associate has knowledge by virtue of Associate’s employment with Walmart. Walmart will compensate Associate for reasonable travel, materials and other expenses incidental to any such support Associate may provide to Walmart, at Walmart’s request.

VI. Preservation of Confidential Information

Associate will not at any time, directly or indirectly, use or disclose any Confidential Information obtained during the course of his/her employment with Walmart and following his/her termination of employment with Walmart, except as may be authorized by Walmart.

VII. Remedies for Breach The parties shall each be entitled to pursue all legal and equitable rights and remedies to secure performance of their respective obligations and duties under this Agreement, and enforcement of one or more of these rights and remedies will not preclude the parties from pursuing any other rights and remedies. Associate acknowledges that a breach of the provisions of Sections IV through VI, above could result in substantial and irreparable damage to Walmart’s business, and that the restrictions contained in Sections IV through VI are a reasonable attempt by Walmart to protect its rights and to safeguard its Confidential Information goodwill and business relationships. Associate expressly agrees that upon a breach or a threatened breach of the provisions of Sections IV through VI, Walmart shall be entitled to injunctive relief to restrain such violation, and Associate hereby expressly consents to the entry of such temporary, preliminary, and/or permanent injunctive relief, as may be necessary to enjoin the violation or threatened violation of Sections VI through VI. With respect to any breach of this Agreement by Associate, Associate agrees to indemnify and hold Walmart harmless from and against any and all loss, cost, damage, or expense, including, but not limited to, attorneys’ fees incurred by Walmart, and to return immediately to Walmart all of the monies previously paid to Associate by Walmart under this Agreement (but, for the avoidance of doubt, not including the Sign-On Bonus except if otherwise required pursuant to the terms of the Offer Letter); provided, however, that such repayment shall not constitute a waiver by Walmart of any other remedies available under this Section or by law or a waiver of its right to enforce any other provision of this Agreement.

VIII. Severability

In the event that a court of competent jurisdiction shall determine that any portion or subportion of this Agreement is invalid or otherwise unenforceable, the parties agree that the remaining portions or subportions of the Agreement shall remain in full force and effect. The parties also expressly agree that if any portion or subportion of the covenant not to compete or non-solicitation set forth in Section VI shall be deemed unenforceable, then the Agreement shall automatically be deemed to have been amended to incorporate such terms as will render the covenant enforceable to the maximum extent permitted by law.

IX. Nature of the Relationship Nothing contained in this Agreement shall be deemed or construed to constitute a contract of employment for a definite term. The parties acknowledge that Associate is not employed by Walmart for a definite term, and that either party may sever the employment relationship at any time and for any reason not otherwise prohibited by law.

X. Entire Agreement

This document, along with the Offer Letter and the most recent Non-Disclosure and Restricted Use Agreement executed by and between the parties (the “Ancillary Agreement”), contain the entire understanding and agreement between Associate and Walmart regarding the subject matter of this Agreement, the Offer Letter and the Ancillary Agreement. This Agreement, together with the Offer Letter and Ancillary Agreement, supersede and replace any and all prior understandings or agreements between the parties regarding these subjects, and no representations or statements by either party shall be deemed binding unless contained herein or therein.

XI. Modification This Agreement may not be amended, modified or altered except in writing signed by both parties or their designated representatives.

XII. Successors and Assigns This Agreement will inure to the benefit of, and will be binding upon, Walmart, its successors and permitted assigns, and on Associate and his/her heirs, successors, and permitted assigns. No rights or obligations under this Agreement may be assigned to any other person without the express written consent of all parties hereto.

XIII. Counterparts This Agreement may be executed in counterparts, in which case each of the two counterparts will be deemed to be an original.

XIV. Governing Law and Venue This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to Delaware law concerning the conflicts of law. The parties agree that any action relating to the interpretation, validity or enforcement of this Agreement shall be brought in the courts of the State of Delaware, County of New Castle, or in the United States District Court of Delaware, and the parties hereby expressly consent to the jurisdiction of such courts and agree that venue is proper in those courts. The parties do hereby irrevocably:

a) Submit themselves to the personal jurisdiction of such courts; b) Agree to service of such courts’ process upon them with respect to any such proceeding; c) Waive any objection to venue laid therein; and d) Consent to service of process by registered mail, return receipt requested.

Associate further agrees that in any claim or action involving the execution, interpretation, validity, or enforcement of this Agreement, Associate will seek satisfaction exclusively from the assets of Walmart and will hold harmless all of Walmart’s individual directors, officers, employees, and representatives.

XV. Statement of Understanding By signing below, Associate acknowledges:

a) That Associate has received a copy of this Agreement,

b) That Associate has read the Agreement carefully before signing it, c) That Associate has had ample opportunity to ask questions concerning the Agreement and has had the opportunity to discuss the

Agreement with legal counsel of Associate’s own choosing, and d) That Associate understands the rights and obligations under this Agreement and enters into this Agreement voluntarily.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

WALMART INC. SURESH KUMAR

By: _/s/Jackie Telfair /s/Suresh Kumar Name: Jackie Telfair Title: SVP, Global Total Rewards

Exhibit 10.17

SEPARATION AGREEMENT

This Separation Agreement (this “Agreement”) is made and entered into on December 3, 2019, between Gregory S. Foran (the “Associate”) and Walmart Inc., a Delaware corporation, and its affiliates and subsidiaries (collectively “Walmart”) (each a “Party” and together the “Parties”).

RECITALS

WHEREAS, on October 9, 2019, the Associate notified Walmart of his intent to resign from his position as Executive Vice President, President and Chief Executive Officer of Walmart’s U.S. segment, effective as of the close of business on October 31, 2019; and

WHEREAS, Walmart desires to continue to employ the Associate as an Executive Vice President through January 31, 2020, as described herein, and the Associate wishes to continue such employment on the terms, provisions, and conditions set forth in this Agreement;

AGREEMENT

NOW, THEREFORE, for good and sufficient consideration, the sufficiency of which the parties acknowledge, the parties agree as follows:

1. Employment. The Associate shall remain employed by Walmart on a full-time basis in his current role as Executive Vice President, President and Chief Executive Officer, Walmart U.S. through October 31, 2019. From November 1, 2019 through and including January 31, 2020 (the “Transitional Period”), the Associate shall remain employed by Walmart as an Executive Vice President in a transitional role, continuing to report to Walmart’s President and Chief Executive Officer. The parties acknowledge that the Associate’s employment with Walmart will terminate on the close of business on January 31, 2020 (the “Separation Date,” unless the parties mutually agree in writing that the Associate’s employment shall terminate on a different date, in which case such other date shall be the Separation Date). During the Transitional Period, the Associate shall:

a) be available for consultation and advice to Walmart’s management and Board of Directors (the “Board”);

b) consult with Walmart’s management on strategic matters, including ongoing and future initiatives relating to Walmart’s U.S. segment; and

c) assist with the transition of the oversight and management of Walmart’s U.S. segment.

During the Transitional Period, the Associate shall be entitled to perform the duties identified in Paragraph 1(a)-(c) remotely from any location as well as use his paid time off and holidays. If Walmart asks the Associate to go to a specific location while he is away from Walmart Head Office, Walmart will pay for business class return direct flights to take him to Walmart’s desired location as well as hotel and other travel accommodations (including transportation and Walmart corporate aircraft connections).

Notwithstanding any provision of this Agreement or any Walmart policy to the contrary, Walmart shall not terminate the Associate’s employment without Cause (as defined in the Associate’s Continued Employment Terms dated October 9, 2019, including any addendums to those terms signed by both parties).

2. Compensation During Remaining Term of Employment. The Associate shall receive the following compensation during the remainder of his employment:

a) Base Salary. Through to and including the Separation Date, the Associate shall continue to be paid his current annualized base salary of $1,163,887, less applicable withholding.

b) Incentive Payments and Equity Awards. Unless the Associate either voluntarily terminates his employment with Walmart in writing with an effective date prior to the Separation Date or is terminated for Cause prior to the end of the Transitional Period, the Associate will receive the following benefits:

(i) an annual cash incentive payment under Walmart’s FY20 Management Incentive Plan for the fiscal year ending January 31, 2020 (“2020 MIP”), in accordance with the terms and conditions set forth in the 2020 MIP. The Associate’s target payout under the 2020 MIP is $2,094,997, less applicable withholding, with the final payout to be calculated based on Walmart’s achievement of the pre- established performance goals under the 2020 MIP. The Associate will not be eligible for an annual cash incentive payout for the fiscal year ending January 31, 2021 or any subsequent fiscal year.

(ii) full vesting in all of the Global Share-Settled Performance-Based Restricted Stock Units (“PRSUs”) awarded to the Associate on January 23, 2017, in accordance with the terms and conditions set forth in the written award agreement. As of October 9, 2019, the number of shares underlying PRSUs held by the Associate is 100,842, less applicable withholding. The Associate will not be eligible for an annual performance equity payout for the fiscal year ending January 31, 2021 or any subsequent fiscal year.

(iii) 24,381 shares of restricted stock, less applicable withholding, awarded to the Associate on January 23, 2017 and scheduled to vest on January 21, 2020, in accordance with the terms and conditions set forth in the written award agreement.

c) Future Equity Grants. The Associate will not be eligible for any future equity grants under Walmart’s Stock Incentive Plan. All restricted stock awards, performance shares, performance equity, restricted stock rights, stock options, and any other equity awards issued to the Associate under Walmart’s equity compensation plans that are not vested as of the Separation Date shall be forfeited and cancelled as of the Separation Date.

d) Other Payments and Benefits. The Associate shall be entitled to participate in and receive benefits under the employee benefit plans and programs available to associates in comparable positions through the Separation Date (except as limited by Sections 2(b) and 2(c) above), including (but not limited to) the Associate’s entitlement to use his remaining PTO and personal aircraft use hours (subject to availability and Walmart’s Global Aviation Policy) during the Transitional Period. To the extent the Associate has unused PTO as of the Separation Date, up to 5 days of remaining PTO will be paid out to the Associate.

3. Separation Payments and Benefits. Subject to compliance with the terms, provisions, and conditions of this Agreement, the Associate shall receive total separation payments and other benefits as described below. The Associate agrees and acknowledges that if the Associate voluntarily resigns from employment in writing with an effective date prior to the Separation Date or is terminated from employment for Cause prior to the Separation Date, he will not be entitled to the payments or other benefits described in this Section 3 or for damages in lieu thereof or for any loss of opportunity relating thereto. None of the payments or other benefits described in this Section 3 are due, payable or earned until the Separation Date.

a) Transition Payments. The Associate shall receive total transition payments of $2,327,775, less applicable withholding (the “Transition Payments”). As soon as practical after the Separation Date, but not to exceed 30 calendar days after the Separation Date, the Associate will receive the first installment of the Transition Payments in a lump-sum payment in the amount of $581,944, less applicable withholding. Thereafter, the Associate shall receive the remaining $1,745,831 of the Transition Payments, less applicable withholding, over an eighteen (18) month period in equal bi-weekly installments beginning at the end of the regularly scheduled pay period that is six (6) months after the Separation Date. Such amounts are inclusive of all amounts to which the Associate would have been entitled under the Post-Termination Agreement and Covenant Not to Compete entered into as of July 23, 2014 between the Associate and Walmart. (the “Non-Competition Agreement”).

b) Bonus Payment. The Associate shall also receive a bonus payment of $2,500,000, less applicable withholding (the “Bonus Payment”), to be paid within 90 days of the Separation Date. The Associate must remain employed through the Separation Date in order to receive the Bonus Payment.

4. Other Benefits. After the Separation Date, Walmart will provide the Associate certain benefits in accordance with the terms and conditions of the Walmart plan or program pursuant to which such benefits were issued, including (but not limited to) the following:

a) COBRA. At the Associate’s election and at the Associate’s expense, the Associate may choose to continue the Associate’s group medical and dental coverage for up to eighteen (18) months from the Separation Date under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

b) Deferred Compensation and Retirement Benefits. All retirement benefits and deferred compensation (including deferred equity awards) which are vested as of the Associate’s Separation Date shall be distributed to the Associate in accordance with the terms of the applicable plans and the Associate’s elections on file, including but (not limited to) benefits to which the Associate is entitled under the Walmart’s 401(k) Plan and Deferred Compensation Matching Plan, subject to subsection (d) below.

c) Other Payments and Benefits. The Associate is not entitled to any other payments or benefits not provided for in this Agreement, unless the payment or benefit is provided for through the Associate’s participation in an established Walmart-sponsored benefit plan or program. In addition, unless otherwise provided for in the plan or provided for in this Agreement, the Associate’s participation in all Walmart-sponsored benefit plans or programs will end on the Separation Date.

d) Section 409A. Notwithstanding anything contained herein or in any Walmart-sponsored plan to the contrary, the Associate acknowledges that any and all distributions of benefits under any Walmart deferred compensation plan which is subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), shall not commence until six (6) months after the Associates incurs a “separation from service” as defined in Section 409A.

5. Releases.

a) Release and Waiver of Claims. In exchange for, and in consideration of, the payments, benefits, and other commitments described above, the Associate releases Walmart from any and all claims of any kind, whether known or unknown, that arose up to and including the date the Associate signs this Agreement (including claims arising out of or relating to the termination of the Associate’s employment with Walmart). For illustration purposes and not as a limitation, the claims the Associate is releasing include any claims for damages, costs, attorneys’ fees, expenses, compensation or any other monetary recovery. Further, the Associate specifically waives and releases all claims he may have that arose up to and including the date the Associate signs this Agreement (including claims arising out of or relating to the termination of the Associate’s employment with Walmart) regarding veteran’s status; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Equal Pay Act; the Americans With Disabilities Act of 1990, as amended; the Rehabilitation Act of 1973, as amended; the Age Discrimination in Employment Act, as amended (“ADEA”); the Family and Medical Leave Act (“FMLA”), as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Genetic Information Non-Discrimination Act; the Immigration Reform and Control Act, as amended; the Workers Adjustment and Retraining Notification Act (“WARN”), as amended; any applicable state WARN-like statute; the Occupational Safety and Health Act, as amended; the Sarbanes-Oxley Act of 2002; the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act of 1974, as amended; the National Labor Relations Act; the Fair Labor Standards Act (FLSA); the Massachusetts Overtime Law; the Massachusetts Payment of Wages Law; the Massachusetts Fair Employment Practices Act; the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq.; the New Jersey Law Against Discrimination; the West Virginia Human Rights Act, W. Va. CSR §77-6-3; the California Fair Employment and Housing Act; the California Family Rights Act; the California Labor Code; the Wage Orders of the California Industrial Welfare Commission; the California Unfair Business Practices law (Cal. Bus. and Prof. Code Sec. 17200, et seq.); California WARN (CA Labor Code Section 1400-1408); and all state or local statutes, ordinances, or regulations regarding anti-discrimination employment laws, as well as all matters arising under federal, state, or local law involving any tort, employment contract (express or implied), public policy, wrongful discharge, retaliation, and leaves of absence claims; and any claims related to emotional distress, mental anguish, benefits, or any other claim brought under local, state or federal law.

b) Release of Age Discrimination Claims. With respect to the Associate’s release and waiver of claims under the ADEA as described in Section 5(a) above, the Associate agrees and acknowledges the following:

(i) The Associate has reviewed this Agreement carefully and understands its terms and conditions. The Associate has been advised, and by this Agreement is again advised, to consult with an attorney of the Associate’s choice prior to entering into this Agreement.

(ii) The Associate shall have twenty-one (21) days from receipt of this Agreement to consider and execute the Agreement by fully executing it below and returning it to Walmart; otherwise, the terms and provisions of this Agreement become null and void. The Associate agrees that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original review period.

(iii) The Associate will have a period of seven (7) calendar days after Associate signs the Agreement during which to revoke the Agreement. The Associate must provide written notice of revocation during the seven (7) day period to Jackie Telfair, Senior Vice President, Global Total Rewards. Any revocation within this period must expressly state, “I hereby revoke my Agreement.” The written revocation must be delivered to Jackie Telfair, Senior Vice President, Global Total Rewards, or to her successor, and be postmarked within seven (7) calendar days of the Associate’s execution of this Agreement. This Agreement will not become effective or enforceable until the revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday, then the revocation period will not expire until the next following day that is not a Saturday, Sunday, or legal holiday.

(iv) The Associate knows that he is waiving his rights under the ADEA and does so voluntarily. The Associate realizes the waiver does not include any ADEA rights which may arise after the Associate signs this Agreement. By signing this Agreement, the Associate acknowledges that he is receiving consideration that the Associate would not otherwise be entitled to receive.

(v) No payments pursuant to Section 3 of this Agreement shall occur or be effective until after (1) the Associate has executed and delivered this Agreement to Walmart, (2) the above-mentioned seven-day revocation period has expired, and (3) the Associate has separated from employment with Walmart as set forth in Section 1 of this Agreement.

c) Limitation of Release. Nothing in this Agreement releases or impairs claims for workers’ compensation or unemployment benefits. Nothing in this Agreement prevents Associate from pursuing administrative claims with or otherwise assisting government agencies, including engaging in or participating in an investigation or proceeding conducted by, or providing information to, the EEOC, NLRB, the Securities and Exchange Commission, or any federal, state or local agency charged with the enforcement of employment or other laws. Associate acknowledges and agrees, however, that the transition payments set forth in Section 3 of this Agreement are in full satisfaction of any amounts to which the Associate might be entitled from any claim against Walmart, and that, as a result of this release and waiver of claims, the Associate is not entitled to receive any additional individual monetary relief from Walmart. This release and waiver of claims will not apply to rights or claims that may arise after the effective date of this Agreement. This Agreement is not intended to release and does not release or include claims that the law states cannot be waived by private agreement, nor does it prevent the Associate from receiving any whistleblower or similar award. Nothing in this subparagraph or in this Agreement is intended to limit or restrict any rights the Associate may have to enforce this Agreement or challenge the Agreement’s validity under the ADEA, or any other right that cannot, by express and unequivocal terms of law, be limited, waived, or extinguished by settlement. Further, nothing in this Agreement is intended to waive, release of impair the Associate’s right to vested benefits under any Walmart-sponsored benefit plan or program. In addition, nothing in this Agreement is intended to release or impair any and all rights to indemnification, advancement or reimbursement of expenses, and insurance coverage available to Associate as an officer, director or employee of Walmart (including Walmart’s director and officer insurance coverage), including without limitation under Walmart’s certificate of incorporation and bylaws and under applicable corporate law (including without limitation to the maximum extent permitted under the Delaware General Corporation Law).

d) Agreement not to File Suits. By signing this Agreement, Associate agrees not to file a lawsuit to assert any claims released under this Section 5. Associate also agrees that if a court of competent jurisdiction makes a final determination that Associate breached this provision, Associate will be liable for all reasonable costs and attorneys’ fees incurred by any person against whom claims were released under Section 5(a) resulting from such action and shall pay all reasonable expenses incurred by such person in defending any proceeding pursuant to this Section 5(d)., together with any tax liability incurred by such person in connection with the receipt of such amounts; provided, however, that the person against whom such claims were released provides Associate with notice of

his/her/its intention to seek payment of the amounts incurred in defending the proceeding at the onset of the defense. To the extent that Associate is determined by a court of competent jurisdiction to be the prevailing party on any claims in such action, Associate will not be liable for any costs, fees or expenses incurred by such person.

6. Confidential Information. Except in the performance of the Associate’s duties during his employment with Walmart, the Associate agrees that he will not at any time, whether prior to or subsequent to the Separation Date, directly or indirectly use any Confidential Information (as defined below) obtained during the course of his employment with Walmart or otherwise, except as previously authorized by Walmart in writing. Additionally, except in the performance of the Associate’s duties during his employment with Walmart, the Associate shall not at any time, whether prior to or subsequent to the Separation Date, disclose any Confidential Information obtained during the course of his employment with Walmart or otherwise, unless such disclosure is (a) previously authorized by Walmart in writing, (b) required by applicable legal proceeding, or (c) as permitted by Section 18(a) of this Agreement. In addition, except in the performance of the Associate’s duties during his employment with Walmart, the Associate shall not disclose any information for which Walmart holds a legally recognized privilege against disclosure or discovery (“Privileged Information”), or take any other action that would cause such privilege to be waived by Walmart. With respect to (b) above only, in the event that the Associate is required by applicable legal proceeding (including, without limitation, by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or other legal proceeding) to disclose any Confidential Information or Privileged Information, the Associate shall provide Walmart with prompt prior written notice of such requirement. The Associate shall also, to the extent legally permissible, provide Walmart as promptly as practicable with a description of the information that may be required to be disclosed (and, if applicable, the text of the disclosure itself) and cooperate with Walmart (at Walmart’s expense) to the extent Walmart may seek to limit such disclosure, including, if requested, by taking all reasonable steps to resist or narrow any such disclosure or to obtain a protective order or other remedy with respect thereto. If a protective order or other remedy is not obtained and disclosure is legally required, the Associate shall (a) disclose such information only to the extent required in the written opinion of the Associate’s legal counsel, and (b) give advance notice to Walmart of the information to be actually disclosed as far in advance as is reasonably possible. In any such event, the Associate and his legal counsel shall use reasonable commercial efforts to ensure that all Confidential Information or Privileged Information that is so disclosed is accorded confidential treatment by the recipient thereof.

“Confidential Information” means information pertaining to the business of Walmart, and includes, without limitation, information regarding processes, suppliers, consultants and service providers (including the terms, conditions, or other business arrangements with suppliers, consultants and service providers), advertising, marketing, and external and internal communications plans and strategies, labor matters and strategies, government relations plans and strategies, litigation matters and strategies, Foreign Corrupt Practices Act investigatory and compliance information and strategies, tax matters and strategies, community relations and public affairs plans and strategies, charitable giving plans and strategies, sustainability plans and strategies, profit margins, seasonal plans, goals, objectives, projections, compilations, and analyses regarding Walmart’s business, salary, staffing, compensation, promotion, diversity objectives and other employment-related data, and any know-how, techniques, practices or non-public technical information regarding the business of Walmart. “Confidential Information” does not include information that is or becomes generally available to the public other than as a result of a disclosure by the Associate or any of the Associate’s representatives or information that Walmart has authorized the Associate to disclose.

As requested by Walmart, the Associate shall return to Walmart all documents, programs, software, equipment, files, statistics, and other written or electronic business materials, including any and all copies both paper and electronic, concerning Walmart.

7. Cooperation.

a. Cooperation with Walmart. The Associate may from time to time after the Separation Date be called upon to testify or provide information to Walmart in connection with employment-related and other legal proceedings against Walmart. The Associate will provide reasonable assistance to, and will cooperate with, Walmart in connection with any litigation, arbitration, investigations, or judicial or non-judicial administrative proceedings that may exist or may subsequently arise regarding events about which the Associate has knowledge. If the assistance is at Walmart’s request, Walmart will compensate the Associate for all reasonable costs and expenses. Walmart acknowledges that the Associate may have other employment and Walmart agrees that it will use its reasonable efforts to minimize the amount of time that any such consultation shall require of the Associate.

b. Cooperation with Governmental Authorities. From time to time, Walmart may be under investigation by various governmental authorities. Walmart encourages the Associate to cooperate with all such investigations.

If such assistance is requested by a governmental authority, Walmart shall reimburse the Associate for all reasonable costs and expenses.

c. Board Membership. Effective as of the Separation Date, the Associate hereby resigns from any boards of directors, boards of managers, and similar governing boards of any Walmart entities of which the Associate may be a member, resigns as an officer of any and all Walmart entities, resigns as Walmart’s representative on any external trade, industry or similar associations, and agrees to sign any documents acknowledging such resignations, as may be requested by Walmart.

8. Non-disclosure and Non-disparagement. The Associate agrees, acknowledges and confirms that he has complied with and will continue to comply with the most recent Non-Disclosure and Restricted Use Agreement between the Associate and Walmart (the “Non-Disclosure Agreement”). The Associate further agrees, promises and covenants that he shall not directly or indirectly at any time, whether prior to or subsequent to the Separation Date, make disparaging comments regarding Walmart, its business strategies and operations, and any of Walmart’s past or present officers, directors, and shareholders, except that nothing herein shall prevent the Associate from providing truthful information and testimony to government authorities, nor shall it prevent the Associate from providing truthful information and testimony in any legal proceedings or as otherwise provided by law. The parties will use reasonable best efforts to keep the terms of this Agreement confidential until such time as the Agreement is publicly disclosed as an exhibit to a periodic or current report of Walmart filed with the U.S. Securities and Exchange Commission; however, Associate may share and discuss the Agreement with his spouse, attorneys, and financial and tax advisors, each of whom shall be informed of the confidential nature of this Agreement.

9. Statement of Ethics and Compliance with Laws. The Associate has read and understands the provisions of Walmart’s Statement of Ethics and agrees to abide by the provisions thereof to the extent applicable to former Walmart associates. The Associate further acknowledges that the Associate has complied with the applicable Statement of Ethics, as well as with all applicable laws, rules and regulations, during the Associate’s employment with Walmart. If a court of competent jurisdiction makes a final determination that the Associate has materially failed to abide by a material provision of the Statement of Ethics and/or materially comply with all applicable material laws, rules or regulations, whenever discovered, this shall, in addition to any other remedies under this Agreement, entitle Walmart to suspend and recoup any payments paid or due under this Agreement.

10. Covenant not to Compete. Due to the strategic, sensitive and far-reaching nature of the Associate’s current and former positions at Walmart and the Confidential Information to which the Associate is and has been exposed, Associate agrees, promises, and covenants that:

(i) own, manage, operate, finance, join, control, advise, consult, render services to, have a current or future interest in, or participate in the ownership, management, operation, financing, or control of, or be employed by or connected in any manner with, any Competing Business as defined below in Section 10(b)(i), any Global Retail Business as defined below in Section 10(b)(ii); and/or

(ii) participate in any other activity that risks the use or disclosure of Confidential Information either overtly by the Associate or inevitably through the performance of such activity by the Associate; and/or

(iii) solicit for employment, hire or offer employment to, or otherwise aid or assist any person or entity other than Walmart in soliciting for employment, hiring, or offering employment to, any Officer, Officer Equivalent or Management Associate of Walmart, or any of its subsidiaries or affiliates. For the avoidance of doubt, nothing in this paragraph prohibits the Associate from making general advertisements for positions that are not specifically targeted at any such person.

b) For purposes of this Agreement:

(i) the term “Competing Business” shall include any general or specialty retail, grocery, wholesale membership club, or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates that: (a) sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined) or has plans to sell goods or merchandise at

retail to consumers and/or businesses (whether through physical locations, via the internet or combined) within twelve (12) months following Associate’s last day of employment with Walmart in the United States; and (b) has gross annual consolidated sales volume or revenues attributable to its retail operations (whether through physical locations, via the internet or combined) equal to or in excess of U.S.D. $7 billion.

(ii) the term “Global Retail Business” shall include any general or specialty retail, grocery, wholesale membership club, or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates, that: (a) in any country or countries outside of the United States in which Walmart conducts business or intends to conduct business in the twelve (12) months following Associate’s last day of employment with Walmart, sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined); and (b) has gross annual consolidated sales volume or revenues attributable to its retail operations (whether through physical locations, via the internet or combined) equal to or in excess of U.S.D. $7 billion in any country pursuant to b(ii)(a) or in the aggregate equal to or in excess of U.S.D. $7 billion in any countries taken together pursuant to b(ii)(a) when no business in any one country has annual consolidated sales volume or revenues attributable to its retail operations equal to or in excess of U.S.D. $7 billion.

c) For purposes of this Agreement, the term “Management Associate” shall mean any domestic or international associate holding the title of “manager” or above.

d) For purposes of this Agreement, the term “Officer” shall mean any domestic Walmart associate who holds a title of Vice President or above.

e) For purposes of this Agreement, the term “Officer Equivalent” shall mean any non-U.S. Walmart associate who Walmart views as holding a position equivalent to an officer position, such as managers and directors in international markets, irrespective of whether such managers and directors are on assignment in the U.S.

f) Ownership of an investment of less than the greater of $25,000 or 1% of any class of equity or debt security of a Competing Business and/or a Global Retail Business will not be deemed ownership or participation in ownership of a Competing Business and/or a Global Retail Business for purposes of this Agreement.

g) The covenant not to compete set forth in this Section 10 shall bind associate and shall remain in full force and effect regardless of whether the Associate qualifies or continues to remain eligible for the Transition Payments set forth in Section 3 above.

11. Affirmation. Other than may be provided for in any class or collective action that was pending against Walmart as of the date of this Agreement, the Associate states and acknowledges that he has been paid and/or received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits are due him, except as provided for in this Agreement. The Associate also states and confirms that he has reported to Walmart any and all work-related injuries incurred by him during his employment by Walmart. Further, Associate acknowledges that he has been properly provided any leave of absence because of the Associate’s or the Associate’s family member’s health condition and has not been subjected to any improper treatment, conduct, or actions due to a request for or taking such leave. Additionally, Associate specifically acknowledges that he has not made any request for leave pursuant to FMLA which was not granted; and, Walmart has not interfered in any way with Associate’s efforts to take leave pursuant to FMLA.

12. Advice of Counsel. The Associate has been advised, and by this Agreement is again advised, to consider this Agreement carefully and to review it with legal counsel of the Associate’s choice. The Associate understands the provisions of this Agreement and has been given the opportunity to seek independent legal advice before signing this Agreement.

13. Non-Admission. The parties acknowledge that the terms and execution of this Agreement are the result of negotiation and compromise, that this Agreement is entered into in good faith, and that this Agreement shall never be considered at any time or for any purpose as an admission of liability by Walmart or that Walmart acted wrongfully with respect to the Associate, or any other person, or that the Associate has any rights or claims whatsoever against Walmart arising out of or from the Associate’s employment. Walmart specifically denies any liability to the Associate on the part of itself, its employees, its agents, and all other persons and entities released herein.

14. Return of Company Property. As soon as practical after the Separation Date, the Associate will return all Walmart-owned property including but not limited to computers, hand-held computing devices (e.g., iPad, Surface, etc.), cell phones, videoconferencing equipment (e.g., Tandberg), documents, files, computer files, keys, ID’s, credit cards, and Associate and spouse discount cards, if any.

15. Taxes. The Associate acknowledges and agrees that the Associate is responsible for paying all taxes and related penalties, and interest on the Associate’s income. Walmart will withhold taxes, including from amounts or benefits payable under this Agreement, and report them to tax authorities, as it determines it is required to do. Although the payments under this Agreement are intended to comply with the requirements of Section 409A and Walmart intends to administer this Agreement so that it will comply with Section 409A, Walmart has not warranted to the Associate that taxes and penalties will not be imposed under Section 409A or any other provision of federal, state, local, or non-United States law.

16. Remedies for Breach. The Parties shall each be entitled to pursue all legal and equitable rights and remedies to secure performance of their respective obligations and duties under this Agreement, and enforcement of one or more of these rights and remedies will not preclude the Parties from pursuing any other rights or remedies. Associate acknowledges that a breach of the provisions of Sections 6 through 10 above could result in substantial and irreparable damage to Walmart’s business, and that the restrictions contained in Sections 6 through 10 are a reasonable attempt by Walmart to safeguard its rights and protect its confidential information. Associate expressly agrees that upon a breach or a threatened breach of the provisions of Sections 6 through 10, Walmart shall be entitled to seek injunctive relief to restrain such violation. With respect to any breach of this Agreement by either Party as made by a final determination by a court of competent jurisdiction, the breaching Party agrees to indemnify and hold the non-breaching Party harmless from and against any and all loss, cost, damage, or expense, including, but not limited to, attorneys’ fees incurred by the non-breaching Party. In addition to any other remedies at law or at equity, if at any time a court of competent jurisdiction makes a final determination that the Associate failed to comply with the terms, provisions or conditions of this Agreement, the Associate acknowledges that Walmart is not obligated to make any further Transition Payments to the Associate.

17. Recoupment. The Associate agrees and acknowledges that incentive compensation paid or granted during the course of the Associate’s employment with Walmart is subject to the recoupment provisions of the incentive plans under which such incentive compensation was paid or granted. Furthermore, in the event that Walmart is required to recoup any incentive compensation previously paid to the Associate pursuant to the provisions of the Dodd-Frank Act or rules promulgated thereunder, the Associate agrees to repay such amounts.

18. Miscellaneous.

a) Protected Rights. Nothing in this Agreement is intended to prohibit the Associate from engaging in any legally protected communication or action. Nothing contained in this Agreement shall restrict, limit or otherwise modify Associate’s rights under Walmart’s Open Door Policy. Nothing contained in this Agreement is intended to discourage the Associate from reporting any activity or information under the Global Statement of Ethics or to a governmental agency as permitted by any “whistleblower” laws. Associate shall not be held liable under this Agreement or any other agreement or any federal or state trade secret law for making any confidential disclosure of a Walmart trade secret or other confidential information to a government official or an attorney for purposes of reporting or investigating a suspected violation of law or regulation, or in a court filing under seal, nor shall Associate be required to obtain approval or notify Walmart prior to making any such disclosure.

b) Entire Agreement. This Agreement, along with the Non-Disclosure Agreement, contains the entire agreement and understanding of the parties, and no prior statements by either party will be binding unless contained in this Agreement or incorporated by reference in this Agreement or the Non-Disclosure Agreement. The parties agree that no prior statements by either party will be binding unless contained in this Agreement or the Non-Disclosure Agreement. In addition, to be binding on the parties, any handwritten changes to this Agreement must be initialed and dated by the Associate and the authorized representative of Walmart whose signature appears below. This Agreement supercedes and specifically terminates all prior agreements between the Associate and Walmart with respect to the subject matter hereof, including the Non-Competition Agreement, and no amounts will be owed or payable to the Associate under or pursuant to the Non-Competition Agreement. For the avoidance of doubt, the Associate’s Continued Employment Terms dated October 9, 2019 (including any addendums to those terms signed by both parties) shall continue to apply and any inconsistencies with the terms of this Agreement will be interpreted for the benefit of the Associate and consistent with such Continued Employment Terms.

c) Conflict with Exhibits. If the terms and provisions of this Agreement conflict with the terms and provisions of any exhibit to this Agreement, the terms and provisions of this Agreement will govern.

d) Severability. If any portion or provision of this Agreement is found to be unenforceable or invalid, the parties agree that the remaining portions will remain in full force and effect. The parties will negotiate in good faith to give such unenforceable or invalid provisions the effect the parties intended.

e) Section Titles. Section titles are informational only and are not to be considered in construing this Agreement.

f) Successors and Assigns. The parties acknowledge that this Agreement will be binding on their respective successors, assigns, and heirs.

g) Governing Law and Dispute Resolution. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to Delaware law concerning the conflicts of law. The Parties further agree that any action relating to the interpretation, validity, or enforcement of this Agreement shall be brought in the of the courts of the State of Delaware, County of New Castle, or in the United States District Court of Delaware, and the parties hereby expressly consent to the jurisdiction of such courts and agree that venue is proper in those courts. The parties do hereby irrevocably: (a) submit themselves to the personal jurisdiction of such courts; (b) agree to service of such courts’ process upon them with respect to any such proceeding; (c) waive any objection to venue laid therein; and (d) consent to service of process by registered mail, return receipt requested. Associate further agrees that in any claim or action involving the execution, interpretation, validity or enforcement of this Agreement, Associate will seek satisfaction exclusively from the assets of Walmart and will hold harmless Walmart’s individual directors, officers, employees, and representatives.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

GREGORY S. FORAN WALMART INC.

/s/ Gregory S. Foran By: /s/ Jackie Telfair Name: Jackie Telfair

Title: Senior Vice President, Global Rewards

Exhibit 10.7(a)

AMENDED SCHEDULE OF EXECUTIVE OFFICERS WHO HAVE EXECUTED A POST-TERMINATION AGREEMENT AND COVENANT NOT TO COMPETE IN THE FORM FILED AS EXHIBIT 10(p) TO THE ANNUAL REPORT ON FORM 10-K OF

THE COMPANY FOR THE FISCAL YEAR ENDED JANUARY 31, 2011 (this "Amended Schedule")

This Amended Schedule amends the Schedule of Executive Officers Who Have Executed a Post-Termination Agreement and Covenant Not to Compete that followed the form of Post-Termination Agreement and Covenant Not to Compete originally filed by Walmart Inc. (formerly Wal-Mart Stores, Inc.) as Exhibit 10(p) to its Annual Report on Form 10-K for the year ended January 31, 2011, as filed on March 30, 2011 (the "Form Agreement"). This Amended Schedule is included pursuant to Instruction 2 of Item 601(a) of Regulation S-K for the purpose of setting forth the details in which the specific agreements executed in the form of the Form Agreement differ from the Form Agreement, in particular to set forth the persons who, with Walmart Inc., were parties to Post-Termination Agreements and Covenants Not to Compete in such form as of January 31, 2020.

Executive Officer Who is a Party to such a Post- Termination Agreement and Covenant Not to

Compete Date of Agreement Value of Restricted Stock Award Granted

in Connection with Agreement Daniel J. Bartlett May 16, 2013 Not Applicable M. Brett Biggs September 21, 2010 $500,000 Rachel L. Brand February 21, 2018 Not Applicable David Chojnowski November 16, 2016 Not Applicable John R. Furner May 7, 2011 Not Applicable C. Douglas McMillon January 19, 2010 $2,000,000 Judith McKenna May 18, 2015 Not Applicable Kathryn McLay December 24, 2015 Not Applicable Donna Morris December 17, 2019 Not Applicable

Exhibit 21

Significant Subsidiaries of Walmart Inc.

Subsidiary Organized or Incorporated Percent of Equity Securities

Owned Name Under Which Doing Business Other Than

Subsidiary's Wal-Mart Stores East, LP Delaware, U.S. 100% Walmart Wal-Mart Stores Texas, LLC Delaware, U.S. 100% Walmart Wal-Mart Property Company Delaware, U.S. 100% NA Wal-Mart Real Estate Business Trust Delaware, U.S. 100% NA Sam's West, Inc. Arkansas, U.S. 100% Sam's Club Sam's East, Inc. Arkansas, U.S. 100% Sam's Club Sam's Property Company Delaware, U.S. 100% NA Sam's Real Estate Business Trust Delaware, U.S. 100% NA ASDA Group Limited England 100% ASDA Wal-Mart de Mexico, S.A.B. de C.V. Mexico 71% Walmex Wal-Mart Canada Corp. Canada 100% Walmart Flipkart Private Limited Singapore 82% Flipkart Wal-Mart Japan Holdings K.K. Japan 100% Seiyu Walmart Chile S.A.(1) Chile 100% Walmart Chile Massmart Holdings Ltd South Africa 53% Massmart (1) The Company owns substantially all of Walmart Chile.

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

The ASDA Group Long Term Incentive Plan The ASDA Group PLC Sharesave Scheme The ASDA 1984 Executive Share Option Scheme The ASDA 1994 Executive Share Option Scheme

of our reports dated March 20, 2020, with respect to the consolidated financial statements of Walmart Inc. and the effectiveness of internal control over financial reporting of Walmart Inc., included in this Annual Report (Form 10-K) of Walmart Inc. for the year ended January 31, 2020.

/s/ Ernst & Young LLP

Rogers, Arkansas March 20, 2020

Exhibit 31.1

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 20, 2020 /s/ C. Douglas McMillon

C. Douglas McMillon President and Chief Executive Officer

Exhibit 31.2

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 20, 2020 /s/ M. Brett Biggs

M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon, President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 20, 2020.

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, M. Brett Biggs, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 20, 2020.

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 99.1

State Court National Prescription Opiate Litigation Case Citations as of March 6, 2020.

City of Kingston v. Teva Pharm. USA, Inc., et al., N.Y. Sup. Ct., Suffolk Cty., 2/27/2020; Mecklenburg Cty. v. Mallinckrodt PLC, et al., Va. Cir. Ct., Mecklenburg Cty., 2/26/2020; Town of Poughkeepsie v. Teva Pharm. USA, Inc., et al., N.Y. Sup. Ct., Suffolk Cty., 2/21/2020; Bd. of Supervisors for La. State Univ. & Agric. & Mech. Coll. v. AmerisourceBergen Drug Corp., et al., La. Jud. Dist., 19th Jud. Dist., E. Baton Rouge Parish, 2/21/2020; City of Muskogee v. Cephalon, Inc., et al., Okla. Dist. Ct., Muskogee Cty., 2/21/2020; City of Daphne v. Amneal Pharm., LLC, et al., Ala. Cir. Ct., Baldwin Cty., 2/21/2020; Mayor Elmer Ray Spence ex rel. Town of Belbarton v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Cty. Comm’n of Tucker Cty. v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Cty. Comm’n of Hardy Cty. v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Sheila Kessler ex rel. Town of Matewan v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Virginia Ann Martin ex rel. City of Mullens v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Thomas Evans, Jr. ex rel. Town of Oceana v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Cty. Comm’n of Preston Cty. v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Maureen Lasky-Setchell ex rel. City of Belington v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Brian Billings ex rel. City of Point Pleasant v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Gary A. Miller ex rel. Town of Junior v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor David Wood ex rel. City of Moundsville v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; Mayor Harold E. Miller ex rel. City of Weirton v. Cardinal Health, Inc., et al., W. Va. Cir. Ct., Marshall Cty., 2/20/2020; City of Orlando v. CVS Health Corp., et al., Fla. Jud. Cir. Ct., 9th Jud. Cir., Orange Cty., 2/12/2020; Bedford Cty. v. Purdue Pharma LP, et al., Pa. Ct. Com. Pl., Bedord Cty., 2/11/2020; Barton Cty. v. Allergan PLC, et al., Mo. Cir. Ct., 22nd Jud. Cir., St. Louis City, 1/24/2020; Cty. of Newberry v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 12/13/2019; City of Clarksburg v. Allergan PLC, et al., W. Va. Cir. Ct., Marshall Cty., 11/20/2019; City of Richwood v. Allergan PLC, et al., W. Va. Cir. Ct., Marshall Cty., 11/20/2019; City of White Sulphur Springs v. Allergan PLC, et al., W. Va. Cir. Ct., Marshall Cty., 11/20/2019; Cty. Bd. of Arlington Cty. v. Mallinckrodt PLC, et al., Va. Cir. Ct., Arlington Cty., 10/18/2019; Mobile Cty. Bd. of Health & Family Oriented Primary Health Care Clinic v. Sackler, et al., Ala. Cir. Ct., Mobile Cty., 10/15/2019; Pinal Cty. v. Actavis PLC, et al., Ariz. Sup. Ct., Maricopa Cty., 9/25/2019; City of Prescott v. Allergan PLC, et al.. Ariz. Sup. Ct., Maricopa Cty., 9/23/2019; Fla. Health Scis. Ctr., Inc., et al. v. Sackler, et al., Fla. Cir. Ct., 17th Jud. Cir., Broward Cty., 9/16/2019; State of Mississippi v. Cardinal Health, Inc., et al., Miss. 1st Jud. Dist., Hinds Cty. Cir. Ct., 9/12/2019; DCH Health Care Auth. v. Purdue Pharma L.P., et al., Ala. Cir. Ct., Conecuh Cty., 9/3/2019; City of Myrtle Beach v. Purdue Pharma L.P., et al., S.C. Ct. of Com. Pl., 15th Jud. Cir., 8/29/2019; State of South Dakota ex rel. Ravnsborg v. Purdue Pharma L.P., et al., S.D. Cir. Ct., 6th Jud. Cir., Hughes Cty., 8/23/2019; Town of Canton v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Chicopee v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Framingham v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Gloucester v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Haverhill v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Lynnfield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Natick v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Salem v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Springfield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Wakefield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Worcester v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Summerville v. Purdue Pharma L.P., et al., S.C. Ct. of Com. Pl., 1st Jud. Cir., 8/23/2019; City of N. Las Vegas v. Purdue Pharma L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; City of Las Vegas v. Purdue Pharma L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; City of Henderson v. Purdue Pharma L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; Town of Mt. Pleasant v. Purdue Pharma L.P., et al., S.C. Ct. of Com. Pl., 9th Jud. Cir., 8/16/2019; City of Charleston v. Purdue Pharma L.P., et al., S.C. Ct. of Com. Pl., 9th Jud. Cir., 8/15/2019; Wasatch Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Cache Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Sevier Cty., et al. v. Purdue Pharma L.P., et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Washington Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Uintah Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Tooele Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Summit Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Weber Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Salt Lake Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; City of N. Charleston v. Purdue Pharma L.P., et al., S.C. Ct. of Com. Pl., 9th Jud. Cir., 7/26/2019; Mayor Peggy Knotts Barney v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 7/2/2019; Mayor Philip Bowers ex rel. City of Philippi v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 7/2/2019; Kingman Hosp., Inc., et al. v. Purdue Pharma L.P., et al., Ariz. Sup. Ct., Mohave Cty., 6/18/2019; Braxton Cty. Mem’l Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019; Williamson Mem’l Hosp., LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019; Wetzel Cty. Hosp. Ass’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019; Princeton Cmty, Hosp. Ass’n., Inc., et al. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019; Grant Mem’l Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019; Cmty. Health Ass’n d/b/a Jackson Gen. Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 6/7/2019;

State of Nevada ex. rel. Ford v. McKesson Corp., et al., Nev. Dist. Ct., Clark Cty., 6/1/2019; City of Yonkers v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Westchester Cty., 5/29/2019; Cty. of Saluda v. Rite Aid of S.C., Inc. et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/20/2019; Cty. of Clarendon v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/20/2019; Cty. of Abbeville v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 5/20/2019; Roane Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; City of Spencer v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Jackson Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; City of Ripley v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Town of Ravenswood v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Wood Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; City of Williamstown v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Wirt Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Town of Elizabeth v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Pleasants Cty. Comm'n v. Mylan Pharm., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; City of St. Marys v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Ritchie Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Town of Harrisville v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Marshall Cty., 5/8/2019; Cty. of Bamberg v. Rite Aid of S.C., Inc., et al., S.C. Ct. of Com. Pl., 2d Jud. Cir., 5/7/2019; Cty. of Barnwell v. Rite Aid of S.C., Inc., et al., S.C. Ct. of Com. Pl., 2d Jud. Cir., 5/7/2019; Cty. of Beaufort v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Colleton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Fairfield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 6th Jud. Cir., 5/7/2019; Cty. of Allendale v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Hampton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Kershaw, et al. v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 5th Jud. Cir., 5/7/2019; Cty. of Jasper v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Lee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/7/2019; Cty. of Orangeburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 5/7/2019; Cty. of Williamsburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/7/2019; Cty. of Chesterfield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 4th Jud. Cir., 5/7/2019; Cty. of Dorchester v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 5/6/2019; Cty. of Horry v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 15th Jud. Cir., 5/6/2019; City of Albany v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Plattsburgh v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Troy v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Schenectady v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; Cty. of Lexington v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/2/2019; Cty. of Marion v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 12th Jud. Cir., 5/2/2019; Cty. of Calhoun v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 5/2/2019; Cty. of Dillon v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 4th Jud. Cir., 5/2/2019; Cty. of Lancaster v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 6th Jud. Cir., 5/2/2019; Cty. of Aiken v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 2d Jud. Cir., 5/2/2019; Cty. of Anderson v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 10th Jud. Cir., 5/1/2019; Cty. of Cherokee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 7th Jud. Cir., 5/1/2019; Cty. of Edgefield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/1/2019; Cty. of Florence v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 12th Jud. Cir., 5/1/2019; Cty. of Greenville v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 13th Jud. Cir., 5/1/2019; Cty. of Greenwood v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 18th Jud. Cir., 5/1/2019; Cty. of Laurens v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 5/1/2019; Cty. of McCormick v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/1/2019; Cty. of Oconee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 10th Jud. Cir., 5/1/2019; Cty. of Pickens v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 13th Jud. Cir., 5/1/2019; Cty. of Spartanburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 7th Jud. Cir., 5/1/2019; Cty. of Sumter v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/1/2019; Cty. of Union v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 16th Jud, Cir., 5/1/2019; Cty. of York v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 16th Jud. Cir., 5/1/2019; W. Va. Univ. Hosps. Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Appalachian Reg’l Healthcare, Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Bluefield Hosp. Co., LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Charleston Area Med. Ctr., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Davis Mem’l Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Broaddus Hosp. Ass’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Webster Cty. Mem’l Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Grafton City Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Greenbrier VMC., LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Monongalia Cty. Gen. Hosp. Co. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Preston Mem’l Hosp. Corp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Stonewall Jackson Mem’l Hosp. Co. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Oak Hill Hosp. Corp. d/b/a Plateau Med. Ctr. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Camden-Clark Mem’l Hosp. Corp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Charles Town Gen. Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; City Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Potomac Valley Hosp. of W. Va., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; Reynolds Mem’l Hosp. Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; St. Joseph’s Hosp. of Buckhannon, Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; United Hosp. Ctr., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 4/29/2019; City of Cambridge v. Purdue Pharma L.P., et al., Mass. Sup. Ct., Middlesex Cty., 4/12/2019; Cty. of Ulster v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 4/10/2019; Cty. of Washington v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 4/1/2019; Town of

Randolph v. Purdue Pharma L.P., et al., Mass. Sup. Ct., Suffolk Cty., 3/27/2019; Cty. of Montgomery v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 3/26/2019; Cty. of Herkimer v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 3/26/2019; State of New Mexico ex rel. Balderas v. Purdue Pharma L.P., et al., N.M. Dist. Ct, 1st Jud. Dist., Santa Fe Cty., 3/6/2019; Cty. of Lewis v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 2/26/2019; Cty. of St. Lawrence v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/30/2019; Jefferson Cty. v. Williams, et al., Mo. Cir. Ct., 23d Jud. Dist., Jefferson Cty., 1/29/2019; Franklin Cty. v. Williams, et al., Mo. Cir. Ct., 20th Jud. Dist., Franklin Cty., 1/29/2019; City of New York v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/16/2019; Cty. Comm’n of Mason Cty. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Barbour Cty. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Mayor Chris Tatum ex rel. Village of Barboursville v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Taylor Cty. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. Comm’n of Webster Cty. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Mayor Don E. McCourt ex rel. Town of Addison aka the Town of Webster Springs v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 1/11/2019; Cty. of Fulton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Cortland v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Ontario v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Columbia v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 12/1/2018; Cty. of Monroe v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 12/1/2018; Cty. of Wyoming v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/28/2018; Cty. of Greene v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/28/2018; Cty. of Oswego v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/27/2018; Cty. of Schenectady v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/15/2018; Delaware Cty. v. Purdue Pharma L.P., et al., Pa. Ct. of Com. Pl., Delaware Cty., 11/14/2018; Cty. of Carbon v. Purdue Pharma L.P., et al., Pa. Ct. of Com. Pl., Delaware Cty., 11/14/2018; Carpenters Health & Welfare Fund of Phila. & Vicinity v. Purdue Pharma L.P., et al., Pa. Ct. Com. Pl., Delaware Cty., 11/14/2018; Cty. of Broome v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Erie v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Orange v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Dutchess v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Seneca v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Sullivan v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Johnson Cty. v. Abbott Labs, et al., Tex. Dist. Ct., 152nd Jud. Dist., Harris Cty., 11/2/2018; City of Ithaca v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Rensselaer v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Saratoga v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Schoharie v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Westchester v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Genesee v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Niagara v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Hamilton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Franklin v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Schuyler v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Steuben v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Clinton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Tompkins v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Suffolk v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Nassau v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Monongalia Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Upshur Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Marion Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Doddridge Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Randolph Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 9/28/2018; Brooke Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Hancock Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Harrison Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Lewis Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Marshall Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Ohio Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Tyler Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017; Wetzel Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Marshall Cty., 12/13/2017.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K (Mark One)

☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 1, 2020.

☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-303

THE KROGER CO. (Exact name of registrant as specified in its charter)

Ohio 31-0345740 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

1014 Vine Street, Cincinnati, OH 45202 (Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (513) 762-4000

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

Title of each class Trading Symbol Name of each exchange on which registered Common, $1.00 Par Value KR New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ⌧ No ◻

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ◻ No ⌧

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧ Accelerated filer ◻ Non-accelerated filer ◻ Smaller reporting company ☐

Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 777,891,827 shares of Common Stock of $1 par value, as of March 25, 2020.

Documents Incorporated by Reference:

Portions of Kroger’s definitive proxy statement for its 2020 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report.

The Kroger Co. Form 10-K

For the Fiscal Year Ended February 1, 2020

Table of Contents

Page Part I Item 1 Business 3 Item 1A Risk Factors 8 Item 1B Unresolved Staff Comments 13 Item 2 Properties 13 Item 3 Legal Proceedings 13 Item 4 Mine Safety Disclosures 14

Part II 14 Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14 Item 6 Selected Financial Data 17 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A Quantitative and Qualitative Disclosures About Market Risk 39 Item 8 Financial Statements and Supplementary Data 41 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 95 Item 9A Controls and Procedures 95 Item 9B Other Information 95

Part III 96 Item 10 Directors, Executive Officers and Corporate Governance 96 Item 11 Executive Compensation 96 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 96 Item 13 Certain Relationships and Related Transactions, and Director Independence 96 Item 14 Principal Accounting Fees and Services 97

Part IV 98 Item 15 Exhibits, Financial Statement Schedules 98 Item 16 Form 10-K Summary 100

Signatures 101

PART I

FORWARD LOOKING STATEMENTS.

This Annual Report on Form 10-K contains forward-looking statements about our future performance. These statements are based on our assumptions and beliefs in light of the information currently available to us. These statements are subject to a number of known and unknown risks, uncertainties and other important factors, including the risks and other factors discussed in “Risk Factors” below, that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward looking statements. Such statements are indicated by words such as “achieve,” “affect,” “believe,” “committed,” “continue,” “could,” “deliver,” “effect,” “estimate,” “expects,” “future,” “growth,” “intends,” “likely,” “may,” “model,” “plan,” “position,” “range,” “result,” “strategy,” “strong,” “trend,” “will” and “would,” and similar words or phrases. Moreover, statements in the sections entitled Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and elsewhere in this report regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward- looking statements. These include:

● The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state of the financial markets and the effect that such condition has on our ability to issue commercial paper at acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities, could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual obligation to lend to us, or in the event that global pandemics, including the novel coronavirus, natural disasters or weather conditions interfere with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state of the financial markets.

● Our ability to achieve sales, earnings and incremental First-In, First-Out (“FIFO”) operating profit goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, the temporary inability of customers to shop due to illness, quarantine, or other travel restrictions or financial hardship, shifts in demand away from discretionary or higher priced products to lower priced products, or stockpiling or similar pantry-filling activities, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, or temporary store closures due to reduced workforces or government mandates; labor negotiations or disputes; changes in the types and numbers of businesses that compete with Kroger; pricing and promotional activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; Kroger's response to these actions; the state of the economy, including interest rates, the inflationary and deflationary trends in certain commodities, changes in tariffs, and the unemployment rate; the effect that fuel costs have on consumer spending; volatility of fuel margins; changes in government-funded benefit programs and the extent and effectiveness of any COVID-19 stimulus packages; manufacturing commodity costs; diesel fuel costs related to Kroger's logistics operations; trends in consumer spending; the extent to which Kroger's customers exercise caution in their purchasing in response to economic conditions; the uncertainty of economic growth or recession; changes in inflation or deflation in product and operating costs; stock repurchases; Kroger's ability to retain pharmacy sales from third party payors; consolidation in the healthcare industry, including pharmacy benefit managers; Kroger's ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the effect of public health crises or other significant catastrophic events, including the coronavirus; the potential costs and risks associated with potential cyber-attacks or data security breaches; the success of Kroger's future growth plans; the ability to execute on Restock Kroger; and the successful integration of merged companies and new partnerships.

● Our ability to achieve these goals may also be affected by our ability to manage the factors identified above. Our ability to execute our financial strategy may be affected by our ability to generate cash flow.

● Our effective tax rate may differ from the expected rate due to changes in laws, the status of pending items with various taxing authorities, and the deductibility of certain expenses.

We cannot fully foresee the effects of changes in economic conditions on our business.

Other factors and assumptions not identified above, including those discussed in Item 1A of this Report, could also cause actual results to differ materially from those set forth in the forward-looking information. Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by forward-looking statements made by us or our representatives. We undertake no obligation to update the forward-looking information contained in this filing.

ITEM 1. BUSINESS.

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. As of February 1, 2020, we are one of the largest retailers in the world based on annual sales. We also manufacture and process some of the food for sale in our supermarkets. We maintain a web site (www.thekrogerco.com) that includes additional information about the Company. We make available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as reasonably practicable after we have filed them with, or furnished them electronically to, the SEC.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominantly by selling products at price levels that produce revenues in excess of the costs to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs and overhead expenses. Our fiscal year ends on the Saturday closest to January 31. All references to 2019, 2018 and 2017 are to the fiscal years ended February 1, 2020, February 2, 2019 and February 3, 2018, respectively, unless specifically indicated otherwise.

EMPLOYEES

As of February 1, 2020, Kroger employed approximately 435,000 full- and part-time employees. A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated with one of several different international unions. There are approximately 360 such agreements, usually with terms of three to five years.

STORES

As of February 1, 2020, Kroger operated, either directly or through its subsidiaries, 2,757 supermarkets under a variety of local banner names, of which 2,270 had pharmacies and 1,567 had fuel centers. We offer Pickup (also referred to as ClickList®) and Harris Teeter ExpressLane™— personalized, order online, pick up at the store services — at 1,989 of our supermarkets and provide home delivery service to 97% of Kroger households. Approximately 54% of our supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our current strategy emphasizes self- development and ownership of real estate. Our stores operate under a variety of banners that have strong local ties and brand recognition. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo stores”); multi-department stores; marketplace stores; or price impact warehouses.

The combo store is the primary food store format. They typically draw customers from a 2-2.5 mile radius. We believe this format is successful because the stores are large enough to offer the specialty departments that customers desire for one-stop shopping, including natural food and organic sections, pharmacies, general merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce.

Multi-department stores are significantly larger in size than combo stores. In addition to the departments offered at a typical combo store, multi-department stores sell a wide selection of general merchandise items such as apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.

Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and health and beauty care departments as well as an expanded perishable offering and general merchandise area that includes apparel, home goods and toys.

Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low prices plus promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy, baked goods and fresh produce items provide a competitive advantage. The average size of a price impact warehouse store is similar to that of a combo store.

SEGMENTS

We operate supermarkets and multi-department stores throughout the United States. Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment. We aggregate our operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, our operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and total assets are shown in our Consolidated Financial Statements set forth in Item 8 below.

MERCHANDISING AND MANUFACTURING

Our Brands products play an important role in our merchandising strategy. Our supermarkets, on average, stock over 16,000 private label items. Our Brands products are primarily produced and sold in three “tiers.” Private Selection® is one of our premium quality brands, offering customers culinary foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Check This Out…® and Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition, we continue to grow natural and organic Our Brands offerings with Simple Truth® and Simple Truth Organic®. Both Simple Truth and Simple Truth Organic are free from a defined list of artificial ingredients that customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic.

Approximately 31% of Our Brands units and 42% of the grocery category Our Brands units sold in our supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of February 1, 2020, we operated 35 food production plants. These plants consisted of 16 dairies, 9 deli or bakery plants, five grocery product plants, two beverage plants, one meat plant and two cheese plants.

SEASONALITY

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year. Additionally, certain significant events including inclement weather systems, particularly winter storms, tend to affect our sales trends.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following is a list of the names and ages of the executive officers and the positions held by each such person. Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the discretion of the Board for the ensuing year until removed or replaced.

Name Age Recent Employment History

Mary E. Adcock 44 Ms. Adcock was elected Senior Vice President effective May 1, 2019 and is responsible for the oversight of several Kroger retail divisions. From June 2016 to April 2019, she served as Group Vice President of Retail Operations. Prior to that, she served as Vice President of Operations for Kroger’s Columbus Division from November 2015 to May 2016 and as Vice President of Merchandising for the Columbus Division from March 2014 to November 2015. From February 2012 to March 2014, Ms. Adcock served as Vice President of Natural Foods Merchandising and from October 2009 to February 2012, she served as Vice President of Deli/Bakery Manufacturing. Prior to that, Ms. Adcock held several leadership positions in the manufacturing department, including human resources manager, general manager and division operations manager. Ms. Adcock joined Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in Bowling Green, Kentucky.

Stuart W. Aitken 48 Mr. Aitken was elected Senior Vice President in February 2019 and served as Group Vice President from June 2015 to February 2019. He is responsible for leading Kroger’s alternative profit businesses, including Kroger’s data analytics subsidiary, 84.51° LLC and Kroger Personal Finance. Prior to joining Kroger, he served as the chief executive officer of dunnhumby USA, LLC from July 2010 to June 2015. Mr. Aitken has over 15 years of marketing, academic and technical experience across a variety of industries, and held various leadership roles with other companies, including Michaels Stores and Safeway, Inc.

Robert W. Clark 54 Mr. Clark was named Senior Vice President of Supply Chain, Manufacturing and Sourcing in May 2019. He was elected Senior Vice President of Merchandising in March 2016. From March 2013 to March 2016, he served as Group Vice President of Non-Perishables. Prior to that, he served as Vice President of Merchandising for Kroger’s Fred Meyer division from October 2011 to March 2013. From August 2010 to October 2011 he served as Vice President of Operations for Kroger’s Columbus division. Prior to that, from May 2002 to August 2010, he served as Vice President of Merchandising for Kroger’s Fry’s division. From 1985 to 2002, Mr. Clark held various leadership positions in store and district management, as well as grocery merchandising. Mr. Clark began his career with Kroger in 1985 as a courtesy clerk at Fry’s.

Yael Cosset 46 Mr. Cosset was elected Senior Vice President and Chief Information Officer in May 2019 and is responsible for leading Kroger’s digital strategy, focused on building Kroger’s presence in the marketplace in digital channels, personalization and e-commerce. Prior to that, Mr. Cosset served as Group Vice President and Chief Digital Officer from January 2017 to April 2019. Before that, he served as Chief Commercial Officer and Chief Information Officer of 84.51° LLC from April 2015 to December 2016. Prior to joining Kroger, Mr. Cosset served in several leadership roles at dunnhumby USA, LLC from 2009 to 2015, including Executive Vice President of Consumer Markets and Global Chief Information Officer.

Michael J. Donnelly 61 Mr. Donnelly was elected Executive Vice President and Chief Operating Officer in December 2017. Prior to that, he was Executive Vice President of Merchandising from September 2015 to December 2017, and Senior Vice President of Merchandising from July 2011 to September 2015. Before that, Mr. Donnelly held a variety of key management positions with Kroger, including President of Ralphs Grocery Company, President of Fry’s Food Stores, and Senior Vice President, Drug/GM Merchandising and Procurement. Mr. Donnelly joined Kroger in 1978 as a clerk.

Carin L. Fike 51 Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to that, she served as Assistant Treasurer from March 2011 to April 2017. Before that, Ms. Fike served as Director of Investor Relations from December 2003 to March 2011. Ms. Fike began her career with Kroger in 1999 as a manager in the Financial Reporting department after working with PricewaterhouseCoopers from 1995 to 1999, where most recently she was an audit manager.

Todd A. Foley 50 Mr. Foley was elected Vice President and Corporate Controller effective April 2017. Before that, he served as Vice President and Treasurer from June 2013 to April 2017. Prior to that, Mr. Foley served as Assistant Corporate Controller from March 2006 to June 2013, and Controller of Kroger’s Cincinnati/Dayton division from October 2003 to March 2006. Mr. Foley began his career with Kroger in 2001 as an audit manager in the Internal Audit Department after working for PricewaterhouseCoopers from 1991 to 2001, where most recently he was a senior audit manager.

Joseph A. Grieshaber, Jr. 62 Mr. Grieshaber was elected Senior Vice President in June 2019 and is responsible for sales, promotional and category planning for center store, fresh foods, and general merchandise categories. Prior to this, he served as President of Kroger’s Fred Meyer division since March 2017, the Columbus division President from March 2015 to March 2017, and the Dillons division President from July 2010 to March 2015. In August 2003, Mr. Grieshaber was named Kroger’s Group Vice President of Perishables Merchandising and Procurement. From 1995 to 2003, he served various leadership roles, including district management and Meat Merchandising in the Michigan Division and Vice President of Merchandising in the Columbus Division. Mr. Grieshaber began his career with Kroger in 1983 as a store manager trainee in Nashville.

Calvin J. Kaufman 57 Mr. Kaufman was elected Senior Vice President in June 2017, and is responsible for the oversight of several Kroger retail divisions. From July 2013 to June 2017, he served as President of the Louisville division. Prior to that, he served as President of Kroger Manufacturing and Our Brands from June 2008 to June 2013, and Group Vice President of Fred Meyer Logistics from September 2005 to May 2008. Mr. Kaufman held various positions in Logistics after joining Kroger in the Fred Meyer division in September 1994.

Timothy A. Massa 53 Mr. Massa was elected Senior Vice President of Human Resources and Labor Relations in June 2018. Prior to that, he served as Group Vice President of Human Resources and Labor Relations from June 2014 to June 2018. Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human Resources and Talent Development. Prior to joining Kroger, he served in various Human Resources leadership roles for 21 years at Procter & Gamble, most recently serving as Global Human Resources Director of Customer Business Development.

Stephen M. McKinney 63 Mr. McKinney was elected Senior Vice President in March 2018, and is responsible for the oversight of several Kroger retail divisions. From October 2013 to March 2018, he served as President of Kroger’s Fry’s Food Stores division. Prior to that, he served as Vice President of Operations for the Ralphs division from October 2007 to September 2013, and Vice President of Operations for the Southwest division from October 2006 to September 2007. From 1988 to 1998, Mr. McKinney served in various leadership positions in the Fry’s Food Stores division, including store manager, deli director, and executive director of operations. From 1981 to 1998, Mr. McKinney held several roles with Florida Choice Supermarkets, a former Kroger banner, including store manager, buyer, and field representative. He started his career with Kroger in 1981 as a clerk with Florida Choice.

W. Rodney McMullen 59 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and Chief Executive Officer effective January 1, 2014. Prior to that, he served as President and Chief Operating Officer from August 2009 to December 2013. Prior to that he was elected Vice Chairman in June 2003, Executive Vice President, Strategy, Planning and Finance in January 2000, Executive Vice President and Chief Financial Officer in May 1999, Senior Vice President in October 1997, and Group Vice President and Chief Financial Officer in June 1995. Before that he was appointed Vice President, Control and Financial Services in March 1993, and Vice President, Planning and Capital Management in December 1989. Mr. McMullen joined Kroger in 1978 as a part-time stock clerk.

Gary Millerchip 48 Mr. Millerchip was elected Senior Vice President and Chief Financial Officer effective April 2019. Prior to this, he serviced as Chief Executive Officer for Kroger Personal Finance since joining Kroger in 2008. Before coming to Kroger he was responsible for the Royal Bank of Scotland (RBS) Personal Credit Card business in the United Kingdom. He joined RBS in 1987 and held leadership positions in Sales & Marketing, Finance, Change Management, Retail Banking Distribution Strategy and Branch Operations during his time there.

Erin S. Sharp 62 Ms. Sharp has served as Group Vice President of Manufacturing since June 2013. She joined Kroger in 2011 as Vice President of Operations for Kroger’s Manufacturing division. Before joining Kroger, Ms. Sharp served as Vice President of Manufacturing for the Sara Lee Corporation. In that role, she led the manufacturing and logistics operations for the central region of their U.S. Fresh Bakery Division. Ms. Sharp has over 30 years of experience supporting food manufacturing operations.

Mark C. Tuffin 60 Mr. Tuffin has served as Senior Vice President since January 2014, and is responsible for the oversight of several of Kroger’s retail divisions. Prior to that, he served as President of Kroger’s Smith’s division from July 2011 to January 2014. From September 2009 to July 2011, Mr. Tuffin served as Vice President of Transition, where he was responsible for implementing an organizational restructuring initiative for Kroger’s retail divisions. He joined Kroger’s Smith’s division in 1996 and served in a series of leadership roles, including Vice President of Merchandising from September 1999 to September 2009. Mr. Tuffin held various positions with other supermarket retailers before joining Smith’s in 1996.

Christine S. Wheatley 49 Ms. Wheatley was elected Group Vice President, Secretary and General Counsel in May 2014. She joined Kroger in February 2008 as Corporate Counsel, and became Senior Attorney in 2010, Senior Counsel in 2011, and Vice President in 2012. Before joining Kroger, Ms. Wheatley was engaged in the private practice of law for 11 years, most recently as a partner at Porter Wright Morris & Arthur in Cincinnati.

COMPETITIVE ENVIRONMENT

For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive Environment.”

ITEM 1A. RISK FACTORS.

There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The following information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our goals or meet our expectations.

COMPETITIVE ENVIRONMENT

The operating environment for the food retailing industry continues to be characterized by intense price competition, expansion, increasing fragmentation of retail and online formats, entry of non-traditional competitors and market consolidation. In addition, evolving customer preferences and the advancement of online, delivery, ship to home, and mobile channels in our industry enhance the competitive environment. We must anticipate and meet these evolving customer preferences and continue to implement technology, software and processes to be able to conveniently and cost-effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex and may not meet customer preferences. If we are not successful in offsetting increased cost of fulfilling orders outside of our traditional in-store channel with efficiencies, cost-savings or expense reductions, our results of operations could be adversely affected. If we do not anticipate customer preferences or fail to quickly adapt to these changing preferences, our sales and profitability could be adversely affected. If we are unable to make, improve, or develop relevant customer-facing technology in a timely manner, our ability to compete and our results of operations could be adversely affected.

We are continuing to enhance the customer connection with investments in our competitive moats of today – which are product freshness and quality, Our Brands, and personalized rewards – and our competitive moat of tomorrow, the seamless ecosystem we are building. If we are unable to enhance the foregoing customer connection, our ability to compete and our financial condition, results of operations, or cash flows could be adversely affected. We believe our Restock Kroger plan provides a balanced approach that will enable us to meet the wide-ranging needs and expectations of our customers. However, we may be unsuccessful in implementing Restock Kroger, including our alternative profit strategy and our cost savings initiatives, which could adversely affect our relationships with our customers, our market share and business growth, and our operations and results. The nature and extent to which our competitors respond to the evolving and competitive industry by developing and implementing their competitive strategies could adversely affect our profitability.

PRODUCT SAFETY

LABOR RELATIONS

A majority of our employees are covered by collective bargaining agreements with unions, and our relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could have a material adverse effect on our results.

We are a party to approximately 360 collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work stoppages by the affected workers could occur if we are unable to negotiate new contracts with labor unions. A prolonged work stoppage affecting a substantial number of locations could have a material adverse effect on our results. Further, if we are unable to control health care, pension and wage costs, or if we have insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating costs and an adverse effect on our financial condition, results of operations, or cash flows.

DATA AND TECHNOLOGY

Our business is increasingly dependent on information technology systems that are complex and vital to continuing operations, resulting in an expansion of our technological presence and corresponding risk exposure. If we were to experience difficulties maintaining or operating existing systems or implementing new systems, we could incur significant losses due to disruptions in our operations.

Through our sales and marketing activities, we collect and store some personal information that our customers provide to us. We also gather and retain information about our associates in the normal course of business. Under certain circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or otherwise in accordance with our privacy policy.

Our technology systems are vulnerable to disruption from circumstances beyond our control. Cyber-attackers may attempt to access information stored in our or our vendors’ systems in order to misappropriate confidential customer or business information. Although we have implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that our security systems will successfully defend against rapidly evolving, increasingly sophisticated cyber- attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a contractor or other third party with whom we do business may in the future circumvent our security measures in order to obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or applications we may use may have inherent defects or could be inadvertently or intentionally applied or used in a way that could compromise our information security.

Our continued investment in our information technology systems may not effectively insulate us from potential attacks, breaches or disruptions to our business operations, which could result in a loss of customers or business information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions, regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse effect on our business, financial condition and results of operations and may not be covered by our insurance. In addition, compliance with privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes and may require us to devote significant management resources to address these issues. The costs of attempting to protect against the foregoing risks and the costs of responding to cyber-attacks are significant. Following a cyber- attack , our and/or our vendors’ remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the unauthorized dissemination of sensitive personal information or confidential information about us or our customers could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations, or cash flows.

Data governance failures can adversely affect our reputation and business. Our business depends on our customers’ willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate disclosure to our customers of our uses of their information, failing to keep our information technology systems and our customers’ sensitive information secure from significant attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations, or cash flows. Large scale data breaches at other entities increase the challenge we and our vendors face in maintaining the security of our information technology systems and proprietary information and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that we will detect them or that they can be sufficiently remediated.

The use of data by our business and our business associates is highly regulated. Privacy and information-security laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems changes and the development of new processes. If we or those with whom we share information fail to comply with laws and regulations, such as the California Consumer Privacy Act (CCPA), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to additional legal risk or financial losses as a result of non-compliance.

PAYMENT SYSTEMS

We accept payments using a variety of methods, including cash and checks, and select credit and debit cards. As we offer new payment options to our customers, we may be subject to additional rules, regulations, compliance requirements, and higher fraud losses. For certain payment methods, we pay interchange and other related acceptance fees, along with additional transaction processing fees. We rely on third parties to provide payment transaction processing services for credit and debit cards. It could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to evolving payment card association and network operating rules, including data security rules, certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card Industry Data Security Standards (“PCI DSS”), which contain compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If our internal systems are breached or compromised, we may be liable for card re-issuance costs, subject to fines and higher transaction fees and lose our ability to accept card payments from our members, and our business, financial condition, results of operations, or cash flows could be adversely affected.

INDEBTEDNESS

Our indebtedness could reduce our ability to obtain additional financing for working capital, mergers and acquisitions or other purposes and could make us vulnerable to future economic downturns as well as competitive pressures. If debt markets do not permit us to refinance certain maturing debt, we may be required to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness. Changes in our credit ratings, or in the interest rate environment, could have an adverse effect on our financing costs and structure.

LEGAL PROCEEDINGS AND INSURANCE

From time to time, we are a party to legal proceedings, including matters involving personnel and employment issues, personal injury, antitrust claims and other proceedings. Other legal proceedings purport to be brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in our evaluations or predictions about the proceedings, could have a material adverse effect on our financial results. Please also refer to the “Legal Proceedings” section in Item 3 and the “Litigation” section in Note 13 to the Consolidated Financial Statements.

We use a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, automobile and general liability, property, director and officers’ liability, and employee health care benefits. Any actuarial projection of losses is subject to a high degree of variability. Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could all affect our financial condition, results of operations, or cash flows.

MULTI-EMPLOYER PENSION OBLIGATIONS

As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer pension plans based on obligations arising under collective bargaining agreements with unions representing employees covered by those agreements. We believe that the present value of actuarially accrued liabilities in most of these multi-employer plans substantially exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to those funds will increase over the next few years. A significant increase to those funding requirements could adversely affect our financial condition, results of operations, or cash flows. Despite the fact that the pension obligations of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably, or adjust their current views unfavorably, when determining their ratings on our debt securities. Any downgrading of our debt ratings likely would adversely affect our cost of borrowing and access to capital.

We also currently bear the investment risk of two multi-employer pension plans in which we participate. In addition, we have been designated as the named fiduciary of these funds with sole investment authority of the assets of these funds. If investment results fail to meet our expectations, we could be required to make additional contributions to fund a portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of operations, or cash flows.

INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES

We enter into mergers, acquisitions and strategic alliances with expected benefits including, among other things, operating efficiencies, procurement savings, innovation, sharing of best practices and increased market share that may allow for future growth. Achieving the anticipated benefits may be subject to a number of significant challenges and uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions underlying expectations regarding potential synergies, capital requirements, and the integration process, unforeseen expenses and delays, and competitive factors in the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our business, financial condition and results of operations, or cash flows.

FUEL

We sell a significant amount of fuel, which could face increased regulation and demand could be affected by concerns about the effect of emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental effects, political unrest, acts of terrorism, disruptions to the economy, including but not limited to the COVID-19 pandemic, and other matters that may affect the cost and availability of fuel, and how our customers will react, which could adversely affect our financial condition, results of operations, or cash flows.

ECONOMIC CONDITIONS

Our operating results could be materially impacted by changes in overall economic conditions that impact consumer confidence and spending, including discretionary spending. Future economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, the availability of credit, interest rates, tax rates, the impact of natural disasters or acts of terrorism or pandemics, such as the spread of the novel coronavirus, COVID- 19, and other matters could reduce consumer spending. Increased fuel prices could also have an effect on consumer spending and on our costs of producing and procuring products that we sell. We are unable to predict how the global economy and financial markets will perform. If the global economy and financial markets do not perform as we expect, it could adversely affect our financial condition, results of operations, or cash flows.

WEATHER AND NATURAL DISASTERS

COVID-19

On March 11, 2020, the World Health Organization announced that infections of the coronavirus (COVID-19) had become a pandemic, and on March 13, the U.S. President announced a National Emergency relating to the disease. There is a possibility of widespread infection in the United States and abroad, with the potential for catastrophic impact. National, state and local authorities have recommended social distancing and imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory business closures. These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration. The effectiveness of economic stabilization efforts, including proposed government payments to affected citizens and industries, is uncertain. Some economists are predicting the United States may enter a recession as a result of the pandemic.

Our business may be negatively impacted by the fear of exposure to or actual effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as reduced travel or recommendations or mandates from governmental authorities to avoid large gatherings or to self-quarantine as a result of the coronavirus pandemic. These impacts include but are not limited to:

● Increased costs due to short-term significant increases in customer traffic and demand spikes;

● Failure of third parties on which we rely, including our suppliers, contract manufacturers, contractors, commercial banks, joint venture partners and external business partners to meet their obligations to the company, or significant disruptions in their ability to do so which may be caused by their own financial or operational difficulties and may adversely impact our operations;

● Supply chain risks such as scrutiny or embargoing of goods produced in infected areas;

● Reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates;

● Temporary store closures due to reduced workforces or government mandates; or

● Reduced consumer traffic and purchasing which may be caused by, but not limited to, the temporary inability of customers to shop with us due to illness, quarantine or other travel restrictions, or financial hardship, shifts in demand from discretionary or higher priced products to lower priced products, or stockpiling or similar pantry-loading activities.

Any of the foregoing factors, or other cascading effects of the coronavirus pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage the Company’s financial condition, results of operations, cash flows and its liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted because of the sweeping nature of the COVID-19 pandemic.

GOVERNMENT REGULATION

Our stores are subject to various laws, regulations, and administrative practices that affect our business. We must comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling and safety, equal employment opportunity, minimum wages, licensing for the sale of food, drugs, and alcoholic beverages, and new provisions relating to the COVID-19 pandemic. We cannot predict future laws, regulations, interpretations, administrative orders, or applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be reformulated. These changes could result in additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have an adverse effect on our financial condition, results of operations, or cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

As of February 1, 2020, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. While our current strategy emphasizes ownership of real estate, a substantial portion of the properties used to conduct our business are leased.

We generally own store equipment, fixtures and leasehold improvements, as well as processing and food production equipment. The total cost of our owned assets and finance leases at February 1, 2020, was $45.8 billion while the accumulated depreciation was $24.0 billion.

We lease certain store real estate, warehouses, distribution centers, office space and equipment. While our current strategy emphasizes ownership of store real estate, we operate in leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For additional information on lease obligations, see Note 10 to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS.

Various claims and lawsuits arising in the normal course of business, including suits charging violations of certain antitrust, wage and hour, or civil rights laws, as well as product liability cases, are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Any damages that may be awarded in antitrust cases will be automatically trebled. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, we believe that any resulting liability will not have a material adverse effect on our financial position, results of operations, or cash flows.

We continually evaluate our exposure to loss contingencies arising from pending or threatened litigation and believe we have made provisions where it is reasonably possible to estimate and where an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. We currently believe that the aggregate range of loss for our exposures is not material. It remains possible that despite our current belief, material differences in actual outcomes or changes in our evaluation or predictions could arise that could have a material adverse effect on our financial condition, results of operations, or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 25, 2020, there were 26,407 shareholders of record.

During 2019, we paid two quarterly cash dividends of $0.14 per share and two quarterly cash dividends of $0.16 per share. During 2018, we paid two quarterly cash dividends of $0.125 per share and two quarterly cash dividends of $0.14 per share. On March 1, 2020, we paid a quarterly cash dividend of $0.16 per share. On March 12, 2020, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on June 1, 2020, to shareholders of record at the close of business on May 15, 2020. We currently expect to continue to pay comparable cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including approval by our Board.

For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

PERFORMANCE GRAPH

Set forth below is a line graph comparing the five-year cumulative total shareholder return on our common shares, based on the market price of the common shares and assuming reinvestment of dividends, with the cumulative total return of companies in the Standard & Poor’s 500 Stock Index and a peer group composed of food and drug companies.

Base INDEXED RETURNS Period Years Ending

Company Name/Index 2014 2015 2016 2017 2018 2019 The Kroger Co. 100 113.63 98.98 88.69 86.45 84.67 S&P 500 Index 100 99.33 120.06 147.48 147.40 179.17 Peer Group 100 93.30 91.76 118.54 115.13 138.93

Kroger’s fiscal year ends on the Saturday closest to January 31.

Data supplied by Standard & Poor’s.

The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an express reference thereto.

* Total assumes $100 invested on January 31, 2015, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends.

** The Peer Group consists of Costco Wholesale Corp., CVS Health Corporation, Etablissements Delhaize Freres Et Cie Le Lion (“Groupe Delhaize”, which is included through July 22, 2016 when it merged with Koninklijke Ahold), Koninklijke Ahold Delhaize NV (changed name from Koninklijke Ahold after merger with Groupe Delhaize), Supervalu Inc. (included through October 19, 2018 when it was acquired by United Natural Foods), Target Corp., Walmart Inc., Walgreens Boots Alliance Inc. (formerly, Walgreen Co.), Whole Foods Market Inc. (included through August 28, 2017 when it was acquired by Amazon.com, Inc.).

The following table presents information on our purchases of our common shares during the fourth quarter of 2019.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Approximate Dollar Shares Value of Shares

Purchased as that May Yet Be Part of Publicly Purchased Under

Total Number Average Announced the Plans or of Shares Price Paid Plans or Programs (4)

Period (1) Purchased (2) Per Share Programs (3) (in millions) First period - four weeks November 10, 2019 to December 7, 2019 224,436 $ 26.95 211,551 $ 1,000 Second period - four weeks December 8, 2019 to January 4, 2020 7,844,559 $ 28.43 7,832,894 $ 787 Third period — four weeks January 5, 2020 to February 1, 2020 7,117,032 $ 28.49 7,117,032 $ 600 Total 15,186,027 $ 28.43 15,161,477 $ 600

(1) The reported periods conform to our fiscal calendar composed of thirteen 28-day periods. The fourth quarter of 2019 contained three 28-day periods.

(2) Includes (i) shares repurchased under the November 2019 Repurchase Program described below in (4), (ii) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”) and (iii) 24,550 shares that were surrendered to the Company by participants under our long term incentive plans to pay for taxes on restricted stock awards.

(3) Represents shares repurchased under the November 2019 Repurchase Program and the 1999 Repurchase Program.

(4) On November 5, 2019, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with rule 10b5- 1 of the Securities Exchange Act of 1934 (the “November 2019 Repurchase Program”). The amounts shown in this column reflect the amount remaining under the November 2019 Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The November 2019 Repurchase Program and the 1999 Repurchase Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time.

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents our selected consolidated financial data for each of the last five fiscal years.

Fiscal Years Ended February 1, February 2, February 3, January 28, January 30,

2020 2019 2018 2017 2016 (52 weeks) (52 weeks) (53 weeks) (52 weeks) (52 weeks)

(In millions, except per share amounts) Sales $ 122,286 $ 121,852 $ 123,280 $ 115,337 $ 109,830 Net earnings including noncontrolling interests $ 1,512 $ 3,078 $ 1,889 $ 1,957 $ 2,049 Net earnings attributable to The Kroger Co. $ 1,659 $ 3,110 $ 1,907 $ 1,975 $ 2,039 Net earnings attributable to The Kroger Co. per diluted common share $ 2.04 $ 3.76 $ 2.09 $ 2.05 $ 2.06

Total assets $ 45,256 $ 38,118 $ 37,197 $ 36,505 $ 33,897

Long-term liabilities, including obligations under finance leases $ 22,440 $ 16,009 $ 16,095 $ 16,935 $ 14,128

Total shareholders’ equity — The Kroger Co. $ 8,602 $ 7,886 $ 6,931 $ 6,698 $ 6,820 Cash dividends per common share $ 0.600 $ 0.530 $ 0.490 $ 0.450 $ 0.395

Note: This information should be read in conjunction with MD&A and the Consolidated Financial Statements.

Fiscal year 2015, 2016, 2018 and 2019 each include 52 weeks. Fiscal year 2017 includes 53 weeks.

Total assets and long-term liabilities, including obligations under finance leases, were impacted in 2019 by the adoption of ASU 2016-02, “Leases,” as further described in Notes 10 and 18 to the Consolidated Financial Statements. Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting policies.

Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. The prior-year amounts have been reclassified to conform to current-year presentation with the exception of 2016 and 2015, which were not material and not adjusted for the sales reclassification. See Item 7, Supplemental Information for additional details.

Fiscal year ended February 2, 2019 includes the gain on sale of our convenience store business unit. Additionally, refer to Note 17 to the Consolidated Financial Statements for disclosure of disposals of businesses.

Refer to Note 2 to the Consolidated Financial Statements for disclosure of business combinations and their effect on the Consolidated Statements of Operations and the Consolidated Balance Sheets.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended February 2, 2019, which provides additional information on comparisons of fiscal years 2018 and 2017.

OUR BUSINESS

The Kroger Co. was founded in 1883 and incorporated in 1902. As of February 1, 2020, Kroger is one of the world’s largest retailers, as measured by revenue, operating 2,757 supermarkets under a variety of local banner names in 35 states and the District of Columbia. Of these stores, 2,270 have pharmacies and 1,567 have fuel centers. We offer Pickup (also referred to as ClickList®) and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 1,989 of our supermarkets and provide home delivery service to 97% of Kroger households. We also operate an online retailer.

We operate 35 food production plants, primarily bakeries and dairies, which supply approximately 31% of Our Brands units and 42% of the grocery category Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment.

On January 27, 2020, Lucky’s Market filed a voluntary petition in the Bankruptcy Court seeking relief under the Bankruptcy Code. Lucky’s Market is included in our Consolidated Balance Sheet for 2018 and our Consolidated Statements of Operations in all periods in 2017 and 2018 and through January 26, 2020. Refer to Note 17 to the Consolidated Financial Statements for additional information.

On April 26, 2019, we completed the sale of our Turkey Hill Dairy business for total proceeds of $225 million. Turkey Hill Dairy is included in our Consolidated Balance Sheet for 2018 and our Consolidated Statements of Operations in all periods in 2017 and 2018 and through April 25, 2019.

On March 13, 2019, we completed the sale of our You Technology business to Inmar for total consideration of $565 million, including $396 million of cash and $64 million of preferred equity received upon closing. We are also entitled to receive other cash payments of $105 million over five years. The transaction includes a long-term service agreement for Inmar to provide us digital coupon services. You Technology is included in our Consolidated Balance Sheet for 2018 and our Consolidated Statements of Operations in all periods in 2017 and 2018 and through March 12, 2019.

On June 22, 2018, we closed our merger with Home Chef by purchasing 100% of the ownership interest in Home Chef, for $197 million net of cash and cash equivalents of $30 million, in addition to future earnout payments of up to $500 million over five years that are contingent on achieving certain milestones. Home Chef is included in our ending Consolidated Balance Sheet for 2018 and 2019 and in our Consolidated Statements of Operations from June 22, 2018 through February 2, 2019 and all periods in 2019. See Note 2 to the Consolidated Financial Statements for more information related to our merger with Home Chef.

On April 20, 2018, we completed the sale of our convenience store business unit for $2.2 billion. The convenience store business is included in our Consolidated Statements of Operations in all periods in 2017 and through April 19, 2018.

USE OF NON-GAAP FINANCIAL MEASURES

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including FIFO gross margin, FIFO operating profit, adjusted net earnings and adjusted net earnings per diluted share because management believes these metrics are useful to investors and analysts. These non-GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP.

We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out (“LIFO”) charge. Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure used by management as management believes FIFO gross margin is a useful metric to investors and analysts because it measures our day- to-day merchandising and operational effectiveness.

We calculate FIFO operating profit as operating profit excluding the LIFO charge. FIFO operating profit is an important measure used by management as management believes FIFO operating profit is a useful metric to investors and analysts because it measures our day-to-day operational effectiveness.

The adjusted net earnings and adjusted net earnings per diluted share metrics are important measures used by management to compare the performance of core operating results between periods. We believe adjusted net earnings and adjusted net earnings per diluted share are useful metrics to investors and analysts because they present more accurate year-over-year comparisons for our net earnings and net earnings per diluted share because adjusted items are not the result of our normal operations. Net earnings for 2019 include the following, which we define as the “2019 Adjusted Items:”

● Charges to operating, general and administrative expenses (“OG&A”) of $135 million, $104 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds; $80 million, $61 million net of tax, for a severance charge and related benefits; $412 million including $305 million attributable to The Kroger Co., $225 million net of tax, for impairment of Lucky’s Market; $52 million, $37 million net of tax, for transformation costs, primarily including 35 planned store closures; and a reduction to OG&A of $69 million, $49 million net of tax, for the revaluation of Home Chef contingent consideration (the “2019 OG&A Adjusted Items”).

● Gains in other income (expense) of $106 million, $80 million net of tax, related to the sale of Turkey Hill Dairy; $70 million, $52 million net of tax, related to the sale of You Technology; and $157 million, $119 million net of tax, for the mark to market gain on Ocado Group plc (“Ocado”) securities (the “2019 Other Income (Expense) Adjusted Items”).

Net earnings for 2018 include the following, which we define as the “2018 Adjusted Items:”

● Charges to OG&A of $155 million, $121 million net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund; $33 million, $26 million net of tax, for the revaluation of Home Chef contingent consideration; and $42 million, $33 million net of tax, for an impairment of financial instrument (the “2018 OG&A Adjusted Items”). We had initially received the financial instrument in 2016 with no cash outlay as part of the consideration for entering into agreements with a third party.

● A reduction to depreciation and amortization expenses of $14 million, $11 million net of tax, related to held for sale assets (the “2018 Depreciation Adjusted Item”).

● Gains in other income (expense) of $1.8 billion, $1.4 billion net of tax, related to the sale of our convenience store business unit and $228 million, $174 million net of tax, for the mark to market gain on Ocado securities.

Net earnings for 2017 include the following, which we define as the “2017 Adjusted Items:”

● Charges to OG&A of $550 million, $360 million net of tax, for obligations related to withdrawing from and settlements of withdrawal liabilities for certain multi-employer pension funds; $184 million, $117 million net of tax, related to the voluntary retirement offering (“VRO”); and $110 million, $74 million net of tax, related to the Kroger Specialty Pharmacy goodwill impairment (the “2017 OG&A Adjusted Items”).

● A reduction to depreciation and amortization expenses of $19 million, $13 million net of tax, related to held for sale assets (the “2017 Depreciation Adjusted Item”).

● A reduction to income tax expense of $922 million primarily due to the re-measurement of deferred tax liabilities and the reduction of the statutory rate for the last five weeks of the fiscal year from the Tax Cuts and Jobs Act ("Tax Act") (the “2017 Tax Expense Adjusted Item”).

● A charge in other income (expense) of $502 million, $335 million net of tax, related to a company-sponsored pension plan termination.

In addition, net earnings for 2017 include $119 million, $79 million net of tax, due to a 53rd week in fiscal year 2017 (the “Extra Week”).

EXECUTIVE SUMMARY – OUR PATH TO DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN

In 2019, we delivered on the total shareholder return model that we outlined at our Investor Day in November 2019 and are positioned to deliver on our total shareholder return model of the future. We also delivered on our guidance for identical sales without fuel, adjusted net earnings per diluted share and adjusted FIFO operating profit. We are using the power of Kroger’s stable and growing supermarket business to create meaningful incremental operating profit through the alternative profit stream businesses, positioning our business for long-term growth. By executing against the Restock Kroger framework, we are repositioning our business by widening and deepening our competitive moats. The four main areas of the Restock Kroger framework – Redefine the Customer Experience, Partner to Create Value, Develop Talent and Live Our Purpose – continue to be a top strategic priority for us. Our model is built upon a strong and durable base driven by our retail supermarket, fuel, and health and wellness businesses. We continue to generate strong free cash flow and are being disciplined in how we deploy it to deliver strong and attractive total shareholder returns.

Our financial strategy is to continue to use our strong free cash flow to invest in the business to drive long-term sustainable growth through the identification of high-return projects that support our strategy. We will allocate capital toward driving profitable sales growth in stores and digital, improving productivity, and building a seamless digital ecosystem and supply chain. At the same time, we are committed to maintaining our net debt to adjusted EBITDA range of 2.30 to 2.50 in order to keep our current investment-grade debt rating. We also expect to continue to grow our dividend over time, reflecting the confidence we have in our free cash flow, and will continue to return excess cash to investors via share repurchases. We expect our model to deliver improved operating results over time and continued strong free cash flow, which will translate into a consistently strong and attractive total shareholder return over the long-term of 8% to 11%. Our full-year 2019 results demonstrated clear progress toward delivering on this model. Restock Kroger is the right strategic framework to deliver both our 2020 guidance and to position Kroger for sustainable growth and total shareholder return.

The following table provides highlights of our financial performance:

Financial Performance Data ($ in millions, except per share amounts)

Percentage 2019 Change 2018

Sales $ 122,286 0.4 % $ 121,852 Net earnings attributable to The Kroger Co. 1,659 (46.7)% 3,110 Adjusted net earnings attributable to The Kroger Co. 1,786 2.3 % 1,745 Net earnings attributable to The Kroger Co. per diluted common share 2.04 (45.7)% 3.76 Adjusted net earnings attributable to The Kroger Co. per diluted common share 2.19 3.8 % 2.11 Operating profit 2,251 (13.9)% 2,614 Adjusted FIFO operating profit 2,995 4.0 % 2,880 Reduction in total debt, including obligations under finance leases 1,153 220.3 % 360 Share repurchases 465 (76.9)% 2,010 Dividends paid 486 11.2 % 437 Dividends paid per common share 0.600 13.2 % 0.530 Identical sales excluding fuel 2.0 % N/A 1.8 % FIFO gross margin rate, excluding fuel and Adjusted Items, bps decrease (0.23) N/A (0.55) OG&A rate, excluding fuel and Adjusted Items, bps increase (decrease) (0.29) N/A 0.07

OVERVIEW

Notable items for 2019 are:

Shareholder Return

● Net earnings attributable to The Kroger Co. per diluted common share of $2.04.

● Adjusted net earnings attributable to The Kroger Co. per diluted common share of $2.19.

● We returned $951 million to shareholders from share repurchases and dividend payments.

● Over the last 12 months, we decreased total debt, including obligations under finance leases, by $1.2 billion.

Other Financial Results

● Identical sales, excluding fuel, increased 2.0% in 2019.

● Digital revenue grew 29% in 2019, driven by Pickup and Delivery sales growth. Digital revenue growth has moderated primarily due to cycling our merger with the Home Chef business. Digital revenue primarily includes revenue from all curbside pickup locations, online sales delivered to customer locations and products shipped to customer locations.

● Alternative profit streams grew over $100 million in 2019 compared to 2018, meeting our expectations. Kroger’s ecosystem fuels the growth of adjacent alternative profit streams like Kroger Personal Finance, customer data insights, and media businesses that are essential components of Restock Kroger. These businesses comprise a significant portion of Kroger’s overall alternative profit stream portfolio. They are dependent on a core supermarket business to deliver sustainable, long-term growth and profitability.

Significant Events

● During the fourth quarter of 2019, we recognized transformation costs of $52 million, $37 million net of tax, primarily including 35 planned store closures.

● During the third quarter of 2019, we approved and implemented a plan to reorganize certain portions of our division management structure, resulting in a charge for severance and related benefits of $80 million, $61 million net of tax. This reorganization is expected to increase operational effectiveness and reduce overhead costs while maintaining a high quality customer experience.

● As a result of a portfolio review, we decided to divest our interest in Lucky’s Market and we recognized a non-cash impairment charge of $238 million in the third quarter of 2019. The amount of the impairment charge attributable to The Kroger Co. is $131 million, $100 million net of tax. Subsequently, the decision was made by Lucky’s Market to file for bankruptcy in January 2020, which led us to fully write off the value of our investment and deconsolidate Lucky’s Market from our consolidated financial statements. This resulted in an additional non-cash charge of $174 million, $125 million net of tax, in the fourth quarter of 2019. The amount of the total 2019 charge attributable to The Kroger Co. is $305 million, $225 million net of tax. This impairment charge was a non-cash charge and reflects the write down of our initial investment in Lucky’s Market, as well as additional funding provided to operate and grow the business. Kroger maintains liabilities associated with certain property related guarantees that will result in Kroger making payments to settle these over time.

● During the first quarter of 2019, we sold our You Technology business to Inmar for total consideration of $565 million, including $396 million of cash and $64 million of preferred equity received upon closing. We are also entitled to receive other cash payments of $105 million over five years. The transaction includes a long-term service agreement for Inmar to provide us digital coupon services.

● During the first quarter of 2019, we sold our Turkey Hill Dairy business to an affiliate of Peak Rock Capital for $225 million.

● In 2019, we recorded charges to OG&A of $135 million, $104 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds.

COVID-19

We expect the ultimate significance of the impact on our financial condition, results of operations, or cash flows will be dictated by the length of time that such circumstances continue, which will depend on the currently unknowable extent and duration of the COVID-19 pandemic and any governmental and public actions taken in response. COVID-19 also makes it more challenging for management to estimate future performance of our businesses, particularly over the near term.

On April 1, 2020, we issued a press release announcing business updates in response to the impact from novel coronavirus (COVID-19).

The following table provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common share to adjusted net earnings attributable to The Kroger Co. per diluted common share, excluding the 2019, 2018 and 2017 Adjusted Items.

Net Earnings per Diluted Share excluding the Adjusted Items ($ in millions, except per share amounts)

2019 2018 2017 Net earnings attributable to The Kroger Co. $ 1,659 $ 3,110 $ 1,907 (Income) expense adjustments Adjustments for pension plan withdrawal liabilities(1)(2) 104 121 360 Adjustment for voluntary retirement offering(1)(3) — — 117 Adjustment for Kroger Specialty Pharmacy goodwill impairment(1)(4) — — 74 Adjustment for company-sponsored pension plan termination(1)(5) — — 335 Adjustment for gain on sale of convenience store business(1)(6) — (1,360) — Adjustment for gain on sale of Turkey Hill Dairy(1)(7) (80) — — Adjustment for gain on sale of You Technology(1)(8) (52) — — Adjustment for mark to market gain on Ocado securities(1)(9) (119) (174) — Adjustment for depreciation related to held for sale assets(1)(10) — (11) (13) Adjustment for severance charge and related benefits(1)(11) 61 — — Adjustment for deconsolidation and impairment of Lucky's Market attributable to The Kroger Co.(1)(12) 225 — — Adjustment for Home Chef contingent consideration(1)(13) (49) 26 — Adjustment for impairment of financial instrument(1)(14) — 33 — Adjustment for transformation costs, primarily including 35 planned store closures(1)(15) 37 — — Adjustment for Tax Act(1)(16) — — (922)

Total Adjusted Items 127 (1,365) (49)

Net earnings attributable to The Kroger Co. excluding the Adjusted Items $ 1,786 $ 1,745 $ 1,858

Extra Week adjustment(1)(17) — — (79)

Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra Week adjustment $ 1,786 $ 1,745 $ 1,779

Net earnings attributable to The Kroger Co. per diluted common share $ 2.04 $ 3.76 $ 2.09 (Income) expense adjustments Adjustments for pension plan withdrawal liabilities(18) 0.13 0.15 0.40 Adjustment for voluntary retirement offering(18) — — 0.13 Adjustment for Kroger Specialty Pharmacy goodwill impairment(18) — — 0.08 Adjustment for company-sponsored pension plan termination(18) — — 0.37 Adjustment for gain on sale of convenience store business(18) — (1.65) — Adjustment for gain on sale of Turkey Hill Dairy(18) (0.10) — — Adjustment for gain on sale of You Technology(18) (0.06) — — Adjustment for mark to market gain on Ocado securities(18) (0.15) (0.21) — Adjustment for depreciation related to held for sale assets(18) — (0.01) (0.01) Adjustment for severance charge and related benefits(18) 0.08 — — Adjustment for deconsolidation and impairment of Lucky's Market attributable to The Kroger Co.(18) 0.28 — — Adjustment for Home Chef contingent consideration(18) (0.07) 0.03 — Adjustment for impairment of financial instrument(18) — 0.04 — Adjustment for transformation costs, primarily including 35 planned store closures(18) 0.04 — — Adjustment for Tax Act(18) — — (1.02)

Total Adjusted Items 0.15 (1.65) (0.05)

Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items $ 2.19 $ 2.11 $ 2.04

Extra Week adjustment(18) — — (0.09)

Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items and the Extra Week adjustment $ 2.19 $ 2.11 $ 1.95

Average numbers of common shares used in diluted calculation 805 818 904

Net Earnings per Diluted Share excluding the Adjusted Items (continued) ($ in millions, except per share amounts)

(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax rates. (2) The pre-tax adjustment for pension plan withdrawal liabilities was $135 in 2019, $155 in 2018 and $550 in 2017. (3) The pre-tax adjustment for the voluntary retirement offering was $184. (4) The pre-tax adjustment for Kroger Specialty Pharmacy goodwill impairment was $110. (5) The pre-tax adjustment for the company-sponsored pension plan termination was $502. (6) The pre-tax adjustment for gain on sale of convenience store business was ($1,782). (7) The pre-tax adjustment for gain on sale of Turkey Hill Dairy was ($106). (8) The pre-tax adjustment for gain on sale of You Technology was ($70). (9) The pre-tax adjustment for mark to market gain on Ocado securities was ($157) in 2019 and ($228) in 2018. (10) The pre-tax adjustment for depreciation related to held for sale assets was ($14) in 2018 and ($19) in 2017. (11) The pre-tax adjustment for severance charge and related benefits was $80. (12) The pre-tax adjustment for deconsolidation and impairment of Lucky’s Market was $412 including $305 attributable to The

Kroger Co. (13) The pre-tax adjustment for Home Chef contingent consideration was ($69) in 2019 and $33 in 2018. (14) The pre-tax adjustment for impairment of financial instrument was $42. (15) The pre-tax adjustment for transformation costs, primarily including 35 planned store closures was $52. (16) Due to the re-measurement of deferred tax liabilities and the reduction of the statutory income tax rate for the last few weeks

of the fiscal year. (17) The pre-tax Extra Week adjustment was ($119). (18) The amount presented represents the net earnings per diluted common share effect of each adjustment.

RESULTS OF OPERATIONS

Sales

Total Sales ($ in millions)

Percentage Percentage 2017 2019 Change(1) 2018 Change(2) 2017 Adjusted(3)

Total sales to retail customers without fuel(4) $ 107,487 2.2 % $ 105,123 2.2 % $ 104,817 $ 102,900 Supermarket fuel sales 14,052 (5.7)% 14,903 15.5 % 13,177 12,906 Convenience stores(5) — — % 944 (78.7)% 4,515 4,434 Other sales(6) 747 (15.3)% 882 15.9 % 771 761 Total sales $ 122,286 0.4 % $ 121,852 0.7 % $ 123,280 $ 121,001

(1) This column represents the percentage change in 2019 compared to 2018. (2) This column represents the percentage change in 2018 compared to 2017 adjusted sales, which removes the Extra Week. (3) The 2017 Adjusted column represents the items presented in the 2017 column adjusted to remove the Extra Week. (4) Digital sales, primarily including Pickup, Delivery, Ship and pharmacy e-commerce sales, grew approximately 29% in 2019,

58% in 2018 and 90% in 2017, adjusted to remove the Extra Week. These sales are included in the “total sales to retail customers without fuel” line above. Digital sales growth has moderated primarily due to cycling our merger with the Home Chef business.

(5) We completed the sale of our convenience store business unit during the first quarter of 2018. (6) Other sales primarily relate to external sales at food production plants, data analytic services, third party media revenue and

digital coupon services. The decrease in other sales in 2019, compared to 2018, is primarily due to the sale of You Technology and Turkey Hill Dairy during the first quarter of 2019, partially offset by an increase in data analytic services and third party media revenue.

Total sales increased in 2019, compared to 2018, by 0.4%. The increase was due to an increase in total sales to retail customers without fuel, partially offset by decreased supermarket fuel sales, a reduction in convenience store sales due to the sale of our convenience store business unit in the first quarter of 2018 and decreased sales due to the disposal of Turkey Hill Dairy and You Technology in the first quarter of 2019. Total sales, excluding fuel, dispositions and the merger with Home Chef increased 2.3% in 2019, compared to 2018. The increase in total sales to retail customers without fuel for 2019, compared to 2018, was primarily due to our merger with Home Chef and our identical sales increase, excluding fuel, of 2.0%. Identical sales, excluding fuel, for 2019, compared to 2018, increased primarily due to growth of loyal households, a higher customer basket value including retail inflation and Kroger Specialty Pharmacy sales growth, partially offset by continued investments in lower prices for our customers. Total supermarket fuel sales decreased 5.7% in 2019, compared to 2018, primarily due to a decrease in fuel gallons sold of 4.8% and a decrease in the average retail fuel price of 1.0%. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel.

Total sales decreased in 2018, compared to 2017, by 1.2%. The decrease in total sales in 2018, compared to 2017, is due to the Extra Week in 2017, partially offset by the increase in 2018 sales, compared to 2017 adjusted sales. Total sales increased in 2018, compared to 2017 adjusted sales, by 0.7%. This increase was primarily due to our increases in total sales to retail customers without fuel and supermarket fuel sales, partially offset by a reduction in convenience store sales due to the sale of our convenience store business unit in the first quarter of 2018. The increase in total sales to retail customers without fuel for 2018, compared to 2017 adjusted sales to retail customers without fuel, was primarily due to our merger with Home Chef and our identical sales increase, excluding fuel, of 1.8%. Identical sales, excluding fuel, for 2018, compared to 2017, increased primarily due to a higher customer basket value and Kroger Specialty Pharmacy sales growth, partially offset by our continued investments in lower prices for our customers. Total supermarket fuel sales increased 15.5% in 2018, compared to 2017 adjusted supermarket fuel sales, primarily due to an increase in the average retail fuel price of 13.6% and an increase in fuel gallons sold of 1.5%. The increase in the average retail fuel price was caused by an increase in the product cost of fuel.

We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, Kroger Specialty Pharmacy businesses and ship-to-home solutions. We define a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. Additionally, sales from all acquired businesses are treated as identical as if they were part of the Company in the prior year. Products and services related primarily to Kroger Personal Finance, which were historically accounted for as an offset to OG&A, are classified as a component of sales as of the beginning of fiscal year 2019. These prior-year amounts have been reclassified to conform to current-year presentation, which is consistent with our Restock Kroger initiative and our view of the products and services as part of our core business strategy. This is also more consistent with industry practice. These Kroger Personal Finance transactions represent sales to retail customers and, as such, are included in identical sales in 2019 and 2018. This change did not affect identical sales percentages for 2018. See “Supplemental Information” section below for more detail on the changes and the impact of the reclassification. Although identical sales is a relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by our management to calculate identical sales may differ from methods other companies use to calculate identical sales. We urge you to understand the methods used by other companies to calculate identical sales before comparing our identical sales to those of other such companies. Our identical sales results are summarized in the following table. We used the identical sales dollar figures presented below to calculate percentage changes for 2019.

Identical Sales ($ in millions)

2019 2018 Excluding fuel $ 106,037 $ 103,946 Excluding fuel 2.0 % 1.8 %

Gross Margin, LIFO and FIFO Gross Margin

We define gross margin as sales minus merchandise costs, including advertising, warehousing, and transportation. Rent expense, depreciation and amortization expense, and interest expense are not included in gross margin.

Our gross margin rates, as a percentage of sales, were 22.07% in 2019 and 21.95% in 2018. The increase in 2019, compared to 2018, resulted primarily from a higher gross margin rate on fuel sales, decreased shrink, as a percentage of sales, growth in our alternative profit stream portfolio and effective negotiations to achieve savings on the cost of products sold, partially offset by industry-wide lower gross margin rates in pharmacy, continued investments in lower prices for our customers, a higher LIFO charge and continued growth in the specialty pharmacy business.

Our LIFO charge was $105 million in 2019 and $29 million in 2018. Our LIFO charge reflects an increase in our product cost inflation for 2019, driven by dry grocery, pharmacy and dairy.

Our FIFO gross margin rate, which excludes the LIFO charge, was 22.16% in 2019, compared to 21.98% for 2018. Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, our FIFO gross margin rate decreased 23 basis points in 2019, compared to 2018. This decrease resulted primarily from industry-wide lower gross margin rates in pharmacy, continued investments in lower prices for our customers and continued growth in the specialty pharmacy business, partially offset by decreased shrink, as a percentage of sales, growth in our alternative profit stream portfolio and effective negotiations to achieve savings on the cost of products sold.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan costs, utilities, and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not included in OG&A.

OG&A expenses, as a percentage of sales, were 17.34% in 2019 and 17.06% in 2018. The increase in 2019, compared to 2018 resulted primarily from the 2019 OG&A Adjusted Items, the effect of decreased supermarket fuel and convenience store sales, which increases our OG&A rate, as a percentage of sales, investments in our digital strategy and increases in hourly associate labor costs. The increase in hourly associate labor costs is attributable to investing in higher wages and other comprehensive benefits to improve employee retention, engagement and customer experience. The increase was partially offset by the 2018 OG&A Adjusted Items, broad based improvement of Restock Kroger cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions, decreased incentive plan and healthcare costs and planned real estate transactions during the first quarter of 2019.

Excluding the effect of fuel, the 2019 OG&A Adjusted Items and the 2018 OG&A Adjusted Items, our OG&A rate decreased 29 basis points in 2019, compared to 2018. This decrease resulted primarily from broad based improvement of Restock Kroger cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions, decreased incentive plan and healthcare costs and planned real estate transactions during the first quarter of 2019. The decrease was partially offset by investments in our digital strategy and increases in hourly associate labor costs attributed to investing in higher wages and other comprehensive benefits to improve employee retention, engagement and customer experience.

During the second quarter of 2019, we accepted an offer to sell an unused warehouse that had been on the market for some time. We used this gain as an opportunity to contribute a similar amount into the United Food and Commercial Workers (“UFCW”) Consolidated Pension Plan, helping stabilize associates’ future benefits. The net impact of these transactions had no effect to OG&A for 2019.

Rent Expense

Rent expense, as a percentage of sales, remained relatively consistent in 2019, compared to 2018.

Depreciation and Amortization Expense

Depreciation and amortization expense increased, as a percentage of sales, in 2019, compared to 2018. This increase is primarily due to the 2018 Depreciation Adjusted Item, additional depreciation on capital investments, excluding mergers and lease buyouts, of $3.0 billion during 2019 and a decrease in the average useful life on these capital investments, as we are investing more in technology projects and our digital ecosystem.

Operating Profit and FIFO Operating Profit

Operating profit was $2.3 billion, or 1.84% of sales, for 2019, compared to $2.6 billion, or 2.15% of sales, for 2018. Operating profit, as a percentage of sales, decreased 31 basis points in 2019, compared to 2018, due to increased OG&A and depreciation and amortization expenses, as a percentage of sales, partially offset by a higher gross margin rate.

FIFO operating profit was $2.4 billion, or 1.93% of sales, for 2019, compared to $2.6 billion, or 2.17% of sales, for 2018. FIFO operating profit excluding the 2019 and 2018 Adjusted Items was $3.0 billion, or 2.45% of sales, for 2019, compared to $2.9 billion, or 2.36% of sales, for 2018. FIFO operating profit excluding the 2019 and 2018 Adjusted Items increased 9 basis points in 2019, compared to 2018, due to increased fuel earnings, improved sales to retail customers without fuel and decreased OG&A expenses, as a percentage of sales, partially offset by decreased pharmacy gross profit and increased depreciation and amortization expense, as a percentage of sales.

Specific factors contributing to the operating trends for operating profit and FIFO operating profit above are discussed earlier in this section.

The following table provides a reconciliation of operating profit to FIFO operating profit, excluding the 2019 and 2018 Adjusted Items.

Operating Profit excluding the Adjusted Items ($ in millions)

2019 2018 Operating profit $ 2,251 $ 2,614 LIFO charge 105 29

FIFO Operating profit 2,356 2,643

Adjustments for pension plan withdrawal liabilities 135 155 Adjustment for depreciation related to held for sale assets — (14) Adjustment for Home Chef contingent consideration (69) 33 Adjustment for severance charge and related benefits 80 — Adjustment for impairment of financial instrument — 42 Adjustment for transformation costs, primarily including 35 planned store closures 52 — Adjustment for deconsolidation and impairment of Lucky's Market(1) 412 — Other 29 21

2019 and 2018 Adjusted items 639 237

Adjusted FIFO operating profit excluding the adjustment items above $ 2,995 $ 2,880

(1) The adjustment for impairment of Lucky’s Market includes a $107 million net loss attributable to the minority interest of Lucky’s Market.

Interest Expense

Interest expense totaled $603 million in 2019 and $620 million in 2018. The decrease in interest expense in 2019, compared to 2018, resulted primarily from decreased borrowings and a lower weighted average interest rate. Over the last 12 months, we decreased total debt, including obligations under finance leases, by $1.2 billion.

Income Taxes

Our effective income tax rate was 23.7% in 2019 and 22.6% in 2018. The 2019 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and Lucky’s Market losses attributable to the noncontrolling interest which reduced pre-tax income but did not impact tax expense. These 2019 items were partially offset by the utilization of tax credits and deductions. The 2018 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and an IRS audit that resulted in a reduction of prior year tax deductions at pre-Tax Act rates and an increase in future tax deductions at post- Tax Act rates. These 2018 items were partially offset by the utilization of tax credits and deductions, the remeasurement of uncertain tax positions and adjustments to provisional amounts that increased prior year deductions at pre-Tax Act rates and decreased future deductions at post-Tax Act rates.

Net Earnings and Net Earnings Per Diluted Share

Our net earnings are based on the factors discussed in the Results of Operations section.

Net earnings were $2.04 per diluted share for 2019 compared to net earnings of $3.76 per diluted share for 2018. Adjusted net earnings of $2.19 per diluted share for 2019 represented an increase of 3.8% compared to adjusted net earnings of $2.11 per diluted share for 2018. The increase in adjusted net earnings per diluted share resulted primarily from increased fuel earnings, decreased interest expense and lower weighted average common shares outstanding due to common share repurchases, partially offset by increased tax expense and a higher LIFO charge.

COMMON SHARE REPURCHASE PROGRAMS

In addition to these repurchase programs, we also repurchase common shares to reduce dilution resulting from our employee stock option plans. This program is solely funded by proceeds from stock option exercises, and the tax benefit from these exercises. We repurchased approximately $65 million in 2019 and $83 million in 2018 of our common shares under the stock option program.

On March 15, 2018, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intending to comply with rule 10b5-1 of the Securities Exchange Act of 1934 (the “March 2018 Repurchase Program”). On November 5, 2019, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with rule 10b5-1 of the Securities Exchange Act of 1934 (the “November 2019 Repurchase Program”). The November 2019 Repurchase Program authorization replaced the existing March 2018 Repurchase Program that had approximately $546 million remaining.

The shares repurchased in 2019 were reacquired under the following share repurchase programs:

● The November 2019 Repurchase program.

● A program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”).

As of February 1, 2020, there was $600 million remaining under the November 2019 Repurchase Program.

During the first quarter through March 25, 2020, we repurchased an additional $39 million of our common shares under the stock option program and $355 million additional shares under the November 2019 Repurchase Program. As of March 25, 2020, we have $245 million remaining under the November 2019 Repurchase Program. To maintain financial flexibility, we have decided to pause on additional share repurchases during the first quarter of 2020.

CAPITAL INVESTMENTS

Capital investments, including changes in construction-in-progress payables and excluding mergers and the purchase of leased facilities, totaled $3.0 billion in 2019 and 2018. Capital investments for mergers were $197 million in 2018 related to the merger with Home Chef. Refer to Note 2 to the Consolidated Financial Statements for more information on these mergers. Capital investments for the purchase of leased facilities totaled $82 million in 2019 and $5 million in 2018. The table below shows our supermarket storing activity and our total supermarket square footage:

Supermarket Storing Activity

2019 2018 2017 Beginning of year 2,764 2,782 2,796 Opened 10 10 24 Opened (relocation) 9 4 15 Acquired 6 10 3 Closed (operational) (19) (38) (41) Closed (relocation) (13) (4) (15) End of year 2,757 2,764 2,782

Total supermarket square footage (in millions) 180 179 179

RETURN ON INVESTED CAPITAL

We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S. GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve, (iii) the average accumulated depreciation and amortization, (iv) for 2018, a rent factor equal to total rent for the last four quarters multiplied by a factor of eight and (v) for 2019, an adjustment due to the adoption of ASU 2016-02, “Leases,” at the beginning of 2019 as further described in Notes 10 and 18 to the Consolidated Financial Statements; minus (i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages, (iv) the average other current liabilities, excluding accrued income taxes, (v) the average liabilities held for sale and (vi) certain other adjustments. Averages are calculated for ROIC by adding the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and dividing by two. For 2018, we used a factor of eight for our total rent as we believe this is a common factor used by our investors, analysts and rating agencies. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to investors and analysts because it measures how effectively we are deploying our assets.

Although ROIC is a relatively standard financial term, numerous methods exist for calculating a company’s ROIC. As a result, the method used by our management to calculate ROIC may differ from methods other companies use to calculate their ROIC. We urge you to understand the methods used by other companies to calculate their ROIC before comparing our ROIC to that of such other companies.

The following table provides a calculation of ROIC for 2019 and 2018 on a 52 week basis ($ in millions). The 2019 calculation of ROIC excludes the financial position and results of operations of You Technology and Turkey Hill Dairy, due to the sales in 2019, and Lucky’s Market, due to the deconsolidation in 2019. The 2018 calculation of ROIC excludes the financial position and results of operations of Home Chef, due to the merger in 2018, and the convenience store business, due to the sale in 2018.

Fiscal Year Ended February 1, February 2,

2020 2019 Return on Invested Capital Numerator

Operating profit $ 2,251 $ 2,614 LIFO charge 105 29 Depreciation and amortization 2,649 2,465 Rent 884 884 Adjustment for merger with Home Chef — 28 Adjustment for operating profit of convenience store business — (21) Adjustment for Home Chef contingent consideration (69) 33 Adjustment for impairment of financial instrument — 42 Adjustments for pension plan withdrawal liabilities 135 155 Adjustment for depreciation related to held for sale assets — (14) Adjustment for severance charge and related benefits 80 — Adjustment for transformation costs, primarily including 35 planned store closures 52 — Adjustment for deconsolidation and impairment of Lucky's Market 412 — Adjustment for operating losses of Lucky's Market 75 — Adjustment for disposal of You Technology (49) — Adjusted ROIC operating profit $ 6,525 $ 6,215

Denominator Average total assets $ 41,687 $ 37,658 Average taxes receivable(1) (41) (115) Average LIFO reserve 1,329 1,263 Average accumulated depreciation and amortization 23,404 21,703 Average trade accounts payable (6,204) (5,959) Average accrued salaries and wages (1,198) (1,163) Average other current liabilities(2) (3,942) (3,571) Average liabilities held for sale (26) (155) Adjustment for merger with Home Chef — (145) Adjustment for disposal of convenience store business — (198) Adjustment for disposal of Turkey Hill Dairy (45) — Adjustment for disposal of You Technology (13) — Adjustment for deconsolidation of Lucky's Market (25) — Rent x 8 — 7,072 Initial operating lease assets at adoption of ASU 2016-02, “Leases” (see Notes 10 and 18) 3,406 — Average invested capital $ 58,332 $ 56,390

Return on Invested Capital 11.19 % 11.02 %

(1) Taxes receivable were $82 as of February 1, 2020 and $229 as of February 3, 2018. We did not have any taxes receivable as of February 2, 2019.

(2) Other current liabilities included accrued income taxes of $60 as of February 2, 2019. We did not have any accrued income taxes as of February 1, 2020 or February 3, 2018. Accrued income taxes are removed from other current liabilities in the calculation of average invested capital.

CRITICAL ACCOUNTING POLICIES

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting policies are summarized in Note 1 to the Consolidated Financial Statements.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. We base our estimates on historical experience and other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

We believe the following accounting policies are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

Impairments of Long-Lived Assets

We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair value. Fair value is determined based on market values or discounted future cash flows. We record impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust the value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar assets and current economic conditions. We recognize impairment for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal.

As discussed previously in the Overview section, we recognized an impairment charge related to Lucky’s Market in the third quarter of 2019 totaling $238 million. The Lucky’s Market impairment charge consists of property, plant and equipment of $200 million; goodwill of $19 million; operating lease assets of $11 million; and other charges of $8 million. Additionally, we recorded asset impairments totaling $120 million in 2019, including $70 million of operating lease assets. This 2019 impairment charge includes the 35 planned store closures across our footprint in 2020 related to our Restock Kroger transformation efforts. We recorded asset impairments in the normal course of business totaling $56 million in 2018. We record costs to reduce the carrying value of long-lived assets in the Consolidated Statements of Operations as OG&A expense.

The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our cash flow projections look several years into the future and include assumptions on variables such as inflation, the economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived assets for impairment at a different level, could produce significantly different results.

Business Combinations

We account for business combinations using the acquisition method of accounting. All the assets acquired, liabilities assumed and amounts attributable to noncontrolling interests are recorded at their respective fair values at the date of acquisition once we obtain control of an entity. The determination of fair values of identifiable assets and liabilities involves estimates and the use of valuation techniques when market value is not readily available. We use various techniques to determine fair value in such instances, including the income approach. Significant estimates used in determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill. See Note 3 for further information about goodwill.

Goodwill

Our goodwill totaled $3.1 billion as of February 1, 2020. We review goodwill for impairment in the fourth quarter of each year, and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows on management’s knowledge of the current operating environment and expectations for the future. We recognize goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Our annual evaluation of goodwill is performed for our reporting units during the fourth quarter. In 2017, we recorded goodwill impairment for our Kroger Specialty Pharmacy (“KSP”) reporting unit totaling $110 million, $74 million net of tax, resulting in a remaining goodwill balance of $243 million. The 2019 fair value of our KSP reporting unit was estimated using multiple valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable mergers and acquisition model (market approaches), with each method weighted in the calculation. The income approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples. The annual evaluation of goodwill performed in 2019 and 2018 did not result in impairment for any of our reporting units. Based on current and future expected cash flows, we believe additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would not indicate a potential for impairment of our goodwill balance.

For additional information relating to our results of the goodwill impairment reviews performed during 2019, 2018 and 2017, see Note 3 to the Consolidated Financial Statements.

The impairment review requires the extensive use of management judgment and financial estimates. Application of alternative estimates and assumptions could produce significantly different results. The cash flow projections embedded in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the market, the economy, market competition and our ability to successfully integrate recently acquired businesses.

Multi-Employer Pension Plans

We contribute to various multi-employer pension plans based on obligations arising from collective bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

We recognize expense in connection with these plans as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $461 million in 2019, $358 million in 2018 and $954 million in 2017. The increase in 2017, compared to 2019 and 2018 is due to the $467 million pre-tax payment we made in 2017 to satisfy withdrawal obligations for certain local unions of the Central States Pension Fund and the 2017 UFCW contribution.

We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have sole investment authority over these assets. We became the fiduciary of the IBT Consolidated Pension Fund in 2017 due to the ratification of a new labor contract with the IBT that provided for the withdrawal of certain local unions from the Central States Pension Fund. Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

● In 2019, we incurred a $135 million charge, $104 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds.

● In 2018, we incurred a $155 million charge, $121 million net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund.

● In 2017, we incurred a $550 million charge, $360 million net of tax, for obligations related to withdrawing from and settlements for withdrawal liabilities for certain multi-employer pension plan obligations, of which $467 million was contributed to the Central States Pension Fund in 2017.

● In 2017, we contributed an incremental $111 million, $71 million net of tax, to the UFCW Consolidated Pension Plan.

As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could incur withdrawal liabilities for certain funds.

As of December 31, 2019, we estimate our share of the underfunding of multi-employer pension plans to which we contribute was approximately $2.3 billion, $1.8 billion net of tax. This represents a decrease in the estimated amount of underfunding of approximately $800 million, $600 million net of tax, as of December 31, 2019, compared to December 31, 2018. The decrease in the amount of underfunding is primarily attributable to higher expected returns on assets in the funds during 2019. Our estimate is based on the most current information available to us including actuarial evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise unreliable.

We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability of ours. Rather, we believe the underfunding is likely to have important consequences. In the event we were to exit certain markets or otherwise cease making contributions to these plans, we could trigger a substantial withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP.

The amount of underfunding described above is an estimate and could change based on contract negotiations, returns on the assets held in the multi-employer pension plans, benefit payments or future restructuring agreements. The amount could decline, and our future expense would be favorably affected, if the values of the assets held in the trust significantly increase or if further changes occur through collective bargaining, trustee action or favorable legislation. On the other hand, our share of the underfunding could increase and our future expense could be adversely affected if the asset values decline, if employers currently contributing to these funds cease participation or if changes occur through collective bargaining, trustee action or adverse legislation. We continue to evaluate our potential exposure to under-funded multi-employer pension plans. Although these liabilities are not a direct obligation or liability of ours, any commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an estimate can be made.

See Note 16 to the Consolidated Financial Statements for more information relating to our participation in these multi- employer pension plans.

NEW ACCOUNTING STANDARDS

Refer to Note 18 and Note 19 to the Consolidated Financial Statements for recently adopted accounting standards and recently issued accounting standards not yet adopted as of February 1, 2020.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Information

Net cash provided by operating activities

We generated $4.7 billion of cash from operations in 2019 compared to $4.2 billion in 2018. Net earnings including noncontrolling interests, adjusted for non-cash items and other impacts, generated approximately $4.9 billion of operating cash flow in 2019 compared to $3.8 billion in 2018. Cash provided (used) by operating activities for changes in working capital was ($259) million in 2019 compared to $395 million in 2018. The decrease in cash provided by operating activities for changes in working capital in 2019, compared to 2018, was primarily due to the following:

● The change in prepaid and other current assets decreased in 2019, compared to 2018, due to a decrease in the amount of prepaid medical benefit costs at the end of 2018 compared to the end of 2017;

● Cash flows from income taxes were favorable in 2018, compared to 2019, because of income tax overpayments made in 2017 that reduced payments made in 2018; and

● Payments on operating lease liabilities; partially offset by

● Proceeds from a contract associated with the sale of a business;

● Decreased contributions to the company-sponsored pension plan in 2019, compared to 2018; and

● Higher third-party payor receivables at the end of 2018 due to the timing of third-party payments, which resulted in a reduction in cash provided by operating activities in 2018. Receivable balances were similar in 2019 compared to 2018.

Cash paid for taxes increased in 2019, compared to 2018, primarily due to the payment of estimated taxes on the gain on sale of the You Technology and Turkey Hill Dairy businesses in 2019 and an overpayment of our fourth quarter 2017 estimated taxes that resulted in lower tax payments in 2018.

Cash paid for interest decreased in 2019, compared to 2018, primarily due to an increase in accrued interest related to certain semi-annual senior notes interest payments that were paid subsequent to February 1, 2020.

Net cash used by investing activities

Investing activities used cash of $2.6 billion in 2019 compared to $1.2 billion in 2018. The amount of cash used by investing activities increased in 2019, compared to 2018, primarily due to the following:

● A lower amount of net proceeds from the sale of businesses, since the proceeds from the sale of the convenience store business exceeded the proceeds from the sales of the Turkey Hill Dairy and You Technology businesses;

● A lower amount of net proceeds from the settlement of a financial instrument; partially offset by

● Increased proceeds from the sale of assets due to the sale of an unused warehouse and proceeds from sale leaseback transactions;

● No payments for purchases of Ocado securities in 2019; and

● No acquisitions in 2019.

Net cash used by financing activities

We used $2.1 billion of cash for financing activities in 2019 compared to $2.9 billion during 2018. The amount of cash used for financing activities for 2019, compared to 2018, decreased primarily due to decreased payments on commercial paper and share repurchases, partially offset by increased payments on long-term debt including obligations under finance leases and a reduction of proceeds from the issuance of long-term debt.

Debt Management

Total debt, including both the current and long-term portions of obligations under finance leases, decreased $1.2 billion to $14.1 billion as of year-end 2019 compared to 2018. The decrease in 2019, compared to 2018, resulted primarily from payment of $500 million of senior notes bearing an interest rate of 1.50%, payment of $750 million of senior notes bearing an interest rate of 6.15% and the repayment of our $1.0 billion term loan, partially offset by the issuance of $750 million of senior notes bearing an interest rate of 3.95% and an increase in outstanding commercial paper borrowings of $350 million at the end of 2019 compared to 2018.

Dividends

The following table provides dividend information ($ in millions, except per share amounts):

2019 2018 Cash dividends paid $ 486 $ 437 Cash dividends paid per common share $ 0.600 $ 0.530

Liquidity Needs

We estimate our liquidity needs over the next twelve-month period to approximate $5.5 billion, which includes anticipated requirements for working capital, capital investments, interest payments and scheduled principal payments of debt and commercial paper, offset by cash and temporary cash investments on hand at the end of 2019. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to the capital markets. Based on current operating trends, we believe that cash flows from operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility, will be adequate to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. We have approximately $700 million of senior notes and $1.2 billion of commercial paper maturing in fiscal year 2020, which are included in the $5.5 billion of estimated liquidity needs. We expect to satisfy these obligations using cash generated from operations and through issuing additional senior notes or commercial paper. We believe we have adequate coverage of our debt covenants to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

Factors Affecting Liquidity

We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At February 1, 2020, we had $1.2 billion of commercial paper borrowings outstanding. Commercial paper borrowings are backed by our credit facility, and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to borrow under our current commercial paper program could be adversely affected for a period of time and increase our interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline, we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500 million on a daily basis. Although our ability to borrow under the credit facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non- credit enhanced long-term senior unsecured debt issued by the Company. On March 18, 2020, we proactively borrowed $1 billion from our revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the coronavirus pandemic. Cash and temporary cash investments immediately following the borrowing were approximately $2.3 billion. As of March 25, 2020, we had no commercial paper borrowings outstanding.

Our credit facility requires the maintenance of a Leverage Ratio and a Fixed Charge Coverage Ratio (our “financial covenants”). A failure to maintain our financial covenants would impair our ability to borrow under the credit facility. These financial covenants are described below:

● Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 2.30 to 1 as of February 1, 2020. If this ratio were to exceed 3.50 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

● Our Fixed Charge Coverage Ratio (the ratio of Adjusted EBITDA plus Consolidated Rental Expense to Consolidated Cash Interest Expense plus Consolidated Rental Expense, as defined in the credit facility) was 4.39 to 1 as of February 1, 2020. If this ratio fell below 1.70 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

Our credit facility is more fully described in Note 6 to the Consolidated Financial Statements. We were in compliance with our financial covenants at year-end 2019.

The tables below illustrate our significant contractual obligations and other commercial commitments, based on year of maturity or settlement, as of February 1, 2020 (in millions of dollars):

2020 2021 2022 2023 2024 Thereafter Total Contractual Obligations(1)(2) Long-term debt(3) $ 1,926 $ 804 $ 894 $ 594 $ 495 $ 8,543 $ 13,256 Interest on long-term debt(4) 488 489 442 421 410 5,301 7,551 Finance lease obligations 84 95 80 86 81 757 1,183 Operating lease obligations 932 884 772 758 637 6,353 10,336 Self-insurance liability(5) 216 141 99 66 41 126 689 Construction commitments(6) 670 — — — — — 670 Purchase obligations(7) 814 360 163 109 37 10 1,493 Total $ 5,130 $ 2,773 $ 2,450 $ 2,034 $ 1,701 $ 21,090 $ 35,178

Other Commercial Commitments Standby letters of credit $ 347 $ — $ — $ — $ — $ — $ 347 Surety bonds 401 — — — — — 401 Total $ 748 $ — $ — $ — $ — $ — $ 748

(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which totaled approximately $34 million in 2019. This table also excludes contributions under various multi-employer pension plans, which totaled $461 million in 2019. This table also excludes the March 18, 2020 $1 billion borrowing under our revolving credit facility since the borrowing occurred subsequent to February 1, 2020.

(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the timing of future tax settlements cannot be determined.

(3) As of February 1, 2020, we had $1.2 billion of commercial paper and no borrowings under our credit facility. (4) Amounts include contractual interest payments using the interest rate as of February 1, 2020, and stated fixed and swapped

interest rates, if applicable, for all other debt instruments. (5) The amounts included in the contractual obligations table for self-insurance liability related to workers’ compensation claims

have been stated on a present value basis. (6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected in other

current liabilities in our Consolidated Balance Sheets. (7) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of business, such

As of February 1, 2020, we maintained a $2.75 billion (with the ability to increase by $1 billion), unsecured revolving credit facility that, unless extended, terminates on August 29, 2022. Outstanding borrowings under the credit facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit facility. As of February 1, 2020, we had $1.2 billion of outstanding commercial paper and no borrowings under our revolving credit facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of February 1, 2020.

In addition to the available credit mentioned above, as of February 1, 2020, we had authorized for issuance $4.3 billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 24, 2019.

We also maintain surety bonds related primarily to our self-insured workers’ compensation claims. These bonds are required by most states in which we are self-insured for workers’ compensation and are placed with predominately third-party insurance providers to insure payment of our obligations in the event we are unable to meet our claim payment obligations up to our self- insured retention levels. These bonds do not represent liabilities of ours, as we already have reserves on our books for the claims costs. Market changes may make the surety bonds more costly and, in some instances, availability of these bonds may become more limited, which could affect our costs of, or access to, such bonds. Although we do not believe increased costs or decreased availability would significantly affect our ability to access these surety bonds, if this does become an issue, we would issue letters of credit, in states where allowed, against our credit facility to meet the state bonding requirements. This could increase our cost and decrease the funds available under our credit facility.

We also are contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. We could be required to satisfy obligations under the leases if any of the assignees are unable to fulfill their lease obligations. Due to the wide distribution of our assignments among third parties, and various other remedies available to us, we believe the likelihood that we will be required to assume a material amount of these obligations is remote. We have agreed to indemnify certain third-party logistics operators for certain expenses, including multi-employer pension plan obligations and withdrawal liabilities.

In addition to the above, we enter into various indemnification agreements and take on indemnification obligations in the ordinary course of business. Such arrangements include indemnities against third party claims arising out of agreements to provide services to us; indemnities related to the sale of our securities; indemnities of directors, officers and employees in connection with the performance of their work; and indemnities of individuals serving as fiduciaries on benefit plans. While our aggregate indemnification obligation could result in a material liability, we are not aware of any current matter that could result in a material liability.

SUPPLEMENTAL INFORMATION

Sales Reclassification

Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to OG&A, are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation, which is consistent with our Restock Kroger initiative and our view of the products and services as part of our core business strategy. This is also more consistent with industry practice.

The following tables summarize the Company's 2018 sales reclassifications ($ in millions):

Fiscal Year Ended Previously Stated Reclassification Reclassified

February 2, February 2, 2019 2018 2019

Sales $ 121,162 $ 690 $ 121,852

Operating expenses Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 94,894 209 95,103

Operating, general and administrative 20,305 481 20,786 Rent 884 — 884 Depreciation and amortization 2,465 — 2,465

Operating profit $ 2,614 $ — $ 2,614

The following tables summarize the Company's 2017 sales reclassifications ($ in millions):

Fiscal Year Ended Previously Stated Reclassification Reclassified

February 3, February 3, 2018 2017 2018

Sales $ 122,662 $ 618 $ 123,280

Operating expenses Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 95,662 149 95,811

Operating, general and administrative 21,041 469 21,510 Rent 911 — 911 Depreciation and amortization 2,436 — 2,436

Operating profit $ 2,612 $ — $ 2,612

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Financial Risk Management

We use derivative financial instruments primarily to manage our exposure to fluctuations in interest rates. We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are straightforward instruments with liquid markets.

We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the strategic use of our commercial paper program, variable and fixed rate debt, and interest rate swaps. Our current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, we use the following guidelines: (i) use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of our debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive or sensitivity to current mark-to-market status.

As of February 1, 2020, we maintained seven forward-starting interest rate swap agreements with a maturity date of January 15, 2021 with an aggregate notional amount totaling $350 million. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. We entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on our forecasted issuances of debt in January 2021. The fixed interest rates for these forward-starting interest rate swaps range from 1.57% to 2.45%. The variable rate component on the forward-starting interest rate swaps is 3 month LIBOR. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 1, 2020, the fair value of the interest rate swaps was recorded in “Other long-term liabilities” for $19 million and accumulated other comprehensive loss for $17 million, net of tax.

Annually, we review with the Financial Policy Committee of our Board of Directors compliance with the guidelines described above. The guidelines may change as our business needs dictate.

The tables below provide information about our underlying debt portfolio as of February 1, 2020 and February 2, 2019. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases, as of February 1, 2020 and February 2, 2019. Interest rates reflect the weighted average rate for the outstanding instruments. The variable rate debt is based on U.S. dollar LIBOR using the forward yield curve as of February 1, 2020 and February 2, 2019. The Fair Value column includes the fair value of our debt instruments as of February 1, 2020 and February 2, 2019. We have no outstanding interest rate derivatives classified as fair value hedges as of February 1, 2020 or February 2, 2019. See Notes 6, 7 and 8 to the Consolidated Financial Statements.

February 1, 2020 Expected Year of Maturity

2020 2021 2022 2023 2024 Thereafter Total Fair Value (in millions)

Debt Fixed rate $ (705) $ (804) $ (894) $ (594) $ (495) $ (8,462) $ (11,954) $ (13,347) Average interest rate 4.39 % 4.56 % 4.47 % 4.69 % 4.86 % 4.65 % Variable rate $ (1,221) $ — $ — $ — $ — $ (81) $ (1,302) $ (1,302) Average interest rate 1.88 % — — — — 1.65 %

February 2, 2019 Expected Year of Maturity

2019 2020 2021 2022 2023 Thereafter Total Fair Value (in millions)

Debt Fixed rate $ (1,251) $ (695) $ (793) $ (896) $ (595) $ (8,163) $ (12,393) $ (12,232) Average interest rate 4.51 % 4.47 % 4.47 % 4.56 % 4.74 % 4.70 % Variable rate $ (1,852) $ (25) $ — $ — $ — $ (81) $ (1,958) $ (1,958) Average interest rate 3.09 % 4.26 % — — — 1.75 %

Based on our year-end 2019 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See Note 7 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of The Kroger Co. For the Fiscal Year Ended February 1, 2020

Table of Contents

Page Report of Independent Registered Public Accounting Firm 42 Consolidated Balance Sheets 45 Consolidated Statements of Operations 46 Consolidated Statements of Comprehensive Income 47 Consolidated Statements of Cash Flows 48 Consolidated Statements of Changes in Shareholders’ Equity 49 Notes to Consolidated Financial Statements 50

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of The Kroger Co.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries (the “Company”) as of February 1, 2020 and February 2, 2019, and the related consolidated statements of operations, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in the period ended February 1, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of February 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1, 2020 and February 2, 2019, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 18 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment – Kroger Specialty Pharmacy (“KSP”) Reporting Unit

As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated goodwill balance was $3.1 billion as of February 1, 2020, and the goodwill associated with the KSP reporting unit was $243 million. Management reviews goodwill annually for impairment in the fourth quarter of each year, and also upon the occurrence of triggering events. The fair value of a reporting unit is compared to its carrying value for purposes of identifying potential impairment. Goodwill impairment is recognized for any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. As disclosed by management, the fair value of the Company's KSP reporting unit was estimated using multiple valuation techniques, a discounted cash flow model (income approach), a market multiple model and comparable mergers and acquisition model (market approaches), with each method weighted in the calculation. The income approach relies on management’s estimates of revenue growth rates, margin assumptions, and discount rate to estimate future cash flows. The market approaches require the determination of an appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the KSP reporting unit is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting unit. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections and significant assumptions, including revenue growth rates, margin assumptions, discount rate, peer group determination, and market multiple selection. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s KSP reporting unit. These procedures also included, among others, testing management’s process for developing the fair value estimate, evaluating the appropriateness of the income and market approach models, testing the completeness, accuracy, and relevance of the underlying data used in the models and evaluating the significant assumptions used by management, including the revenue growth rates, margin assumptions, discount rate, peer group determination, and market multiple selection. Evaluating management’s assumptions relating to revenue growth rates and margin assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating the Company’s peer group determinations included evaluating the appropriateness of the identified peer companies. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow and market models, and certain significant assumptions, including the discount rate, peer group determination, and market multiples. /s/ PricewaterhouseCoopers LLP Cincinnati, Ohio April 1, 2020

We have served as the Company’s auditor since 1929.

THE KROGER CO. CONSOLIDATED BALANCE SHEETS

February 1, February 2, (In millions, except par amounts) 2020 2019 ASSETS Current assets

Cash and temporary cash investments $ 399 $ 429 Store deposits in-transit 1,179 1,181 Receivables 1,706 1,589 FIFO inventory 8,464 8,123 LIFO reserve (1,380) (1,277) Assets held for sale — 166 Prepaid and other current assets 522 592 Total current assets 10,890 10,803

Property, plant and equipment, net 21,871 21,635 Operating lease assets 6,814 — Intangibles, net 1,066 1,258 Goodwill 3,076 3,087 Other assets 1,539 1,335

Total Assets $ 45,256 $ 38,118

LIABILITIES Current liabilities

Current portion of long-term debt including obligations under finance leases $ 1,965 $ 3,157 Current portion of operating lease liabilities 597 — Trade accounts payable 6,349 6,059 Accrued salaries and wages 1,168 1,227 Liabilities held for sale — 51 Other current liabilities 4,164 3,780 Total current liabilities 14,243 14,274

Long-term debt including obligations under finance leases 12,111 12,072 Noncurrent operating lease liabilities 6,505 — Deferred income taxes 1,466 1,562 Pension and postretirement benefit obligations 608 494 Other long-term liabilities 1,750 1,881

Total Liabilities 36,683 30,283

Commitments and contingencies see Note 13

SHAREHOLDERS’ EQUITY

Preferred shares, $100 par per share, 5 shares authorized and unissued — — Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2019 and 2018 1,918 1,918 Additional paid-in capital 3,337 3,245 Accumulated other comprehensive loss (640) (346) Accumulated earnings 20,978 19,681 Common shares in treasury, at cost, 1,130 shares in 2019 and 1,120 shares in 2018 (16,991) (16,612)

Total Shareholders’ Equity - The Kroger Co. 8,602 7,886 Noncontrolling interests (29) (51)

Total Equity 8,573 7,835

Total Liabilities and Equity $ 45,256 $ 38,118

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended February 1, 2020, February 2, 2019 and February 3, 2018

2019 2018 2017

(In millions, except per share amounts) (52 weeks) (52 weeks) (53 weeks) Sales $ 122,286 $ 121,852 $ 123,280

Operating expenses Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 95,294 95,103 95,811

Operating, general and administrative 21,208 20,786 21,510 Rent 884 884 911 Depreciation and amortization 2,649 2,465 2,436

Operating profit 2,251 2,614 2,612

Other income (expense) Interest expense (603) (620) (601) Non-service component of company-sponsored pension plan costs — (26) (527) Mark to market gain on Ocado securities 157 228 — Gain on sale of businesses 176 1,782 —

Net earnings before income tax (benefit) expense 1,981 3,978 1,484

Income tax (benefit) expense 469 900 (405)

Net earnings including noncontrolling interests 1,512 3,078 1,889 Net loss attributable to noncontrolling interests (147) (32) (18)

Net earnings attributable to The Kroger Co. $ 1,659 $ 3,110 $ 1,907

Net earnings attributable to The Kroger Co. per basic common share $ 2.05 $ 3.80 $ 2.11

Average number of common shares used in basic calculation 799 810 895

Net earnings attributable to The Kroger Co. per diluted common share $ 2.04 $ 3.76 $ 2.09

Average number of common shares used in diluted calculation 805 818 904

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended February 1, 2020, February 2, 2019 and February 3, 2018

2019 2018 2017

(In millions) (52 weeks) (52 weeks) (53 weeks) Net earnings including noncontrolling interests $ 1,512 $ 3,078 $ 1,889

Other comprehensive income (loss) Realized gains on available for sale securities, net of income tax(1) — (4) 4 Change in pension and other postretirement defined benefit plans, net of income tax(2) (105) 147 214 Unrealized gains and losses on cash flow hedging activities, net of income tax(3) (47) (23) 23 Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax(4) 4 5 3

Cumulative effect of accounting change(5) (146) — —

Total other comprehensive income (loss) (294) 125 244

Comprehensive income 1,218 3,203 2,133 Comprehensive loss attributable to noncontrolling interests (147) (32) (18)

Comprehensive income attributable to The Kroger Co. $ 1,365 $ 3,235 $ 2,151

(1) Amount is net of tax expense (benefit) of ($1) in 2018 and $1 in 2017. (2) Amount is net of tax expense (benefit) of ($33) in 2019, $45 in 2018 and $83 in 2017. (3) Amount is net of tax expense (benefit) of ($17) in 2019, ($8) in 2018 and $0 in 2017. (4) Amount is net of tax expense of $3 in 2019 and $3 in 2018 and $3 in 2017. (5) Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, “Income Statement – Reporting Comprehensive

Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (see Note 18 for additional details).

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended February 1, 2020, February 2, 2019 and February 3, 2018 2019 2018 2017

(In millions) (52 weeks) (52 weeks) (53 weeks) Cash Flows from Operating Activities:

Net earnings including noncontrolling interests $ 1,512 $ 3,078 $ 1,889 Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: Depreciation and amortization 2,649 2,465 2,436 Asset impairment charge 120 56 71 Operating lease asset amortization 640 — — LIFO charge (credit) 105 29 (8) Stock-based employee compensation 155 154 151 Expense for company-sponsored pension plans 39 76 591 Goodwill impairment charge — — 110 Deferred income taxes (56) (45) (694) Gain on sale of businesses (176) (1,782) — (Gain) loss on the sale of assets (158) 2 (31) Mark to market gain on Ocado securities (157) (228) — Loss on deconsolidation and impairment of Lucky's Market 412 — — Other (109) 58 39 Changes in operating assets and liabilities net of effects from mergers and disposals of businesses:

Store deposits in-transit 3 (20) (265) Receivables (36) (208) 61 Inventories (351) (354) (23) Prepaid and other current assets (33) 244 41 Trade accounts payable 342 213 158 Accrued expenses 302 416 (40) Income taxes receivable and payable (142) 289 (96) Contribution to company-sponsored pension plan — (185) (1,000) Operating lease liabilities (639) — — Proceeds from contract associated with sale of business 295 — — Other (53) (94) 23

Net cash provided by operating activities 4,664 4,164 3,413

Cash Flows from Investing Activities: Payments for property and equipment, including payments for lease buyouts (3,128) (2,967) (2,809) Proceeds from sale of assets 273 85 138 Proceeds on settlement of financial instrument — 235 — Payments for acquisitions, net of cash acquired — (197) (16) Purchases of stores — (44) — Net proceeds from sale of businesses 327 2,169 — Purchases of Ocado securities — (392) — Other (83) (75) (20)

Net cash used by investing activities (2,611) (1,186) (2,707)

Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 813 2,236 1,523 Payments on long-term debt including obligations under finance leases (2,304) (1,372) (788) Net proceeds (payments) on commercial paper 350 (1,321) 696 Dividends paid (486) (437) (443) Proceeds from issuance of capital stock 55 65 51 Treasury stock purchases (465) (2,010) (1,633) Other (46) (57) (87)

Net cash used by financing activities (2,083) (2,896) (681)

Net (decrease) increase in cash and temporary cash investments (30) 82 25

Cash and temporary cash investments: Beginning of year 429 347 322 End of year $ 399 $ 429 $ 347

Reconciliation of capital investments: Payments for property and equipment, including payments for lease buyouts $ (3,128) $ (2,967) $ (2,809) Payments for lease buyouts 82 5 13 Changes in construction-in-progress payables 2 (56) (188) Total capital investments, excluding lease buyouts $ (3,044) $ (3,018) $ (2,984)

Disclosure of cash flow information: Cash paid during the year for interest $ 523 $ 614 $ 656 Cash paid during the year for income taxes $ 706 $ 600 $ 348

The accompanying notes are an integral part of the consolidated financial statements

THE KROGER CO. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Years Ended February 1, 2020, February 2, 2019 and February 3, 2018 Accumulated

Additional Other Common Stock Paid-In Treasury Stock Comprehensive Accumulated Noncontrolling

(In millions, except per share amounts) Shares Amount Capital Shares Amount Income (Loss) Earnings Interest Total Balances at January 28, 2017 1,918 $ 1,918 $ 3,070 994 $ (13,118) $ (715) $ 15,543 $ 12 $ 6,710 Issuance of common stock:

Stock options exercised — — — (4) 51 — — — 51 Restricted stock issued — — (119) (2) 85 — — — (34)

Treasury stock activity: Treasury stock purchases, at cost — — — 58 (1,567) — — — (1,567) Stock options exchanged — — — 2 (66) — — — (66)

Share-based employee compensation — — 151 — — — — — 151 Other comprehensive income net of tax of $87 — — — — — 244 — — 244 Other — — 59 — (69) — — (20) (30) Cash dividends declared ($0.495 per common share) — — — — — — (443) — (443) Net earnings (loss) including non-controlling interests — — — — — — 1,907 (18) 1,889

Balances at February 3, 2018 1,918 $ 1,918 $ 3,161 1,048 $ (14,684) $ (471) $ 17,007 $ (26) $ 6,905 Issuance of common stock:

Stock options exercised — — — (4) 65 — — — 65 Restricted stock issued — — (119) (3) 74 — — — (45)

Treasury stock activity: Treasury stock purchases, at cost — — — 76 (1,927) — — — (1,927) Stock options exchanged — — — 3 (83) — — — (83)

Share-based employee compensation — — 154 — — — — — 154 Other comprehensive income net of tax of $39 — — — — — 125 — — 125 Other — — 49 — (57) — — 7 (1) Cash dividends declared ($0.545 per common share) — — — — — — (436) — (436) Net earnings (loss) including non-controlling interests — — — — — — 3,110 (32) 3,078

Balances at February 2, 2019 1,918 $ 1,918 $ 3,245 1,120 $ (16,612) $ (346) $ 19,681 $ (51) $ 7,835 Issuance of common stock:

Stock options exercised — — — (3) 55 — — — 55 Restricted stock issued — — (128) (3) 92 — — — (36)

Treasury stock activity: Treasury stock purchases, at cost — — — 14 (400) — — — (400) Stock options exchanged — — — 2 (65) — — — (65)

Share-based employee compensation — — 155 — — — — — 155 Other comprehensive loss net of tax of ($47) — — — — — (294) — — (294) Cumulative effect of accounting change (see Note 18) — — — — — — 146 — 146 Deconsolidation of Lucky's Market — — — — — — — 168 168 Other — — 65 — (61) — (5) 1 — Cash dividends declared ($0.62 per common share) — — — — — — (503) — (503) Net earnings (loss) including non-controlling interests — — — — — — 1,659 (147) 1,512

Balances at February 1, 2020 1,918 $ 1,918 $ 3,337 1,130 $ (16,991) $ (640) $ 20,978 $ (29) $ 8,573

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All amounts in the Notes to Consolidated Financial Statements are in millions except per share amounts.

1. ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in preparing these financial statements.

Description of Business, Basis of Presentation and Principles of Consolidation

The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. As of February 1, 2020, the Company was one of the largest retailers in the world based on annual sales. The Company also manufactures and processes food for sale by its supermarkets. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and other consolidated entities. Intercompany transactions and balances have been eliminated.

Refer to Note 18 for a description of changes to the Consolidated Balance Sheet for recently adopted accounting standards regarding the recognition of lease agreements and reclassification of stranded tax effects.

Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 52-week period ended February 1, 2020, 52-week period ended February 2, 2019 and 53-week period ended February 3, 2018.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ from those estimates.

Cash, Temporary Cash Investments and Book Overdrafts

Cash and temporary cash investments represent store cash and short-term investments with original maturities of less than three months. Book overdrafts are included in “Trade accounts payable” and “Accrued salaries and wages” in the Consolidated Balance Sheets.

Deposits In-Transit

Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does not have immediate access but settle within a few days of the sales transaction.

Inventories

Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, approximately 91% of inventories in 2019 and 90% of inventories in 2018 were valued using the LIFO method. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1,380 at February 1, 2020 and $1,277 at February 2, 2019. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its LIFO charge or credit.

The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs (net of vendor allowances and cash discounts).

The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the financial statement date.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the asset. Food production plant and distribution center equipment is depreciated over lives varying from three to 15 years. Information technology assets are generally depreciated over three to five years. Depreciation and amortization expense was $2,649 in 2019, $2,465 in 2018 and $2,436 in 2017.

Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 4 for further information regarding the Company’s property, plant and equipment.

Leases

The Company leases certain store real estate, warehouses, distribution centers, office space and equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents the rate used for a secured borrowing of a similar term as the lease.

Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent expense over the lease term and finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 10 to the Consolidated Financial Statements.

Goodwill

The Company reviews goodwill for impairment during the fourth quarter of each year, and also upon the occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Results of the goodwill impairment reviews performed during 2019, 2018 and 2017 are summarized in Note 3.

Impairment of Long-Lived Assets

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairments totaling $120 in 2019, including $70 of operating lease assets. This 2019 impairment charge includes 35 planned store closures across the Company’s footprint in 2020. The Company recorded asset impairments in the normal course of business totaling $56 and $71 in 2018 and 2017, respectively. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as Operating, general and administrative (“OG&A”) expense.

Accounts Payable

The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers’ decisions to finance amounts under this arrangement.

Contingent Consideration

The Company’s Home Chef business combination involves potential payment of future consideration that is contingent upon the achievement of certain performance milestones. The Company records contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in earnings until the contingency is resolved. In 2019, an adjustment to decrease the contingent consideration liability as of year-end 2019 was recorded for ($69) in OG&A expense. In 2018, an adjustment to increase the contingent consideration liability as of year-end 2018 was recorded for $33 in OG&A expense.

Store Closing Costs

The Company provides for closed store liabilities relating to the present value of the estimated remaining non-cancellable lease payments after the closing date, net of estimated subtenant income. The Company estimates the net lease liabilities using a discount rate to calculate the present value of the remaining net rent payments on closed stores. The closed store lease liabilities usually are paid over the lease terms associated with the closed stores, which generally have remaining terms ranging from one to 20 years. Adjustments to closed store liabilities primarily relate to changes in subtenant income and actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known. Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs is adjusted to income in the proper period.

Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying values of property, equipment and leasehold improvements are accounted for in accordance with the Company’s policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are classified in the Consolidated Statements of Operations as “Merchandise costs.” Costs to transfer inventory and equipment from closed stores are expensed as incurred.

The current portion of the future lease obligations of stores is included in “Other current liabilities,” and the long-term portion is included in “Other long-term liabilities” in the Consolidated Balance Sheets.

Interest Rate Risk Management

The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The Company’s current program relative to interest rate protection and the methods by which the Company accounts for its derivative instruments are described in Note 7.

Benefit Plans and Multi-Employer Pension Plans

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end that is closest to its fiscal year-ends, which were February 1, 2020 for fiscal 2019 and February 2, 2019 for fiscal 2018.

The determination of the obligation and expense for company-sponsored pension plans and other post-retirement benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those amounts. Those assumptions are described in Note 15 and include, among others, the discount rate, the expected long-term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense and recorded obligation in future periods. While the Company believes that the assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the pension and other post-retirement obligations and future expense.

The Company also participates in various multi-employer plans for substantially all union employees. Pension expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. Refer to Note 16 for additional information regarding the Company’s participation in these various multi-employer pension plans.

The Company administers and makes contributions to the employee 401(k) retirement savings accounts. Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service period in the case of automatic contributions. Refer to Note 15 for additional information regarding the Company’s benefit plans.

Share Based Compensation

The Company accounts for stock options under fair value recognition provisions. Under this method, the Company recognizes compensation expense for all share-based payments granted. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. In addition, the Company records expense for restricted stock awards in an amount equal to the fair market value of the underlying stock on the grant date of the award, over the period the awards lapse. Excess tax benefits related to share-based payments are recognized in the provision for income taxes. Refer to Note 12 for additional information regarding the Company’s stock based compensation.

Deferred Income Taxes

Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and liabilities and their financial reporting basis. Refer to Note 5 for the types of differences that give rise to significant portions of deferred income tax assets and liabilities.

Uncertain Tax Positions

The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 5 for the amount of unrecognized tax benefits and other related disclosures related to uncertain tax positions.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. As of February 1, 2020, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ending January 30, 2016.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Self-Insurance Costs

The Company is primarily self-insured for costs related to workers’ compensation and general liability claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim basis. The Company is insured for covered costs in excess of these per claim limits.

The following table summarizes the changes in the Company’s self-insurance liability through February 1, 2020.

2019 2018 2017 Beginning balance $ 696 $ 695 $ 682 Expense 209 229 247 Claim payments (216) (228) (234) Ending balance 689 696 695 Less: Current portion (216) (228) (234) Long-term portion $ 473 $ 468 $ 461

The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is included in “Other long-term liabilities” in the Consolidated Balance Sheets.

The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the Company, as the Company has recorded reserves for the claim costs.

The Company is similarly self-insured for property-related losses. The Company maintains stop loss coverage to limit its property loss exposures including coverage for earthquake, wind, flood and other catastrophic events.

Revenue Recognition

Sales

The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer and may include shipping revenue. Discounts provided to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale. The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. Effective February 4, 2018, the Company prospectively reclassified certain pharmacy fees of $250 for 2018 from merchandise costs to be recorded as a reduction to sales on the Company’s Consolidated Statements of Operations. For pharmacy sales, collection of third party receivables is typically expected within three months or less from the time of purchase. The third-party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $646 as of February 1, 2020 and $645 as of February 2, 2019.

Gift Cards and Gift Certificates

The Company does not recognize a sale when it sells its own gift cards and gift certificates (collectively “gift cards”). Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card breakage under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards. The Company’s gift card deferred revenue liability was $114 as of February 1, 2020 and $100 as of February 2, 2019.

Disaggregated Revenues

The following table presents sales revenue by type of product for the year-ended February 1, 2020, February 2, 2019, and February 3, 2018:

2019 2018 2017 Amount % of total Amount % of total Amount % of total

Non Perishable (1)(5) $ 61,464 50.3 % $ 60,649 49.8 % $ 60,872 49.4 % Fresh (2)(5) 29,452 24.1 % 29,089 23.9 % 29,141 23.6 % Supermarket Fuel 14,052 11.5 % 14,903 12.2 % 13,177 10.7 % Pharmacy (5) 11,015 9.0 % 10,617 8.7 % 10,724 8.7 % Convenience Stores (3) — - % 944 0.8 % 4,515 3.7 % Other (4)(5)(6) 6,303 5.1 % 5,650 4.6 % 4,851 3.9 %

Total Sales $ 122,286 100 % $ 121,852 100 % $ 123,280 100 %

(1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) The Company completed the sale of its convenience store business unit during the first quarter of 2018. (4) Consists primarily of sales related to food production plants to outside parties, data analytic services, third party media

revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above.

(5) Digital sales, primarily including Pickup, Delivery and pharmacy e-commerce sales, grew approximately 29%, 58% and 90% in 2019, 2018 and 2017, respectively, adjusted to remove the impact of the 53rd week in 2017. These sales are included in the non perishable, fresh, pharmacy, and other line items above.

(6) Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to OG&A, are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation.

Merchandise Costs

The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, purchasing management salaries and administration costs are included in the OG&A line item along with most of the Company’s other managerial and administrative costs. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations.

Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and maintenance, utilities, inbound freight and, where applicable, third party warehouse management fees. These costs are recognized in the periods the related expenses are incurred.

The Company believes the classification of costs included in merchandise costs could vary widely throughout the industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring products and making them available to customers in its stores. The Company believes this approach most accurately presents the actual costs of products sold.

The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold.

Advertising Costs

The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs totaled $854 in 2019, $752 in 2018 and $707 in 2017. The Company does not record vendor allowances for co-operative advertising as a reduction of advertising expense.

Operating, General and Administrative Expenses

Consolidated Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be temporary cash investments.

Segments

The Company operates supermarkets and multi-department stores throughout the United States. The Company’s retail operations, which represent 97% of the Company’s consolidated sales, are its only reportable segment. The Company aggregated its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker, assesses performance internally. All of the Company’s operations are domestic.

2. MERGERS AND PARTNERSHIP AGREEMENTS

Merger Agreement

On June 22, 2018, the Company finalized the merger with Home Chef, a meal kit delivery company. The merger allows the Company to increase the availability of meal kits and expand its offerings to customers. The Company completed the merger by purchasing 100% of the ownership interest in Home Chef, for $197 net of cash and cash equivalents of $30, in addition to future earnout payments of up to $500 over five years that are contingent on achieving certain milestones. The contingent consideration is based on future performance of both the online and offline business and the related customer engagement. The fair value of the earnout liability in the amount of $91 recognized on the acquisition date was measured using unobservable (Level 3) inputs and was included in “Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating results for both the online and offline businesses related to the Home Chef merger and the estimated probability of achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout liability. Changes in the fair value of the earnout liability in future periods will be recorded in the Company’s results in the period of the change, refer to Note 8 for additional details.

The merger was accounted for under the purchase method of accounting and was financed through the issuance of commercial paper. In a business combination, the purchase price is allocated to assets acquired and liabilities assumed based on their fair values, with any excess of purchase price over fair value recognized as goodwill. In addition to recognizing assets and liabilities on the acquired company’s balance sheet, the Company reviews supply contracts, leases, financial instruments, employment agreements and other significant agreements to identify potential assets or liabilities that require recognition in connection with the application of acquisition accounting under Accounting Standards Codification (“ASC”) 805. Intangible assets are recognized apart from goodwill when the asset arises from contractual or other legal rights, or are separable from the acquired entity such that they may be sold, transferred, licensed, rented or exchanged either on a standalone basis or in combination with a related contract, asset or liability.

The Company’s purchase price allocation was finalized in the second quarter of 2019. The changes in the fair values assumed from the preliminary amounts determined as of June 22, 2018 were an increase of goodwill of $8 and an increase of deferred income tax liability of $8. The table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date.

June 22, 2018

ASSETS Total current assets $ 36

Property, plant and equipment 6 Other assets 1 Intangibles 143

Total Assets, excluding Goodwill 186

LIABILITIES Total current liabilities (28)

Other long-term liabilities (94) Deferred income taxes (8)

Total Liabilities (130)

Total Identifiable Net Assets 56 Goodwill 171

Total Purchase Price $ 227

Of the $143 allocated to intangible assets, the Company recorded $99 and $44 related to customer relationships and the trade name, respectively. The Company will amortize the customer relationships, using the cash flow trended method over seven years. The goodwill recorded as part of the merger was attributable to the assembled workforce of Home Chef and operational synergies expected from the merger. The merger was treated as a 30% stock purchase and 70% partnership interest purchase for income tax purposes. The tax basis of the assets acquired and liabilities assumed for the portion of the transaction treated as a partnership interest purchase was stepped up, and the related goodwill is deductible for tax purposes. The assets acquired and liabilities assumed for the portion treated as a stock purchase did not result in a step up of tax basis, and goodwill is not expected to be deductible for tax purposes. The Company determined the Home Chef results of operations are not material. Therefore, the pro forma information is not required for fiscal year 2018 and 2017.

Partnership Agreement

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”). Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. As part of the agreement, the Company provided a letter of credit for $180, which supports its commitment to contract with Ocado to build a number of fulfilment centers. The balance of the letter of credit will reduce over time with the construction of each fulfilment center.

In addition, on May 17, 2018, the Company entered into a Share Subscription Agreement with Ocado, pursuant to which the Company agreed to purchase 33.1 million ordinary shares of Ocado for an aggregate purchase price of $243. The Company completed the purchase of these 33.1 million shares on May 29, 2018. This is in addition to 8.1 million Ocado shares purchased earlier in the first quarter of 2018, and 6.5 million additional shares purchased in the second quarter of 2018. The equity investment in Ocado is measured at fair value through earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was $776 as of February 1, 2020 and $620 as of February 2, 2019 and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The Company recorded an unrealized gain of $157 in 2019 and $228 in 2018, none of which was realized during the period as the Company did not sell any Ocado securities.

3. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through February 1, 2020.

2019 2018 Balance beginning of year

Goodwill $ 5,729 $ 5,567 Accumulated impairment losses (2,642) (2,642)

Subtotal 3,087 2,925

Activity during the year Mergers 8 163 Impairment losses (19) — Held for sale adjustment — (1)

Balance end of year Goodwill 5,737 5,729 Accumulated impairment losses (2,661) (2,642)

Total Goodwill $ 3,076 $ 3,087

In 2019, the Company finalized the purchase accounting for the Home Chef acquisition (see Note 2) resulting in an increase of goodwill and deferred taxes of $8. The Company also recorded an impairment charge of $19 as a result of the Lucky’s Market impairment.

In 2018, the Company acquired all of the outstanding shares of Home Chef (see Note 2) resulting in additional goodwill totaling $163. Certain assets and liabilities including goodwill totaling $1 for 2018 was classified as held for sale in the Consolidated Balance Sheet (see Note 17).

Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth quarter of 2019 and 2018 and did not result in impairment.

Based on the results of the Company’s impairment assessment in the fourth quarter of 2017, the Kroger Specialty Pharmacy reporting unit was the only reporting unit for which there was a potential impairment. In the fourth quarter of 2017, the operating performance of the Kroger Specialty Pharmacy reporting unit began to be affected by reduced margins as a result of compression in reimbursement by third party payers and a reduction of certain types of revenue. As a result of this decline, particularly in future expected cash flows, along with comparable fair value information, management concluded that the carrying value of goodwill for Kroger Specialty Pharmacy reporting unit exceeded its fair value, resulting in a pre-tax impairment charge of $110, $74 net of tax. The pre-impairment goodwill balance for Kroger Specialty Pharmacy was $353, as of the fourth quarter 2017.

The following table summarizes the Company’s intangible assets balance through February 1, 2020.

2019 2018 Gross carrying Accumulated Gross carrying Accumulated

amount amortization(1) amount amortization(1) Definite-lived favorable leasehold interests(2) $ — $ — $ 160 $ (47) Definite-lived pharmacy prescription files 320 (133) 316 (92) Definite-lived customer relationships 186 (120) 186 (88) Definite-lived other 106 (68) 103 (55) Indefinite-lived trade name 685 — 685 — Indefinite-lived liquor licenses 90 — 90 —

Total $ 1,387 $ (321) $ 1,540 $ (282)

(1) Favorable leasehold interests are amortized to rent expense, pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense.

(2) Due to the adoption of ASU 2016-02 “Leases,” favorable leasehold interests were reclassified and included in the measurement of new lease assets, refer to Note 10 and 18 for further description of the impact of adoption.

In 2018, the Company acquired definite and indefinite lived intangible assets totaling approximately $143, excluding goodwill, as a result of the merger with Home Chef (see Note 2). Additionally, the majority of the Company’s pharmacy prescription file purchases for 2018 were completed in a single transaction for $75.

Amortization expense associated with intangible assets totaled approximately $85, $80 and $59, during fiscal years 2019, 2018 and 2017, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2019 is estimated to be approximately:

2020 $ 73 2021 58 2022 51 2023 42 2024 39 Thereafter 28

Total future estimated amortization associated with definite-lived intangible assets $ 291

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of:

2019 2018 Land $ 3,299 $ 3,254 Buildings and land improvements 12,553 12,245 Equipment 15,031 14,277 Leasehold improvements 10,832 10,306 Construction-in-progress 3,166 2,716 Leased property under finance leases 966 1,066

Total property, plant and equipment 45,847 43,864 Accumulated depreciation and amortization (23,976) (22,229)

Property, plant and equipment, net $ 21,871 $ 21,635

Accumulated depreciation and amortization for leased property under finance leases was $276 at February 1, 2020 and $345 at February 2, 2019. This decrease was primarily related to the reclassification of certain finance leases to operating leases due to the adoption of ASU 2016-02 “Leases.”

Approximately $162 and $169, net book value, of property, plant and equipment collateralized certain mortgages at February 1, 2020 and February 2, 2019, respectively.

5. TAXES BASED ON INCOME

The provision for taxes based on income consists of:

2019 2018 2017 Federal

Current $ 454 $ 775 $ 309 Deferred (50) (3) (747)

Subtotal federal 404 772 (438)

State and local Current 70 108 15 Deferred (5) 20 18

Subtotal state and local 65 128 33

Total $ 469 $ 900 $ (405)

A reconciliation of the statutory federal rate and the effective rate follows:

2019 2018 2017 Statutory rate 21.0 % 21.0 % 33.7 % State income taxes, net of federal tax benefit 2.6 2.6 1.7 Credits (1.5) (1.3) (2.5) Resolution of issues (0.1) 0.5 — Domestic manufacturing deduction — — (1.1) Excess tax benefits from share-based payments (0.2) (0.3) (0.4) Effect of Tax Cuts and Jobs Act — — (60.8) Impairment of goodwill — — 2.3 Impairment losses attributable to noncontrolling interest 1.2 — — Other changes, net 0.7 0.1 (0.2)

23.7 % 22.6 % (27.3)%

The 2019 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and Lucky’s Market losses attributable to the noncontrolling interest which reduced pre-tax income but did not impact tax expense, partially offset by the utilization of tax credits and deductions.

The 2018 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and an IRS audit that resulted in a reduction of prior year tax deductions at pre-Tax Act rates and an increase in future tax deductions at post-Tax Act rates. These 2018 items were partially offset by the utilization of tax credits and deductions, the remeasurement of uncertain tax positions and adjustments to provisional amounts that increased prior year deductions at pre-Tax Act rates and decreased future deductions at post-Tax Act rates.

The tax effects of significant temporary differences that comprise tax balances were as follows:

2019 2018 Deferred tax assets:

Compensation related costs $ 406 $ 350 Lease liabilities 1,872 81 Closed store reserves 55 41 Net operating loss and credit carryforwards 100 110 Deferred Income 172 84 Allowance for uncollectible receivables 93 18 Other — 9

Subtotal 2,698 693 Valuation allowance (55) (54)

Total deferred tax assets 2,643 639

Deferred tax liabilities: Depreciation and amortization (1,942) (1,850) Operating lease assets (1,782) — Insurance related costs (28) (38) Inventory related costs (252) (257) Equity investments in excess of tax basis (94) (56) Other (11) —

Total deferred tax liabilities (4,109) (2,201)

Deferred taxes $ (1,466) $ (1,562)

At February 1, 2020, the Company had net operating loss carryforwards for state income tax purposes of $1,197. These net operating loss carryforwards expire from 2020 through 2039. The utilization of certain of the Company’s state net operating loss carryforwards may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state net operating losses.

At February 1, 2020, the Company had state credit carryforwards of $47, most of which expire from 2020 through 2027. The utilization of certain of the Company’s credits may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state credits.

The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether these assets are more likely than not to be realized based on all available evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on expected results and assumptions with respect to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of February 1, 2020, February 2, 2019 and February 3, 2018 the total valuation allowance was $55, $54 and $62, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting only the timing of tax benefits, is as follows:

2019 2018 2017 Beginning balance $ 174 $ 180 $ 177 Additions based on tax positions related to the current year 13 7 11 Reductions based on tax positions related to the current year — (1) (1) Additions for tax positions of prior years 8 23 6 Reductions for tax positions of prior years (1) (22) (8) Settlements (19) (10) — Lapse of statute (1) (3) (5) Ending balance $ 174 $ 174 $ 180

The Company does not anticipate that changes in the amount of unrecognized tax benefits over the next twelve months will have a significant impact on its results of operations or financial position.

As of February 1, 2020, February 2, 2019 and February 3, 2018 the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $74, $72 and $88, respectively.

To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and classified as a component of income tax expense. During the years ended February 1, 2020, February 2, 2019 and February 3, 2018, the Company recognized approximately $7, $2 and $8, respectively, in interest and penalties. The Company had accrued approximately $30, $30 and $28 for the payment of interest and penalties as of February 1, 2020, February 2, 2019 and February 3, 2018.

As of February 1, 2020, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended January 30, 2016.

6. DEBT OBLIGATIONS

Long-term debt consists of:

February 1, February 2, 2020 2019

1.50% to 8.00% Senior Notes due through 2049 $ 11,598 $ 12,097 5.63% to 12.75% Mortgages due through 2027 12 14 1.77% to 2.63% Commercial paper borrowings due through February 2020 1,150 800 3.37% Term Loan — 1,000 Other 496 440

Total debt, excluding obligations under finance leases 13,256 14,351 Less current portion (1,926) (3,103)

Total long-term debt, excluding obligations under finance leases $ 11,330 $ 11,248

In 2019, the Company issued $750 of senior notes due in fiscal year 2049 bearing an interest rate of 3.95%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2019. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $12, $10 net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company repaid $750 of senior notes bearing an interest rate of 6.15%, with proceeds from the senior notes issuances. During 2019, the Company also repaid, upon maturity, $1,000 term loan bearing an interest rate of 3.37% and $500 of senior notes bearing an interest rate of 1.50%, using cash generated by operations and proceeds from issuing commercial paper.

In 2018, the Company issued $600 of senior notes due in fiscal year 2029 bearing an interest rate of 4.50% and $600 of senior notes due in fiscal year 2049 bearing an interest rate of 5.40%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $750. These forward- starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2018. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized gain of $39, $30 net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company also repaid, upon maturity, $300 of senior notes bearing an interest rate of 6.80%, $300 of senior notes bearing an interest rate of 2.00%, $200 of senior notes bearing an interest rate of 7.00% and $500 of senior notes bearing an interest rate of 2.30%, with proceeds from the senior notes issuances.

In 2018, the Company obtained a $1,000 term loan with a maturity date of March 16, 2019. The funds were drawn on March 26, 2018 and were used to reduce outstanding commercial paper borrowings. Under the terms of the agreement, interest rates are adjusted monthly based on the Company’s Public Debt Rating and prevailing LIBOR rates. On March 15, 2019, the Company paid the $1,000 term loan through increased commercial paper borrowings.

On August 29, 2017, the Company entered into an amended, extended and restated $2,750 unsecured revolving credit facility (the “Credit Agreement”), with a termination date of August 29, 2022, unless extended as permitted under the Credit Agreement. This Credit Agreement amended the Company’s $2,750 credit facility that would otherwise have terminated on June 30, 2019. The Company has the ability to increase the size of the Credit Agreement by up to an additional $1,000, subject to certain conditions.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) LIBOR plus a market spread, based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the Federal Funds Rate plus 0.5%, (b) the Bank of America prime rate, and (c) one-month LIBOR plus 1.0%, plus a market rate spread based on the Company’s Public Debt Rating. The Company will also pay a Commitment Fee based on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced long- term senior unsecured debt issued by the Company.

The Credit Agreement contains covenants, which, among other things, require the maintenance of a Leverage Ratio of not greater than 3.50:1.00 and a Fixed Charge Coverage Ratio of not less than 1.70:1.00. The Company may repay the Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed by the Company’s subsidiaries.

As of February 1, 2020, the Company had $1,150 of commercial paper borrowings, with a weighted average interest rate of 1.77% and no borrowings under the Credit Agreement. As of February 2, 2019, the Company had $800 of commercial paper borrowings, with a weighted average interest rate of 2.63% and no borrowings under the Credit Agreement.

As of February 1, 2020, the Company had outstanding letters of credit in the amount of $362, of which $2 reduces funds available under the Credit Agreement. As of February 2, 2019, the Company had outstanding letters of credit in the amount of $363, of which $3 reduces funds available under the Credit Agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the option of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group, together with any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of Directors, in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a change of control and a below investment grade rating.

The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2019, and for the years subsequent to 2019 are:

2020 $ 1,926 2021 804 2022 894 2023 594 2024 495 Thereafter 8,543

Total debt $ 13,256

7. DERIVATIVE FINANCIAL INSTRUMENTS

GAAP requires that derivatives be carried at fair value on the balance sheet, and provides for hedge accounting when certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective portions of cash flow hedges, if any, are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as “fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded in current period earnings. Ineffective portions of fair value hedges, if any, are recognized in current period earnings.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company discontinues hedge accounting prospectively.

Interest Rate Risk Management

The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to interest rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of the Company’s debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive or sensitivity to current mark-to-market status.

The Company reviews compliance with these guidelines annually with the Financial Policy Committee of the Board of Directors. These guidelines may change as the Company’s needs dictate.

Fair Value Interest Rate Swaps

The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of February 1, 2020 and February 2, 2019.

Cash Flow Forward-Starting Interest Rate Swaps

As of February 1, 2020, the Company had seven forward-starting interest rate swap agreements with a maturity date of January 2021 with an aggregate notional amount totaling $350. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuance of debt in January 2021. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 1, 2020, the fair value of the interest rate swaps was recorded in other long-term liabilities for $19 and accumulated other comprehensive loss for $17 net of tax.

As of February 2, 2019, the Company had five forward-starting interest rate swap agreements with a maturity date of January 2020 with an aggregate notional amount totaling $250. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuance of debt in January 2020. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 2, 2019, the fair value of the interest rate swaps was recorded in other assets for $33 and accumulated other comprehensive income for $20 net of tax.

During 2019, the Company terminated six forward-starting interest rate swaps with maturity dates of January 2020 with an aggregate notional amount totaling $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2019. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $12, $10 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made.

During 2018, the Company terminated nine forward-starting interest rate swaps with maturity dates of January 2019 with an aggregate notional amount totaling $750. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2018. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized gain of $39, $30 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made.

The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges for 2019, 2018 and 2017:

Year-To-Date Amount of Gain/(Loss) in Amount of Gain/(Loss)

AOCI on Derivative Reclassified from AOCI into Location of Gain/(Loss) Derivatives in Cash Flow Hedging (Effective Portion) Income (Effective Portion) Reclassified into Income Relationships 2019 2018 2017 2019 2018 2017 (Effective Portion) Forward-Starting Interest Rate Swaps, net of tax* $ (42) $ 6 $ 24 $ (4) $ (5) $ (3) Interest expense

* The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior to end of 2019, 2018 and 2017, respectively.

For the above cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives Association master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or of the Company under these master netting agreements. As of February 1, 2020 and February 2, 2019, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances upon an event of default or termination event is as follows as of February 1, 2020 and February 2, 2019:

Gross Amounts Not Offset in the Net Amount Balance Sheet

Gross Amount Gross Amounts Offset Presented in the Financial February 1, 2020 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount Liabilities Cash Flow Forward- Starting Interest Rate Swaps $ 19 $ — $ 19 $ — $ — $ 19

Gross Amounts Not Offset in the Net Amount Balance Sheet

Gross Amount Gross Amounts Offset Presented in the Financial February 2, 2019 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount Assets Cash Flow Forward- Starting Interest Rate Swaps $ 33 $ — $ 33 $ — $ — $ 33

8. FAIR VALUE MEASUREMENTS

GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable;

Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at February 1, 2020 and February 2, 2019:

February 1, 2020 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable

Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total

Trading Securities $ 840 $ — $ — $ 840 Other Investment — — 41 41 Interest Rate Hedges — (19) — (19) Total $ 840 $ (19) $ 41 $ 862

February 2, 2019 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable

Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total

Trading Securities $ 671 $ — $ — $ 671 Other Investment — — 22 22 Interest Rate Hedges — 33 — 33 Total $ 671 $ 33 $ 22 $ 726

In 2018, realized gains on Level 1, available-for-sale securities totaled $5.

The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 3 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company’s policies and recorded amounts for impairments of long-lived assets and valuation of store lease exit costs. In 2019, long-lived assets with a carrying amount of $152 were written down to their fair value of $32, resulting in an impairment charge of $120, which included the 35 planned store closures. In 2018, long-lived assets with a carrying amount of $85 were written down to their fair value of $29, resulting in an impairment charge of $56. In 2018, the Company entered into an agreement with a third party. As part of the consideration for entering the agreement, the Company received a financial instrument of $22.

Mergers are accounted for using the acquisition method of accounting, which requires that the purchase price paid for a merger be allocated to the assets and liabilities acquired based on their estimated fair values as of the effective date of the merger, with the excess of the purchase price over the net assets being recorded as goodwill. See Note 2 for further discussion related to accounting for mergers.

Fair Value of Other Financial Instruments

Current and Long-term Debt

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at respective year-ends. At February 1, 2020, the fair value of total debt excluding obligation under finance leases was $14,649 compared to a carrying value of $13,256. At February 2, 2019, the fair value of total debt excluding obligation under finance leases was $14,190 compared to a carrying value of $14,351.

Contingent Consideration

Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Trade Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Other Assets

In 2016, the Company entered into agreements with a third party. As part of the consideration for entering these agreements, the Company received a financial instrument that derives its value from the third party’s business operations. The Company used the Monte-Carlo simulation method to determine the fair value of this financial instrument. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of this financial instrument. The assumptions used in the Monte-Carlo simulation are classified as Level 3 inputs. The financial instrument was valued at $335 and recorded in “Other assets” within the Consolidated Balance Sheets. As the financial instrument was obtained in exchange for certain obligations, the Company also recognized offsetting deferred revenue liabilities in “Other current liabilities” and “Other long-term liabilities” within the Consolidated Balance Sheets. The deferred revenue will be amortized to “Sales” within the Consolidated Statements of Operations over the term of the agreements. Post inception, the Company received a distribution of $58, which was recorded as a reduction of the cost method investment. In the fourth quarter of 2018, a transaction occurred that resulted in the settlement of the financial instrument. As a result of the settlement, the Company received cash proceeds of $235. The Company recognized an impairment of financial instrument of $42 in OG&A in the fourth quarter of 2018.

The fair values of certain investments recorded in “other assets” within the Consolidated Balance Sheets were estimated based on quoted market prices for those or similar investments, or estimated cash flows, if appropriate. At February 1, 2020 and February 2, 2019, the carrying and fair value of long-term investments for which fair value is determinable was $278 and $155, respectively. At February 1, 2020 and February 2, 2019, the carrying value of notes receivable for which fair value is determinable was $210 and $146, respectively.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the changes in AOCI by component for the years ended February 1, 2020 and February 2, 2019:

Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit

Activities(1) Securities(1) Plans(1) Total(1) Balance at February 3, 2018 $ 24 $ 4 $ (499) $ (471) OCI before reclassifications(2) (23) (4) 104 77 Amounts reclassified out of AOCI(3) 5 — 43 48 Net current-period OCI (18) (4) 147 125 Balance at February 2, 2019 $ 6 $ — $ (352) $ (346)

Balance at February 2, 2019 $ 6 $ — $ (352) $ (346) Cumulative effect of accounting change(4) (5) — (141) (146) OCI before reclassifications(2) (47) — (134) (181) Amounts reclassified out of AOCI(3) 4 — 29 33 Net current-period OCI (48) — (246) (294) Balance at February 1, 2020 $ (42) $ — $ (598) $ (640)

(1) All amounts are net of tax. (2) Net of tax of $(8), $(1) and $32 for cash flow hedging activities, available for sale securities and pension and postretirement

defined benefit plans, respectively, as of February 2, 2019. Net of tax of ($17) and ($42) for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of February 1, 2020.

(3) Net of tax of $13 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of February 2, 2019. Net of tax of $9 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of February 1, 2020.

(4) Related to the adoption of ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (see Note 18 for additional details).

The following table represents the items reclassified out of AOCI and the related tax effects for the years ended February 1, 2020, February 2, 2019 and February 3, 2018:

For the year ended For the year ended For the year ended February 1, 2020 February 2, 2019 February 3, 2018

Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities(1) $ 7 $ 8 $ 6

Tax expense (3) (3) (3) Net of tax 4 5 3

Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost(2)

38 56 69 Tax expense

(9) (13) (20) Net of tax

29 43 49 Total reclassifications, net of tax

$ 33 $ 48 $ 52

(1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are

included in the computation of net periodic pension expense.

10. LEASES AND LEASE-FINANCED TRANSACTIONS

The Company leases certain store real estate, warehouses, distribution centers, office space and equipment. While the Company’s current strategy emphasizes ownership of store real estate, the Company operates in leased facilities in approximately half of its store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years.

The following table provides supplemental balance sheet classification information related to leases:

February 1, February 2, Classification 2020 2019

Assets Operating Operating lease assets $ 6,814 $ — Finance Property, plant and equipment, net(1) 690 721

Total leased assets $ 7,504 $ 721

Liabilities Current Operating Current portion of operating lease liabilities $ 597 $ —

Finance Current portion of long-term debt including obligations under finance leases 39 54

Noncurrent Operating Noncurrent operating lease liabilities 6,505 — Finance Long-term debt including obligations under finance leases 781 824

Total lease liabilities $ 7,922 $ 878

(1) Finance lease assets are recorded net of accumulated amortization of $276 and $345 as of February 1, 2020 and February 2, 2019.

The following table provides the components of lease cost:

Year-To-Date Lease Cost Classification February 1, 2020 Operating lease cost(1) Rent Expense $ 1,000 Sublease and other rental income Rent Expense (116) Finance lease cost Amortization of leased assets Depreciation and Amortization 53 Interest on lease liabilities Interest Expense 48

Net lease cost $ 985

(1) Includes short-term leases and variable lease costs, which are immaterial.

Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised.

Operating Finance Leases Leases Total

2020 $ 932 $ 84 $ 1,016 2021 884 95 979 2022 772 80 852 2023 758 86 844 2024 637 81 718 Thereafter 6,353 757 7,110

Total lease payments 10,336 1,183 $ 11,519

Less amount representing interest 3,234 363

Present value of lease liabilities(1) $ 7,102 $ 820

(1) Includes the current portion of $597 for operating leases and $39 for finance leases.

Total future minimum rentals under non-cancellable subleases at February 1, 2020 were $296.

The following table provides the weighted-average lease term and discount rate for operating and finance leases:

February 1, 2020 Weighted-average remaining lease term (years) Operating leases 16.0 Finance leases 15.3

Weighted-average discount rate Operating leases 4.3 % Finance leases 5.4 %

The following table provides supplemental cash flow information related to leases:

Year-To-Date February 1, 2020

Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 942 Operating cash flows from finance leases 48 Financing cash flows from finance leases 45

Leased assets obtained in exchange for new operating lease liabilities 849 Leased assets obtained in exchange for new finance lease liabilities 233 Net gain recognized from sale and leaseback transactions(1) 58 Impairment of operating lease assets(2) 81 Impairment of finance lease assets 40

(1) In 2019, the Company entered into sale leaseback transactions related to nine properties, which resulted in total proceeds of $113.

(2) Impairment of operating lease assets includes $11 related to Lucky’s Market.

The Company adopted new lease accounting guidance in the first quarter of 2019 as discussed in Note 1 and Note 18, and as required, the following disclosure is provided for periods prior to adoption. Minimum annual rentals and payments under capital leases and lease-financed transactions for the five years subsequent to February 2, 2019 and in the aggregate are listed below. Amounts in the table below only include payments through the noncancelable lease term.

Lease- Capital Operating Financed Leases Leases Transactions

2019 $ 103 $ 948 $ 5 2020 89 880 6 2021 86 773 5 2022 82 649 5 2023 81 556 5 Thereafter 766 3,197 17

Total 1,207 $ 7,003 $ 43

Less estimated executory costs included in capital leases —

Net minimum lease payments under capital leases 1,207 Less amount representing interest 372

Present value of net minimum lease payments under capital leases $ 835

11. EARNINGS PER COMMON SHARE

Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share:

For the year ended For the year ended For the year ended February 1, 2020 February 2, 2019 February 3, 2018

Per Per Per Earnings Shares Share Earnings Shares Share Earnings Shares Share

(in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 1,640 799 $ 2.05 $ 3,076 810 $ 3.80 $ 1,890 895 $ 2.11

Dilutive effect of stock options 6 8 9

Net earnings attributable to The Kroger Co. per diluted common share $ 1,640 805 $ 2.04 $ 3,076 818 $ 3.76 $ 1,890 904 $ 2.09

The Company had combined undistributed and distributed earnings to participating securities totaling $19, $34 and $17 in 2019, 2018 and 2017, respectively.

The Company had stock options outstanding for approximately 18.4 million, 10.1 million and 15.6 million shares, respectively, for the years ended February 1, 2020, February 2, 2019, and February 3, 2018, which were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per diluted share.

12. STOCK-BASED COMPENSATION

The Company recognizes compensation expense for all share-based payments granted. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award based on the fair value at the date of the grant.

The Company grants options for common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of the stock option at the date of grant. The Company accounts for stock options under the fair value recognition provisions. Stock options typically expire 10 years from the date of grant. Stock options vest between one and five years from the date of grant.

In addition to the stock options described above, the Company awards restricted stock to employees and nonemployee directors under various plans. The restrictions on these awards generally lapse between one and five years from the date of the awards. The Company determines the fair value for restricted stock awards in an amount equal to the fair market value of the underlying shares on the grant date of the award.

At February 1, 2020, approximately 58 million common shares were available for future options or restricted stock grants under the 2011, 2014, and 2019 Long-Term Incentive Plans (the “Plans”). Options granted reduce the shares available under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of 2.83 to one.

Equity awards granted are based on the aggregate value of the award on grant date. This can affect the number of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring shortly after the Company’s release of quarterly earnings. The 2019 primary grants were made in conjunction with the March and June meetings of the Company’s Board of Directors.

All awards become immediately exercisable upon certain changes of control of the Company.

Stock Options

Changes in options outstanding under the stock option plans are summarized below:

Shares Weighted- subject average to option exercise

(in millions) price Outstanding, year-end 2016 34.3 $ 21.32

Granted 7.0 $ 23.00 Exercised (3.8) $ 14.08 Canceled or Expired (0.8) $ 28.29

Outstanding, year-end 2017 36.7 $ 22.23 Granted 2.7 $ 27.88 Exercised (4.4) $ 15.34 Canceled or Expired (0.9) $ 28.05

Outstanding, year-end 2018 34.1 $ 23.42 Granted 3.1 $ 24.63 Exercised (4.0) $ 14.17 Canceled or Expired (1.0) $ 28.87

Outstanding, year-end 2019 32.2 $ 24.52

A summary of options outstanding, exercisable and expected to vest at February 1, 2020 follows:

Weighted-average Aggregate remaining Weighted-average intrinsic

Number of shares contractual life exercise price value (in millions) (in years) (in millions)

Options Outstanding 32.2 5.35 $ 24.52 153 Options Exercisable 22.5 4.24 $ 23.50 134 Options Expected to Vest 9.5 7.90 $ 26.89 19

Restricted stock

Changes in restricted stock outstanding under the restricted stock plans are summarized below:

Restricted shares Weighted-average

outstanding grant-date (in millions) fair value

Outstanding, year-end 2016 7.4 $ 32.09 Granted 5.8 $ 23.04 Lapsed (3.6) $ 31.05 Canceled or Expired (0.4) $ 29.26

Outstanding, year-end 2017 9.2 $ 26.78 Granted 4.6 $ 27.99 Lapsed (4.4) $ 25.93 Canceled or Expired (0.6) $ 26.57

Outstanding, year-end 2018 8.8 $ 27.86 Granted 5.4 $ 22.72 Lapsed (4.1) $ 28.07 Canceled or Expired (0.8) $ 25.68

Outstanding, year-end 2019 9.3 $ 24.85

The weighted-average grant date fair value of stock options granted during 2019, 2018 and 2017 was $6.00, $6.78 and $4.71, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes accounting judgment and financial estimates, including the term option holders are expected to retain their stock options before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations. The decrease in the fair value of the stock options granted during 2019, compared to 2018, resulted primarily from a decrease in the Company’s share price, partially offset by an increase in the weighted average expected volatility. The increase in the fair value of the stock options granted during 2018, compared to 2017, resulted primarily from an increase in the Company’s share price, which decreased the expected dividend yield, an increase in the weighted average expected volatility and the weighted average risk-free interest rate also contributed to the increase in fair value.

The following table reflects the weighted-average assumptions used for grants awarded to option holders:

2019 2018 2017 Weighted average expected volatility 25.37 % 24.50 % 22.78 % Weighted average risk-free interest rate 2.54 % 2.82 % 2.21 % Expected dividend yield 2.00 % 2.00 % 2.20 % Expected term (based on historical results) 7.2 years 7.2 years 7.2 years

The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date, continuously compounded, which matures at a date that approximates the expected term of the options. The dividend yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon historical exercise and cancellation experience.

Total stock compensation recognized in 2019, 2018 and 2017 was $155, $154 and $151, respectively. Stock option compensation recognized in 2019, 2018 and 2017 was $24, $25 and $32, respectively. Restricted shares compensation recognized in 2019, 2018 and 2017 was $131, $129 and $119, respectively.

The total intrinsic value of stock options exercised was $51, $58 and $55 in 2019, 2018 and 2017, respectively. The total amount of cash received in 2019 by the Company from the exercise of stock options granted under share-based payment arrangements was $55. As of February 1, 2020, there was $194 of total unrecognized compensation expense remaining related to non-vested share-based compensation arrangements granted under Plans. This cost is expected to be recognized over a weighted- average period of approximately two years. The total fair value of options that vested was $26, $30 and $29 in 2019, 2018 and 2017, respectively.

Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2019, the Company repurchased approximately two million common shares in such a manner.

13. COMMITMENTS AND CONTINGENCIES

The Company continuously evaluates contingencies based upon the best available evidence.

The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited.

The principal contingencies are described below:

Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium plans, deductible plans, and self-insured retention plans. The liability for workers’ compensation risks is accounted for on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss allowances, based upon actuarially determined estimates.

Litigation — Various claims and lawsuits arising in the normal course of business, including suits charging violations of certain antitrust, wage and hour, or civil rights laws, as well as product liability cases, are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Any damages that may be awarded in antitrust cases will be automatically trebled. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Assignments — The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.

14. STOCK

Preferred Shares

The Company has authorized five million shares of voting cumulative preferred shares; two million shares were available for issuance at February 1, 2020. The shares have a par value of $100 per share and are issuable in series.

Common Shares

The Company has authorized two billion common shares, $1 par value per share.

Common Stock Repurchase Program

The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made open market purchases totaling $400, $727 and $1,567 under these repurchase programs in 2019, 2018 and 2017, respectively.

On April 20, 2018 the Company entered and funded a $1,200 accelerated stock repurchase (“ASR”) program to reacquire shares in privately negotiated transactions. The final delivery under the ASR program occurred during the second quarter of 2018, which included the settlement of the remaining 2.3 million Kroger Common shares. In total, the Company invested $1,200 to repurchase 46.3 million Kroger common shares at an average price of $25.91 per share.

In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds from stock option exercises and the related tax benefit. The Company repurchased approximately $65, $83 and $66 under the stock option program during 2019, 2018 and 2017, respectively.

15. COMPANY- SPONSORED BENEFIT PLANS

The Company administers non-contributory defined benefit retirement plans for some non-union employees and union- represented employees as determined by the terms and conditions of collective bargaining agreements. These include several qualified pension plans (the “Qualified Plans”) and non-qualified pension plans (the “Non-Qualified Plans”). The Non-Qualified Plans pay benefits to any employee that earns in excess of the maximum allowed for the Qualified Plans by Section 415 of the Internal Revenue Code. The Company only funds obligations under the Qualified Plans. Funding for the company-sponsored pension plans is based on a review of the specific requirements and on evaluation of the assets and liabilities of each plan.

In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. The majority of the Company’s employees may become eligible for these benefits if they reach normal retirement age while employed by the Company. Funding of retiree health care benefits occurs as claims or premiums are paid.

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end that is closest to its fiscal year-ends, which were February 1, 2020 for fiscal 2019 and February 2, 2019 for fiscal 2018.

Amounts recognized in AOCI as of February 1, 2020 and February 2, 2019 consists of the following (pre-tax):

Pension Benefits Other Benefits Total 2019 2018 2019 2018 2019 2018

Net actuarial loss (gain) $ 955 $ 837 $ (109) $ (130) $ 846 $ 707 Prior service credit — — (68) (66) (68) (66)

Total $ 955 $ 837 $ (177) $ (196) $ 778 $ 641

Amounts in AOCI expected to be recognized as components of net periodic pension or postretirement benefit costs in the next fiscal year are as follows (pre-tax):

Pension Benefits Other Benefits Total 2020 2020 2020

Net actuarial loss (gain) $ 35 $ (9) $ 26 Prior service credit — (12) (12)

Total $ 35 $ (21) $ 14

Other changes recognized in other comprehensive income (loss) in 2019, 2018 and 2017 were as follows (pre-tax):

Pension Benefits Other Benefits Total 2019 2018 2017 2019 2018 2017 2019 2018 2017

Incurred net actuarial loss (gain) $ 179 $ (126) $ 322 $ 9 $ (10) $ (20) $ 188 $ (136) $ 302 Amortization of prior service credit — — — 11 11 8 11 11 8 Amortization of net actuarial gain (loss) (61) (77) (88) 12 10 11 (49) (67) (77) Settlement recognition of net actuarial loss — — (502) — — — — — (502) Other (1) — — (12) — (28) (13) — (28) Total recognized in other comprehensive income (loss) 117 (203) (268) 20 11 (29) 137 (192) (297)

Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 165 $ (127) $ 323 $ 11 $ 5 $ (30) $ 176 $ (122) $ 293

Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans recorded in the Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted average assumptions and components of net periodic benefit cost follow:

Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits

2019 2018 2019 2018 2019 2018 Change in benefit obligation: Benefit obligation at beginning of fiscal year $ 2,994 $ 3,235 $ 298 $ 328 $ 200 $ 202

Service cost 32 35 1 2 6 7 Interest cost 124 124 12 12 8 8 Plan participants’ contributions — — — — 13 13 Actuarial (gain) loss 545 (134) 41 (13) 9 (9) Plan curtailments — (92) — (6) — — Benefits paid (180) (174) (21) (24) (26) (21) Other 3 — (3) (1) (12) —

Benefit obligation at end of fiscal year $ 3,518 $ 2,994 $ 328 $ 298 $ 198 $ 200

Change in plan assets: Fair value of plan assets at beginning of fiscal year $ 3,010 $ 2,943 $ — $ — $ — $ —

Actual return on plan assets 590 46 — — — — Employer contributions — 185 21 25 13 8 Plan participants’ contributions — — — — 13 13 Benefits paid (180) (174) (21) (24) (26) (21) Other 2 10 — (1) — —

Fair value of plan assets at end of fiscal year $ 3,422 $ 3,010 $ — $ — $ — $ — Funded status and net asset and liability recognized at end of fiscal year $ (96) $ 16 $ (328) $ (298) $ (198) $ (200)

As of February 1, 2020, other assets and other current liabilities include $19 and $33, respectively, of the net asset and liability recognized for the above benefit plans. As of February 2, 2019, other assets and other current liabilities include $47 and $35, respectively, of the net asset and liability recognized for the above benefit plans.

In 2018, the Company contributed $185, $117 net of tax, to the company-sponsored pension plan. This contribution was designated to the 2017 tax year in order to deduct the contributions at the previous year tax rate. The Company announced changes to certain non-union company-sponsored pension plans. The Company froze the compensation and service periods used to calculate pension benefits for active employees who participate in the affected pension plans as of December 31, 2019. Beginning January 1, 2020, the affected active employees no longer accrue additional benefits for future service and eligible compensation received under these plans.

As of February 1, 2020 and February 2, 2019, pension plan assets do not include common shares of The Kroger Co.

Pension Benefits Other Benefits Weighted average assumptions 2019 2018 2017 2019 2018 2017 Discount rate — Benefit obligation 3.01 % 4.23 % 4.00 % 2.97 % 4.19 % 3.93 % Discount rate — Net periodic benefit cost 4.23 % 4.00 % 4.25 % 4.19 % 3.93 % 4.18 % Expected long-term rate of return on plan assets 6.00 % 5.90 % 7.50 %

Rate of compensation increase — Net periodic benefit cost 3.04 % 3.03 % 3.07 %

Rate of compensation increase — Benefit obligation 3.03 % 3.04 % 3.03 %

The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be effectively settled. They take into account the timing and amount of benefits that would be available under the plans. The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that produce the same present value of cash flows. The selection of the 3.01% and 2.97% discount rates as of year-end 2019 for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better rating constructed with the assistance of an outside consultant. A 100 basis point increase in the discount rate would decrease the projected pension benefit obligation as of February 1, 2020, by approximately $401.

The Company’s 2019 assumed pension plan investment return rate was 6.00% compared to 5.90% in 2018 and 7.50% in 2017. The value of all investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2019, net of investment management fees and expenses, increased 18.3% and for fiscal year 2019 investments increased 19.7%. Historically, the Company’s pension plans’ average rate of return was 7.6% for the 10 calendar years ended December 31, 2019, net of all investment management fees and expenses. For the past 20 years, the Company’s pension plans’ average annual rate of return has been 6.70%. At the beginning of 2018, to determine the expected rate of return on pension plan assets held by the Company for 2018, the Company considered current and forecasted plan asset allocations as well as historical and forecasted rates of return on various asset categories.

The Company calculates its expected return on plan assets by using the market-related value of plan assets. The market- related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each plan year. Gains or losses on plan assets are recognized evenly over a five-year period. Using a different method to calculate the market-related value of plan assets would provide a different expected return on plan assets.

On February 1, 2020, the Company adopted an updated assumption for generational mortality improvement, based on additional years of published mortality experience.

The pension benefit unfunded status increased in 2019, compared to 2018, due to the decrease in discount rate from 2018 to 2019, assumption changes related to the Company’s experience study, partially offset by higher than anticipated asset returns.

The following table provides the components of the Company’s net periodic benefit costs for 2019, 2018 and 2017:

Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits

2019 2018 2017 2019 2018 2017 2019 2018 2017 Components of net periodic benefit cost:

Service cost $ 32 $ 35 $ 53 $ 1 $ 2 $ 2 $ 6 $ 7 $ 8 Interest cost 124 124 163 12 12 13 8 8 9 Expected return on plan assets (182) (174) (233) — — — — — — Amortization of: Prior service credit — — — — — — (11) (11) (8) Actuarial (gain) loss 55 69 79 6 8 9 (12) (10) (11) Settlement loss recognized — — 502 — — — — — — Other — — — — — 3 — — 1

Net periodic benefit cost $ 29 $ 54 $ 564 $ 19 $ 22 $ 27 $ (9) $ (6) $ (1)

The following table provides the projected benefit obligation (“PBO”), accumulated benefit obligation (“ABO”) and the fair value of plan assets for those company-sponsored pension plans with accumulated benefit obligations in excess of plan assets.

Qualified Plans Non-Qualified Plans 2019 2018 2019 2018

PBO at end of fiscal year $ 3,272 $ 295 $ 328 $ 298 ABO at end of fiscal year $ 3,271 $ 293 $ 328 $ 291 Fair value of plan assets at end of year $ 3,157 $ 263 $ — $ —

The following table provides information about the Company’s estimated future benefit payments.

Pension Other Benefits Benefits

2020 $ 208 $ 12 2021 $ 215 $ 12 2022 $ 224 $ 13 2023 $ 213 $ 13 2024 $ 217 $ 13 2025 —2029 $1,104 $ 69

The following table provides information about the target and actual pension plan asset allocations as of February 1, 2020.

Actual Target allocations Allocations

2019 2019 2018 Pension plan asset allocation

Global equity securities 2.0 % 4.3 % 4.2 % Emerging market equity securities 1.0 2.3 2.3 Investment grade debt securities 80.0 77.8 73.2 High yield debt securities 4.0 2.9 3.5 Private equity 10.0 8.1 9.5 Hedge funds — 2.8 4.5 Real estate 3.0 1.8 2.8

Total 100.0 % 100.0 % 100.0 %

Investment objectives, policies and strategies are set by the Retirement Benefit Plan Management Committee (the “Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the investment objectives is long-term in nature and plan assets are managed on a going-concern basis.

Investment objectives and guidelines specifically applicable to each manager of assets are established and reviewed annually. Derivative instruments may be used for specified purposes, including rebalancing exposures to certain asset classes. Any use of derivative instruments for a purpose or in a manner not specifically authorized is prohibited, unless approved in advance by the Committee.

The target allocations shown for 2019 were established in 2019 in conjunction with the continuation of the Company’s transition to a LDI strategy, which began in 2017. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. This LDI strategy will be phased in over time as the Company is able to transition out of illiquid investments. During this transition, the Company’s target allocation will change by increasing the Company’s fixed income instruments. Cash flow from employer contributions and redemption of plan assets to fund participant benefit payments can be used to fund underweight asset classes and divest overweight asset classes, as appropriate. The Company expects that cash flow will be sufficient to meet most rebalancing needs.

The Company did not make any contributions to its company-sponsored pension plans in 2019 and the Company is not required to make any contributions to these plans in 2020. If the Company does make any contributions in 2020, the Company expects these contributions will decrease its required contributions in future years. Among other things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations, and future changes in legislation, will determine the amounts of any contributions. The Company expects 2020 benefit costs for company-sponsored pension plans to be approximately ($16).

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The Company used a 5.70% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.50% ultimate health care cost trend rate in 2037, to determine its expense. A one-percentage-point change in the assumed health care cost trend rates would have the following effects:

1% Point 1% Point Increase Decrease

Effect on total of service and interest cost components $ 2 $ (1) Effect on postretirement benefit obligation $ 22 $ (18)

The following tables, set forth by level, within the fair value hierarchy, the Qualified Plans’ assets at fair value as of February 1, 2020 and February 2, 2019:

Assets at Fair Value as of February 1, 2020

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured

(Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 186 $ — $ — $ — $ 186 Corporate Stocks 78 — — — 78 Corporate Bonds — 1,157 — — 1,157 U.S. Government Securities — 194 — — 194 Mutual Funds 305 — — — 305 Collective Trusts — — — 945 945 Hedge Funds — — 43 51 94 Private Equity — — — 275 275 Real Estate — — 43 17 60 Other — 128 — — 128 Total $ 569 $ 1,479 $ 86 $ 1,288 $ 3,422

Assets at Fair Value as of February 2, 2019

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured

(Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 126 $ — $ — $ — $ 126 Corporate Stocks 66 — — — 66 Corporate Bonds — 896 — — 896 U.S. Government Securities — 240 — — 240 Mutual Funds 257 — — — 257 Collective Trusts — — — 805 805 Hedge Funds — — 49 85 134 Private Equity — — — 285 285 Real Estate — — 67 19 86 Other — 115 — — 115 Total $ 449 $ 1,251 $ 116 $ 1,194 $ 3,010

Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented for these investments in the preceding tables are intended to permit reconciliation of the fair value hierarchies to the total fair value of plan assets.

For measurements using significant unobservable inputs (Level 3) during 2019 and 2018, a reconciliation of the beginning and ending balances is as follows:

Hedge Funds Real Estate Ending balance, February 3, 2018 $ 56 68 Contributions into Fund — 9 Realized gains 1 12 Unrealized losses 4 (5) Distributions (16) (15) Other 4 (2)

Ending balance, February 2, 2019 49 67 Contributions into Fund 2 3 Realized gains (2) 23 Unrealized gains — (17) Distributions (11) (33) Other 5 —

Ending balance, February 1, 2020 $ 43 $ 43

See Note 8 for a discussion of the levels of the fair value hierarchy. The assets’ fair value measurement level above is based on the lowest level of any input that is significant to the fair value measurement.

The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in the above tables:

● Cash and cash equivalents: The carrying value approximates fair value.

● Corporate Stocks: The fair values of these securities are based on observable market quotations for identical assets and are valued at the closing price reported on the active market on which the individual securities are traded.

● Corporate Bonds: The fair values of these securities are primarily based on observable market quotations for similar bonds, valued at the closing price reported on the active market on which the individual securities are traded. When such quoted prices are not available, the bonds are valued using a discounted cash flow approach using current yields on similar instruments of issuers with similar credit ratings, including adjustments for certain risks that may not be observable, such as credit and liquidity risks.

● U.S. Government Securities: Certain U.S. Government securities are valued at the closing price reported in the active market in which the security is traded. Other U.S. government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for similar securities, the security is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

● Mutual Funds: The fair values of these securities are based on observable market quotations for identical assets and are valued at the closing price reported on the active market on which the individual securities are traded.

● Collective Trusts: The collective trust funds are public investment vehicles valued using a Net Asset Value (NAV) provided by the manager of each fund. These assets have been valued using NAV as a practical expedient.

● Hedge Funds: The Hedge funds classified as Level 3 include investments that are not readily tradeable and have valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3. Certain other hedge funds are private investment vehicles valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a practical expedient.

● Private Equity: Private Equity investments are valued based on the fair value of the underlying securities within the fund, which include investments both traded on an active market and not traded on an active market. For those investments that are traded on an active market, the values are based on the closing price reported on the active market on which those individual securities are traded. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on audits of the private equity fund financial statements; such adjustments are reflected in the fair value of the plan’s assets.

● Real Estate: Real estate investments include investments in real estate funds managed by a fund manager. These investments are valued using a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches. The valuations for these investments are not based on readily observable inputs and are classified as Level 3 investments. Certain other real estate investments are valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a practical expedient.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement.

The Company contributed and expensed $264, $263 and $219 to employee 401(k) retirement savings accounts in 2019, 2018 and 2017, respectively. The 401(k) retirement savings account plans provide to eligible employees both matching contributions and automatic contributions from the Company based on participant contributions, compensation as defined by the plan and length of service.

In 2019, the Company approved and implemented a plan to reorganize certain portions of its division management structure. This reorganization is expected to increase operational effectiveness and reduce overhead costs while maintaining a high quality customer experience. The Company recorded a charge for severance and related benefits of $80, $61 net of tax, in 2019, which is included in the OG&A caption within the Consolidated Statements of Operations. Of the total charge, $42 remains unpaid as of February 1, 2020 and is included in Other Current Liabilities within the Consolidated Balance Sheet.

16. MULTI-EMPLOYER PENSION PLANS

The Company contributes to various multi-employer pension plans based on obligations arising from collective bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

The Company recognizes expense in connection with these plans as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans of $461 in 2019, $358 in 2018 and $954 in 2017. The increase in 2017, compared to 2019 and 2018, is primarily due to the $467 pre-tax payment to satisfy withdrawal obligations of certain local unions of the Central States Pension Fund and the 2017 United Food and Commercial Workers (“UFCW”) contribution.

The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans as it relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since these off balance sheet commitments are typically considered in the Company’s investment grade debt rating.

The Company is currently designated as the named fiduciary of the UFCW Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and has sole investment authority over these assets. The Company became the fiduciary of the IBT Consolidated Pension Fund in 2017 due to the ratification of a new labor contract with the IBT that provided certain local unions of the Company to withdraw from the Central States Pension Fund. Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

● In 2019, the Company incurred a $135 charge, $104 net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension plan funds.

● In 2018, the Company incurred a $155 charge, $121 net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension plan fund.

● In 2017, the Company incurred a $550 charge, $360 net of tax, for obligations related to withdrawals from and settlements of withdrawal liabilities for certain multi-employer pension plan funds, of which $467 was contributed to the Central States Pension Plan in 2017.

● In 2017, the Company contributed $111, $71 net of tax, to the UFCW Consolidated Pension Plan.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects:

a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers.

c. If the Company stops participating in some of its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to as a withdrawal liability.

The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent Pension Protection Act Zone Status available in 2019 and 2018 is for the plan’s year-end at December 31, 2018 and December 31, 2017, respectively. Among other factors, generally, plans in the red zone are less than 65 percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80 percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2018 and December 31, 2017. The multi-employer contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years 2019, 2018 and 2017.

The following table contains information about the Company’s multi-employer pension plans:

FIP/RP Pension Protection Status

EIN / Pension Act Zone Status Pending/ Multi-Employer Contributions Surcharge Pension Fund Plan Number 2019 2018 Implemented 2019 2018 2017 Imposed (5) SO CA UFCW Unions & Food Employers Joint Pension Trust Fund(1)(2) 95-1939092 - 001 Yellow Yellow Implemented $ 75 $ 71 $ 66 No

Desert States Employers & UFCW Unions Pension Plan(1) 84-6277982 - 001 Green Green No 19 19 18 No

Sound Retirement Trust (formerly Retail Clerks Pension Plan)(1)(3) 91-6069306 – 001 Yellow Green Implemented 25 23 20 No

Rocky Mountain UFCW Unions and Employers Pension Plan(1) 84-6045986 - 001 Green Green No 23 20 19 No

Oregon Retail Employees Pension Plan(1) 93-6074377 - 001 Green Green No 9 9 9 No

Bakery and Confectionary Union & Industry International Pension Fund(1) 52-6118572 - 001 Red Red Implemented 10 11 11 No

Retail Food Employers & UFCW Local 711 Pension(1) 51-6031512 - 001 Yellow Yellow Implemented 10 10 10 No

United Food & Commercial Workers Intl Union — Industry Pension Fund(1)(4) 51-6055922 - 001 Green Green No 32 32 33 No

Western Conference of Teamsters Pension Plan 91-6145047 - 001 Green Green No 34 34 34 No

Central States, Southeast & Southwest Areas Pension Plan 36-6044243 - 001 Red Red Implemented — 18 492 No

UFCW Consolidated Pension Plan(1) 58-6101602 – 001 Green Green No 174 55 201 No IBT Consolidated Pension Plan(1)(6) 82-2153627 - 001 N/A N/A No 33 37 — No Other(7) 17 19 41 Total Contributions $ 461 $ 358 $ 954

(1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension funds.

(2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2019 and March 31, 2018. (3) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at September 30, 2018 and September 30, 2017. (4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2018 and June 30, 2017. (5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is

not in compliance with a rehabilitation plan. As of February 1, 2020, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund.

(6) The plan was formed after 2006, and therefore is not subject to zone status certifications. (7) The increase in 2017, compared to 2019 and 2018, in the "Other" funds is due primarily to withdrawal settlement payments for certain multi-

employer funds in 2017.

The following table describes (a) the expiration date of the Company’s collective bargaining agreements and (b) the expiration date of the Company’s most significant collective bargaining agreements for each of the material multi-employer funds in which the Company participates.

Expiration Date Most Significant Collective of Collective Bargaining Agreements(1) Bargaining (not in millions)

Pension Fund Agreements Count Expiration SO CA UFCW Unions & Food Employers Joint Pension Trust Fund June 2020 to March 2022 2 June 2020 to March 2022 UFCW Consolidated Pension Plan March 2020 to May 2023 4 April 2020 to August 2022 Desert States Employers & UFCW Unions Pension Plan October 2020 to February 2022 1 October 2020 Sound Retirement Trust (formerly Retail Clerks Pension Plan) April 2020 to February 2023 4 May 2022 to August 2022 Rocky Mountain UFCW Unions and Employers Pension Plan January 2022 1 January 2022 Oregon Retail Employees Pension Plan (2) August 2021 to March 2023 3 August 2021 to July 2022 Bakery and Confectionary Union & Industry International Pension Fund December 2019 (2) to July 2022 4 May 2020 to October 2021

Retail Food Employers & UFCW Local 711 Pension June 2017 (2) to April 2020 1 March 2019 (2) United Food & Commercial Workers Intl Union — Industry Pension Fund November 2019 (2) to August 2023 2 July 2023 to August 2023

Western Conference of Teamsters Pension Plan September 2020 to April 2022 4 September 2020 to April 2022 International Brotherhood of Teamsters Consolidated Pension Fund September 2019 (2) to September 2022 3 September 2019 (2) to September 2022

(1) This column represents the number of significant collective bargaining agreements and their expiration date for each of the Company’s pension funds listed above. For purposes of this table, the “significant collective bargaining agreements” are the largest based on covered employees that, when aggregated, cover the majority of the employees for which we make multi-employer contributions for the referenced pension fund.

(2) Certain collective bargaining agreements for each of these pension funds are operating under an extension.

Based on the most recent information available to it, the Company believes the present value of actuarial accrued liabilities in most of these multi-employer plans substantially exceeds the value of the assets held in trust to pay benefits. Moreover, if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could trigger a substantial withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be reasonably estimated.

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits to active and retired participants. Total contributions made by the Company to these other multi-employer health and welfare plans were approximately $1,252 in 2019, $1,282 in 2018 and $1,247 in 2017.

17. HELD FOR SALE AND DISPOSAL OF BUSINESS

During the second quarter of 2018, the Company announced that as a result of a review of its assets, the Company had decided to explore strategic alternatives for its Turkey Hill Dairy business, including a potential sale. Additionally during the fourth quarter of 2018, the Company announced that it had entered into a definitive agreement to sell its You Technology business.

The following table presents information related to the major classes of assets and liabilities of all business that were classified as assets and liabilities held for sale in the Consolidated Balance Sheet as of February 2, 2019:

February 2, (In millions) 2019 Assets held for sale: Cash and temporary cash investments $ 1 Receivables 64 FIFO inventory 21 LIFO reserve (1) Prepaid and other current assets 3 Property, plant and equipment, net 77 Goodwill 1

Total assets held for sale $ 166

Liabilities held for sale: Trade accounts payable $ 26 Accrued salaries and wages 8 Other current liabilities 17

Total liabilities held for sale $ 51

On March 13, 2019, the Company completed the sale of its You Technology business to Inmar for total consideration of $565, including $396 of cash and $64 of preferred equity received upon closing. The Company is also entitled to receive other cash payments of $105 over five years. The transaction includes a long-term service agreement for Inmar to provide the Company digital coupon services. The sale resulted in a gain of $70, $52 net of tax, which is included in “Gain on sale of businesses” in the Consolidated Statement of Operations. The Company recorded the fair value of the long-term service agreement of $358 in “Other current liabilities” and “Other long-term liabilities” in the Consolidated Balance Sheets and such amount is being recorded as sales over the 10-year agreement.

On April 26, 2019, the Company completed the sale of its Turkey Hill Dairy business to an affiliate of Peak Rock Capital for total proceeds of $225. The sale resulted in a gain of $106, $80 net of tax, which is included in “Gain on sale of businesses” in the Consolidated Statements of Operations.

In the third quarter of 2019, as a result of a portfolio review, the Company decided to divest its interest in Lucky’s Market. The Company recognized an impairment charge of $238 in the third quarter of 2019, which is included in OG&A in the Consolidated Statements of Operations. The impairment charge consists of property, plant and equipment of $200, which includes $40 of finance lease assets; goodwill of $19; operating lease assets of $11; and other charges of $8. The amount of the impairment charge attributable to The Kroger Co. is $131, $100 net of tax, with the remaining amount attributable to the minority interest. Subsequently, the decision was made by Lucky’s Market to file for bankruptcy in January 2020, which led the Company to fully write off the value of its investment and deconsolidate Lucky’s Market from the consolidated financial statements. This resulted in an additional non-cash charge of $174, $125 net of tax, in the fourth quarter of 2019, which is included in OG&A in the Consolidated Statements of Operations. The amount of the total 2019 charge attributable to The Kroger Co. is $305, $225 net of tax. The Company maintains liabilities associated with certain property related guarantees that will result in the Company making payments to settle these over time.

18. RECENTLY ADOPTED ACCOUNTING STANDARDS

On February 4, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which superseded previous revenue recognition guidance. Topic 606 is a comprehensive new revenue recognition model that requires a company to recognize revenue when goods and services are transferred to the customer in an amount that is proportionate to what has been delivered at that point and that reflects the consideration to which the company expects to be entitled for those goods or services. The Company adopted the standard using a modified retrospective approach with the adoption primarily involving the evaluation of whether the Company acts as principal or agent in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company will continue to record revenue and related costs on a gross basis for the arrangements. The adoption of the standard did not have a material effect on the Company’s Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows.

On February 3, 2019, the Company adopted ASU 2016-02, “Leases,” which provides guidance for the recognition of lease agreements. The Company adopted the standard using the modified retrospective approach, which provides a method for recording existing leases at adoption that approximates the results of a full retrospective approach. In addition, the Company elected the transition package of practical expedients permitted within the standard, which allowed it to carry forward the historical lease classification, and applied the transition option which does not require application of the guidance to comparative periods in the year of adoption.

The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $6,800 and $7,000, respectively, as of February 3, 2019. Included in the measurement of the new lease assets is the reclassification of certain balances including those historically recorded as prepaid or deferred rent and favorable and unfavorable leasehold interests. Several other asset and liability line items in the Consolidated Balance Sheets were also impacted by immaterial amounts. The adoption of this standard also resulted in a change in naming convention for leases classified historically as capital leases. These leases are now referred to as finance leases. The adoption of this standard did not materially affect the Company’s consolidated net earnings or cash flows.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, "Income Statement— Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This amendment allows companies to reclassify stranded tax effects resulting from the Tax Act from accumulated other comprehensive income (AOCI) to retained earnings. The Company adopted ASU 2018-02 on February 3, 2019, which resulted in a decrease to AOCI and an increase to accumulated earnings of $146, primarily related to deferred taxes previously recorded for pension and other postretirement benefits and cash flow hedges. The adoption of this standard did not have an effect on the Company’s consolidated results of operations or cash flows.

19. RECENTLY ISSUED ACCOUNTING STANDARDS

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” Under the new standard, implementation costs related to a cloud computing arrangement will be deferred or expensed as incurred, in accordance with the existing internal-use software guidance for similar costs. The new standard also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense. This guidance will be effective for the Company in the first quarter of the Company’s fiscal year ending January 30, 2021. The amendments may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact that adoption of this guidance will have on its Consolidated Financial Statements and related disclosures.

20. QUARTERLY DATA (UNAUDITED)

The two tables that follow reflect the unaudited results of operations for 2019 and 2018.

Quarter First Second Third Fourth Total Year

2019 (16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks) (52 Weeks) Sales $ 37,251 $ 28,168 $ 27,974 $ 28,893 $ 122,286

Operating Expenses Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 28,983 22,007 21,798 22,507 95,294

Operating, general and administrative 6,314 4,811 5,097 4,985 21,208 Rent 274 200 201 209 884 Depreciation and amortization 779 591 624 655 2,649

Operating profit 901 559 254 537 2,251

Other income (expense) Interest expense (197) (130) (137) (140) (603) Non-service component of company sponsored pension plan costs 3 (4) (1) 2 —

Mark to market gain (loss) on Ocado securities 106 (45) 106 (9) 157 Gain on sale of business 176 — — — 176

Net earnings before income tax expense 989 380 222 390 1,981

Income tax expense 226 93 79 71 469

Net earnings including noncontrolling interests 763 287 143 319 1,512 Net loss attributable to noncontrolling interests (9) (10) (120) (8) (147)

Net earnings attributable to The Kroger Co. $ 772 $ 297 $ 263 $ 327 $ 1,659

Net earnings attributable to The Kroger Co. per basic common share $ 0.96 $ 0.37 $ 0.32 $ 0.40 $ 2.05

Average number of shares used in basic calculation 798 800 802 797 799

Net earnings attributable to The Kroger Co. per diluted common share $ 0.95 $ 0.37 $ 0.32 $ 0.40 $ 2.04

Average number of shares used in diluted calculation 805 805 807 804 805

Dividends declared per common share $ 0.14 $ 0.16 $ 0.16 $ 0.16 $ 0.62

Annual amounts may not sum due to rounding.

Net earnings for the first quarter of 2019 include charges to OG&A expenses of $59, $44 net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund and a reduction to OG&A of $24, $18 net of tax, for the revaluation of Home Chef contingent consideration. Gains in other income of $106, $80 net of tax, related to the sale of Turkey Hill Dairy; $70, $52 net of tax, related to the sale of You Technology; and $106, $80 net of tax, for the mark to market gain on Ocado Group plc (“Ocado”) securities.

Net earnings for the second quarter of 2019 include charges to OG&A of $27, $22 net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund and $2, $2 net of tax, for the revaluation of Home Chef contingent consideration. A charge in other income (expense) of $45, $36 net of tax, for the mark to market loss on Ocado securities.

Net earnings for the third quarter of 2019 include a charge to OG&A of $45, $35 net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund; $80, $61 net of tax, for a severance charge and related benefits; $238 including $131 attributable to the Kroger Co., $100 net of tax, for impairment of Lucky’s Market; and $4, $3 net of tax, for the revaluation of Home Chef contingent consideration. A gain in other income of $106, $81 net of tax, for the mark to market gain on Ocado securities.

Net earnings for the fourth quarter of 2019 include charges to OG&A of $4, $3 net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds; $174, $125 net of tax, for deconsolidation and impairment of Lucky’s Market; $52, $37 net of tax, for transformation costs, primarily including 35 planned store closures; and a reduction to OG&A of $51, $36 net of tax, for the revaluation of Home Chef contingent consideration. Loss in other income (expense) of $9, $6 net of tax, for the mark to market loss on Ocado securities.

Quarter First Second Third Fourth Total Year

2018 (16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks) (52 Weeks) Sales $ 37,722 $ 28,014 $ 27,831 $ 28,286 $ 121,852

Operating Expenses Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 29,419 21,976 21,753 21,955 95,103

Operating, general and administrative 6,257 4,711 4,661 5,155 20,786 Rent 276 204 200 204 884 Depreciation and amortization 741 574 570 581 2,465

Operating profit 1,029 549 647 391 2,614

Other income (expense) Interest expense (192) (144) (142) (142) (620) Non-service component of company sponsored pension plan costs (10) (4) (6) (7) (26)

Mark to market gain (loss) on Ocado securities 36 216 (100) 75 228 Gain on sale of business 1,771 11 — — 1,782

Net earnings before income tax expense 2,634 628 399 317 3,978

Income tax expense 616 127 91 66 900

Net earnings including noncontrolling interests 2,018 501 308 251 3,078 Net loss attributable to noncontrolling interests (8) (7) (9) (8) (32)

Net earnings attributable to The Kroger Co. $ 2,026 $ 508 $ 317 $ 259 $ 3,110

Net earnings attributable to The Kroger Co. per basic common share $ 2.39 $ 0.63 $ 0.39 $ 0.32 $ 3.80

Average number of shares used in basic calculation 839 797 797 798 810

Net earnings attributable to The Kroger Co. per diluted common share $ 2.37 $ 0.62 $ 0.39 $ 0.32 $ 3.76

Average number of shares used in diluted calculation 846 805 807 806 818

Dividends declared per common share $ 0.125 $ 0.140 $ 0.140 $ 0.140 $ 0.545

Annual amounts may not sum due to rounding.

Net earnings for the first quarter of 2018 include a reduction to OG&A expenses of $13, $10 net of tax, for adjustments to obligations related to certain local unions withdrawing from the Central States multi-employer pension fund, a reduction to depreciation and amortization expenses of $14, $11 net of tax, related to held for sale assets, gains in other income (expense) of $1,771, $1,352 net of tax, related to the sale of the convenience store business unit and $36, $27 net of tax, for the mark to market gain on Ocado securities.

Net earnings for the second quarter of 2018 include gains in other income (expense) of $11, $8 net of tax, related to the sale of the convenience store business unit and $216, $164 net of tax, for the mark to market gain on Ocado securities.

Net earnings for the third quarter of 2018 include a loss in other income (expense) of $100, $77 net of tax, for the mark to market loss on Ocado securities.

Net earnings for the fourth quarter of 2018 include charges to OG&A expenses of $168, $131 net of tax, for obligations related to certain local unions withdrawing from the Central States multi-employer pension fund, $33, $26 net of tax, for the revaluation of contingent consideration and $42, $33 net of tax, for an impairment of financial instrument, a gain in other income (expense) of $75, $59 net of tax, for the mark to market gain on Ocado securities.

21. SUBSEQUENT EVENTS

On March 18, 2020, the Company proactively borrowed $1,000 from the revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the coronavirus pandemic. Cash and temporary cash investments immediately following the borrowing were approximately $2,336.

In anticipation of future debt refinancing, the Company, subsequent to February 1, 2020, entered into three forward-starting interest rate swap agreements with a maturity date of January 2021 with an aggregate notional amount totaling $150.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

As of February 1, 2020, our Chief Executive Officer and Chief Financial Officer, together with a disclosure review committee appointed by the Chief Executive Officer, evaluated the Company’s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of February 1, 2020.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There was no change in our internal control over financial reporting during the fiscal quarter ended February 1, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of February 1, 2020.

The effectiveness of the Company’s internal control over financial reporting as of February 1, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which can be found in Item 8 of this Form 10-K.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item 10 with respect to executive officers is included within Item 1 in Part I of this Annual Report on Form 10-K under the caption “Information about our Executive Officers.” The information required by this Item not otherwise set forth in Part I above is set forth under the headings Election of Directors, Information Concerning the Board of Directors- Committees of the Board, Information Concerning the Board of Directors- Audit Committee, Information Concerning the Board of Directors- Code of Ethics and Section 16(a) Beneficial Ownership Reporting Compliance in the definitive proxy statement to be filed by the Company with the Securities and Exchange Commission within 120 days after the end of the fiscal year 2019 (the “2020 proxy statement”) and is hereby incorporated by reference into this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is set forth in the sections entitled Compensation Discussion and Analysis, Compensation Committee Report, and Compensation Tables in the 2020 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table provides information regarding shares outstanding and available for issuance under our existing equity compensation plans.

Equity Compensation Plan Information

(a) (b) (c) Number of securities

remaining available for future Number of securities to Weighted-average issuance under equity be issued upon exercise exercise price of compensation plans of outstanding options, outstanding options, (excluding securities

Plan Category warrants and rights (1) warrants and rights (1) reflected in column (a))

Equity compensation plans approved by security holders 35,135,064 $ 24.52 57,586,095

Equity compensation plans not approved by security holders — $ — —

Total 35,135,064 $ 24.52 57,586,095

(1) The total number of securities reported includes the maximum number of common shares, 2,936,351, that may be issued under performance units granted under our long-term incentive plans. The nature of the awards is more particularly described in the Compensation Discussion and Analysis section of the definitive 2020 proxy statement and is hereby incorporated by reference into this Form 10-K. The weighted-average exercise price in column (b) does not take these performance unit awards into account. Based on historical data, or in the case of the awards made in 2017 through 2019 and earned in 2019 the actual payout percentage, our best estimate of the number of common shares that will be issued under the performance unit grants is approximately 2,024,683.

The remainder of the information required by this Item is set forth in the section entitled Beneficial Ownership of Common Stock in the 2020 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

This information required by this Item is set forth in the sections entitled Related Person Transactions and Information Concerning the Board of Directors-Independence in the 2020 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is set forth in the section entitled Ratification of the Appointment of Kroger’s Independent Auditor in the 2020 proxy statement and is hereby incorporated by reference into this Form 10-K.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)1. Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 1, 2020 and February 2, 2019 Consolidated Statements of Operations for the years ended February 1, 2020, February 2, 2019 and February 3, 2018 Consolidated Statements of Comprehensive Income for the years ended February 1, 2020, February 2, 2019 and February 3, 2018 Consolidated Statements of Cash Flows for the years ended February 1, 2020, February 2, 2019 and February 3, 2018 Consolidated Statement of Changes in Shareholders’ Equity for the years ended February 1, 2020, February 2, 2019 and February 3, 2018 Notes to Consolidated Financial Statements

(a)2. Financial Statement Schedules: There are no Financial Statement Schedules included with this filing for the reason that they are not applicable or are not required or the information is included in the financial statements or notes thereto.

(a)3.(b) Exhibits

3.1 Amended Articles of Incorporation are hereby incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 22, 2010, as amended by the Amendment to Amended Articles of Incorporation, which is hereby incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 23, 2015.

3.2 The Company’s Regulations are hereby incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 27, 2019.

4.1 Instruments defining the rights of holders of long-term debt of the Company and its subsidiaries are not filed as Exhibits because the amount of debt under each instrument is less than 10% of the consolidated assets of the Company. The Company undertakes to file these instruments with the SEC upon request.

4.2 Description of Securities

10.1* The Kroger Co. Deferred Compensation Plan for Independent Directors. Incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016.

10.2* The Kroger Co. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.4 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.

10.3* The Kroger Co. 401(k) Retirement Savings Account Restoration Plan. Incorporated by reference to Exhibit 10.4 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

10.4* The Kroger Co. Supplemental Retirement Plans for Certain Retirement Benefit Plan Participants. Incorporated by reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

10.5* The Kroger Co. Employee Protection Plan dated January 13, 2017. Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017.

10.6 Amended and Restated Credit Agreement dated August 29, 2017, among The Kroger Co., the initial lenders named therein, and Bank of America, N.A. and Wells Fargo Bank National Association, as co-administrative agents, Citibank, N.A., as syndication agent, and Mizuho Bank, Ltd. and U.S. Bank National Association, as co- documentation agents, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 29, 2017.

10.7* The Kroger Co. 2008 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on June 26, 2008.

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10.8* The Kroger Co. 2011 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on June 23, 2011.

10.9* The Kroger Co. 2014 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on July 29, 2014.

10.10* The Kroger Co. 2019 Long-Term Incentive Plan. Incorporated by reference to Exhibit 99.1 of the Company’s Form S-8 filed with the SEC on June 28, 2019.

10.11* Form of Restricted Stock Grant Agreement under Long-Term Incentive Cash Bonus Plans.

10.12* Form of Restricted Stock Grant Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by reference to Exhibit 10.9 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

10.13* Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plan.

10.14* Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 24, 2008.

10.15* Form of Performance Unit Award Agreement under Long-Term Incentive and Cash Bonus Plans.

10.16* Form of Performance Unit Award Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended August 12, 2017.

10.17* Form of Performance Unit Award Under Long-Term Incentive Plans. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended August 18, 2018.

10.18* The Kroger Co. 2015 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 23, 2015.

10.19* The Kroger Co. 2016 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016.

10.20* The Kroger Co. 2017 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 20, 2017.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Independent Registered Public Accounting Firm.

24.1 Powers of Attorney.

31.1 Rule 13a-14(a)/15d-14(a) Certification.

31.2 Rule 13a-14(a)/15d-14(a) Certification.

32.1 Section 1350 Certifications.

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* Management contract or compensatory plan or arrangement.

ITEM 16. FORM 10-K SUMMARY

Not Applicable.

101

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE KROGER CO.

Dated: April 1, 2020 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities indicated on the 1st April 2020.

/s/ Gary Millerchip Senior Vice President and Chief Financial Officer Gary Millerchip (principal financial officer)

/s/ Todd A. Foley Vice President & Corporate Controller Todd A Foley (principal accounting officer)

* Director Nora A. Aufreiter * Director Anne Gates * Director Susan J. Kropf * Director Karen Hoguet * Chairman of the Board and Chief Executive Officer W. Rodney McMullen * Director Jorge P. Montoya * Director Clyde R. Moore * Director James A. Runde * Director Ronald L. Sargent * Director Bobby S. Shackouls * Director Mark S. Sutton * Director Ashok Vemuri

* By: /s/ Christine S. Wheatley Christine S. Wheatley Attorney-in-fact

Exhibit 4.2

DESCRIPTION OF COMMON STOCK

General

Our Amended Articles of Incorporation, as amended (our “Articles”), authorize us to issue 2,000,000,000 common shares, $1.00 par value per share (“common shares”). As of March 25, 2020, there were outstanding 777,891,827 common shares.

The principal stock exchange on which our common shares is listed is the New York Stock Exchange under the symbol “KR.”

The following description of the terms of our common shares is not complete and is qualified in its entirety by reference to our Articles and our Regulations, both of which are exhibits to our Annual Reports on Form 10-K.

Rights of Common Shareholders

All outstanding common shares are validly issued, fully paid and nonassessable. Subject to rights of preferred shareholders if any preferred shares are issued and outstanding, holders of common shares:

 are entitled to any dividends validly declared;

 will share ratably in our net assets in the event of a liquidation; and

 are entitled to one vote per share.

The common shares have no conversion rights. Holders of common shares have no preemption, subscription, redemption, or call rights related to those shares.

Board of Directors

The number of members on the Board of directors shall be determined by the Board of directors or by the affirmative vote of the holders of 75% of the shares which are entitled to vote on such proposal.

All of the directors or any individual director may be removed by the holders of 75% of the shares then entitled to vote at an election of directors, but only for cause.

Amendments

Our regulations may be amended or repealed or new regulations may be adopted at any meeting of shareholders called for that purpose or without such meeting by the affirmative vote or consent of the holders of record of shares entitling them to exercise a majority of the voting power on such proposal, except that the affirmative vote or consent of the holders of record of common shares entitling them to exercise 75% of the voting power on such proposal shall be required to amend, alter, change or repeal Sections 1 or 5 of Article II or Article VII of our regulations, or to amend, alter, change or repeal our regulations in any way inconsistent with the intent of the foregoing provisions.

Certain Provisions of Ohio Law and the Amended Articles of Incorporation and Regulations

There are provisions in our Articles and our Regulations and in statutory provisions of Ohio law that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or changes in management with respect to us, including transactions in which our shareholders might otherwise receive a premium over the then current market prices for their shares.

Amended Articles of Incorporation and Regulations

Our Articles and our Regulations contain various provisions that may have the effect, either alone or in combination with each other, of making more difficult or discouraging a business combination or an attempt to obtain control of us that is not approved by the Board of directors. Under such provisions, the following actions shall require the affirmative vote of 75% of the outstanding Voting Shares (as defined in our Articles):

i. any merger or consolidation of the Company or any Subsidiary (as defined in our Articles) with or into (i) any Interested Shareholder (as defined in our Articles) or (ii) any other corporation (whether or not itself an Interested Shareholder) which, after such merger or consolidation, would be an Affiliate (as defined in our Articles) of an Interested Shareholder;

ii. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the Company or any Subsidiary having an aggregate fair market value of $15,000,000 or more;

iii. the issuance or transfer by the Company or any Subsidiary (in one transaction or a series of related transactions) of any securities or options, warrants or rights to acquire securities, of the Company or any Subsidiary, to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $15,000,000 or more;

iv. the adoption of any plan or proposal for the complete or partial liquidation or dissolution of the Company as a result of which an Interested Shareholder would receive any assets of the Company other than cash;

v. any reclassification of securities (including any reverse stock split), or recapitalization of the Company, or any merger or consolidation of the Company with any of its Subsidiaries, or any similar transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Company or any Subsidiary which is directly or indirectly beneficially owned by any Interested Shareholder; or

vi. any agreement, contract or other arrangement which upon consummation will result in any of the transactions described above.

Ohio Law

The following summarizes Chapter 1704 of the Ohio Revised Code, which may have the effect of prohibiting, raising the costs of, or otherwise impeding, a change of control by us, whether by merger, consolidation or sale of assets or stock (by tender offer or otherwise), or by other methods. Chapter 1704 provides generally that any person who has beneficial ownership of 10% or more of a corporation’s voting stock (thereby being an “interested shareholder”) may not engage in a wide range of business combinations with the corporation for a period of three years following the date the person became an interested shareholder, unless the directors of the corporation have approved the transaction or the interested shareholder’s acquisition of shares of the corporation, in either case, prior to the date the interested shareholder became an interested shareholder of the corporation. After the three-year period, business combinations between the corporation and the interested shareholder are prohibited unless certain fair price provisions are complied with or the shareholders of the corporation approve the transaction by the affirmative vote of two-thirds of the voting power of the corporation, including at least a majority of the disinterested shareholders. These restrictions on interested shareholders do not apply under certain circumstances, including when a person becomes an “interested shareholder” only because a corporation has repurchased some of its voting stock. Action on any matter that requires the affirmative vote or consent of a larger portion than the holders of a majority of the shares entitled to vote thereon or consent thereto, may be taken by the affirmative vote or consent of the holders of a majority of shares entitled to vote thereon or consent thereto.

Exhibit 10.11

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

The date of this document is <Date of Grant>.

THE KROGER CO. RESTRICTED STOCK AGREEMENT

Pursuant to a Long‑Term Incentive Plan (the “Plan”), The Kroger Co. (“we” or “us”) hereby grants

<Number of Shares Granted> shares of restricted stock (the “shares”) to the undersigned grantee (“you”) on <Date of Grant> (the “grant date”).

1. The shares will be issued in your name, or in the name of an agent or plan administrator on your behalf, but will be held by us. The shares will be subject to, and any certificate issued to evidence the shares will bear, the following legend:

“This certificate and the shares of stock represented hereby are subject to the terms and conditions (including the risks of forfeiture and restrictions against transfer) contained in a Long‑Term Incentive Plan of The Kroger Co. and an Agreement entered into between the Plan participant and The Kroger Co. Release from such terms and conditions will be made only in accordance with the provisions of the Plan and the Agreement, a copy of each of which is on file in the office of the Secretary of The Kroger Co. or The Kroger Co.’s plan administrator.” 2. Neither the shares, the right to vote the shares or the right to receive dividends thereon may

be sold, assigned, transferred, pledged, hypothecated or otherwise transferred or encumbered by you during the restricted period. You will have all the other rights of a shareholder. Dividends on the restricted shares will be treated as compensation for tax purposes, unless a Section 83(b) election is made in which case they will be treated as dividends for tax purposes, but in either case will not be considered as earnings for purposes of calculating retirement benefits.

3. Unless and until the restrictions on the shares lapse, the shares will be forfeited by you if your employment by us ceases for any reason other than

(a) death or disability, as determined by the Committee as defined in the Plan; (b) your “Retirement,” as defined below; or (c) your employment is terminated without “Cause” or by you for “Good Reason” within two

years after a “Change in Control,” all as defined below.

At the time of either of the foregoing (a) or (c), the restrictions will lapse, the shares no longer will be subject to the restrictions, and any new certificates issued to you or the your legal representative for all shares theretofore subject to risk of forfeiture will be free of the foregoing legend. Subject to the provisions of Paragraphs 11 and 12, below, upon your Retirement the restrictions on your shares will continue to lapse in accordance with the vesting schedule outlined in Paragraph 7, and upon lapsing of those restrictions those shares will no longer be subject to the risk of forfeiture and will be free of the restrictive legend.

4. For purposes of Paragraph 3, the following definitions shall apply:

(i) “Change in Control” means:

(a) any Person, excluding Kroger, any of its Affiliates and any employee benefit plan of

Kroger or any of its Affiliates, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of Kroger representing 30% or more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors;

(b) consummation of a reorganization, merger, consolidation or sale or other disposition

of all or substantially all of the assets of the Company and its Affiliates (a “Business Combination”), in each case, unless, following such Business Combination, Persons that were the beneficial owners of outstanding voting securities entitled to vote generally in the election of directors of Kroger immediately prior to such Business Combination beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which, as a result of such Business Combination, owns all or substantially all of the Company and its Affiliates or their assets either directly or through one or more subsidiaries or affiliates) in substantially the same proportions as their ownership of such securities immediately prior to such Business Combination;

beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof; provided that, any individual becoming a director of Kroger whose appointment or election by the Board or nomination for election by Kroger’s shareholders was approved or recommended by a vote of at least two-thirds of the Incumbent Directors shall also be considered an Incumbent Director; or

(d) the approval by the shareholders of Kroger of a complete liquidation or dissolution of

the Company.

(ii) “Affiliate” means a corporation, partnership, business trust, limited liability company, or other form of business organization at least 50% of the total combined voting power of all classes of stock or other equity interests of which is owned by Kroger, either directly or indirectly; (iii) “Kroger” and “Company” means the parent company, The Kroger Co.;

(iv) “Person” means an individual, corporation, partnership, association, trust, unincorporated organization, limited liability company or other legal entity. All references to Person shall include an individual Person or group (as defined in Rule 13d-5 under the Exchange Act) of persons; (v) “Board” means the Board of Directors of Kroger; (vi) “Good Reason” means:

(a) without your consent

(i) A material diminution in your base compensation; (ii) A material diminution in your authority, duties, or responsibilities; (iii) A material change in the geographic location at which you must perform services (this shall be deemed to occur if and only if your principal place of work is relocated more than 50 miles from your principal place of work immediately before a Change in Control); or (iv) Any action or inaction by Kroger which results in employee benefits, perquisites and fringe benefits that, in the aggregate, are materially less favorable than those provided to you immediately prior to the Change in Control.

(b) You shall not have Good Reason for a termination of employment unless:

(i) the condition constituting Good Reason occurs during the two years following a Change in Control; (ii) you provide written notice to the Committee of the existence of the condition constituting Good Reason within 90 days of the initial existence of the condition constituting Good Reason and the Company is given 30 days to cure such condition; and (iii) you incur a termination of employment no later than 120 days following the end of the two years after a Change in Control.

(vii) “Cause” means your:

(a) failure to substantially perform your duties (other than by reason of disability) with respect to Kroger or an Affiliate, (b) breach of fiduciary duty to Kroger or an Affiliate,

(c) dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect to the business or affairs of Kroger or an Affiliate, (d) willful violation of the policies of Kroger or an Affiliate after receiving written notice of such violation, or (e) conviction of a felony or crime involving moral turpitude.

All determinations of Cause hereunder shall be made by the Committee and shall be binding for all

purposes hereunder.

You acknowledge and agree that the foregoing definitions of “Change in Control,” “Cause,” and “For Good Reason” are subject to amendment from time to time in relevant Kroger plan documents and that if, as of a given time, the definitions of “Change in Control,” “Cause,” or “Good Reason” have been amended in relevant Kroger plan documents and differs from the ones in this Agreement, those amended definitions shall supersede, take the place of and be construed and deemed to supersede and take the place of the definitions of “Change of Control,” “Cause,” or “Good Reason” contained within this Agreement. You will, in the event of such an amendment, be informed of the amendment.

5. For purposes of this Agreement, a Retirement will be deemed to occur if your employment by or service to Kroger voluntarily terminates after reaching age 62 with at least five years of service at Kroger and provided that you are within the employment of or are a director providing service to Kroger on the first anniversary of the date of grant, and provided it is on terms deemed satisfactory to the Committee in its sole discretion.

6. This Agreement does not give you any right of continued employment by or to continue to

provide service to Kroger or its subsidiaries. It does not affect your right or our right to terminate your employment or service at any time.

7. The restrictions will lapse on the later to occur of (i) the date on which you formally accept this Agreement in the manner that we advise you in writing, and (ii) the passage of the period of time, known as the vesting period, as follows:

Annual Anniversary of Date of Grant You Are Vested In: 1st 25% of the shares 2nd 25% of the shares 3rd 25% of the shares 4th 25% of the shares

After the restrictions have lapsed, the shares thereafter no longer will be subject to the restrictions, and any new certificate issued to you or your representative will be free of the foregoing legend.

In the event that you fail to accept this Agreement within one year from the grant date, we will accept it on your behalf, and your failure to notify us in writing directed to the Benefits Department, The Kroger Co., 1014 Vine Street, Cincinnati, OH 45202, of your desire to reject this Agreement will be deemed to be your express authority for us to accept this Agreement on your behalf.

8. For purposes of this Agreement, the fair market value of a share of common stock is the amount determined pursuant to a reasonable method adopted by the Committee. If no sales are made on that date, the Committee will use the most recent prior date for which sales are reported.

9. You or your representative will be responsible to satisfy all tax obligations, if any, prior to the

lapsing of the restrictions. If you or your representative do not satisfy those obligations through a cash payment to our stock option administrator or as we otherwise direct, on or before the date on which the restrictions lapse, we are authorized and directed to retain that number of shares with a fair market value, as defined in the prospectus for the Plan and this Agreement, equal to the tax obligations due, on the date of the release. You or your representative will remain liable for any tax obligations remaining in excess of the amounts so withheld.

10. Any shares to be issued under this Agreement, at our election, may be issued in certificate

form or may be maintained in book-entry form and not represented by a certificate. Shares may be issued directly in your name or in the name of a designated agent or plan administrator on your behalf.

11. If your employment terminates due to Retirement, notwithstanding anything contained in

Paragraph 3 to the contrary, in the event that while this Agreement is outstanding you provide services as an employee, director, consultant, agent or otherwise (professionally engaged in any respect – directly or indirectly) to or with any person, company or entity engaged in any business (whether brick-and-mortar or online) that within the United States sells at retail groceries, food, drugs, health or beauty care items, motor fuels, or pharmaceuticals, or manufactures food/beverage products that are sold at retail, or conducts data analytics activity, financial services activity, or any other business activity of any kind that is in competition with any business line that is conducted by Kroger or is under active consideration by Kroger at any time during the last six months of your employment with Kroger, in each case, this Agremeent expires and any shares for which the restrictions have not then lapsed are immediately forfeited.

12. Notwithstanding anything contained in Paragraph 3 to the contrary, during your employment

or thereafter, you or anyone acting at your behest or on your behalf shall not in any respect divulge or disclose in any way to any third party any Kroger trade secrets, business plans, strategies or policies, financial or marketing information, sales or market share information, vendor or supplier information, contractual information, or other confidential company information of any kind whatsoever (that is, material business-related information not already disclosed by the company, or any

other material non-public company information). In the event of a violation of the foregoing provision, this Agreement expires and any shares for which the restrictions have not lapsed are forfeited. You further acknowledge and agree that the foregoing expiration and forfeiture is not the exclusive or sole consequence or remedy in the event of a divulgence or disclosure as described above in this Paragraph but rather one among others, and that in addition to the foregoing Kroger fully reserves and retains the right to pursue all other remedies available or potentially available to it as a matter of law or equity.

13. This Agreement is governed by the laws of the state of Ohio. The parties have executed this Agreement on the date of grant set forth above.

The Kroger Co. By Rodney McMullen (“you”) <Participant’s Name>

Exhibit 10.13

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

The date of this document is <Date of Grant>.

The Kroger Co., an Ohio corporation with its principal place of business at Cincinnati, Ohio, (“we” or “us”) has adopted a Long-Term Incentive Plan for employees and directors of Kroger and its subsidiaries ("Kroger"). The plan is administered by the Committee as defined in the plan. The Committee determines the employees and directors who are granted awards and the types and amounts of awards.

The plan provides that the terms of grants are determined by the Committee and will be set forth in this

Agreement. The Committee has decided to grant nonqualified stock options to purchase <Number of Shares Granted>

Kroger common shares to <Name of Participant> (“you”) on the date of this document <Date of Grant> (the “date of grant”).

In consideration of the services you have provided and that you will provide, we grant you the option to

purchase Kroger common shares, subject to the terms of the plan and the following specific terms and conditions:

1. The option price of $<Grant Price> is the Fair Market Value of a Kroger common share on the date of grant of the option. Fair Market Value for purposes of establishing the option price is the closing price of Kroger common shares reported on the date of grant on the New York Stock Exchange. For all other purposes, Fair Market Value of a common share is the amount determined pursuant to a reasonable method adopted by the Committee. If no sales are made on that date, the Committee will use the most recent prior date for which sales are reported.

2. Except as otherwise provided in Paragraph 7 or Paragraph 8 below, you have no right to exercise

any part of this option until the later of (i) your formal acceptance of this Agreement in the manner that we have advised you in writing, and (ii) the passage of the period of time, known as the vesting period, as follows:

Annual Anniversary of Date of Grant You Are Vested In: Expiration Date 1 25% of the options ExpireDate 2 25% of the options ExpireDate 3 25% of the options ExpireDate 4 25% of the options ExpireDate

If your employment by or service to Kroger is terminated prior to this option becoming exercisable, other than as set forth in Paragraph 7, all rights under this Agreement will terminate.

3. You cannot transfer this option except by will or the laws of descent and distribution. It is exercisable, during your lifetime, only by you, or, in the event of legal disability, by your legal representative.

4. You are entitled to the privileges of share ownership only as to those shares actually purchased by

you under this Agreement. 5. If you want to exercise all or any part of this option, you must make the election in writing. You

must deliver your notice of election, this Agreement, and cash payment for your shares to: Stock Option Administrator, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202. The Committee can establish any other place or method for delivery of stock option exercises, including electronic means directly with us or our designated administrator. We will notify you in advance of any alternate place or method of delivery of stock option exercises. No shares will be delivered to you until the full option price per share for the number of shares then exercised is paid. In addition to cash, you may pay the exercise price by delivering Kroger

common shares, fully endorsed and containing a signature guaranty. Any shares delivered by you will be valued at the Fair Market Value, as described in Paragraph 1 of this Agreement, on the date of exercise of the option. You must have owned those shares for at least six months. The Committee can increase this required holding period for up to two years. Under certain circumstances, unless prohibited by law, you also can elect to have a portion of the shares issuable upon exercise sold in order to satisfy the exercise price and any taxes that must be withheld. You can obtain information on how to accomplish this, along with other forms of cashless exercise, from your human resources office.

6. You must pay all withholding tax or liabilities prior to issuance of shares. 7. Except as otherwise provided in Paragraph 13 and 14, if your employment by or service to Kroger

voluntarily terminates after reaching age 62 with at least five years of service at Kroger and provided that you are within the employment of or are a director providing service to Kroger on the first anniversary of the date of grant, and provided it is on terms deemed satisfactory to the Committee in its sole discretion (“Retirement”), your options will continue to vest as shown in paragraph 2 of this Agreement and you will be permitted to exercise your option throughout the remaining term. “Terms deemed satisfactory to the Committee” will include but not be limited to a retirement date and leadership transition plan acceptable to both you and Kroger. If you die or become disabled, as determined by us, your option will become exercisable and your personal representative will be permitted to exercise your option throughout the remaining term. If you leave Kroger’s employ or cease providing services as a director to Kroger for any other reason, this option expires. If any portion of the option is exercisable prior to that expiration, you or your personal representative have one year or the remainder of the ten year term, whichever is shorter, to exercise the option.

8. This option becomes immediately exercisable in full, but not in part, if at any time after the date of

this Agreement, your employment is terminated without Cause or by you for Good Reason within two years after a Change in Control of Kroger. For purposes of this paragraph 8 only, the following definitions shall apply:

(i) “Change in Control” means:

(a) any Person, excluding Kroger, any of its Affiliates and any employee benefit plan of Kroger

or any of its Affiliates, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of Kroger representing 30% or more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors;

(b) consummation of a reorganization, merger, consolidation or sale or other disposition of all

or substantially all of the assets of the Company and its Affiliates (a “Business Combination”), in each case, unless, following such Business Combination, Persons that were the beneficial owners of outstanding voting securities entitled to vote generally in the election of directors of Kroger immediately prior to such Business Combination beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which, as a result of such Business Combination, owns all or substantially all of the Company and its Affiliates or their assets either directly or through one or more subsidiaries or affiliates) in substantially the same proportions as their ownership of such securities immediately prior to such Business Combination;

of such period, constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof; provided that, any individual becoming a director of Kroger whose appointment or election by the Board or nomination for election by Kroger’s shareholders was approved or recommended by a vote of at least two-thirds of the Incumbent Directors shall also be considered an Incumbent Director; or

(d) the approval by the shareholders of Kroger of a complete liquidation or dissolution of the

Company.

(iii) “Kroger” and “Company” means the parent company, The Kroger Co.;

(v) “Board” means the Board of Directors of Kroger;

(vi) “Good Reason” means: (a) without your consent

(i) A material diminution in your base compensation;

(ii) A material diminution in your authority, duties, or responsibilities;

(iii) A material change in the geographic location at which you must perform services (this shall be deemed to occur if and only if your principal place of work is relocated more than 50 miles from your principal place of work immediately before a Change in Control); or (iv) Any action or inaction by Kroger which results in employee benefits, perquisites and fringe benefits that, in the aggregate, are materially less favorable than those provided to you immediately prior to the Change in Control.

(b) You shall not have Good Reason for a termination of employment unless:

(vii) “Cause” means your:

(a) failure to substantially perform your duties (other than by reason of disability) with respect to Kroger or an Affiliate,

(b) breach of fiduciary duty to Kroger or an Affiliate,

(c) dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect to the business or affairs of Kroger or an Affiliate,

(d) willful violation of the policies of Kroger or an Affiliate after receiving written notice of such violation, or

(e) conviction of a felony or crime involving moral turpitude.

All determinations of Cause hereunder shall be made by the Committee and shall be binding for all purposes hereunder.

You acknowledge and agree that the foregoing definitions of “Change in Control,” “Cause,” and “For Good

Reason” are subject to amendment from time to time in relevant Kroger plan documents and that if, as of a given time, the definitions of “Change in Control,” “Cause,” or “For Good Reason” have been amended in relevant Kroger plan documents and differ from the one in this Agreement, those amended definitions shall supersede, take the place of and be construed and deemed to supersede and take the place of the definitions of “Change of Control,” “Cause,” or “for Good Reason” contained within this Agreement. You will, in the event of such an amendment, be informed of the amendment.

9. This Agreement does not give you any right of continued employment by or to continue to provide

service to Kroger. It does not affect your right or Kroger’s right, to terminate your employment or service at any time.

10. In the event of any stock splits, stock dividends, or reverse stock splits, the number of shares and

the price per share set forth in this Agreement will be adjusted proportionately. 11. Unless sooner terminated under one or more of the terms and conditions in this Agreement, this

option will remain in force for a term of ten years from the date of this Agreement, and it must be exercised by the holder on or before that date. In the event that the option expires on a day that is not a business day, it must be exercised on or before the last business day prior to the expiration date.

12. The option evidenced by this Agreement and the exercise of the option are subject to the terms

and conditions of the plan. This option is subject to any rules and regulations adopted by the Committee. 13. If your employment terminates due to Retirement, notwithstanding anything contained in

Paragraph 7 to the contrary, in the event that while this Agreement is outstanding you provide services as an employee, director, consultant, agent or otherwise (professionally engaged in any respect – directly or indirectly) to or with any person, company or entity engaged in any business (whether brick-and-mortar or online) that within the United States sells at retail groceries, food, drugs, health or beauty care items, motor fuels, or pharmaceuticals, or manufactures food/beverage products that are sold at retail, or conducts data analytics activity, financial services activity, or any other business activity of any kind that is in competition with any business line that is conducted by Kroger or is under active consideration by Kroger at any time during the last six months of your employment with Kroger, in each case, any unvested portion of this option shall immediately expire. If any portion of the option is vested and exercisable prior to that expiration, you or your personal representative have one year or the remainder of the ten year term, whichever is shorter, to exercise such vested portion of the option.

14. Notwithstanding anything contained in Paragraph 7 to the contrary, during your employment or

thereafter, you or anyone acting at your behest or on your behalf shall not in any respect divulge or disclose in any way to any third party any Kroger trade secrets, business plans, strategies or policies, financial or marketing information, sales or market share information, vendor or supplier information, contractual information, or other confidential company information of any kind whatsoever (that is, material business-related information not already disclosed by the company, or any other material non-public company information). In the event of a violation of the foregoing provision, any unvested portion of this option shall immediately expire. If any portion of the option is vested and exercisable prior to that expiration, you or your personal representative have one year or the remainder of the ten year term, whichever is shorter, to exercise such vested portion of the option. You further acknowledge and agree that the immediate expiration of any unvested portion of this option is not the exclusive or sole consequence or remedy in the event of a divulgence or disclosure as described above in this paragraph but rather one among others, and that in addition to the foregoing Kroger fully reserves and retains the right to pursue all other remedies available or potentially available to it as a matter of law or equity.

15. This Agreement is governed by the laws of the state of Ohio.

The parties have executed this Agreement on the date of grant set forth above.

The Kroger Co. By Rodney McMullen (“you”) <Name>

Exhibit 10.15

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

The date of this document is __________

PERFORMANCE UNIT AWARD UNDER THE PROVISIONS OF ONE OF THE KROGER CO.

LONG-TERM INCENTIVE PLANS

Pursuant to the provisions of a Long-Term Incentive Plan (the “Plan”) of The Kroger Co., the Compensation Committee of the Board of Directors (the “Committee”) has granted to you, on ____________, _____, a performance unit award, on and subject to the terms of the Plan and your Agreement to the following terms, conditions and restrictions.

1. Delivery of Shares. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, The Kroger Co. (the “Company” or “Kroger”) will deliver to you the number of common shares, $1 par value per share, of Kroger (the “Shares”) equal to the product determined by multiplying (a) the number of performance units converted from the value indicated on your 2019 Executive Compensation form or award letter with respect to the 2019-2021 long term incentive plan (“Notice of Award”) by (b) the percentage determined in accordance with the provisions of Paragraphs 2 and 3 below. The Performance Period shall include fiscal years 2019, 2020, and 2021. Delivery of Shares will be deemed to occur on the date of the regularly scheduled meeting of Kroger’s Board of Directors held in March 2022 or such other date as determined by the Committee, and Shares will be deposited into your account at Kroger’s designated brokerage firm as soon thereafter as is administratively practical.

2. Performance Criteria. You are eligible to earn a percentage of the value indicated on your Notice of

Award. The percentage will be determined based on (i) cumulative savings included in net operating profit growth; (ii) cumulative free cash flow; and (iii) ROIC modifier.

3. Calculation of Awards. The number of shares earned will be based on the criteria set forth in

Paragraph 2 above, calculated in the manner shown on Attachment A, and prorated in accordance with Paragraph 5 below, if applicable. Any resulting partial Shares will be rounded up or down to the nearest whole Share amount. Kroger will pay to participants, in cash, an amount equal to the product of the total dividends per share paid on Kroger common shares during the Performance Period and the number of Shares earned during the Performance Period. In all cases, the effect during the Performance Period of accelerating the payment, funding, or recognition of expense of multi-employer pension liability, or the imposition of pension withdrawal liability; in either case undertaken by Kroger as part of its effort to mitigate its exposure to multi-employer pension plan liability, will be excluded for purposes of calculating the award hereunder. In no event will awards exceed 120% of the value indicated on the Notice of Award.

4. Adjustments. The Committee will make such adjustments as it deems necessary or desirable based on

changes in accounting or tax law, or on account of any acquisition,

disposition or other developments that may affect the calculation of awards under this Agreement. 5. Termination of Employment, Permanent Disability, Retirement, Leave of Absence, or Death of

Participant.

(a) Participation in the Plan does not create a contract of employment, or grant any employee the right to be retained in the service of Kroger. Any participant whose employment is terminated by Kroger; who voluntarily terminates his or her employment (other than in accordance with paragraph (b) below); or whose pay level drops below pay level 35, prior to the end of the Performance Period, will forfeit all rights hereunder. (b) If a participant voluntarily terminates his or her employment after reaching age 55 with at least five years of service with Kroger, or due to permanent disability as determined by Kroger, participation will continue, and that participant will receive a prorata number of Shares earned according to the terms of the award proportionate to the period of active service during the Performance Period. (c) If a participant is on an approved leave of absence during the Performance Period for which they are eligible, the participant will be given service credit for 90 days. Thereafter, the award will be reduced by a pro-rata amount for any leave time that extends beyond 90 days, with discretion reserved for special circumstances. (d) If a participant dies during the Performance Period, participation will continue until the end of the fiscal year in which the death occurs, and the participant's designated beneficiary (or if none, then the participant's estate) will receive a prorata number of Shares earned and dividends earned according to the terms of the award proportionate to the period of active service during the Performance Period before the participant's death. The amount of Shares to be issued, as soon as reasonably practicable as determined by the Committee, will be determined as of the end of the fiscal year in which the participant’s death occurs based on actual results as of the end of that fiscal year. (e) Notwithstanding anything contained in this paragraph 5 to the contrary, in the event that during the Performance Period the Participant provides services as an employee, director, consultant, agent or otherwise (professionally engaged in any respect – directly or indirectly) to or with any person, company or entity engaged in any business (whether brick-and-mortar or online) that within the United States sells at retail groceries, food, drugs, health or beauty care items, motor fuels, or pharmaceuticals, or manufactures food/beverage products that are sold at retail, or conducts data analytics activity, financial services activity, or any other business activity of any kind that is in competition with any business line that is conducted by Kroger or is under active consideration by Kroger at any time during the last six months of his or her employment with Kroger, in each case, this

Agreement terminates and the Participant immediately forfeits all rights hereunder. (f) For purposes of the Plan, “period of active service” means the period of time that the participant actually is working for Kroger, subject to paragraph 4(c), plus any earned but unused vacation for the year in which the participant ceases employment, and excluding any “banked” vacation earned but not taken in prior years.

6. Change in Control. Shares in an amount equal to 50% of the number of Shares and the dividends related to those shares indicated on the Notice of Award will be delivered to you if at any time after the date of this Agreement, your employment is terminated without “Cause” or by you for “Good Reason” within two years after a “Change in Control,” all as defined below. For purposes of this paragraph 6 only, the following definitions shall apply:

(i) “Change in Control” means:

(a) any Person, excluding Kroger, any of its Affiliates and any employee benefit plan of Kroger or any of its Affiliates, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of Kroger representing 30% or more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors; (b) consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company and its Affiliates (a “Business Combination”), in each case, unless, following such Business Combination, Persons that were the beneficial owners of outstanding voting securities entitled to vote generally in the election of directors of Kroger immediately prior to such Business Combination beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which, as a result of such Business Combination, owns all or substantially all of the Company and its Affiliates or their assets either directly or through one or more subsidiaries or affiliates) in substantially the same proportions as their ownership of such securities immediately prior to such Business Combination; (c) during any period of twenty-four (24) consecutive months, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof; provided that, any individual becoming a director of Kroger whose appointment or election by the Board or nomination for election by Kroger’s shareholders was approved or recommended by a vote of at least two-thirds of the Incumbent Directors shall also be considered an Incumbent Director; or

(d) the approval by the shareholders of Kroger of a complete liquidation or dissolution of the Company.

(iii) “Kroger” and “Company” means the parent company, The Kroger Co.;

(v) “Board” means the Board of Directors of Kroger; (vi) “Good Reason” means:

(a) without your consent

(i) A material diminution in your base compensation;

(ii) A material diminution in your authority, duties, or responsibilities;

(b) You shall not have Good Reason for a termination of employment unless:

(iii) you incur a termination of employment no later than 120 days following the end of the two years after a Change in Control.

(vii) “Cause” means your:

(a) failure to substantially perform your duties (other than by reason of disability) with respect to Kroger or an Affiliate, (b) breach of fiduciary duty to Kroger or an Affiliate, (c) dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect to the business or affairs of Kroger or an Affiliate, (d) willful violation of the policies of Kroger or an Affiliate after receiving written notice of such violation, or (e) conviction of a felony or crime involving moral turpitude.

All determinations of Cause hereunder shall be made by the Committee and shall be binding for all purposes

hereunder.

You acknowledge and agree that the foregoing definitions of “Change in Control,” “Cause,” and “For Good Reason” are subject to amendment from time to time in relevant Kroger plan documents and that if, as of a given time, the definitions of “Change in Control,” “Cause,” and “For Good Reason” have been amended in relevant Kroger plan documents and differ from the ones in this Agreement, those amended definitions shall supersede, take the place of and be construed and deemed to supersede and take the place of the definitions of “Change in Control,” “Cause,” and “For Good Reason” contained within this Agreement. You will, in the event of such an amendment, be informed of the amendment.

7. Transferability. Your right to receive a payout under this award is not assignable or transferable by

you other than by will or by the laws of descent and distribution. 8. Taxes. In connection with a payment to you under this award, Kroger will withhold or cause to be

withheld from that payment the amount of tax required by law to be withheld with respect to the payment. For Shares to be issued under this award, Kroger will withhold sufficient Shares with a market value equal to the tax required by law to be withheld with respect to the award unless you have notified us in writing in advance of the issuance of the Shares of your desire to pay the taxes and have made the funds available to us or our designated agent.

9. Compliance with Code. This award is designed to be exempt from the provisions of Section 409A of

the Code as a short-term deferral. This award will be construed, administered, and governed in a manner that affects that intent. Kroger does not represent or

guarantee that any particular federal or state income, estate, payroll, or other tax consequences will occur because of this award and the compensation provided hereunder. In the event that any other Agreement serves to modify this award in a manner that causes the award to not be exempt from Section 409A as a short term deferral, any issuance of Shares or payment of cash to a “specified employee” within the meaning of Treas. Reg. 1.409A-1(i) (or any successor thereto) on account of termination of employment will be made six months after the date of termination, and termination of employment will not be considered to occur until there is a termination of employment within the meaning of Treasury Regulation Section 1.409(h)(1)(ii), where the employee’s services permanently decrease to less than 50% of the average level of services performed over the preceding 36 month period.

10. Notwithstanding anything contained in Paragraph 3 to the contrary, during your employment or

thereafter, you or anyone acting at your behest or on your behalf in any respect divulge or disclose in any way to any third-party, any Kroger trade secrets, business plans, strategies or policies, financial or marketing information, sales or market share information, vendor or supplier information, contractual information, or other confidential company information of any kind whatsoever (that is, material business-related information not already disclosed by the company, or any other material non-public company information), this Agreement terminates and you immediately forfeits all rights hereunder. You further acknowledge and agree that the termination of the Agreement and the forfeiture of all rights hereunder is not the exclusive or sole consequence or remedy in the event of a divulgence or disclosure as described above in this paragraph, but rather one among others, and that in addition to the foregoing, Kroger fully reserves and retains the right to pursue all other remedies available or potentially available to it as a matter of law or equity.

11. Acceptance of Agreement. In the event that you fail to accept this Agreement within one year from the grant date, Kroger will accept it on your behalf, and your failure to notify Kroger in writing directed to the Benefits Department, The Kroger Co., 1014 Vine Street, Cincinnati, OH 45202, of your desire to reject this Agreement will be deemed to be your express authority for Kroger to accept this Agreement on your behalf.

12. Amendments. Any amendment to the Plan will be deemed to be an amendment to this Agreement to

the extent that the amendment is applicable hereto. No amendment will adversely affect your rights under this Agreement without your consent. Notwithstanding the forgoing, to the extent necessary to preserve Kroger’s federal tax deduction that would otherwise be denied due to Section 162(m) of the Internal Revenue Code (applicable only to certain top senior executives), Kroger may elect (without your consent) to delay delivery of your award Shares until 30 days following your termination of employment. If Kroger so elects to delay payment, all other deferred compensation payments for the year that would be nondeductible under Section 162(m) also will be delayed to avoid negative tax consequences to you.

13. Severability. In the event that any provision of this Agreement is invalidated for any reason by a court

of competent jurisdiction, any provision so invalidated will be deemed to be separable from the other provisions hereof. The remaining provisions will continue to be valid and fully enforceable.

14. Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any

inconsistency between the provisions of this Agreement and the Plan, the Plan will govern. Capitalized terms used herein without definition have the meanings assigned to them in the Plan. The Committee acting pursuant to the Plan, as constituted from time to time, will, except as expressly provided otherwise herein, have the right to determine any questions that arise in connection with the grant of this award.

15. Successors and Assigns. Without limiting Paragraph 7 hereof, the provisions of this Agreement will

inure to the benefit of, and be binding upon, your successors, administrators, heirs, legal representatives and assigns, and the successors and assigns of Kroger.

16. Governing Law. The interpretation, performance, and enforcement of this Agreement will be

governed by the laws of the State of Ohio, without giving effect to the principles of conflict of laws thereof.

THE KROGER CO. By “participant”

EXHIBIT 21.1

SUBSIDIARIES OF THE KROGER CO. 84.51 LLC [Ohio] 84.51 HQ Building Company, LLC [Ohio] Alpha Beta Company [California] Ansonborough Square Investors I, LLC [Delaware] Ansonborough Square Retail, LLC [South Carolina] Ardrey Kell Investments, LLC [North Carolina] Bay Area Warehouse Stores, Inc. [California] Beech Tree Holdings, LLC [Delaware] Bell Markets, Inc. [California] Bleecker Ventures LLC [New York] Bluefield Beverage Company [Ohio] Box Cutter, Inc. [New York] Brier Creek Arbors Drive Retail, LLC [North Carolina] Cala Co. [Delaware] Cala Foods, Inc. [California] CB&S Advertising Agency, Inc. [Oregon] Cheeses of All Nations, Inc. [New York] Country Oven, Inc. [Ohio] Crawford Stores, Inc. [California] Creedmoor Retail, LLC [North Carolina] Dillon Companies, LLC [Kansas]

Also Doing Business As: Baker's Supermarkets City Market Dillon Food Stores

Gerbes Supermarkets Inter-American Products King Soopers Peyton’s Fountain

Dillon Real Estate Co., Inc. [Kansas] Distribution Trucking Company [Oregon] Dotto, Inc. [Indiana] Edgewood Plaza Holdings, LLC [Ohio] Embassy International, Inc. [Ohio] Farmacia Doral, Inc. [Puerto Rico] FM, Inc. [Utah] FMJ, Inc. [Delaware]

Also Doing Business As: FMJ Ecommerce Fred Meyer Jewelers Mail Order fredmeyerjewelers.com littmanjewelers.com

Food 4 Less GM, Inc. [California] Food 4 Less Holdings, Inc. [Delaware] Food 4 Less Merchandising, Inc. [California] Food 4 Less of California, Inc. [California] Food 4 Less of Southern California, Inc. [Delaware] Fred Meyer, Inc. [Delaware]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Fred Meyer Jewelers, Inc. [California] Also Doing Business As: Fred Meyer Jewelers Littman Jewelers

Fred Meyer Stores, Inc. [Ohio] Also Doing Business As: Fred Meyer Inter-American Products QFC Quality Food Centers Swan Island Dairy

Glasswing Labs LLC [Ohio] Glendale/Goodwin Realty I, LLC [Ohio] Grubstake Investments, LLC [Oregon] Harris Teeter, LLC [North Carolina] Harris Teeter Properties, LLC [North Carolina] Harris-Teeter Services, Inc. [North Carolina] Harris Teeter Supermarkets, Inc. [North Carolina] Healthy Options Inc. [Delaware]

Also Doing Business As: Columbus Central Fill Postal Prescription Services

Henpil, Inc. [Texas] Hood-Clayton Logistics LLC [Georgia] HT Fuel DE, LLC [Delaware] HT Fuel NC, LLC [North Carolina] HT Fuel SC, LLC [South Carolina] HT Fuel VA, LLC [Virginia] HTGBD, LLC [North Carolina] HTP Bluffton, LLC [North Carolina] HTP Plaza LLC [North Carolina] HTP Relo, LLC [North Carolina] HTPS, LLC [North Carolina] HTTAH, LLC [North Carolina] Hughes Markets, Inc. [California] Hughes Realty, Inc. [California] Inter-American Foods, Inc. [Ohio] Inter-American Products, Inc. [Ohio] IRP, LLC [Wisconsin] I.T.A., Inc. [Wisconsin] ITAC 119, LLC [North Carolina] ITAC 265, LLC [North Carolina] Jondex Corp. [Wisconsin] Jubilee Carolina, LLC [North Carolina] J.V. Distributing, Inc. [Michigan] KCDE-2 LLC [Ohio] KCDE-3 LLC [Ohio] KCDE-4 LLC [Ohio] KCDE-5 LLC [Ohio] KCDE – 2012, LLC [Ohio] KCDE – 2013, LLC [Ohio] Kee Trans, Inc. [Wisconsin] Kessel FP, L.L.C. [Michigan] Kessel RCD, L.L.C. [Michigan] Kessel Saginaw, L.L.C. [Michigan]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

KGO LLC [Ohio] Kiosk Medicine Kentucky, LLC [Kentucky]

Also Doing Business As: The Little Clinic Kirkpatrick West Retail, LLC [Virginia] KPF Insurance Services LLC [Ohio] KPF, LLC [Delaware] KPS, LLC [Ohio] KRGP Inc. [Ohio]

Also Doing Business As: Kitchen 1883

KRLP Inc. [Ohio] The Kroger Co. of Michigan [Michigan]

Also Doing Business As: Inter-American Products

Kessel Food Markets Kessel Pharmacies Kroger Kroger Fresh Fare Michigan Dairy

Kroger Community Development Entity, LLC [Ohio] Kroger Dedicated Logistics Co. [Ohio]

Also Doing Business As: KDL

Kroger G.O. LLC [Ohio] Kroger Limited Partnership I [Ohio]

Also Doing Business As: Chef’s Choice Catering Foods Plus Gene Maddy Drugs Inter-American Products

JayC Food Stores Kentucky Distribution Center Kroger Food Stores Kroger Marketplace Owen's Supermarket Pay Less Super Markets Peyton's Southeastern Queen City Centre Ruler Foods Scott’s Food & Pharmacy

Kroger Limited Partnership II [Ohio] Also Doing Business As: Country Oven Bakery Crossroad Farms Dairy Inter-American Products K. B. Specialty Foods Kenlake Foods Pace Dairy of Indiana Peyton's Northern Winchester Farms Dairy

Kroger Management Co. [Michigan] Kroger Management – Corryville, LLC [Ohio] Kroger Management – NMTC Athens I, LLC [Ohio] Kroger Management – NMTC Champaign I, LLC [Ohio]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Kroger Management – NMTC Champaign II, LLC [Ohio] Kroger Management – NMTC Cincinnati I, LLC [Ohio] Kroger Management – NMTC Dallas I, LLC [Ohio] Kroger Management – NMTC Danville I, LLC [Ohio] Kroger Management – NMTC Griffin I, LLC [Ohio] Kroger Management – NMTC Logansport I, LLC [Ohio] Kroger Management – NMTC Missouri I, LLC [Ohio] Kroger Management – NMTC Oak Ridge I, LLC [Ohio] Kroger Management – NMTC Olney I, LLC [Ohio] Kroger Management – NMTC Omaha I, LLC [Ohio] Kroger Management – NMTC Portsmouth I, LLC [Ohio] Kroger Management – NMTC Starkville I, LLC [Ohio] Kroger Management – NMTC Topeka I, LLC [Ohio] Kroger Management – NMTC Warrenton I, LLC [Ohio] Kroger MC Holdings, LLC [Ohio] Kroger MTL Management, LLC [Ohio] Kroger NMTC Fremont I, LLC [Ohio] Kroger Opportunity Fund I, Inc. [Ohio] Kroger OZ1 Inc. [Ohio] Kroger OZ2 Inc. [Ohio] Kroger OZ3 Inc. [Ohio] Kroger OZ1 LLC [Ohio] Kroger OZ2 LLC [Ohio] Kroger OZ3 LLC [Ohio] Kroger Prescription Plans, Inc. [Ohio] Kroger Specialty Infusion AL, LLC [Alabama] Kroger Specialty Infusion CA, LLC [California] Kroger Specialty Infusion Holdings, Inc. [Delaware] Kroger Specialty Infusion TX, LLC [Texas] Kroger Specialty Pharmacy CA, LLC [Delaware] Kroger Specialty Pharmacy CA 2 LLC [Delaware] Kroger Specialty Pharmacy FL 2 LLC [Delaware] Kroger Specialty Pharmacy Holdings, Inc. [Delaware] Kroger Specialty Pharmacy Holdings I, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 2, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 3, Inc. [Delaware] Kroger Specialty Pharmacy, Inc. [Florida]

Also Doing Business As: Kroger Specialty Pharmacy CA Kroger Specialty Pharmacy FL Kroger Specialty Pharmacy MS

Kroger Specialty Pharmacy LA, LLC [Louisiana] Also Doing Business As: Kroger Specialty Pharmacy TX

Kroger Texas L.P. [Ohio] Also Doing Business As: America's Beverage Company Inter-American Products Kroger Vandervoort Dairy Foods Company

LCGP3 Home Cooking, Inc. [Delaware] The Little Clinic LLC [Delaware] The Little Clinic Management Services LLC [Delaware] The Little Clinic of Arizona LLC [Delaware] The Little Clinic of Colorado LLC [Delaware]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

The Little Clinic of IN LLC [Delaware] The Little Clinic of Kansas LLC [Delaware] The Little Clinic of Mississippi LLC [Delaware] The Little Clinic of Ohio LLC [Ohio] The Little Clinic of Tennessee LLC [Delaware] The Little Clinic of TX LLC [Delaware] The Little Clinic of VA LLC [Delaware] Local Mkt LLC [Ohio]

Also Doing Business As: Fresh Eats MKT

Main & Vine LLC [Ohio] Matthews Property 1, LLC [North Carolina] Mega Marts, LLC [Wisconsin]

Also Doing Business As: Metro Market Pick ‘n Save

Michigan Dairy, L.L.C. [Michigan] Murray’s Cheese LLC [Ohio] Murray’s LIC LLC [New York]

Also Doing Business As: Murray’s Cheese Bar

Murray’s Table LLC [New York] Pace Dairy Foods Company [Ohio] Paramount Logistics, LLC [Ohio] Pay Less Super Markets, Inc. [Indiana] Peyton's-Southeastern, Inc. [Tennessee]

Also Doing Business As: Peyton's Mid-South Company

Plum Labs LLC [Ohio] Pontiac Foods, Inc. [South Carolina] Queen City Assurance, Inc. [Vermont] Ralphs Grocery Company [Ohio]

Also Doing Business As: Food 4 Less Food 4 Less Midwest Foods Co. Inter-American Products Ralphs Ralphs Fresh Fare Ralphs Marketplace

RBF, LLC [Wisconsin] Relish Labs LLC [Delaware]

Also Doing Business As: Home Chef

RGC Southeast Properties LLC [Ohio] Rocket Newco, Inc. [Texas] Roundy’s Acquisition Corp. [Delaware] Roundy’s Illinois, LLC [Wisconsin]

Also Doing Business As: Mariano’s

Roundy’s, Inc. [Delaware] Roundy’s Supermarkets, Inc. [Wisconsin]

Also Doing Business As: Mariano’s Pharmacy RCK Foods

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Second Story, Inc. [Washington] Shop-Rite, LLC [Wisconsin]

Also Doing Business As: Metro Market Pick ‘n Save

Smith’s Beverage of Wyoming, Inc. [Wyoming] Smith’s Food & Drug Centers, Inc. [Ohio]

Also Doing Business As: Fry’s Food Stores Fry’s Marketplace Fry’s Mercado Inter-American Products Smith’s Express Smith’s Food & Drug Smith’s Fuel Centers Smith’s Marketplace

Southern Ice Cream Specialties, Inc. [Ohio] Stallings Investors I, LLC [North Carolina] Sunrise R&D Holdings, LLC [Ohio] Sunrise Technology LLC [Ohio] TLC Corporate Services LLC [Delaware] TLC Immunization Clinic LLC [Delaware] TLC of Georgia LLC [Delaware]

Also Doing Business As: The Little Clinic

Topvalco, Inc. [Ohio] Ultimate Mart, LLC [Wisconsin]

Also Doing Business As: Copps Metro Market Pick ‘n Save

Ultra Mart Foods, LLC [Wisconsin] Also Doing Business As: Pick ‘n Save

Vine Court Assurance Incorporated [Vermont] Vitacost.com, Inc. [Delaware] Woodmont Holdings, LLC [North Carolina]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333- 231727) and Form S-8 (Nos. 333-232437, 033-55501, 333-27211, 333-78935, 333-91354, 333-126076, 333-151967, 333-164951, 333-175086, 333-185446, 333-197711, 333-197712, 333-206531 and 333-206532) of The Kroger Co. of our report dated April 1, 2020 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP Cincinnati, Ohio April 1, 2020

Exhibit 24.1 POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned directors of THE KROGER CO. (the “Company”) hereby makes, constitutes and appoints Christine S. Wheatley and Stacey M. Heiser, or either of them, his or her true and lawful attorneys-in-fact to sign and execute for and on his or her behalf the Company’s annual report on Form 10-K, and any and all amendments thereto, to be filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, in such form as they, or either of them, may approve and to do any and all other acts which said attorneys-in-fact, or either of them, may deem necessary or desirable to enable the Company to comply with said Act or the rules and regulations thereunder. IN WITNESS WHEREOF, the undersigned directors have hereunto set their hands as of the 12 day of March 2020.

/s/ Nora A. Aufreiter /s/ Clyde R. Moore Nora A. Aufreiter Clyde R. Moore /s/ Anne Gates /s/ James A Runde Anne Gates James A. Runde /s/ Karen M. Hoguet /s/ Ronald L. Sargent Karen M. Hoguet Ronald L. Sargent /s/ Susan J. Kropf /s/ Bobby S. Shackouls Susan J. Kropf Bobby S. Shackouls /s/ W. Rodney McMullen /s/ Mark S. Sutton W. Rodney McMullen Mark S. Sutton /s/ Jorge P Montoya /s/ Ashok Vemuri Jorge P. Montoya Ashok Vemuri

EXHIBIT 31.1

CERTIFICATION I, W. Rodney McMullen, certify that: 1. I have reviewed this annual report on Form 10-K of The Kroger Co.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 1, 2020 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

EXHIBIT 31.2

CERTIFICATION I, Gary Millerchip, certify that: 1. I have reviewed this annual report on Form 10-K of The Kroger Co.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 1, 2020 /s/ Gary Millerchip Gary Millerchip Senior Vice President and Chief Financial Officer (principal financial officer)

EXHIBIT 32.1

CERTIFICATIONS NOTE: The referenced officers, based on their knowledge, furnish the following certification, pursuant to 18 U.S.C. §1350. We, W. Rodney McMullen, Chief Executive Officer and Chairman of the Board, and Gary Millerchip, Senior Vice President and Chief Financial Officer, of The Kroger Co. (the “Company”), do hereby certify in accordance with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Annual Report on Form 10-K of the Company for the period ending February 1, 2020 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or 78o(d)); and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

Dated: April 1, 2020 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer /s/ Gary Millerchip Gary Millerchip Senior Vice President and Chief Financial Officer A signed original of this written statement as required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to The Kroger Co., and will be retained by The Kroger Co. and furnished to the SEC or its staff upon request.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K (Mark One)

☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 30, 2021.

☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission file number 1-303

THE KROGER CO. (Exact name of registrant as specified in its charter)

Ohio 31-0345740 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

1014 Vine Street, Cincinnati, OH 45202 (Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (513) 762-4000 Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol Name of each exchange on which registered Common, $1.00 Par Value KR New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (August 15, 2020). $27.6 billion. The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 751,993,701 shares of Common Stock of $1 par value, as of March 24, 2021.

Documents Incorporated by Reference:

The Kroger Co. Form 10-K

For the Fiscal Year Ended January 30, 2021

Table of Contents

Page Part I 2 Item 1 Business 3 Item 1A Risk Factors 9 Item 1B Unresolved Staff Comments 16 Item 2 Properties 16 Item 3 Legal Proceedings 16 Item 4 Mine Safety Disclosures 16

Part II 17 Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 17 Item 6 Selected Financial Data 20 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A Quantitative and Qualitative Disclosures About Market Risk 43 Item 8 Financial Statements and Supplementary Data 44 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 95 Item 9A Controls and Procedures 95 Item 9B Other Information 95

Part III 96 Item 10 Directors, Executive Officers and Corporate Governance 96 Item 11 Executive Compensation 96 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 96 Item 13 Certain Relationships and Related Transactions, and Director Independence 97 Item 14 Principal Accounting Fees and Services 97

Part IV 98 Item 15 Exhibits, Financial Statement Schedules 98 Item 16 Form 10-K Summary 100

Signatures 101

PART I

FORWARD LOOKING STATEMENTS.

Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward- looking statements. These include:

● The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state of the financial markets and the effect that such condition has on our ability to issue commercial paper at acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities, could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual obligation to lend to us, or in the event that global pandemics, including the COVID-19 pandemic, natural disasters or weather conditions interfere with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state of the financial markets.

● Our ability to achieve sales, earnings, incremental FIFO operating profit, and adjusted free cash flow goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, the temporary inability of customers to shop due to illness, quarantine, or other travel restrictions or financial hardship, shifts in demand away from discretionary or higher priced products to lower priced products, or stockpiling or similar pantry-filling activities, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates, temporary store closures due to reduced workforces or government mandates, or the availability and efficacy of a vaccine; labor negotiations or disputes; changes in the types and numbers of businesses that compete with Kroger; pricing and promotional activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; Kroger's response to these actions; the state of the economy, including interest rates, the inflationary and deflationary trends in certain commodities, changes in tariffs, and the unemployment rate; the effect that fuel costs have on consumer spending; volatility of fuel margins; changes in government-funded benefit programs and the extent and effectiveness of any COVID-19 stimulus packages; manufacturing commodity costs; diesel fuel costs related to Kroger's logistics operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing in response to economic conditions; the uncertainty of economic growth or recession; changes in inflation or deflation in product and operating costs; stock repurchases; our ability to retain pharmacy sales from third-party payors; consolidation in the healthcare industry, including pharmacy benefit managers; our ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the effect of public health crises or other significant catastrophic events, including the coronavirus; the potential costs and risks associated with potential cyber- attacks or data security breaches; the success of our future growth plans; the ability to execute our growth strategy and value creation model, including continued cost savings, growth of our alternative profit businesses, and widening and deepening our strategic moats of fresh, Our Brands, personalization, and seamless; and the successful integration of merged companies and new partnerships.

● Our effective tax rate may differ from the expected rate due to changes in laws, the status of pending items with various taxing authorities, and the deductibility of certain expenses.

We cannot fully foresee the effects of changes in economic conditions on our business.

Other factors and assumptions not identified above, including those discussed in Part 1, Item 1A of this Annual Report, could also cause actual results to differ materially from those set forth in the forward-looking information. Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by forward-looking statements made by us or our representatives. We undertake no obligation to update the forward-looking information contained in this filing.

ITEM 1. BUSINESS.

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. As of January 30, 2021, we are one of the largest retailers in the world based on annual sales. We also manufacture and process some of the food for sale in our supermarkets. We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional information about the Company. Kroger’s website and any reports or other information made available by Kroger through its website are not part of or incorporated by reference into this Annual Report on Form 10-K. We make available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as reasonably practicable after we have filed them with, or furnished them electronically to, the SEC.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominantly by selling products at price levels that produce revenues in excess of the costs to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs and overhead expenses. Our fiscal year ends on the Saturday closest to January 31. All references to 2020, 2019 and 2018 are to the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019, respectively, unless specifically indicated otherwise.

STORES

As of January 30, 2021, Kroger operated, either directly or through its subsidiaries, 2,742 supermarkets under a variety of local banner names, of which 2,255 had pharmacies and 1,596 had fuel centers. We offer Pickup (also referred to as ClickList®) and Harris Teeter ExpressLane™— personalized, order online, pick up at the store services — at 2,223 of our supermarkets and provide home delivery service to substantially all of Kroger households. Approximately 51% of our supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate under a variety of banners that have strong local ties and brand recognition. Fuel sales are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at each of our supermarket locations when it is feasible and it is expected to be profitable. Each fuel center typically includes 5 to 10 islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo stores”); multi-department stores; marketplace stores; or price impact warehouses.

SEGMENTS

MERCHANDISING AND MANUFACTURING

Our Brands products play an important role in our merchandising strategy. Our supermarkets, on average, stock over 15,000 private label items. Our Brands products are primarily produced and sold in three “tiers.” Private Selection® is one of our premium quality brands, offering customers culinary foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Check This Out…® and Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition to our three “tiers,” Our Brands offers customers a variety of natural and organic products with Simple Truth® and Simple Truth Organic®. Both Simple Truth and Simple Truth Organic are free from a defined list of artificial ingredients that customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic.

Approximately 29% of Our Brands units and 40% of the grocery category Our Brands units sold in our supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of January 30, 2021, we operated 35 food production plants. These plants consisted of 16 dairies, 9 deli or bakery plants, five grocery product plants, two beverage plants, one meat plant and two cheese plants.

SEASONALITY

HUMAN CAPITAL MANAGEMENT

Our People

We want Kroger to be a place our customers love to shop and associates love to work. This is why we create working environments where associates feel encouraged and supported to be their best selves every day. As of January 30, 2021, Kroger employed approximately 465,000 full- and part-time employees. With these nearly half a million associates serving more than nine million customers every day, our people are essential to our success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the communities we serve. We have long been guided by our core values – Honesty, Integrity, Respect, Safety, Diversity and Inclusion.

Attracting & Developing Our Talent

We recognize that our people are our most important asset. To deliver on our customers’ experiences, we continually improve how we attract and retain talent. In addition to competitive wages, quality benefits, and a safe work environment, we offer a broad range of employment opportunities for workers of all ages and aspirations. During the past decade, Kroger has added 100,000 new jobs in communities across America. Many supermarket roles offer opportunities to learn new skills, grow and advance careers — inside or outside our family of companies.

Associates at all levels of the Company have access to training and education programs to build their skills and prepare for the roles they want. In 2021, we expect to spend approximately $125 million on training our associates through onboarding, leadership development programs, and programs designed to upskill associates across the Company. We continue to invest in new platforms and applications to make learning more accessible to our associates.

Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to $3,500 annually — $21,000 over the course of employment — toward continuing education. These funds can be applied to education programs like certifications, associate or graduate degrees. Kroger has invested more than $15 million in this program since it launched in 2018.

Rewarding Our Associates

We care about our associates’ overall well-being — physical, financial and emotional — and provide wages and benefits that help associates take care of themselves and their families. Between 2018 and 2020, we invested an incremental $800 million in associate wages. Since 2018, Kroger’s average retail hourly wage increased to over $15 per hour. Including benefit equivalents, the average rate surpasses $20 per hour.

Promoting Diversity, Equity & Inclusion

Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we serve and foster a culture that empowers everyone to be their true self, inspires collaboration, and feeds the human spirit. During the past year, we have taken a very thoughtful and purposeful approach to enact meaningful change and develop what we believe are the right actions to achieve true and lasting equality. Our new Framework for Action: Diversity, Equity & Inclusion plan reflects our desire to redefine, deepen, and advance our commitment, mobilizing our people, passion, scale and resources. The following summarizes our framework: Create a More Inclusive Culture; Develop Diverse Talent; Advance Diverse Partnerships; Advance Equitable Communities; Deeply Listen and Report Progress.

Creating a Safe Environment

Our associates’ safety is a top priority and it is one of our core values. Since March of 2020, we have made significant investments to reward and safeguard our associates and customers. At the onset of the COVID-19 pandemic, we activated our Pandemic Preparedness Plan and Business Resilience Plan to help protect frontline associates, stay open to serve our customers and communities, and anticipate and adapt to critical needs in a rapidly changing situation. Since then, we have enacted more than 30 policy changes to help keep our associates safe, including offering paid emergency leave to those most directly affected by COVID-19, providing personal protective equipment, offering free testing through our COVID-19 at-home test kits, and promoting physical distancing in our locations. We are committed to supporting the health and well-being of our associates by providing a robust range of physical and mental health benefits and offering an incentive to associates who choose to get the COVID-19 vaccine.

Beyond the pandemic, we prioritize providing the right safety training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the number of injuries and accidents that happen in our workplace.

We track health and safety metrics centrally for an enterprise-wide view of issues, trends and opportunities and monitor associate injury performance including total injuries, Occupational Safety and Health Administration (“OSHA”) injury rates, and lost-time injuries, as well as customer injury metrics like slip-and-fall injuries. We also track the completion of required training for associates and we regularly share these metrics with leaders and relevant team members to inform management decisions.

Supporting Labor Relations

A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated with one of several different international unions. There are approximately 350 such agreements, usually with terms of three to five years. Our objective in every negotiation is to find a fair and reasonable balance on compensation packages that provide solid wages as well as good quality, affordable health care and retirement benefits while also keeping our family of companies competitive in the market.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Name Age Recent Employment History

Mary E. Adcock 45 Ms. Adcock was elected Senior Vice President effective May 1, 2019 and is responsible for retail operations as well as the oversight of several Kroger retail divisions. From June 2016 to April 2019, she served as Group Vice President of Retail Operations. Prior to that, she served as Vice President of Operations for Kroger’s Columbus Division from November 2015 to May 2016 and as Vice President of Merchandising for the Columbus Division from March 2014 to November 2015. From February 2012 to March 2014, Ms. Adcock served as Vice President of Natural Foods Merchandising and from October 2009 to February 2012, she served as Vice President of Deli/Bakery Manufacturing. Prior to that, Ms. Adcock held several leadership positions in the manufacturing department, including human resources manager, general manager and division operations manager. Ms. Adcock joined Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in Bowling Green, Kentucky.

Stuart W. Aitken 49 Mr. Aitken was named Senior Vice President and Chief Merchant and Marketing Officer in August 2020. He was elected Senior Vice President in February 2019 and served as Group Vice President from June 2015 to February 2019. He is responsible for sales, pricing, promotional and category planning for fresh foods, center store and general merchandise categories, as well as analytics & execution, e-commerce and Digital Merchandising, and Our Brands. Prior to joining Kroger, he served as the chief executive officer of dunnhumby USA, LLC from July 2010 to June 2015. Mr. Aitken has over 15 years of marketing, academic and technical experience across a variety of industries, and held various leadership roles with other companies, including Michaels Stores and Safeway, Inc.

Gabriel Arreaga 46 Mr. Arreaga was elected Senior Vice President of Supply Chain in December 2020. He is responsible for the company’s industry-leading Supply Chain organization, Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers. Prior to Kroger, Mr. Arreaga served as senior vice president of Supply Chains for Mondelez, where he was responsible for all operations and functions from field to consumer, internal and external factories, fulfillment centers, direct to store branches, Logistics and product development. He was also global vice president of Operations for Stanley Black and Decker and held numerous leadership roles at Unilever including vice president of Food and Beverage Operations.

Yael Cosset 47 Mr. Cosset was elected Senior Vice President and Chief Information Officer in May 2019 and is responsible for leading Kroger’s digital strategy, focused on building Kroger’s presence in the marketplace in digital channels, personalization and e-commerce. In August 2020, he also assumed responsibility for Kroger’s alternative profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦLLC and Kroger Personal Finance. Prior to that, Mr. Cosset served as Group Vice President and Chief Digital Officer from January 2017 to April 2019. Before that, he served as Chief Commercial Officer and Chief Information Officer of 84.51° LLC from April 2015 to December 2016. Prior to joining Kroger, Mr. Cosset served in several leadership roles at dunnhumby USA, LLC from 2009 to 2015, including Executive Vice President of Consumer Markets and Global Chief Information Officer.

Michael J. Donnelly 62 Mr. Donnelly was elected Executive Vice President and Chief Operating Officer in December 2017. Prior to that, he was Executive Vice President of Merchandising from September 2015 to December 2017, and Senior Vice President of Merchandising from July 2011 to September 2015. Before that, Mr. Donnelly held a variety of key management positions with Kroger, including President of Ralphs Grocery Company, President of Fry’s Food Stores, and Senior Vice President, Drug/GM Merchandising and Procurement. Mr. Donnelly joined Kroger in 1978 as a clerk. Mr. Donnelly has announced his plan to retire in Spring of 2021.

Carin L. Fike 52 Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to that, she served as Assistant Treasurer from March 2011 to April 2017. Before that, Ms. Fike served as Director of Investor Relations from December 2003 to March 2011. Ms. Fike began her career with Kroger in 1999 as a manager in the Financial Reporting department after working with PricewaterhouseCoopers from 1995 to 1999, where most recently she was an audit manager.

Todd A. Foley 51 Mr. Foley was elected Vice President and Corporate Controller effective April 2017. Before that, he served as Vice President and Treasurer from June 2013 to April 2017. Prior to that, Mr. Foley served as Assistant Corporate Controller from March 2006 to June 2013, and Controller of Kroger’s Cincinnati/Dayton division from October 2003 to March 2006. Mr. Foley began his career with Kroger in 2001 as an audit manager in the Internal Audit Department after working for PricewaterhouseCoopers from 1991 to 2001, where most recently he was a senior audit manager.

Calvin J. Kaufman 58 Mr. Kaufman was elected Senior Vice President in June 2017, and is responsible for the oversight of several Kroger retail divisions. From July 2013 to June 2017, he served as President of the Louisville division. Prior to that, he served as President of Kroger Manufacturing and Our Brands from June 2008 to June 2013, and Group Vice President of Fred Meyer Logistics from September 2005 to May 2008. Mr. Kaufman held various positions in Logistics after joining Kroger in the Fred Meyer division in September 1994.

Timothy A. Massa 54 Mr. Massa was elected Senior Vice President of Human Resources and Labor Relations in June 2018. Prior to that, he served as Group Vice President of Human Resources and Labor Relations from June 2014 to June 2018. Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human Resources and Talent Development. Prior to joining Kroger, he served in various Human Resources leadership roles for 21 years at Procter & Gamble, most recently serving as Global Human Resources Director of Customer Business Development.

Stephen M. McKinney 64 Mr. McKinney was elected Senior Vice President in March 2018, and is responsible for the oversight of several Kroger retail divisions. From October 2013 to March 2018, he served as President of Kroger’s Fry’s Food Stores division. Prior to that, he served as Vice President of Operations for the Ralphs division from October 2007 to September 2013, and Vice President of Operations for the Southwest division from October 2006 to September 2007. From 1988 to 1998, Mr. McKinney served in various leadership positions in the Fry’s Food Stores division, including store manager, deli director, and executive director of operations. From 1981 to 1998, Mr. McKinney held several roles with Florida Choice Supermarkets, a former Kroger banner, including store manager, buyer, and field representative. He started his career with Kroger in 1981 as a clerk with Florida Choice.

W. Rodney McMullen 60 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and Chief Executive Officer effective January 1, 2014. Prior to that, he served as President and Chief Operating Officer from August 2009 to December 2013. Prior to that he was elected Vice Chairman in June 2003, Executive Vice President, Strategy, Planning and Finance in January 2000, Executive Vice President and Chief Financial Officer in May 1999, Senior Vice President in October 1997, and Group Vice President and Chief Financial Officer in June 1995. Before that he was appointed Vice President, Control and Financial Services in March 1993, and Vice President, Planning and Capital Management in December 1989. Mr. McMullen joined Kroger in 1978 as a part-time stock clerk.

Gary Millerchip 49 Mr. Millerchip was elected Senior Vice President and Chief Financial Officer effective April 2019. Prior to this, he served as Chief Executive Officer for Kroger Personal Finance since joining Kroger in 2008. Before coming to Kroger he was responsible for the Royal Bank of Scotland (RBS) Personal Credit Card business in the United Kingdom. He joined RBS in 1987 and held leadership positions in Sales & Marketing, Finance, Change Management, Retail Banking Distribution Strategy and Branch Operations during his time there.

Erin S. Sharp 63 Ms. Sharp has served as Group Vice President of Manufacturing since June 2013. She joined Kroger in 2011 as Vice President of Operations for Kroger’s Manufacturing division. Before joining Kroger, Ms. Sharp served as Vice President of Manufacturing for the Sara Lee Corporation. In that role, she led the manufacturing and logistics operations for the central region of their U.S. Fresh Bakery Division. Ms. Sharp has over 30 years of experience supporting food manufacturing operations. Ms. Sharp has announced her plan to retire in Spring of 2021.

Mark C. Tuffin 61 Mr. Tuffin has served as Senior Vice President since January 2014, and is responsible for the oversight of several of Kroger’s retail divisions. Prior to that, he served as President of Kroger’s Smith’s division from July 2011 to January 2014. From September 2009 to July 2011, Mr. Tuffin served as Vice President of Transition, where he was responsible for implementing an organizational restructuring initiative for Kroger’s retail divisions. He joined Kroger’s Smith’s division in 1996 and served in a series of leadership roles, including Vice President of Merchandising from September 1999 to September 2009. Mr. Tuffin held various positions with other supermarket retailers before joining Smith’s in 1996.

Christine S. Wheatley 50 Ms. Wheatley was elected Group Vice President, Secretary and General Counsel in May 2014. She joined Kroger in February 2008 as Corporate Counsel, and became Senior Attorney in 2010, Senior Counsel in 2011, and Vice President in 2012. Before joining Kroger, Ms. Wheatley was engaged in the private practice of law for 11 years, most recently as a partner at Porter Wright Morris & Arthur in Cincinnati.

COMPETITIVE ENVIRONMENT

For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive Environment.”

ITEM 1A. RISK FACTORS.

COMPETITIVE ENVIRONMENT

We are continuing to enhance the customer connection with investments in our four competitive moats – Seamless, Personalization, Fresh, and Our Brands. Each of these are strategic differentiators and each one is designed to generate customer loyalty and sustainable growth momentum. We believe our plans to deepen and strengthen our competitive moats provide a balanced approach that will enable us to meet the wide-ranging needs and expectations of our customers. If we are unable to continue to enhance the foregoing key elements of our connection with customers, or they fail to strengthen customer loyalty, our ability to compete and our financial condition, results of operations or cash flows could be adversely affected. Our ecosystem monetizes the traffic and data insights generated by our enhanced customer experience. We are using our assets in new ways through these fast-growing, asset-light and margin rich businesses. We may be unsuccessful in implementing our alternative profit strategy, which could adversely affect our market share and business growth, and our financial condition, results of operations or cash flows. The nature and extent to which our competitors respond to the evolving and competitive industry by developing and implementing their competitive strategies could adversely affect our profitability.

In addition, evolving customer preferences and the advancement of online, delivery, ship to home, and mobile channels in our industry enhance the competitive environment. We must anticipate and meet these evolving customer preferences and continue to implement technology, software and processes to be able to conveniently and cost-effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex and may not meet customer preferences. If we are not successful in reducing or offsetting the cost of fulfilling orders outside of our traditional in-store channel with efficiencies, cost-savings, expense reductions, or alternative revenues, our financial condition, results of operations or cash flows could be adversely affected.

In addition, if we do not successfully develop and maintain a relevant digital experience for our customers, our business, financial condition, results of operations or cash flows could be adversely impacted. Digital retailing is rapidly evolving, and we must keep pace with new developments by our competitors as well as the evolving needs and preferences of our customers. Our digital business accelerated significantly during the COVID-19 pandemic including Pickup, Delivery and Ship. We must compete by offering a convenient shopping experience for our customers regardless of how they choose to shop with us, and by investing in, providing and maintaining relevant customer-facing apps and interfaces that have the features customers want that are also reliable and easy to use. The future success of the digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities, whether in store, in pickup-only locations, and through customer fulfillment centers powered by Ocado.

PRODUCT SAFETY

Customers count on Kroger to provide them with safe food and drugs and other merchandise. Concerns regarding the safety of the products that we sell could cause shoppers to avoid purchasing certain products from us, or to seek alternative sources of supply even if the basis for the concern is outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish. We could be adversely affected by personal injury or project liability claims, product recalls, or other health and safety issues. If we sell products that cause illness or injury to customers, resulting from product contamination or spoilage, the presence of certain substances, or damage caused in handling, storage or transportation, we could be exposed to claims or litigation. Any issue regarding the safety of items whether Our Brands items manufactured by the company or for the company or CPG products we sell, regardless of the cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash flows.

EMPLOYEE MATTERS

A majority of our associates are covered by collective bargaining agreements with unions, and our relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could have a material adverse effect on our financial condition, results of operations or cash flows. We are a party to approximately 350 collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work stoppages by the affected workers could occur if we are unable to negotiate new contracts with labor unions. In addition, changes to national labor policy could affect labor relations with our associates and relationships with unions. Further, if we are unable to control health care, pension and wage costs, or if we have insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating costs and an adverse effect on our financial condition, results of operations or cash flows.

We are committed to paying fair wages and providing the benefits that were collectively bargained with the United Food and Commercial Workers (“UFCW”) and other labor unions representing associates. Our ability to control labor and benefit costs is subject to numerous internal and external factors, including regulatory changes, wage rates, and healthcare and other insurance costs. Changes to wage regulations, including further increases in the minimum wage and extra pay ordinances enacted by local governments, could have an impact on our future financial condition, results of operations or cash flows. Our ability to meet our labor needs, while controlling wages and other costs, is subject to numerous external factors, including the available qualified workforce in each area where we are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws.

Our continued success depends on the ongoing contributions of our associates, including members of our senior management and other key personnel. We must recruit, hire, develop and retain qualified associates with an increasingly large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non-retail businesses for these associates and invest significant resources in training and motivating them. Competition among potential employers could result in increased associate costs, or in our failure to recruit and retain associates. There is no assurance that we will be able to attract or retain sufficient highly qualified associates in the future, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

DATA AND TECHNOLOGY

Through our sales and marketing activities, we collect and store some personal information that our customers provide to us.

We also gather and retain information about our associates in the normal course of business. Under certain circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or otherwise in accordance with our privacy policy.

Our technology systems are vulnerable to disruption from circumstances beyond our control, and we regularly defend against and respond to data security incidents. Cyber-attackers have targeted and accessed, and may in the future again attempt to target and access, information stored in our or our vendors’ systems in order to misappropriate confidential customer or business information. Although we have implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly sophisticated cyber-attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a contractor or other third party with whom we do business may in the future circumvent our security measures in order to obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or applications we may use may have inherent defects, vulnerabilities, or could be inadvertently or intentionally applied or used in a way that could compromise our information security.

Our cybersecurity program, continued investment in our information technology systems, and our processes to evaluate and select vendors with reasonable information security controls may not effectively insulate us from potential attacks, data breaches or disruptions to our business operations, which could result in a loss of customers or business information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions, regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse effect on our business, financial condition, results of operations or cash flows and may not be covered by our insurance. In addition, compliance with privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes and may require us to devote significant management resources to address these issues. The costs of attempting to protect against the foregoing risks and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’ remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the unauthorized dissemination of sensitive personal information or confidential information about us or our customers could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers and business relationships, litigation or other actions which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations or cash flows.

Data governance failures can adversely affect our reputation and business. Our business depends on our customers’ willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate disclosure to our customers of our uses of their information, failing to keep our information technology systems and our customers’ sensitive information secure from significant attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations or cash flows. Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge we and our vendors face in maintaining the security of our information technology systems and proprietary information and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that we will detect them or that they can be sufficiently remediated.

The use of data by our business and our business associates is highly regulated. Privacy and information-security laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems changes and the development of new processes. If we or those with whom we share information fail to comply with laws and regulations, such as the California Consumer Privacy Act (CCPA) or the Health Insurance Portability and Accountability Act (HIPAA), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to additional legal risk or financial losses as a result of non-compliance.

PAYMENT SYSTEMS

We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and Kroger Pay, a mobile payment solution. As we offer new payment options to our customers, we may be subject to additional rules, regulations, compliance requirements, and higher fraud losses. For certain payment methods, we pay interchange and other related acceptance fees, along with additional transaction processing fees. We rely on third parties to provide payment transaction processing services for credit and debit cards. It could disrupt our business if these companies become unwilling or unable to provide these services to us, including due to short term disruption of service. We are also subject to evolving payment card association and network operating rules, including data security rules, certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card Industry Data Security Standards (“PCI DSS”), which contain compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If our payment card terminals or internal systems are breached or compromised, we may be liable for card re-issuance costs and other costs, subject to fines and higher transaction fees, and lose our ability to accept card payments from our members, or if our third-party service providers’ systems are breached or compromised, our business, financial condition, results of operations or cash flows could be adversely affected.

INDEBTEDNESS

LEGAL PROCEEDINGS AND INSURANCE

From time to time, we are a party to legal proceedings, including matters involving personnel and employment issues, personal injury, contract disputes, regulatory claims and other proceedings. Other legal proceedings purport to be brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in our evaluations or predictions about the proceedings, could have a material adverse effect on our financial condition, results of operations or cash flows. Please also refer to the “Litigation” section in Note 13 to the Consolidated Financial Statements.

We use a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, automobile and general liability, property, director and officers’ liability, cyber risk exposure and associate health care benefits. Any actuarial projection of losses is subject to a high degree of variability. With respect to insured matters, we are liable for retention amounts that vary by the nature of the claim, and some losses may not be covered by insurance. Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could all affect our financial condition, results of operations or cash flows.

MULTI-EMPLOYER PENSION OBLIGATIONS

As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer pension plans based on obligations arising under collective bargaining agreements with unions representing associates covered by those agreements. We believe that the present value of actuarially accrued liabilities in most of these multi-employer plans substantially exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to those funds will increase over the next few years. A significant increase to those funding requirements could adversely affect our financial condition, results of operations or cash flows. Despite the fact that the pension obligations of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably, or adjust their current views unfavorably, when determining their ratings on our debt securities. Any downgrading of our debt ratings likely would adversely affect our cost of borrowing and access to capital.

INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES

We enter into mergers, acquisitions and strategic alliances with expected benefits including, among other things, operating efficiencies, procurement savings, innovation, sharing of best practices and increased market share that may allow for future growth. Achieving the anticipated or desired benefits may be subject to a number of significant challenges and uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions underlying expectations regarding potential synergies, capital requirements, and the integration process, unforeseen expenses and delays, and competitive factors in the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our business, financial condition, results of operations or cash flows.

FUEL

We sell a significant amount of fuel in our 1,596 fuel centers, which could face increased regulation, including due to climate change or other environmental concerns, and demand could be affected by concerns about the effect of emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental effects, political unrest, acts of terrorism, disruptions to the economy, including but not limited to the COVID-19 pandemic, and other matters that may affect the cost and availability of fuel, and how our customers will react to such factors, which could adversely affect our financial condition, results of operations or cash flows.

ECONOMIC CONDITIONS

Our operating results could be materially impacted by changes in overall economic conditions that impact consumer confidence and spending, including discretionary spending. Future economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, the availability of credit, interest rates, tax rates and other matters could reduce consumer spending. Increased fuel prices could also have an effect on consumer spending and on our costs of producing and procuring products that we sell. We are unable to predict how the global economy and financial markets will perform. If the global economy and financial markets do not perform as we expect, it could adversely affect our financial condition, results of operations or cash flows.

WEATHER, NATURAL DISASTERS AND OTHER EVENTS

A large number of our stores and distribution facilities are geographically located in areas that are susceptible to hurricanes, tornadoes, floods, droughts and earthquakes. Weather conditions and natural disasters could disrupt our operations at one or more of our facilities, interrupt the delivery of products to our stores, substantially increase the cost of products, including supplies and materials and substantially increase the cost of energy needed to operate our facilities or deliver products to our facilities. Moreover, the effects of climate change, including those associated with extreme weather events, may affect our ability to procure needed commodities at costs and in quantities that are optimal for us or at all. Adverse weather, natural disasters, geo- political and catastrophic events, such as war, civil unrest, acts of terrorism or other acts of violence, including active shooter situations (which have occurred in the past at our locations), or pandemics, such as the spread of the novel coronavirus, COVID- 19, or other future pandemics and other matters that could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows.

COVID-19

The global COVID-19 pandemic continues to affect our business. A full year into the pandemic, many factors and uncertainties remain, including:

● the continuing concerns about the health of, and the effect on our associates, and our ability to meet staffing needs in our stores, distribution facilities, corporate offices and other critical functions;

● the ultimate duration of the pandemic, including whether there will be additional spikes in the number of COVID- 19 cases, future mutations or related strains of the virus;

● the duration, degree and effectiveness of governmental measures, such as access to unemployment compensation, stimulus payments, and other fiscal policy changes;

● the timing and availability of, and prevalence of access to and utilization of, effective medical treatments and timely rollout of vaccinations for COVID-19;

● evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures;

● the impact of the pandemic on economic activity and the pace and extent of recovery when the pandemic subsides, which may vary materially over time and among the different regions and markets we serve;

● the extent and duration of the effect on consumer confidence, economic well-being, spending, customer demand, buying patterns and shopping behaviors, including spend on discretionary categories, which often include higher margin products, and increased utilization of online sales channels, both during and after the pandemic; and

● the long-term impact of the pandemic on our business, including consumer behaviors.

In addition, we cannot predict with certainty the extent of the impact that COVID-19 will have on our customers, suppliers, vendors, and other business partners, and each of their financial conditions; however, any material adverse effect on these parties could materially and adversely impact us. To the extent that COVID-19 continues to affect the U.S. and global economy and our business, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor availability and cost, litigation and operational risk as a result of regulatory requirements.

GOVERNMENT REGULATION

SUPPLY CHAIN

Disruption in our global supply chain could negatively impact our business. The products we sell are sourced from a wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner could adversely impact our business. The loss or disruption of such supply arrangements for any reason, labor disputes, loss or impairment of key manufacturing sites, acts of war or terrorism, quality control issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have a material adverse impact on our business, financial condition, results of operations or cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

As of January 30, 2021, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food production equipment. The total cost of our owned assets and finance leases at January 30, 2021, was $46.0 billion while the accumulated depreciation was $23.6 billion.

We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For additional information on lease obligations, see Note 10 to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS.

Incorporated by reference herein is information regarding certain legal proceedings in which we are involved as set forth under “Litigation” contained in Note 13 – “Commitments and Contingencies” in the notes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 24, 2021, there were 25,973 shareholders of record.

During 2020, we paid two quarterly cash dividends of $0.16 per share and two quarterly cash dividends of $0.18 per share. During 2019, we paid two quarterly cash dividends of $0.14 per share and two quarterly cash dividends of $0.16 per share. On March 1, 2021, we paid a quarterly cash dividend of $0.18 per share. On March 11, 2021, we announced that our Board of Directors declared a quarterly cash dividend of $0.18 per share, payable on June 1, 2021, to shareholders of record at the close of business on May 14, 2021. We currently expect to continue to pay comparable cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including approval by our Board.

PERFORMANCE GRAPH

Base INDEXED RETURNS Period Years Ending

Company Name/Index 2015 2016 2017 2018 2019 2020 The Kroger Co. 100 87.11 78.05 76.08 74.51 97.75 S&P 500 Index 100 120.87 148.47 148.38 180.37 211.48 Peer Group 100 98.35 127.05 123.40 148.90 183.16

Kroger’s fiscal year ends on the Saturday closest to January 31.

Data supplied by Standard & Poor’s.

The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an express reference thereto.

* Total assumes $100 invested on January 30, 2016, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends.

** The Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), Costco Wholesale Corp., CVS Health Corporation, Etablissements Delhaize Freres Et Cie Le Lion (“Groupe Delhaize”, which is included through July 22, 2016 when it merged with Koninklijke Ahold), Koninklijke Ahold Delhaize NV (changed name from Koninklijke Ahold after merger with Groupe Delhaize), Supervalu Inc. (included through October 19, 2018 when it was acquired by United Natural Foods), Target Corp., Walgreens Boots Alliance Inc., Walmart Inc., Whole Foods Market Inc. (included through August 28, 2017 when it was acquired by Amazon.com, Inc.).

The following table presents information on our purchases of our common shares during the fourth quarter of 2020.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Approximate Dollar Shares Value of Shares

Purchased as that May Yet Be Part of Publicly Purchased Under

Total Number Average Announced the Plans or of Shares Price Paid Per Plans or Programs(4)

Period(1) Purchased(2) Share(2) Programs(3) (in millions) First four weeks

November 8, 2020 to December 5, 2020 4,397,677 $ 32.38 4,397,633 $ 583 Second four weeks

December 6, 2020 to January 2, 2021 3,788,929 $ 31.10 3,756,853 $ 470 Third four weeks

January 3, 2021 to January 30, 2021 2,363,215 $ 32.05 2,363,215 $ 400 Total 10,549,821 $ 31.85 10,517,701 $ 400

(1) The reported periods conform to our fiscal calendar composed of thirteen 28-day periods. The fourth quarter of 2020 contained three 28-day periods.

(2) Includes (i) shares repurchased under the September 2020 Repurchase Program described below in (4), (ii) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”) and (iii) 32,120 shares that were surrendered to the Company by participants under our long term incentive plans to pay for taxes on restricted stock awards.

(3) Represents shares repurchased under the September 2020 Repurchase Program and the 1999 Repurchase Program.

(4) On September 11, 2020, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2020 Repurchase Program”). The amounts shown in this column reflect the amount remaining under the September 2020 Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The September 2020 Repurchase Program and the 1999 Repurchase Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time.

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents our selected consolidated financial data for each of the last five fiscal years.

Fiscal Years Ended January 30, February 1, February 2, February 3, January 28,

2021 2020 2019 2018 2017 (52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks)

(In millions, except per share amounts) Sales $ 132,498 $ 122,286 $ 121,852 $ 123,280 $ 115,337 Net earnings including noncontrolling interests $ 2,588 $ 1,512 $ 3,078 $ 1,889 $ 1,957 Net earnings attributable to The Kroger Co. $ 2,585 $ 1,659 $ 3,110 $ 1,907 $ 1,975 Net earnings attributable to The Kroger Co. per diluted

common share $ 3.27 $ 2.04 $ 3.76 $ 2.09 $ 2.05 Total assets $ 48,637 $ 45,256 $ 38,118 $ 37,197 $ 36,505

Long-term liabilities, including obligations under finance leases $ 23,717 $ 22,440 $ 16,009 $ 16,095 $ 16,935

Total shareholders’ equity — The Kroger Co. $ 9,576 $ 8,602 $ 7,886 $ 6,931 $ 6,698 Cash dividends per common share $ 0.68 $ 0.60 $ 0.53 $ 0.49 $ 0.45

Note: This information should be read in conjunction with MD&A and the Consolidated Financial Statements.

Fiscal year 2016, 2018, 2019 and 2020 each include 52 weeks. Fiscal year 2017 includes 53 weeks.

Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. The prior-year amounts have been reclassified to conform to current-year presentation with the exception of 2016, which was not material and not adjusted for the sales reclassification.

Refer to Note 2 to the Consolidated Financial Statements for disclosure of business combinations and their effect on the Consolidated Statements of Operations and the Consolidated Balance Sheets.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended February 1, 2020, which provides additional information on comparisons of fiscal years 2019 and 2018.

EXECUTIVE SUMMARY – OUR PATH TO DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN

We are proud of our results in 2020 and the balance achieved in delivering for all our key stakeholders – our Associates, Customers, Communities and Investors. We gained market share and exceeded guidance that we gave in the second half of 2020. We committed more than $2.5 billion to safeguard the environment our associates and customers work and shop in and to reward associates, including a $1 billion commitment to a UFCW pension fund. Identical sales, without fuel, were 14.1% for 2020, as customers continued to consolidate trips and spend more per transaction. We grew digital sales triple digits in 2020, enabled by our team’s ability to pivot quickly and effectively in the first stage of the pandemic to ensure that we were meeting our customers’ demand for safe, low-touch or touchless shopping modalities. Our strong performance in digital is also a testament to the proactive investments we made over the last several years in our network, which positioned us to respond with agility during this critical time. We were disciplined in balancing investments in our customers and associates with cost savings. For the third year in a row, our operations and sourcing teams delivered over $1 billion in incremental cost savings. These savings continue to be focused in areas that take complexity out of the business and allow our associates to provide a better customer experience. Strong execution by our team and accelerated investments in our competitive moats – Fresh, Our Brands, Data & Personalization and Seamless, during the pandemic allowed us to create significant value for shareholders and strengthen our balance sheet, including accelerated growth in our alternative profit business. The momentum we see in our business, which started pre- pandemic and accelerated during the pandemic, places us in an even better position to grow sales and profitability in the future and deliver on our total shareholder return commitments.

Our financial model is underpinned by our leading position in food. We continue to invest in areas of the business that matter most to our customers and deepen our competitive moats, to drive sales growth in our retail supermarket business, including fuel and pharmacy. This in turn generates the data and traffic that enables our fast-growing alternative profit streams. Our financial strategy is to continue to use our free cash flow to invest in the business to drive long-term sustainable net earnings growth, through the identification of high-return projects that support our strategy. Capital allocation is a core element of our value creation model, and we will allocate capital towards driving profitable sales growth, accelerating digital, expanding margin as well as maintaining the business. We will continue to be disciplined in deploying capital towards projects that exceed our hurdle rate of return and prioritize the highest return opportunities to drive 3% to 5% net earnings growth. At the same time, we are committed to maintaining our net debt to adjusted EBITDA range of 2.30 to 2.50 in order to keep our current investment grade debt rating. Our resilient cash flow will allow us to continue to grow our dividend over time and continue to return excess cash to investors via share repurchases, resulting in consistently strong and sustainable total shareholder return of between 8% and 11%.

The following table provides highlights of our financial performance:

Financial Performance Data ($ in millions, except per share amounts)

Fiscal Year Percentage

2020 Change 2019 Sales $ 132,498 8.4 % $ 122,286 Sales without fuel 123,012 13.7 % 108,234 Net earnings attributable to The Kroger Co. 2,585 55.8 % 1,659 Adjusted net earnings attributable to The Kroger Co. 2,740 53.4 % 1,786 Net earnings attributable to The Kroger Co. per diluted common share 3.27 60.3 % 2.04 Adjusted net earnings attributable to The Kroger Co. per diluted common share 3.47 58.4 % 2.19 Operating profit 2,780 23.5 % 2,251 Adjusted FIFO operating profit 4,056 35.4 % 2,995 Dividends paid 534 9.9 % 486 Dividends paid per common share 0.68 13.3 % 0.60 Identical sales excluding fuel 14.1 % N/A 2.0 % FIFO gross margin rate, excluding fuel, bps increase (decrease) 0.14 N/A (0.23) OG&A rate, excluding fuel and Adjusted Items, bps decrease 0.06 N/A 0.29 Reduction in total debt, including obligations under finance leases compared to

prior fiscal year end 663 N/A 1,153 Share repurchases 1,324 N/A 465

OVERVIEW

Notable items for 2020 are:

Shareholder Return

● Net earnings attributable to The Kroger Co. per diluted common share of $3.27.

● Adjusted net earnings attributable to The Kroger Co. per diluted common share of $3.47.

● Achieved operating profit of $2.8 billion.

● Achieved adjusted FIFO operating profit of $4.1 billion.

● Generated cash from operations of $6.8 billion.

● Increased cash and temporary cash investments by $1.3 billion, reflecting improved operating performance, significant improvements in working capital and the deferral of tax payments as a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which was enacted in the first quarter of 2020.

● Returned $1.9 billion to shareholders through share repurchases and dividend payments.

● Decreased total debt, including obligations under finance leases, by $663 million.

Other Financial Results

● Identical sales, excluding fuel, increased 14.1% in 2020.

● Digital revenue grew 116% in 2020. Digital revenue primarily includes Pickup, Delivery, Ship and pharmacy e- commerce sales.

● Alternative profit streams contributed an incremental $150 million of operating profit in 2020 fueled by our retail media business – Kroger Precision Marketing.

● Cost savings for 2020 exceeded $1 billion.

Significant Events

● During the fourth quarter of 2020, certain of the Company’s associates ratified an agreement with certain UFCW local unions to withdraw from the UFCW International Union-Industry Pension Fund (“National Fund”). We incurred a withdrawal liability charge of $962 million, on a pre-tax basis, to fulfill obligations for past service for associates and retirees in the National Fund. We also made a $27 million commitment to a transition reserve in the new variable annuity pension plan. On an after-tax basis, the withdrawal liability and commitment to the transition reserve total $754 million (collectively, the “National Fund Commitment”). The withdrawal liability will be satisfied by payments to the National Fund over the next three years.

● During 2020, we invested over $1.5 billion to support and safeguard associates, customers and communities during the COVID-19 pandemic. These investments primarily relate to items within OG&A such as associate appreciation awards, expanded sick and emergency leave pay and investments in associate and customer safety during the pandemic (collectively, the “COVID-19 Investments”). Supported by our strong performance and cash position, we committed more than $2.5 billion to safeguard the environment our associates and customers work and shop in and to reward associates, including the National Fund Commitment.

● During the first quarter of 2020, in addition to the recurring multi-employer pension contributions we make in the normal course of business, we contributed an incremental $236 million, $180 million net of tax, to multi-employer pension plans, helping stabilize future associate benefits (the “First Quarter 2020 Multi-Employer Pension Contribution”).

COVID-19

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become a pandemic, and on March 13, the U.S. President announced a National Emergency relating to the disease. The impact on our financial condition, results of operations, and cash flows was material in fiscal year 2020. We expect the ultimate significance will be dictated by the length of time that such circumstances continue, which will depend on the currently unknowable extent and duration of the COVID-19 pandemic and any governmental and public actions taken in response.

Since the beginning of the pandemic, our most urgent priority has been to safeguard our associates and customers. We’ve implemented dozens of new safety and cleanliness processes and procedures in our stores and other facilities, including safety partitions and physical distancing floor decals, implementation of customer capacity limits, and providing personal protective equipment like masks for our associates. All of which are described in our Blueprint for Businesses – an open source guide we created to help other companies navigate the complexities of safely operating during a pandemic.

As the pandemic has evolved, we have experienced unusually strong sales. We continue to see people eat and work more from home and prioritize health and cleanliness. The change in customer behavior caused by COVID-19 was a major factor in our 2020 results. The pandemic brought to the forefront the importance to the customer of fresh and digital. We continued to invest and grow our capabilities in these areas, leading to gains in both digital and total food at home market share. Identical sales, without fuel, were 14.1% for 2020, as customers continued to consolidate trips and spend more per transaction. Digital revenue grew 116% in 2020, enabled by our team’s ability to pivot quickly and effectively in the first stage of the pandemic to ensure that we were meeting our customers’ demand for safe, low-touch or touchless shopping modalities.

Our OG&A expenses include significant incremental costs related to investments in pay and benefits for our associates and measures to safeguard our associates and customers. Supported by our strong performance and cash position, in 2020 we committed more than $2.5 billion to safeguard the environment our associates and customers work and shop in and to reward associates, including committing nearly $1 billion to better secure pensions for over 30,000 associates. This was in addition to paid emergency leave, financial assistance through our Helping Hands program and more. As a percentage of sales, these incremental costs were partially offset by sales leverage resulting from strong sales growth due to the COVID-19 pandemic.

On March 18, 2020, we proactively borrowed $1 billion under the revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the COVID-19 pandemic. Strong execution by our team and accelerated investments in our competitive moats during the pandemic allowed us to strengthen our balance sheet. During 2020, we fully repaid the $1 billion borrowed under the revolving credit facility and $1.2 billion in outstanding commercial paper obligations, as of year-end 2019, using cash generated by operations.

For additional information about our debt activity in 2020, including the drawdown and repayments under our revolving credit facility, forward-starting interest rate swap agreements and our senior note issuances, see Note 6 to the Consolidated Financial Statements. For additional information about our business results, including the impact of the COVID-19 pandemic, see our Results of Operations and Liquidity and Capital Resources sections within MD&A.

OUR BUSINESS

The Kroger Co. was founded in 1883 and incorporated in 1902. As of January 30, 2021, Kroger is one of the world’s largest retailers, as measured by revenue, operating 2,742 supermarkets under a variety of local banner names in 35 states and the District of Columbia. Of these stores, 2,255 have pharmacies and 1,596 have fuel centers. We offer Pickup (also referred to as ClickList®) and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 2,223 of our supermarkets and provide home delivery service to substantially all of Kroger households. We also operate an online retailer.

We operate 35 food production plants, primarily bakeries and dairies, which supply approximately 29% of Our Brands units and 40% of the grocery category Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment.

On January 27, 2020, Lucky’s Market filed a voluntary petition in the Bankruptcy Court seeking relief under the Bankruptcy Code. Lucky’s Market is included in our Consolidated Statements of Operations in all periods in 2018 and through January 26, 2020. Refer to Note 17 to the Consolidated Financial Statements for additional information.

On April 26, 2019, we completed the sale of our Turkey Hill Dairy business for total proceeds of $225 million. Turkey Hill Dairy is included in our Consolidated Statements of Operations in all periods in 2018 and through April 25, 2019.

On March 13, 2019, we completed the sale of our You Technology business to Inmar for total consideration of $565 million, including $396 million of cash and $64 million of preferred equity received upon closing. We are also entitled to receive other cash payments of $105 million over five years. The transaction includes a long-term service agreement for Inmar to provide us digital coupon services. You Technology is included in our Consolidated Statements of Operations in all periods in 2018 and through March 12, 2019.

On June 22, 2018, we closed our merger with Home Chef by purchasing 100% of the ownership interest in Home Chef, for $197 million net of cash and cash equivalents of $30 million, in addition to future earnout payments of up to $500 million over five years that are contingent on achieving certain milestones. Home Chef is included in our ending Consolidated Balance Sheet for 2019 and 2020 and in our Consolidated Statements of Operations from June 22, 2018 through February 2, 2019 and all periods in 2019 and 2020. See Note 2 to the Consolidated Financial Statements for more information related to our merger with Home Chef.

USE OF NON-GAAP FINANCIAL MEASURES

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including First-In, First-Out (“FIFO”) gross margin, FIFO operating profit, adjusted net earnings and adjusted net earnings per diluted share because management believes these metrics are useful to investors and analysts. These non-GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP.

The adjusted net earnings and adjusted net earnings per diluted share metrics are important measures used by management to compare the performance of core operating results between periods. We believe adjusted net earnings and adjusted net earnings per diluted share are useful metrics to investors and analysts because they present more accurate year-over-year comparisons for our net earnings and net earnings per diluted share because adjusted items are not the result of our normal operations. Net earnings for 2020 include the following, which we define as the “2020 Adjusted Items:”

● Charges to OG&A of $989 million, $754 million net of tax, for commitments to certain multi-employer pension funds, $189 million, $141 million net of tax, for the revaluation of Home Chef contingent consideration and $111 million, $81 million net of tax, for transformation costs (the “2020 OG&A Adjusted Items”).

● Gains in other income (expense) of $1.1 billion, $821 million net of tax, for the gain on investments (the “2020 Other Income (Expense) Adjusted Item”).

Net earnings for 2019 include the following, which we define as the “2019 Adjusted Items:”

● Charges to OG&A of $135 million, $104 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds; $80 million, $61 million net of tax, for a severance charge and related benefits; $412 million including $305 million attributable to The Kroger Co., $225 million net of tax, for impairment of Lucky’s Market; $52 million, $37 million net of tax, for transformation costs, primarily including 35 planned store closures; and a reduction to OG&A of $69 million, $49 million net of tax, for the revaluation of Home Chef contingent consideration (the “2019 OG&A Adjusted Items”).

Net earnings for 2018 include the following, which we define as the “2018 Adjusted Items:”

● A reduction to depreciation and amortization expenses of $14 million, $11 million net of tax, related to held for sale assets (the “2018 Depreciation Adjusted Item”).

Net Earnings per Diluted Share excluding the Adjusted Items ($ in millions, except per share amounts)

2020 2019 2018 Net earnings attributable to The Kroger Co. $ 2,585 $ 1,659 $ 3,110 (Income) expense adjustments

Adjustments for pension plan withdrawal liabilities(1)(2) 754 104 121 Adjustment for gain on sale of convenience store business(1)(3) — — (1,360) Adjustment for gain on sale of Turkey Hill Dairy(1)(4) — (80) — Adjustment for gain on sale of You Technology(1)(5) — (52) — Adjustment for gain on investments(1)(6) (821) (119) (174) Adjustment for depreciation related to held for sale assets(1)(7) — — (11) Adjustment for severance charge and related benefits(1)(8) — 61 — Adjustment for deconsolidation and impairment of Lucky's Market attributable to The Kroger

Co.(1)(9) — 225 — Adjustment for Home Chef contingent consideration(1)(10) 141 (49) 26 Adjustment for impairment of financial instrument(1)(11) — — 33 Adjustment for transformation costs(1)(12) 81 37 —

Total Adjusted Items 155 127 (1,365)

Net earnings attributable to The Kroger Co. excluding the Adjusted Items $ 2,740 $ 1,786 $ 1,745

Net earnings attributable to The Kroger Co. per diluted common share $ 3.27 $ 2.04 $ 3.76 (Income) expense adjustments

Adjustments for pension plan withdrawal liabilities(13) 0.95 0.13 0.15 Adjustment for gain on sale of convenience store business(13) — — (1.65) Adjustment for gain on sale of Turkey Hill Dairy(13) — (0.10) — Adjustment for gain on sale of You Technology(13) — (0.06) — Adjustment for gain on investments(13) (1.05) (0.15) (0.21) Adjustment for depreciation related to held for sale assets(13) — — (0.01) Adjustment for severance charge and related benefits(13) — 0.08 — Adjustment for deconsolidation and impairment of Lucky's Market attributable to The Kroger

Co.(13) — 0.28 — Adjustment for Home Chef contingent consideration(13) 0.18 (0.07) 0.03 Adjustment for impairment of financial instrument(13) — — 0.04 Adjustment for transformation costs(13) 0.12 0.04 —

Total Adjusted Items 0.20 0.15 (1.65)

Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items $ 3.47 $ 2.19 $ 2.11

Average numbers of common shares used in diluted calculation 781 805 818

(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax rates. (2) The pre-tax adjustment for pension plan withdrawal liabilities was $989 in 2020, $135 in 2019 and $155 in 2018. (3) The pre-tax adjustment for gain on sale of convenience store business was ($1,782). (4) The pre-tax adjustment for gain on sale of Turkey Hill Dairy was ($106). (5) The pre-tax adjustment for gain on sale of You Technology was ($70). (6) The pre-tax adjustment for gain on investments was ($1,105) in 2020, ($157) in 2019 and ($228) in 2018. (7) The pre-tax adjustment for depreciation related to held for sale assets was ($14) in 2018. (8) The pre-tax adjustment for severance charge and related benefits was $80. (9) The pre-tax adjustment for deconsolidation and impairment of Lucky’s Market was $412 including $305 attributable to The

Kroger Co. (10) The pre-tax adjustment for Home Chef contingent consideration was $189 in 2020, ($69) in 2019 and $33 in 2018. (11) The pre-tax adjustment for impairment of financial instrument was $42. (12) The pre-tax adjustment for transformation costs was $111 in 2020 and $52 in 2019. Transformation costs primarily include

costs related to store and business closures and third-party professional consulting fees associated with business transformation and cost saving initiatives.

(13) The amount presented represents the net earnings per diluted common share effect of each adjustment.

RESULTS OF OPERATIONS

Sales

Total Sales ($ in millions)

Percentage Percentage 2020 Change(1) 2019 Change(2) 2018

Total sales to retail customers without fuel(3) $ 122,134 13.6 % $ 107,487 2.2 % $ 105,123 Supermarket fuel sales 9,486 (32.5)% 14,052 (5.7)% 14,903 Convenience stores(4) — — % — — % 944 Other sales(5) 878 17.5 % 747 (15.3)% 882 Total sales $ 132,498 8.4 % $ 122,286 0.4 % $ 121,852

(1) This column represents the percentage change in 2020 compared to 2019. (2) This column represents the percentage change in 2019 compared to 2018. (3) Digital sales, primarily including Pickup, Delivery, Ship and pharmacy e-commerce sales, grew approximately 116% in

2020, 29% in 2019 and 58% in 2018. These sales are included in the “total sales to retail customers without fuel” line above. (4) We completed the sale of our convenience store business unit during the first quarter of 2018. (5) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media revenue.

The increase in 2020, compared to 2019, is primarily due to growth in third-party media revenue, partially offset by decreased sales due to the disposal of Turkey Hill Dairy and You Technology in the first quarter of 2019. The decrease in 2019, compared to 2018, is primarily due to the disposal of Turkey Hill Dairy and You Technology in the first quarter of 2019, partially offset by an increase in data analytic services and third-party media revenue.

Total sales increased in 2020, compared to 2019, by 8.4%. The increase was due to an increase in total sales to retail customers without fuel, partially offset by a reduction in supermarket fuel sales and decreased sales due to the disposal of Turkey Hill Dairy and You Technology in the first quarter of 2019. Total sales to retail customers without fuel increased 13.6% in 2020, compared to 2019. The increase was primarily due to our identical sales increase, excluding fuel, of 14.1%, partially offset by decreased sales due to the deconsolidation of Lucky’s Market in the fourth quarter of 2019. Total sales excluding fuel and dispositions increased 14.2% in 2020 compared to 2019. The significant increase in identical sales, excluding fuel, was caused by unprecedented demand due to the COVID-19 pandemic, digital sales growth and growth in market share. Market share growth contributed to our identical sales increase, excluding fuel, as our sales outpaced the general growth in the food retail industry during 2020. The increase in identical sales, excluding fuel, was broad based across all supermarket divisions and remained heightened throughout 2020. During the pandemic, customers reduced trips while significantly increasing basket value.

Total supermarket fuel sales decreased 32.5% in 2020, compared to 2019, primarily due to a decrease in fuel gallons sold of 17.5% and a decrease in the average retail fuel price of 18.2%. The decrease in fuel gallons sold was reflective of the national trend, which decreased due to the COVID-19 pandemic. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel.

Total supermarket fuel sales decreased 5.7% in 2019, compared to 2018, primarily due to a decrease in fuel gallons sold of 4.8% and a decrease in the average retail fuel price of 1.0%. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel.

Identical Sales ($ in millions)

2020 2019 Excluding fuel $ 120,762 $ 105,806 Excluding fuel 14.1 % 2.0 %

Gross Margin, LIFO and FIFO Gross Margin

Our gross margin rates, as a percentage of sales, were 23.32% in 2020 and 22.07% in 2019. The increase in 2020, compared to 2019, resulted primarily from decreased fuel sales, which have a lower gross margin rate, an increase in our fuel gross margin, growth in our alternative profit stream portfolio, effective negotiations to achieve savings on the cost of products sold and decreased shrink, transportation and advertising costs, as a percentage of sales, reflecting the significant increase in sales volumes, partially offset by continued investments in lower prices for our customers and a change in our product sales mix, including lower relative sales in higher gross margin categories such as deli/bakery.

Our LIFO credit was $7 million in 2020 compared to a LIFO charge of $105 million in 2019. Our LIFO credit was primarily driven by fourth quarter 2020 working capital improvements in pharmacy inventory and dairy deflation.

Our FIFO gross margin rate, which excludes the LIFO charge, was 23.32% in 2020, compared to 22.16% in 2019. Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, our FIFO gross margin rate increased 14 basis points in 2020, compared to 2019. This increase resulted primarily from growth in our alternative profit stream portfolio, effective negotiations to achieve savings on the cost of products sold and decreased shrink, transportation and advertising costs, as a percentage of sales, reflecting the significant increase in sales volumes, partially offset by continued investments in lower prices for our customers and a change in our product sales mix, including lower relative sales in higher gross margin categories such as deli/bakery.

Operating, General and Administrative Expenses

OG&A expenses, as a percentage of sales, were 18.49% in 2020 and 17.34% in 2019. The increase in 2020, compared to 2019, resulted primarily from the First Quarter 2020 Multi-Employer Pension Contribution, the 2020 OG&A Adjusted Items, the COVID-19 Investments, growth in our digital channel as a result of heightened demand during the pandemic, increased incentive plan costs and the effect of decreased fuel sales, which increases our OG&A rate, as a percentage of sales, partially offset by the effect of increased sales due to the pandemic which decreases our OG&A rate, as a percentage of sales, the 2019 OG&A Adjusted Items and broad based improvement from cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions.

Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the 2020 OG&A Adjusted Items and the 2019 OG&A Adjusted Items, our OG&A rate decreased 6 basis points in 2020, compared to 2019. This decrease resulted primarily from the effect of increased sales due to the pandemic which decreases our OG&A rate, as a percentage of sales and broad based improvement from cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions, partially offset by the First Quarter 2020 Multi-Employer Pension Contribution, the COVID-19 Investments, growth in our digital channel as a result of heightened demand during the pandemic and increased incentive plan costs. Excluding the $236 million First Quarter 2020 Multi-Employer Pension Contribution from the above calculation, which we proactively made to cover future funding requirements for certain multi-employer pension plans, our OG&A rate improved 25 basis points.

Rent Expense

Rent expense was $874 million, or 0.66% of sales, for 2020, compared to $884 million, or 0.72% of sales, for 2019. Rent expense, as a percentage of sales, decreased 6 basis points in 2020, compared to 2019, primarily due to the effect of increased sales due to the pandemic which decreases our rent expense, as a percentage of sales.

Depreciation and Amortization Expense

Depreciation and amortization expense was $2.7 billion, or 2.07% of sales, for 2020, compared to $2.6 billion, or 2.17% of sales, for 2019. Depreciation and amortization expense, as a percentage of sales, decreased 10 basis points in 2020, compared to 2019. This decrease resulted primarily from the effect of increased sales due to the pandemic which decreases our depreciation expense, as a percentage of sales, partially offset by decreased fuel sales, which increases our depreciation expense, as a percentage of sales, additional depreciation on capital investments, excluding mergers and lease buyouts, of $3.2 billion during 2020 and a decrease in the average useful life on these capital investments. Our strategy includes initiatives to enhance the customer experience in stores, improve our process efficiency and integrate our digital shopping experience through technology developments. As such, the percentage of capital investments related to digital and technology has grown compared to the prior year, which has caused a decrease in the average depreciable life of our capital portfolio.

Operating Profit and FIFO Operating Profit

Operating profit was $2.8 billion, or 2.10% of sales, for 2020, compared to $2.3 billion, or 1.84% of sales, for 2019. Operating profit, as a percentage of sales, increased 26 basis points in 2020, compared to 2019, due to improved sales to retail customers without fuel, a higher gross margin rate, decreased rent and depreciation and amortization expenses, as a percentage of sales, and increased fuel earnings, partially offset by increased OG&A expense with fuel, as a percentage of sales.

FIFO operating profit was $2.8 billion, or 2.09% of sales, for 2020, compared to $2.4 billion, or 1.93% of sales, for 2019. FIFO operating profit, excluding the 2020 and 2019 Adjusted Items, increased 64 basis points in 2020, compared to 2019, due to improved sales to retail customers without fuel, a higher gross margin rate, decreased rent and depreciation and amortization expenses, as a percentage of sales, and increased fuel earnings, partially offset by increased OG&A expense with fuel, as a percentage of sales.

Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are discussed earlier in this section.

The following table provides a reconciliation of operating profit to FIFO operating profit, excluding the 2020 and 2019 Adjusted Items.

Operating Profit excluding the Adjusted Items ($ in millions)

2020 2019 Operating profit $ 2,780 $ 2,251 LIFO (credit) charge (7) 105

FIFO Operating profit 2,773 2,356

Adjustment for pension plan withdrawal liabilities 989 135 Adjustment for Home Chef contingent consideration 189 (69) Adjustment for severance charge and related benefits — 80 Adjustment for transformation costs(1) 111 52 Adjustment for deconsolidation and impairment of Lucky's Market(2) — 412 Other (6) 29

2020 and 2019 Adjusted items 1,283 639

Adjusted FIFO operating profit excluding the adjustment items above $ 4,056 $ 2,995

(1) Transformation costs primarily include costs related to store and business closures and third-party professional consulting fees associated with business transformation and cost saving initiatives.

(2) The adjustment for impairment of Lucky’s Market includes a $107 million net loss attributable to the minority interest of Lucky’s Market.

Interest Expense

Interest expense totaled $544 million in 2020 and $603 million in 2019. The decrease in interest expense in 2020, compared to 2019, resulted primarily from decreased borrowings. Over the last 12 months, we decreased total debt, including obligations under finance leases, by $663 million.

Income Taxes

Our effective income tax rate was 23.2% in 2020 and 23.7% in 2019. The 2020 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The 2019 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and Lucky’s Market losses attributable to the noncontrolling interest which reduced pre-tax income but did not impact tax expense.

Net Earnings and Net Earnings Per Diluted Share

Our net earnings are based on the factors discussed in the Results of Operations section.

Net earnings were $3.27 per diluted share for 2020 compared to net earnings of $2.04 per diluted share for 2019. Adjusted net earnings of $3.47 per diluted share for 2020 represented an increase of 58.4% compared to adjusted net earnings of $2.19 per diluted share for 2019. The increase in adjusted net earnings per diluted share resulted primarily from increased FIFO operating profit without fuel, the decrease in the LIFO charge, increased fuel earnings and lower weighted average common shares outstanding due to common share repurchases, partially offset by a higher income tax expense.

COMMON SHARE REPURCHASE PROGRAMS

In addition to these repurchase programs, we also repurchase common shares to reduce dilution resulting from our employee stock option plans. This program is solely funded by proceeds from stock option exercises, and the tax benefit from these exercises. We repurchased approximately $128 million in 2020 and $65 million in 2019 of our common shares under the stock option program.

On November 5, 2019, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “November 2019 Repurchase Program”). On September 11, 2020, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2020 Repurchase Program”). The September 2020 Repurchase Program authorization replaced the existing November 2019 Repurchase Program.

The shares repurchased in 2020 were reacquired under the following share repurchase programs:

● The November 2019 Repurchase Program.

● The September 2020 Repurchase Program.

As of January 30, 2021, there was $400 million remaining under the September 2020 Repurchase Program.

During the first quarter through March 24, 2021, we repurchased an additional $36 million of our common shares under the stock option program and $191 million additional shares under the September 2020 Repurchase Program. As of March 24, 2021, we have $209 million remaining under the September 2020 Repurchase Program.

CAPITAL INVESTMENTS

Capital investments, including changes in construction-in-progress payables and excluding mergers and the purchase of leased facilities, totaled $3.2 billion in 2020 and $3.0 billion in 2019. Capital investments for the purchase of leased facilities totaled $58 million in 2020 and $82 million in 2019. The table below shows our supermarket storing activity and our total supermarket square footage:

Supermarket Storing Activity

2020 2019 2018 Beginning of year 2,757 2,764 2,782 Opened 5 10 10 Opened (relocation) 6 9 4 Acquired — 6 10 Closed (operational) (20) (19) (38) Closed (relocation) (6) (13) (4) End of year 2,742 2,757 2,764

Total supermarket square footage (in millions) 179 180 179

RETURN ON INVESTED CAPITAL

We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain items included in operating profit, and adding back our LIFO charge (credit), depreciation and amortization and rent to our U.S. GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve, (iii) the average accumulated depreciation and amortization and (iv) for 2019, an adjustment due to the adoption of ASU 2016-02, “Leases,” at the beginning of 2019 as further described in Notes 10 and 18 to the Consolidated Financial Statements; minus (i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages, (iv) the average other current liabilities, excluding accrued income taxes, (v) the average liabilities held for sale and (vi) certain other adjustments. Averages are calculated for ROIC by adding the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and dividing by two. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to investors and analysts because it measures how effectively we are deploying our assets.

The following table provides a calculation of ROIC for 2020 and 2019 on a 52 week basis ($ in millions). The 2019 calculation of ROIC excludes the financial position and results of operations of You Technology and Turkey Hill Dairy, due to the sales in 2019, and Lucky’s Market, due to the deconsolidation in 2019.

Fiscal Year Ended January 30, February 1,

2021 2020 Return on Invested Capital Numerator

Operating profit $ 2,780 $ 2,251 LIFO charge (credit) (7) 105 Depreciation and amortization 2,747 2,649 Rent 874 884 Adjustment for Home Chef contingent consideration 189 (69) Adjustment for pension plan withdrawal liabilities 989 135 Adjustment for severance charge and related benefits — 80 Adjustment for transformation costs 111 52 Adjustment for deconsolidation and impairment of Lucky's Market — 412 Adjustment for operating losses of Lucky's Market — 75 Adjustment for disposal of You Technology — (49) Adjusted ROIC operating profit $ 7,683 $ 6,525

Denominator Average total assets $ 46,959 $ 41,687 Average taxes receivable(1) (74) (41) Average LIFO reserve 1,377 1,329 Average accumulated depreciation and amortization 24,161 23,404 Average trade accounts payable (6,514) (6,204) Average accrued salaries and wages (1,291) (1,198) Average other current liabilities(2) (4,926) (3,942) Average liabilities held for sale — (26) Adjustment for disposal of Turkey Hill Dairy — (45) Adjustment for disposal of You Technology — (13) Adjustment for deconsolidation of Lucky's Market — (25) Initial operating lease assets at adoption of ASU 2016-02, “Leases” (see Notes 10 and 18) — 3,406 Average invested capital $ 59,692 $ 58,332

Return on Invested Capital 12.87 % 11.19 %

(1) Taxes receivable were $66 as of January 30, 2021 and $82 as of February 1, 2020. We did not have any taxes receivable as of February 2, 2019.

(2) Other current liabilities included accrued income taxes of $9 as of January 30, 2021 and $60 as of February 2, 2019. We did not have any accrued income taxes as of February 1, 2020. Accrued income taxes are removed from other current liabilities in the calculation of average invested capital.

CRITICAL ACCOUNTING POLICIES

Impairments of Long-Lived Assets

We recorded asset impairments in the normal course of business totaling $70 million in 2020. In 2019, we recognized an impairment charge related to Lucky’s Market totaling $238 million. The Lucky’s Market impairment charge consisted of property, plant and equipment of $200 million; goodwill of $19 million; operating lease assets of $11 million; and other charges of $8 million. Additionally, we recorded asset impairments totaling $120 million in 2019, including $70 million of operating lease assets. This 2019 impairment charge included the 35 planned store closures across our footprint in 2020 related to our transformation efforts. We record costs to reduce the carrying value of long-lived assets in the Consolidated Statements of Operations as OG&A expense.

Business Combinations

Goodwill

Our goodwill totaled $3.1 billion as of January 30, 2021. We review goodwill for impairment in the fourth quarter of each year, and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows on management’s knowledge of the current operating environment and expectations for the future. We recognize goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Our annual evaluation of goodwill is performed for our reporting units during the fourth quarter. The 2020 fair value of our Kroger Specialty Pharmacy reporting unit was estimated using multiple valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable mergers and acquisition model (market approaches), with each method weighted in the calculation. The income approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples. The annual evaluation of goodwill performed in 2020, 2019 and 2018 did not result in impairment for any of our reporting units. Based on current and future expected cash flows, we believe additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would not indicate a potential for impairment of our goodwill balance.

For additional information relating to our results of the goodwill impairment reviews performed during 2020, 2019 and 2018, see Note 3 to the Consolidated Financial Statements.

Multi-Employer Pension Plans

We recognize expense in connection with these plans as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $619 million in 2020, $461 million in 2019 and $358 million in 2018. The increase in 2020, compared to 2019 and 2018 is due to the First Quarter 2020 Multi-Employer Pension Contribution.

We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have sole investment authority over these assets. Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

● In 2020, we incurred a $989 million charge, $754 million net of tax, for commitments to certain multi-employer pension funds.

● In 2019, we incurred a $135 million charge, $104 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds.

● In 2018, we incurred a $155 million charge, $121 million net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund.

As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could incur withdrawal liabilities for certain funds.

As of December 31, 2020, we estimate our share of the underfunding of multi-employer pension plans to which we contribute was approximately $1.7 billion, $1.3 billion net of tax. This represents a decrease in the estimated amount of underfunding of approximately $600 million, $500 million net of tax, as of December 31, 2020, compared to December 31, 2019. The decrease in the amount of underfunding is primarily attributable to higher expected returns on assets in the funds during 2020, restructuring of the National Fund and the First Quarter 2020 Multi-Employer Pension Contribution. Our estimate is based on the most current information available to us including actuarial evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise unreliable.

See Note 16 to the Consolidated Financial Statements for more information relating to our participation in these multi- employer pension plans.

NEW ACCOUNTING STANDARDS

Refer to Note 18 and Note 19 to the Consolidated Financial Statements for recently adopted accounting standards and recently issued accounting standards not yet adopted as of January 30, 2021.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Information

Net cash provided by operating activities

We generated $6.8 billion of cash from operations in 2020 compared to $4.7 billion in 2019. Net earnings including noncontrolling interests, adjusted for non-cash items and other impacts, generated approximately $5.3 billion of operating cash flow in 2020 compared to $5.0 billion in 2019. Cash provided (used) by operating activities for changes in operating assets and liabilities, including working capital, net of effects from mergers and disposals of businesses was $1.5 billion in 2020 compared to ($312) million in 2019. The increase in cash provided by operating activities for changes in operating assets and liabilities, including working capital, net of effects from mergers and disposals of businesses, was primarily due to the following:

● A decrease in FIFO inventory at the end of 2020 due to accelerated timing of inventory sell-through resulting from elevated demand for our products during the pandemic;

● An increase in accrued expenses at the end of 2020 primarily due to the following:

o An increase in the current portion of the deferral of the employer portion of social security tax payments as a result of the CARES Act;

o An increase in accrued incentive plan costs at the end of 2020; and

o An increase in the current portion of our commitments due to the National Fund; and

● An increase in long-term liabilities at the end of 2020, primarily due to the following:

o An increase in the noncurrent portion of the deferral of the employer portion of social security tax payments as a result of the CARES Act; and

o An increase in the noncurrent portion of our commitments due to the National Fund;

● Partially offset by an increase in prepaid and other current assets due to escrow deposits related to the restructuring of multi-employer pension plans; and

● Proceeds from a contract associated with the sale of a business that benefited 2019.

Cash paid for taxes decreased in 2020, compared to 2019, primarily due to the payment of taxes on the gain on sale of the You Technology and Turkey Hill Dairy businesses in 2019.

Cash paid for interest increased in 2020, compared to 2019, primarily due to the timing of certain semi-annual senior note interest payments that were paid during the first quarter of 2020 which were accrued as of the end of fiscal year 2019.

Net cash used by investing activities

Investing activities used cash of $2.8 billion in 2020 compared to $2.6 billion in 2019. The amount of cash used by investing activities increased in 2020, compared to 2019, primarily due to the following:

● Decreased proceeds from the sale of assets in 2020 compared to 2019; and

● Proceeds from the sale of businesses that benefited 2019, partially offset by

● Payments for property and equipment continued at a slower pace in 2020 due to disruptions from the pandemic. However, increased purchase activity near the end of the year resulted in an increase in construction-in-progress payables as of year-end 2020 compared to 2019.

Net cash used by financing activities

We used $2.7 billion of cash for financing activities in 2020 compared to $2.1 billion during 2019. The amount of cash used for financing activities for 2020, compared to 2019, increased primarily due to increased payments on commercial paper and share repurchases, partially offset by increased proceeds from the issuance of long-term debt and decreased payments on long- term debt.

Debt Management

Total debt, including both the current and long-term portions of obligations under finance leases, decreased $663 million to $13.4 billion as of year-end 2020 compared to 2019. The decrease in 2020, compared to 2019, resulted primarily from net payments on commercial paper borrowings of $1.2 billion and payment of $700 million of senior notes bearing an interest rate of 3.30%, partially offset by the issuance of $500 million of senior notes bearing an interest rate of 2.20%, the issuance of $500 million of senior notes bearing an interest rate of 1.70% and a net increase in obligations under finance leases of $183 million.

Dividends

The following table provides dividend information ($ in millions, except per share amounts):

2020 2019 Cash dividends paid $ 534 $ 486 Cash dividends paid per common share $ 0.68 $ 0.60

Liquidity Needs

Based on current operating trends, we believe that cash flows from operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility, will be adequate to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. Our liquidity needs include anticipated requirements for working capital, capital investments, pension plan commitments, interest payments and scheduled principal payments of debt and commercial paper, offset by cash and temporary cash investments on hand at the end of 2020. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to the capital markets. We have approximately $800 million of senior notes maturing in the next twelve months, $311 million of the employer portion of social security tax payments we have deferred under the CARES act that is required to be paid by December 31, 2021 and expect to pay approximately $307 million in the first half of 2021 to satisfy a portion of the National Fund commitment. We expect to satisfy these obligations using cash generated from operations, temporary cash investments on hand, or through the issuance of additional senior notes or commercial paper. We believe we have adequate coverage of our debt covenants to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

We held cash and temporary cash investments of $1.7 billion as of the end of 2020 which reflects our elevated operating performance and significant improvements in working capital. We remain committed to our dividend and share repurchase program and we will evaluate the optimal use of any excess free cash flow, consistent with our previously stated capital allocation strategy.

The CARES Act, which was enacted on March 27, 2020, includes measures to assist companies in response to the COVID- 19 pandemic. These measures include deferring the due dates of tax payments and other changes to income and non-income- based tax laws. As permitted under the CARES Act, we are deferring the remittance of the employer portion of the social security tax. The social security tax provision requires that the deferred employment tax be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. During 2020, we deferred the employer portion of social security tax of $622 million. Of the total, $311 million is included in “Other current liabilities” and $311 million is included in “Other long-term liabilities” in our Consolidated Balance Sheets.

Factors Affecting Liquidity

We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At January 30, 2021, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit facility and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to borrow under our current commercial paper program could be adversely affected for a period of time and increase our interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline, we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500 million on a daily basis. Although our ability to borrow under the credit facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Company. As of March 24, 2021, we had no commercial paper borrowings outstanding.

● Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.63 to 1 as of January 30, 2021. If this ratio were to exceed 3.50 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

● Our Fixed Charge Coverage Ratio (the ratio of Adjusted EBITDA plus Consolidated Rental Expense to Consolidated Cash Interest Expense plus Consolidated Rental Expense, as defined in the credit facility) was 5.37 to 1 as of January 30, 2021. If this ratio fell below 1.70 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

Our credit facility is more fully described in Note 6 to the Consolidated Financial Statements. We were in compliance with our financial covenants at year-end 2020.

The tables below illustrate our significant contractual obligations and other commercial commitments, based on year of maturity or settlement, as of January 30, 2021 (in millions of dollars):

2021 2022 2023 2024 2025 Thereafter Total Contractual Obligations(1)(2) Long-term debt(3) $ 844 $ 894 $ 617 $ 494 $ 575 $ 8,986 $ 12,410 Interest on long-term debt(4) 491 474 439 427 407 5,001 7,239 Finance lease obligations 109 97 95 93 92 935 1,421 Operating lease obligations 947 865 790 717 653 6,260 10,232 Self-insurance liability(5) 220 156 107 70 45 133 731 Construction commitments(6) 1,030 — — — — — 1,030 Purchase obligations(7) 742 378 365 257 240 1,950 3,932 Total $ 4,383 $ 2,864 $ 2,413 $ 2,058 $ 2,012 $ 23,265 $ 36,995

Other Commercial Commitments Standby letters of credit $ 368 $ — $ — $ — $ — $ — $ 368 Surety bonds 408 — — — — — 408 Total $ 776 $ — $ — $ — $ — $ — $ 776

(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which totaled approximately $33 million in 2020. This table also excludes contributions under various multi-employer pension plans, which totaled $619 million in 2020.

(3) As of January 30, 2021, we had no outstanding commercial paper and no borrowings under our credit facility. (4) Amounts include contractual interest payments using the interest rate as of January 30, 2021 and stated fixed and swapped

interest rates, if applicable, for all other debt instruments. (5) The amounts included in the contractual obligations table for self-insurance liability related to workers’ compensation claims

have been stated on a present value basis. (6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected in “Other

current liabilities” in our Consolidated Balance Sheets. (7) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of business, such

as several contracts to purchase raw materials utilized in our food production plants and several contracts to purchase energy to be used in our stores and food production plants. Our obligations also include management fees for facilities operated by third parties and outside service contracts. Any upfront vendor allowances or incentives associated with outstanding purchase commitments are recorded as either current or long-term liabilities in our Consolidated Balance Sheets. We included our future commitments for customer fulfillment centers for which we have placed an order. We did not include our commitments associated with additional customer fulfillment centers that have not yet been ordered. We have provided a letter of credit which supports our commitment to build a certain number of fulfillment centers. The balance of the letter of credit reduces primarily upon the construction of each fulfillment center. If we do not reach our total purchase commitment, we will be responsible for the balance remaining on the letter of credit. This letter of credit balance is included in the “Standby letters of credit” line above.

As of January 30, 2021, we maintained a $2.75 billion (with the ability to increase by $1 billion), unsecured revolving credit facility that, unless extended, terminates on August 29, 2022. Outstanding borrowings under the credit facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit facility. As of January 30, 2021, we had no outstanding commercial paper and no borrowings under our revolving credit facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of January 30, 2021.

In addition to the available credit mentioned above, as of January 30, 2021, we had authorized for issuance $3.3 billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 24, 2019.

In addition to the above, we enter into various indemnification agreements and take on indemnification obligations in the ordinary course of business. Such arrangements include indemnities against third-party claims arising out of agreements to provide services to us; indemnities related to the sale of our securities; indemnities of directors, officers and employees in connection with the performance of their work; and indemnities of individuals serving as fiduciaries on benefit plans. While our aggregate indemnification obligation could result in a material liability, we are not aware of any current matter that could result in a material liability.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Financial Risk Management

When we use derivative financial instruments, it is primarily to manage our exposure to fluctuations in interest rates. We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are straightforward instruments with liquid markets. As of January 30, 2021, we had no forward-starting interest rate swap agreements outstanding.

Annually, we review with the Financial Policy Committee of our Board of Directors compliance with the guidelines described above. The guidelines may change as our business needs dictate.

The tables below provide information about our underlying debt portfolio as of January 30, 2021 and February 1, 2020. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases, as of January 30, 2021 and February 1, 2020. Interest rates reflect the weighted average rate for the outstanding instruments. The variable rate debt is based on U.S. dollar LIBOR using the forward yield curve as of January 30, 2021 and February 1, 2020. The Fair Value column includes the fair value of our debt instruments as of January 30, 2021 and February 1, 2020. We have no outstanding interest rate derivatives classified as fair value hedges as of January 30, 2021 or February 1, 2020. See Notes 6, 7 and 8 to the Consolidated Financial Statements.

January 30, 2021 Expected Year of Maturity

2021 2022 2023 2024 2025 Thereafter Total Fair Value (in millions)

Debt Fixed rate $ (802) $ (894) $ (594) $ (494) $ (494) $ (8,986) $ (12,264) $ (14,534) Average interest rate 4.20 % 4.29 % 4.41 % 4.55 % 4.58 % 4.40 % Variable rate $ (42) $ — $ (23) $ — $ (81) $ — $ (146) $ (146) Average interest rate 1.87 % — 2.62 % — 0.08 % — %

February 1, 2020 Expected Year of Maturity

2020 2021 2022 2023 2024 Thereafter Total Fair Value (in millions)

Based on our year-end 2020 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See Note 7 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of The Kroger Co. For the Fiscal Year Ended January 30, 2021

Table of Contents

Page Report of Independent Registered Public Accounting Firm 45 Consolidated Balance Sheets 48 Consolidated Statements of Operations 49 Consolidated Statements of Comprehensive Income 50 Consolidated Statements of Cash Flows 51 Consolidated Statements of Changes in Shareholders’ Equity 52 Notes to Consolidated Financial Statements 53

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of The Kroger Co.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries (the “Company”) as of January 30, 2021 and February 1, 2020, and the related consolidated statements of operations, of comprehensive income, of changes in shareholders' equity and of cash flows for each of the three years in the period ended January 30, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of January 30, 2021 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the three years in the period ended January 30, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

Basis for Opinions

Definition and Limitations of Internal Control over Financial Reporting

Critical Audit Matters

Goodwill Impairment Assessment – Kroger Specialty Pharmacy (“KSP”) Reporting Unit

As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated goodwill balance was $3.1 billion as of January 30, 2021, a portion of which is allocated to the KSP reporting unit. Management reviews goodwill annually for impairment in the fourth quarter of each year, and also upon the occurrence of triggering events. The fair value of a reporting unit is compared to its carrying value for purposes of identifying potential impairment. Goodwill impairment is recognized for any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. As disclosed by management, the fair value of the Company's KSP reporting unit was estimated using multiple valuation techniques, a discounted cash flow model (income approach), a market multiple model and comparable mergers and acquisition model (market approaches), with each method weighted in the calculation. The income approach relies on management’s estimates of revenue growth rates, margin assumptions, and discount rate to estimate future cash flows. The market approaches require the determination of an appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the KSP reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the reporting unit; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections and significant assumptions related to revenue growth rates, margin assumptions, discount rate, peer group determination, and market multiple selection; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s KSP reporting unit. These procedures also included, among others, testing management’s process for developing the fair value estimate, evaluating the appropriateness of the income and market approach models, testing the completeness and accuracy of the underlying data used in the models and evaluating the reasonableness of significant assumptions used by management related to the revenue growth rates, margin assumptions, discount rate, peer group determination, and market multiple selection. Evaluating management’s assumptions relating to revenue growth rates and margin assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating the Company’s peer group determinations included evaluating the appropriateness of the identified peer companies. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow and market models and evaluating the reasonableness of certain significant assumptions related to the discount rate, peer group determination, and market multiples. /s/ PricewaterhouseCoopers LLP Cincinnati, Ohio March 30, 2021

We have served as the Company’s auditor since 1929.

THE KROGER CO. CONSOLIDATED BALANCE SHEETS

January 30, February 1, (In millions, except par amounts) 2021 2020 ASSETS Current assets

Cash and temporary cash investments $ 1,687 $ 399 Store deposits in-transit 1,096 1,179 Receivables 1,781 1,706 FIFO inventory 8,436 8,464 LIFO reserve (1,373) (1,380) Prepaid and other current assets 876 522

Total current assets 12,503 10,890

Property, plant and equipment, net 22,386 21,871 Operating lease assets 6,796 6,814 Intangibles, net 997 1,066 Goodwill 3,076 3,076 Other assets 2,904 1,539

Total Assets $ 48,662 $ 45,256

LIABILITIES Current liabilities

Current portion of long-term debt including obligations under finance leases $ 911 $ 1,965 Current portion of operating lease liabilities 667 597 Trade accounts payable 6,679 6,349 Accrued salaries and wages 1,413 1,168 Other current liabilities 5,696 4,164

Total current liabilities 15,366 14,243

Long-term debt including obligations under finance leases 12,502 12,111 Noncurrent operating lease liabilities 6,507 6,505 Deferred income taxes 1,542 1,466 Pension and postretirement benefit obligations 535 608 Other long-term liabilities 2,660 1,750

Total Liabilities 39,112 36,683

Commitments and contingencies see Note 13

SHAREHOLDERS’ EQUITY

Preferred shares, $100 par per share, 5 shares authorized and unissued — — Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2020 and 2019 1,918 1,918 Additional paid-in capital 3,461 3,337 Accumulated other comprehensive loss (630) (640) Accumulated earnings 23,018 20,978 Common shares in treasury, at cost, 1,160 shares in 2020 and 1,130 shares in 2019 (18,191) (16,991)

Total Shareholders’ Equity - The Kroger Co. 9,576 8,602 Noncontrolling interests (26) (29)

Total Equity 9,550 8,573

Total Liabilities and Equity $ 48,662 $ 45,256

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

2020 2019 2018

(In millions, except per share amounts) (52 weeks) (52 weeks) (52 weeks) Sales $ 132,498 $ 122,286 $ 121,852

Operating expenses Merchandise costs, including advertising, warehousing, and transportation,

excluding items shown separately below 101,597 95,294 95,103 Operating, general and administrative 24,500 21,208 20,786 Rent 874 884 884 Depreciation and amortization 2,747 2,649 2,465

Operating profit 2,780 2,251 2,614

Other income (expense) Interest expense (544) (603) (620) Non-service component of company-sponsored pension plan costs 29 — (26) Gain on investments 1,105 157 228 Gain on sale of businesses — 176 1,782

Net earnings before income tax expense 3,370 1,981 3,978

Income tax expense 782 469 900

Net earnings including noncontrolling interests 2,588 1,512 3,078 Net income (loss) attributable to noncontrolling interests 3 (147) (32)

Net earnings attributable to The Kroger Co. $ 2,585 $ 1,659 $ 3,110

Net earnings attributable to The Kroger Co. per basic common share $ 3.31 $ 2.05 $ 3.80

Average number of common shares used in basic calculation 773 799 810

Net earnings attributable to The Kroger Co. per diluted common share $ 3.27 $ 2.04 $ 3.76

Average number of common shares used in diluted calculation 781 805 818

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

2020 2019 2018 (In millions) (52 weeks) (52 weeks) (52 weeks) Net earnings including noncontrolling interests $ 2,588 $ 1,512 $ 3,078

Other comprehensive income (loss) Realized gains on available for sale securities, net of income tax(1) — — (4) Change in pension and other postretirement defined benefit plans, net of income tax(2) 22 (105) 147 Unrealized gains and losses on cash flow hedging activities, net of income tax(3) (14) (47) (23) Amortization of unrealized gains and losses on cash flow hedging activities, net of

income tax(4) 2 4 5 Cumulative effect of accounting change(5) — (146) —

Total other comprehensive income (loss) 10 (294) 125

Comprehensive income 2,598 1,218 3,203 Comprehensive income (loss) attributable to noncontrolling interests 3 (147) (32)

Comprehensive income attributable to The Kroger Co. $ 2,595 $ 1,365 $ 3,235

(1) Amount is net of tax benefit of ($1) in 2018. (2) Amount is net of tax expense (benefit) of $7 in 2020, ($33) in 2019 and $45 in 2018. (3) Amount is net of tax benefit of ($8) in 2020, ($17) in 2019 and ($8) in 2018. (4) Amount is net of tax expense of $2 in 2020, $3 in 2019 and $3 in 2018. (5) Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, “Income Statement – Reporting Comprehensive

Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (See Note 18 for additional details).

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended January 30, 2021, February 1, 2020 and February 2, 2019

2020 2019 2018 (In millions) (52 weeks) (52 weeks) (52 weeks) Cash Flows from Operating Activities:

Net earnings including noncontrolling interests $ 2,588 $ 1,512 $ 3,078 Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:

Depreciation and amortization 2,747 2,649 2,465 Asset impairment charges 70 120 56 Operating lease asset amortization 626 640 — LIFO (credit) charge (7) 105 29 Stock-based employee compensation 185 155 154 Expense (credit) for company-sponsored pension plans (9) 39 76 Deferred income taxes 73 (56) (45) Gain on sale of businesses — (176) (1,782) (Gain) loss on the sale of assets (59) (158) 2 Gain on investments (1,105) (157) (228) Loss on deconsolidation and impairment of Lucky's Market — 412 — Other 165 (109) 58 Changes in operating assets and liabilities net of effects from mergers and disposals of businesses:

Store deposits in-transit 83 3 (20) Receivables (90) (36) (208) Inventories 7 (351) (354) Prepaid and other current assets (342) (33) 244 Trade accounts payable 330 342 213 Accrued expenses 1,382 302 416 Income taxes receivable and payable 24 (142) 289 Contribution to company-sponsored pension plan — — (185) Operating lease liabilities (552) (639) — Proceeds from contract associated with sale of business — 295 — Other 699 (53) (94)

Net cash provided by operating activities 6,815 4,664 4,164

Cash Flows from Investing Activities: Payments for property and equipment, including payments for lease buyouts (2,865) (3,128) (2,967) Proceeds from sale of assets 165 273 85 Proceeds on settlement of financial instrument — — 235 Payments for acquisitions, net of cash acquired — — (197) Purchases of stores — — (44) Net proceeds from sale of businesses — 327 2,169 Purchases of Ocado securities — — (392) Other (114) (83) (75)

Net cash used by investing activities (2,814) (2,611) (1,186)

Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 1,049 813 2,236 Payments on long-term debt including obligations under finance leases (747) (2,304) (1,372) Net proceeds (payments) on commercial paper (1,150) 350 (1,321) Dividends paid (534) (486) (437) Proceeds from issuance of capital stock 127 55 65 Treasury stock purchases (1,324) (465) (2,010) Other (134) (46) (57)

Net cash used by financing activities (2,713) (2,083) (2,896)

Net increase (decrease) in cash and temporary cash investments 1,288 (30) 82

Cash and temporary cash investments: Beginning of year 399 429 347 End of year $ 1,687 $ 399 $ 429

Reconciliation of capital investments: Payments for property and equipment, including payments for lease buyouts $ (2,865) $ (3,128) $ (2,967) Payments for lease buyouts 58 82 5 Changes in construction-in-progress payables (359) 2 (56)

Total capital investments, excluding lease buyouts $ (3,166) $ (3,044) $ (3,018)

Disclosure of cash flow information: Cash paid during the year for interest $ 564 $ 523 $ 614 Cash paid during the year for income taxes $ 659 $ 706 $ 600

The accompanying notes are an integral part of the consolidated financial statements

THE KROGER CO. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Years Ended January 30, 2021, February 1, 2020 and February 2, 2019 Accumulated

Additional Other Common Stock Paid-In Treasury Stock Comprehensive Accumulated Noncontrolling

(In millions, except per share amounts) Shares Amount Capital Shares Amount Income (Loss) Earnings Interest Total Balances at February 3, 2018 1,918 $ 1,918 $ 3,161 1,048 $ (14,684) $ (471) $ 17,007 $ (26) $ 6,905 Issuance of common stock:

Stock options exercised — — — (4) 65 — — — 65 Restricted stock issued — — (119) (3) 74 — — — (45)

Treasury stock activity: Treasury stock purchases, at cost — — — 76 (1,927) — — — (1,927) Stock options exchanged — — — 3 (83) — — — (83)

Balances at February 2, 2019 1,918 $ 1,918 $ 3,245 1,120 $ (16,612) $ (346) $ 19,681 $ (51) $ 7,835 Issuance of common stock:

Stock options exercised — — — (3) 55 — — — 55 Restricted stock issued — — (128) (3) 92 — — — (36)

Treasury stock activity: Treasury stock purchases, at cost — — — 14 (400) — — — (400) Stock options exchanged — — — 2 (65) — — — (65)

Share-based employee compensation — — 155 — — — — — 155 Other comprehensive loss net of tax of ($47) — — — — — (294) — — (294) Cumulative effect of accounting change (see note 18) — — — — — — 146 — 146 Deconsolidation of Lucky's Market — — — — — — — 168 168 Other — — 65 — (61) — (5) 1 — Cash dividends declared ($0.62 per common share) — — — — — — (503) — (503) Net earnings (loss) including non-controlling interests — — — — — — 1,659 (147) 1,512

Balances at February 1, 2020 1,918 $ 1,918 $ 3,337 1,130 $ (16,991) $ (640) $ 20,978 $ (29) $ 8,573 Issuance of common stock:

Stock options exercised — — — (7) 127 — — — 127 Restricted stock issued — — (134) (3) 71 — — — (63)

Treasury stock activity: Treasury stock purchases, at cost — — — 36 (1,196) — — — (1,196) Stock options exchanged — — — 4 (128) — — — (128)

Share-based employee compensation — — 185 — — — — — 185 Other comprehensive income net of tax of $1 — — — — — 10 — — 10 Other — — 73 — (74) — — — (1) Cash dividends declared ($0.70 per common share) — — — — — — (545) — (545) Net earnings including non-controlling interests — — — — — — 2,585 3 2,588

Balances at January 30, 2021 1,918 $ 1,918 $ 3,461 1,160 $ (18,191) $ (630) $ 23,018 $ (26) $ 9,550

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All amounts in the Notes to Consolidated Financial Statements are in millions except per share amounts.

1. ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in preparing these financial statements.

Description of Business, Basis of Presentation and Principles of Consolidation

The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. As of January 30, 2021, the Company was one of the largest retailers in the world based on annual sales. The Company also manufactures and processes food for sale by its supermarkets. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and other consolidated entities. Intercompany transactions and balances have been eliminated.

Refer to Note 18 for a description of changes to the Consolidated Financial Statements for recently adopted accounting standards regarding the recognition of lease agreements, reclassification of stranded tax effects and implementation costs of cloud computing arrangements.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 52-week periods ended January 30, 2021, February 1, 2020 and February 2, 2019.

Pervasiveness of Estimates

Cash, Temporary Cash Investments and Book Overdrafts

Deposits In-Transit

Inventories

Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, approximately 92% of inventories in 2020 and 91% of inventories in 2019 were valued using the LIFO method. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1,373 at January 30, 2021 and $1,380 at February 1, 2020. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its LIFO charge or credit. During 2020, the Company had a LIFO liquidation primarily related to pharmacy inventory. The liquidated inventory was carried at lower costs prevailing in prior years as compared with current costs. The effect of this reduction in inventory decreased “Merchandise costs” by approximately $76, $58 net of tax.

Property, Plant and Equipment

Leases

Goodwill

Impairment of Long-Lived Assets

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairments totaling $70, $120 and $56 in 2020, 2019 and 2018, respectively. The increase in the 2019 impairment charge, compared to 2020 and 2018, related to the 35 planned store closures in 2020. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as Operating, general and administrative (“OG&A”) expense.

Accounts Payable Financing Arrangement

Contingent Consideration

The Company’s Home Chef business combination involves potential payment of future consideration that is contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in earnings until the contingency is resolved. In 2020 and 2018, adjustments to increase the contingent consideration liability as of year-end were recorded for $189 and $33, respectively, in OG&A expense. In 2019, an adjustment to decrease the contingent consideration liability as of year-end 2019 was recorded for ($69) in OG&A expense.

Store Closing Costs

The Company regularly evaluates the performance of its stores and periodically closes those stores that are underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known.

Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are classified in the Consolidated Statements of Operations as “Merchandise costs.” Costs to transfer inventory and equipment from closed stores are expensed as incurred.

Interest Rate Risk Management

Benefit Plans and Multi-Employer Pension Plans

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end that is closest to its fiscal year-ends, which were January 30, 2021 for fiscal 2020 and February 1, 2020 for fiscal 2019.

Share Based Compensation

The Company recognizes compensation expense for all share-based payments granted under fair value recognition provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award based on the fair value at the date of the grant. The Company grants options for common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of the stock option at the date of grant. Stock options typically expire 10 years from the date of grant. Stock options vest between one and five years from the date of grant. In addition to stock options, the Company awards restricted stock to employees and nonemployee directors under various plans. The restrictions on these awards generally lapse between one and five years from the date of the awards. The Company determines the fair value for restricted stock awards in an amount equal to the fair market value of the underlying shares on the grant date of the award.

Deferred Income Taxes

Uncertain Tax Positions

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. As of January 30, 2021, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended January 30, 2016.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Self-Insurance Costs

The following table summarizes the changes in the Company’s self-insurance liability through January 30, 2021.

2020 2019 2018 Beginning balance $ 689 $ 696 $ 695 Expense 262 209 229 Claim payments (220) (216) (228) Ending balance 731 689 696 Less: Current portion (220) (216) (228) Long-term portion $ 511 $ 473 $ 468

The Company also maintains insurance coverages for some risks, including cyber exposure and property-related losses. The Company’s insurance coverage begins for these exposures ranging from $25 to $50.

Revenue Recognition

Sales

The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer. Amounts billed to a customer related to shipping and delivery represent revenues earned for the goods provided and are classified as sales. When shipping is discounted, it is recorded as an adjustment to sales. Discounts provided to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale. The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy sales, collection of third-party receivables is typically expected within three months or less from the time of purchase. The third-party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $672 as of January 30, 2021 and $646 as of February 1, 2020.

Gift Cards and Gift Certificates

The Company does not recognize a sale when it sells its own gift cards and gift certificates (collectively “gift cards”). Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card breakage under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards. The Company’s gift card deferred revenue liability was $160 as of January 30, 2021 and $114 as of February 1, 2020.

Disaggregated Revenues

The following table presents sales revenue by type of product for the year-ended January 30, 2021, February 1, 2020, and February 2, 2019:

2020 2019 2018 Amount % of total Amount % of total Amount % of total

Non Perishable(1) $ 71,434 53.9 % $ 61,464 50.3 % $ 60,649 49.8 % Fresh(2) 33,449 25.2 % 29,452 24.1 % 29,089 23.9 % Supermarket Fuel 9,486 7.2 % 14,052 11.5 % 14,903 12.2 % Pharmacy 11,388 8.6 % 11,015 9.0 % 10,617 8.7 % Convenience Stores (3) — - % — - % 944 0.8 % Other(4) 6,741 5.1 % 6,303 5.1 % 5,650 4.6 %

Total Sales $ 132,498 100 % $ 122,286 100 % $ 121,852 100 %

revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above.

Merchandise Costs

The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, purchasing management salaries and administration costs are included in the OG&A line item along with most of the Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations.

Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs are recognized in the periods the related expenses are incurred.

Advertising Costs

The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs totaled $888 in 2020, $854 in 2019 and $752 in 2018. The Company does not record vendor allowances for co-operative advertising as a reduction of advertising expense.

Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are shown separately in the Consolidated Statement of Operations.

Consolidated Statements of Cash Flows

Segments

2. PARTNERSHIP AGREEMENTS

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”). The Partnership Framework Agreement was amended in 2020. Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. As part of the agreement, the Company provided a letter of credit which supports its commitment to contract with Ocado to build a number of fulfilment centers. The balance of the letter of credit was $207 as of January 30, 2021 and will reduce primarily upon the construction of each fulfillment center.

In addition, on May 17, 2018, the Company entered into a Share Subscription Agreement with Ocado, pursuant to which the Company agreed to purchase 33.1 million ordinary shares of Ocado for an aggregate purchase price of $243. The Company completed the purchase of these 33.1 million shares on May 29, 2018. This is in addition to 8.1 million Ocado shares purchased earlier in the first quarter of 2018, and 6.5 million additional shares purchased in the second quarter of 2018. Fair value adjustments in equity of Ocado flow through “Gain on investments” in the Company’s Consolidated Statements of Operations. The fair value of all shares owned, which is measured using Level 1 inputs, was $1,808 as of January 30, 2021 and $776 as of February 1, 2020 and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The Company recorded an unrealized gain of $1,032 in 2020, $157 in 2019 and $228 in 2018, none of which was realized during the period as the Company did not sell any Ocado securities.

3. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through January 30, 2021.

2020 2019 Balance beginning of year

Goodwill $ 5,737 $ 5,729 Accumulated impairment losses (2,661) (2,642)

Subtotal 3,076 3,087

Activity during the year Mergers — 8 Impairment losses — (19)

Balance end of year Goodwill 5,737 5,737 Accumulated impairment losses (2,661) (2,661)

Total Goodwill $ 3,076 $ 3,076

In 2019, the Company finalized the purchase accounting for the Home Chef acquisition resulting in an increase of goodwill and deferred taxes of $8. The Company also recorded an impairment charge of $19 as a result of the Lucky’s Market impairment.

The following table summarizes the Company’s intangible assets balance through January 30, 2021.

2020 2019 Gross carrying Accumulated Gross carrying Accumulated

amount amortization(1) amount amortization(1) Definite-lived pharmacy prescription files 315 (167) 320 (133) Definite-lived customer relationships 186 (143) 186 (120) Definite-lived other 110 (78) 106 (68) Indefinite-lived trade name 685 — 685 — Indefinite-lived liquor licenses 89 — 90 —

Total $ 1,385 $ (388) $ 1,387 $ (321)

(1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense.

Amortization expense associated with intangible assets totaled approximately $67, $85 and $80, during fiscal years 2020, 2019 and 2018, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2020 is estimated to be approximately:

2021 $ 58 2022 51 2023 38 2024 34 2025 30 Thereafter 12

Total future estimated amortization associated with definite-lived intangible assets $ 223

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of:

2020 2019 Land $ 3,373 $ 3,299 Buildings and land improvements 13,149 12,553 Equipment 14,928 15,031 Leasehold improvements 10,516 10,832 Construction-in-progress 2,892 3,166 Leased property under finance leases 1,165 966

Total property, plant and equipment 46,023 45,847 Accumulated depreciation and amortization (23,637) (23,976)

Property, plant and equipment, net $ 22,386 $ 21,871

Accumulated depreciation and amortization for leased property under finance leases was $321 at January 30, 2021 and $276 at February 1, 2020.

Approximately $152 and $162, net book value, of property, plant and equipment collateralized certain mortgages at January 30, 2021 and February 1, 2020, respectively.

5. TAXES BASED ON INCOME

The provision for taxes based on income consists of:

2020 2019 2018 Federal

Current $ 577 $ 454 $ 775 Deferred 75 (50) (3)

Subtotal federal 652 404 772

State and local Current 133 70 108 Deferred (3) (5) 20

Subtotal state and local 130 65 128

Total $ 782 $ 469 $ 900

A reconciliation of the statutory federal rate and the effective rate follows:

2020 2019 2018 Statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 3.0 2.6 2.6 Credits (0.7) (1.5) (1.3) Resolution of issues — (0.1) 0.5 Excess tax benefits from share-based payments (0.8) (0.2) (0.3) Impairment losses attributable to noncontrolling interest — 1.2 — Other changes, net 0.7 0.7 0.1

23.2 % 23.7 % 22.6 %

The 2020 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions.

The tax effects of significant temporary differences that comprise tax balances were as follows:

2020 2019 Deferred tax assets:

Compensation related costs $ 766 $ 406 Lease liabilities 1,932 1,872 Closed store reserves 38 55 Net operating loss and credit carryforwards 86 100 Deferred income 149 172 Allowance for uncollectible receivables 23 93 Other 46 —

Subtotal 3,040 2,698 Valuation allowance (53) (55)

Total deferred tax assets 2,987 2,643

Deferred tax liabilities: Depreciation and amortization (2,115) (1,942) Operating lease assets (1,794) (1,782) Insurance related costs — (28) Inventory related costs (264) (252) Equity investments in excess of tax basis (356) (94) Other — (11)

Total deferred tax liabilities (4,529) (4,109)

Deferred taxes $ (1,542) $ (1,466)

At January 30, 2021, the Company had net operating loss carryforwards for state income tax purposes of $1,081. These net operating loss carryforwards expire from 2021 through 2040. The utilization of certain of the Company’s state net operating loss carryforwards may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state net operating losses.

At January 30, 2021, the Company had state credit carryforwards of $38, most of which expire from 2021 through 2027. The utilization of certain of the Company’s state credits may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state credits.

The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether these assets are more likely than not to be realized based on all available evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of January 30, 2021, February 1, 2020 and February 2, 2019 the total valuation allowance was $53, $55 and $54, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting only the timing of tax benefits, is as follows:

2020 2019 2018 Beginning balance $ 174 $ 174 $ 180 Additions based on tax positions related to the current year 7 13 7 Reductions based on tax positions related to the current year — — (1) Additions for tax positions of prior years 16 8 23 Reductions for tax positions of prior years — (1) (22) Settlements — (19) (10) Lapse of statute (4) (1) (3) Ending balance $ 193 $ 174 $ 174

As of January 30, 2021, February 1, 2020 and February 2, 2019 the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $85, $74 and $72 respectively.

To the extent interest and penalties (recoveries) would be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and classified as a component of income tax expense. During the years ended January 30, 2021, February 1, 2020 and February 2, 2019, the Company recognized approximately $7, $7 and $2, respectively, in interest and penalties (recoveries). The Company had accrued approximately $38, $30 and $30 for the payment of interest and penalties as of January 30, 2021, February 1, 2020 and February 2, 2019.

As of January 30, 2021, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended January 30, 2016. The Company anticipates resolution in the next twelve to eighteen months of Internal Revenue Service audits for tax years ending January 28, 2017 and February 3, 2018.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, includes measures to assist companies in response to the COVID-19 pandemic. These measures include deferring the due dates of tax payments and other changes to income and non-income-based tax laws. As permitted under the CARES Act, the Company is deferring the remittance of the employer portion of the social security tax. The social security tax provision requires that the deferred employment tax be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. During 2020, the Company deferred the employer portion of social security tax of $622. Of the total, $311 is included in “Other current liabilities” and $311 is included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets.

6. DEBT OBLIGATIONS

Long-term debt consists of:

January 30, February 1, 2021 2020

1.70% to 8.00% Senior Notes due through 2049 $ 11,899 $ 11,598 1.77% Commercial paper borrowings — 1,150 Other 511 508

Total debt, excluding obligations under finance leases 12,410 13,256 Less current portion (844) (1,926)

Total long-term debt, excluding obligations under finance leases $ 11,566 $ 11,330

In 2020, the Company issued $500 of senior notes due in fiscal year 2030 bearing an interest rate of 2.20% and $500 of senior notes due in fiscal year 2030 bearing interest rate of 1.70%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $450 due in fiscal year 2030. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $41, $31 net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company repaid $700 of senior notes bearing an interest rate of 3.30% with proceeds from the senior notes issuances.

On March 18, 2020, the Company proactively borrowed $1,000 under the revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the COVID-19 pandemic. During 2020, the Company fully repaid the $1,000 borrowed under the revolving credit facility and the entire $1,150 in outstanding commercial paper obligations using cash generated by operations.

On August 29, 2017, the Company entered into an amended, extended and restated $2,750 unsecured revolving credit facility (the “Credit Agreement”), with a termination date of August 29, 2022, unless extended as permitted under the Credit Agreement. The Company has the ability to increase the size of the Credit Agreement by up to an additional $1,000, subject to certain conditions.

As of January 30, 2021, the Company had no commercial paper borrowings and no borrowings under the Credit Agreement. As of February 1, 2020, the Company had $1,150 of commercial paper borrowings, with a weighted average interest rate of 1.77% and no borrowings under the Credit Agreement.

As of January 30, 2021, the Company had outstanding letters of credit in the amount of $381, of which $2 reduces funds available under the Credit Agreement. As of February 1, 2020, the Company had outstanding letters of credit in the amount of $362, of which $2 reduces funds available under the Credit Agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2020, and for the years subsequent to 2020 are:

2021 $ 844 2022 894 2023 617 2024 494 2025 575 Thereafter 8,986

Total debt $ 12,410

7. DERIVATIVE FINANCIAL INSTRUMENTS

GAAP requires that derivatives be carried at fair value on the balance sheet and provides for hedge accounting when certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective portions of cash flow hedges, if any, are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as “fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded in current period earnings. Ineffective portions of fair value hedges, if any, are recognized in current period earnings.

Interest Rate Risk Management

The Company reviews compliance with these guidelines annually with the Financial Policy Committee of the Board of Directors. These guidelines may change as the Company’s needs dictate.

Fair Value Interest Rate Swaps

The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of January 30, 2021 and February 1, 2020.

Cash Flow Forward-Starting Interest Rate Swaps

The Company did not have any outstanding forward-starting interest rate swap agreements as of January 30, 2021.

During 2020, the Company terminated nine forward-starting interest rate swaps with maturity dates of January 2021 with an aggregate notional amount totaling $450. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $41, $31 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made. In addition, the Company terminated and discontinued hedge accounting for one forward-starting interest rate swap with a maturity date of January 2021 with an aggregate notional amount totaling $50. The gain of $7 from the termination of this forward starting interest rate swap was record in interest income in the fourth quarter of 2020.

The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges for 2020, 2019 and 2018:

Year-To-Date Amount of Gain/(Loss) in Amount of Gain/(Loss)

AOCI on Derivative Reclassified from AOCI into Location of Gain/(Loss) Derivatives in Cash Flow Hedging (Effective Portion) Income (Effective Portion) Reclassified into Income Relationships 2020 2019 2018 2020 2019 2018 (Effective Portion) Forward-Starting Interest Rate Swaps, net of tax* $ (54) $ (42) $ 6 $ (2) $ (4) $ (5) Interest expense

Collateral is generally not required of the counterparties or of the Company under these master netting agreements. As of February 1, 2020, no cash collateral was received or pledged under the master netting agreements.

Gross Amounts Not Offset in the Net Amount Balance Sheet

Gross Amount Gross Amounts Offset Presented in the Financial February 1, 2020 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount Liabilities Cash Flow Forward-

Starting Interest Rate Swaps $ 19 $ — $ 19 $ — $ — $ 19

8. FAIR VALUE MEASUREMENTS

GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable;

For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at January 30, 2021 and February 1, 2020:

January 30, 2021 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Unobservable

Assets Inputs (Level 1) (Level 3) Total

Trading Securities $ 1,882 $ — $ 1,882 Other Investment — 160 160 Total $ 1,882 $ 160 $ 2,042

February 1, 2020 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable

Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total

Trading Securities $ 840 $ — $ — $ 840 Other Investment — — 41 41 Interest Rate Hedges — (19) — (19) Total $ 840 $ (19) $ 41 $ 862

In 2018, realized gains on Level 1, available-for-sale securities totaled $5.

The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs.

The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was $1,808 and $776 as of January 30, 2021 and February 1, 2020, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized gain for this level 1 investment was approximately $1,032 and $157 for 2020 and 2019, respectively, and is included in “Gain on investments” in the Company’s Consolidated Statements of Operations. The Company held other equity investments without a readily determinable fair value. These investments are measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of these investments, which were measured using Level 3 inputs, was $160 and $41 at January 30, 2021 and February 1, 2020, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized gain for these level 3 investments was approximately $73 for 2020 and is included in “Gain on investments” in the Company’s Consolidated Statements of Operations.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 3 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2020, long-lived assets with a carrying amount of $72 were written down to their fair value of $2, resulting in an impairment charge of $70. In 2019, long-lived assets with a carrying amount of $152 were written down to their fair value of $32, resulting in an impairment charge of $120, which included the 35 planned store closures.

Fair Value of Other Financial Instruments

Current and Long-term Debt

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at respective year-ends. At January 30, 2021, the fair value of total debt excluding obligation under finance leases was $14,680 compared to a carrying value of $12,410. At February 1, 2020, the fair value of total debt excluding obligation under finance leases was $14,649 compared to a carrying value of $13,256.

Contingent Consideration

As a result of the Home Chef merger, the Company recognized a contingent liability of $91 on the acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in “Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating results for both the online and offline businesses related to the Home Chef merger and the estimated probability of achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones to align with the Company’s current business strategies. In 2020, an adjustment to increase the contingent consideration liability as of year-end 2020 was recorded for $189 in OG&A. In 2019, an adjustment to decrease the contingent consideration liability as of year-end 2019 was recorded for ($69) in OG&A.

Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Trade Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Other Assets

The fair values of certain investments recorded in “Other assets” within the Consolidated Balance Sheets were estimated based on quoted market prices for those or similar investments, or estimated cash flows, if appropriate. Other assets include other long-term investments of $280 and $261 as of January 30, 2021 and February 1, 2020, respectively. Other assets include notes receivable of $240 and $210 as of January 30, 2021 and February 1, 2020, respectively. Other assets also include prepaid deposits under certain contractual arrangements of $186 and $111 as of January 30, 2021 and February 1, 2020. The carrying value for these assets approximates fair value.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the changes in AOCI by component for the years ended January 30, 2021 and February 1, 2020:

Pension and Cash Flow Postretirement Hedging Defined Benefit

Activities(1) Plans(1) Total(1) Balance at February 2, 2019 $ 6 $ (352) $ (346) Cumulative effect of accounting change(2) (5) (141) (146) OCI before reclassifications(3) (47) (134) (181) Amounts reclassified out of AOCI(4) 4 29 33 Net current-period OCI (48) (246) (294) Balance at February 1, 2020 $ (42) $ (598) $ (640)

Balance at February 1, 2020 $ (42) $ (598) $ (640) OCI before reclassifications(3) (14) 8 (6) Amounts reclassified out of AOCI(4) 2 14 16 Net current-period OCI (12) 22 10 Balance at January 30, 2021 $ (54) $ (576) $ (630)

(1) All amounts are net of tax. (2) Related to the adoption of ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (see Note 18 for additional details).

(3) Net of tax of ($17) and ($42) for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of February 1, 2020. Net of tax of ($8) and $2 for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of January 30, 2021.

(4) Net of tax of $9 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of February 1, 2020. Net of tax of $5 and $2 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of January 30, 2021.

The following table represents the items reclassified out of AOCI and the related tax effects for the years ended January 30, 2021, February 1, 2020 and February 2, 2019:

For the year ended For the year ended For the year ended January 30, 2021 February 1, 2020 February 2, 2019

Cash flow hedging activity items Amortization of gains and losses on cash flow hedging

activities(1) $ 4 $ 7 $ 8 Tax expense (2) (3) (3) Net of tax 2 4 5

Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic

pension cost(2)

19 38 56 Tax expense

(5) (9) (13) Net of tax

14 29 43 Total reclassifications, net of tax

$ 16 $ 33 $ 48

(1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are

included in the computation of net periodic pension expense.

10. LEASES AND LEASE-FINANCED TRANSACTIONS

The Company leases certain store real estate, warehouses, distribution centers, office space and equipment. The Company operates in leased facilities in approximately half of its store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years.

The following table provides supplemental balance sheet classification information related to leases:

January 30, February 1, Classification 2021 2020

Assets Operating Operating lease assets $ 6,796 $ 6,814 Finance Property, plant and equipment, net(1) 844 690

Total leased assets $ 7,640 $ 7,504

Liabilities Current

Operating Current portion of operating lease liabilities $ 667 $ 597

Finance Current portion of long-term debt including obligations under

finance leases 67 39

Noncurrent Operating Noncurrent operating lease liabilities 6,507 6,505 Finance Long-term debt including obligations under finance leases 936 781

Total lease liabilities $ 8,177 $ 7,922

(1) Finance lease assets are recorded net of accumulated amortization of $321 and $276 as of January 30, 2021 and February 1, 2020.

The following table provides the components of lease cost:

Year-To-Date Year-To-Date Lease Cost Classification January 30, 2021 February 1, 2020 Operating lease cost(1) Rent Expense $ 981 $ 1,000 Sublease and other rental income Rent Expense (107) (116) Finance lease cost

Amortization of leased assets Depreciation and Amortization 55 53 Interest on lease liabilities Interest Expense 45 48

Net lease cost $ 974 $ 985

(1) Includes short-term leases and variable lease costs, which are immaterial.

Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised.

Operating Finance Leases Leases Total

2021 $ 947 $ 109 $ 1,056 2022 865 97 962 2023 790 95 885 2024 717 93 810 2025 653 92 745 Thereafter 6,260 935 7,195

Total lease payments 10,232 1,421 $ 11,653

Less amount representing interest 3,058 418

Present value of lease liabilities(1) $ 7,174 $ 1,003

(1) Includes the current portion of $667 for operating leases and $67 for finance leases.

Total future minimum rentals under non-cancellable subleases at January 30, 2021 were $261.

The following table provides the weighted-average lease term and discount rate for operating and finance leases:

January 30, 2021 February 1, 2020 Weighted-average remaining lease term (years)

Operating leases 15.3 16.0 Finance leases 16.2 15.3

Weighted-average discount rate Operating leases 4.2 % 4.3 % Finance leases 4.4 % 5.4 %

The following table provides supplemental cash flow information related to leases:

Year-To-Date Year-To-Date January 30, 2021 February 1, 2020

Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 849 $ 942 Operating cash flows from finance leases 45 48 Financing cash flows from finance leases 37 45

Leased assets obtained in exchange for new operating lease liabilities 679 849 Leased assets obtained in exchange for new finance lease liabilities 190 233 Net gain recognized from sale and leaseback transactions(1) 39 58 Impairment of operating lease assets(2) 4 81 Impairment of finance lease assets 2 40

(1) In 2020, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $78. In 2019, the Company entered into sale leaseback transactions related to nine properties, which resulted in total proceeds of $113.

(2) In 2019, impairment of operating lease assets includes $11 related to Lucky’s Market.

11. EARNINGS PER COMMON SHARE

For the year ended For the year ended For the year ended January 30, 2021 February 1, 2020 February 2, 2019

Per Per Per Earnings Shares Share Earnings Shares Share Earnings Shares Share

(in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic

common share $ 2,556 773 $ 3.31 $ 1,640 799 $ 2.05 $ 3,076 810 $ 3.80 Dilutive effect of stock options 8 6 8

Net earnings attributable to The Kroger Co. per diluted common share $ 2,556 781 $ 3.27 $ 1,640 805 $ 2.04 $ 3,076 818 $ 3.76

The Company had combined undistributed and distributed earnings to participating securities totaling $29, $19 and $34 in 2020, 2019 and 2018, respectively.

The Company had stock options outstanding for approximately 9.1 million, 18.4 million and 10.1 million shares, respectively, for the years ended January 30, 2021, February 1, 2020, and February 2, 2019, which were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per diluted share.

12. STOCK-BASED COMPENSATION

At January 30, 2021, approximately 34 million common shares were available for future options or restricted stock grants under the 2011, 2014, and 2019 Long-Term Incentive Plans (the “Plans”). Options granted reduce the shares available under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of 2.83 to one.

Equity awards granted are based on the aggregate value of the award on the grant date. This can affect the number of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring shortly after the Company’s release of quarterly earnings. The 2020 primary grants were made in conjunction with the March and June meetings of the Company’s Board of Directors.

All awards become immediately exercisable upon certain changes of control of the Company.

Stock Options

Changes in options outstanding under the stock option plans are summarized below:

Shares Weighted- subject average to option exercise

(in millions) price Outstanding, year-end 2017 36.7 $ 22.23

Granted 2.7 $ 27.88 Exercised (4.4) $ 15.34 Canceled or Expired (0.9) $ 28.05

Outstanding, year-end 2018 34.1 $ 23.42 Granted 3.1 $ 24.63 Exercised (4.0) $ 14.17 Canceled or Expired (1.0) $ 28.87

Outstanding, year-end 2019 32.2 $ 24.52 Granted 2.9 $ 29.31 Exercised (7.3) $ 17.72 Canceled or Expired (1.0) $ 30.53

Outstanding, year-end 2020 26.8 $ 26.65

A summary of options outstanding, exercisable and expected to vest at January 30, 2021 follows:

Weighted-average Aggregate remaining Weighted-average intrinsic

Number of shares contractual life exercise price value (in millions) (in years) (in millions)

Options Outstanding 26.8 5.43 $ 26.65 231 Options Exercisable 18.5 4.34 $ 26.42 168 Options Expected to Vest 8.2 7.82 $ 27.16 62

Restricted stock

Changes in restricted stock outstanding under the restricted stock plans are summarized below:

Restricted shares Weighted-average

outstanding grant-date (in millions) fair value

Outstanding, year-end 2017 9.2 $ 26.78 Granted 4.6 $ 27.99 Lapsed (4.4) $ 25.93 Canceled or Expired (0.6) $ 26.57

Outstanding, year-end 2018 8.8 $ 27.86 Granted 5.4 $ 22.72 Lapsed (4.1) $ 28.07 Canceled or Expired (0.8) $ 25.68

Outstanding, year-end 2019 9.3 $ 24.85 Granted 4.0 $ 31.99 Lapsed (4.9) $ 24.69 Canceled or Expired (0.6) $ 26.71

Outstanding, year-end 2020 7.8 $ 28.46

The weighted-average grant date fair value of stock options granted during 2020, 2019 and 2018 was $6.43, $6.00 and $6.78, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes accounting judgment and financial estimates, including the term option holders are expected to retain their stock options before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations. The increase in the fair value of the stock options granted during 2020, compared to 2019, resulted primarily from increases in the Company’s share price and the weighted average expected volatility, partially offset by a decrease in the interest rate. The decrease in the fair value of the stock options granted during 2019, compared to 2018, resulted primarily from a decrease in the Company’s share price, partially offset by an increase in the weighted average expected volatility.

The following table reflects the weighted-average assumptions used for grants awarded to option holders:

2020 2019 2018 Weighted average expected volatility 26.96 % 25.37 % 24.50 % Weighted average risk-free interest rate 0.82 % 2.54 % 2.82 % Expected dividend yield 2.00 % 2.00 % 2.00 % Expected term (based on historical results) 7.2 years 7.2 years 7.2 years

Total stock compensation recognized in 2020, 2019 and 2018 was $185, $155 and $154, respectively. Stock option compensation recognized in 2020, 2019 and 2018 was $22, $24 and $25, respectively. Restricted shares compensation recognized in 2020, 2019 and 2018 was $163, $131 and $129, respectively.

The total intrinsic value of stock options exercised was $115, $51 and $58 in 2020, 2019 and 2018, respectively. The total amount of cash received in 2020 by the Company from the exercise of stock options granted under share-based payment arrangements was $127. As of January 30, 2021, there was $201 of total unrecognized compensation expense remaining related to non-vested share-based compensation arrangements granted under Plans. This cost is expected to be recognized over a weighted-average period of approximately two years. The total fair value of options that vested was $23, $26 and $30 in 2020, 2019 and 2018, respectively.

Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2020, the Company repurchased approximately four million common shares in such a manner.

13. COMMITMENTS AND CONTINGENCIES

The Company continuously evaluates contingencies based upon the best available evidence.

The principal contingencies are described below:

Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury, contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows.

14. STOCK

Preferred Shares

The Company has authorized five million shares of voting cumulative preferred shares; two million shares were available for issuance at January 30, 2021. The shares have a par value of $100 per share and are issuable in series.

Common Shares

The Company has authorized two billion common shares, $1 par value per share.

Common Stock Repurchase Program

The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made open market purchases totaling $1,196, $400 and $727 under these repurchase programs in 2020, 2019 and 2018, respectively.

In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds from stock option exercises and the related tax benefit. The Company repurchased approximately $128, $65 and $83 under the stock option program during 2020, 2019 and 2018, respectively.

15. COMPANY- SPONSORED BENEFIT PLANS

In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. Based on employee’s age, years of service and position with the Company, the employee may be eligible for retiree health care benefits. Funding of retiree health care benefits occurs as claims or premiums are paid.

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end that is closest to its fiscal year-ends, which were January 30, 2021 for fiscal 2020 and February 1, 2020 for fiscal 2019.

Amounts recognized in AOCI as of January 30, 2021 and February 1, 2020 consists of the following (pre-tax):

Pension Benefits Other Benefits Total 2020 2019 2020 2019 2020 2019

Net actuarial loss (gain) $ 951 $ 955 $ (147) $ (109) $ 804 $ 846 Prior service credit — — (55) (68) (55) (68)

Total $ 951 $ 955 $ (202) $ (177) $ 749 $ 778

Other changes recognized in other comprehensive income (loss) in 2020, 2019 and 2018 were as follows (pre-tax):

Pension Benefits Other Benefits Total 2020 2019 2018 2020 2019 2018 2020 2019 2018

Incurred net actuarial loss (gain) $ 36 $ 179 $ (126) $ (46) $ 9 $ (10) $ (10) $ 188 $ (136) Amortization of prior service credit — — — 13 11 11 13 11 11 Amortization of net actuarial gain (loss) (40) (61) (77) 8 12 10 (32) (49) (67) Other — (1) — — (12) — — (13) — Total recognized in other comprehensive

income (loss) $ (4) $ 117 $ (203) $ (25) $ 20 $ 11 $ (29) $ 137 $ (192)

Total recognized in net periodic benefit cost and other comprehensive income (loss) $ (4) $ 165 $ (127) $ (34) $ 11 $ 5 $ (38) $ 176 $ (122)

Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits

2020 2019 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of fiscal year $ 3,518 $ 2,994 $ 328 $ 298 $ 198 $ 200

Service cost 13 32 — 1 7 6 Interest cost 104 124 10 12 6 8 Plan participants’ contributions — — — — 12 13 Actuarial (gain) loss 175 545 35 41 (47) 9 Plan settlements (16) — — — — — Benefits paid (171) (180) (21) (21) (24) (26) Other (8) 3 (1) (3) — (12)

Benefit obligation at end of fiscal year $ 3,615 $ 3,518 $ 351 $ 328 $ 152 $ 198

Change in plan assets: Fair value of plan assets at beginning of fiscal year $ 3,422 $ 3,010 $ — $ — $ — $ —

Actual return on plan assets 342 590 — — — — Employer contributions — — 21 21 12 13 Plan participants’ contributions — — — — 12 13 Plan settlements (16) — — — — — Benefits paid (171) (180) (21) (21) (24) (26) Other (8) 2 — — — —

Fair value of plan assets at end of fiscal year $ 3,569 $ 3,422 $ — $ — $ — $ — Funded status and net asset and liability recognized at end of

fiscal year $ (46) $ (96) $ (351) $ (328) $ (152) $ (198)

As of January 30, 2021, other assets and other current liabilities include $21 and $35, respectively, of the net asset and liability recognized for the above benefit plans. As of February 1, 2020, other assets and other current liabilities include $19 and $33, respectively, of the net asset and liability recognized for the above benefit plans.

The Company announced changes to certain non-union company-sponsored pension plans. The Company froze the compensation and service periods used to calculate pension benefits for active employees who participate in the affected pension plans as of December 31, 2019. Beginning January 1, 2020, the affected active employees no longer accrue additional benefits for future service and eligible compensation received under these plans.

As of January 30, 2021 and February 1, 2020, pension plan assets do not include common shares of The Kroger Co.

Pension Benefits Other Benefits Weighted average assumptions 2020 2019 2018 2020 2019 2018 Discount rate — Benefit obligation 2.72 % 3.01 % 4.23 % 2.43 % 2.97 % 4.19 % Discount rate — Net periodic benefit cost 3.01 % 4.23 % 4.00 % 2.97 % 4.19 % 3.93 % Expected long-term rate of return on plan

assets 5.50 % 6.00 % 5.90 % Rate of compensation increase — Net

periodic benefit cost 3.03 % 3.04 % 3.03 % Rate of compensation increase — Benefit

obligation 3.03 % 3.03 % 3.04 % Cash Balance plan interest crediting rate 3.30 % 3.60 % 4.00 %

The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be effectively settled. They take into account the timing and amount of benefits that would be available under the plans. The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that produce the same present value of cash flows. The selection of the 2.72% and 2.43% discount rates as of year-end 2020 for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better rating constructed with the assistance of an outside consultant. A 100 basis point increase in the discount rate would decrease the projected pension benefit obligation as of January 30, 2021, by approximately $410.

The Company’s 2020 assumed pension plan investment return rate was 5.50% compared to 6.00% in 2019 and 5.90% in 2018. The value of all investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2020, net of investment management fees and expenses, increased 16.9% and for fiscal year 2020 investments increased 10.2%. Historically, the Company’s pension plans’ average rate of return was 7.7% for the 10 calendar years ended December 31, 2020, net of all investment management fees and expenses. For the past 20 years, the Company’s pension plans’ average annual rate of return has been 7.2%. To determine the expected rate of return on pension plan assets held by the Company, the Company considers current and forecasted plan asset allocations as well as historical and forecasted rates of return on various asset categories.

The pension benefit unfunded status decreased in 2020, compared to 2019, due to higher than anticipated asset returns, partially offset by a decline in the discount rate from 2019 to 2020 and changes in demographic assumptions in 2020.

The following table provides the components of the Company’s net periodic benefit costs for 2020, 2019 and 2018:

Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits

2020 2019 2018 2020 2019 2018 2020 2019 2018 Components of net periodic benefit cost:

Service cost $ 13 $ 32 $ 35 $ — $ 1 $ 2 $ 7 $ 6 $ 7 Interest cost 104 124 124 10 12 12 6 8 8 Expected return on plan assets (168) (182) (174) — — — — — — Amortization of:

Prior service credit — — — — — — (13) (11) (11) Actuarial (gain) loss 35 55 69 5 6 8 (8) (12) (10) Other 1 — — — — — (1) — —

Net periodic benefit cost $ (15) $ 29 $ 54 $ 15 $ 19 $ 22 $ (9) $ (9) $ (6)

The following table provides the projected benefit obligation (“PBO”) and the fair value of plan assets for those company- sponsored pension plans with projected benefit obligations in excess of plan assets.

Qualified Plans Non-Qualified Plans 2020 2019 2020 2019

PBO at end of fiscal year $ 3,415 $ 3,272 $ 351 $ 328 Fair value of plan assets at end of year $ 3,349 $ 3,157 $ — $ —

The following table provides the accumulated benefit obligation (“ABO”) and the fair value of plan assets for those company-sponsored pension plans with accumulated benefit obligations in excess of plan assets.

Qualified Plans Non-Qualified Plans 2020 2019 2020 2019

ABO at end of fiscal year $ 3,415 $ 3,271 $ 351 $ 328 Fair value of plan assets at end of year $ 3,349 $ 3,157 $ — $ —

The following table provides information about the Company’s estimated future benefit payments.

Pension Other Benefits Benefits

2021 $ 224 $ 11 2022 $ 231 $ 12 2023 $ 219 $ 12 2024 $ 223 $ 12 2025 $ 226 $ 12 2026 —2030 $ 1,124 $ 57

The following table provides information about the target and actual pension plan asset allocations as of January 30, 2021.

Actual Target allocations Allocations

2020 2020 2019 Pension plan asset allocation

Global equity securities 2.0 % 6.0 % 4.3 % Emerging market equity securities 1.0 1.6 2.3 Investment grade debt securities 80.0 77.9 77.8 High yield debt securities 4.0 2.7 2.9 Private equity 10.0 8.1 8.1 Hedge funds — 2.2 2.8 Real estate 3.0 1.5 1.8

Total 100.0 % 100.0 % 100.0 %

The target allocations shown for 2020 were established in 2020 in conjunction with the continuation of the Company’s transition to a LDI strategy, which began in 2017. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. This LDI strategy will be phased in over time as the Company is able to transition out of illiquid investments. During this transition, the Company’s target allocation will change by increasing the Company’s fixed income instruments. Cash flow from employer contributions and redemption of plan assets to fund participant benefit payments can be used to fund underweight asset classes and divest overweight asset classes, as appropriate. The Company expects that cash flow will be sufficient to meet most rebalancing needs.

The Company did not make any contributions to its company-sponsored pension plans in 2020 and the Company is not required to make any contributions to these plans in 2021. If the Company does make any contributions in 2021, the Company expects these contributions will decrease its required contributions in future years. Among other things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations, and future changes in legislation, will determine the amounts of any contributions. The Company expects 2021 net periodic benefit costs for company-sponsored pension plans to be approximately ($45).

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The Company used a 5.50% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.50% ultimate health care cost trend rate in 2037, to determine its expense.

The following tables, set forth by level within the fair value hierarchy, present the Qualified Plans’ assets at fair value as of January 30, 2021 and February 1, 2020:

Assets at Fair Value as of January 30, 2021

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured

(Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 120 $ — $ — $ — $ 120 Corporate Stocks 89 — — — 89 Corporate Bonds — 1,240 — — 1,240 U.S. Government Securities — 225 — — 225 Mutual Funds 329 — — — 329 Collective Trusts — — — 1,014 1,014 Hedge Funds — — 35 46 81 Private Equity — — — 289 289 Real Estate — — 39 16 55 Other — 127 — — 127 Total $ 538 $ 1,592 $ 74 $ 1,365 $ 3,569

Assets at Fair Value as of February 1, 2020

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured

For measurements using significant unobservable inputs (Level 3) during 2020 and 2019, a reconciliation of the beginning and ending balances is as follows:

Hedge Funds Real Estate Ending balance, February 2, 2019 $ 49 $ 67 Contributions into Fund 2 3 Realized gains (2) 23 Unrealized losses — (17) Distributions (11) (33) Other 5 —

Ending balance, February 1, 2020 43 43 Contributions into Fund 2 1 Realized gains — 4 Unrealized gains — (6) Distributions (10) (3)

Ending balance, January 30, 2021 $ 35 $ 39

The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in the above tables:

● Cash and cash equivalents: The carrying value approximates fair value.

The Company contributed and expensed $294, $264 and $263 to employee 401(k) retirement savings accounts in 2020, 2019 and 2018, respectively. The 401(k) retirement savings account plans provide to eligible employees both matching contributions and automatic contributions from the Company based on participant contributions, compensation as defined by the plan and length of service.

In 2019, the Company approved and implemented a plan to reorganize certain portions of its division management structure. This reorganization increased operational effectiveness and reduced overhead costs while maintaining a high quality customer experience. The Company recorded a charge for severance and related benefits of $80, $61 net of tax, in 2019, which is included in the OG&A caption within the Consolidated Statements of Operations. Of the total charge, $42 was unpaid as of February 1, 2020 and was included in Other Current Liabilities within the Consolidated Balance Sheet and the remaining balance was paid in 2020.

16. MULTI-EMPLOYER PENSION PLANS

The Company recognizes expense in connection with these plans as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans of $619 in 2020, $461 in 2019 and $358 in 2018. The increase in 2020, compared to 2019 and 2018, is primarily due to incremental contributions of $236, $180 net of tax, to multi-employer pension plans, helping stabilize future associate benefits.

The Company is currently designated as the named fiduciary of the United Food and Commercial Workers (“UFCW”) Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and has sole investment authority over these assets. Due to opportunities arising, the Company has restructured certain multi-employer pension plans. The significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

● In 2020, certain of the Company’s associates ratified an agreement with certain UFCW local unions to withdraw from the UFCW International Union-Industry Pension Fund (“National Fund”). Due to the ratification of the agreement, the Company incurred a withdrawal liability charge of $962, on a pre-tax basis, to fulfill obligations for past service for associates and retirees in the National Fund. The Company also incurred an additional $27 commitment to a transition reserve in the new variable annuity pension plan. On an after-tax basis, the withdrawal liability and commitment to the transition reserve totaled $754. The current portion of the commitment of $523 is included in “Other current liabilities” and the long-term portion of the commitment of $466 is included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. These commitments will be satisfied by payments to the National Fund over the next three years. The long-term portion is included in “Other” within “Changes in operating assets and liabilities net of effects from mergers and disposals of businesses” in the Company’s Consolidated Statements of Cash Flows.

● In 2019, the Company incurred a $135 charge, $104 net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension plan funds.

● In 2018, the Company incurred a $155 charge, $121 net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension plan fund.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects:

a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers.

The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent Pension Protection Act Zone Status available in 2020 and 2019 is for the plan’s year-end at December 31, 2019 and December 31, 2018, respectively. Among other factors, generally, plans in the red zone are less than 65 percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80 percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2019 and December 31, 2018. The multi-employer contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years 2020, 2019 and 2018.

The following table contains information about the Company’s multi-employer pension plans:

FIP/RP Pension Protection Status

EIN / Pension Act Zone Status Pending/ Multi-Employer Contributions Surcharge Pension Fund Plan Number 2020 2019 Implemented 2020 2019 2018 Imposed (5) SO CA UFCW Unions & Food

Employers Joint Pension Trust Fund(1)(2) 95-1939092 - 001 Yellow Yellow Implemented $ 86 $ 75 $ 71 No

Desert States Employers & UFCW Unions Pension Plan(1) 84-6277982 - 001 Green Green No 19 19 19 No

Sound Retirement Trust (formerly Retail Clerks Pension Plan)(1)(3) 91-6069306 – 001 Yellow Yellow Implemented 29 25 23 No

Rocky Mountain UFCW Unions and Employers Pension Plan(1) 84-6045986 - 001 Green Green No 28 23 20 No

Oregon Retail Employees Pension Plan(1) 93-6074377 - 001 Green Green No 9 9 9 No

Bakery and Confectionary Union & Industry International Pension Fund(1) 52-6118572 - 001 Red Red Implemented 8 10 11 No

Retail Food Employers & UFCW Local 711 Pension(1) 51-6031512 - 001 Yellow Yellow Implemented 11 10 10 No

United Food & Commercial Workers Intl Union — Industry Pension Fund(1)(4) 51-6055922 - 001 Green Green No 29 32 32 No

Western Conference of Teamsters Pension Plan 91-6145047 - 001 Green Green No 35 34 34 No

Central States, Southeast & Southwest Areas Pension Plan 36-6044243 - 001 Red Red Implemented 12 — 18 No

UFCW Consolidated Pension Plan(1) 58-6101602 – 001 Green Green No 321 174 55 No

IBT Consolidated Pension Plan(1)(6) 82-2153627 - 001 N/A N/A No 18 33 37 No Other 14 17 19 Total Contributions $ 619 $ 461 $ 358

(1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension funds.

(2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2020 and March 31, 2019. (3) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at September 30, 2019 and September 30, 2018. (4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2019 and June 30, 2018. (5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is

not in compliance with a rehabilitation plan. As of January 30, 2021, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund.

(6) The plan was formed after 2006, and therefore is not subject to zone status certifications.

Expiration Date of Collective Most Significant Collective Bargaining Bargaining Agreements(1)

Pension Fund Agreements Count Expiration SO CA UFCW Unions & Food Employers Joint Pension

Trust Fund March 2021 to March 2022 2 March 2021 to March 2022 UFCW Consolidated Pension Plan April 2020 (2) to July 2024 4 April 2020 (2) to August 2022 Desert States Employers & UFCW Unions Pension Plan February 2022 to October 2023 1 October 2023 Sound Retirement Trust (formerly Retail Clerks Pension

Plan) September 2021 to June 2023 4 May 2022 to August 2022 Rocky Mountain UFCW Unions and Employers Pension

Plan January 2022 1 January 2022 Oregon Retail Employees Pension Plan (2) August 2021 to March 2023 3 August 2021 to July 2022 Bakery and Confectionary Union & Industry International

Pension Fund December 2020 (2) to July 2022 3 May 2021 to October 2021 Retail Food Employers & UFCW Local 711 Pension March 2022 to January 2024 1 March 2022 United Food & Commercial Workers Intl Union — Industry

Pension Fund February 2020 (2) to February 2024 2 July 2023 to August 2023 Western Conference of Teamsters Pension Plan April 2021 to September 2025 4 July 2021 to September 2025 International Brotherhood of Teamsters Consolidated

Pension Fund September 2022 to September 2024 3 September 2022 to September 2024

(1) This column represents the number of significant collective bargaining agreements and their expiration date for each of the Company’s pension funds listed above. For the purposes of this table, the “significant collective bargaining agreements” are the largest based on covered employees that, when aggregated, cover the majority of the employees for which we make multi-employer contributions for the referenced pension fund.

(2) Certain collective bargaining agreements for each of these pension funds are operating under an extension.

The Company held escrow deposits as of January 30, 2021, amounting to $271 due to certain restructuring agreements. These payments are included in “Prepaid and other current assets” in the Company’s Consolidated Balance Sheets.

17. DISPOSAL OF BUSINESS

18. RECENTLY ADOPTED ACCOUNTING STANDARDS

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” Under the new standard, implementation costs related to a cloud computing arrangement will be deferred or expensed as incurred, in accordance with the existing internal-use software guidance for similar costs. The new standard also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense. The Company adopted this guidance on a prospective basis in the first quarter of 2020. Capitalized implementation costs of $81, net of accumulated amortization of $2, are included in “Other assets” in the Company’s Consolidated Balance Sheets as of January 30, 2021. The corresponding cash flows related to these arrangements are included in “Net cash provided by operating activities” in the Company’s Consolidated Statements of Cash Flows.

19. RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This standard provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference LIBOR or other reference rates expected to be discontinued. This guidance is effective upon issuance and can be applied through December 31, 2022. The Company may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company is currently evaluating the effect of this standard on its Consolidated Financial Statements.

20. QUARTERLY DATA (UNAUDITED)

The two tables that follow reflect the unaudited results of operations for 2020 and 2019.

Quarter First Second Third Fourth Total Year

2020 (16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks) (52 Weeks) Sales $ 41,549 $ 30,489 $ 29,723 $ 30,737 $ 132,498

Operating Expenses Merchandise costs, including advertising, warehousing, and

transportation, excluding items shown separately below 31,454 23,551 22,901 23,691 101,597 Operating, general and administrative 7,671 5,297 5,194 6,338 24,500 Rent 273 204 205 192 874 Depreciation and amortization 825 617 631 674 2,747

Operating profit (loss) 1,326 820 792 (158) 2,780

Other income (expense) Interest expense (174) (135) (129) (106) (544) Non-service component of company sponsored pension plan

costs 11 8 9 1 29 Gain on investments 422 368 162 153 1,105

Net earnings (loss) before income tax expense 1,585 1,061 834 (110) 3,370

Income tax expense (benefit) 373 241 202 (34) 782

Net earnings (loss) including noncontrolling interests 1,212 820 632 (76) 2,588 Net income attributable to noncontrolling interests — 1 1 1 3

Net earnings (loss) attributable to The Kroger Co. $ 1,212 $ 819 $ 631 $ (77) $ 2,585

Net earnings (loss) attributable to The Kroger Co. per basic common share $ 1.53 $ 1.04 $ 0.81 $ (0.10) $ 3.31

Average number of shares used in basic calculation 780 777 772 761 773

Net earnings (loss) attributable to The Kroger Co. per diluted common share $ 1.52 $ 1.03 $ 0.80 $ (0.10) $ 3.27

Average number of shares used in diluted calculation 788 786 780 761 781

Dividends declared per common share $ 0.16 $ 0.18 $ 0.18 $ 0.18 $ 0.70

Annual amounts may not sum due to rounding.

Net earnings for the first quarter of 2020 include charges to OG&A of $60, $44 net of tax, for the revaluation of Home Chef contingent consideration and $38, $28 net of tax, for transformation costs and gains in other income (expense) of $422, $312 net of tax, for the gain on investments.

Net earnings for the second quarter of 2020 include charges to OG&A of $25, $19 net of tax, for the revaluation of Home Chef contingent consideration and $29, $21 net of tax, for transformation costs and a gain in other income (expense) of $368, $278 net of tax, for the gain on investments.

Net earnings for the third quarter of 2020 include charges to OG&A of $24, $17 net of tax, for the revaluation of Home Chef contingent consideration and $33, $24 net of tax, for transformation costs and a gain in other income (expense) of $162, $115 net of tax, for the gain on investments.

Net earnings for the fourth quarter of 2020 include charges to OG&A of $989, $754 net of tax, for commitments to certain multi-employer pension funds, $80, $61 net of tax, for the revaluation of Home Chef contingent consideration and $11, $8 net of tax, for transformation costs and a gain in other income (expense) of $153, $116 net of tax, for the gain on investments.

Quarter First Second Third Fourth Total Year

2019 (16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks) (52 Weeks) Sales $ 37,251 $ 28,168 $ 27,974 $ 28,893 $ 122,286

Operating Expenses Merchandise costs, including advertising, warehousing, and

transportation, excluding items shown separately below 28,983 22,007 21,798 22,507 95,294 Operating, general and administrative 6,314 4,811 5,097 4,985 21,208 Rent 274 200 201 209 884 Depreciation and amortization 779 591 624 655 2,649

Operating profit 901 559 254 537 2,251

Other income (expense) Interest expense (197) (130) (137) (140) (603) Non-service component of company sponsored pension plan

costs 3 (4) (1) 2 — Gain (loss) on investments 106 (45) 106 (9) 157 Gain on sale of business 176 — — — 176

Net earnings before income tax expense 989 380 222 390 1,981

Income tax expense 226 93 79 71 469

Net earnings including noncontrolling interests 763 287 143 319 1,512 Net loss attributable to noncontrolling interests (9) (10) (120) (8) (147)

Net earnings attributable to The Kroger Co. $ 772 $ 297 $ 263 $ 327 $ 1,659

Net earnings attributable to The Kroger Co. per basic common share $ 0.96 $ 0.37 $ 0.32 $ 0.40 $ 2.05

Average number of shares used in basic calculation 798 800 802 797 799

Net earnings attributable to The Kroger Co. per diluted common share $ 0.95 $ 0.37 $ 0.32 $ 0.40 $ 2.04

Average number of shares used in diluted calculation 805 805 807 804 805

Dividends declared per common share $ 0.14 $ 0.16 $ 0.16 $ 0.16 $ 0.62

Annual amounts may not sum due to rounding.

Net earnings for the first quarter of 2019 include charges to OG&A expenses of $59, $44 net of tax, for obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund and a reduction to OG&A of $24, $18 net of tax, for the revaluation of Home Chef contingent consideration and gains in other income of $106, $80 net of tax, related to the sale of Turkey Hill Dairy, $70, $52 net of tax, related to the sale of You Technology and $106, $80 net of tax, for the mark to market gain on Ocado.

Net earnings for the second quarter of 2019 include charges to OG&A of $27, $22 net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund and $2, $2 net of tax, for the revaluation of Home Chef contingent consideration, and a charge in other income (expense) of $45, $36 net of tax, for the mark to market loss on Ocado securities.

Net earnings for the third quarter of 2019 include a charge to OG&A of $45, $35 net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund, $80, $61 net of tax, for a severance charge and related benefits, $238 including $131 attributable to the Kroger Co., $100 net of tax, for impairment of Lucky’s Market and $4, $3 net of tax, for the revaluation of Home Chef contingent consideration and gain in other income of $106, $81 net of tax, for the mark to market gain on Ocado securities.

Net earnings for the fourth quarter of 2019 include charges to OG&A of $4, $3 net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds, $174, $125 net of tax, for deconsolidation and impairment of Lucky’s Market, $52, $37 net of tax, for transformation costs, primarily including 35 planned store closures and a reduction to OG&A of $51, $36 net of tax, for the revaluation of Home Chef contingent consideration and a loss in other income (expense) of $9, $6 net of tax, for the mark to market loss on Ocado securities.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

As of January 30, 2021, our Chief Executive Officer and Chief Financial Officer, together with a disclosure review committee appointed by the Chief Executive Officer, evaluated the Company’s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of January 30, 2021.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There was no change in our internal control over financial reporting during the fiscal quarter ended January 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The effectiveness of the Company’s internal control over financial reporting as of January 30, 2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which can be found in Item 8 of this Form 10-K.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our board of directors has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, employees and directors, including Kroger’s principal executive, financial and accounting officers. The Policy on Business Ethics is available on our website at ir.kroger.com under Investors – Governance – Policy on Business Ethics. A copy of the Code of Ethics is available in print free of charge to any shareholder who requests a copy. Shareholders may make a written request to Kroger’s Secretary at our executive offices at 1014 Vine Street, Cincinnati, Ohio 45202. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver from, a provision of the Policy on Business Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website.

The information required by this Item 10 with respect to executive officers is included within Item 1 in Part I of this Annual Report on Form 10-K under the caption “Information about our Executive Officers.” The information required by this Item not otherwise set forth in Part I above or in this Item 10 of Part III is set forth under the headings Election of Directors, Information Concerning the Board of Directors- Committees of the Board, Information Concerning the Board of Directors- Audit Committee and Delinquent 16(a) Reports in the definitive proxy statement to be filed by the Company with the Securities and Exchange Commission within 120 days after the end of the fiscal year 2020 (the “2021 proxy statement”) and is hereby incorporated by reference into this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is set forth in the sections entitled Compensation Discussion and Analysis, Compensation Committee Report, and Compensation Tables in the 2021 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table provides information regarding shares outstanding and available for issuance under our existing equity compensation plans.

Equity Compensation Plan Information

(a) (b) (c) Number of securities

Plan Category warrants and rights(1) warrants and rights(1) reflected in column (a))

Equity compensation plans approved by security holders 30,516,238 $ 26.65 33,857,862

Equity compensation plans not approved by security holders — $ — —

Total 30,516,238 $ 26.65 33,857,862

(1) The total number of securities reported includes the maximum number of common shares, 3,693,198, that may be issued under performance units granted under our long-term incentive plans. The nature of the awards is more particularly described in the Compensation Discussion and Analysis section of the definitive 2021 proxy statement and is hereby incorporated by reference into this Form 10-K. The weighted-average exercise price in column (b) does not take these performance unit awards into account. Based on historical data, or in the case of the awards made in 2018 through 2020 and earned in 2020 the actual payout percentage, our best estimate of the number of common shares that will be issued under the performance unit grants is approximately 5,052,484.

The remainder of the information required by this Item is set forth in the section entitled Beneficial Ownership of Common Stock in the 2021 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

This information required by this Item is set forth in the sections entitled Related Person Transactions and Information Concerning the Board of Directors-Independence in the 2021 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is set forth in the section entitled Ratification of the Appointment of Kroger’s Independent Auditor in the 2021 proxy statement and is hereby incorporated by reference into this Form 10-K.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)1. Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of January 30, 2021 and February 1, 2020 Consolidated Statements of Operations for the years ended January 30, 2021, February 1, 2020 and February 2, 2019 Consolidated Statements of Comprehensive Income for the years ended January 30, 2021, February 1, 2020 and February 2, 2019 Consolidated Statements of Cash Flows for the years ended January 30, 2021, February 1, 2020 and February 2, 2019 Consolidated Statement of Changes in Shareholders’ Equity for the years ended January 30, 2021, February 1, 2020 and February 2, 2019 Notes to Consolidated Financial Statements

(a)3.(b) Exhibits

3.2 The Company’s Regulations are hereby incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 27, 2019.

4.2 Description of Securities. Incorporated by reference to Exhibit 4.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020..

10.2* The Kroger Co. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.4 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.

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10.7* The Kroger Co. 2008 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on June 26, 2008.

10.8* The Kroger Co. 2011 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on June 23, 2011.

10.9* The Kroger Co. 2014 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the Company’s Form S-8 filed with the SEC on July 29, 2014.

10.10* The Kroger Co. 2019 Long-Term Incentive Plan. Incorporated by reference to Exhibit 99.1 of the Company’s Form S-8 filed with the SEC on June 28, 2019.

10.11* Form of Restricted Stock Grant Agreement under Long-Term Incentive Cash Bonus Plans. Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

10.13* Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

10.15* Form of Performance Unit Award Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

10.16*† Form of Restricted Stock Grant Agreement under Long-Term Incentive and Cash Bonus Plans.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Independent Registered Public Accounting Firm.

24.1 Powers of Attorney.

31.1 Rule 13a-14(a)/15d-14(a) Certification.

31.2 Rule 13a-14(a)/15d-14(a) Certification.

32.1 Section 1350 Certifications.

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* Management contract or compensatory plan or arrangement. † Filed herewith.

ITEM 16. FORM 10-K SUMMARY

Not Applicable.

101

SIGNATURES

THE KROGER CO.

Dated: March 30, 2021 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

/s/ Gary Millerchip Senior Vice President and Chief Financial Officer Gary Millerchip (principal financial officer)

/s/ Todd A. Foley Vice President & Corporate Controller Todd A Foley (principal accounting officer)

* Director Nora A. Aufreiter * Director Kevin M. Brown * Director Anne Gates * Director Karen M. Hoguet * Director Susan J. Kropf * Chairman of the Board and Chief Executive Officer W. Rodney McMullen * Director Clyde R. Moore * Director Ronald L. Sargent * Director J. Amanda Sourry Knox * Director Mark S. Sutton * Director Ashok Vemuri

* By: /s/ Christine S. Wheatley Christine S. Wheatley Attorney-in-fact

Exhibit 10.16

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

The date of this document is <Date of Grant>.

THE KROGER CO. RESTRICTED STOCK AGREEMENT

Pursuant to a Long-Term Incentive Plan (the “Plan”), The Kroger Co. (“we” or “us”) hereby grants <Number of Shares Granted> shares of restricted stock (the “shares”) to the undersigned grantee (“you”) on <Date of Grant> (the “grant date”).

“This certificate and the shares of stock represented hereby are subject to the terms and conditions (including the risks of forfeiture and restrictions against transfer) contained in a Long-Term Incentive Plan of The Kroger Co. and an Agreement entered into between the Plan participant and The Kroger Co. Release from such terms and conditions will be made only in accordance with the provisions of the Plan and the Agreement, a copy of each of which is on file in the office of the Secretary of The Kroger Co. or The Kroger Co.’s plan administrator.”

2. Neither the shares, the right to vote the shares or the right to receive dividends thereon may be sold, assigned, transferred, pledged, hypothecated or otherwise transferred or encumbered by you during the restricted period. You will have all the other rights of a shareholder. Dividends on the restricted shares will be treated as compensation for tax purposes, unless a Section 83(b) election is made in which case they will be treated as dividends for tax purposes, but in either case will not be considered as earnings for purposes of calculating retirement benefits.

3. Unless and until the restrictions on the shares lapse, the shares will be forfeited by you if your employment by us ceases for any reason other than

after a “Change in Control,” all as defined below. At the time of either of the foregoing (a) or (c), the restrictions will lapse, the shares no longer will be subject to the restrictions, and any new certificates issued to you or the your legal representative for all shares theretofore subject to risk of forfeiture will be free of the foregoing legend. Subject to the provisions of Paragraphs 11 and 12, below, upon your Retirement the restrictions on your shares will continue to lapse in accordance with the vesting schedule outlined in Paragraph 7, and upon lapsing of those restrictions those shares will no longer be subject to the risk of forfeiture and will be free of the restrictive legend.

4. For purposes of Paragraph 3, the following definitions shall apply:

(i) “Change in Control” means:

(b) consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company and its Affiliates (a “Business Combination”), in each case, unless, following such Business Combination, Persons that were the beneficial owners of outstanding voting securities entitled to vote generally in the election of directors of Kroger immediately prior to such Business Combination beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which, as a result of such Business Combination, owns all or substantially all of the Company and its Affiliates or their assets either directly or through one or more subsidiaries or affiliates) in substantially the same proportions as their ownership of such securities immediately prior to such Business Combination;

(c) during any period of twenty-four (24) consecutive months, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof; provided that, any individual becoming a director of Kroger whose appointment or election by the Board or nomination for election by Kroger’s shareholders was approved or recommended by a vote of at least two-thirds of the Incumbent Directors shall also be considered an Incumbent Director; or

(d) the approval by the shareholders of Kroger of a complete liquidation or dissolution of the Company.

(iii) “Kroger” and “Company” means the parent company, The Kroger Co.;

(v) “Board” means the Board of Directors of Kroger;

(vi) “Good Reason” means:

(a) without your consent

(i) A material diminution in your base compensation;

(ii) A material diminution in your authority, duties, or responsibilities;

(iv) Any action or inaction by Kroger which results in employee benefits, perquisites and fringe benefits that, in the aggregate, are materially less favorable than those provided to you immediately prior to the Change in Control.

(b) You shall not have Good Reason for a termination of employment unless:

(i) the condition constituting Good Reason occurs during the two years following a Change in Control;

(ii) you provide written notice to the Committee of the existence of the condition constituting Good Reason within 90 days of the initial existence of the condition constituting Good Reason and the Company is given 30 days to cure such condition; and

(iii) you incur a termination of employment no later than 120 days following the end of the two years after a Change in Control.

(vii) “Cause” means your:

(a) failure to substantially perform your duties (other than by reason of disability) with respect to Kroger or an Affiliate,

(b) breach of fiduciary duty to Kroger or an Affiliate,

(c) dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect to the business or affairs of Kroger or an Affiliate,

(d) willful violation of the policies of Kroger or an Affiliate after receiving written notice of such violation, or

(e) conviction of a felony or crime involving moral turpitude.

All determinations of Cause hereunder shall be made by the Committee and shall be binding for all purposes hereunder.

5. For purposes of this Agreement, a Retirement will be deemed to occur if your employment by or service to Kroger voluntarily terminates and provided it is on terms deemed satisfactory to the Committee in its sole discretion.

6. This Agreement does not give you any right of continued employment by or to continue to provide service to Kroger or its subsidiaries. It does not affect your right or our right to terminate your employment or service at any time.

Annual Anniversary of Date of Grant You Are Vested In: 1st 100% of the shares

9. You or your representative will be responsible to satisfy all tax obligations, if any, prior to the lapsing of the restrictions. If you or your representative do not satisfy those obligations through a cash payment to our stock option administrator or as we otherwise direct, on or before the date on which the restrictions lapse, we are authorized and directed to retain that number of shares with a fair market value, as defined in the prospectus for the Plan and this Agreement, equal to the tax obligations due, on the date of the release. You or your representative will remain liable for any tax obligations remaining in excess of the amounts so withheld.

10. Any shares to be issued under this Agreement, at our election, may be issued in certificate form or may be maintained in book-entry form and not represented by a certificate. Shares may be issued directly in your name or in the name of a designated agent or plan administrator on your behalf.

11. If your employment terminates due to Retirement, notwithstanding anything contained in Paragraph 3 to the contrary, in the event that while this Agreement is outstanding you provide services as an employee, director, consultant, agent or otherwise (professionally engaged in any respect – directly or indirectly) to or with any person, company or entity engaged in any business (whether brick-and-mortar or online) that within the United States sells at retail groceries, food, drugs, health or beauty care items, motor fuels, or pharmaceuticals, or manufactures food/beverage products that are sold at retail, or conducts data analytics activity, financial services activity, or any other business activity of any kind that is in competition with any business line that is conducted by Kroger or is under active consideration by Kroger at any time during the last six months of your employment with Kroger, in each case, this Agreement expires and any shares for which the restrictions have not then lapsed are immediately forfeited.

12. Notwithstanding anything contained in Paragraph 3 to the contrary, during your employment or thereafter, you or anyone acting at your behest or on your behalf shall not in any respect divulge or disclose in any way to any third party any Kroger trade secrets, business plans, strategies or policies, financial or marketing information, sales or market share information, vendor or supplier information, contractual information, or other confidential company information of any kind whatsoever (that is, material business-related information not already disclosed by the company, or any other material non-public company information). In the event of a violation of the foregoing provision, this Agreement expires and any shares for which the restrictions have not lapsed are forfeited. You further acknowledge and agree that the foregoing expiration and forfeiture is not the exclusive or sole consequence or remedy in the event of a divulgence or disclosure as described above in this Paragraph but rather one among others, and that in addition to the foregoing Kroger fully reserves and retains the

right to pursue all other remedies available or potentially available to it as a matter of law or equity.

13. This Agreement is governed by the laws of the state of Ohio.

The parties have executed this Agreement on the date of grant set forth above.

The Kroger Co.

By Rodney McMullen (“you”)

<Participant’s Name>

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

EXHIBIT 21.1

SUBSIDIARIES OF THE KROGER CO.

84.51 LLC [Ohio] 84.51 HQ Building Company, LLC [Ohio] Alpha Beta Company [California]

Also Doing Business As: Food 4 Less Ralphs Ansonborough Square Investors I, LLC [Delaware] Ansonborough Square Retail, LLC [South Carolina] Ardrey Kell Investments, LLC [North Carolina] Bay Area Warehouse Stores, Inc. [California]

Also Doing Business As: Foods Co. Beech Tree Holdings, LLC [Delaware] Bell Markets, Inc. [California] Bleecker Ventures LLC [New York] Bluefield Beverage Company [Ohio] Box Cutter, Inc. [New York] Brier Creek Arbors Drive Retail, LLC [North Carolina] Cala Co. [Delaware]

Also Doing Business As: Food 4 Less Cala Foods, Inc. [California]

Also Doing Business As: Foods Co. CB&S Advertising Agency, Inc. [Oregon] Cheeses of All Nations, Inc. [New York] Country Oven, Inc. [Ohio] Crawford Stores, Inc. [California] Creedmoor Retail, LLC [North Carolina] Dillon Companies, LLC [Kansas]

Also Doing Business As: Baker's Supermarkets City Market

City Market Fuel Center City Market Pharmacy

Dillons Dillons Marketplace Dillons Pharmacy Gerbes Supermarkets Inter-American Products King Soopers King Soopers Fuel Center King Soopers Marketplace Peyton’s Fountain

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

FMJ, Inc. [Delaware] Also Doing Business As:

FMJ Ecommerce Fred Meyer Jewelers Mail Order fredmeyerjewelers.com littmanjewelers.com

Food 4 Less GM, Inc. [California] Food 4 Less Holdings, Inc. [Delaware] Food 4 Less Merchandising, Inc. [California] Food 4 Less of California, Inc. [California]

Also Doing Business As: Food 4 Less

Food 4 Less of Southern California, Inc. [Delaware] Fred Meyer, Inc. [Delaware] Fred Meyer Jewelers, Inc. [California]

Also Doing Business As: Fred Meyer Jewelers Littman Jewelers

Fred Meyer Stores, Inc. [Ohio] Also Doing Business As:

Fred Meyer Cork & Tap Fred Meyer Fuel Center Fred Meyer Fuel Stop Fred Meyer Pharmacy Fred Meyer Inter-American Products QFC QFC Fuel Station Q20 Pub Quality Food Centers Swan Island Dairy

Glasswing Labs LLC [Ohio] Glendale/Goodwin Realty I, LLC [Ohio] Grubstake Investments, LLC [Oregon] Harris Teeter, LLC [North Carolina]

Also Doing Business As: Harris Teeter Harris Teeter Properties, LLC [North Carolina] Harris-Teeter Services, Inc. [North Carolina] Harris Teeter Supermarkets, Inc. [North Carolina] Healthy Options Inc. [Delaware]

Also Doing Business As: Columbus Central Fill Postal Prescription Services

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

HTTAH, LLC [North Carolina] Hughes Markets, Inc. [California]

Also Doing Business As: Ralphs Hughes Realty, Inc. [California] Inter-American Foods, Inc. [Ohio] Inter-American Products, Inc. [Ohio] IRP, LLC [Wisconsin] I.T.A., Inc. [Wisconsin] ITAC 119, LLC [North Carolina] ITAC 265, LLC [North Carolina] Jondex Corp. [Wisconsin] Jubilee Carolina, LLC [North Carolina] J.V. Distributing, Inc. [Michigan] KCDE-2 LLC [Ohio] KCDE-3 LLC [Ohio] KCDE-4 LLC [Ohio] KCDE-5 LLC [Ohio] KCDE – 2012, LLC [Ohio] KCDE – 2013, LLC [Ohio] Kee Trans, Inc. [Wisconsin] KGO LLC [Ohio] Kiosk Medicine Kentucky, LLC [Kentucky]

Also Doing Business As: The Little Clinic

Kirkpatrick West Retail, LLC [Virginia] KPF, LLC [Delaware] KPS, LLC [Ohio] KRGP LLC [Ohio]

Also Doing Business As: Kitchen 1883

KRLP Inc. [Ohio] The Kroger Co. of Michigan [Michigan]

Also Doing Business As: Inter-American Products

Kessel Food Markets Kessel Pharmacies Kroger Kroger Fresh Fare Kroger Marketplace Michigan Dairy

Kroger Community Development Entity, LLC [Ohio] Kroger Dedicated Logistics Co. [Ohio]

Also Doing Business As: KDL

Kroger Fulfillment Network, LLC [Ohio] Kroger G.O. LLC [Ohio] Kroger Limited Partnership I [Ohio]

Also Doing Business As: Chef’s Choice Catering Foods Plus Gene Maddy Drugs Inter-American Products

JayC Food Stores Kentucky Distribution Center

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Kroger Kroger Fresh Fare Kroger Marketplace Kroger Pharmacy Owen's Supermarket Pay Less Super Markets Peyton's Southeastern Queen City Centre Ruler Foods Scott’s Food & Pharmacy

Kroger Limited Partnership II [Ohio] Also Doing Business As:

Country Oven Bakery Crossroad Farms Dairy Inter-American Products K. B. Specialty Foods

Kenlake Foods Pace Dairy of Indiana Peyton's Northern Winchester Farms Dairy

Kroger LM Real Estate Holdings, LLC [Ohio] Kroger Management Co. [Michigan] Kroger Management – Corryville, LLC [Ohio] Kroger Management – NMTC Athens I, LLC [Ohio] Kroger Management – NMTC Champaign I, LLC [Ohio] Kroger Management – NMTC Champaign II, LLC [Ohio] Kroger Management – NMTC Cincinnati I, LLC [Ohio] Kroger Management – NMTC Dallas I, LLC [Ohio] Kroger Management – NMTC Danville I, LLC [Ohio] Kroger Management – NMTC Logansport I, LLC [Ohio] Kroger Management – NMTC Missouri I, LLC [Ohio] Kroger Management – NMTC Oak Ridge I, LLC [Ohio] Kroger Management – NMTC Olney I, LLC [Ohio] Kroger Management – NMTC Omaha I, LLC [Ohio] Kroger Management – NMTC Portsmouth I, LLC [Ohio] Kroger Management – NMTC Starkville I, LLC [Ohio] Kroger Management – NMTC Topeka I, LLC [Ohio] Kroger Management – NMTC Warrenton I, LLC [Ohio] Kroger MC Holdings, LLC [Ohio] Kroger MTL Management, LLC [Ohio] Kroger NMTC Fremont I, LLC [Ohio] Kroger Opportunity Fund I, Inc. [Ohio] Kroger OZ1 Inc. [Ohio] Kroger OZ2 Inc. [Ohio] Kroger OZ3 Inc. [Ohio] Kroger OZ1 LLC [Ohio] Kroger OZ2 LLC [Ohio] Kroger OZ3 LLC [Ohio] Kroger Prescription Plans, Inc. [Ohio] Kroger Specialty Infusion AL, LLC [Alabama]

Also Doing Business As: Kroger Specialty Infusion AL Kroger Specialty Infusion CA, LLC [California]

Also Doing Business As: Kroger Specialty Infusion CA

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Kroger Specialty Infusion Holdings, Inc. [Delaware] Kroger Specialty Infusion TX, LLC [Texas]

Also Doing Business As: Kroger Specialty Infusion TX Kroger Specialty Pharmacy CA, LLC [Delaware]

Also Doing Business As: Kroger Specialty Infusion CA Kroger Specialty Pharmacy CA 2 LLC [Delaware] Kroger Specialty Pharmacy FL 2 LLC [Delaware]

Also Doing Business As: Kroger Specialty Infusion FL 2 Kroger Specialty Pharmacy Holdings, Inc. [Delaware] Kroger Specialty Pharmacy Holdings I, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 2, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 3, Inc. [Delaware] Kroger Specialty Pharmacy, Inc. [Florida]

Also Doing Business As: Kroger Specialty Pharmacy CA 3 Kroger Specialty Pharmacy FL

Kroger Specialty Pharmacy LA, LLC [Louisiana] Also Doing Business As:

Kroger Specialty Pharmacy LA Kroger Texas L.P. [Ohio]

Also Doing Business As: America's Beverage Company Inter-American Products Kroger Kroger Fresh Fare Kroger Marketplace Vandervoort Dairy Foods Company

KV Anderson, LLC [Delaware] Latta Village, LLC [North Carolina] LCGP3 Home Cooking, Inc. [Delaware] The Little Clinic LLC [Delaware] The Little Clinic Management Services LLC [Delaware] The Little Clinic of Arizona LLC [Delaware] The Little Clinic of Colorado LLC [Delaware] The Little Clinic of IN LLC [Delaware] The Little Clinic of Kansas LLC [Delaware] The Little Clinic of Mississippi LLC [Delaware] The Little Clinic of Ohio LLC [Ohio] The Little Clinic of Tennessee LLC [Delaware] The Little Clinic of TX LLC [Delaware] The Little Clinic of VA LLC [Delaware] Local Mkt LLC [Ohio] Main & Vine LLC [Ohio] Matthews Property 1, LLC [North Carolina] Mega Marts, LLC [Wisconsin]

Also Doing Business As: Metro Market

Pick ‘n Save Michigan Dairy, L.L.C. [Michigan] Murray’s Cheese LLC [Ohio]

Also Doing Business As: Murray’s Cheese

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Murray’s LIC LLC [New York] Also Doing Business As:

Murray’s Cheese Bar Murray’s Table LLC [New York]

Also Doing Business As: Murray’s Table Pace Dairy Foods Company [Ohio] Paramount Logistics, LLC [Ohio] Pay Less Super Markets, Inc. [Indiana] Peyton's-Southeastern, Inc. [Tennessee]

Also Doing Business As: Peyton's Mid-South Company

Plum Labs LLC [Ohio] Pontiac Foods, Inc. [South Carolina] Queen City Assurance, Inc. [Vermont] Ralphs Grocery Company [Ohio]

Also Doing Business As: Food 4 Less Food 4 Less Midwest Foods Co. Inter-American Products Ralphs Ralphs Fresh Fare

RBF, LLC [Wisconsin] Relish Labs LLC [Delaware]

Also Doing Business As: Home Chef

RGC Southeast Properties LLC [Ohio] Rocket Newco, Inc. [Texas] Roundy’s Acquisition Corp. [Delaware] Roundy’s Illinois, LLC [Wisconsin]

Also Doing Business As: Mariano’s

Roundy’s, Inc. [Delaware] Roundy’s Supermarkets, Inc. [Wisconsin]

Also Doing Business As: Mariano’s Pharmacy

RCK Foods Second Story, Inc. [Washington] Shop-Rite, LLC [Wisconsin]

Also Doing Business As: Metro Market

Pick ‘n Save Smith’s Beverage of Wyoming, Inc. [Wyoming] Smith’s Food & Drug Centers, Inc. [Ohio]

Also Doing Business As: Fry’s Food Stores Fry’s Marketplace Fry’s Mercado Inter-American Products Smith’s Express Smith’s Food & Drug Smith’s Fuel Centers Smith’s Marketplace

Southern Ice Cream Specialties, Inc. [Ohio]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Stallings Investors I, LLC [North Carolina] Sunrise R&D Holdings, LLC [Ohio] Sunrise Technology LLC [Ohio] TLC Corporate Services LLC [Delaware] TLC Immunization Clinic LLC [Delaware] TLC of Georgia LLC [Delaware]

Also Doing Business As: The Little Clinic

Topvalco, Inc. [Ohio] Ultimate Mart, LLC [Wisconsin]

Also Doing Business As: Metro Market

Pick ‘n Save Ultra Mart Foods, LLC [Wisconsin]

Also Doing Business As: Metro Market

Pick ‘n Save Vine Court Assurance Incorporated [Vermont] Vitacost.com, Inc. [Delaware] Woodmont Holdings, LLC [North Carolina]

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-231727) and Form S-8 (Nos. 333-232437, 033-55501, 333-91354, 333-126076, 333-151967, 333-164951, 333-175086, 333- 185446, 333-197711, 333-197712, 333-206531 and 333-206532) of The Kroger Co. of our report dated March 30, 2021 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Cincinnati, Ohio

March 30, 2021

Exhibit 24.1

POWER OF ATTORNEY

/s/ Nora A. Aufreiter /s/ Clyde R. Moore

Nora A. Aufreiter Clyde R. Moore

/s/ Kevin M. Brown /s/

Ronald L. Sargent

Kevin M. Brown Ronald L. Sargent

/s/ Anne Gates /s/ J.

Amanda Sourry Knox

Anne Gates J. Amanda Sourry Knox

/s/ Karen M. Hoguet /s/ Mark

S. Sutton Karen M. Hoguet Mark S.

Sutton /s/ Susan J. Kropf /s/

Ashok Vemuri

Susan J. Kropf Ashok Vemuri

/s/ W. Rodney McMullen W. Rodney McMullen

EXHIBIT 31.1

CERTIFICATION

I, W. Rodney McMullen, certify that:

1. I have reviewed this annual report on Form 10-K of The Kroger Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2021 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

EXHIBIT 31.2

CERTIFICATION

I, Gary Millerchip, certify that:

1. I have reviewed this annual report on Form 10-K of The Kroger Co.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2021 /s/ Gary Millerchip Gary Millerchip Senior Vice President and Chief Financial Officer (principal financial officer)

EXHIBIT 32.1

CERTIFICATIONS

NOTE: The referenced officers, based on their knowledge, furnish the following certification, pursuant to 18 U.S.C. §1350.

We, W. Rodney McMullen, Chief Executive Officer and Chairman of the Board, and Gary Millerchip, Senior Vice President and Chief Financial Officer, of The Kroger Co. (the “Company”), do hereby certify in accordance with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Annual Report on Form 10-K of the Company for the period ending January 30, 2021 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or 78o(d)); and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 30, 2021 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer

/s/ Gary Millerchip Gary Millerchip Senior Vice President and Chief Financial Officer

A signed original of this written statement as required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to The Kroger Co., and will be retained by The Kroger Co. and furnished to the SEC or its staff upon request.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ___________________________________________

FORM 10-K ___________________________________________

☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended January 31, 2021, or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-06991. ___________________________________________

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

___________________________________________

DE 71-0415188 (State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

702 S.W. 8th Street 72716Bentonville, AR

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

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

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.10 per share WMT NYSE

1.900% Notes Due 2022 WMT22 NYSE 2.550% Notes Due 2026 WMT26 NYSE

Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

Large Accelerated Filer ☒ Accelerated Filer ☐☐ Non-Accelerated Filer ☐☐ Smaller Reporting Company ☐☐

Emerging Growth Company ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒☒

As of July 31, 2020, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2020, was $182,886,052,366. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common stock are the affiliates of the registrant.

The registrant had 2,817,071,695 shares of common stock outstanding as of March 17, 2021.

DOCUMENTS INCORPORATED BY REFERENCE

Document Parts Into Which Incorporated Portions of the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held June 2, 2021 (the "Proxy Statement")

Part III

Walmart Inc. Form 10-K

For the Fiscal Year Ended January 31, 2021

Table of Contents

Page Part I Item 1 Business 6 Item 1A Risk Factors 14 Item 1B Unresolved Staff Comments 25 Item 2 Properties 26 Item 3 Legal Proceedings 28 Item 4 Mine Safety Disclosures 30

Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6 Selected Financial Data 32 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A Quantitative and Qualitative Disclosures About Market Risk 48 Item 8 Financial Statements and Supplementary Data 50 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 81 Item 9A Controls and Procedures 81 Item 9B Other Information 81

Part III Item 10 Directors, Executive Officers and Corporate Governance 82 Item 11 Executive Compensation 82 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 82 Item 13 Certain Relationships and Related Transactions, and Director Independence 82 Item 14 Principal Accounting Fees and Services 82

Part IV Item 15 Exhibits, Financial Statement Schedules 83 Item 16 Form 10-K Summary 85

Signatures 86

#WMT-20210131_HTM_IAAF0CABF1F7048C9B7E317B3E9C1CFC5_58

WALMART INC.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2021

All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on June 2, 2021 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Walmart," "the Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Walmart Inc." and, except where expressly noted otherwise or the context otherwise requires, that corporation's consolidated subsidiaries.

pickup and delivery; • our workforce strategy; • volatility in currency exchange rates affecting our or one of our segments' results of operations; • the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share repurchase authorization over a

certain period or the source of funding of a certain portion of our share repurchases; • our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund our operations, finance our global investment and expansion

activities, pay dividends and fund share repurchases; • cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash

needs; • the reclassification of amounts related to our derivatives; • our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of resolutions of tax-related matters; • the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are subject; • the effect on the Company's results of operations or financial position of the Company's adoption of certain new, or amendments to existing, accounting

standards; or • our commitments, intentions, plans or goals related to the sustainability of our environment and supply chains, the promotion of economic opportunity or

"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy," "to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue," "will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result," "will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results. The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

ITEM 1. BUSINESS

General Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our customers. Each week, we serve over 240 million customers who visit approximately 11,400 stores and numerous eCommerce websites under 54 banners in 26 countries. Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2021 ("fiscal 2021"), January 31, 2020 ("fiscal 2020") and January 31, 2019 ("fiscal 2019"). During fiscal 2021, we generated total revenues of $559.2 billion, which was primarily comprised of net sales of $555.2 billion. We maintain our principal offices in Bentonville, Arkansas. Our common stock trades on the New York Stock Exchange under the symbol "WMT."

The Development of Our Company

The businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation of variety stores. In 1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first Walmart Neighborhood Market. In 1991, we began our first international initiative when we entered into a joint venture in Mexico and, as of January 31, 2021, our Walmart International segment conducted business in 25 countries. In 2000, we began our first eCommerce initiative by creating both walmart.com and samsclub.com. Since then, our eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores. To date, we now have approximately 7,300 pickup and 5,200 delivery locations globally. In recent years, we have heavily invested in omni-channel and eCommerce innovation, as well as made several eCommerce acquisitions to better serve our customers. These investments have enabled us to leverage technology, talent and expertise, incubate digitally-native brands, and expand our assortment and service offerings in stores and on walmart.com. We have also continued to enhance our eCommerce initiatives internationally, such as with our acquisition of a majority stake of Flipkart Private Limited ("Flipkart"), which is our ecosystem in India that includes eCommerce platforms of Flipkart and Myntra as well as PhonePe, a digital transaction platform. In fiscal 2021, we launched Walmart+ in the U.S., a new membership offering with omni-channel shopping benefits that currently include unlimited free shipping on eligible items with no order minimum, unlimited delivery from store, fuel discounts, and mobile scan & go for a streamlined in-store shopping experience. We are enhancing our ecosystem with our omni-channel capabilities, stores, services, eCommerce sites and supply chain combined with our more than 2.3 million associates as of January 31, 2021 to better serve our customers. Together, we believe these elements produce a flywheel effect which creates customer relationships where customers view Walmart as their primary destination. During fiscal 2021, the world has been, and continues to be, impacted by the COVID-19 pandemic. While we have incurred incremental costs associated with operating during a global health crisis, the COVID-19 pandemic has also accelerated our business growth and eCommerce expansion. We have continued to invest in our omni-channel offering which resonates with customers around the world who are increasingly seeking convenience.

Information About Our Segments We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Canada, Central America, Chile, China, India and Mexico. The Company also engaged in operations in the U.K. and Japan, both of which were classified as held for sale as of January 31, 2021. We also operated in Argentina and Brazil prior to the sale of Walmart Argentina in November 2020 and the majority stake of Walmart Brazil in fiscal 2019. Refer to Note 12 to our Consolidated Financial Statements for information on these divestitures. Our operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club, which are further described below. Each segment contributes to the Company's operating results differently. However, each has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. Additional information on our operating segments and geographic and product information is contained in Note 13 to our Consolidated Financial Statements.

Walmart U.S. Segment Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $370.0 billion for fiscal 2021, representing 67% of our fiscal 2021 consolidated net sales, and had net sales of $341.0 billion and $331.7 billion for fiscal 2020 and 2019, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income.

Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce, through services such as pickup and delivery, ship-from-store, and digital pharmacy fulfillment options. As of January 31, 2021, we had approximately 3,750 pickup locations and 3,000 delivery locations. Our Walmart+ membership incorporates several service offerings which provide enhanced omni-channel shopping experiences and benefits for members. We have several eCommerce websites, the largest of which is walmart.com. We define eCommerce sales as sales initiated by customers digitally and fulfilled by a number of methods including our dedicated eCommerce fulfillment centers and leveraging our stores. The following table provides the approximate size of our retail stores as of January 31, 2021:

Minimum Square Feet

Maximum Square Feet Average Square Feet

Supercenters (general merchandise and grocery) 69,000 260,000 178,000 Discount stores (general merchandise and limited grocery) 30,000 221,000 106,000 Neighborhood markets (grocery) 28,000 65,000 42,000

(1) Excludes other small formats.

Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below: • Grocery consists of a full line of grocery items, including dry grocery, snacks, dairy, meat, produce, deli & bakery, frozen foods, alcoholic and

nonalcoholic beverages, as well as consumables such as health and beauty aids, pet supplies, household chemicals, paper goods and baby products; • General merchandise includes:

◦ Entertainment (e.g., electronics, toys, seasonal merchandise, wireless, video games, movies, music and books); ◦ Hardlines (e.g., automotive, hardware and paint, sporting goods, outdoor living and stationery); ◦ Apparel (e.g., apparel for men, women, girls, boys and infants, as well as shoes, jewelry and accessories); and ◦ Home (e.g., housewares and small appliances, bed & bath, furniture and home organization, home furnishings, home decor, fabrics and crafts).

• Health and wellness includes pharmacy, over-the-counter drugs and other medical products, optical services and clinical services.

Walmart U.S. recently launched Walmart+, a membership offering providing omni-channel shopping benefits such as unlimited free shipping on eligible items with no order minimums, as well as delivery and other benefits which help customers save more time and money. Walmart U.S. also offers an in-house advertising offering via Walmart Connect, supply chain and fulfillment capabilities to online marketplace sellers via Walmart Fulfillment Services, as well as quality, affordable, and accessible healthcare via Walmart Health. Additional service offerings include fuel and financial services and related products, such as money orders, prepaid cards, money (wire) transfers, check cashing and bill payment. Combined, these offerings did not represent a significant portion of annual segment revenues. Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of merchandise under our private-label brands, including brands such as: "Allswell," "Athletic Works," "Bonobos," "Eloquii,"

(1)

"Equate," "Freshness Guaranteed," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "No Boundaries," "Onn," "Ozark Trail," "Parent's Choice," "Sam's Choice," "Scoop," "Spring Valley," "SwissTech," "Time and Tru" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware," "Pioneer Woman" and "Russell."

Operations. Historically, many supercenters, discount stores and neighborhood markets were generally open 24 hours each day. In response to the COVID-19 pandemic, we reduced store hours to allow for additional cleaning and sanitizing but expanded store hours slightly toward the end of fiscal 2021. Consistent with its strategy, Walmart U.S. continues to develop technology tools and services that help better serve customers and help stores operate more efficiently, such as pickup and delivery, Walmart+, ship-from-store and other initiatives which provide convenient and seamless omni-channel shopping experiences.

Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31. However, the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the seasonal fluctuations of our business.

Competition. Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce retailers. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following:

• EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our prices will not change under frequent promotional activity;

• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers; and • Omni-channel offerings such as pickup and delivery and our new Walmart+ membership offering, all of which enhance convenience and seek to serve

customers in the ways they want to be served.

Distribution. For fiscal 2021, the majority of Walmart U.S.'s purchases of store merchandise were shipped through our 156 distribution facilities, which are located strategically throughout the U.S. The remaining store merchandise we purchased was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 32 dedicated eCommerce fulfillment centers, as well as leveraging our ability to ship directly from approximately 3,000 stores.

Walmart International Segment Walmart International is our second largest segment and operated in 25 countries outside of the U.S as of January 31, 2021. Walmart International operated through our wholly-owned subsidiaries in Canada, Chile, and China, as well as our businesses classified as held for sale in Japan and the United Kingdom as of January 31, 2021. Walmart International also operates through our majority-owned subsidiaries in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua), India and Mexico. Walmart International previously operated in Argentina and Brazil prior to the sale of Walmart Argentina in fiscal 2021 and the majority stake of Walmart Brazil in fiscal 2019. Refer to Note 12 for discussion of recent divestitures. Walmart International includes numerous formats divided into three major categories: retail, wholesale and other. These categories consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry, as well as eCommerce through walmart.com.mx, walmart.ca, flipkart.com and other sites. Walmart International had net sales of $121.4 billion for fiscal 2021, representing 22% of our fiscal 2021 consolidated net sales, and had net sales of $120.1 billion and $120.8 billion for fiscal 2020 and 2019, respectively. The segment's net sales were negatively impacted by currency exchange rate fluctuations for all years presented. The gross profit rate is lower than that of Walmart U.S. primarily because of its merchandise mix.

• Acquisition of a majority stake of Flipkart in August 2018. • Divestiture of 80 percent of Walmart Brazil in August 2018.  • Divestiture of the Walmart Chile banking operations in December 2018 and the divestiture of the Walmart Canada banking operations in April 2019. • Divestiture of Walmart Argentina in November 2020. • Divestiture of Asda Group Limited ("Asda”), our retail operations in the U.K., in February 2021. • Divestiture of a majority stake in Seiyu, our retail operations in Japan, in March 2021.

Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and eCommerce, such as through pickup and delivery services in most of our markets, our marketplaces such as Flipkart in India, and a digital transaction platform anchored in payments such as PhonePe in India. In China, our partnerships with JD.com and JD Daojia provide customers one-hour delivery by leveraging Walmart stores as fulfillment centers. Generally, retail units' selling area range in size from 1,400 square feet to 186,000 square feet. Our wholesale stores' selling area generally range in size from 24,000 square feet to 156,000 square feet. As of January 31, 2021, Walmart International had approximately 3,000 pickup and 2,200 delivery locations.

Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality, low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside" and "Parent's Choice," our international markets have developed market specific brands including "Aurrera," "Cambridge," "Lider," "Myntra," and "PhonePe." In addition, we have developed and continue to grow our relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at low prices.

Walmart International also offers fuel, financial services and related products in various markets. Our businesses in Mexico and Canada, for example, offer prepaid cards and money (wire) transfers, and our PhonePe business in India provides a platform that offers mobile and bill payment, person-to-person (P2P) payment, investment and insurance solutions, financial services and advertising. Combined, these offerings did not represent a significant portion of annual segment revenues.

Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets within countries, depending upon local and national ordinances governing hours of operation. Toward the beginning of the COVID-19 pandemic, government mandates led to extensive store and operational closures in several of our international markets as well as limitations on certain merchandise sales in select markets. While most closed stores and warehouses resumed operations by the end of fiscal 2021, store hours have been partially reduced or modified in several markets. Additionally, several markets implemented enhanced safety and sanitization protocols, as well as provided increased customer options and capacity for pickup and delivery services.

Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, its highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the business varies by country due to different national and religious holidays, festivals and customs, as well as different weather patterns. However, the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the seasonal fluctuations of our business.

Competition. Walmart International competes with omni-channel retailers who operate department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and eCommerce retailers, as well as catalog businesses. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni- channel experience largely determines our competitive position within the retail industry. We believe price leadership is a critical part of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant impact on our competitive position in the markets where we operate.

Distribution. We utilize a total of 221 distribution facilities located in Canada, Central America, Chile, China, India, Mexico and South Africa, as well as Japan and the United Kingdom, whose operations are classified as held for sale as of January 31, 2021, and subsequently divested in the first quarter of fiscal 2022. Through these facilities, we process and distribute both imported and domestic products to the operating units of the Walmart International segment. During fiscal 2021, the majority of Walmart International's purchases passed through these distribution facilities. Suppliers ship the remainder of Walmart International's purchases directly to our stores in the various markets in which we operate. Across the segment, we have efficient networks connecting physical stores and distribution and fulfillment centers which facilitate the movement of goods to where our customers live. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 83 dedicated eCommerce fulfillment centers, more than 2,800 eCommerce sort centers and last-mile delivery facilities in India, as well as our physical retail stores.

Sam's Club Segment Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also operates samsclub.com. Sam's Club had net sales of $63.9 billion for fiscal 2021, representing 11% of our consolidated fiscal 2021 net sales, and had net sales of $58.8 billion and $57.8 billion for fiscal 2020 and 2019, respectively. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.

Membership. The following two options are available to members:

Plus Membership Club Membership Annual Membership Fee $100 $45 Number of Add-on Memberships ($40 each) Up to 16 Up to 8 Eligible for Cash Rewards Yes No

All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is a benefit that provides 2% back on qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can be used for purchases or redeemed for cash. Plus Members are also eligible for free shipping on the majority of merchandise, with no minimum order size, and receive discounts on prescriptions and glasses.

Omni-channel. Sam's Club is a membership-only warehouse club which provides an omni-channel experience to customers, integrating retail stores and eCommerce through such services as Curbside Pickup, mobile Scan & Go, and ship-from-club. Members have access to a broad assortment of merchandise and services, including those not found in our clubs, online at samsclub.com and through our mobile commerce applications. The warehouse facility sizes generally range between 32,000 and 168,000 square feet, with an average size of approximately 134,000 square feet.

snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies and other consumable items; • Fuel, tobacco and other categories consists of gasoline stations and tobacco; • Home and apparel includes home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools and power equipment, housewares, toys,

seasonal items, mattresses, and tire and battery centers; • Technology, office and entertainment includes consumer electronics and accessories, software, video games, office supplies, appliances, and third-party

gift cards; and • Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.

In addition, the Member's Mark private label brand continues to expand assortment and deliver member value.

Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:00 p.m., Saturday from 9:00 a.m. to 8:00 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, most club locations offer Plus Members the ability to shop before the regular operating hours Monday through Saturday, starting at 8:00 a.m. While store operating hours generally remained stable during the COVID-19 pandemic, designated “Hero Hours” were also established for first responders, health care workers, and associates. Consistent with its strategy, Sam's Club continues to develop technology tools to drive a great member experience. During the pandemic, Curbside Pickup was launched at all clubs to help provide fast, easy and contact-free shopping for members. Sam's Club also offers "Scan & Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.

Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume has occurred in the fiscal quarter ending January 31. However, the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the seasonal fluctuations of our business.

Distribution. During fiscal 2021, the majority of Sam's Club's non-fuel club purchases were shipped from Sam's Club's 27 dedicated distribution facilities, located strategically throughout the U.S., or from some of the Walmart U.S. segment's distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the remainder of the Sam's Club segment's club purchases directly to Sam's Club locations. Sam's Club ships merchandise purchased on samsclub.com and through its mobile commerce applications by a number of methods including shipments made directly from clubs, 11 dedicated eCommerce fulfillment centers and other distribution centers. Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs.

Suppliers and Supply Chain As a retailer and warehouse club operator, we utilize a global supply chain that includes both U.S. and international suppliers from whom we purchase the merchandise that we sell in our stores, clubs and online. In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of the annual sales for a number of our suppliers, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the attractiveness of our merchandise assortment we offer to our customers and members.

Government Regulation As a company with global operations, we are subject to the laws of the United States and multiple foreign jurisdictions in which we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions. For additional information, see the risk factors herein in "Item 1A. Risk Factors" under the sub-caption “Legal, Tax, Regulatory, Compliance, Reputational and Other Risks".

Human Capital Management Our commitment to help people around the world save money and live better is delivered by our associates who make the difference for our customers every day. As of the end of fiscal 2021, we employed more than 2.3 million associates worldwide, with 1.6 million associates in the U.S. and 0.7 million associates internationally. In the U.S., approximately 94% of these associates are hourly and approximately 64% are full-time. We believe the strength of our workforce is a significant contributor to our success. Walmart is a place of opportunity, not only as a foundational entry point to develop critical skills that are relevant for a variety of careers, but also a place where people can grow in their careers across our global omni-channel business. As customer demands and technology change the nature of work, we need to attract, develop and retain associates to thrive in an ever-changing omni-channel environment. Approximately 75% of our U.S. salaried store, club and supply chain management started their careers in hourly positions. We believe our focus on improving career paths for our associates through robust training, competitive wages, new ways of working, and opportunities for advancement has improved turnover in the U.S. over the past few years. Our workforce strategy includes the following strategic priorities: Inclusion - Build a Walmart for everyone: a diverse, equitable and inclusive company, where associates' ideas and opinions matter. We are focused on creating an inclusive culture and a diverse associate base, where all associates believe they belong and are empowered to be themselves, which we believe is important in serving our customers now and in the future. Management provides recurring culture, diversity, equity and inclusion updates to senior leadership, including our President and CEO, and the Compensation, Management and Development Committee of the Board of Directors. Of the more than 2.3 million associates employed worldwide, 54% identify as women. In the U.S., 47% of the 1.6 million associates identify as ethnically diverse. We review our processes regarding our commitment to fair-pay practices. We are committed to creating a performance culture where associates are rewarded based on meaningful factors such as qualifications, experience, performance and the type of work they do. To build a company where associates feel valued and heard, we gather and respond to associates’ feedback in a variety of ways, including but not limited to an anonymous, periodic, formal, associate engagement survey, our Open Door process, and one-on-one interactions. Management reviews the results of feedback obtained from our formal associate engagement survey. Feedback and suggestions received through these channels have led to meaningful changes in our business, including a new U.S. attendance policy, for example. Well-being - Focus on the physical, emotional, and financial well-being of our associates. We invest in our associates by offering competitive wages including bonuses based on Company performance, as well as a broad range of benefits that vary based on customary local practices and statutory requirements and believe these investments in our associates are important to our future. In the U.S., we offer affordable healthcare coverage to our full-time and eligible part-time associates, as well as Company paid benefits such as a store discount card or Sam's Club membership, 401(k) match, maternity leave, a paid parental leave program to all full-time associates, paid time off, Associate Stock Purchase Plan match, life insurance and behavioral health services. Certain information relating to retirement-related benefits we provide to our associates is included in Note 11 to our Consolidated Financial Statements. In fiscal 2021, we added incremental benefits to support associate health and well-being during the COVID-19 pandemic. We provided extra pay and benefits, including special cash bonuses totaling $1.6 billion, and the introduction of the COVID-19 Emergency Leave Policy in the U.S. See "COVID-19 Updates" in Management's Discussion and Analysis for additional information regarding our response to the COVID-19 pandemic. Growth - Provide ongoing growth, development and learning opportunities for associates and continue to attract talent with new skills. To help associates acquire the experiences and skills needed for success in the jobs of today and tomorrow, we have invested in their development – including new roles and career paths, cross-training, on-the-job coaching, and formal, classroom-style training such as Walmart Academy in the U.S. We also provide access to educational opportunities for our eligible associates through our Live Better U program, which provides a pathway to earn a high school diploma at no cost or a college degree for $1 a day, as well as multiple digital learning opportunities. Digital - Accelerate digital transformation and ways of working to improve the associate experience and drive business results. To deliver a seamless customer and associate experience, we continue to invest in digital tools to improve associate productivity, engagement, and performance. As more customers shop digitally, we have adapted by adding more roles in eCommerce fulfillment and our home office associates have accelerated tech-based solutions that enhance the customer and associate experiences.

Name Business Experience

Current Position

Held Since Age Daniel J. Bartlett Executive Vice President, Corporate Affairs, effective June 2013. From November 2007 to

June 2013, he served as the Chief Executive Officer and President of U.S. Operations at Hill & Knowlton, Inc., a public relations company.

2013 49

M. Brett Biggs Executive Vice President and Chief Financial Officer, effective January 2016. From January 2014 to December 2015, he served as Executive Vice President and Chief Financial Officer of Walmart International.

2016 52

Rachel Brand Executive Vice President, Global Governance, Chief Legal Officer and Corporate Secretary, effective April 2018. From May 2017 to February 2018, she served as Associate Attorney General in the United States Department of Justice. From January 2017 to May 2017, Ms. Brand was an Associate Professor of Law at George Mason University Antonin Scalia Law School. From August 2012 to February 2017, she served as a board member on the Privacy and Civil Liberties Oversight Board of the U.S. government.

2018 47

David M. Chojnowski Senior Vice President and Controller effective January 2017. From October 2014 to January 2017, he served as Vice President and Controller, Walmart U.S.

2017 51

John Furner Executive Vice President, President and Chief Executive Officer, Walmart U.S. effective November 2019. From February 2017 until November 2019, he served as President and Chief Executive Officer, Sam's Club. From October 2015 to January 2017, he served as Executive Vice President and Chief Merchandising Officer of Sam's Club.

2019 46

Suresh Kumar Executive Vice President, Global Chief Technology Officer and Chief Development Officer effective July 2019. From February 2018 until June 2019, Mr. Kumar was Vice President and General Manager at Google LLC. From May 2014 until February 2018, he was Corporate Vice President at Microsoft Corporation.

2019 56

Judith McKenna Executive Vice President, President and Chief Executive Officer, Walmart International, effective February 2018. From February 2015 to January 2018, she served as Executive Vice President and Chief Operating Officer of Walmart U.S.

2018 54

Kathryn McLay Executive Vice President, President and Chief Executive Officer, Sam's Club effective November 15, 2019. From February 2019 to November 2019, she served as Executive Vice President, Walmart U.S. Neighborhood Markets. From December 2015 until February 2019, she served as Senior Vice President, U.S. Supply Chain. Ms. McLay originally joined the Company in April 2015 as Vice President of U.S. Finance and Strategy.

2019 47

C. Douglas McMillon President and Chief Executive Officer, effective February 2014. From February 2009 to January 2014, he served as Executive Vice President, President and Chief Executive Officer, Walmart International.

2014 54

Donna Morris Executive Vice President, Global People, and Chief People Officer, effective February 2020. From April 2002 to January 2020, she worked at Adobe Inc. in various roles, including most recently, Chief Human Resources Officer and Executive Vice President, Employee Experience.

2020 53

Our Website and Availability of SEC Reports and Other Information Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, such as the Company, that file electronically with the SEC. The address of that website is www.sec.gov. Our SEC filings, our Reporting Protocols for Senior Financial Officers and our Code of Conduct can be found on our website at www.stock.walmart.com. These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal offices. A description of any substantive amendment or waiver of Walmart's Reporting Protocols for Senior Financial Officers or our Code of Conduct for our chief executive officer, our chief financial officer and our controller, who is our principal accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such description will be located on our website for a period of 12 months following the amendment or waiver.

ITEM 1A. RISK FACTORS

The risks described below could, in ways we may or may not be able to accurately predict, materially and adversely affect our business, results of operations, financial position and liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally. The following risk factors do not identify all risks that we may face.

Strategic Risks Failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology may materially adversely affect our market position, net sales and financial performance. The retail business continues to rapidly evolve and consumers increasingly embrace digital shopping. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of this increase could continue to accelerate. Our strategy, which includes investments in eCommerce, technology, acquisitions, joint ventures, store remodels and other customer initiatives, may not adequately or effectively allow us to continue to grow our eCommerce business, increase comparable store sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club openings. The success of this strategy will depend in large measure on our ability to continue building and delivering a seamless omni-channel shopping experience for our customers and is further subject to the related risks discussed in this Item 1A. Failure to successfully execute this strategy may adversely affect our market position, net sales and financial performance which could also result in impairment charges to intangible assets or other long-lived assets. In addition, a greater concentration of eCommerce sales, including increasing online grocery sales, could result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect our financial performance. Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred, will adversely impact our financial performance in the short-term and failure to realize the benefits of these investments may adversely impact our financial performance over the longer term.

If we do not timely identify or effectively respond to consumer trends or preferences, it could negatively affect our relationship with our customers, demand for the products and services we sell, our market share and the growth of our business. It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of merchandise, the related impact on the demand for existing products and the competitive environment. Price transparency, assortment of products, customer experience, convenience, ease and the speed and cost of shipping are of primary importance to customers and continue to increase in importance, particularly as a result of digital tools and social media available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively respond to changing consumer tastes, preferences (including those related to sustainability) and shopping patterns, or any other failure on our part to timely identify or effectively respond to changing consumer tastes, preferences and shopping patterns could negatively affect our reputation and relationship with our customers, the demand for the products we sell or services we offer, our market share and the growth of our business.

We face strong competition from other retailers and wholesale club operators which could materially adversely affect our financial performance. Each of our segments competes for customers, employees, digital prominence, products and services and in other important aspects of its business with many other local, regional, national and global physical, eCommerce and omni-channel retailers, wholesale club operators and retail intermediaries. We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability, services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and digital operations.

A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of our strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional discussion of the competitive situation of each of our reportable segments. Certain segments of the retail industry are undergoing consolidation or substantially reducing operations, whether due to bankruptcy, consolidation or other factors. Such consolidation, or other business combinations or alliances, or reduction in operation may result in competitors with greatly improved financial resources, improved access to merchandise, greater market penetration than they previously enjoyed and other improvements in their competitive positions. Such business combinations or alliances could result in the provision of a wider variety of products and services at competitive prices by such consolidated or aligned companies, which could adversely affect our financial performance.

General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial performance. General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil, natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation, deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax laws, changes in healthcare laws, other regulatory changes, the imposition of tariffs or other measures that create barriers to or increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products we sell in the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater markdowns of inventory, or otherwise materially adversely affect our operations and operating results and could result in impairment charges to intangible assets, goodwill or other long-lived assets. In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially adversely affect our operations and operating results. The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing goods in the volume typically available to us for sale.

The performance of strategic alliances and other business relationships to support the expansion of our business could materially adversely affect our financial performance. We may enter into strategic alliances and other business relationships in the countries in which we have existing operations or in other markets to expand our business. These arrangements may not generate the level of sales we anticipate when entering into the arrangement or may otherwise adversely impact our business and competitive position relative to the results we could have achieved in the absence of such alliance. In addition, any investment we make in connection with a strategic alliance, business relationship or in certain of our recently divested markets, could materially adversely affect our financial performance.

Operational Risks The impact of the COVID-19 pandemic on our business, financial position and results of operations is in many respects unpredictable, and we may be unable to sustain our revenue growth rate in the future. The continuing impacts of the COVID-19 pandemic are highly unpredictable and volatile, with varying impacts on certain business operations, demand for our products and services, in-stock positions, costs of doing business, access to inventory, supply chain operations, our ability to predict future performance, exposure to litigation, and our financial performance, among other things. The COVID-19 pandemic has resulted in widespread and continuing impacts on the global economy and on our domestic and international associates, members, suppliers and other people and entities with which we do business. There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business and government shutdowns and other restrictions on retailers. Customer demand for certain products has also fluctuated as the pandemic has progressed and customer behaviors have changed, which has challenged our ability to anticipate and/or adjust inventory levels to meet that demand. These factors have resulted in higher out-of-stock positions in certain products, as well as delays in delivering those products, and could impact inventory levels in the future. Other factors and uncertainties include, but are not limited to: the severity and duration of the pandemic, including whether there are additional outbreaks or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in areas in which we operate; further increased operational costs associated with operating during a global pandemic; evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; unknown consequences on our business performance and initiatives stemming from the substantial investment of time, capital and other resources to the pandemic response; the availability of, and prevalence of access to, effective medical treatments and vaccines for COVID-19; the pace of recovery when the pandemic subsides; and the long-term impact of the COVID-19 pandemic on our business, including consumer behaviors. These risks and their impacts are difficult to predict and could otherwise disrupt and adversely affect our operations and our financial performance. The COVID-19 pandemic has led to increased revenue growth relative to historic trends, and has particularly accelerated our eCommerce growth. These results, as well as those of other metrics such as net income and other financial and operating data, may not be indicative of results for future periods. Once the impact of the COVID-19 pandemic subsides, particularly as vaccines become more widely available, and customers return to work or school or are otherwise no longer subject to the aforementioned containment directives and similar mandates, a failure by us to continue capitalizing on growth opportunities may result in declining revenue and future operating results may fall below expectations. To the extent that the COVID-19 pandemic continues to adversely affect the U.S. and the global economy, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, our reputation, implementation of strategic initiatives, cybersecurity threats, payment-related risks, technology systems disruption, supply chain disruptions, labor availability and cost, litigation, and regulatory requirements.

Natural disasters, climate change, geopolitical events, global health epidemics or pandemics and catastrophic events could materially adversely affect our financial performance. The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise; geopolitical events; global health epidemics or pandemics or other contagious outbreaks such as the ongoing COVID-19 pandemic; and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence, including active shooter situations (such as those that have occurred in our U.S. stores), in countries in which we operate or in which our suppliers are located, could adversely affect our operations and financial performance. Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or more stores, clubs and distribution or fulfillment centers, limitations on store or club operating hours, the lack of an adequate work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from areas in which our stores, clubs and distribution and fulfillment centers are located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers (including the frequency of visits by consumers to physical retail locations, whether as a result of limitations on large gatherings, travel and movement limitations or otherwise) and in consumers' disposable income, the temporary or long-term disruption in the supply of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the delivery of goods to our distribution and fulfillment centers or stores within a country in which we are operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our facilities, and the disruption in our communications with our stores.

Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable. These changes over time could affect, for example, the availability and cost of certain consumer products, commodities and energy (including utilities), which in turn may impact our ability to procure those certain goods or services required for the operation of our business at the quantities and levels we require. We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our financial performance.

Risks associated with our suppliers could materially adversely affect our financial performance. The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws, including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner and in the large volumes we may demand, is a significant challenge, especially with respect to suppliers located and goods sourced outside the U.S. Political and economic instability, as well as other impactful events and circumstances in the countries in which our suppliers and their manufacturers are located (such as the ongoing COVID-19 pandemic), the financial instability of suppliers, suppliers' failure to meet our terms and conditions or our supplier standards (including our responsible sourcing standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise safety and quality issues, disruption or delay in the transportation of merchandise from the suppliers and manufacturers to our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of merchandise we purchase enters into the markets in which we operate, currency exchange rates, transport availability and cost, transport security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, the U.S. foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries and entities, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and our access to products could adversely affect our financial performance.

If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience a material impact to our brand, reputation and financial performance. We are also subject to reputational and other risks related to third-party sales on our digital platforms. Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish and such products also expose us to product liability or food safety claims. As such, any issue regarding the safety of any food or non-food items we sell, regardless of the cause, could adversely affect our brand, reputation and financial performance. In addition, third-parties sell goods on some of our digital platforms, which we refer to as marketplace transactions. Whether laws related to such sales apply to us is currently unsettled and any unfavorable changes could expose us to loss of sales, reduction in transactions and deterioration of our competitive position. In addition, we may face reputational, financial and other risks, including liability, for third-party sales of goods that are controversial, counterfeit or otherwise fail to comply with applicable law. Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements. Any of these events could have a material adverse impact on our business and results of operations and impede the execution of our eCommerce growth strategy.

fully redundant and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, breached or cease to function properly, we may have to make a significant investment to repair or replace them, and may experience loss or corruption of critical data as well as suffer interruptions in our business operations in the interim. Any interruption to our information systems may have a material adverse effect on our business or results of operations. In addition, we are constantly updating our information technology processes and systems. The risk of system disruption is increased when significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we may fail to realize the cost savings or operational benefits anticipated to be derived from these initiatives.

If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our omni-channel business globally, could be materially adversely affected. Increasingly, customers are using computers, tablets, and smart phones to shop with us and with our competitors and to do comparison shopping. We use social media, online advertising, and email to interact with our customers and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, we offer various pickup, delivery and shipping programs including options where many products available for purchase online can be picked up by the customer or member at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a rapidly evolving part of the retail industry and of our operations around the world. We must anticipate and meet our customers' changing expectations while adjusting for technology investments and developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and that continually meet the changing expectations of online shoppers and developments in online and digital platform merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally and have a material adverse impact on our business and results of operations. Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the systems on which they run, including those applications and systems in our acquired eCommerce businesses, are regularly subject to cyberattacks. Those attacks involve attempts to gain unauthorized access to our eCommerce websites (including marketplace platforms) or mobile commerce applications to obtain and misuse customers' or members' information including payment information and related risks discussed in this Item 1A. Such attacks, if successful, in addition to potential data misuse and/or loss, may also create denials of service or otherwise disable, degrade or sabotage one or more of our digital platforms or otherwise significantly disrupt our customers' and members' shopping experience, our supply chain integrity and continuity, and our ability to efficiently operate our business. If we are unable to maintain the security of our digital platforms and keep them operating within acceptable parameters, we could suffer loss of sales, reductions in transactions, reputational damage and deterioration of our competitive position and incur liability for any damage to customers or others whose personal or confidential information is unlawfully obtained and misused, any of which events could have a material adverse impact on our business and results of operations and impede the execution of our strategy for the growth of our business.

Associate error or malfeasance, faulty password management, social engineering or other vulnerabilities and irregularities may also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. Any compromise of our data security systems or of those of businesses with which we interact, which results in confidential information being accessed, obtained, damaged, disclosed, destroyed, modified, lost or used by unauthorized persons could harm our reputation and expose us to regulatory actions, customer attrition, remediation expenses, and claims from customers, members, associates, vendors, financial institutions, payment card networks and other persons, any of which could materially and adversely affect our business operations, financial position and results of operations. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of a compromise, we may be unable to anticipate these techniques or to implement adequate preventative measures and we or our third-party service providers may not discover any security breach, vulnerability or compromise of information for a significant period of time after the security incident occurs. To the extent that any cyberattack, ransomware or incursion in our or one of our third-party service provider's information systems results in the loss, damage, misappropriation or other compromise of information, we may be materially adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks and others. Our compliance programs, information technology, and enterprise risk management efforts cannot eliminate all systemic risk. Disruptions in our systems caused by security breaches or cyberattacks – including attacks on those parties we do business with – could harm our ability to conduct our operations, which may have a material effect on us, may result in losses that could have a material adverse effect on our financial position or results of operations, or may have a cascading effect that adversely impacts our partners, third-party service providers, customers, financial services firms, and other third parties that we interact with on a regular basis. In addition, such security-related events could be widely publicized and could materially adversely affect our reputation with our customers, members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our stores thereby materially adversely affecting our operations, net sales, results of operations, financial position, cash flows and liquidity. Such events could also result in the release to the public of confidential information about our operations and financial position and performance and could result in litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security compromise or ransomware event could require us to devote significant management resources to address the problems created by the issue and to expend significant additional resources to upgrade further the security measures we employ to guard personal and confidential information against cyberattacks and other attempts to access or otherwise compromise such information and could result in a disruption of our operations, particularly our digital operations. We accept payments using a variety of methods, including cash, checks, credit and debit cards, and our private label credit cards and gift cards, and we may offer new payment options over time, which may have information security risk implications. As a retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain or detect cyberattacks, cyberterrorism, security breaches or other compromises from known malware or ransomware or other threats that may be developed in the future. In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial. Additionally, we offer money (wire) transfer services, digital payment platforms, bill payment, money orders and check cashing and we sell prepaid cards and gift cards. We further offer co-branded credit cards and installment loans through financial services partners. These products and services require us to comply with legal and regulatory requirements, including global anti-money laundering and sanctions laws and regulations as well as international, federal and state consumer financial laws and regulations. Failure to comply with these laws and regulations could result in fines, sanctions, penalties and harm to our reputation. The Company also has compliance obligations associated with new privacy laws enacted to protect and regulate the collection, use, retention, disclosure and transfer of personal information, which include statutory liability for security breaches. Consequently, cybersecurity attacks that cause a data breach could subject us to fines, sanctions and other legal liability and harm our reputation.

Changes in the results of our health and wellness business could adversely affect our overall results of operations, cash flows and liquidity. Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments, as well as the recent addition of Walmart Health Centers in a number of states. A large majority of our retail pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and pharmacy benefit managers ("PBMs"). Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans and programs toward plans and programs with less favorable reimbursement terms); changes in third-party payer drug formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential coverage treatment); growth in, and our participation in or exclusion from, pharmacy payer network arrangements including exclusive and preferred pharmacy network arrangements operated by PBMs and/or any insurance plan or program; increases in the prices we pay for brand name and generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement; changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug programs; increased competition from other retail pharmacy operations including competitors offering online retail pharmacy options with or without home delivery options; further consolidation and strategic alliances among third-party payers, PBMs or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for them to the extent the costs are not reimbursed by a third-party; failure to meet any performance or incentive thresholds to which our level of third-party reimbursement may be subject; changes in laws or regulations or the practices of third-party payers and PBMs related to the use of third-party financial assistance to assist our pharmacy customers with paying for drugs prescribed for them; and any additional changes in the regulatory environment for the retail pharmacy industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other changes in laws, rules and regulations that affect our retail pharmacy business. If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy customers transferring their prescriptions to other pharmacies. One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations or result in the loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of operations, cash flows and liquidity.

Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance. Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to fill positions that become vacant at our existing stores, clubs, distribution and fulfillment centers and corporate offices, while controlling our associate wage and related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and adoption of new or revised employment and labor laws and regulations. Additionally, our ability to successfully execute organizational changes, including management transitions within the Company's senior leadership, and to effectively motivate and retain associates are critical to our business success. If we are unable to locate, attract or retain qualified personnel, or manage leadership transition successfully, the quality of service we provide to our customers may decrease and our financial performance may be adversely affected. In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially adversely affected.

Financial Risks

Failure to meet market expectations for our financial performance could adversely affect the market price and volatility of our stock. We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure to meet or delay in meeting these expectations, including our comparable store and club sales growth rates, eCommerce growth rates, gross margin, or earnings and adjusted earnings per share could cause the market price of our stock to decline, as could changes in our dividend or stock repurchase programs or policies, changes in our financial estimates and recommendations by securities analysts or, failure of Walmart's performance to compare favorably to that of other retailers may have a negative effect on the price of our stock.

Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported results of operations. Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our Consolidated Financial Statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates that were unfavorable have had adverse effects on our reported results of operations. As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may also result in our Consolidated Financial Statements reflecting significant adverse period-over-period changes in our financial performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our reported consolidated results of operations. We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding adverse effect on our gross profit. Consequently, unfavorable fluctuations in currency exchange rates have and may continue to adversely affect our results of operations.

The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries, laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with having numerous facilities located in countries that have historically been less stable than the U.S. Additional risks inherent in our international operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations. In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act or the laws and regulations of other countries. We maintain a global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our reputation.

Changes in tax and trade laws and regulations could materially adversely affect our financial performance. In fiscal 2021, our Walmart U.S. and Sam's Club operating segments generated approximately 78% of our consolidated net sales. Significant changes in tax and trade policies, including tariffs and government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in our stores and clubs could have an adverse effect on our financial performance. A significant portion of the general merchandise we sell in our U.S. stores and clubs is manufactured in other countries. Any such actions including the imposition of further tariffs on imports could increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers, which could materially adversely affect the financial performance of our U.S. operations and our business. We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax laws, tax rates, regulations or accounting principles. We are also exposed to future tax legislation, as well as the issuance of future regulations and changes in administrative interpretations of existing tax laws, any of which can impact our current and future years' tax provision. The effect of such changes in tax law could have a material effect on our business, financial position and results of operations. In the U.S., the Tax Cuts and Jobs Act of 2017 (the "Tax Act") significantly changed federal income tax laws that affect U.S. corporations and additional guidance from the U.S. Treasury Department, the IRS, and other standard-setting bodies is still pending. As further guidance is issued by these taxing authorities, any resulting changes in our estimates will be treated in accordance with the relevant accounting guidance. Compliance with the Tax Act, including collecting information not regularly produced by the Company or unexpected changes in our estimates, may require us to incur additional costs and could affect our results of operations. In addition, in response to significant market volatility and disruptions to business operations resulting from the global spread of COVID-19, legislatures and taxing authorities in many jurisdictions in which we operate may enact changes to their tax rules. These changes could include modifications that have temporary effect and more permanent changes. The impact of these potential new rules as well as any other changes in domestic and international tax rules and regulations could have a material effect on our effective tax rate. Furthermore, we are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Consolidated Financial Statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and settlement is made.

Changes in and/or failure to comply with other laws and regulations specific to the environments in which we operate could materially adversely affect our reputation, market position, or our business and financial performance. We operate in complex regulated environments in the U.S. and in the other countries in which we operate and could be adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Our operations in the U.S. are subject to numerous federal, state and local regulations including licensing and other requirements and reimbursement arrangements affecting our health and wellness operations. The regulations to which we are subject include, but are not limited to: federal and state registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act, laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"), trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws; patient inducement regulations; and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care and health care services. For example, in the U.S., the DEA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal and holding of controlled substances. The DEA, the FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and state laws and regulations of general applicability, including laws and regulations related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and employment matters, laws and regulations related to competition and antitrust matters, and health and wellness related regulations for our pharmacy operations outside of the U.S. In addition, certain financial services we offer or make available, such as our money transfer agent services, are subject to legal and regulatory requirements, including those intended to help detect and prevent money laundering, sanctions, fraud and other illicit activity as well as consumer financial protection. We are also subject to data privacy and protection laws regulating the collection, use, retention, disclosure, transfer and processing of personal information, such as the California Consumer Protection Act (“CCPA”), which was recently significantly modified by the California Privacy Rights Act (“CPRA”), as well as the European Union’s General Data Protection Regulation (“GDPR”). The potential effects of these laws are far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply. In the case of non-compliance with a material provision of the GDPR (such as non-adherence to the core principles of processing personal data), regulators have the authority to levy a fine in an amount that is up to the greater of €20 million or 4% of global annual turnover in the prior year. These administrative fines are discretionary and based, in each case, on a multi-factored approach. The CCPA and CPRA give California residents expanded rights to access, correct and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used. The CCPA and CPRA provide for civil penalties for violations, as well as a private right of action for data breaches. Furthermore, our marketing and customer engagement activities are subject to communications privacy laws such as the Telephone Consumer Protection Act. We may be subjected to penalties and other consequences for noncompliance, including changing some portions of our business. Even an unsuccessful challenge by customer or regulatory authorities of our activities could result in adverse publicity and could require a costly response from and defense by us. The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services we offer, or result in adverse publicity and harm our reputation.

While we strive to adhere our practices and procedures to these laws, they are subject to evolving regulations, interpretations and regulator discretion. To the extent a regulator or court disagrees with our interpretation of these laws and determines that our practices are not in compliance with applicable laws and regulations, we could be subject to civil and criminal penalties that could adversely affect the continued operation of our businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs in the U.S.; loss of licenses; termination from contractual relationships, including those with our drug suppliers and third-party payers; and significant fines or monetary damages and/or penalties. In addition, failure to comply with applicable legal or regulatory requirements in the U.S. or in any of the countries in which we operate could result in significant legal and financial exposure, damage to our reputation, and have a material adverse effect on our business operations, financial position and results of operations.

We are subject to risks related to litigation and other legal proceedings that may materially adversely affect our results of operations, financial position and liquidity. We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax, environmental and other governmental authorities. We may also have indemnification obligations for legal commitments of certain businesses we have divested. Legal proceedings, in general, and securities, derivative action and class action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years. For example, we are currently a defendant in a number of cases containing class or collective-action allegations, or both, in which the plaintiffs have brought claims under federal and state wage and hour laws, as well as a number of cases containing class-action allegations in which the plaintiffs have brought claims under federal and state consumer laws. The Company has also been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids and is also a defendant in numerous litigation proceedings related to opioids including the consolidated multidistrict litigation entitled In re National Prescription Opiate Litigation (MDL No. 2804), currently pending in the U.S. District Court for the Northern District of Ohio. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. On October 22, 2020, the Company filed a declaratory judgment action in the U.S. District Court for the Eastern District of Texas against the U.S. Department of Justice (the “DOJ”) and the U.S. Drug Enforcement Administration, asking a federal court to clarify the roles and responsibilities of pharmacists and pharmacies as to the dispensing and distribution of opioids under the Controlled Substances Act (the “CSA”). The Company’s action was dismissed and the Company is appealing the decision. On December 22, 2020, the DOJ filed a civil complaint against the Company in the U.S. District Court for the District of Delaware alleging that the Company unlawfully dispensed controlled substances from its pharmacies and unlawfully distributed controlled substances to those pharmacies in violation of the CSA. The DOJ is seeking civil penalties and injunctive relief. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021. In addition, the Company is the subject of two securities class actions alleging violations of the federal securities laws regarding the Company’s disclosures with respect to opioids filed in the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021 purportedly on behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. A derivative action was also filed by one of the Company's shareholders in the U.S. District Court for the District of Delaware on February 9, 2021 alleging breach of fiduciary duties against certain of its current and former directors with respect to oversight of the Company’s distribution and dispensing of opioids. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from such claims and the related opioid matters. We discuss these cases and other litigation to which we are party below under the caption "Item 3. Legal Proceedings" and in Note 10 in the "Notes to our Consolidated Financial Statements," which are part of this Annual Report on Form 10-K.

Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could increase the costs for our shareholders to bring claims, discourage our shareholders from bringing claims, or limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, associates or shareholders in such capacity. Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for claims, including derivative claims that are based upon a violation of a duty by a current or former director, officer, associate or shareholder in such capacity or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery. The exclusive forum provision may increase the costs for a shareholder to bring a claim or limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable for disputes with us or our directors, officers, associates or shareholders in such capacity, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial position or results of operations. While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

United States The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2021, unit counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:

Walmart U.S. Sam's Club

State or Territory Supercenters Discount Stores

Neighborhood Markets and other small

formats Clubs Grand Total Alabama 101 1 29 13 144 Alaska 7 2 — — 9 Arizona 83 2 28 12 125 Arkansas 76 5 37 9 127 California 142 71 78 29 320 Colorado 70 4 18 17 109 Connecticut 12 21 1 1 35 Delaware 6 3 — 1 10 Florida 232 9 98 46 385 Georgia 154 2 35 24 215 Hawaii — 10 — 2 12 Idaho 23 — 3 1 27 Illinois 139 15 12 25 191 Indiana 97 6 11 13 127 Iowa 58 2 — 9 69 Kansas 58 2 16 9 85 Kentucky 78 7 9 9 103 Louisiana 88 2 34 14 138 Maine 19 3 — 3 25 Maryland 30 18 3 11 62 Massachusetts 27 21 4 — 52 Michigan 90 3 9 23 125 Minnesota 65 3 1 12 81 Mississippi 65 3 11 7 86 Missouri 112 9 18 19 158 Montana 14 — — 2 16 Nebraska 35 — 7 5 47 Nevada 30 2 11 7 50 New Hampshire 19 7 — 2 28 New Jersey 35 27 1 8 71 New Mexico 35 2 9 7 53 New York 80 17 9 12 118 North Carolina 143 6 45 22 216 North Dakota 14 — — 3 17 Ohio 139 6 2 27 174 Oklahoma 81 7 35 13 136 Oregon 29 7 10 — 46 Pennsylvania 116 20 3 24 163 Puerto Rico 13 5 12 7 37 Rhode Island 5 4 — — 9 South Carolina 84 — 26 13 123 South Dakota 15 — — 2 17 Tennessee 117 1 20 14 152 Texas 392 18 110 82 602 Utah 41 — 13 8 62 Vermont 3 3 — — 6 Virginia 110 4 21 15 150 Washington 52 10 5 — 67 Washington D.C. 3 — 2 — 5 West Virginia 38 — 1 5 44 Wisconsin 83 4 2 10 99 Wyoming 12 — — 2 14 U.S. total 3,570 374 799 599 5,342

Square feet (in thousands) 634,154 39,464 29,414 80,239 783,271

International The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2021 for Walmart International are summarized by major category for each geographic market as follows:

Geographic Market Retail Wholesale Other Total Square feet Africa 332 91 — 423 24,537 Canada 408 — — 408 52,976 Central America 855 — — 855 13,724 Chile 352 6 — 358 15,932 China 403 31 — 434 69,312 India — 29 — 29 1,569 Japan 328 — — 328 19,570 Mexico 2,470 164 — 2,634 101,993 United Kingdom 614 — 18 632 37,660 International total 5,762 321 18 6,101 337,273

(1) Walmart International unit counts, with the exception of Canada, are as of December 31, 2020, to correspond with the balance sheet date of the related geographic market. Canada unit counts are as of January 31, 2021.

Zambia. (5) Central America unit counts reside in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. (6) As of January 31, 2021, the Company's operations in Japan and the United Kingdom were classified as held for sale. Refer to Note 12.

(1)

(2) (3)

(4)

(5)

(6)

Owned and Leased Properties

The following table provides further details of our retail units and distribution facilities, including return facilities and dedicated eCommerce fulfillment centers, as of January 31, 2021:

Owned Leased Total U.S. properties Walmart U.S. retail units 4,067 676 4,743 Sam's Club retail units 513 86 599 Total U.S. retail units 4,580 762 5,342 Walmart U.S. distribution facilities 108 48 156 Sam's Club distribution facilities 11 16 27 Total U.S. distribution facilities 119 64 183

Total U.S. properties 4,699 826 5,525

International properties Africa 37 386 423 Canada 124 284 408 Central America 358 497 855 Chile 188 170 358 China 2 432 434 India 2 27 29 Japan 54 274 328 Mexico 700 1,934 2,634 United Kingdom 433 199 632 Total International retail units 1,898 4,203 6,101 International distribution facilities 32 189 221

Total International properties 1,930 4,392 6,322 Total properties 6,629 5,218 11,847

Total retail units 6,478 4,965 11,443 Total distribution facilities 151 253 404 Total properties 6,629 5,218 11,847

Also includes U.S. and international distribution facilities which are third-party owned and operated. As of January 31, 2021, the Company's operations in Japan and the United Kingdom were classified as held for sale. Refer to Note 12,

(1)

(2)

(1)

(2)

ITEM 3. LEGAL PROCEEDINGS

I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial Statements, which is included in "Item 8. Financial Statements and Supplementary Data." We refer you to that discussion for important information concerning those legal proceedings, including the basis for such actions and, where known, the relief sought.

We provide the following additional information concerning those legal proceedings, including the name of the lawsuit, the court in which the lawsuit is pending, and the date on which the petition commencing the lawsuit was filed. Asda Equal Value Claims: Ms S Brierley & Others v ASDA Stores Ltd (2406372/2008 & Others - Manchester Employment Tribunal); ASDA Stores Ltd v Brierley & Ors (A2/2016/0973 - United Kingdom Court of Appeal); ASDA Stores Ltd v Ms S Brierley & Others (UKEAT/0059/16/DM - United Kingdom Employment Appeal Tribunal); ASDA Stores Ltd v Ms S Brierley & Others (UKEAT/0009/16/JOJ - United Kingdom Employment Appeal Tribunal). National Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804) (the "MDL"). The MDL is pending in the U.S. District Court for the Northern District of Ohio and includes over 2,000 cases as of March 5, 2021, some of which cases are in the process of being transferred to the MDL. A trial previously scheduled to begin on May 10, 2021 against a number of parties, including the Company, regarding opioid dispensing and distribution claims has been postponed and rescheduled for October 4, 2021. A separate trial in the MDL that had been expected to start in November 2020 against a number of parties, including the Company, regarding opioid distribution claims has been postponed indefinitely. There is one case in which the Company is named as a defendant that was remanded from the MDL court to the U.S. District Court for the Eastern District of Oklahoma. In addition, there are over 200 state court cases pending as of March 5, 2021, some of which may be removed to federal court to seek MDL transfer. The case citations for the state cases are listed on Exhibit 99.1 to this Form 10-K. DOJ Opioid Litigation: On October 22, 2020, the Company filed a declaratory judgment action in the Eastern District of Texas against the U.S. Department of Justice (the “DOJ”) and the U.S. Drug Enforcement Administration, asking a federal court to clarify the roles and responsibilities of pharmacists and pharmacies as to the dispensing and distribution of opioids under the Controlled Substances Act (the “CSA”). The Company’s action, Walmart Inc. v. U.S. Department of Justice et al., USDC, Eastern Dist. of Texas, 10/22/20, was dismissed and the Company is appealing the decision. A civil complaint pending in the U.S. District Court for the District of Delaware has been filed by the DOJ against the Company, in which the DOJ alleges violations of the CSA related to nationwide distribution and dispensing of opioids. U.S. v. Walmart Inc., et al., USDC, Dist. of DE, 12/22/20. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021. Opioids Related Securities Class Actions and Derivative Litigation: A derivative complaint and class action lawsuits drawing heavily on the allegations of the DOJ complaint have been filed in Delaware naming various current and former directors and certain officers as defendants. The plaintiff in the derivative suit (in which the Company is a nominal defendant) alleges, among other things, that the defendants breached their fiduciary duties in connection with their oversight of opioids dispensing and distribution. The securities class actions, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended regarding the Company’s disclosures with respect to opioids were purportedly filed on behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. Derivative Lawsuit: Abt v. Alvarez et al., USDC, Dist. of DE, 2/9/21. Securities Class Actions: Stanton v. Walmart Inc. et al., USDC, Dist. of DE, 1/20/21; Martin v. Walmart Inc. et al., USDC, Dist. of DE, 3/5/21.

II. CERTAIN OTHER MATTERS: The Company has received grand jury subpoenas issued by the United States Attorney’s Office for the Middle District of Pennsylvania seeking documents regarding the Company’s consumer fraud program and anti-money laundering compliance related to the Company’s money transfer services, where Walmart is an agent. The most recent subpoena was issued in August 2020. The Company has been responding to these subpoenas and is cooperating with the government’s investigation. The Company has also responded to civil investigative demands from the United States Federal Trade Commission (the “FTC”) and is cooperating with the FTC’s investigation related to money transfers and the Company’s anti-fraud program in its capacity as an agent. The Company is unable to predict the outcome of the investigations or any related actions by the governmental entities regarding these matters at this time. While the Company does not currently believe that the outcome of these matters will have a material adverse effect on its business, financial position, results of operations or cash flows, the Company can provide no assurance as to the scope and outcome of these matters and whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no environmental matters to disclose for this period.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Stock The principal market on which Walmart's common stock is listed for trading is the New York Stock Exchange. The common stock trades under the symbol "WMT."

Holders of Record of Common Stock As of March 17, 2021, there were 214,673 holders of record of Walmart's common stock.

Stock Performance Chart This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ended through fiscal 2021 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison assumes $100 was invested on February 1, 2016 in shares of our common stock and in each of the indices shown and assumes that all of the dividends were reinvested.

*Assumes $100 Invested on February 1, 2016 Assumes Dividends Reinvested

Fiscal Year ended January 31, 2021

Fiscal Years Ended January 31, 2016 2017 2018 2019 2020 2021

Walmart Inc. $ 100.00 $ 103.50 $ 169.56 $ 156.05 $ 190.21 $ 237.33 S&P 500 Index 100.00 120.04 151.74 148.23 180.37 211.48 S&P 500 Retailing Index 100.00 120.09 174.49 186.29 219.46 316.05

Issuer Repurchases of Equity Securities From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2021 were made under the $20.0 billion share repurchase program approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31, 2021. On February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning February 22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.

Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended January 31, 2021, was as follows:

Fiscal Period Total Number of

Shares Repurchased

Average Price Paid per Share (in dollars)

Total Number of Shares Repurchased as Part of Publicly

Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Repurchased Under the

Plans or Programs (in billions)

November 1 - 30, 2020 1,827,372 $ 148.91 1,827,372 $ 4.2 December 1 - 31, 2020 4,334,315 146.33 4,334,315 3.6 January 1 - 31, 2021 3,926,701 145.80 3,926,701 3.0 Total 10,088,388 10,088,388

(1) Represents the approximate dollar value of shares that could have been repurchased at the end of the month.

ITEM 6. SELECTED FINANCIAL DATA

This Item is reserved as a result of the Company’s early adoption of Item 301 of Regulation S-K, as deleted pursuant to SEC Release No. 33-10890; 34-90459 (Management’s Discussion and Analysis; Selected Financial Data, and Supplementary Financial Information) adopted by the Securities and Exchange Commission on November 19, 2020.

(1)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview This discussion, which presents our results for the fiscal years ended January 31, 2021 ("fiscal 2021"), January 31, 2020 ("fiscal 2020") and January 31, 2019 ("fiscal 2019"), should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of each of the three segments to provide a better understanding of how each of those segments and its results of operations affect the financial position and results of operations of the Company as a whole. Throughout this Item 7, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income and other measures as determined by the information regularly reviewed by our chief operating decision maker. Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated digitally, including omni-channel transactions which are fulfilled through our stores and clubs. Sales at a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Sales related to divested businesses are excluded from comparable sales, and sales related to acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies. In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31; however, the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the seasonal fluctuations of our business. We have taken certain strategic actions to strengthen our Walmart International portfolio for the long-term, including the following highlights over the last three years:

• Acquisition of 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart Private Limited ("Flipkart") in August 2018. Refer to Note 12 for additional information on the transaction.

• Divestiture of 80 percent of Walmart Brazil in August 2018, for which we recorded a pre-tax loss of $4.8 billion in fiscal 2019. Refer to Note 12 for additional information on the transaction.

• Divestiture of banking operations in Walmart Chile and Walmart Canada in December 2018 and April 2019, respectively. • In October 2020, we agreed to sell Asda for net consideration of $9.4 billion and recognized an estimated non-cash loss in fiscal 2021 of $5.7 billion, after

tax, which includes the loss associated with the expected derecognition of the Asda pension plan. In February 2021, we completed the sale of Asda. Refer to Note 11 and Note 12.

• In November 2020, we completed the sale of Walmart Argentina and recorded a non-cash loss of $1.0 billion, after-tax, primarily due to cumulative foreign currency translation losses. Refer to Note 12.

• In November 2020, we agreed to sell a majority stake in Seiyu for net consideration of approximately $1.2 billion and recognized an estimated non-cash loss of $1.9 billion, after-tax, in fiscal 2021. In March 2021, we completed the sale of Seiyu. Refer to Note 12.

We operate in the highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or international omni-channel or eCommerce presence. We compete with a number of companies for attracting and retaining quality associates. We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, global health epidemics including the ongoing COVID-19 pandemic, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, the imposition of tariffs, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be found herein under "Item 1A. Risk Factors."

COVID-19 Updates Throughout fiscal 2021, we have operated with a clear set of priorities to guide our decision making through the COVID-19 pandemic. These priorities are:

• Supporting our associates on the front lines in terms of their physical safety, financial health and emotional well-being. We are providing extra pay and benefits, including special cash bonuses to associates and the introduction of a COVID-19 Emergency Leave Policy in the U.S.

• Serving our customers as safely as possible and keeping our supply chain operating. We reduced our store operating hours at the onset of the COVID-19 pandemic and have expanded store hours slightly toward the end of the year.

• Helping others which includes waiving or discounting rent for in-store tenants in April and May 2020 as well as hiring more than 500,000 new associates. • Managing the business well both operationally and financially and driving our long-term strategy. We are maintaining our everyday low-price discipline

while investing in our omni-channel offering which continues to resonate with customers around the world who are increasingly seeking convenience. While we incurred incremental costs of $4.0 billion during fiscal 2021 associated with operating during a global health crisis, the COVID-19 pandemic resulted in overall net sales growth during fiscal 2021 with strong comparable sales in the U.S. and the majority of our international markets. Sales trends were positively affected by eCommerce growth acceleration and we also saw customers consolidate shopping trips and purchase larger baskets. For a detailed discussion on results of operations by reportable segment, refer to "Results of Operations" below. We expect continued uncertainty in our business and the global economy due to the duration and intensity of the COVID-19 pandemic; the duration and extent of economic stimulus; timing and effectiveness of global vaccines; and volatility in employment trends and consumer confidence which may impact our results.

• strong, efficient growth; • consistent operating discipline; and • strategic capital allocation.

As we execute on this financial framework, we believe our returns on capital will improve over time.

Strong, Efficient Growth Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities, increasing comparable store and club sales, accelerating eCommerce sales growth and expanding omni-channel initiatives while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-term growth of the Company. Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar. Calendar comparable sales, including the impact of fuel, for fiscal 2021 and 2020, were as follows:

Fiscal Years Ended January 31, 2021 2020 2021 2020 With Fuel Fuel Impact Walmart U.S. 8.7% 2.9% (0.2)% 0.0% Sam's Club 8.7% 1.6% (3.4)% 0.8% Total U.S. 8.7% 2.7% (0.6)% 0.1%

Comparable sales in the U.S., including fuel, increased 8.7% and 2.7% in fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. Walmart U.S. comparable sales increased 8.7% and 2.9% in fiscal 2021 and 2020, respectively. For fiscal 2021, comparable sales growth was driven by growth in average ticket primarily resulting from increased demand due to the COVID-19 pandemic, partially offset by a decline in transactions as customers consolidated shopping trips. For fiscal 2020, comparable sales growth was driven by growth in average ticket and transactions. Walmart U.S. eCommerce sales positively contributed approximately 5.4% and 2.1% to comparable sales for fiscal 2021 and 2020, respectively, as we continue to focus on a seamless omni-channel experience for our customers.

Sam's Club comparable sales increased 8.7% and 1.6% in fiscal 2021 and 2020, respectively. For fiscal 2021, Sam's Club comparable sales benefited from growth in transactions and average ticket resulting from the COVID-19 pandemic, partially offset by both our decision to remove tobacco from certain club locations and by lower fuel sales. Sam's Club comparable sales for fiscal 2020 benefited from growth in transactions and higher fuel sales, which were partially offset by lower average ticket due to our decision to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed approximately 2.2% and 1.8% to comparable sales for fiscal 2021 and 2020, respectively.

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2021 2020 Net sales $ 555,233 $ 519,926 Percentage change from comparable period 6.8 % 1.9 % Operating, selling, general and administrative expenses $ 116,288 $ 108,791 Percentage change from comparable period 6.9 % 1.5 % Operating, selling, general and administrative expenses as a percentage of net sales 20.9 % 20.9 %

For fiscal 2021, operating expenses as a percentage of net sales was flat when compared to the previous fiscal year. Operating expenses as a percentage of net sales benefited from strong growth in comparable sales and lapping the $0.9 billion business restructuring charges from the prior year described below. These benefits were offset by $4.0 billion of incremental costs related to the COVID-19 pandemic and a $0.4 billion business restructuring charge in the Walmart U.S. segment recorded in the second quarter of fiscal 2021.

For fiscal 2020, operating expenses as a percentage of net sales decreased 8 basis points compared to the previous fiscal year due to our focus on expense management combined with our growth in comparable store sales. These improvements were partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in the write down of certain assets in the Walmart U.S. and Walmart International segments.

Strategic Capital Allocation Our strategy includes improving our customer-facing initiatives in stores and clubs and creating a seamless omni-channel experience for our customers. As such, we are allocating more capital to eCommerce, technology, supply chain, and store remodels and less to new store and club openings. Total fiscal 2021 capital expenditures decreased slightly compared to the prior year. The following table provides additional detail:

(Amounts in millions) Fiscal Years Ended January 31, Allocation of Capital Expenditures 2021 2020 eCommerce, technology, supply chain and other $ 5,681 $ 5,643 Remodels 2,013 2,184 New stores and clubs, including expansions and relocations 134 77 Total U.S. $ 7,828 $ 7,904 Walmart International 2,436 2,801 Total capital expenditures $ 10,264 $ 10,705

Return on Assets and Return on Investment We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts. ROA was 5.6% and 6.7% for fiscal 2021 and 2020, respectively. The decrease in ROA was primarily due to the losses on certain international operations held for sale or sold, partially offset by the fair value change in our equity investments as well as the increase in operating income. ROI was 14.0% and 13.4% for fiscal 2021 and 2020, respectively. The increase in ROI was primarily due to the increase in operating income. We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing twelve months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period. For fiscal 2020, lease related assets and associated accumulated amortization are included in the denominator at their carrying amount as of that balance sheet date, rather than averaged, because they are not directly comparable to the prior year calculation which included rent for the trailing 12 months multiplied by a factor of 8. A two-point average was used for leased assets beginning in fiscal 2021, after one full year from the date of adoption of ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in accordance with generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.

The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 CALCULATION OF RETURN ON ASSETS Numerator

Consolidated net income $ 13,706 $ 15,201 Denominator

Average total assets $ 244,496 $ 227,895

Return on assets (ROA) 5.6 % 6.7 %

CALCULATION OF RETURN ON INVESTMENT Numerator

Operating income $ 22,548 $ 20,568 + Interest income 121 189 + Depreciation and amortization 11,152 10,987 + Rent 2,626 2,670 ROI operating income $ 36,447 $ 34,414

Denominator Average total assets $ 244,496 $ 235,277 + Average accumulated depreciation and amortization 94,351 90,351 - Average accounts payable 48,057 47,017 - Average accrued liabilities 30,131 22,228 Average invested capital $ 260,659 $ 256,383

Return on investment (ROI) 14.0 % 13.4 %

As of January 31, 2021 2020 2019 Certain Balance Sheet Data Total assets $ 252,496 $ 236,495 $ 219,295

Leased assets, net NP 21,841 7,078 Total assets without leased assets, net NP 214,654 212,217

Accumulated depreciation and amortization 94,187 94,514 87,175 Accumulated amortization on leased assets NP 4,694 5,682

Accumulated depreciation and amortization, without leased assets NP 89,820 81,493 Accounts payable 49,141 46,973 47,060 Accrued liabilities 37,966 22,296 22,159

(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the corresponding prior period and dividing by 2. Average total assets as used in ROA includes the average impact of the adoption of ASU 2016-02.

(2) For fiscal 2020, as a result of adopting ASU 2016-02, average total assets is based on the average of total assets without leased assets, net plus leased assets, net as of January 31, 2020. Average accumulated depreciation and amortization is based on the average of accumulated depreciation and amortization, without leased assets plus accumulated amortization on leased assets as of January 31, 2020.

NP = Not provided.

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future settlement, the inclusion of a full year of Flipkart operations, and the timing of vendor payments. Free cash flow for fiscal 2020 declined when compared to fiscal 2019 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.4 billion in increased capital expenditures. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Net cash provided by operating activities $ 36,074 $ 25,255 $ 27,753 Payments for property and equipment (10,264) (10,705) (10,344) Free cash flow $ 25,810 $ 14,550 $ 17,409

Net cash used in investing activities $ (10,071) $ (9,128) $ (24,036) Net cash used in financing activities (16,117) (14,299) (2,537)

(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

Results of Operations Consolidated Results of Operations

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2021 2020 2019 Total revenues $ 559,151 $ 523,964 $ 514,405 Percentage change from comparable period 6.7 % 1.9 % 2.8 % Net sales $ 555,233 $ 519,926 $ 510,329 Percentage change from comparable period 6.8 % 1.9 % 2.9 % Total U.S. calendar comparable sales increase 8.7 % 2.7 % 4.0 % Gross profit rate 24.3 % 24.1 % 24.5 % Operating income $ 22,548 $ 20,568 $ 21,957 Operating income as a percentage of net sales 4.1 % 4.0 % 4.3 % Consolidated net income $ 13,706 $ 15,201 $ 7,179 Unit counts at period end 11,443 11,501 11,361 Retail square feet at period end 1,121 1,129 1,129

(1) Unit counts and associated retail square feet are presented for stores and clubs generally open as of period end, and includes stores associated with operations classified as held for sale as of January 31, 2021. Permanently closed locations are not included.

Our total revenues, which includes net sales and membership and other income, increased $35.2 billion or 6.7% and $9.6 billion or 1.9% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. These increases in revenues were due to increases in net sales, which increased $35.3 billion or 6.8% and $9.6 billion or 1.9% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to strong positive comparable sales for the Walmart U.S. and Sam's Club segments as well as positive comparable sales in the majority of our international markets resulting from increased demand stemming from the COVID-19 pandemic. Overall net sales growth was strong despite certain operating limitations in several international markets in the second quarter of fiscal 2021 due to government regulations and precautionary measures taken as a result of the COVID-19 pandemic. The net sales increase was partially offset by negative fluctuations in currency exchange rates of $5.0 billion. For fiscal 2020, net sales were positively impacted by overall positive comparable sales for Walmart U.S. and Sam's Club segments, along with the addition of net sales from Flipkart, which we acquired in August 2018, and positive comparable sales in the majority of our international markets. These increases were partially offset by $4.1 billion of negative impact from fluctuations in currency exchange rates in fiscal 2020 and our sale of the majority stake in Walmart Brazil in August 2018. Our gross profit rate increased 20 basis points and decreased 40 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to strategic sourcing initiatives, strong sales in higher margin categories, and fewer markdowns. This was partially offset in the Walmart U.S. segment by carryover of prior year price investment as well as the temporary closure of our Auto Care Centers and Vision Centers in response to the

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COVID-19 pandemic. For fiscal 2020, the decrease was primarily due to price investment in the Walmart U.S. segment and the addition of Flipkart in the Walmart International segment, partially offset by favorable merchandise mix including strength in private brands and less pressure from transportation costs in the Walmart U.S. segment. For fiscal 2021, operating expenses as a percentage of net sales was flat when compared to the previous fiscal year. Operating expenses as a percentage of net sales benefited from strong growth in comparable sales and lapping the $0.9 billion business restructuring charges from the prior year described below. These benefits were offset by $4.0 billion of incremental costs related to the COVID-19 pandemic and a $0.4 billion business restructuring charge in the Walmart U.S. segment recorded in the second quarter of fiscal 2021. For fiscal 2020, operating expenses as a percentage of net sales decreased 8 basis points, when compared to the previous fiscal year, due to our focus on expense management combined with our growth in comparable store sales. These improvements were partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in the write down of certain assets in the Walmart U.S. and Walmart International segments. Other gains and losses consisted of net gains of $0.2 billion and $2.0 billion for fiscal 2021 and 2020, respectively. The gain in fiscal 2021 primarily reflects $8.7 billion in net gains associated with the fair value changes of our equity investments, partially offset by the $8.3 billion pre-tax loss related to the divestiture of certain international operations classified as held for sale or sold in fiscal 2021. The gain in fiscal 2020 was primarily the result of a $1.9 billion increase in the market value of our investment in JD.com. Our effective income tax rate was 33.3% for fiscal 2021, 24.4% for fiscal 2020, and 37.4% for fiscal 2019. The increase in our effective tax rate for fiscal 2021 as compared to fiscal 2020 is primarily due to the loss related to the divestiture of certain international operations classified as held for or sold in fiscal 2021, which provided minimal realizable tax benefit. The decrease in our effective tax rate for fiscal 2020 as compared to fiscal 2019 was primarily due to the fiscal 2019 loss on sale of a majority stake in Walmart Brazil, which increased the previous comparative fiscal year's effective tax rate, as it provided minimal realizable tax benefit. Our effective income tax rate may also fluctuate as a result of various factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix and size of earnings among our U.S. operations and international operations, which are subject to statutory rates that, beginning in fiscal 2019, are generally higher than the U.S. statutory rate. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2021, 2020 and 2019 is presented in Note 9. As a result of the factors discussed above, we reported $13.7 billion and $15.2 billion of consolidated net income for fiscal 2021 and 2020, respectively, which represents a decrease of $1.5 billion and an increase of $8.0 billion for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $4.75, $5.19 and $2.26 for fiscal 2021, 2020 and 2019, respectively.

Walmart U.S. Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2021 2020 2019 Net sales $ 369,963 $ 341,004 $ 331,666 Percentage change from comparable period 8.5 % 2.8 % 4.1 % Calendar comparable sales increase 8.7 % 2.9 % 3.7 % Operating income $ 19,116 $ 17,380 $ 17,386 Operating income as a percentage of net sales 5.2 % 5.1 % 5.2 % Unit counts at period end 4,743 4,756 4,769 Retail square feet at period end 703 703 705

Net sales for the Walmart U.S. segment increased $29.0 billion or 8.5% and $9.3 billion or 2.8% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in comparable sales of 8.7% and 2.9% for fiscal 2021 and 2020, respectively. Comparable sales in fiscal 2021 were driven by growth in average ticket primarily resulting from meeting the increased demand due to economic conditions related to the COVID-19 pandemic while transactions decreased as customers consolidated shopping trips. Comparable sales in fiscal 2020 were driven by both average ticket and transaction growth for fiscal 2020. Walmart U.S. eCommerce sales positively contributed approximately 5.4% and 2.1% to comparable sales for fiscal 2021 and 2020, respectively, as we continue to focus on a seamless omni-channel experience for our customers. Gross profit rate was flat and decreased 14 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. While fiscal 2021 gross profit rate was flat, it benefited from strategic sourcing initiatives and fewer markdowns, offset by a change in merchandise mix, the carryover effect of prior year price investment and the temporary closure of our Auto Care and Vision Centers in response to the COVID-19 pandemic. For fiscal 2020, the decrease was primarily the result of continued price investments which were partially offset by better merchandise mix, including strength in private brands, and less pressure from transportation costs.

Operating expenses as a percentage of segment net sales decreased 15 and 4 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. We leveraged operating expenses in fiscal 2021 primarily as a result of strong sales, which were partially offset by $3.2 billion of incremental costs related to the COVID-19 pandemic including special bonuses, expanded sick and emergency leave pay, costs associated with outfitting our stores and associates with masks, gloves and sanitizer, and expanded cleaning practices. Fiscal 2021 operating expenses as a percentage of net sales was also slightly aided by lapping the $0.5 billion business restructuring charges from the prior year described below, offset by a $0.4 billion business restructuring charge recorded in the second quarter of fiscal 2021 resulting from changes to Walmart U.S. support teams to better support its omni-channel strategy. The decrease in fiscal 2020 was primarily due to strong sales and productivity improvements which were mostly offset by business restructuring charges of $0.5 billion consisting primarily of non-cash impairment charges for certain trade names, acquired developed technology and other business restructuring charges due to decisions that resulted in the write down of certain eCommerce assets. As a result of the factors discussed above, segment operating income increased $1.7 billion and decreased $6 million for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year.

Walmart International Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2021 2020 2019 Net sales $ 121,360 $ 120,130 $ 120,824 Percentage change from comparable period 1.0 % (0.6) % 2.3 % Operating income $ 3,660 $ 3,370 $ 4,883 Operating income as a percentage of net sales 3.0 % 2.8 % 4.0 % Unit counts at period end 6,101 6,146 5,993 Retail square feet at period end 337 345 344

Net sales for the Walmart International segment increased $1.2 billion or 1.0% and decreased $0.7 billion or 0.6% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to positive comparable sales growth in the majority of our markets driven by changes in consumer behavior in response to the COVID-19 pandemic, partially offset by negative fluctuations in currency exchange rates of $5.0 billion. The pandemic led to significant economic pressures and channel and mix shifts due to changes in consumer behavior, including accelerated growth in eCommerce in several markets. While several of our markets experienced extensive store and operational closures in the second quarter as a result of government mandates, most closed stores and warehouses had resumed operations by the third quarter. For fiscal 2020, the decrease was primarily due to negative fluctuations in currency exchange rates of $4.1 billion as well as a reduction in sales due to our sale of the majority stake in Walmart Brazil in August 2018, offset by a full year of net sales from Flipkart and positive comparable sales growth in the majority of our markets. Gross profit rate increased 50 basis points and decreased 136 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to Flipkart's improved margin mix and reduced fuel sales in the U.K. For fiscal 2020, the decrease was primarily due to Flipkart, as well as a change in merchandise mix. Operating expenses as a percentage of segment net sales increased 14 basis points and decreased 13 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. The increase in operating expenses as a percentage of segment net sales for fiscal 2021 was primarily due to $0.5 billion of incremental costs related to the COVID-19 pandemic, partially offset by positive comparable sales in the majority of our markets and lapping the impairment charges in the prior year discussed below. Fiscal 2020 decreased primarily due to positive comparable sales in the majority of our markets as well as cost discipline across multiple markets, partially offset by $0.4 billion in impairment charges primarily due to the write-off of the carrying value of one of Flipkart's two fashion trade names, Jabong.com, as a result of a strategic decision to focus our efforts on a single fashion platform in order to simplify the business and customer proposition. As a result of the factors discussed above, segment operating income increased $0.3 billion and decreased $1.5 billion for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year.

Sam's Club Segment

Fiscal Years Ended January 31, (Amounts in millions, except unit counts) 2021 2020 2019 Including Fuel

Net sales $ 63,910 $ 58,792 $ 57,839 Percentage change from comparable period 8.7 % 1.6 % (2.3) % Calendar comparable sales increase 8.7 % 1.6 % 5.4 % Operating income $ 1,906 $ 1,642 $ 1,520 Operating income as a percentage of net sales 3.0 % 2.8 % 2.6 % Unit counts at period end 599 599 599 Retail square feet at period end 80 80 80

Excluding Fuel Net sales $ 59,184 $ 52,792 $ 52,332 Percentage change from comparable period 12.1 % 0.9 % (3.9) % Operating income $ 1,645 $ 1,486 $ 1,383 Operating income as a percentage of net sales 2.8 % 2.8 % 2.6 %

Net sales for the Sam's Club segment increased $5.1 billion or 8.7% and $1.0 billion or 1.6% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. Our 8.7% growth in comparable sales for fiscal 2021 benefited from growth in transactions and average ticket resulting from the COVID-19 pandemic, partially offset by both our decision to remove tobacco from certain club locations and by lower fuel sales. Sam's Club eCommerce sales positively contributed approximately 2.2% to comparable sales. For fiscal 2020, the increase was primarily due to comparable sales, including fuel, of 1.6%. Comparable sales benefited from growth in transactions and higher fuel sales, which were partially offset by lower ticket due to our decision to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed approximately 1.8% to comparable sales. Gross profit rate increased 65 basis points and decreased 11 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. The increase in gross profit rate was due to favorable sales mix, including lower fuel and tobacco sales, and improvement in inventory losses which was partially offset by price investment and higher eCommerce fulfillment costs. For fiscal 2020, gross profit rate decreased due to price investment and higher eCommerce fulfillment costs, partially offset by reduced tobacco sales. Membership and other income increased 6.8% and 4.7% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021 and 2020, the increases were primarily due to growth in total members, which benefited from higher overall renewal rates, and higher Plus Member penetration. Fiscal 2021 growth was also positively affected by the COVID-19 pandemic. Fiscal 2020 was also benefited by gains on property sales and other income. Operating expenses as a percentage of segment net sales increased 42 and decreased 19 basis points for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. Despite increased net sales from the strong demand resulting from the COVID-19 pandemic, fiscal 2021 operating expenses as a percentage of net sales increased primarily due to $0.3 billion of incremental costs related to the pandemic, which included additional costs such as special bonuses, expanded cleaning practices and security, expanded sick and emergency leave pay, and outfitting our associates with masks and gloves. Additionally, the increase in operating expense as a percentage of segment net sales was affected by reduced tobacco and fuel sales. For fiscal 2020, the decrease was primarily the result of lower labor-related costs and a charge of approximately $50 million related to lease exit costs in the prior comparable period. These benefits were partially offset by a reduction in sales of tobacco and a higher level of technology investment. As a result of the factors discussed above, segment operating income increased $0.3 billion and $0.1 billion for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year.

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Net Cash Provided by Operating Activities

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Net cash provided by operating activities $ 36,074 $ 25,255 $ 27,753

Net cash provided by operating activities was $36.1 billion, $25.3 billion and $27.8 billion for fiscal 2021, 2020 and 2019, respectively. Net cash provided by operating activities for fiscal 2021 increased when compared to the previous fiscal year primarily due to the impact of the global health crisis which accelerated inventory sell-through, as well as the timing and payment of inventory purchases, incremental COVID-19 related expenses and certain benefit payments. The decrease in net cash provided by operating activities for fiscal 2020, when compared to the previous fiscal year, was primarily due to the contribution to our Asda pension plan in anticipation of its future settlement, the inclusion of a full year of Flipkart operations, and the timing of vendor payments.

Cash Equivalents and Working Capital Deficit Cash and cash equivalents were $17.7 billion and $9.5 billion as of January 31, 2021 and 2020, respectively. We maintained more cash at January 31, 2021 compared to January 31, 2020 in order to provide us with enhanced financial flexibility due to the uncertainties related to the COVID-19 pandemic. Our working capital deficit, defined as total current assets less total current liabilities, was $2.6 billion and $16.0 billion as of January 31, 2021 and 2020, respectively. The decrease in working capital deficit as compared to the previous fiscal year is primarily driven by the increase in cash and cash equivalents as well as the increase in current assets and current liabilities due to the classification of the Company's operations in the U.K. and Japan as held for sale. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of cash dividends and share repurchases. We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. Additionally, from time-to-time, we repatriate earnings and related cash from jurisdictions outside of the U.S. Historically, U.S. taxes were due upon repatriation of foreign earnings. Due to the enactment of U.S. tax reform, repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. While we are awaiting anticipated technical guidance from the Internal Revenue Service ("IRS") and the U.S. Treasury Department, we do not expect current local laws, other existing limitations or potential taxes on anticipated future repatriations of cash amounts held outside the U.S. to have a material effect on our overall liquidity, financial position or results of operations. As of January 31, 2021 and 2020, cash and cash equivalents of $2.8 billion and $2.3 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions. Of the $2.8 billion as of January 31, 2021, approximately $1.0 billion can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart minority shareholders; however, this cash is expected to be utilized to fund the operations of Flipkart.

Net Cash Used in Investing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Net cash used in investing activities $ (10,071) $ (9,128) $ (24,036)

Net cash used in investing activities was $10.1 billion, $9.1 billion and $24.0 billion for fiscal 2021, 2020 and 2019, respectively, and generally consisted of payments for business acquisitions and to expand our eCommerce capabilities, invest in other technologies and supply chain, remodel existing stores and clubs and add new stores and clubs. Net cash used in investing activities increased $0.9 billion for fiscal 2021 when compared to the previous fiscal year primarily as a result of lapping the net proceeds received from the sale of our banking operations in Walmart Canada and the change in other investing activities, partially offset by decreased capital expenditures. Net cash used in investing activities decreased $14.9 billion for fiscal 2020 when compared to the previous fiscal year, primarily as a result of the $13.8 billion payment for the acquisition of Flipkart, net of cash acquired, as well as payments for other, smaller acquisitions in fiscal 2019.

Additionally, refer to the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure detail for fiscal 2021 and 2020.

Growth Activities For the fiscal year ending January 31, 2022 ("fiscal 2022"), we project capital expenditures will be approximately $14 billion, with a focus on supply chain, automation, customer-facing initiatives and technology.

Net Cash Used in Financing Activities

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Net cash used in financing activities $ (16,117) $ (14,299) $ (2,537)

Net cash used in financing activities generally consists of transactions related to our short-term and long-term debt, financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interest shareholders are also classified as cash flows from financing activities. Fiscal 2021 net cash used in financing activities increased $1.8 billion when compared to the same period in the previous fiscal year. The increase is primarily due to the timing of issuances and repayments of long-term debt, partially offset by both a reduction in cash used to pay down short-term borrowings as well as share repurchases as we manage our financial position during the current economic environment. Fiscal 2020 net cash used in financing activities increased $11.8 billion for fiscal 2020 when compared to the same period in the previous fiscal year. The increase was primarily due to the $15.9 billion of net proceeds received in fiscal 2019 from the issuance of long-term debt to fund a portion of the purchase price for Flipkart partially offset by $5.5 billion of additional long-term debt in the fiscal 2020 to fund general business operations.

Short-term Borrowings We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. The following table includes additional information related to the Company's short-term borrowings for fiscal 2021, 2020 and 2019:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Maximum amount outstanding at any month-end $ 4,048 $ 13,315 $ 13,389 Average daily short-term borrowings 1,577 7,120 10,625 Annual weighted-average interest rate 3.1 % 2.5 % 2.4 %

We also have $15.0 billion of various undrawn committed lines of credit in the U.S. as of January 31, 2021 that provide additional liquidity, if needed. Additionally, we maintain access to various credit facilities outside of the U.S. to further support our Walmart International segment operations, as needed.

Long-term Debt The following table provides the changes in our long-term debt for fiscal 2021:

(Amounts in millions) Long-term debt due

within one year Long-term debt Total Balances as of February 1, 2020 $ 5,362 $ 43,714 $ 49,076 Repayments of long-term debt (5,382) — (5,382) Reclassifications of long-term debt 3,126 (3,126) — Other 9 606 615 Balances as of January 31, 2021 $ 3,115 $ 41,194 $ 44,309

Dividends Our total dividend payments were $6.1 billion, $6.0 billion and $6.1 billion for fiscal 2021, 2020 and 2019, respectively. The Board of Directors approved, effective February 18, 2021, the fiscal 2022 annual dividend of $2.20 per share, an increase over the fiscal 2021 annual dividend of $2.16 per share. For fiscal 2022, the annual dividend will be paid in four quarterly installments of $0.55 per share, according to the following record and payable dates:

Record Date Payable Date March 19, 2021 April 5, 2021 May 7, 2021 June 1, 2021 August 13, 2021 September 7, 2021 December 10, 2021 January 3, 2022

Company Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2021 were made under the $20 billion share repurchase program approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31, 2021. On February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning February 22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded through the Company's free cash flow. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2021, 2020 and 2019:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2021 2020 2019 Total number of shares repurchased 19.4 53.9 79.5 Average price paid per share $ 135.20 $ 105.98 $ 93.18 Total amount paid for share repurchases $ 2,625 $ 5,717 $ 7,410

Capital Resources

We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our capital expenditures, acquisitions, dividend payments and share repurchases. We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. As of January 31, 2021, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

Rating agency Commercial paper Long-term debt Standard & Poor's A-1+ AA Moody's Investors Service P-1 Aa2 Fitch Ratings F1+ AA

Payments Due During Fiscal Years Ending January 31, (Amounts in millions) Total 2022 2023-2024 2025-2026 Thereafter Recorded contractual obligations:

Long-term debt $ 44,309 $ 3,115 $ 7,735 $ 5,840 $ 27,619 Short-term borrowings 224 224 — — — Operating lease obligations 20,949 2,189 3,878 3,224 11,658 Finance lease obligations and other 8,835 896 1,461 1,221 5,257 Obligations related to businesses held for sale 8,081 564 1,034 899 5,584

Unrecorded contractual obligations: Estimated interest on long-term debt 21,124 1,636 3,072 2,678 13,738 Syndicated and other letters of credit 2,019 2,019 — — — Purchase obligations 15,004 7,017 5,562 1,495 930 Obligations related to businesses held for sale 856 621 210 22 3

Total contractual obligations $ 121,401 $ 18,281 $ 22,952 $ 15,379 $ 64,789

(1) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. (2) Represents our contractual obligations to make future payments under non-cancelable operating leases and finance lease agreements, both of which are recorded on the balance sheet at

their present value. Refer to Note 7 to our Consolidated Financial Statements for additional information regarding operating and finance leases. (3) Finance lease obligations and other includes contractual obligations under other financing obligations of $1.3 billion. (4) Includes obligations related to our operations in Japan and the United Kingdom which are classified as held for sale as of January 31, 2021.

Under the terms of the sale of the majority stake of Walmart Brazil, we agreed to indemnify the purchaser for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian interbank deposit rate. As of January 31, 2021, the indemnification liability was $0.6 billion and recorded in deferred income taxes and other in the Company's Consolidated Balance Sheet. Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding as of January 31, 2021, and assumes interest rates remain at current levels for our variable rate debt. Additionally, we have $15.0 billion of various undrawn committed lines of credit in the U.S. as of January 31, 2021. Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts. For the purposes of the above table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not include a fixed or minimum quantity, are excluded from the table above. Accordingly, purchase orders for inventory are not included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for cancellation without significant penalty. The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations. In addition to the amounts shown in the table above, $1.7 billion of net unrecognized tax benefits are considered uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.

Off Balance Sheet Arrangements As of January 31, 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial position, results of operations, liquidity, capital expenditures or capital resources.

(1)

(2)

(2)(3)

(4)

Other Matters

We discuss our "Asda Equal Value Claims" which includes certain existing employment claims against our recently divested United Kingdom subsidiary, Asda Group Limited, including certain risks arising therefrom, under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements. We also discuss the Opioids Litigation including certain risks arising therefrom, in "Item 1A. Risk Factors" under the caption "Legal, Tax, Regulatory, Compliance, Reputational and Other Risks" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements. We also discuss various legal proceedings related to the Asda Equal Value Claims and Opioids Litigation in "Item 3. Legal Proceedings" herein under the caption "Supplemental Information." The foregoing matters and other matters described elsewhere in this Annual Report on Form 10-K represent contingencies of the Company that may or may not result in the Company incurring a material liability upon their final resolution.

Inventories

We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a decrease to the carrying value of inventory. As of January 31, 2021 and 2020, our inventories valued at LIFO approximated those inventories as if they were valued at first-in, first-out ("FIFO").

Impairment of Assets We evaluate long-lived assets for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments regarding the existence of impairment indicators are based on market conditions and financial performance. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level. The variability of these factors depends on a number of conditions, including uncertainty about future events and changes in demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to conclude that indicators of impairment exist and require impairment tests be performed, which could result in management determining the value of long-lived assets is impaired, resulting in a write-down of the related long-lived assets. Impairment charges on assets held and used were immaterial in fiscal 2021, 2020 and 2019. As a measure of sensitivity, fiscal 2021 impairment would not change materially with a 10% decrease in the undiscounted cash flows for the stores or clubs with indicators of impairment. In fiscal 2021, the Company's operations in Argentina, Japan and the United Kingdom met the held for sale criteria. As a result, the individual disposal groups were measured at fair value, less costs to sell, which resulted in impairment charges that were included in the total estimated pre-tax loss of $8.3 billion recorded in fiscal 2021. Refer to Note 12. Fiscal 2019 included a pre-tax loss of $4.8 billion related to the sale of the majority stake in Walmart Brazil, which included full impairment of all related assets.

Business Combinations, Goodwill, and Acquired Intangible Assets

Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2021, our reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units have generated sufficient returns to recover the cost of goodwill, as the fair value significantly exceeded the carrying value. Our indefinite-lived acquired intangible assets have also historically generated sufficient returns to recover their cost. Because of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be materially impacted. Due to certain strategic restructuring decisions, we recorded approximately $0.7 billion in impairment in fiscal 2020 related to acquired trade names and acquired developed software.

Contingencies

We are involved in a number of legal proceedings. We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We also perform an assessment of the materiality of loss contingencies where a loss is either not probable or it is reasonably possible that a loss could be incurred in excess of amounts accrued. If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, we provide disclosure of the loss contingency in the footnotes to our financial statements. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the loss can be made. Although we are not able to predict the outcome or reasonably estimate a range of possible losses in certain matters described in Note 10 to our Consolidated Financial Statements, and have not recorded an associated accrual related to these matters, an adverse judgment or negotiated resolution in any of these matters could have a material adverse effect on our business, financial position, results of operations or cash flows.

Income Taxes Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Accordingly, the determination of our provision for income taxes requires judgment, the use of estimates in certain cases and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors, including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and international operations where the statutory rates are generally higher than the U.S. statutory rate, and may fluctuate as a result. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of judgment in evaluating our tax positions and assessing the timing and amounts of deductible and taxable items. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies on estimates. On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective beginning January 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on foreign-sourced earnings and related-party payments. As discussed in Note 9 to our Consolidated Financial Statements, we completed our accounting for the tax effects of the Tax Act in fiscal 2019. As further guidance is issued by the U.S. Treasury Department, the IRS, and other standard–setting bodies, any resulting changes to our estimates will be treated in accordance with the relevant accounting guidance.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates, currency exchange rates and the fair value of certain equity investments. The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a change in another, which may magnify or negate other sensitivities.

Interest Rate Risk We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt. We hedge a portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2021, the net fair value of our interest rate swaps increased $69 million primarily due to fluctuations in market interest rates. The table below provides information about our financial instruments that are sensitive to changes in interest rates. For long-term debt, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing market rates as of January 31, 2021.

Expected Maturity Date (Amounts in millions) Fiscal 2022 Fiscal 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026 Thereafter Total Liabilities

Short-term borrowings: Variable rate $ 224 $ — $ — $ — $ — $ — $ 224 Weighted-average interest rate 1.9 % — % — % — % — % — % 1.9 %

Long-term debt : Fixed rate $ 2,365 $ 3,014 $ 4,721 $ 4,360 $ 1,480 $ 27,619 $ 43,559 Weighted-average interest rate 3.8 % 1.7 % 3.1 % 2.7 % 3.6 % 4.5 % 3.9 % Variable rate $ 750 $ — $ — $ — $ — $ — $ 750 Weighted-average interest rate 0.5 % — % — % — % — % — % 0.5 %

Interest rate derivatives Interest rate swaps:

Fixed to variable $ — $ — $ 1,750 $ 1,500 $ — $ — $ 3,250 Weighted-average pay rate — % — % 0.6 % 1.3 % — % — % 0.9 % Weighted-average receive rate — % — % 2.6 % 3.3 % — % — % 2.9 %

(1) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.

As of January 31, 2021, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 9% of our total short-term and long-term debt. Based on January 31, 2021 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $42 million.

Foreign Currency Risk We are exposed to fluctuations in currency exchange rates as a result of our net investments and operations in countries other than the U.S, as well as our foreign- currency-denominated long-term debt. For fiscal 2021, movements in currency exchange rates and the related impact on the translation of the balance sheets resulted in the $0.2 billion net gain in the currency translation and other category of accumulated other comprehensive loss. We hedge a portion of our foreign currency risk by entering into currency swaps. The aggregate fair value of these swaps was in a liability position of $83 million and $241 million as of January 31, 2021 and January 31, 2020, respectively. The change in the fair value of these swaps was due to fluctuations in currency exchange rates, primarily due to the strengthening of certain currencies relative to the U.S. dollar in fiscal 2021. The hypothetical result of a uniform 10% weakening in the value of the U.S. dollar relative to other currencies underlying these swaps would have resulted in a change in the value of the swaps of $524 million. A hypothetical 10% change in interest rates underlying these swaps from the market rates in effect as of January 31, 2021 would have resulted in a change in the value of the swaps of $46 million.

(1)

In addition to currency swaps, we also hedge a portion of our foreign currency risk by designating foreign-currency-denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion as of January 31, 2021 and January 31, 2020 that was designated as a hedge of our net investment in the U.K. As of January 31, 2021, a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted in a change in the value of the debt of $210 million. In addition, we had outstanding long-term debt of ¥100 billion as of January 31, 2021 and ¥180 billion as of January 31, 2020 that was designated as a hedge of our net investment in Japan. As of January 31, 2021, a hypothetical 10% change in value of the U.S. dollar relative to the Japanese yen would have resulted in a change in the value of the debt of $87 million. As of January 31, 2021, the Company's operations in the U.K. and Japan are classified as held for sale, and subsequently closed in February 2021 and March 2021, respectively. Refer to Note 12 to our Consolidated Financial Statements. In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of purchase commitments denominated in non-functional currencies.

Investment Risk

We are exposed to changes in the stock price of our equity investments with readily determinable fair values. The change in fair value is recorded within other gains and losses and resulted in a gain of $8.7 billion in fiscal 2021 due to net increases in the stock price of those equity investments. As of January 31, 2021, the fair value of our equity investments with readily determinable fair values was $14.4 billion. As of January 31, 2021, a hypothetical 10% change in the stock price of such investments would have changed the fair value of such investments by approximately $1.4 billion.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements of Walmart Inc. For the Fiscal Year Ended January 31, 2021

Table of Contents

Page Report of Independent Registered Public Accounting Firm 51 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 53 Consolidated Statements of Income 54 Consolidated Statements of Comprehensive Income 55 Consolidated Balance Sheets 56 Consolidated Statements of Shareholders' Equity 57 Consolidated Statements of Cash Flows 58 Notes to Consolidated Financial Statements 59

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2021, and the related notes (collectively referred to as the "Consolidated Financial Statements"). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at January 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 19, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

Critical Audit Matters

Contingencies Description of the Matter As described in Note 10 to the Consolidated Financial Statements, at January 31, 2021, the Company is involved in a number of

legal proceedings and has made accruals with respect to these matters, where appropriate. For some matters, a liability is not probable, or the amount cannot be reasonably estimated and therefore an accrual has not been made. Where a liability is reasonably possible and may be material, such matters have been disclosed. Management assessed the probability of occurrence and the estimation of any potential loss based on the ability to predict the number of claims that may be filed or whether any loss or range of loss can be reasonably estimated. For example, in assessing the probability of occurrence in a particular legal proceeding, management exercises judgment to determine if it can predict the number of claims that may be filed and whether it can reasonably estimate any loss or range of loss that may arise from that proceeding. In connection with the sale of Asda, the Company is no longer liable for the Asda Equal Value Claims; however, the Company has agreed to provide indemnification for any potential Asda liability related to these claims up to a contractually determined amount.

Auditing management’s accounting for, and disclosure of, loss contingencies and the estimated fair value of related indemnifications was complex and highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of occurrence for contingencies or related indemnifications or when determining whether an estimate of the loss or range of loss could be made.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of contingencies and related indemnities. For example, we tested controls over the Company’s assessment of the likelihood of loss and the Company’s determinations regarding the measurement of loss.

To test the Company’s assessment of the probability of occurrence or determination of an estimate of loss, or range of loss, among other procedures, we read the minutes of the meetings of the Board of Directors and committees of the Board of Directors, reviewed opinions provided to the Company by certain outside legal counsel, read letters received directly by us from internal and external counsel, and evaluated the current status of contingencies based on discussions with internal legal counsel. We also evaluated the appropriateness of the related disclosures. To test the estimated fair value of indemnities, we involved a valuation specialist to evaluate the valuation methodologies and significant assumptions including, among others, the discount rate.

Valuation of Indefinite-Lived Intangible Assets Description of the Matter At January 31, 2021, the Company has $4.9 billion of indefinite-lived intangible assets which primarily consist of acquired

tradenames. As disclosed in Notes 1, 8 and 12 to the Consolidated Financial Statements, these assets are evaluated for impairment at least annually using valuation techniques to estimate fair value. These fair value estimates are sensitive to certain significant assumptions including revenue growth rates, discount rates, and royalty rates.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s indefinite-lived intangible asset impairment review process. Our procedures included, among others, testing controls over management’s review of the significant assumptions described above used to estimate the fair values of the indefinite-lived intangible assets.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1969.

Rogers, Arkansas March 19, 2021

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Walmart Inc.

Opinion on Internal Control over Financial Reporting We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2021, and the related notes and our report dated March 19, 2021 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Rogers, Arkansas March 19, 2021

Walmart Inc. Consolidated Statements of Income

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2021 2020 2019 Revenues:

Net sales $ 555,233 $ 519,926 $ 510,329 Membership and other income 3,918 4,038 4,076

Total revenues 559,151 523,964 514,405 Costs and expenses:

Cost of sales 420,315 394,605 385,301 Operating, selling, general and administrative expenses 116,288 108,791 107,147

Operating income 22,548 20,568 21,957 Interest:

Debt 1,976 2,262 1,975 Finance, capital lease and financing obligations 339 337 371 Interest income (121) (189) (217)

Interest, net 2,194 2,410 2,129 Other (gains) and losses (210) (1,958) 8,368 Income before income taxes 20,564 20,116 11,460 Provision for income taxes 6,858 4,915 4,281 Consolidated net income 13,706 15,201 7,179 Consolidated net income attributable to noncontrolling interest (196) (320) (509) Consolidated net income attributable to Walmart $ 13,510 $ 14,881 $ 6,670

Net income per common share: Basic net income per common share attributable to Walmart $ 4.77 $ 5.22 $ 2.28 Diluted net income per common share attributable to Walmart 4.75 5.19 2.26

Weighted-average common shares outstanding: Basic 2,831 2,850 2,929 Diluted 2,847 2,868 2,945

Dividends declared per common share $ 2.16 $ 2.12 $ 2.08

See accompanying notes.

Walmart Inc. Consolidated Statements of Comprehensive Income

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Consolidated net income $ 13,706 $ 15,201 $ 7,179

Consolidated net income attributable to noncontrolling interest (196) (320) (509) Consolidated net income attributable to Walmart 13,510 14,881 6,670

Other comprehensive income (loss), net of income taxes Currency translation and other 842 286 (226) Net investment hedges (221) 122 272 Cash flow hedges 235 (399) (290) Minimum pension liability (30) (1,244) 131

Other comprehensive income (loss), net of income taxes 826 (1,235) (113) Other comprehensive (income) loss attributable to noncontrolling interest 213 (28) 188

Other comprehensive income (loss) attributable to Walmart 1,039 (1,263) 75

Comprehensive income, net of income taxes 14,532 13,966 7,066 Comprehensive (income) loss attributable to noncontrolling interest 17 (348) (321)

Comprehensive income attributable to Walmart $ 14,549 $ 13,618 $ 6,745

See accompanying notes.

Walmart Inc. Consolidated Balance Sheets

As of January 31, (Amounts in millions) 2021 2020 ASSETS Current assets:

Cash and cash equivalents $ 17,741 $ 9,465 Receivables, net 6,516 6,284 Inventories 44,949 44,435 Prepaid expenses and other 20,861 1,622

Total current assets 90,067 61,806

Property and equipment, net 92,201 105,208 Operating lease right-of-use assets 13,642 17,424 Finance lease right-of-use assets, net 4,005 4,417 Goodwill 28,983 31,073 Other long-term assets 23,598 16,567 Total assets $ 252,496 $ 236,495

LIABILITIES AND EQUITY Current liabilities:

Short-term borrowings $ 224 $ 575 Accounts payable 49,141 46,973 Accrued liabilities 37,966 22,296 Accrued income taxes 242 280 Long-term debt due within one year 3,115 5,362 Operating lease obligations due within one year 1,466 1,793 Finance lease obligations due within one year 491 511

Total current liabilities 92,645 77,790

Long-term debt 41,194 43,714 Long-term operating lease obligations 12,909 16,171 Long-term finance lease obligations 3,847 4,307 Deferred income taxes and other 14,370 12,961

Commitments and contingencies

Equity: Common stock 282 284 Capital in excess of par value 3,646 3,247 Retained earnings 88,763 83,943 Accumulated other comprehensive loss (11,766) (12,805)

Total Walmart shareholders' equity 80,925 74,669 Noncontrolling interest 6,606 6,883

Total equity 87,531 81,552 Total liabilities and equity $ 252,496 $ 236,495

See accompanying notes.

Walmart Inc. Consolidated Statements of Shareholders' Equity

Accumulated Total Capital in Other Walmart

(Amounts in millions) Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total

Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity Balances as of February 1, 2018 2,952 $ 295 $ 2,648 $ 85,107 $ (10,181) $ 77,869 $ 2,953 $ 80,822 Adoption of new accounting standards, net of income taxes — — — 2,361 (1,436) 925 (1) 924 Consolidated net income — — — 6,670 — 6,670 509 7,179 Other comprehensive income (loss), net of income taxes — — — — 75 75 (188) (113) Cash dividends declared ($2.08 per share) — — — (6,102) — (6,102) — (6,102) Purchase of Company stock (80) (8) (245) (7,234) — (7,487) — (7,487) Cash dividend declared to noncontrolling interest — — — — — — (488) (488) Noncontrolling interest of acquired entity — — — — — — 4,345 4,345 Other 6 1 562 (17) — 546 8 554 Balances as of January 31, 2019 2,878 288 2,965 80,785 (11,542) 72,496 7,138 79,634 Adoption of new accounting standards on February 1, 2019, net of income taxes — — — (266) — (266) (34) (300)

Consolidated net income — — — 14,881 — 14,881 320 15,201 Other comprehensive income (loss), net of income taxes — — — — (1,263) (1,263) 28 (1,235) Cash dividends declared ($2.12 per share) — — — (6,048) — (6,048) — (6,048) Purchase of Company stock (53) (5) (199) (5,435) — (5,639) — (5,639) Cash dividend declared to noncontrolling interest — — — — — — (475) (475) Other 7 1 481 26 — 508 (94) 414 Balances as of January 31, 2020 2,832 284 3,247 83,943 (12,805) 74,669 6,883 81,552 Consolidated net income — — — 13,510 — 13,510 196 13,706 Other comprehensive income (loss), net of income taxes — — — — 1,039 1,039 (213) 826 Cash dividends declared ($2.16 per share) — — — (6,116) — (6,116) — (6,116) Purchase of Company stock (20) (2) (97) (2,559) — (2,658) — (2,658) Cash dividends declared to noncontrolling interest — — — — — — (365) (365) Other 9 — 496 (15) — 481 105 586 Balances as of January 31, 2021 2,821 $ 282 $ 3,646 $ 88,763 $ (11,766) $ 80,925 $ 6,606 $ 87,531

See accompanying notes.

Walmart Inc. Consolidated Statements of Cash Flows

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Cash flows from operating activities:

Consolidated net income $ 13,706 $ 15,201 $ 7,179 Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Depreciation and amortization 11,152 10,987 10,678 Net unrealized and realized (gains) and losses (8,589) (1,886) 3,516 Losses on disposal of business operations 8,401 15 4,850 Asda pension contribution — (1,036) — Deferred income taxes 1,911 320 (499) Other operating activities 1,521 1,981 1,734 Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:

Receivables, net (1,086) 154 (368) Inventories (2,395) (300) (1,311) Accounts payable 6,966 (274) 1,831 Accrued liabilities 4,623 186 183 Accrued income taxes (136) (93) (40)

Net cash provided by operating activities 36,074 25,255 27,753

Cash flows from investing activities: Payments for property and equipment (10,264) (10,705) (10,344) Proceeds from the disposal of property and equipment 215 321 519 Proceeds from the disposal of certain operations 56 833 876 Payments for business acquisitions, net of cash acquired (180) (56) (14,656) Other investing activities 102 479 (431)

Net cash used in investing activities (10,071) (9,128) (24,036)

Cash flows from financing activities: Net change in short-term borrowings (324) (4,656) (53) Proceeds from issuance of long-term debt — 5,492 15,872 Repayments of long-term debt (5,382) (1,907) (3,784) Dividends paid (6,116) (6,048) (6,102) Purchase of Company stock (2,625) (5,717) (7,410) Dividends paid to noncontrolling interest (434) (555) (431) Other financing activities (1,236) (908) (629)

Net cash used in financing activities (16,117) (14,299) (2,537)

Effect of exchange rates on cash, cash equivalents and restricted cash 235 (69) (438)

Net increase in cash, cash equivalents and restricted cash 10,121 1,759 742 Cash and cash equivalents reclassified as assets held for sale (1,848) — — Cash, cash equivalents and restricted cash at beginning of year 9,515 7,756 7,014 Cash, cash equivalents and restricted cash at end of year $ 17,788 $ 9,515 $ 7,756

Supplemental disclosure of cash flow information: Income taxes paid $ 5,271 $ 3,616 $ 3,982 Interest paid 2,216 2,464 2,348

See accompanying notes.

Walmart Inc. Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies General Walmart Inc. ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers. The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.

Principles of Consolidation The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2021 ("fiscal 2021"), January 31, 2020 ("fiscal 2020") and January 31, 2019 ("fiscal 2019"). Intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. These variable interest entities and equity method investments are immaterial to the Company's Consolidated Financial Statements. The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of January 2021 related to the operations consolidated using a lag that materially affected the Consolidated Financial Statements.

Use of Estimates The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles. Those principles require management to make estimates and assumptions, including potential impacts arising from the COVID-19 pandemic and related government actions, that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Receivables Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following: customers, which also includes insurance companies resulting from pharmacy sales, banks for customer credit, debit cards and electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs; governments for income taxes; and real estate transactions. As of January 31, 2021 and January 31, 2020, receivables from transactions with customers, net were $2.7 billion and $2.9 billion, respectively.

Inventories

The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for the Walmart U.S. segment's inventories. The inventory for the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. As of January 31, 2021 and January 31, 2020, the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.

Held for Sale Components and businesses that meet accounting requirements to be classified as held for sale are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. The Company reviews its businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. As of January 31, 2021, $19.2 billion assets held for sale and $12.7 billion liabilities held for sale were classified in prepaid expenses and other and accrued liabilities in the Consolidated Balance Sheets, respectively, reflecting the Company's operations in the U.K. and Japan classified as held for sale. Refer to Note 12 for additional details. As of January 31, 2020, assets and liabilities held for sale were immaterial.

Property and Equipment Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The following table summarizes the Company's property and equipment balances, and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis:

As of January 31, (Amounts in millions) Estimated Useful Lives 2021 2020 Land N/A $ 19,308 $ 24,619 Buildings and improvements 3 - 40 years 97,582 105,674 Fixtures and equipment 1 - 30 years 56,639 58,607 Transportation equipment 3 - 15 years 2,301 2,377 Construction in progress N/A 4,741 3,751 Property and equipment 180,571 195,028 Accumulated depreciation (88,370) (89,820) Property and equipment, net $ 92,201 $ 105,208

Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under finance leases and financing obligations, property under capital leases and intangible assets for fiscal 2021, 2020 and 2019 was $11.2 billion, $11.0 billion and $10.7 billion, respectively.

Leases For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a lease. The Company records right-of- use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less. For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components. For leases in which the lease and non- lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance.

Goodwill and Other Acquired Intangible Assets Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2021, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair value of each reporting unit is significantly greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill. The following table reflects goodwill activity, by reportable segment, for fiscal 2021 and 2020:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Total Balances as of February 1, 2019 $ 2,552 $ 28,316 $ 313 $ 31,181 Changes in currency translation and other — (149) — (149) Acquisitions 41 — — 41 Balances as of January 31, 2020 2,593 28,167 313 31,073 Changes in currency translation and other — 10 — 10 Acquisitions 103 — 8 111 Amounts reclassified related to operations held for sale — (2,211) — (2,211) Balances as of January 31, 2021 $ 2,696 $ 25,966 $ 321 $ 28,983

Represents goodwill associated with operations in the U.K. and Japan which are classified as held for sale as of January 31, 2021. Refer to Note 12.

Intangible assets are included in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2021 and 2020, the Company had $4.9 billion and $5.2 billion, respectively, in indefinite-lived intangible assets which primarily consists of acquired trade names. Refer to Note 12 for additional information related to acquired intangible assets for the Flipkart acquisition in fiscal 2019. There were no significant impairment charges related to intangible assets for fiscal 2021. During fiscal 2020, the Company incurred approximately $0.7 billion in impairment charges related to its intangible assets. Refer to Note 8 for additional information.

Fair Value Measurement

The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Refer to Note 8 for more information. Additionally, the Company may provide routine indemnifications in connection with certain transactions, primarily divestitures, for which an indemnification liability equal to the estimated fair value of the obligation is recorded upon inception. Where necessary, these obligations are recorded at their fair value within deferred income taxes and other in the Consolidated Balance Sheets.

(1)

Investments

Investments in equity securities with readily determinable fair values are recorded at fair value in other long-term assets in the Consolidated Balance Sheets with changes in fair value recognized in other gains and losses in the Consolidated Statements of Income. Refer to Note 8 for details. Equity investments without readily determinable fair values are carried at cost in other long-term assets in the Consolidated Balance Sheets, and adjusted for any observable price changes or impairments recorded in other gains and losses in the Consolidated Statements of Income. Investments in debt securities classified as held-to-maturity are reported at amortized cost in other long-term assets in the Consolidated Balance Sheets with interest or dividend income recorded in interest income in the Consolidated Statements of Income.

Self Insurance Reserves

The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run- out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.

Derivatives

The Company uses derivatives for hedging purposes to manage its exposure to changes in interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivatives in hedging programs subjects the Company to certain risks, such as market and credit risks. The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty. The Company enters into derivatives with counterparties rated only "A-" or better by nationally recognized credit rating agencies. The Company is subject to master netting arrangements which provides set-off and close out netting of exposures with counterparties, but the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. The Company’s collateral arrangements require the counterparty in a net liability position in excess of pre-determined thresholds, after considering the effects of netting arrangements, to pledge cash collateral. Cash collateral received under these arrangements was not significant as of January 31, 2021 and 2020. The Company was not required to provide any cash collateral to counterparties as of January 31, 2021 and 2020. In order to qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. If a derivative is recorded using hedge accounting, depending on the nature of the hedge, derivative gains and losses are recorded through the same financial statement line item in earnings or are recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Derivatives that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings. Derivatives with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and derivatives with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 8 for the presentation of the Company's derivative assets and liabilities.

Cash Flow Hedges The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The Company records changes in the fair value of these swaps in accumulated other comprehensive loss which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives will mature on dates ranging from April 2022 to March 2034.

Net Investment Hedges The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure associated with net investments of certain of its foreign operations. The Company records changes in fair value attributable to the hedged risk in accumulated other comprehensive loss. These derivatives, which relate to the Company's operations in the United Kingdom held for sale as of January 31, 2021, have maturity dates ranging from October 2023 to February 2030. The Company also designated certain foreign currency denominated long-term debt as a hedge of currency exposure associated with the net investment of the Company's operations in the United Kingdom and Japan, both of which were classified as held for sale as of January 31, 2021. The Company records foreign currency gain or loss associated with designated long-term debt in accumulated other comprehensive loss. As of January 31, 2021 and 2020, the Company had $3.3 billion and $3.9 billion, respectively, of outstanding long-term debt designated as net investment hedges.

These derivative and non-derivative gains or losses continue to defer in accumulated other comprehensive loss until the sale or substantial liquidation of these foreign operations. Refer to Note 12 for additional detail regarding the divestiture of the Company's operations in the United Kingdom and Japan.

Income Taxes

Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely on estimates. The Tax Cuts and Jobs Act of 2017 (the "Tax Act") contains a provision which subjects a U.S. parent of a foreign subsidiary to current U.S. tax on its global intangible low–taxed income (“GILTI”). The GILTI income is eligible for a deduction, which lowers the effective tax rate to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. The Company will report the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis differences expected to reverse as GILTI. In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures.

Revenue Recognition

Membership Fee Revenue The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. Membership fee revenue was $1.7 billion for fiscal 2021, $1.5 billion for fiscal 2020 and $1.4 billion for fiscal 2019, respectively. Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. Deferred membership fee revenue is included in accrued liabilities in the Company's Consolidated Balance Sheets.

Advertising Costs Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.2 billion, $3.7 billion and $3.5 billion for fiscal 2021, 2020 and 2019, respectively.

Note 2. Net Income Per Common Share Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net income per common share attributable to Walmart for fiscal 2021, 2020 and 2019. The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2021 2020 2019 Numerator

Consolidated net income $ 13,706 $ 15,201 $ 7,179 Consolidated net income attributable to noncontrolling interest (196) (320) (509) Consolidated net income attributable to Walmart $ 13,510 $ 14,881 $ 6,670

Denominator Weighted-average common shares outstanding, basic 2,831 2,850 2,929 Dilutive impact of stock options and other share-based awards 16 18 16 Weighted-average common shares outstanding, diluted 2,847 2,868 2,945

Net income per common share attributable to Walmart Basic $ 4.77 $ 5.22 $ 2.28 Diluted 4.75 5.19 2.26

Note 3. Shareholders' Equity The total authorized shares of $0.10 par value common stock is 11.0 billion, of which 2.8 billion were issued and outstanding as of January 31, 2021 and 2020. Share-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's consolidated subsidiaries granted in the subsidiaries' respective stock, was $1.2 billion, $0.9 billion and $0.8 billion for fiscal 2021, 2020 and 2019, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $0.3 billion, $0.2 billion and $0.2 billion for fiscal 2021, 2020 and 2019, respectively. The following table summarizes the Company's share- based compensation expense by award type for all plans:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Restricted stock units $ 742 $ 553 $ 456 Restricted stock and performance-based restricted stock units 277 270 293 Other 150 31 24 Share-based compensation expense $ 1,169 $ 854 $ 773

The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as subsequently amended and restated, was established to grant stock options, restricted (non-vested) stock, performance share units and other equity compensation awards for which 260 million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933. The Company believes that such awards serve to align the interests of its associates with those of its shareholders. The Plan's award types are summarized as follows:

• Restricted Stock and Performance-based Restricted Stock Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance-based restricted stock units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance-based restricted stock units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance-based restricted stock units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance-based restricted stock units in fiscal 2021, 2020 and 2019 was 4.5%, 5.1% and 6.2%, respectively.

In addition to the Plan, Flipkart has certain share-based compensation plans for associates under which options to acquire Flipkart common shares may be issued. Share-based compensation expense associated with these plans is included in the Other line in the table above. The following table shows the activity for restricted stock units and restricted stock and performance-based restricted stock units during fiscal 2021:

Restricted Stock Units Restricted Stock and

Performance-based Restricted Stock Units

(Shares in thousands) Shares

Weighted-Average Grant-Date Fair Value Per Share Shares

Weighted-Average Grant-Date Fair Value Per Share

Outstanding as of February 1, 2020 23,261 $ 79.51 6,045 $ 93.04 Granted 7,472 114.51 2,867 120.47 Adjustment for performance achievement — — 576 86.46 Vested/exercised (7,798) 76.11 (3,075) 88.88 Forfeited (3,035) 92.20 (1,000) 96.36

Outstanding as of January 31, 2021 19,900 $ 92.13 5,413 $ 108.72

(1) Represents the adjustment to previously granted performance share units for performance achievement.

The following table includes additional information related to restricted stock units and restricted stock and performance-based restricted stock units:

Fiscal Years Ended January 31, (Amounts in millions, except years) 2021 2020 2019 Fair value of restricted stock units vested $ 597 $ 442 $ 386 Fair value of restricted stock and performance-based restricted stock units vested 275 365 183 Unrecognized compensation cost for restricted stock units 1,062 1,096 1,002 Unrecognized compensation cost for restricted stock and performance-based restricted stock units 344 326 362 Weighted average remaining period to expense for restricted stock units (years) 1.1 1.3 1.6 Weighted average remaining period to expense for restricted stock and performance-based restricted stock units (years) 1.4 1.4 1.1

Share Repurchase Program From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during fiscal 2021 were made under the $20.0 billion share repurchase program approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31, 2021. On February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning February 22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations and the market price of the Company's common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2021, 2020 and 2019:

Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2021 2020 2019 Total number of shares repurchased 19.4 53.9 79.5 Average price paid per share $ 135.20 $ 105.98 $ 93.18 Total cash paid for share repurchases $ 2,625 $ 5,717 $ 7,410

(1)

Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2021, 2020, and 2019:

(Amounts in millions and net of immaterial income taxes)

Currency Translation and Other

Net Investment Hedges

Unrealized Gain on Available-for-Sale

Securities Cash Flow

Hedges Minimum

Pension Liability Total Balances as of February 1, 2018 $ (12,136) $ 1,030 $ 1,646 $ 122 $ (843) $ (10,181) Adoption of new accounting standards 89 93 (1,646) 28 — (1,436) Other comprehensive income (loss) before reclassifications, net (2,093) 272 — (339) 93 (2,067) Reclassifications to income, net 2,055 — — 49 38 2,142 Balances as of January 31, 2019 (12,085) 1,395 — (140) (712) (11,542) Other comprehensive income (loss) before reclassifications, net 281 122 — (399) (1,283) (1,279) Reclassifications to income, net (23) — — — 39 16 Balances as of January 31, 2020 (11,827) 1,517 — (539) (1,956) (12,805) Other comprehensive income (loss) before reclassifications, net 214 (221) — 186 (172) 7 Reclassifications to income, net 841 — — 49 142 1,032 Balances as of January 31, 2021 $ (10,772) $ 1,296 $ — $ (304) $ (1,986) $ (11,766)

(2) Includes a cumulative foreign currency translation loss of $2.0 billion, for which there was no related income taxes, upon sale of the majority stake in Walmart Brazil. Refer to Note 12.

(3) Primarily includes the remeasurement of Asda Group Limited's ("Asda") pension benefit obligation subsequent to the cash contribution made by Asda in fiscal 2020. Refer to Note 11. (4) Includes a cumulative foreign currency translation loss of $0.8 billion, for which there was no related income taxes, upon sale of the majority stake in Walmart Argentina. Refer to Note 12.

Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following as of January 31, 2021 and 2020: January 31, (Amounts in millions) 2021 2020 Liabilities held for sale $ 12,734 $ — Accrued wages and benefits 7,654 6,093 Self-insurance 4,698 4,469 Accrued non-income taxes 3,328 3,039 Deferred gift card revenue 2,310 1,990 Other 7,242 6,705 Total accrued liabilities $ 37,966 $ 22,296

(1) Liabilities held for sale relate to the Company's operations in Japan and the U.K. classified as held for sale as of January 31, 2021. See Note 12. (2) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans. (3) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. (4) Accrued non-income taxes include accrued payroll, property, value-added, sales and miscellaneous other taxes. (5) Other accrued liabilities consist of various items such as interest, maintenance, utilities, legal contingencies, and advertising.

(1)

(2)

(3)

(4)

(1)

(2)

(3)

(4)

(5)

Note 6. Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2021 and 2020 were $0.2 billion and $0.6 billion, respectively, with weighted-average interest rates of 1.9% and 5.0%, respectively. Short-term borrowings as of January 31, 2020 were primarily outside of the U.S. The Company has various committed lines of credit in the U.S. to support its commercial paper program and are summarized in the following table:

January 31, 2021 January 31, 2020 (Amounts in millions) Available Drawn Undrawn Available Drawn Undrawn Five-year credit facility $ 5,000 $ — $ 5,000 $ 5,000 $ — $ 5,000

364-day revolving credit facility 10,000 — 10,000 10,000 — 10,000 Total $ 15,000 $ — $ 15,000 $ 15,000 $ — $ 15,000

(1) In April 2020, the Company renewed and extended its existing 364-day revolving credit facility.

The committed lines of credit in the table above mature at various times between April 2021 and May 2024, carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt. Additionally, the Company has syndicated and fronted letters of credit available which totaled $1.8 billion as of January 31, 2021 and 2020, of which $1.8 billion and $1.6 billion was drawn as of January 31, 2021 and 2020, respectively. The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following as of January 31, 2021 and 2020:

January 31, 2021 January 31, 2020

(Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate Amount Average Rate

Unsecured debt Fixed 2022 - 2050 $ 35,216 3.9% $ 39,752 3.8% Variable 2022 750 0.5% 1,500 2.1%

Total U.S. dollar denominated 35,966 41,252 Fixed 2023 - 2030 3,034 3.3% 2,758 3.3% Variable — —

Total Euro denominated 3,034 2,758 Fixed 2031 - 2039 3,682 5.4% 3,518 5.4% Variable — —

Total Sterling denominated 3,682 3,518 Fixed 2023-2028 1,624 0.3% 1,652 0.4% Variable — —

Total Yen denominated 1,624 1,652 Total unsecured debt 44,306 49,180 Total other 3 (104) Total debt 44,309 49,076 Less amounts due within one year (3,115) (5,362) Long-term debt $ 41,194 $ 43,714

Annual maturities of long-term debt during the next five years and thereafter are as follows:

(Amounts in millions) Annual Fiscal Year Maturities 2022 $ 3,115 2023 3,014 2024 4,721 2025 4,360 2026 1,480 Thereafter 27,619 Total $ 44,309

(1)

(1) (1)

(2)

Debt Issuances There were no long-term debt issuances in fiscal 2021. Information on long-term debt issued during fiscal 2020, for general corporate purposes, is as follows:

(Amounts in millions) Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds April 23, 2019 $1,500 July 8, 2024 Fixed 2.850% $ 1,493 April 23, 2019 $1,250 July 8, 2026 Fixed 3.050% 1,242 April 23, 2019 $1,250 July 8, 2029 Fixed 3.250% 1,243 September 24, 2019 $500 September 24, 2029 Fixed 2.375% 497 September 24, 2019 $1,000 September 24, 2049 Fixed 2.950% 975 Various $42 Various Various Various 42 Total $ 5,492

The fiscal 2020 issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants which restrict the Company's ability to pay dividends or repurchase company stock.

Repayments The following table provides details of debt repayments during fiscal 2021:

(Amounts in millions) Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment June 23, 2020 $750 Floating Floating $ 750 June 23, 2020 $1,250 Fixed 2.850% 1,250 July 8, 2020 $840 Fixed 3.630% 840 July 28, 2020 ¥10,000 Fixed 1.600% 95 October 25, 2020 $1,197 Fixed 3.250% 1,197 December 15, 2020 $1,250 Fixed 1.900% 1,250

Total repayment of matured debt $ 5,382

The following table provides details of debt repayments during fiscal 2020:

(Amounts in millions) Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment February 1, 2019 $364 Fixed 4.125% $ 364 October 20, 2019 $300 Floating Floating 300 October 20, 2019 $1,200 Fixed 1.750% 1,200 Various $43 Various Various 43

Total repayment of matured debt $ 1,907

(1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations.

Fiscal years ended January 31, (Amounts in millions) 2021 2020

Operating lease cost $ 2,626 $ 2,670 Finance lease cost: Amortization of right-of-use assets 583 480 Interest on lease obligations 298 306 Variable lease cost 777 691

Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $3.0 billion in fiscal 2019.

(1)

Other lease information is as follows:

Fiscal years ended January 31, (Dollar amounts in millions) 2021 2020

Cash paid for amounts included in measurement of lease obligations: Operating cash flows from operating leases $ 2,629 $ 2,614 Operating cash flows from finance leases 286 278 Financing cash flows from finance leases 546 485

Assets obtained in exchange for operating lease obligations 2,131 2,151 Assets obtained in exchange for finance lease obligations 1,547 1,081

As of January 31, 2021 2020

Weighted-average remaining lease term - operating leases 12.5 years 15.6 years Weighted-average remaining lease term - finance leases 13.7 years 14.4 years Weighted-average discount rate - operating leases 6.1% 5.4% Weighted-average discount rate - finance leases 6.8% 8.6%

For fiscal 2021, weighted average remaining lease term and discount rate amounts exclude operations classified as held for sale.

The aggregate annual lease obligations at January 31, 2021, are as follows:

(Amounts in millions) Fiscal Year Operating Leases Finance Leases 2022 $ 2,189 $ 717 2023 2,017 613 2024 1,861 551 2025 1,697 496 2026 1,527 449 Thereafter 11,658 4,746 Total undiscounted lease obligations 20,949 7,572 Less imputed interest (6,574) (3,234) Net lease obligations $ 14,375 $ 4,338

The Company measures the fair value of equity investments on a recurring basis in the accompanying Consolidated Balance Sheets. The fair value of the Company's equity investments with readily determinable fair values are as follows:

(Amounts in millions) Fair Value as of

January 31, 2021 Fair Value as of

January 31, 2020 Equity investments measured using Level 1 inputs $ 6,517 $ 2,715 Equity investments measured using Level 2 inputs 7,905 2,723 Total $ 14,422 $ 5,438

(1)

Derivatives

The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2021 and January 31, 2020, the notional amounts and fair values of these derivatives were as follows:

January 31, 2021 January 31, 2020

(Amounts in millions) Notional Amount Fair Value

Notional Amount Fair Value

Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges $ 3,250 $ 166 (1) $ 4,000 $ 97 (1)

Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges 1,250 311 (1) 3,750 455 (1) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges 5,073 (394) (3) 4,067 (696) (2)

Total $ 9,573 $ 83 $ 11,817 $ (144)

Classified in other long-term assets within the Company's Consolidated Balance Sheets. Classified in deferred income taxes and other within the Company's Consolidated Balance Sheets. Approximately $456 million of cash flow hedges were classified in deferred income taxes and other and $62 million of cash flow were classified in other long-term assets in the Company's Consolidated Balance Sheets.

Nonrecurring Fair Value Measurements In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. As further discussed in Note 12, the Company's operations in Argentina, Japan and the U.K. met the held for sale criteria in fiscal 2021. As a result, the individual disposal groups were measured at fair value, less costs to sell, which is considered a Level 3 fair value measurement based on each transaction’s expected consideration. The carrying value of the Argentina, Japan and U.K. disposal groups exceeded their fair value, less costs to sell, and as a result, the Company recognized non-recurring impairment charges. The aggregate pre-tax loss of $8.3 billion associated with the divestiture of these operations in the Walmart International segment was recorded in other gains and losses in the Consolidated Statements of Income for the year ended January 31, 2021 and included these impairment charges as well as a $2.3 billion charge related to the Asda pension plan. These impairment charges include the anticipated release of non-cash cumulative foreign currency translation losses associated with the disposal groups. Other impairment charges for assets measured at fair value on a nonrecurring basis during fiscal 2021 were immaterial. For the fiscal year ended January 31, 2020, the Company recorded impairment charges related to assets measured at fair value on a non-recurring basis primarily related to the following:

These impairment charges were classified in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Other impairment charges for assets measured at fair value on a nonrecurring basis during fiscal 2020 were immaterial. For the fiscal year ended January 31, 2019, the Company sold the majority stake in Walmart Brazil during fiscal 2019 as discussed in Note 12. The assets of the disposal group totaled $3.3 billion and were comprised of $1.0 billion in current assets, $1.6 billion in property and equipment and property under capital lease and financing obligations, net, and $0.7 billion of other long-term assets. When measured as held for sale, these assets were fully impaired as the carrying value of the disposal group exceeded the fair value, less costs to sell and contributed to a pre-tax net loss of $4.8 billion in the Walmart International segment, which was recorded in other gains and losses in the Company's Consolidated Statement of Income. Other impairment charges to assets measured at fair value on a nonrecurring basis during fiscal 2019 were immaterial.

(1)

(2)

(3)

The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2021 and 2020, are as follows:

January 31, 2021 January 31, 2020 (Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including amounts due within one year $ 44,309 $ 54,240 $ 49,076 $ 57,769

Note 9. Taxes The components of income (loss) before income taxes are as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 U.S. $ 20,003 $ 17,098 $ 15,875 Non-U.S. 561 3,018 (4,415) Total income before income taxes $ 20,564 $ 20,116 $ 11,460

A summary of the provision for income taxes is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Current:

U.S. federal $ 2,991 $ 2,794 $ 2,763 U.S. state and local 742 587 493 International 1,127 1,205 1,495

Total current tax provision 4,860 4,586 4,751 Deferred:

U.S. federal 2,316 663 (361) U.S. state and local 23 35 (16) International (341) (369) (93)

Total deferred tax expense (benefit) 1,998 329 (470) Total provision for income taxes $ 6,858 $ 4,915 $ 4,281

In December 2017, the Tax Act was enacted and significantly changed U.S. income tax law. Beginning January 2018, the Tax Act reduced the U.S. statutory tax rate and created new taxes focused on foreign-sourced earnings and related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed income ("GILTI"). In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with SAB 118. The Company elected to apply the measurement period provisions of this guidance to certain income tax effects of the Tax Act when it became effective. The provisional measurement period ended in the fourth quarter of fiscal 2019. Management completed the Company's accounting for tax reform in fiscal 2019 based on prevailing regulations and currently available information, and any additional guidance issued by the IRS could impact the aforementioned amounts in future periods. In fiscal 2019, the Company recorded $442 million of additional tax expense related to the Tax Act, included as a component of provision for income taxes.

One-time Transition Tax The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. The Company calculated the transition tax liability and increased the provisional amount by $413 million, with the increase included as a component of provision for income taxes in fiscal 2019.

Effective Income Tax Rate Reconciliation A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax income from continuing operations is as follows:

Fiscal Years Ended January 31, 2021 2020 2019 U.S. statutory tax rate 21.0 % 21.0 % 21.0 % U.S. state income taxes, net of federal income tax benefit 2.9 % 2.2 % 3.0 % Impact of the Tax Act:

One-time transition tax — % — % 3.6 % Deferred tax effects — % — % (0.7) %

Income taxed outside the U.S. (0.1) % (1.0) % (3.4) % Disposal and wind-down of certain business operations 7.1 % — % 6.7 % Valuation allowance 2.3 % 2.3 % 6.3 % Net impact of repatriated international earnings (0.4) % 0.4 % 0.8 % Federal tax credits (0.9) % (0.8) % (1.3) % Enacted change in tax laws — % (1.9) % — % Change in reserve for tax contingencies 0.8 % 2.5 % 0.6 % Other, net 0.6 % (0.3) % 0.8 % Effective income tax rate 33.3 % 24.4 % 37.4 %

The following sections regarding deferred taxes, unremitted earnings, net operating losses, tax credit carryforwards, valuation allowances and uncertain tax positions exclude amounts related to operations classified as held for sale as of January 31, 2021.

Deferred Taxes The significant components of the Company's deferred tax account balances are as follows:

January 31, (Amounts in millions) 2021 2020 Deferred tax assets:

Loss and tax credit carryforwards $ 9,179 $ 9,056 Accrued liabilities 2,582 2,483 Share-based compensation 224 250 Lease obligations 4,450 4,098 Other 589 887

Total deferred tax assets 17,024 16,774 Valuation allowances (8,782) (8,588) Deferred tax assets, net of valuation allowances 8,242 8,186 Deferred tax liabilities:

Property and equipment 4,802 4,364 Acquired intangibles 1,071 1,153 Inventory 1,235 1,414 Lease right of use assets 4,390 3,998 Mark-to-market investments 2,678 723 Other 675 824

Total deferred tax liabilities 14,851 12,476 Net deferred tax liabilities $ 6,609 $ 4,290

The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:

January 31, (Amounts in millions) 2021 2020 Balance Sheet classification Assets: Other long-term assets $ 1,836 $ 1,914

Liabilities: Deferred income taxes and other 8,445 6,204

Net deferred tax liabilities $ 6,609 $ 4,290

Unremitted Earnings Prior to the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings, and repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. As of January 31, 2021, the Company has not recorded approximately $2 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation.

Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances As of January 31, 2021, the Company's net operating loss and capital loss carryforwards totaled approximately $38.4 billion. Of these carryforwards, approximately $26.4 billion will expire, if not utilized, in various years through 2041. The remaining carryforwards have no expiration. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income. The Company had valuation allowances of $8.8 billion and $8.6 billion as of January 31, 2021 and 2020, respectively, on deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation allowance during fiscal 2021 related to valuation allowance builds in multiple markets, as well as releases due to the expiration of underlying deferred tax assets.

Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2021 and 2020, the amount of gross unrecognized tax benefits related to continuing operations was $3.1 billion and $1.8 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $1.7 billion and $1.6 billion as of January 31, 2021 and 2020, respectively. A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Gross unrecognized tax benefits, beginning of year $ 1,817 $ 1,305 $ 1,010 Increases related to prior year tax positions 92 516 620 Decreases related to prior year tax positions (264) (15) (107) Increases related to current year tax positions 1,582 66 203 Settlements during the period (64) (29) (390) Lapse in statutes of limitations (28) (26) (31) Gross unrecognized tax benefits, end of year $ 3,135 $ 1,817 $ 1,305

The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for fiscal 2021, 2020 and 2019. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2014, and 2018 through 2021. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through 2021, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2021. With few exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before fiscal 2012.

Note 10. Contingencies Legal Proceedings The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders. Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the aggregate, may result in a liability material to the Company's financial position, results of operations or cash flows. Asda Equal Value Claims Asda, a wholly-owned subsidiary of the Company which was sold in February 2021, is a defendant in over 40,000 "equal value" claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom ("U.K.") on behalf of current and former Asda store employees, and further claims may be asserted in the future. The claimants allege that the work performed by employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs compared to that of employees working in Asda's warehouse and distribution facilities, and that the difference in pay between these job positions disparately impacts women because more women work in retail stores while more men work in warehouses and distribution facilities, and that the pay difference is not objectively justified. The claimants are requesting differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a prospective basis. In October 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions in Asda's retail stores with those of employees in Asda's warehouse and distribution facilities. Asda appealed the ruling and is awaiting a decision from the Supreme Court of the U.K. Notwithstanding the appeal, claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work performed by employees in Asda's warehouse and distribution facilities. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. Accordingly, the Company can provide no assurance as to the scope and outcomes of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. Following the sale of Asda described in Note 12, the Company will continue to conduct the defense of these claims. While potential liability for these claims remains with Asda, the Company has agreed to provide indemnification with respect to these claims up to a contractually determined amount. Opioids Litigation In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payers, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, but believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. The Company has also been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids. On October 22, 2020, the Company filed a declaratory judgment action in the U.S. District Court for the Eastern District of Texas against the U.S. Department of Justice (the “DOJ”) and the U.S. Drug Enforcement Administration, asking a federal court to clarify the roles and responsibilities of pharmacists and pharmacies as to the dispensing and distribution of opioids under the Controlled Substances Act (the “CSA”). The Company’s action was dismissed and the Company is appealing the decision. On December 22, 2020, the DOJ filed a civil complaint in the U.S. District Court for the District of Delaware alleging that the Company unlawfully dispensed controlled

substances from its pharmacies and unlawfully distributed controlled substances to those pharmacies. The complaint alleges that this conduct resulted in violations of the CSA. The DOJ is seeking civil penalties and injunctive relief. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021. In addition, the Company is the subject of two securities class actions alleging violations of the federal securities laws regarding the Company’s disclosures with respect to opioids, filed in the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021 purportedly on behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. A derivative action was also filed by one of the Company's shareholders in the U.S. District Court for the District of Delaware on February 9, 2021 alleging breach of fiduciary duties against certain of its current and former directors with respect to oversight of the Company’s distribution and dispensing of opioids. The Company cannot reasonably estimate any loss or range of loss that may arise from the various Opioids Litigation and intends to vigorously defend these litigation matters. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

Note 11. Retirement-Related Benefits The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest at 100% for each associate. Participants can contribute up to 50% of their pre-tax earnings, but not more than the statutory limits. Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which they are established. The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2021, 2020 and 2019:

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Defined contribution plans:

U.S. $ 1,290 $ 1,184 $ 1,165 International 200 177 126

Total contribution expense for defined contribution plans $ 1,490 $ 1,361 $ 1,291

Additionally, the Company's subsidiary in the United Kingdom has a sponsored defined benefit pension plan. In October 2019, Asda, Walmart and the Trustee of the Asda Group Pension Scheme (the "Plan") entered into an agreement pursuant to which Asda made a cash contribution of $1.0 billion to the Plan (the "Asda Pension Contribution") which enabled the Plan to purchase a bulk annuity insurance contract for the benefit of Plan participants. The agreement between Asda, Walmart and the Trustee of the Plan contemplates that subsequent to the purchase of the bulk annuity insurance contract by the Plan, each of the Plan participants will be issued an individual annuity contract. The issuer of the individual annuity insurance contracts will be solely responsible for paying each participant’s benefits in full and will release the Plan and Asda from any future obligations. In connection with the sale of Asda, all accumulated pension components of $2.3 billion were included in the disposal group and the estimated pre-tax loss recognized during the fourth quarter of fiscal 2021 as discussed in Note 8 and Note 12.

Note 12. Disposals, Acquisitions and Related Items

The following disposals and acquisitions impact the Company's Walmart International segment. Walmart Argentina In November 2020, the Company completed the sale of Walmart Argentina. As a result, the Company recorded a pre-tax loss of $1.0 billion in the third quarter of fiscal 2021 in other gains and losses in its Consolidated Statement of Income primarily due to the impact of cumulative translation losses on the carrying value of the disposal group. Asda In October 2020, the Company agreed to sell Asda, the Company’s retail operations in the U.K., for net consideration of $9.4 billion, which was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021.  Under the terms of the agreement, the Company agreed to indemnify the buyer for certain legal and tax matters and will retain an investment in Asda that will be accounted for as a debt security. As a result, the Company recognized an estimated pre-tax loss of $5.5 billion in other gains and losses in its Consolidated Statement of Income in the fourth quarter of fiscal 2021. In calculating the loss, the fair value of the disposal group was reduced by approximately $0.8 billion related to the estimated fair value of certain indemnities and other transaction related costs. The Company completed the sale in February 2021, and will deconsolidate the financial statements of Asda in the first quarter of fiscal 2022 and begin recognizing immaterial interest income related to its debt security. In October 2019, Asda, Walmart, and the Trustee of the Plan entered into an agreement which provides for the issuance of individual annuity contracts to each Plan participant and will release the Plan and Asda from any future obligations. Upon classifying the Asda disposal group as held for sale, $2.3 billion of accumulated pension components associated with the expected derecognition of the Asda pension plan were included as part of the loss mentioned above, which will be reclassified from accumulated other comprehensive loss upon completion of the sale in February 2021. Seiyu In November 2020, the Company agreed to sell Seiyu, the Company's retail operations in Japan, for net consideration of $1.2 billion, which was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021. As a result, the Company recognized an estimated pre-tax loss of $1.9 billion in other gains and losses in its Consolidated Statement of Income in the fourth quarter of fiscal 2021. The sale was completed in March 2021 and the Company will deconsolidate the financial statements of Seiyu in the first quarter of fiscal 2022 and account for its retained 15 percent ownership interest as an equity investment. Assets and liabilities held for sale associated with the Asda and Seiyu disposal groups as of January 31, 2021 were as follows:

January 31, (Amounts in millions) 2021 Cash and cash equivalents $ 1,848 Other current assets 2,545 Property and equipment, net 13,193 Operating lease right-of-use assets 4,360 Finance lease right-of-use assets, net 1,395 Goodwill 2,211 Other long-term assets 1,063 Valuation allowance against assets held for sale (7,420)

Total assets held for sale $ 19,195

Current liabilities 6,535 Operating lease obligations, including amounts due within one year 4,245 Finance lease obligations, including amounts due within one year 1,495 Deferred income taxes and other 459

Total liabilities held for sale $ 12,734

Includes inventories, receivables, net and prepaid expenses and other. Includes the $2.3 billion loss associated with the derecognition of the Asda pension plan and $1.3 billion cumulative foreign currency and related net investment hedge and other impacts included within the disposal groups, which will be reclassified from accumulated other comprehensive loss upon closure of each transaction. Includes accounts payable and accrued liabilities.

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Walmart Brazil In August 2018, the Company sold an 80 percent stake of Walmart Brazil to Advent International ("Advent"). Under the terms of the sale, Advent agreed to contribute additional capital to the business over a three-year period and Walmart agreed to indemnify Advent for certain matters. As a result, the Company recorded a pre-tax net loss of $4.8 billion during fiscal 2019 in other gains and losses in the Company's Consolidated Statement of Income. Substantially all of this charge was recorded during the second quarter of fiscal 2019 upon meeting the held for sale criteria. In calculating the loss, the fair value of the disposal group was reduced by $0.8 billion related to an indemnity, for which a liability was recognized upon closing and is recorded in deferred income taxes and other in the Company's Consolidated Balance Sheets. Under the indemnity, the Company will indemnify Advent for certain pre-closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian interbank deposit rate. The Company deconsolidated the financial statements of Walmart Brazil during the third quarter of fiscal 2019 and began accounting for its remaining 20 percent ownership interest using the equity method of accounting. This equity method investment was determined to have no fair value and continues to have no carrying value. Flipkart In August 2018, the Company acquired 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart, an eCommerce marketplace in India, for cash consideration of approximately $16 billion. The acquisition increases the Company's investment in India, a large, growing economy. In the second quarter of fiscal 2020, the Company finalized the valuation of assets acquired and liabilities assumed for the Flipkart acquisition as follows:

• Assets of $24.1 billion, which comprise primarily of $2.2 billion in cash and cash equivalents, $2.8 billion in other current assets, $5.0 billion in intangible assets and $13.5 billion in goodwill. Of the intangible assets, $4.7 billion represents the fair value of trade names, each with an indefinite life, which were estimated using the income approach based on Level 3 unobservable inputs. The remaining $0.3 billion of intangible assets primarily relate to acquired technology with a life of 3 years. The goodwill arising from the acquisition consists largely of anticipated synergies and economies of scale primarily related to procurement and logistics and is not expected to be deductible for tax purposes;

• Liabilities of $3.7 billion, which comprise primarily of $1.8 billion of current liabilities and $1.7 billion of deferred income taxes; and • Noncontrolling interest of $4.3 billion, for which the fair value was estimated using the income approach based on Level 3 unobservable inputs.

Note 13. Segments and Disaggregated Revenue

Segments The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Canada, Central America, Chile, China, India and Mexico. The Company also engaged in operations in Japan and the United Kingdom, both of which were classified as held for sale as of January 31, 2021, and subsequently sold in February 2021 and March 2021, respectively. The Company also operated in Argentina prior to the sale of Walmart Argentina in November 2020 and in Brazil prior to sale of the majority stake of Walmart Brazil in fiscal 2019. Refer to Note 12 for discussion of recent divestitures. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impracticable to segregate and identify revenues for each of these individual products and services. The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce and omni-channel initiatives. The Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as eCommerce and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly

reviewed by its CODM. Beginning with the first quarter in fiscal 2021, the Company revised its definition of eCommerce net sales to include certain pharmacy transactions, and accordingly, revised prior period amounts to maintain comparability. Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before income taxes, is provided in the following table:

(Amounts in millions) Walmart U.S. Walmart

International Sam's Club Corporate and

support Consolidated Fiscal Year Ended January 31, 2021 Net sales $ 369,963 $ 121,360 $ 63,910 $ — $ 555,233 Operating income (loss) 19,116 3,660 1,906 (2,134) 22,548 Interest, net (2,194) Other gains and (losses) 210 Income before income taxes $ 20,564 Total assets $ 113,490 $ 109,445 $ 13,415 $ 16,146 $ 252,496 Depreciation and amortization 6,561 2,633 599 1,359 11,152 Capital expenditures 6,131 2,436 488 1,209 10,264

Fiscal Year Ended January 31, 2020 Net sales $ 341,004 $ 120,130 $ 58,792 $ — $ 519,926 Operating income (loss) 17,380 3,370 1,642 (1,824) 20,568 Interest, net (2,410) Other gains and (losses) 1,958 Income before income taxes $ 20,116 Total assets $ 110,353 $ 105,811 $ 13,494 $ 6,837 $ 236,495 Depreciation and amortization 6,408 2,682 605 1,292 10,987 Capital expenditures 6,315 2,801 525 1,064 10,705

Fiscal Year Ended January 31, 2019 Net sales $ 331,666 $ 120,824 $ 57,839 $ — $ 510,329 Operating income (loss) 17,386 4,883 1,520 (1,832) 21,957 Interest, net (2,129) Loss on extinguishment of debt (8,368) Income before income taxes $ 11,460 Total assets $ 105,114 $ 97,066 $ 12,893 $ 4,222 $ 219,295 Depreciation and amortization 6,201 2,590 639 1,248 10,678 Capital expenditures 6,034 2,661 450 1,199 10,344

Fiscal Years Ended January 31, (Amounts in millions) 2021 2020 2019 Revenues U.S. operations $ 436,649 $ 402,532 $ 392,265 Non-U.S. operations 122,502 121,432 122,140 Total revenues $ 559,151 $ 523,964 $ 514,405

Long-lived assets U.S. operations $ 87,068 $ 86,944 $ 81,144 Non-U.S. operations 22,780 40,105 30,251 Total long-lived assets $ 109,848 $ 127,049 $ 111,395

No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals. Long-lived assets related to operations classified as held for sale are excluded from the table above. Additionally, the Company did not generate material revenues from any single customer.

Disaggregated Revenues In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales related to eCommerce are provided for each segment, which include omni-channel sales, where a customer initiates an order digitally and the order is fulfilled through a store or club.

(Amounts in millions) Fiscal Years Ended January 31, Walmart U.S. net sales by merchandise category 2021 2020

Grocery $ 208,413 $ 192,428 General merchandise 119,406 108,687 Health and wellness 38,522 36,558 Other categories 3,622 3,331

Total $ 369,963 $ 341,004

Of Walmart U.S.'s total net sales, approximately $43.0 billion and $24.1 billion related to eCommerce for fiscal 2021 and fiscal 2020, respectively.

(Amounts in millions) Fiscal Years Ended January 31, Walmart International net sales by market 2021 2020

Mexico and Central America $ 32,642 $ 33,350 United Kingdom 29,234 29,243 Canada 19,991 18,420 China 11,430 10,671 Other 28,063 28,446

Total $ 121,360 $ 120,130

Of Walmart International's total net sales, approximately $16.6 billion and $11.8 billion related to eCommerce for fiscal 2021 and fiscal 2020, respectively.

(Amounts in millions) Fiscal Years Ended January 31, Sam’s Club net sales by merchandise category 2021 2020

Grocery and consumables $ 42,148 $ 35,043 Fuel, tobacco and other categories 7,838 10,571 Home and apparel 7,092 6,744 Health and wellness 3,792 3,372 Technology, office and entertainment 3,040 3,062

Total $ 63,910 $ 58,792

Of Sam's Club's total net sales, approximately $5.3 billion and $3.8 billion related to eCommerce for fiscal 2021 and fiscal 2020, respectively.

Note 14. Subsequent Event Dividends Declared The Board of Directors approved, effective February 18, 2021, the fiscal 2022 annual dividend of $2.20 per share, an increase over the fiscal 2021 dividend of $2.16 per share. For fiscal 2022, the annual dividend will be paid in four quarterly installments of $0.55 per share, according to the following record and payable dates:

Record Date Payable Date March 19, 2021 April 5, 2021 May 7, 2021 June 1, 2021 August 13, 2021 September 7, 2021 December 10, 2021 January 3, 2022

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries. In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems, automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations and increasing monitoring controls. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting and ensure that our internal control environment remains effective. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

Report on Internal Control Over Financial Reporting Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting as of January 31, 2021. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013). Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of January 31, 2021. The Company's internal control over financial reporting as of January 31, 2021, has been audited by Ernst & Young LLP as stated in their report which appears herein.

Changes in Internal Control Over Financial Reporting There has been no change in the Company's internal control over financial reporting as of January 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Please see the information concerning our executive officers contained in "Item 1. Business" herein under the caption "Information About Our Executive Officers," which is included in accordance with the Instruction to Item 401 of the SEC's Regulation S-K. Information required by this Item 10 with respect to the Company's directors and certain family relationships is incorporated by reference to such information under the caption "Proposal No. 1 – Election of Directors" included in our Proxy Statement relating to our 2021 Annual Meeting of Shareholders (our "Proxy Statement"). No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to our Board of Directors since those procedures were disclosed in our proxy statement relating to our 2020 Annual Shareholders' Meeting as previously filed with the SEC. The information regarding our Audit Committee, including our audit committee financial experts and our Reporting Protocols for Senior Financial Officers and our Code of Conduct applicable to all of our associates, including our Chief Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this Item 10 is incorporated herein by reference to the information under the captions "Corporate Governance" and "Proposal No. 3: Ratification of Independent Accountants" included in our Proxy Statement. "Item 1. Business" above contains information relating to the availability of a copy of our Reporting Protocols for Senior Financial Officers and our Code of Conduct and the posting of amendments to and any waivers of the Reporting Protocols for Senior Financial Officers and our Code of Conduct on our website.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is incorporated herein by reference to the information that appears under the caption "Stock Ownership" included in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 is incorporated herein by reference to the information under the caption "Proposal No. 3 – Ratification of Independent Accountants" included in our Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report are as follows:

1. Financial Statements: See the Financial Statements in "Item 8. Financial Statements and Supplementary Data."

2 Financial Statement Schedules: Certain schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements, including the notes thereto.

3. Exhibits: See exhibits listed under part (b) below.

(b) The required exhibits are filed as part of this Form 10-K or are incorporated by reference herein.

3.1 Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on February 1, 2018

3.2 Amended and Restated Bylaws of the Company dated July 23, 2019 are incorporated herein by reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on July 26, 2019

4.1 Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on Form S-3 (File Number 33-51344)

4.2 First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344)

4.3 Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number 333- 101847)

4.4 Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number 333-126512)

4.5 First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post- Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)

4.6 Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration Statement on Form S-3 (File Number 333-201074)

4.7 Third Supplemental Indenture, dated June 26, 2018, between the Company and The Bank of New York Trust Company, N.A., as successor-in- interest to J.P. Morgan Trust Company, National Association, as Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4(S) to Current Report on Form 8-K filed on June 26, 2018.

4.8 Description of Registrant's Securities is incorporated herein by reference to Exhibit 4.8 to the Annual Report on Form 10-K filed on March 20, 2020

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10.1 Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2019 is incorporated by reference to Exhibit 10(a) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2019, filed on March 30, 2019

10.2 Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(b) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018

10.3 Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(c) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018

10.4 Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(d) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018

10.5 Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(e) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018

10.6 Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018 is incorporated by reference to Exhibit 10(f) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2018, filed on March 30, 2018

10.7 Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10- K of the Company for the fiscal year ended January 31, 2011, filed on March 30, 2011

10.7(a) Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2011 is incorporated herein by reference to Exhibit 10.7(a) to the Annual Report on Form 10-K filed on March 20, 2020

10.8 Form of Walmart Inc. Stock Incentive Plan of 2015 Restricted Stock Award, Notification of Award and Terms and Conditions of Award is incorporated herein by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed on March 20, 2020

10.9 Form of Walmart Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based Restricted Stock Unit Notification and Terms and Conditions (January 2020 annual award - all executive officers) is incorporated herein by reference to Exhibit 10.9 to the Annual Report on Form 10-K filed on March 20, 2020

10.10 Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Marc Lore on September 19, 2016, is incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended October 31, 2016, filed on December 1, 2016

10.11 Deferred Contingent Merger Consideration Agreement dated August 7, 2016, between the Company and Marc Lore is incorporated herein by reference to Exhibit 10(v) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017

10.12 Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016, between the Company and Marc Lore is incorporated herein by reference to Exhibit 10(w) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017

10.13 Non-Competition, Non-Solicitation and No-Hire Agreement between the Company and Marc Lore dated September 19, 2016 is incorporated herein by reference to Exhibit 10(x) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017

10.14 Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award (Suresh Kumar) dated July 9, 2019 is incorporated by reference to Exhibit 10.1 to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019

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10.15 Form of Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Suresh Kumar on July 9, 2019 is incorporated by reference to Exhibit 10.2 to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019

10.16 Post Termination Agreement and Covenant Not to Compete between the Company and Suresh Kumar dated June 6, 2019 is incorporated herein by reference to Exhibit 10.16 to the Annual Report on Form 10-K filed on March 20, 2020

10.17 Separation Agreement between the Company and Gregory S. Foran dated December 3, 2019 is incorporated herein by reference to Exhibit 10.17 to the Annual Report on Form 10-K filed on March 20, 2020

10.18* Separation Agreement between the Company and Marc Lore dated January 26, 2021

10.19 Share Issuance and Acquisition Agreement by and Between Flipkart Private Limited and Walmart Inc. dated as of May 9, 2018. is incorporated herein by reference to Exhibit 10.1. to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)

10.20 Counterpart Form of Share Purchase Agreement by and Among Wal-Mart International Holdings, Inc. the shareholders of Flipkart Private Limited identified on Schedule I thereto, Fortis Advisors LLC and Walmart Inc. dated as of May 9, 2018 is incorporated herein by reference to Exhibit 10.2. to the Quarterly Report of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)

21* List of the Company's Significant Subsidiaries

23* Consent of Independent Registered Public Accounting Firm

31.1* Chief Executive Officer Section 302 Certification

31.2* Chief Financial Officer Section 302 Certification

32.1** Chief Executive Officer Section 906 Certification

32.2** Chief Financial Officer Section 906 Certification

99.1* State Court Opioids Litigation Case Citations and Currently Scheduled Trial Dates

101.INS* XBRL Instance Document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith as an Exhibit. ** Furnished herewith as an Exhibit. (C) This Exhibit is a management contract or compensatory plan or arrangement (P) This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided. (1) Certain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item601(b)(4)(iii) of Regulation S-K. The Company hereby

undertakes to furnish to the SEC, upon request, copies of any such instruments.

ITEM 16. FORM 10-K SUMMARY

None.

(C)

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Walmart Inc.

Date: March 19, 2021 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Date: March 19, 2021 By /s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer and Director (Principal Executive Officer)

Date: March 19, 2021 By /s/ Gregory B. Penner Gregory B. Penner Chairman of the Board and Director

Date: March 19, 2021 By /s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: March 19, 2021 By /s/ David M. Chojnowski David M. Chojnowski Senior Vice President and Controller

(Principal Accounting Officer)

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2021

Date: March 19, 2021 By /s/ Cesar Conde Cesar Conde Director

Date: March 19, 2021 By /s/ Timothy P. Flynn Timothy P. Flynn Director

Date: March 19, 2021 By /s/ Sarah Friar Sarah Friar Director

Date: March 19, 2021 By /s/ Carla A. Harris Carla A. Harris Director

Date: March 19, 2021 By /s/ Thomas W. Horton Thomas W. Horton Director

Date: March 19, 2021 By /s/ Marissa A. Mayer Marissa A. Mayer Director

Date: March 19, 2021 By /s/ Steven S Reinemund Steven S. Reinemund Director

Date: By Randall L. Stephenson Director

Date: March 19, 2021 By /s/ S. Robson Walton S. Robson Walton Director

Date: March 19, 2021 By /s/ Steuart L. Walton Steuart L. Walton Director

Signature Page to Walmart Inc. Form 10-K for the Fiscal Year Ended January 31, 2021

Exhibit 10.18

SEPARATION AGREEMENT

This Separation Agreement (this “Agreement”) is made and entered into on January 26, 2021, between Marc Lore (the “Associate”) and Walmart Inc., a Delaware corporation, and its affiliates and subsidiaries (collectively “Walmart”).

RECITALS

WHEREAS, the Associate and Walmart mutually desire that the Associate separate from employment with Walmart; and

WHEREAS, the Associate and Walmart wish to express the understandings and agreements they have reached concerning the Associate’s separation from employment and have set forth those understandings and agreements in this Agreement.

AGREEMENT

NOW, THEREFORE, for good and sufficient consideration, the sufficiency of which the parties acknowledge, the parties agree as follows:

1. Separation Date. The parties acknowledge that the Associate’s employment with Walmart will terminate on January 31, 2021 (the “Separation Date”).

2. Consideration. Subject to compliance with the terms and conditions of this Agreement, including but not limited to Sections 4-9, the Associate shall receive a one-time payment of $36,000, less applicable withholding, to be paid as soon as practicable after the Separation Date, but in no event later than 45 days following the Separation Date. In addition, Walmart and the Associate agree to amend the terms and conditions of certain contingent payments owed to the Associate and to amend the terms and conditions of certain unvested restricted stock units held by the Associate, as follows:

a) Effective as of the Separation Date, Walmart and the Associate hereby amend the Deferred Contingent Merger Consideration Agreement by and between Walmart and the Associate dated August 7, 2016, as amended by that Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016 (as amended, the “Deferred Contingent Merger Consideration Agreement”), as follows:

i. Section 2 of the Deferred Contingent Merger Agreement is hereby deleted and replaced in its entirety as follows:

“All of your Deferred Contingent Merger Consideration will be deferred at the Closing and will be held back by the Acquiror and not paid to you. You will permanently forfeit (except as otherwise provided for below) for no consideration, and the Acquiror will permanently retain, any portion of the Deferred Contingent Merger Consideration that has not become payable to you pursuant to the terms of this Agreement in the event that you violate any of the terms and conditions of that certain “Separation Agreement” by and between you and Walmart dated January 26, 2021, as amended by the Letter Agreement between you and Walmart dated January 26, 2021, or the terms and conditions of that certain “Non-Competition, Non-Solicitation and No-Hire Agreement” by and between you and Walmart dated August 7, 2016, as amended by the Letter Agreement between you and Walmart dated January 26, 2021, (the “Forfeiture Provision”).

The Forfeiture Provision, and Acquiror’s right to retain, will lapse as to each installment of Deferred Contingent Merger Consideration set forth on Annex A attached hereto (the “ Consideration Schedule”) on the corresponding date for such installment set forth on the Consideration Schedule, subject to your compliance with the Separation Agreement through such

installment date, meaning that such installment of Deferred Contingent Merger Consideration will become payable to you on such corresponding installment date, without any interest. Deferred Contingent Merger Consideration that has become payable pursuant to the Consideration Schedule is referred to as “Due Merger Consideration”.

You will receive the payment of your Due Merger Consideration (without interest) on the last day of the calendar month in which such Due Merger Consideration becomes payable in accordance with the Consideration Schedule, provided that if the last day of any such calendar month is not a Business Day, such payment shall be made on the next succeeding Business Day.”

ii. Section 3 of the Deferred Merger Consideration Agreement is hereby deleted in its entirety.

b) Effective as of the Separation Date, Walmart and the Associate amend the terms and conditions of the restricted stock units (“RSUs) set forth in that Share-Settled Restricted Stock Unit Notification and Terms and Conditions by and between Walmart and the Associate dated September 19, 2016 (the “Notification”), as follows:

i. Paragraph 6 of the Notification is hereby deleted and replaced in its entirety as follows:

“Forfeiture Situation. The RSUs that would otherwise vest in whole or in part on the applicable Vesting Date (the “Unvested RSUs”) will not vest and will be immediately forfeited if, prior to the applicable Vesting Date, you violate any of the terms and conditions of that certain “Separation Agreement” by and between you and Walmart dated January 26, 2021, as amended by the Letter Agreement between you and Walmart dated January 26, 2021, or the terms and conditions of that certain “Non-Competition, Non-Solicitation and No-Hire Agreement” by and between you and Walmart dated August 7, 2016, as amended by the Letter Agreement between you and Walmart dated January 26, 2021, (a “Forfeiture Situation”). Upon the occurrence of a Forfeiture Situation, you shall have no further rights with respect to the Unvested RSUs or the underlying Shares.”

ii. Paragraph 7 of the Notification is hereby deleted in its entirety.

iii. Subparagraph D of Paragraph 11 of the Notification is hereby deleted in its entirety.

iv. Subparagraph J of Paragraph 11 of the Notification is hereby deleted and replaced in its entirety as follows:

“No claim or entitlement to compensation or damages shall arise from forfeiture of the Unvested RSUs and the Shares underlying the Unvested RSUs pursuant to Paragraph 6 above.”

c) Walmart and the Associate agree that the terms and conditions of the Unvested RSUs are governed by the Notification, as amended by this Agreement, and that the Notification, as amended by this Agreement, amends the Offer Letter from Walmart to the Associate dated August 7, 2016 as follows:

i. Paragraph III shall have no further force and effect.

d) Except as expressly modified by this Agreement, the terms of the Deferred Contingent Merger Agreement, as amended; the Notification, as amended; the Offer Letter and any other agreements between Walmart and the Associate, shall remain in full force and effect.

3. Other Benefits. After the Separation Date, Walmart will provide the Associate certain benefits in accordance with the terms and conditions of the Walmart plan or program pursuant to which such benefits were issued:

b) Incentive Payments and Performance Shares. The Associate must remain employed through January 31, 2021 in order to be eligible for, and if the Associate remains employed through January 31, 2021, shall receive, a cash incentive payment and a performance equity payout for the fiscal year ending January 31, 2021. The Associate will not be eligible for a cash incentive payment or a performance equity payout for the fiscal year ending January 31, 2022 or any subsequent fiscal year.

c) Equity Grants. Except as provided by Section 2 above, all unvested equity grants (e.g., stock options, performance shares, restricted stock, etc.) under Walmart’s stock incentive plans as of the Separation Date will be cancelled.

d) Other Payments and Benefits. The Associate is not entitled to any other payments or benefits not provided for in this Agreement, unless the payment or benefit is provided for through the Associate’s participation in an established Walmart-sponsored plan or program. In addition, unless otherwise provided for in the plan, the Associate’s participation in all Walmart-sponsored benefit plans or programs will end on the Separation Date.

e) Section 409A. Notwithstanding anything contained herein or in any Walmart-sponsored plan to the contrary, the Associate acknowledges that any and all distributions of benefits under any Walmart deferred compensation plan which is subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), shall not commence until six (6) months after the Associates incurs a “separation from service” as defined in Section 409A.

4. Releases.

a) Release and Waiver of Claims. In exchange for, and in consideration of, the payments, benefits, and other commitments described above, the Associate releases Walmart from any and all claims of any kind, whether known or unknown, that arose up to and including the date the Associate signs this Agreement (including claims arising out of or relating to the termination of the Associate’s employment with Walmart). This waiver and release of claims includes any claims the Associate may have under the laws of any foreign jurisdiction. For illustration purposes and not as a limitation, the claims the Associate is releasing include any claims for damages, costs, attorneys’ fees, expenses, compensation or any other monetary recovery. Further, the Associate specifically waives and releases all claims he may have that arose up to and including the date the Associate signs this Agreement (including claims arising out of or relating to the termination of the Associate’s employment with Walmart) regarding veteran’s status; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Equal Pay Act; the Americans With Disabilities Act of 1990, as amended; the Rehabilitation Act of 1973, as amended; the Age Discrimination in Employment Act, as amended (“ADEA”); the Family and Medical Leave Act (“FMLA”), as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Genetic Information Non-Discrimination Act; the Immigration Reform and Control Act, as amended; the Workers Adjustment and Retraining Notification Act (“WARN”), as amended; any applicable state WARN-like statute; the Occupational Safety and Health Act, as amended; the Sarbanes-Oxley Act of 2002; the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act of 1974, as amended; the National Labor Relations Act; the Fair Labor Standards Act (FLSA); the Massachusetts Overtime Law; the Massachusetts Payment of Wages Law; the Massachusetts Fair Employment Practices Act; the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq.; the New Jersey Law Against Discrimination; the West Virginia Human Rights Act, W. Va. CSR §77-6-3; the California Fair Employment and Housing Act; the California Family Rights Act; the California Labor Code; the Wage Orders of the California Industrial Welfare Commission; the California Unfair Business Practices law (Cal. Bus. and Prof. Code Sec. 17200, et seq.); California WARN

(CA Labor Code Section 1400-1408); and all state or local statutes, ordinances, or regulations regarding anti-discrimination employment laws, as well as all matters arising under federal, state, or local law involving any tort, employment contract (express or implied), public policy, wrongful discharge, retaliation, and leaves of absence claims; and any claims related to emotional distress, mental anguish, benefits, or any other claim brought under local, state or federal law.

b) Release of Age Discrimination Claims. With respect to the Associate’s release and waiver of claims under the ADEA as described in Section 4(a) above, the Associate agrees and acknowledges the following:

i. The Associate has reviewed this Agreement carefully and understands its terms and conditions. The Associate has been advised, and by this Agreement is again advised, to consult with an attorney of the Associate’s choice prior to entering into this Agreement.

ii. The Associate shall have twenty-one (21) days from receipt of this Agreement to consider and execute the Agreement by fully executing it below and returning it to Walmart; otherwise, the terms and provisions of this Agreement become null and void. The Associate agrees that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original review period.

iii. The Associate will have a period of seven (7) calendar days after Associate signs the Agreement during which to revoke the Agreement. The Associate must deliver written notice of revocation during the seven (7) day period to Jackie Telfair, Senior Vice President, Global Total Rewards, or to her successor. Any revocation within this period must expressly state, “I hereby revoke my Agreement,” and must be postmarked within seven (7) calendar days of the Associate’s execution of this Agreement. This Agreement will not become effective or enforceable until the revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday, then the revocation period will not expire until the next following day that is not a Saturday, Sunday, or legal holiday.

iv. The Associate knows that he is waiving his rights under the ADEA and does so voluntarily. The Associate realizes the waiver does not include any ADEA rights which may arise after the Associate signs this Agreement. By signing this Agreement, the Associate acknowledges that he is receiving consideration that the Associate would not otherwise be entitled to receive.

v. No payments pursuant to Section 2 of this Agreement shall occur or be effective until after the Associate has executed and delivered this Agreement to Walmart, the above-mentioned seven-day revocation period has expired, and the Associate has separated from employment as set forth in Section 1 of this Agreement.

c) Limitation of Release. Nothing in this Agreement releases Associate’s claims for workers’ compensation or unemployment benefits. Nothing in this Agreement prevents Associate from pursuing administrative claims with or otherwise assisting government agencies, including engaging in or participating in an investigation or proceeding conducted by, or providing information to, the EEOC, NLRB, the Securities and Exchange Commission, or any federal, state or local agency charged with the enforcement of employment or other laws. Associate acknowledges and agrees, however, that the separation payments set forth in Section 2 of this Agreement are in full satisfaction of any amounts to which the Associate might be entitled from any claim against Walmart released under this Section 4, and that, as a result of this release and waiver of claims, the Associate is not entitled to receive any additional individual monetary relief from Walmart. This release and waiver of claims will not apply to rights or claims that may arise after the effective date of this Agreement. This Agreement is not intended to release and does not release or include claims that the law states cannot be waived by private agreement, nor does it prevent the Associate from receiving any whistleblower or similar award. Nothing in this

subparagraph or in this Agreement is intended to limit or restrict any rights the Associate may have to enforce this Agreement or challenge the Agreement’s validity under the ADEA, or any other right that cannot, by express and unequivocal terms of law, be limited, waived, or extinguished by settlement. Further, nothing in this Agreement is intended to waive the Associate’s right to vested benefits under any Walmart- sponsored benefit plan or program.

d) Agreement not to File Suits. By signing this Agreement, Associate agrees not to file a lawsuit to assert any claims released under this Section 4. Associate also agrees that if Associate breaches this provision, Associate will be liable for all costs and attorneys’ fees incurred by any person against whom claims were released under Section 4(a) resulting from such action if the court in such action affirmatively determines that the person that incurred such costs and attorneys’ fees is the prevailing party, taking into account all claims made by any party to such action.

5. Confidential Information. The Associate acknowledges that in the course of his employment with Walmart, he has had access to Confidential Information (as defined below) and that he may continue to have access to Confidential Information after the Separation Date by virtue of providing certain consulting services to Walmart. The Associate agrees that he will not at any time, whether prior to or subsequent to the Separation Date, directly or indirectly use any Confidential Information obtained during the course of his employment with Walmart or otherwise, except as previously authorized by Walmart in writing. Additionally, the Associate shall not at any time, whether prior to or subsequent to the Separation Date, disclose any Confidential Information obtained during the course of his employment with Walmart or otherwise, unless such disclosure is (a) previously authorized by Walmart in writing, (b) required by applicable legal proceeding, or (c) as permitted by Section 17(a) of this Agreement. In addition, the Associate shall not disclose any information for which Walmart holds a legally recognized privilege against disclosure or discovery (“Privileged Information”) or take any other action that would cause such privilege to be waived by Walmart. With respect to (b) above only, in the event that the Associate is required by applicable legal proceeding (including, without limitation, by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or other legal proceeding) to disclose any Confidential Information or Privileged Information, the Associate shall provide Walmart with prompt prior written notice of such requirement. The Associate shall also, to the extent legally permissible, provide Walmart as promptly as practicable with a description of the information that may be required to be disclosed (and, if applicable, the text of the disclosure itself) and cooperate with Walmart (at Walmart’s expense) to the extent Walmart may seek to limit such disclosure, including, if requested, by taking all reasonable steps to resist or narrow any such disclosure or to obtain a protective order or other remedy with respect thereto. If a protective order or other remedy is not obtained and disclosure is legally required, the Associate shall (a) disclose such information only to the extent required in the written opinion of the Associate’s legal counsel, and (b) give advance notice to Walmart of the information to be actually disclosed as far in advance as is reasonably possible. In any such event, the Associate and his legal counsel shall use reasonable commercial efforts to ensure that all Confidential Information or Privileged Information that is so disclosed is accorded confidential treatment by the recipient thereof.

“Confidential Information” means information pertaining to the business of Walmart, and includes, without limitation, information regarding processes, suppliers, consultants and service providers (including the terms, conditions, or other business arrangements with suppliers, consultants and service providers), advertising, marketing, and external and internal communications plans and strategies, labor matters and strategies, government relations plans and strategies, litigation matters and strategies, Foreign Corrupt Practices Act investigatory and compliance information and strategies, tax matters and strategies, community relations and public affairs plans and strategies, charitable giving plans and strategies, sustainability plans and strategies, profit margins, seasonal plans, goals, objectives, projections, compilations, and analyses regarding Walmart’s business, salary, staffing, compensation, promotion, diversity objectives and other employment-related data, and any know-how, techniques, practices or non public technical information regarding the business of Walmart. “Confidential Information” does not include information that is or becomes generally available to the public other than as a result of a disclosure by the Associate or any of the Associate’s representatives or information that Walmart has authorized the Associate to disclose.

As requested by Walmart, the Associate shall return to Walmart all documents, programs, software equipment, files, statistics, and other written or electronic business materials, including any and all copies both paper and electronic, concerning Walmart.

6. Cooperation.

a) Cooperation with Walmart. The Associate may from time to time after the Separation Date be called upon to testify or provide information to Walmart in connection with employment-related and other legal proceedings against Walmart. The Associate will, upon reasonable written notice, provide reasonable assistance to, and will cooperate with, Walmart in connection with any litigation, arbitration, investigations, or judicial or non-judicial administrative proceedings that may exist or may subsequently arise regarding events about which the Associate has material knowledge and was materially involved. If the assistance is at Walmart’s request, Walmart will compensate the Associate for all reasonable costs and expenses.

b) Cooperation with Governmental Authorities. From time to time, Walmart may be under investigation by various governmental authorities. Walmart encourages the Associate to cooperate with all such investigations. If such assistance is requested by a governmental authority, Walmart shall reimburse the Associate for all reasonable costs and expenses.

c) Board Membership. Effective as of the Separation Date, the Associate hereby resigns from any boards of directors, boards of managers, and similar governing boards of any Walmart entities of which the Associate may be a member, resigns as an officer of any and all Walmart entities, resigns as Walmart’s representative on any external trade, industry or similar associations, and agrees to sign any documents acknowledging such resignations, as may be requested by Walmart.

7. Non-disclosure and Non-disparagement. The Associate agrees, acknowledges and confirms that he has complied with and will continue to comply with the most recent Non-Disclosure and Restricted Use Agreement between the Associate and Walmart (the “Non-Disclosure Agreement”). The Associate further agrees, promises and covenants that he shall not directly or indirectly at any time, whether prior to or subsequent to the Separation Date: a) discuss or disclose the existence or terms of this Agreement with anyone, except as permitted below; or b) make disparaging comments regarding Walmart, its business strategies and operations, and any of Walmart’s officers, directors, associates, and shareholders, except that nothing herein shall prevent the Associate from providing truthful information and testimony to government authorities, nor shall it prevent the Associate from providing truthful information and testimony in any legal proceedings or as otherwise provided by law. The Associate agrees and understands that the terms of this Agreement are CONFIDENTIAL including the existence, fact and terms of this Agreement and the fact that money was paid to the Associate. Except as permitted by Section 17(a) below, the Associate warrants to have not disclosed the above to anyone prior to signing and will not disclose to anyone the existence, fact and terms of this Agreement, except for the Associate’s spouse, attorney, and financial advisor, all of whom shall be informed of the confidential nature of this Agreement and agree to abide by its terms.

8. Code of Conduct and Compliance with Laws. The Associate has read and understands the provisions of Walmart’s Code of Conduct and agrees to abide by the provisions thereof to the extent applicable to former Walmart associates. The Associate further acknowledges that the Associate has complied with the applicable Code of Conduct, as well as with all applicable laws, rules and regulations, during the Associate’s employment with Walmart. The discovery of a failure to abide by the Code of Conduct and/or comply with all applicable laws, rules or regulations, whenever discovered, shall, in addition to any other remedies under this Agreement, entitle Walmart to suspend and recoup any payments paid or due under this Agreement or any other agreements between the parties.

9. Covenant not to Compete. The Associate agrees, promises, and covenants that:

a) Until September 19, 2023, the Associate will not, except as permitted in the accompanying Letter Agreement between the parties, dated January 26, 2021 (the “Letter Agreement”) directly or

indirectly, including on behalf of any individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization, or other entity:

i. own, manage, operate, finance, join, control, advise, consult, render services to, have a current or future interest in, or participate in the ownership, management, operation, financing, or control of, or be employed by or connected in any manner with, any Competing Business as defined below in Section 9.b(i), and/or any Global Retail Business as defined below in Section 9.b(ii); and/or

ii. solicit for employment, hire or offer employment to, or otherwise aid or assist any person or entity other than Walmart in soliciting for employment, hiring, or offering employment to, any Officer, Officer Equivalent or Management Associate of Walmart, or any of its subsidiaries or affiliates.

b) For purposes of this Agreement:

i. the term “Competing Business” shall include any general or specialty retail, grocery, wholesale membership club, or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates that: (a) sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined) or has plans to sell goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined) within twelve (12) months following Associate’s last day of employment with Walmart in the United States; and (b) has gross annual consolidated sales volume or revenues attributable to its retail operations (whether through physical locations, via the internet or combined) equal to or in excess of U.S.D. $7 billion.

ii. the term “Global Retail Business” shall include any general or specialty retail, grocery, wholesale membership club, or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates, that: (a) in any country or countries outside of the United States in which Walmart conducts business or intends to conduct business in the twelve (12) months following Associate’s last day of employment with Walmart, sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined); and (b) has gross annual consolidated sales volume or revenues attributable to its retail operations (whether through physical locations, via the internet or combined) equal to or in excess of U.S.D. $7 billion in any country pursuant to b(ii)(a) or in the aggregate equal to or in excess of U.S.D. $7 billion in any countries taken together pursuant to b(ii)(a) when no business in any one country has annual consolidated sales volume or revenues attributable to its retail operations equal to or in excess of U.S.D. $7 billion.

c) For purposes of this Agreement and the Letter Agreement, the term “Management Associate” shall mean any domestic or international associate holding the title of “manager” or above.

d) For purposes of this Agreement and the Letter Agreement, the term “Officer” shall mean any domestic Walmart associate who holds a title of Vice President or above.

e) For purposes of this Agreement and the Letter Agreement, the term “Officer Equivalent” shall mean any non-U.S. Walmart associate who Walmart views as holding a position equivalent to an officer position, such as managers and directors in international markets, irrespective of whether such managers and directors are on assignment in the U.S.

Except as expressly set forth in this Agreement and the Letter Agreement, all terms and conditions of the Non-Compete Agreement remain in full force and effect.

10. Affirmation. Other than may be provided for in any class or collective action that was pending against Walmart as of the date of this Agreement, the Associate states and acknowledges that he has been paid and/or received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits are due him, except as provided for in this Agreement. The Associate also states and confirms that he has reported to Walmart any and all work-related injuries incurred by him during his employment by Walmart. Further, Associate acknowledges that he has been properly provided any leave of absence because of the Associate’s or the Associate’s family member’s health condition and has not been subjected to any improper treatment, conduct, or actions due to a request for or taking such leave. Additionally, Associate specifically acknowledges that he has not made any request for leave pursuant to FMLA which was not granted; and, Walmart has not interfered in any way with Associate’s efforts to take leave pursuant to FMLA.

11. Advice of Counsel. The Associate has been advised, and by this Agreement is again advised, to consider this Agreement carefully and to review it with legal counsel of the Associate’s choice. The Associate understands the provisions of this Agreement and has been given the opportunity to seek independent legal advice before signing this Agreement.

12. Non-Admission. The parties acknowledge that the terms and execution of this Agreement are the result of negotiation and compromise, that this Agreement is entered into in good faith, and that this Agreement shall never be considered at any time or for any purpose as an admission of liability by Walmart or that Walmart acted wrongfully with respect to the Associate, or any other person, or that the Associate has any rights or claims whatsoever against Walmart arising out of or from the Associate’s employment. Walmart specifically denies any liability to the Associate on the part of itself, its employees, its agents, and all other persons and entities released herein.

13. Return of Company Property. As soon as practical after the Separation Date, the Associate will return all Walmart-owned property including but not limited to any computers, hand-held computing devices (e.g., iPhone, iPad, Surface, etc.), cell phones, videoconferencing equipment (e.g., Tandberg), documents, files, computer files, keys, ID’s, credit cards, and Associate and spouse discount cards, if any, except for such property that Associate and Walmart agree Associate needs to perform his post-employment consulting services for Walmart.

14. Taxes. The Associate acknowledges and agrees that the Associate is responsible for paying all taxes and related penalties, and interest on the Associate’s income. Walmart will withhold taxes, including from amounts or benefits payable under this Agreement, and report them to tax authorities, as it determines it is required to do by law. Although the payments under this Agreement are intended to comply with the requirements of Section 409A and Walmart intends to administer this Agreement so that it will comply with Section 409A, Walmart has not warranted to the Associate that taxes and penalties will not be imposed under Section 409A or any other provision of federal, state, local, or non-United States law.

15. Remedies for Breach. The parties shall each be entitled to pursue all legal and equitable rights and remedies to secure performance of their respective obligations and duties under this Agreement, and enforcement of one or more of these rights and remedies will not preclude the parties from pursuing any other rights or remedies. Associate acknowledges that a breach of the provisions of Sections 5, 7, and 9 above could result in substantial and irreparable damage to Walmart’s business, and that the restrictions contained in Sections 5, 7, and 9 are a reasonable attempt by Walmart to safeguard its rights and protect its confidential information. Associate expressly agrees that upon a breach or a threatened breach of the

provisions of Sections 5, 7, and 9, Walmart shall be entitled to injunctive relief to restrain such violation, and Associate hereby expressly consents to the entry of such temporary, preliminary, and/or permanent injunctive relief, as may be necessary to enjoin the violation or threatened violation of Sections 5, 7, and 9. If a court of law determines that Associate breached Sections 5, 7, or 9 of this Agreement, the Associate agrees to indemnify and hold Walmart harmless from and against any and all loss, cost, damage, or expense, including, but not limited to, attorneys’ fees incurred by Walmart and to return immediately to Walmart all of the monies previously paid to the Associate by Walmart under this Agreement; provided, however, that such repayment shall not constitute a waiver by Walmart of any other remedies available under this Agreement or by law, including injunctive relief. In addition to any other remedies at law or at equity, if at any time the Associate fails to comply with the terms, provisions or conditions of this Agreement, the Associate acknowledges that Walmart is not obligated to make any further Transition Payments to the Associate.

16. Recoupment. Notwithstanding any other provision of this Agreement to the contrary, Associate agrees and acknowledges that all amounts and benefits provided under this Agreement and all compensation paid during the course of Associate’s employment with Walmart will be subject to the recoupment policies adopted by the Company from time to time, and including any policy adopted pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other law or the listing requirements of any national securities exchange on which the common stock of Walmart may be listed.

17. Miscellaneous.

b) Entire Agreement. This Agreement, along with the Non-Disclosure Agreement, the Deferred Contingent Merger Consideration Agreement, as amended herein, the Notification, as amended herein, the Non-Competition Agreement, as amended herein, the Offer Letter, as amended herein, the Letter Agreement, and the Consulting Agreement between Mr. Lore and Walmart (the “Consulting Agreement”) (collectively, the “Lore Agreements”) contains the entire agreement and understanding of the parties, and no prior statements by either party will be binding unless contained in the Lore Agreements or incorporated by reference in the Lore Agreements. The parties agree that no prior statements by either party will be binding unless contained in this Agreement or the Non-Disclosure Agreement. In addition, to be binding on the parties, any handwritten changes to this Agreement must be initialed and dated by the Associate and the authorized representative of Walmart whose signature appears below.

c) Conflict with Other Agreements and Exhibits. If the terms and provisions of this Agreement or the Letter Agreement conflict with the terms and provisions of any of the other aforementioned Lore Agreements or any exhibits to any of the Lore Agreements, the terms and provisions of this Agreement and the Letter Agreement will govern.

e) Section Titles. Section titles are informational only and are not to be considered in construing this Agreement.

f) Successors and Assigns. The parties acknowledge that this Agreement will be binding on their respective successors, assigns, and heirs.

g) Governing Law and Dispute Resolution. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to Delaware law concerning the conflicts of law. The Parties further agree that any action relating to the interpretation, validity, or enforcement of this Agreement shall be brought in the of the courts of the State of Delaware, County of New Castle, or in the United States District Court of Delaware, and the parties hereby expressly consent to the jurisdiction of such courts and agree that venue is proper in those courts. The parties do hereby irrevocably: (a) submit themselves to the personal jurisdiction of such courts; (b) agree to service of such courts’ process upon them with respect to any such proceeding; (c) waive any objection to venue laid therein; and (d) consent to service of process by registered mail, return receipt requested. Associate further agrees that in any claim or action involving the execution, interpretation, validity, or enforcement of this Agreement, Associate will seek satisfaction exclusively from the assets of Walmart and will hold harmless all of Walmart’s individual directors, officers, employees, and representatives.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

MARC LORE WALMART, INC.

/s/ Marc Lore By: /s/ Jackie Telfair Name: Jackie Telfair Title: SVP, Global Total Rewards

Exhibit 21

Significant Subsidiaries of Walmart Inc.

Subsidiary Organized or Incorporated Percent of Equity Securities

Owned Name Under Which Doing Business Other Than

Subsidiary's Wal-Mart Stores East, LP Delaware, U.S. 100% Walmart Wal-Mart Stores Texas, LLC Delaware, U.S. 100% Walmart Wal-Mart Property Company Delaware, U.S. 100% NA Wal-Mart Real Estate Business Trust Delaware, U.S. 100% NA Sam's West, Inc. Arkansas, U.S. 100% Sam's Club Sam's East, Inc. Arkansas, U.S. 100% Sam's Club Sam's Property Company Delaware, U.S. 100% NA Sam's Real Estate Business Trust Delaware, U.S. 100% NA ASDA Group Limited England 100% ASDA Wal-Mart de Mexico, S.A.B. de C.V. Mexico 71% Walmex Wal-Mart Canada Corp. Canada 100% Walmart Flipkart Private Limited Singapore 83% Flipkart Wal-Mart Japan Holdings K.K. Japan 100% Seiyu Walmart Chile S.A. Chile 100% Walmart Chile Massmart Holdings Ltd. South Africa 53% Massmart Qomolangma Holdings Ltd. Cayman Islands 100% NA

(1) The Company sold its retail operations in the U.K and Japan in February and March of 2021, respectively. (2) The Company owns substantially all of Walmart Chile.

(1)

(2)

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Shareholder Investment Plan of Wal-Mart Stores, Inc. Form S-3 File No. 333-02089 (2) Wal-Mart Stores, Inc. Director Compensation Plan Form S-8 File No. 333-24259 (3) Wal-Mart Stores, Inc. 401(k) Retirement Savings Plan Form S-8 File No. 333-29847 (4) Wal-Mart Puerto Rico, Inc., 401(k) Retirement Savings Plan Form S-8 File No. 333-44659 (5) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996 Form S-8 File No. 333-62965 (6) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and restated the 2010 plan Form S-8 File No. 333-60329 (7) Wal-Mart Profit Sharing and 401(k) Plan Form S-8 File No. 333-109421 (8) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996 Form S-8 File No. 333-109417 (9) Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan Form S-8 File No. 333-109414

(10) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and restated the 2010 plan Form S-8 File No. 333-128204 (11) Walmart Deferred Compensation Matching Plan Form S-8 File No. 333-178717 (12) Wal-Mart Stores, Inc. Common Stock Form S-3 ASR File No. 333-178385 (13) Walmart 401(k) Plan Form S-8 File No. 333-187577 (14) Wal-Mart Stores, Inc. Associate Stock Purchase Plan Form S-8 File No. 333-214060 (15) Debt Securities of Walmart Inc. Form S-3 ASR File No. 333-251124 (16) Walmart Inc. 2016 Associate Stock Purchase Plan Form S-8 File No. 333-228631 (17) Walmart Inc. Stock Incentive Plan of 2015 Form S-8 File No. 333-228635 (18) Walmart 401(k) Plan Form S-8 File No. 333-233682

of our reports dated March 19, 2021, with respect to the consolidated financial statements of Walmart Inc. and the effectiveness of internal control over financial reporting of Walmart Inc., included in this Annual Report (Form 10-K) of Walmart Inc. for the year ended January 31, 2021.

/s/ Ernst & Young LLP

Rogers, Arkansas March 19, 2021

Exhibit 31.1

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 19, 2021 /s/ C. Douglas McMillon

C. Douglas McMillon President and Chief Executive Officer

Exhibit 31.2

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 19, 2021 /s/ M. Brett Biggs

M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon, President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 19, 2021.

/s/ C. Douglas McMillon C. Douglas McMillon President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, M. Brett Biggs, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 19, 2021.

/s/ M. Brett Biggs M. Brett Biggs Executive Vice President and Chief Financial Officer

Exhibit 99.1 State Court Opioids Litigation Case Citations and Currently Scheduled Trial Dates A. Case Citations For Pending State Court Cases as of March 5, 2021 State of West Virginia ex rel. Morrisey v. Walmart, Inc., W. Va. Cir. Ct., Putnam Cty., 8/18/2020; City of Fernley v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Lyon Cty., 7/30/2020; City of W. Wendover v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Elko Cty., 7/30/2020; Churchill Cty. v. Teva Pharm. USA. Inc., et al., Nev. Dist. Ct., Churchill Cty., 7/29/2020; Carson City v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Carson City, 7/29/2020; Douglas Cty. v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Douglas Cty., 7/29/2020; City of Sparks v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Washoe Cty., 7/28/2020; Esmeralda Cty. v. Teva Pharm. USA Inc., et al., Nev. Dist. Ct., Esmeralda Cty.; Cty. of Chester v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 6th Jud. Cir., 7/28/2020; Cty. of Marlboro v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 4th Jud. Cir., 7/28/2020; Washoe Cty. v. Teva Pharm. USA, Inc., et al., Nev. Dist. Ct., Washoe Cty., 7/24/2020; Pulaski Cty., et al. v. Walmart Inc., et al., Ark. Cir. Ct., Jefferson Cty., 7/21/2020; Cty. Comm’rs of Grant Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 6/17/2020; Cty. Comm’n of Mineral Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 6/17/2020; Cty. Comm’n of Monroe Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 6/17/2020; Miss. Baptist Med. Ctr. Inc., et al. v. Amneal Pharm., LLC, et al., Miss. 1st Jud. Dist., Hinds Cty. Cir. Ct., 5/15/2020; City of Holly Springs v. Johnson & Johnson, et al., Miss. 3d Jud. Dist., Marshall Cty. Cir. Ct., 5/13/2020; City of Fairmont v. Allergan PLC, et al., W. Va. Cir. Ct., Kanawha Cty., 4/30/2020; Lester E. Cox Med. Ctrs., et al. v. Amneal Pharm. LLC, et al., Mo. Cir. Ct., Greene Cty., 4/14/2020; City of Beckley v. Allergan PLC, et al., W. Va Cir. Ct., Kanawha Cty., 3/3/2020; City of Kingston v. Teva Pharm. USA, Inc., et al., N.Y. Sup. Ct., Suffolk Cty., 2/27/2020; Mayor Elmer Ray Spence ex rel. Town of Delbarton v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Cty. Comm’n of Tucker Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Cty. Comm’n of Hardy Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Sheila Kessler ex rel. Town of Matewan v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Virginia Ann Martin ex rel. City of Mullens v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Thomas Evans, Jr. ex rel. Town of Oceana v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Cty. Comm’n of Preston Cty. v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Maureen Lasky-Setchell ex rel. City of Belington v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Brian Billings ex rel. City of Point Pleasant v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Gary A. Miller ex rel. Town of Junior v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor David Wood ex rel. City of Moundsville v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Mayor Harold E. Miller ex rel. City of Weirton v. Cardinal Health Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 2/20/2020; Cty. of Newberry v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 12/13/2019; City of Clarksburg v. Allergan PLC, et al., W. Va. Cir. Ct., Kanawha Cty., 11/20/2019; City of Richwood v. Allergan PLC, et al., W. Va. Cir. Ct., Kanawha Cty., 11/20/2019; City of White Sulphur Springs v. Allergan PLC, et al., W. Va. Cir. Ct., Kanawha Cty., 11/20/2019; Cty. Bd. of Arlington Cty. v. Mallinckrodt PLC, et al., Va. Cir. Ct., Arlington Cty., 10/18/2019; Mobile Cty. Bd. of Health & Family Oriented Primary Health Care Clinic v. Sackler, et al., Ala. Cir. Ct., Mobile Cty., 10/15/2019; Pinal Cty. v. Actavis PLC, et al., Ariz. Super. Ct., Maricopa Cty., 9/25/2019; City of Prescott v. Allergan PLC, et al. Ariz. Super. Ct., Maricopa Cty., 9/23/2019; Fla. Health Scis. Ctr., Inc., et al. v. Sackler, et al., Fla. Cir. Ct., 17th Jud. Cir., Broward Cty., 9/16/2019; State of Mississippi v. Cardinal Health, Inc., et al., Miss. 1st Jud. Dist., Hinds Cty. Cir. Ct., 9/12/2019; DCH Health Care Auth. v. Purdue Pharma L.P., et al., Ala. Cir. Ct., Conecuh Cty., 9/3/2019; City of Myrtle Beach v. Purdue Pharma L.P., et al., S.C. Ct. Com. Pl., 15th Jud. Cir., 8/29/2019; State of South Dakota ex rel. Ravnsborg v. Purdue Pharma L.P., et al., S.D. Cir. Ct., 6th Jud. Cir., Hughes Cty., 8/27/2019; Town of Canton v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Chicopee v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Framingham v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Gloucester v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Haverhill v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Lynnfield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Natick v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Salem v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Springfield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Wakefield v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; City of Worcester v. Purdue Pharma L.P., et al., Mass. Super. Ct., Suffolk Cty., 8/23/2019; Town of Summerville v. Purdue Pharma L.P., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 8/23/2019; City of N. Las Vegas v. Purdue Pharma, L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; City of Las Vegas v. Purdue Pharma, L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; City of Henderson v. Purdue Pharma, L.P., et al., Nev. Dist. Ct., Clark Cty., 8/22/2019; Town of Mt. Pleasant v. Purdue Pharma L.P., et al., S.C. Ct. Com. Pl., 9th Jud. Cir., 8/16/2019; City of Charleston v. Purdue Pharma L.P., et al., S.C. Ct. Com. Pl., 9th Jud. Cir., 8/15/2019; Wasatch Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Cache Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Sevier Cty., et al. v. Purdue Pharma L.P., et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Washington Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Uintah Cty., et al. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Tooele Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Summit Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Weber Cty. v. Sackler, et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; Salt Lake Cty. v. Purdue Pharma L.P., et al., Utah Dist. Ct., 3d Dist., Summit Cty., 7/26/2019; City of N. Charleston v. Purdue Pharma L.P., et al., S.C. Ct. Com. Pl., 9th Jud. Cir., 7/26/2019; Mayor Peggy Knotts Barney ex rel. City of Grafton v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 7/2/2019; Mayor Philip Bowers ex rel. City of Philippi v.

Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 7/2/2019; Kingman Hosp., Inc., et al. v. Purdue Pharma L.P., et al., Ariz. Super. Ct., Mohave Cty., 6/18/2019; Braxton Cty. Mem’l Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; Williamson Mem’l Hosp., LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; Wetzel Cty. Hosp. Ass’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; Princeton Cmty, Hosp. Ass’n, Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; Grant Mem’l Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; Cmty. Health Ass’n d/b/a Jackson Gen. Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 6/7/2019; State of Nevada ex. rel. Ford v. McKesson Corp., et al., Nev. Dist. Ct., Clark Cty., 6/1/2019; City of Yonkers v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/29/2019; Cty. of Saluda v. Rite Aid of S.C., Inc. et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/20/2019; Cty. of Clarendon v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/20/2019; Cty. of Abbeville v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 5/20/2019; Roane Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; City of Spencer v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Jackson Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; City of Ripley v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Town of Ravenswood v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Wood Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; City of Williamstown v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Wirt Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Town of Elizabeth v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Pleasants Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; City of St. Marys v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Ritchie Cty. Comm'n v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Town of Harrisville v. Mylan Pharm. Inc., et al., W. Va. Cir. Ct., Kanawha Cty., 5/8/2019; Cty. of Beaufort v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/8/2019; Cty. of Bamberg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 2d Jud. Cir., 5/7/2019; Cty. of Barnwell v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 2d Jud. Cir., 5/7/2019; Cty. of Colleton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Fairfield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 6th Jud. Cir., 5/7/2019; Cty. of Allendale v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Hampton v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Kershaw v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 5th Jud. Cir., 5/7/2019; Cty. of Jasper v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 14th Jud. Cir., 5/7/2019; Cty. of Lee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/7/2019; Cty. of Orangeburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 5/7/2019; Cty. of Williamsburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/7/2019; Cty. of Chesterfield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 4th Jud. Cir., 5/7/2019; Cty. of Horry v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 15th Jud. Cir., 5/6/2019; City of Albany v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Plattsburgh v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Troy v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; City of Schenectady v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 5/3/2019; Cty. of Lexington v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/2/2019; Cty. of Marion v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 12th Jud. Cir., 5/2/2019; Cty. of Calhoun v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 5/2/2019; Cty. of Dillon v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 4th Jud. Cir., 5/2/2019; Cty. of Lancaster v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 6th Jud. Cir., 5/2/2019; Cty. of Aiken v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 2d Jud. Cir., 5/2/2019; Cty. of Anderson v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 10th Jud. Cir., 5/1/2019; Cty. of Cherokee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 7th Jud. Cir., 5/1/2019; Cty. of Edgefield v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/1/2019; Cty. of Florence v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 12th Jud. Cir., 5/1/2019; Cty. of Greenville v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 13th Jud. Cir., 5/1/2019; Cty. of Greenwood v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 5/1/2019; Cty. of Laurens v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 8th Jud. Cir., 5/1/2019; Cty. of McCormick v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 11th Jud. Cir., 5/1/2019; Cty. of Oconee v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 10th Jud. Cir., 5/1/2019; Cty. of Pickens v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 13th Jud. Cir., 5/1/2019; Cty. of Spartanburg v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 7th Jud. Cir., 5/1/2019; Cty. of Sumter v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 3d Jud. Cir., 5/1/2019; Cty. of Union v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 16th Jud, Cir., 5/1/2019; Cty. of York v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 16th Jud. Cir., 5/1/2019; W. Va. Univ. Hosps. Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Appalachian Reg’l Healthcare, Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Bluefield Hosp. Co., LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Charleston Area Med. Ctr., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Davis Mem’l Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Broaddus Hosp. Ass’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Webster Cty. Mem’l Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Grafton City Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Greenbrier VMC, LLC v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Monongalia Cty. Gen. Hosp. Co. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Preston Mem’l Hosp. Corp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Stonewall Jackson Mem’l Hosp. Co. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Oak Hill Hosp. Corp. d/b/a Plateau Med. Ctr. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Camden-Clark Mem’l Hosp. Corp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Charles Town Gen. Hosp. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; City Hosp., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Potomac Valley Hosp. of W. Va., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; Reynolds Mem’l Hosp. Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; St. Joseph’s Hosp. of Buckhannon, Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; United Hosp. Ctr., Inc. v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 4/29/2019; City

of Cambridge v. Purdue Pharma L.P., et al., Mass. Super. Ct., Middlesex Cty., 4/12/2019; Cty. of Ulster v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 4/10/2019; Cty. of Washington v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 4/1/2019; Town of Randolph v. Purdue Pharma L.P., et al., Mass. Sup. Ct., Suffolk Cty., 3/27/2019; Cty. of Montgomery v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 3/26/2019; Cty. of Herkimer v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 3/26/2019; State of New Mexico ex rel. Balderas v. Purdue Pharma L.P., et al., N.M. Dist. Ct, 1st Jud. Dist., Santa Fe Cty., 3/6/2019; Cty. of Lewis v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 2/26/2019; Cty. of St. Lawrence v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/30/2019; Jefferson Cty. v. Williams, et al., Mo. Cir. Ct., 23d Jud. Dist., Jefferson Cty., 1/29/2019; Franklin Cty. v. Williams, et al., Mo. Cir. Ct., 20th Jud. Dist., Franklin Cty., 1/29/2019; City of New York v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/16/2019; Cty. Comm’n of Mason Cty. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Cty. Comm’n of Barbour Cty. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Mayor Chris Tatum ex rel. Village of Barboursville v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Cty. Comm’n of Taylor Cty. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Cty. Comm’n of Webster Cty. v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Mayor Don E. McCourt ex rel. Town of Addison aka Town of Webster Springs v. Purdue Pharma, L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 1/11/2019; Cty. of Fulton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Cortland v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Ontario v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 1/8/2019; Cty. of Columbia v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 12/1/2018; Cty. of Monroe v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 12/1/2018; Cty. of Wyoming v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/28/2018; Cty. of Greene v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/28/2018; Cty. of Oswego v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/27/2018; Cty. of Schenectady v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/15/2018; Delaware Cty. v. Purdue Pharma L.P., et al., Pa. Ct. Com. Pl., Delaware Cty., 11/14/2018; Cty. of Carbon v. Purdue Pharma L.P., et al., Pa. Ct. Com. Pl., Delaware Cty., 11/14/2018; Carpenters Health & Welfare Fund of Phila. & Vicinity v. Purdue Pharma L.P., et al., Pa. Ct. Com. Pl., Delaware Cty., 11/14/2018; Cty. of Broome v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Erie v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Orange v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Dutchess v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Seneca v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Cty. of Sullivan v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 11/13/2018; Johnson Cty. v. Abbott Labs, et al., Tex. Dist. Ct., 152nd Jud. Dist., Harris Cty., 11/2/2018; City of Ithaca v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Rensselaer v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Saratoga v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Schoharie v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Westchester v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Genesee v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Niagara v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Hamilton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Franklin v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Schuyler v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Steuben v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Clinton v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Tompkins v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Suffolk v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Cty. of Nassau v. Purdue Pharma L.P., et al., N.Y. Sup. Ct., Suffolk Cty., 10/23/2018; Monongalia Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 9/28/2018; Upshur Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 9/28/2018; Marion Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 9/28/2018; Doddridge Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 9/28/2018; Randolph Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 9/28/2018; Cty. of Dorchester v. Rite Aid of S.C., Inc., et al., S.C. Ct. Com. Pl., 1st Jud. Cir., 6/19/2018; Brooke Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Hancock Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Harrison Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Lewis Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Marshall Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Ohio Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Tyler Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017; Wetzel Cty. Comm’n v. Purdue Pharma L.P., et al., W. Va. Cir. Ct., Kanawha Cty., 12/13/2017.

B. Currently Scheduled Trial Dates In Pending State Court Cases as of March 5, 2021 • 6/8/2021 if public health conditions permit – Cty. of Suffolk v. Purdue Pharma L.P., et al. and Cty. of Nassau v. Purdue Pharma L.P., et al., cases (both

consolidated into In Re Opioid Litigation, N.Y. Sup. Ct., Suffolk Cty., Index No. 400000/2017). • 11/1/2021 – In re: Opioid Litigation, W. Va. Cir. Ct., Kanawha Cty. • 4/18/2022 – State of Nevada ex. rel. Ford v. McKesson Corp., et al., Nev. Dist. Ct., Clark Cty. • 5/16/2022 – The DCH Health Care Authority, et al., v. Purdue Pharma LP, et al., Ala. Cir. Ct., Conecuh Cty. (Trial limited to defendants’ liability for public

nuisance) • 6/6/2022 – Jefferson Cty. v. Williams, et al., Mo. Cir. Ct., 23d Jud. Dist., Jefferson Cty. • 9/6/2022 – State of New Mexico ex rel. Balderas v. Purdue Pharma L.P., et al., N.M. Dist. Ct, 1st Jud. Dist., Santa Fe Cty.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K (Mark One)

☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 3, 2018.

☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-303

THE KROGER CO. (Exact name of registrant as specified in its charter)

Ohio 31-0345740 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

1014 Vine Street, Cincinnati, OH 45202 (Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code (513) 762-4000

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

Title of each class Name of each exchange on which registered

Common Stock $1 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§299.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10- K. ☒

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the Common Stock of The Kroger Co. held by non-affiliates as of August 12, 2017: $21.1 billion. There were 865,976,354 shares of Common Stock ($1 par value) outstanding as of March 29, 2018.

Documents Incorporated by Reference:

Portions of Kroger’s definitive proxy statement for its 2018 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report.

PART I

FORWARD LOOKING STATEMENTS.

This Annual Report on Form 10-K contains forward-looking statements about our future performance. These statements are based on our assumptions and beliefs in light of the information currently available to us. These statements are subject to a number of known and unknown risks, uncertainties and other important factors, including the risks and other factors discussed in “Risk Factors” and “Outlook” below, that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward looking statements. Such statements are indicated by words such as “comfortable,” “committed,” “will,” “expect,” “goal,” “should,” “intend,” “target,” “believe,” “anticipate,” “plan,” and similar words or phrases. Moreover, statements in the sections entitled Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Outlook, and elsewhere in this report regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. ITEM 1. BUSINESS.

The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. As of February 3, 2018, we are one of the largest retailers in the world based on annual sales. We also manufacture and process some of the food for sale in our supermarkets. We maintain a web site (www.thekrogerco.com) that includes additional information about the Company. We make available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as reasonably practicable after we have filed them with, or furnished them electronically to, the SEC.

Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms. We earn income predominantly by selling products at price levels that produce revenues in excess of the costs to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs and overhead expenses. Our fiscal year ends on the Saturday closest to January 31. All references to 2017, 2016 and 2015 are to the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016, respectively, unless specifically indicated otherwise. EMPLOYEES

As of February 3, 2018, Kroger employed approximately 449,000 full- and part-time employees. A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated with one of several different international unions. There are approximately 360 such agreements, usually with terms of three to five years. STORES

As of February 3, 2018, Kroger operated, either directly or through its subsidiaries, 2,782 supermarkets under a variety of local banner names, of which 2,268 had pharmacies and 1,489 had fuel centers. We offer ClickList™ and Harris Teeter ExpressLane— personalized, order online, pick up at the store services — at 1,056 of our supermarkets and continue to increase our home delivery service available to customers. Approximately 45% of our supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our current strategy emphasizes self-development and ownership of store real estate. Our stores operate under a variety of banners that have strong local ties and brand recognition. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo stores”); multi-department stores; marketplace stores; or price impact warehouses.

The combo store is the primary food store format. They typically draw customers from a 2 — 2.5 mile radius. We believe this format is successful because the stores are large enough to offer the specialty departments that customers desire for one-stop shopping, including natural food and organic sections, pharmacies, general merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce.

Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and health

and beauty care departments as well as an expanded perishable offering and general merchandise area that includes apparel, home goods and toys.

In addition to the supermarkets, as of February 3, 2018, we operated, through subsidiaries, 782 convenience stores, 274 fine jewelry stores and an online retailer. All 71 of our fine jewelry stores located in malls are operated in leased locations. In addition, 66 convenience stores were operated by franchisees through franchise agreements. Approximately 55% of the convenience stores operated by subsidiaries were operated in Company-owned facilities. The convenience stores offer a limited assortment of staple food items and general merchandise and, in most cases, sell fuel. SEGMENTS

We operate supermarkets, multi-department stores, jewelry stores, and convenience stores throughout the United States. Our retail operations, which represent over 97% of our consolidated sales, is our only reportable segment. We aggregate our operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long- term financial performance. In addition, our operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and total assets are shown in our Consolidated Financial Statements set forth in Item 8 below. MERCHANDISING AND MANUFACTURING

Our Brands products play an important role in our merchandising strategy. Our supermarkets, on average, stock over 15,000 private label items. Our Brands products are primarily produced and sold in three “tiers.” Private Selection® is the premium quality brand designed to be a unique item in a category or to meet or beat the “gourmet” or “upscale” brands. The “banner brand” (Kroger®, Ralphs®, Fred Meyer®, King Soopers®, etc.), which represents the majority of our private label items, is designed to satisfy customers with quality products. Before we will carry a “banner brand” product we must be satisfied that the product quality meets our customers’ expectations in taste and efficacy, and we guarantee it. P$$T…®, Check This Out… and Heritage Farm™ are the three value brands, designed to deliver good quality at a very affordable price. In addition, we continue to grow Our Brands offerings, including Simple Truth® and Simple Truth Organic®. Both Simple Truth and Simple Truth Organic are Free From 101+ artificial preservatives and ingredients that customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic.

Approximately 33% of Our Brands units and 44% of the grocery category Our Brands units sold in our supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of February 3, 2018, we operated 37 food production plants. These plants consisted of 17 dairies, ten deli or bakery plants, five grocery product plants, two beverage plants, one meat plant and two cheese plants.

SEASONALITY

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year. Additionally, significant inclement weather systems, particularly winter storms, tend to affect our sales trends. EXECUTIVE OFFICERS OF THE REGISTRANT

The disclosure regarding executive officers is set forth in Item 10 of Part III of this Form 10-K under the heading “Executive Officers of the Company,” and is incorporated herein by reference. COMPETITIVE ENVIRONMENT

For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive Environment.” ITEM 1A. RISK FACTORS.

There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The following information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Outlook” section in Item 7 of this Form 10-K, which include forward-looking statements and factors that could cause us not to realize our goals or meet our expectations. COMPETITIVE ENVIRONMENT

The operating environment for the food retailing industry continues to be characterized by intense price competition, aggressive expansion, increasing fragmentation of retail and online formats, entry of non-traditional competitors and market consolidation. In addition, evolving customer preferences and the advancement of online, delivery, ship to home, and mobile channels in our industry enhance the competitive environment.

We believe our Restock Kroger plan provides a balanced approach that will enable us to meet the wide-ranging needs and

expectations of our customers. However, we may be unsuccessful in implementing Restock Kroger , which could adversely affect our relationships with our customers, our market share and business growth, and our operations and results. The nature and extent to which our competitors respond to the evolving and competitive industry by developing and implementing their competitive strategies could adversely affect our profitability. PRODUCT SAFETY

DATA AND TECHNOLOGY

Our technology systems are vulnerable to disruption from circumstances beyond our control. Cyber-attackers may attempt to

access information stored in our or our vendors’ systems in order to misappropriate confidential customer or business information. Although we have implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that our security systems will successfully defend against rapidly evolving, increasingly sophisticated cyber- attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a contractor or other third party with whom we do business may in the future circumvent our security measures in order to obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or applications we may use may have inherent defects or could be inadvertently or intentionally applied or used in a way that could compromise our information security.

Our continued investment in our information technology systems may not effectively insulate us from potential attacks,

breaches or disruptions to our business operations, which could result in a loss of customers or business information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions, regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse effect on our business, financial condition and results of operations and may not be covered by our insurance. In addition, compliance with privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes and may require us to devote significant management resources to address these issues.

Additionally, on October 1, 2015, the payment card industry shifted liability for certain transactions to retailers who are not able to accept Europay, MasterCard, Visa (EMV) transactions. We completed the implementation of the EMV technology for our supermarket transactions, and have a plan in place to complete implementation for our fuel centers prior to the liability shift for fuel centers, which will occur in 2020. INDEBTEDNESS

MULTI-EMPLOYER PENSION OBLIGATIONS

As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies- Multi-Employer Pension Plans ,” Kroger contributes to several multi-employer pension plans based on obligations arising under collective bargaining agreements with unions representing employees covered by those agreements. We believe that the present value of actuarially accrued liabilities in most of these multi-employer plans substantially exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to those funds will increase over the next few years. A significant increase to those funding requirements could adversely affect our financial condition, results of operations, or cash flows. Despite the fact that the pension obligations of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably when determining their ratings on our debt securities. Any downgrading of our debt ratings likely would adversely affect our cost of borrowing and access to capital.

We also currently bear the investment risk of two of the larger multi-employer pension plans in which we participate. In addition, we have been designated as the named fiduciary of these funds with sole investment authority of the assets of these funds. If investment results fail to meet our expectations, we could be required to make additional contributions to fund a portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of operations, or cash flows. INTEGRATION OF NEW BUSINESS

We enter into mergers and acquisitions with expected benefits including, among other things, operating efficiencies, procurement savings, innovation, sharing of best practices and increased market share that may allow for future growth. Achieving the anticipated benefits may be subject to a number of significant challenges and uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions underlying expectations regarding potential synergies and the integration process, unforeseen expenses and delays, and competitive factors in the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our business, financial condition and results of operations, or cash flows. FUEL

We sell a significant amount of fuel, which could face increased regulation and demand could be affected by concerns about the effect of emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental effects, political unrest, acts of terrorism and other matters that may affect the cost and availability of fuel, and how our customers will react, which could adversely affect our financial condition, results of operations, or cash flows.

ECONOMIC CONDITIONS

Our operating results could be materially impacted by changes in overall economic conditions that impact consumer confidence and spending, including discretionary spending. Future economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, the availability of credit, interest rates, tax rates, the impact of natural disasters or acts of terrorism, and other matters could reduce consumer spending. Increased fuel prices could also have an effect on consumer spending and on our costs of producing and procuring products that we sell. We are unable to predict how the global economy and financial markets will perform. If the global economy and financial markets do not perform as we expect, it could adversely affect our financial condition, results of operations, or cash flows. WEATHER AND NATURAL DISASTERS

Our stores are subject to various laws, regulations, and administrative practices that affect our business. We must comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling and safety, equal employment opportunity, minimum wages, and licensing for the sale of food, drugs, and alcoholic beverages. We cannot predict future laws, regulations, interpretations, administrative orders, or applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be reformulated. These changes could result in additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have an adverse effect on our financial condition, results of operations, or cash flows. ITEM 1B. UNRESOLVED STAFF COMMENTS.

None. ITEM 2. PROPERTIES.

As of February 3, 2018, we operated approximately 3,900 owned or leased supermarkets, convenience stores, fine jewelry stores, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. While our current strategy emphasizes ownership of store real estate, a majority of the properties used to conduct our business are leased.

We generally own store equipment, fixtures and leasehold improvements, as well as processing and food production equipment. The total cost of our owned assets and capitalized leases at February 3, 2018, was $41.7 billion while the accumulated depreciation was $20.7 billion.

Leased premises generally have base terms ranging from ten-to-twenty years with renewal options for additional periods. Some options provide the right to purchase the property after the conclusion of the lease term. Store rentals are normally payable monthly at a stated amount or at a guaranteed minimum amount plus a percentage of sales over a stated dollar volume. Rentals for the distribution, food production and miscellaneous facilities generally are payable monthly at stated amounts. For additional information on lease obligations, see Note 10 to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS.

Not applicable.

PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES. (a)

The following table sets forth the high and low sales prices for our common shares on the New York Stock Exchange for each full quarterly period of the two most recently completed fiscal years.

COMMON SHARE PRICE RANGE

2017 2016 Quarter High Low High Low 1st $ 34.75 $ 28.29 $ 40.91 $ 33.62 2nd $ 30.93 $ 20.46 $ 37.97 $ 32.02 3rd $ 23.71 $ 19.69 $ 33.24 $ 28.71 4th $ 31.45 $ 21.15 $ 36.44 $ 30.44 Main trading market: New York Stock Exchange (Symbol KR) Number of shareholders of record at fiscal year-end 2017: 27,574 Number of shareholders of record at March 29, 2018: 27,448

During 2017, we paid two quarterly cash dividends of $0.12 per share and two quarterly cash dividends of $0.125 per share. During 2016, we paid two quarterly cash dividends of $0.105 per share and two quarterly cash dividends of $0.12 per share. On March 1, 2018, we paid a quarterly cash dividend of $0.125 per share. On March 15, 2018, we announced that our Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on June 1, 2018, to shareholders of record at the close of business on May 15, 2018. We currently expect to continue to pay comparable cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including approval by our Board.

PERFORMANCE GRAPH

Base INDEXED RETURNS Period Years Ending Company Name/Index 2012 2013 2014 2015 2016 2017 The Kroger Co. 100 131.71 255.60 290.43 252.96 226.64 S&P 500 Index 100 120.30 137.42 136.50 164.99 202.66 Peer Group 100 113.70 142.19 132.67 130.48 168.56

Kroger’s fiscal year ends on the Saturday closest to January 31.

Data supplied by Standard & Poor’s.

The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an express reference thereto.

* Total assumes $100 invested on February 3, 2013, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends.

** The Peer Group consists of Costco Wholesale Corp., CVS Caremark Corp, Etablissements Delhaize Freres Et Cie Le Lion (“Groupe Delhaize”, which is included through July 22, 2016 when it merged with Koninklijke Ahold), Koninklijke Ahold Delhaize NV (changed name from Koninklijke Ahold after merger with Groupe Delhaize), Safeway, Inc. (included through January 29, 2015 when it was acquired by AB Acquisition LLC), Supervalu Inc., Target Corp., Tesco Plc (included through November 27, 2013 when it sold its U.S. business), Wal-Mart Stores Inc., Walgreens Boots Alliance Inc. (formerly, Walgreen Co.), Whole Foods Market Inc. (included through August 28, 2017 when it was acquired by Amazon.com, Inc.).

The following table presents information on our purchases of our common shares during the fourth quarter of 2017.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Maximum Dollar Shares Value of Shares Purchased as that May Yet Be Part of Publicly Purchased Under Total Number Average Announced the Plans or of Shares Price Paid Plans or Programs (4) Period (1) Purchased (2) Per Share Programs (3) (in millions) First period - four weeks November 5, 2017 to December 2, 2017 3,845,500 $ 22.39 3,845,500 $ 507 Second period - four weeks December 3, 2017 to December 30, 2017 4,031,990 $ 26.85 4,005,396 $ 405 Third period — five weeks December 31, 2017 to February 3, 2018 5,150,914 $ 28.86 5,118,081 $ 272 Total 13,028,404 $ 26.33 12,968,977 $ 272

(1) The fourth quarter of 2017 contained two 28-day periods and one 35-day period. (2) Includes (i) shares repurchased under the June 2017 Repurchase Program described below in (4), (ii) shares repurchased

under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”), and (iii) 59,427 shares that were surrendered to the Company by participants under our long-term incentive plans to pay for taxes on restricted stock awards .

(3) Represents shares repurchased under the June 2017 Repurchase Program and the 1999 Repurchase Program . (4) On June 22, 2017, our Board of Directors approved a $1.0 billion share repurchase program (the “June 2017 Repurchase

Program”). The amounts shown in this column reflect the amount remaining under the June 2017 Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The June 2017 Repurchase Program and the 1999 Repurchase Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time. On March 15, 2018, our Board of Directors approved a $1.0 billion share repurchase program, to supplement the June 2017 Repurchase Program, to reacquire shares via open market purchase or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intending to comply with rule 10b5-1 of the Securities Exchange Act of 1934. The June 2017 Repurchase Program was exhausted during the first quarter of 2018.

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents our selected consolidated financial data for each of the last five fiscal years. Refer to Note 2 of the Consolidated Financial Statements for disclosure of business combinations and their effect on the Consolidated Statements of Operations and the Consolidated Balance Sheets. All share and per share amounts presented are reflective of the two-for-one stock split that began trading at the split adjusted price on July 14, 2015.

Fiscal Years Ended

February

3, January

28, January

30, February 1, February

2, 2018 2017 2016 2015 2014 (53 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (In millions, except per share amounts) Sales $122,662 $115,337 $109,830 $ 108,465 $ 98,375 Net earnings including noncontrolling interests 1,889 1,957 2,049 1,747 1,531 Net earnings attributable to The Kroger Co. 1,907 1,975 2,039 1,728 1,519 Net earnings attributable to The Kroger Co. per diluted common share 2.09 2.05 2.06 1.72 1.45 Total assets 37,197 36,505 33,897 30,497 29,281 Long-term liabilities, including obligations under capital leases and financing obligations 16,095 16,935 14,128 13,663 13,181 Total shareholders’ equity — The Kroger Co. 6,931 6,698 6,820 5,412 5,384 Cash dividends per common share 0.490 0.450 0.395 0.340 0.308

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be read in

conjunction with the “Forward-looking Statements” section set forth in Part I, the “Risk Factors” section set forth in Item 1A of Part I and the “Outlook” section below. OUR BUSINESS

The Kroger Co. was founded in 1883 and incorporated in 1902. As of February 3, 2018, Kroger is one of the world’s largest retailers, as measured by revenue, operating 2,782 supermarkets under a variety of local banner names in 35 states and the District of Columbia. Of these stores, 2,268 have pharmacies and 1,489 have fuel centers. We offer ClickList™ and Harris Teeter ExpressLane — personalized, order online, pick up at the store services — at 1,056 of our supermarkets and continue to increase our home delivery service available to customers. In addition, we operate 782 convenience stores, either directly or through franchisees, 274 fine jewelry stores and an online retailer.

We operate 37 food production plants, primarily bakeries and dairies, which supply approximately 33% of Our Brands units and 44% of the grocery category Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers.

Our revenues are earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via

our online platforms. We earn income predominately by selling products at price levels that produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail operations, which represent over 97% of our consolidated sales, is our only reportable segment.

On September 2, 2016, we closed our merger with Modern HC Holdings, Inc. (“ModernHEALTH”) by purchasing 100% of

the outstanding shares of ModernHEALTH for $407 million. ModernHEALTH is included in our ending Consolidated Balance Sheet for 2016 and 2017 and in our Consolidated Statements of Operations from September 2, 2016 through January 28, 2017 and all periods in 2017.

On December 18, 2015, we closed our merger with Roundy’s, Inc. (“Roundy’s”) by purchasing 100% of Roundy’s® outstanding common stock for $3.60 per share and assuming Roundy’s outstanding debt, for a purchase price of $866 million. Roundy’s is included in our ending Consolidated Balance Sheets for 2015, 2016 and 2017, and in our Consolidated Statements of Operations for the last six weeks of 2015 and all periods in 2016 and 2017.

See Note 2 to the Consolidated Financial Statements for more information related to our mergers with ModernHEALTH and Roundy’s. USE OF NON-GAAP FINANCIAL MEASURES

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including First-In, First-Out (“FIFO”) gross margin, FIFO operating profit, adjusted net earnings, adjusted net earnings per diluted share and free cash flow because management believes these metrics are useful to investors and analysts. These non-GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings, net earnings per diluted share and net cash provided or used by operating or investing activities or any other GAAP measure of performance. These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. Our calculation and reasons these are useful metrics to investors and analysts are explained below.

We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out (“LIFO”) credit or charge. Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure used by management to evaluate merchandising and operational effectiveness. Management believes FIFO gross margin is a useful metric to investors and analysts because it measures our day-to-day merchandising and operational effectiveness.

We calculate FIFO operating profit as operating profit excluding the LIFO credit or charge. FIFO operating profit is an important measure used by management to evaluate operational effectiveness. Management believes FIFO operating profit is a useful metric to investors and analysts because it measures our day-to-day operational effectiveness.

The adjusted net earnings per diluted share metric is an important measure used by management to compare the performance of core operating results between periods. W e believe adjusted net earnings per diluted share is a useful metric to investors and analysts because it presents more accurate year-over-year comparisons for our net earnings per diluted share because adjusted items are not the result of our normal operations. Net earnings for 2017 include the following, which we define as the “2017 Adjusted Items”:

· Charges to operating, general and administrative expenses (“OG&A”) of $550 million, $360 million net of tax, for

obligations related to withdrawing from and settlements of withdrawal liabilities for certain multi-employer pension funds; $184 million, $117 million net of tax, related to the voluntary retirement offering (“VRO”); $110 million, $74 million net of tax, related to the Kroger Specialty Pharmacy goodwill impairment; and $502 million, $335 million net of tax, related to a company-sponsored pension plan termination (the “2017 OG&A Adjusted Items”).

· A reduction to depreciation and amortization expenses of $19 million, $13 million net of tax, related to held for sale

assets (the “2017 Depreciation Adjusted Item”).

· A reduction to income tax expense of $922 million primarily due to the re-measurement of deferred tax liabilities and the reduction of the statutory rate for the last five weeks of the fiscal year from the Tax Cuts and Jobs Act ("Tax Act") (the “2017 Tax Expense Adjusted Item”).

In addition, net earnings include $119 million, $79 million net of tax, due to a 53 week in fiscal year 2017 (the “Extra

Week”). Net earnings for 2016 include $111 million, $71 million net of tax, of charges to OG&A related to the restructuring of certain

pension obligations to help stabilize associates’ future benefits (the “2016 Adjusted Items”). There were no adjusted items in 2015.

We calculate free cash flow as net cash provided by operating activities minus net cash used by investing activities. Free

cash flow is an important measure used by management to evaluate available funding for share repurchases, dividends, other strategic investments and managing debt levels. Management believes free cash flow is a useful metric to investors and analysts because it demonstrates our ability to make share repurchases and other strategic investments, pay dividends and manage debt levels.

OVERVIEW

Notable items for 2017 are:

· Net earnings per diluted share of $2.09.

· Adjusted net earnings per diluted share of $2.04.

· The Extra Week in 2017 contributed $0.09 to our net earnings per diluted share result for 2017.

· Identical supermarket sales, excluding fuel, increased 0.7% in 2017.

· Digital revenue up 90% in 2017, driven by ClickList. Digital revenue primarily includes revenue from all curbside pickup locations and online sales by Vitacost.com.

· On February 5, 2018, we announced a definitive agreement for the sale of our convenience store business unit to EG Group for $2.15 billion.

· Gross margin for 2017 decreased, as a percentage of sales, as compared to 2016. See Gross Margin, LIFO and FIFO Gross Margin section for additional details.

· OG&A expenses for 2017 increased, as a percentage of sales, as compared to 2016. See Operating, General and Administrative Expenses section for additional details on these fluctuations.

· During 2017, we returned $2.1 billion to shareholders from share repurchases and dividend payments.

· We contributed $1.2 billion to company-sponsored and company-managed pension plans, which significantly addressed the underfunded position of these plans, and paid $467 million to satisfy withdrawal obligations to the Central States Pension Fund. These contributions were deductible for tax purposes, resulting in a tax benefit of approximately $613 million. Included in the contribution is an incremental $111 million to the United Food and Commercial Workers International Union (“UFCW”) Consolidated Pension Plan (the “2017 UFCW Contribution”), which was contributed in the third quarter of 2017.

· Net cash provided by operating activities was $3.4 billion in 2017 compared to $4.3 billion in 2016. Net cash used by investing activities was $2.7 billion in 2017 compared to $3.9 billion in 2016.

· Free cash flow was $706 million in 2017 compared to $397 million during 2016.

· Announced Restock Kroger during 2017. Restock Kroger has four main drivers: Redefine the Food and Grocery Customer Experience, Expand Partnerships to Create Customer Value, Develop Talent, and Live Kroger’s Purpose. Over the next three years, Restock Kroger will be fueled by cost savings that we will invest in associates, customers and infrastructure. Our goal is to continue generating shareholder value even as we make strategic investments to grow our business.

Net Earnings per Diluted Share excluding the Adjusted Items ($ in millions, except per share amounts)

2017 2016 2015 Net earnings attributable to The Kroger Co. $ 1,907 $ 1,975 $ 2,039 Adjustments for pension plan agreements 360 71 — Adjustment for voluntary retirement offering 117 — — Adjustment for Kroger Specialty Pharmacy goodwill impairment 74 — — Adjustment for company-sponsored pension plan termination 335 — — Adjustment for depreciation related to held for sale assets (13) — — Adjustment for Tax Act (922) — — Total Adjusted Items (49) 71 — Net earnings attributable to The Kroger Co. excluding the Adjusted Items $ 1,858 $ 2,046 $ 2,039 Extra Week adjustment (79) — — Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra Week adjustment $ 1,779 $ 2,046 $ 2,039 Net earnings attributable to The Kroger Co. per diluted common share $ 2.09 $ 2.05 $ 2.06 Adjustments for pension plan agreements 0.40 0.07 — Adjustment for voluntary retirement offering 0.13 — — Adjustment for Kroger Specialty Pharmacy goodwill impairment 0.08 — — Adjustment for company-sponsored pension plan termination 0.37 — — Adjustment for depreciation related to held for sale assets (0.01) — — Adjustment for Tax Act (1.02) — — Total Adjusted Items (0.05) 0.07 — Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items $ 2.04 $ 2.12 $ 2.06 Extra Week adjustment (0.09) — — Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items and the Extra Week adjustment $ 1.95 $ 2.12 $ 2.06 Average numbers of common shares used in diluted calculation 904 958 980

(1) The amounts presented represent the after-tax effect of each adjustment. (2) The pre-tax adjustments for the pension plan agreements were $550 and $111 in 2017 and 2016, respectively. (3) The pre-tax adjustment for the voluntary retirement offering was $184. (4) The pre-tax adjustment for Kroger Specialty Pharmacy goodwill impairment was $110. (5) The pre-tax adjustment for the company-sponsored pension plan termination was $502. (6) The pre-tax adjustment for depreciation related to held for sale assets was ($19). (7) Due to the re-measurement of deferred tax liabilities and the reduction of the statutory income tax rate for the last few weeks

of the fiscal year. (8) The pretax Extra Week adjustment was ($119). (9) The amount presented represents the net earnings per diluted common share effect of each adjustment.

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RESULTS OF OPERATIONS Sales

Total Sales ($ in millions)

2017 Percentage Percentage 2017 Adjusted Change 2016 Change 2015 Total supermarket sales without fuel $100,800 $ 99,025 2.2 % $ 96,900 6.1 % $ 91,310 Fuel sales 16,246 15,918 13.9 % 13,979 (5.6)% 14,804 Other Sales 5,616 5,440 22.0 % 4,458 20.0 % 3,716 Total sales $122,662 $120,383 4.4 % $115,337 5.0 % $109,830

(1) Ot her sales primarily relate to sales at convenience stores, excluding fuel; jewelry stores; food production plants to outside customers; data analytic services; variable interest entities; Kroger Specialty Pharmacy; in-store health clinics; digital coupon services; and online sales by Vitacost.com.

(2) The 2017 Adjusted column represents the items presented in the 2017 column adjusted to remove the Extra Week. (3) This column represents the percentage change in 2017 adjusted sales, compared to 2016. (4) This column represents the percentage change in 2016, compared to 2015.

The increase in total sales in 2017, compared to 2016, is due to the increase in adjusted sales and the Extra Week. Total

adjusted sales increased in 2017, compared to 2016, by 4.4%. This increase was primarily due to our increases in total supermarket sales without fuel, fuel sales and our merger with Modern HC Holdings, Inc. (“ ModernHEALTH”). The increase in total supermarket sales without fuel for 2017, adjusted for the Extra Week, compared to 2016, was primarily due to our identical supermarket sales increase, excluding fuel, of 0.7%, and an increase in supermarket square footage. Identical supermarket sales, excluding fuel, for 2017, compared to 2016, increased primarily due to an increase in the number of households shopping with us, changes in product mix and product cost inflation of 0.7%, partially offset by our continued investments in lower prices for our customers. Excluding mergers, acquisitions and operational closings, total supermarket square footage at the end of 2017 increased 1.9% over the end of 2016. Total adjusted fuel sales increased 13.9% in 2017, compared to 2016, primarily due to an increase in the average retail fuel price of 12.3% and an increase in fuel gallons sold of 1.4%. The increase in the average retail fuel price was caused by an increase in the product cost of fuel.

Total sales increased in 2016, compared to 2015, by 5.0%. This increase was primarily due to our increase in total supermarket sales, without fuel, and our merger with ModernHEALTH, partially offset by a decrease in fuel sales due to a 9.4% decrease in the average retail fuel price. The increase in total supermarket sales without fuel for 2016, compared to 2015, was primarily due to our merger with Roundy’s, an increase in supermarket square footage and our identical supermarket sales increase, excluding fuel, of 1.0%. Identical supermarket sales, excluding fuel, for 2016, compared to 2015, increased primarily due to an increase in the number of households shopping with us, partially offset by product cost deflation of 0.8%. Excluding mergers, acquisitions and operational closings, total supermarket square footage at the end of 2016 increased 3.4% over 2015. Total fuel sales decreased 5.6% in 2016, compared to 2015, primarily due to a decrease in the average retail fuel price of 9.4%, partially offset by an increase in fuel gallons sold of 4.2%. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel.

We define a supermarket as identical when it has been in operation without expansion or relocation for five full

quarters. Although identical supermarket sales is a relatively standard term, numerous methods exist for calculating identical supermarket sales growth. As a result, the method used by our management to calculate identical supermarket sales may differ from methods other companies use to calculate identical supermarket sales. We urge you to understand the methods used by other companies to calculate identical supermarket sales before comparing our identical supermarket sales to those of other such companies. Fuel discounts received at our fuel centers and earned based on in-store purchases are included in all of the identical supermarket sales results calculations illustrated below and reduce our identical supermarket sales results. Differences between total supermarket sales and identical supermarket sales primarily relate to changes in supermarket square footage. Identical supermarket sales include sales from all departments at identical multi-department stores. Our identical supermarket sales results are summarized in the following table. We used the identical supermarket dollar figures presented below to calculate percentage changes for 2017 and 2016.

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Identical Supermarket Sales ($ in millions)

2017 2016 Including supermarket fuel centers $109,161 $ 107,135 Excluding supermarket fuel centers $ 96,639 $ 95,942 Including supermarket fuel centers 1.9 % 0.1 % Excluding supermarket fuel centers 0.7 % 1.0 %

(1) Identical supermarket sales for 2016 were adjusted to a comparable 53 week basis by including week 1 of fiscal 2017 in our 2016 identical supermarket sales base. However, for purposes of determining the percentage change in identical supermarket sales from 2015 to 2016, 2016 identical supermarket sales were not adjusted to include the sales from week 1 of 2017.

Gross Margin, LIFO and FIFO Gross Margin

Our gross margin rates, as a percentage of sales, were 22.01% in 2017, 22.40% in 2016 and 22.16% in 2015. The decrease

in 2017, compared to 2016, resulted primarily from continued investments in lower prices for our customers and our merger with ModernHEALTH due to its lower gross margin rate, and increased warehousing, transportation and shrink costs, as a percentage of sales, partially offset by improved merchandise costs, a lower LIFO charge, a change in our product sales mix, including higher gross margin perishable departments growing their percentage share of sales to total sales, growth in Our Brands products which have a higher gross margin compared to national brand products, decreased advertising costs, as a percentage of sales, and a higher gross margin rate on fuel sales.

The increase in 2016, compared to 2015, resulted primarily from lower fuel sales, a lower LIFO charge and our merger with

Roundy’s due to its historically higher gross margin rate, partially offset by continued investments in lower prices for our customers, unfavorable pricing and cost effects due to transitioning to a deflationary operating environment, our merger with ModernHEALTH due to its historically lower gross margin rate and increased warehousing and shrink costs, as a percentage of sales.

Our LIFO credit for 2017 was $8 million, compared to a LIFO charge of $19 million in 2016 and $28 million in 2015. Our LIFO credit in 2017 was primarily due to a reduction of pharmacy inventory in 2017 compared to 2016. In 2016, our LIFO charge primarily resulted from annualized product cost inflation related to pharmacy, and was partially offset by annualized product cost deflation in other departments. In 2015, our LIFO charge primarily resulted from annualized product cost inflation related to pharmacy, and was partially offset by annualized product cost deflation related to meat and dairy.

Our FIFO gross margin rates, which exclude the LIFO credit and charge, were 22.01% in 2017, 22.42% in 2016 and 22.18% in 2015. Excluding the effect of fuel, the Extra Week and ModernHEALTH, our FIFO gross margin rate decreased 19 basis points in 2017, compared to 2016. This decrease resulted primarily from continued investments in lower prices for our customers, increased warehousing, transportation and shrink costs, as a percentage of sales, partially offset by improved merchandise costs, a change in our product sales mix, including higher gross margin perishable departments growing their percentage share of sales to total sales, growth in Our Brands products which have a higher gross margin compared to national brand products and decreased advertising costs, as a percentage of sales. Excluding the effect of fuel and our mergers with Roundy’s and ModernHEALTH, our FIFO gross margin rate decreased seven basis points in 2016, compared to 2015. This decrease resulted primarily from continued investments in lower prices for our customers, unfavorable pricing and cost effects due to transitioning to a deflationary operating environment and increased warehousing and shrink costs, as a percentage of sales. Operating, General and Administrative Expenses

OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs and retirement plan

costs; and utility and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not included in OG&A.

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OG&A expenses, as a percentage of sales, were 17.58% in 2017, 16.63% in 2016 and 16.34% in 2015. The increase in 2017, compared to 2016, resulted primarily from the 2017 OG&A Adjusted Items, investing in our digital strategy, increases in store wages attributed to investing in incremental labor hours and higher wages to improve retention, employee engagement and customer experience, the 2017 UFCW Contribution, increases in incentive plan and healthcare costs, partially offset by savings from the VRO, effective cost controls, higher fuel sales, the 2016 Adjusted Items and our merger with ModernHEALTH due to its lower OG&A rate, as a percentage of sales. Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the Extra Week, the 2017 UFCW Contribution, the 2017 OG&A and 2016 Adjusted Items and ModernHEALTH, our OG&A rate increased 22 basis points in 2017, compared to 2016. This increase resulted primarily from investing in our digital strategy, increases in store wages attributed to investing in incremental labor hours and higher wages to improve retention, employee engagement and customer experience, increases in incentive plan and healthcare costs, partially offset by savings from the VRO and effective cost controls.

The increase in 2016, compared to 2015, resulted primarily from a decrease in fuel sales, the loss of sales leverage due to

transitioning to a deflationary operating environment, the 2016 Adjusted Items, our mergers with Roundy’s and ModernHEALTH due to their historically higher OG&A rate, compared to our other divisions, and increases in healthcare benefit and credit card costs, partially offset by increased supermarket sales, productivity improvements, effective cost controls, $110 million UFCW contributions made during 2015 (“2015 UFCW Contributions”) and decreases in incentive plans, company-sponsored pension plans and utility costs, as a percentage of sales. Excluding the effect of fuel, the 2016 Adjusted Items, recent mergers and the 2015 UFCW Contributions, our OG&A rate decreased five basis points in 2016, compared to 2015. This decrease resulted primarily from increased supermarket sales, productivity improvements, effective cost controls and decreases in incentive plans, company-sponsored pension plans and utility costs, partially offset by the loss of sales leverage due to transitioning to a deflationary operating environment and increases in healthcare benefit and credit card costs, as a percentage of sales.

Rent Expense

Rent expense decreased as a percentage of sales in 2017, compared to 2016, due to our continued emphasis on owning rather

than leasing, whenever possible, and higher fuel sales, which decreases our rent expense, as a percentage of sales, partially offset by increased closed store liabilities.

Rent expense increased as a percentage of sales in 2016, compared to 2015, due to o ur merger with Roundy’s, due to its

higher volume of leased versus owned supermarkets, and l ower f uel sales, which increases our rent expense rate, as a percentage of sales. Depreciation and Amortization Expense Depreciation and amortization expense decreased as a percentage of sales in 2017, compared to 2016, due to higher fuel

sales, which decreases our depreciation expense as a percentage of sales, the Extra Week and the 2017 Depreciation Adjusted Item, partially offset by additional depreciation on capital investments, excluding mergers and lease buyouts, of $3.0 billion, during 2017.

Depreciation and amortization expense increased as a percentage of sales 2016, compared to 2015, due to a dditional

depreciation on capital investments, excluding mergers and lease buyouts, of $3.6 billion, during 2016, unfavorable sales leveraging from transitioning to a deflationary operating environment, and our merger with Roundy’s. Operating Profit and FIFO Operating Profit

Operating profit was $2.1 billion in 2017, $3.4 billion in 2016 and $3.6 billion in 2015. Operating profit, as a percentage of

sales, was 1.70% in 2017, 2.98% in 2016 and 3.26% in 2015. Operating profit, as a percentage of sales, decreased 128 basis points in 2017, compared to 2016, due to a lower gross margin and increased OG&A, partially offset by lower depreciation and amortization expenses and a lower LIFO charge, as a percentage of sales.

Operating profit, as a percentage of sales, decreased 28 basis points in 2016, compared to 2015, due to increased OG&A, depreciation and amortization and rent expenses, partially offset by higher gross margin and a lower LIFO charge, as a percentage of sales.

FIFO operating profit was $2.1 billion in 2017, $3.5 billion in 2016 and $3.6 billion in 2015. FIFO operating profit, as a

percentage of sales, was 1.69% in 2017, 3.00% in 2016 and 3.28% in 2015. Fuel sales lower our operating profit rate due to the very low operating profit rate, as a percentage of sales, of fuel sales compared to non-fuel sales. FIFO operating profit, as a percentage of sales excluding fuel, the Extra Week, the 2017 UFCW Contribution, the 2017 and 2016 Adjusted Items and ModernHEALTH, decreased 46 basis points in 2017, compared to 2016, due to a lower gross margin and increased OG&A and depreciation and amortization expenses, as a percentage of sales.

FIFO operating profit, as a percentage of sales excluding fuel, the 2016 Adjusted Items, the effects of our recent mergers and

the 2015 UFCW Contributions, decreased 14 basis points in 2016, compared to 2015. This decrease was due to lower gross margin, higher depreciation and amortization, partially offset by decreased OG&A and rent expenses, as a percentage of sales.

Specific factors of the above operating trends under operating profit and FIFO operating profit are discussed earlier in this

section.

Interest Expense

Interest expense totaled $601 million in 2017, $522 million in 2016 and $482 million in 2015. The increase in interest expense in 2017, compared to 2016, resulted primarily from additional borrowings used for share repurchases, the Extra Week, the $1.2 billion we contributed to company-sponsored and company-managed pension plans in 2017, a $467 million pre-tax payment to satisfy withdrawal obligations to the Central States Pension Fund, partially offset by a lower weighted average interest rate. The increase in interest expense in 2016, compared to 2015, resulted primarily from additional borrowings used for share repurchases, mergers and a higher weighted average interest rate. Income Taxes

Our effective income tax rate was (27.3)% in 2017, 32.8% in 2016 and 33.8% in 2015. The 2017 tax rate differed from the

federal statutory rate primarily as a result of remeasuring deferred taxes due to the Tax Act , the Domestic Manufacturing Deduction and other changes, partially offset by non-deductible goodwill impairment charges and the effect of state income taxes. The 2016 tax rate differed from the federal statutory rate primarily as a result of the recognition of excess tax benefits related to share-based payments after the adoption of ASU 2016-09, the utilization of tax credits, the Domestic Manufacturing Deduction and other changes, partially offset by the effect of state income taxes. The 2015 tax rate differed from the federal statutory rate primarily as a result of the utilization of tax credits, the Domestic Manufacturing Deduction and other changes, partially offset by the effect of state income taxes.

Net Earnings and Net Earnings Per Diluted Share Our net earnings are based on the factors discussed in the Results of Operations section. Net earnings of $2.09 per diluted share in 2017 represented an increase of 2.0% from net earnings of $2.05 per diluted share

in 2016. Excluding the 2017 and 2016 Adjusted Items and the Extra Week, adjusted net earnings of $1.95 per diluted share in 2017 represented a decrease of 8.0% from adjusted net earnings of $2.12 per diluted share in 2016. The 8.0% decrease in adjusted net earnings per diluted share resulted primarily from lower non-fuel FIFO operating profit and increased interest expense, partially offset by higher fuel earnings, a lower LIFO charge, decreased income tax expense and lower weighted average common shares outstanding due to common share repurchases.

Net earnings of $2.05 per diluted share in 2016 represented a decrease of 0.5% from net earnings of $2.06 per diluted share in 2015. Excluding the 2016 Adjusted Items, net earnings of $2.12 per diluted share in 2016 represented an increase of 2.9% from net earnings of $2.06 per diluted share in 2015. The net earnings of 2015 do not include any adjusted items. The 2.9% increase resulted primarily from a lower LIFO charge, lower income tax expense and lower weighted average common shares outstanding due to common share repurchases, partially offset by lower non-fuel FIFO operating profit and lower fuel earnings.

COMMON SHARE REPURCHASE PROGRAMS

We maintain share repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934 and allow for the orderly repurchase of our common shares, from time to time. The share repurchase programs do not have an expiration date but may be suspended or terminated by our Board of Directors at any time. We made open market purchases of our common shares totaling $1.6 billion in 2017, $1.7 billion in 2016 and $500 million in 2015 under these repurchase programs. In addition to these repurchase programs, we also repurchase common shares to reduce dilution resulting from our employee stock option plans. This program is solely funded by proceeds from stock option exercises, and the tax benefit from these exercises. We repurchased approximately $66 million in 2017, $105 million in 2016 and $203 million in 2015 of our common shares under the stock option program.

The shares repurchased in 2017 were reacquired under the following repurchase programs authorized by the Board of Directors to reacquire shares via open market purchases:

· On September 15, 2016, our Board of Directors approved a $500 million share repurchase program (the “September

2016 Repurchase Program”). This program was exhausted during the first quarter of 2017.

· On March 9, 2017, our Board of Directors approved an additional $500 million share repurchase program to supplement the September 2016 Repurchase Program. This program was exhausted during the second quarter of 2017.

· On June 22, 2017, our Board of Directors approved a $1.0 billion share repurchase program. As of February 3, 2018, there was $272 million remaining under this share repurchase program.

On March 15, 2018, our Board of Directors approved a $1.0 billion share repurchase program, to supplement the June 2017 Repurchase Program, to reacquire shares via open market purchase or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intending to comply with rule 10b5-1 of the Securities Exchange Act of 1934 (the “March 2018 Repurchase Program”).

During the first quarter through March 29, 2018, we used an additional $388 million of cash to repurchase 16 million

common shares at an average price of $25.05 per share. As of March 29, 2018, we have exhausted the June 2017 Repurchase Program and have $885 million remaining under the March 2018 Repurchase Program.

CAPITAL INVESTMENTS

Capital investments, including changes in construction-in-progress payables and excluding mergers and the purchase of leased facilities, totaled $3.0 billion in 2017, $3.7 billion in 2016 and $3.3 billion in 2015. Capital investments for mergers totaled $16 million in 2017, $401 million in 2016 and $168 million in 2015. We merged with ModernHEALTH in 2016 and Roundy’s in 2015. Refer to Note 2 to the Consolidated Financial Statements for more information on these mergers. Capital investments for the purchase of leased facilities totaled $13 million in 2017, $5 million in 2016 and $35 million in 2015. The table below shows our supermarket storing activity and our total supermarket square footage:

Supermarket Storing Activity

2017 2016 2015 Beginning of year 2,796 2,778 2,625 Opened 24 50 31 Opened (relocation) 15 21 12 Acquired 3 — 159 Closed (operational) (41) (32) (37) Closed (relocation) (15) (21) (12) End of year 2,782 2,796 2,778 Total supermarket square footage (in millions) 179 178 173

RETURN ON INVESTED CAPITAL

We calculate return on invested capital (“ROIC”) by dividing adjusted operating profit for the prior four quarters by the average invested capital. Adjusted operating profit is calculated by excluding certain items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S. GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve, (iii) the average accumulated depreciation and amortization and (iv) a rent factor equal to total rent for the last four quarters multiplied by a factor of eight; minus (i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages, (iv) the average other current liabilities, excluding accrued income taxes and (v) the average liabilities held for sale. Averages are calculated for ROIC by adding the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and dividing by two. We use a factor of eight for our total rent as we believe this is a common factor used by our investors, analysts and rating agencies. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to investors and analysts because it measures how effectively we are deploying our assets.

The following table provides a calculation of ROIC for 2017 and 2016 on a 52 week basis ($ in millions).

Rolling Four Quarters

Ended February 3, January 28, 2018 2017 Return on Invested Capital Numerator

Operating profit on a 53 week basis in fiscal year 2017 $ 2,085 $ 3,436 Extra Week operating profit adjustment (131) — LIFO (credit) charge (8) 19 Depreciation and amortization 2,436 2,340 Rent on 53 week basis in fiscal year 2017 911 881 Extra Week rent adjustment (17) — Adjustment for Kroger Specialty Pharmacy goodwill impairment 110 — Adjustments for pension plan agreements 550 111 Adjustment for company-sponsored pension plan termination 502 — Adjustment for depreciation related to held for sale assets (19) — Adjustments for voluntary retirement offering 184 — Adjusted operating profit on a 52 week basis $ 6,603 $ 6,787

Denominator

Average total assets $ 36,851 $ 35,201 Average taxes receivable (181) (262) Average LIFO reserve 1,270 1,283 Average accumulated depreciation and amortization 20,287 18,940 Average trade accounts payable (5,838) (5,773) Average accrued salaries and wages (1,167) (1,330) Average other current liabilities (3,363) (3,265) Average liabilities held for sale (130) — Rent x 8 7,152 7,048 Average invested capital $ 54,881 $ 51,842

Return on Invested Capital 12.03 % 13.09 %

(1) Taxes receivable were $229 as of February 3, 2018, $132 as of January 28, 2017 and $392 as of January 30, 2016. The January 30, 2016 balance is higher than the other comparative balances due to changes to tangible property regulations in 2015. Refer to Note 5 of the Consolidated Financial Statements for further detail.

(2) Other current liabilities included accrued income taxes of $1 as of January 28, 2017. We did not have any accrued income taxes as of February 3, 2018 or January 30, 2016. Accrued income taxes are removed from other current liabilities in the calculation of average invested capital.

CRITICAL ACCOUNTING POLICIES

We believe that the following accounting policies are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

(1)

(2)

Self-Insurance Costs

We primarily are self-insured for costs related to workers’ compensation and general liability claims. The liabilities represent our best estimate, using generally accepted actuarial reserving methods, of the ultimate obligations for reported claims plus those incurred but not reported for all claims incurred through February 3, 2018. We establish case reserves for reported claims using case-basis evaluation of the underlying claim data and we update as information becomes known.

For both workers’ compensation and general liability claims, we have purchased stop-loss coverage to limit our exposure to any significant exposure on a per claim basis. We are insured for covered costs in excess of these per claim limits. We account for the liabilities for workers’ compensation claims on a present value basis utilizing a risk-adjusted discount rate. A 25 basis point decrease in our discount rate would increase our liability by approximately $3 million. General liability claims are not discounted.

The assumptions underlying the ultimate costs of existing claim losses are subject to a high degree of unpredictability, which can affect the liability recorded for such claims. For example, variability in inflation rates of health care costs inherent in these claims can affect the amounts realized. Similarly, changes in legal trends and interpretations, as well as a change in the nature and method of how claims are settled can affect ultimate costs. Our estimates of liabilities incurred do not anticipate significant changes in historical trends for these variables, and any changes could have a considerable effect on future claim costs and currently recorded liabilities. Impairments of Long-Lived Assets

We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering

events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair value. Fair value is determined based on market values or discounted future cash flows. We record impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust the value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar assets and current economic conditions. We recognize impairment for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. We recorded asset impairments in the normal course of business totaling $71 million in 2017, $26 million in 2016 and $46 million in 2015. We record costs to reduce the carrying value of long-lived assets in the Consolidated Statements of Operations as “Operating, general and administrative” expense.

Our goodwill totaled $2.9 billion as of February 3, 2018. We review goodwill for impairment in the fourth quarter of each

year, and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions and variable interest entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows on management’s knowledge of the current operating environment and expectations for the future. We recognize goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Our annual evaluation of goodwill is performed for our reporting units during the fourth quarter. In 2017, we recorded goodwill impairment for our Kroger Specialty Pharmacy reporting unit totaling $110 million, $74 million net of tax. The annual evaluation of goodwill performed in 2016 and 2015 did not result in impairment. Based on current and future expected cash flows, we believe additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would not indicate a potential for impairment of our goodwill balance.

For additional information relating to our results of the goodwill impairment reviews performed during 2017, 2016 and 2015 see Note 3 to the Consolidated Financial Statements.

The impairment review requires the extensive use of management judgment and financial estimates. Application of alternative estimates and assumptions, such as reviewing goodwill for impairment at a different level, could produce significantly different results. The cash flow projections embedded in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the market, the economy, market competition and our ability to successfully integrate recently acquired businesses. Post-Retirement Benefit Plans

We account for our defined benefit pension plans using the recognition and disclosure provisions of GAAP, which require

the recognition of the funded status of retirement plans on the Consolidated Balance Sheet. We record, as a component of Accumulated Other Comprehensive Income (“AOCI”), actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized.

The determination of our obligation and expense for company-sponsored pension plans and other post-retirement benefits is dependent upon our selection of assumptions used by actuaries in calculating those amounts. Those assumptions are described in Note 15 to the Consolidated Financial Statements and include, among others, the discount rate, the expected long-term rate of return on plan assets, mortality and the rate of increases in compensation and health care costs. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense and recorded obligation in future periods. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions, including the discount rate used and the expected return on plan assets, may materially affect our pension and other post-retirement obligations and our future expense. Note 15 to the Consolidated Financial Statements also discusses the effect of a 1% change in the assumed health care cost trend rate on other post-retirement benefit costs and the related liability.

The objective of our discount rate assumptions was intended to reflect the rates at which the pension benefits could be effectively settled. In making this determination, we take into account the timing and amount of benefits that would be available under the plans. Our methodology for selecting the discount rates was to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that produce the same present value of cash flows. The selection of the 4.00% and 3.93% discount rates as of year-end 2017 for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better rating constructed with the assistance of an outside consultant. We utilized a discount rate of 4.25% and 4.18% as of year- end 2016 for pension and other benefits, respectively. A 100 basis point increase in the discount rate would decrease the projected pension benefit obligation as of February 3, 2018, by approximately $426 million.

Our 2017 assumed pension plan investment return rate was 7.50% compared to 7.40% in 2016 and 7.44% in 2015. The value of all investments in our company-sponsored defined benefit pension plans during the calendar year ending December 31, 2017, net of investment management fees and expenses, increased 8.7%. Historically, the Kroger pension plans’ average rate of return was 5.7% for the 10 calendar years ended December 31, 2017, net of all investment management fees and expenses. For the past 20 years, the Kroger pension plans’ average annual rate of return has been 7.10%. At the beginning of 2017, to determine the expected rate of return on pension plan assets held by Kroger for 2017, we considered current and forecasted plan asset allocations as well as historical and forecasted rates of return on various asset categories. Based on this information and forward looking assumptions for investments made in a manner consistent with our target allocations, which contemplates our transition to a liability driven investment strategy, we believed a 7.50% rate of return assumption was reasonable for 2017. In 2016, Kroger began managing the assets for the Harris Teeter and Roundy’s pension plans, and our expected rate of return for 2016 reflects implementing a similar investment management strategy for the Harris Teeter and Roundy’s plans’ assets. See Note 15 to the Consolidated Financial Statements for more information on the asset allocations of pension plan assets.

On January 31, 2015, we adopted new industry specific mortality tables based on mortality experience and assumptions for generational mortality improvement in determining our benefit obligations. On January 28, 2017, we adopted an updated assumption for generational mortality improvement, based on additional years of published mortality experience.

Sensitivity to changes in the major assumptions used in the calculation of Kroger’s pension plan liabilities is illustrated below (in millions).

Projected Benefit Percentage Obligation Expense Point Change Decrease/(Increase) Decrease/(Increase) Discount Rate +/- 1.0% $ 426/(516) $ 39/(49) Expected Return on Assets +/- 1.0% — $ 31/(31)

In 2017, we contributed $1.0 billion to our company-sponsored defined benefit plans and we are not required to make any contributions to these plans in 2018. We contributed $3 million to our company-sponsored defined benefit plans in 2016 and $5 million in 2015. Among other things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations, and future changes in legislation, will determine the amounts of contributions.

In 2017, we settled certain company-sponsored pension plan obligations using existing assets of the plan and the $1.0 billion

contribution. We recognized a settlement charge of approximately $502 million, $335 million net of tax, associated with the settlement of our obligations for the eligible participants’ pension balances that were distributed out of the plan via a transfer to other qualified retirement plan options, a lump sum payout, or the purchase of an annuity contract, based on each participant’s election.

We contributed and expensed $219 million in 2017, $215 million in 2016 and $196 million in 2015 to employee 401(k) retirement savings accounts. The increase in 2016, compared to 2015, is primarily due to our recent mergers. The 401(k) retirement savings account plans provide to eligible employees both matching contributions and automatic contributions from the Company based on participant contributions, plan compensation and length of service. Multi-Employer Pension Plans

We contribute to various multi-employer pension plans based on obligations arising from collective bargaining agreements.

These multi-employer pension plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

We recognize expense in connection with these plans as contributions are funded or when commitments are probable and

reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $954 million in 2017, $289 million in 2016 and $426 million in 2015. The increase in 2017, compared to 2016, is due to the $467 million pre-tax payment to satisfy withdrawal obligations to the Central States Pension Fund and the 2017 UFCW Contribution.

We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change our debt profile as it relates to our credit rating since these off balance sheet commitments are typically considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have sole investment authority over these assets. As such, we include contributions to these plans when we disclose contributions to company-sponsored and company-managed pension plans. We became the fiduciary of the IBT Consolidated Pension Fund in 2017 due to the ratification of a new labor contract with the IBT that provided our withdrawal from the Central States Pension Fund. Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

· In 2017, we incurred a $550 million charge, $360 million net of tax, for obligations related to withdrawing from and settlements for withdrawal liabilities for certain multi-employer pension plan obligations, of which $467 million was contributed to the Central States Pension Fund in 2017.

· In 2017, we contributed an incremental $111 million, $71 million net of tax, to the UFCW Consolidated Pension Plan.

· In 2016, we incurred a charge of $111 million, $71 million net of tax, due to commitments and withdrawal liabilities arising from the restructuring of certain multi-employer pension plan obligations, of which $28 million was contributed to the UFCW Consolidated Pension Plan in 2016.

· In 2015, we contributed $190 million to the UFCW Consolidated Pension Plan. We had previously accrued $60 million of the total contributions at January 31, 2015 and recorded expense for the remaining $130 million at the time of payment in 2015.

As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could incur

withdrawal liabilities for certain funds.

Based on the most recent information available to us, we believe that the present value of actuarially accrued liabilities in most of the multi-employer plans to which we contribute substantially exceeds the value of the assets held in trust to pay benefits. We have attempted to estimate the amount by which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2017. Because we are only one of a number of employers contributing to these plans, we also have attempted to estimate the ratio of our contributions to the total of all contributions to these plans in a year as a way of assessing our “share” of the underfunding. Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer. As of December 31, 2017, we estimate our share of the underfunding of multi-employer pension plans to which we contribute, or as it relates to certain funds, an estimated withdrawal liability, was approximately $2.3 billion, $1.8 billion net of tax. This represents a decrease in the estimated amount of underfunding of approximately $700 million, $446 million net of tax, as of December 31, 2017, compared to December 31, 2016. The decrease in the amount of underfunding is primarily attributable to withdrawing from and settlements for withdrawal liabilities for certain multi-employer pension plan obligations, the 2017 UFCW Contribution and returns on assets in the funds. Our estimate is based on the most current information available to us including actuarial evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise unreliable.

See Note 16 to the Consolidated Financial Statements for more information relating to our participation in these multi- employer pension plans. Inventories

Inventories are stated at the lower of cost (principally on a LIFO basis) or market. In total, approximately 93% and 89% of

inventories were valued using the LIFO method in 2017 and 2016, respectively. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1.2 billion at February 3, 2018 and $1.3 billion at January 28, 2017. We follow the Link- Chain, Dollar-Value LIFO method for purposes of calculating our LIFO charge or credit.

We follow the item-cost method of accounting to determine inventory cost before the LIFO adjustment for substantially all store inventories at our supermarket divisions. This method involves counting each item in inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In addition, substantially all of our inventory consists of finished goods and is recorded at actual purchase costs (net of vendor allowances and cash discounts).

We evaluate inventory shortages throughout the year based on actual physical counts in our facilities. We record allowances for inventory shortages based on the results of recent physical counts to provide for estimated shortages from the last physical count to the financial statement date. Vendor Allowances

We recognize all vendor allowances as a reduction in merchandise costs when the related product is sold. In most cases,

vendor allowances are applied to the related product cost by item, and therefore reduce the carrying value of inventory by item. When it is not practicable to allocate vendor allowances to the product by item, we recognize vendor allowances as a reduction in merchandise costs based on inventory turns and as the product is sold. We recognized approximately $8.5 billion in 2017, $7.8 billion in 2016 and $7.3 billion in 2015 of vendor allowances as a reduction in merchandise costs. We recognized approximately 93% of all vendor allowances in the item cost with the remainder being based on inventory turns. RECENTLY ADOPTED ACCOUNTING STANDARDS

In September 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” This amendment eliminates the requirement to retrospectively account for adjustments made to provisional amounts recognized in a business combination. This amendment became effective for us beginning January 31, 2016, and was adopted prospectively in accordance with the standard. The adoption of this amendment did not have a material effect on our Consolidated Balance Sheets or Consolidated Statements of Operations.

During the second quarter of 2016, we adopted ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This amendment addresses several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As a result of the adoption, we recognized $49 million of excess tax benefits related to share-based payments in our provision for income taxes in 2016. These items were historically recorded in additional paid-in capital. In addition, for 2016, cash flows related to excess tax benefits are classified as an operating activity. Cash paid on employees’ behalf related to shares withheld for tax purposes is classified as a financing activity. Retrospective application of the cash flow presentation requirements resulted in increases to both “Net cash provided by operating activities” and “Net cash used by financing activities” of $59 million for 2016 and $84 million for 2015. Our stock compensation expense continues to reflect estimated forfeitures.

During 2016, we adopted ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going

Concern (Topic 205)”. This standard requires us to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date the Consolidated Financial Statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around our plan to alleviate these doubts are required. The adoption of this standard did not affect our Consolidated Financial Statements.

During 2016, we adopted ASU 2015-07, “Fair Value Measurement - Disclosures for Investments in Certain Entities that

Calculate Net Asset Value per Share (or Its Equivalent) (Topic 820)”. This standard requires us to disclose which assets we value using net asset value as a practical expedient, and ends the requirement to classify these assets within the GAAP fair value hierarchy. See Note 15 of our Consolidated Financial Statements for disclosures of assets we value using net asset value as a practical expedient.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred

Taxes.” This amendment requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. This amendment became effective for us beginning January 29, 2017, and was adopted prospectively in accordance with the standard. The implementation of this amendment resulted in the reclassification of current deferred tax liabilities as non-current and had no effect on our Consolidated Statements of Operations.

During the fourth quarter of 2017, we adopted ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350): Simplifying the

Test for Goodwill Impairment.” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. ASU 2017-04 requires applying a one-step quantitative test and recording the amount of goodwill impairment as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. We performed our annual evaluation of goodwill in accordance with this standard, which resulted in a goodwill impairment charge of $110 million, $74 million net of tax, related to our Kroger Specialty Pharmacy reporting unit. RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, as amended by several subsequent ASUs, which provides guidance for revenue recognition. The standard’s overarching principle is that revenue must be recognized when goods and services are transferred to the customer in an amount that is proportionate to what has been delivered at that point and that reflects the consideration to which the company expects to be entitled for those goods or services. Per ASU 2015-14, “Deferral of Effective Date,” this guidance will be effective for us in the first quarter of fiscal year ending February 2, 2019. We formed a project team to assess and document our accounting policies related to the new revenue guidance. As of the end of 2017, we have completed this assessment and documentation. Based on this project, we do not expect that the implementation of the new standard will have a material effect on our Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows. We intend to adopt the new standard on a modified retrospective basis and will be addressing new disclosures regarding revenue recognition policies as required by the new standard at adoption. During our assessment, we identified and will be implementing changes, at the beginning of the first quarter of 2018, to our accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which provides guidance for the recognition of lease agreements. The standard’s core principle is that a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This guidance will be effective for us in the first quarter of fiscal year ending February 1, 2020. Early adoption is permitted. The adoption of this ASU will result in a significant increase to our Consolidated Balance Sheets for lease liabilities and right-of-use assets, and we are currently evaluating the other effects of adoption of this ASU on our Consolidated Financial Statements. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to our lease accounting information technology system in order to determine the best implementation strategy. We believe our current off-balance sheet leasing commitments are reflected in our investment grade debt rating.

In March 2017, the FASB issued ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the

Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 requires an employer to report the service cost component of retiree benefits in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented separately from the service cost component and outside a subtotal of income from operations. ASU 2017-07 is effective for years, and interim periods within those years, beginning after December 15, 2017, and requires retrospective application to all periods presented. This ASU will impact our Operating Profit subtotal as reported in our Consolidated Statement of Operations by excluding interest expense, investment returns, settlements and other non-service cost components of retiree benefit expenses. Information about interest expense, investment returns and other components of retiree benefit expenses can be found in Note 15 of our Consolidated Financial Statements .

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other

Comprehensive Income.” ASU 2018-02 amends ASC 220, “Income Statement - Reporting Comprehensive Income,” to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. In addition, under the ASU 2018-02, we may be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of the standard on our Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES Cash Flow Information

Net cash provided by operating activities

We generated $3.4 billion of cash from operations in 2017, compared to $4.3 billion in 2016 and $4.9 billion in 2015. The

cash provided by operating activities came from net earnings including non-controlling interests adjusted primarily for non-cash expenses of depreciation and amortization, LIFO (credit) charge, stock compensation, expense for company-sponsored pension plans, goodwill impairment charge and deferred income taxes. Changes in working capital created a net cash outflow in 2017 and 2016, and a net cash inflow for 2015.

The decrease in net cash provided by operating activities in 2017, compared to 2016, resulted primarily from a decrease in

net earnings including noncontrolling interests, the $1.0 billion contribution to the company-sponsored defined benefit plans and deferred taxes, partially offset by an increase in non-cash expenses and changes in working capital. Deferred taxes changed in 2017, compared to 2016, as a result of remeasuring deferred taxes due to the Tax Act.

The decrease in net cash provided by operating activities in 2016, compared to 2015, resulted primarily due to a decrease in

net earnings including noncontrolling interests and changes in working capital, partially offset by an increase in non-cash expenses, deferred taxes and lower payments on long-term liabilities.

Cash provided (used) by operating activities for changes in working capital was ($164) in 2017 compared to ($492) million in 2016 and $180 million in 2015. The decrease in cash used by operating activities for changes in working capital in 2017, compared to 2016, was primarily due to the following:

· A lower amount of cash used for inventory purchases due to decreased capital investments related to store growth ,

· Increased cash collections due to our emphasis on better receivables management, and

· A lower increase, over the prior year, of prepaid benefit costs in 2017, compared to 2016 ; partially offset by

· An overpayment of our fourth quarter 2017 estimated income taxes , and · An increase in store deposits in-transit due to increased sales in the last few days of the year .

The decrease in cash provided by operating activities for changes in working capital in 2016, compared to 2015, was

primarily due to the net effect of the following:

· Higher receivables due to increasing vendor allowance activity and pharmacy sales requiring third party payments,

· Increased inventory purchases due to store growth and new distribution centers,

· Higher prepayment of benefit costs,

· Lower accrued expenses due to reduced incentive plan payout accruals, and

· Lower tax payments due to a 2015 tax deduction associated with tangible property regulations. Net cash used by investing activities

Cash used by investing activities was $2.7 billion in 2017, compared to $3.9 billion in 2016 and $3.6 billion in 2015. The

amount of cash used by investing activities decreased in 2017 compared to 2016 primarily due to reduced cash payments for capital investments and lower payments for mergers. The amount of cash used by investing activities increased in 2016, compared to 2015, primarily due to increased cash payments for capital investments and our merger with ModernHEALTH.

Net cash used by financing activities

Cash used by financing activities was $681 million in 2017, $352 million in 2016 and $1.3 billion in 2015. The increase in the amount of cash used for financing activities in 2017 compared to 2016 was primarily due to lower net long-term borrowings, partially offset by lower treasury stock purchases and higher net commercial paper borrowings. The decrease in the amount of cash used for financing activities in 2016, compared to 2015, was primarily due to higher treasury stock purchases, partially offset by higher long-term and commercial paper borrowings.

Debt Management

Total debt, including both the current and long-term portions of capital lease and lease-financing obligations, increased $1.5 billion to $15.6 billion as of year-end 2017 compared to 2016. The increase in 2017, compared to 2016, resulted from the issuance of (i) $400 million of senior notes bearing an interest rate of 2.80%, (ii) $600 million of senior notes bearing an interest rate of 3.70%, (iii) $500 million of senior notes bearing an interest rate of 4.65% and (iv) increases in commercial paper borrowings, partially offset by payments of $700 million on maturing long-term debt obligations.

Total debt, including both the current and long-term portions of capital lease and lease-financing obligations, increased $2.0 billion to $14.1 billion as of year-end 2016, compared to 2015. The increase in 2016, compared to 2015, resulted from the issuance of (i) $1.0 billion of senior notes bearing an interest rate of 4.45%, (ii) $750 million of senior notes bearing an interest rate of 2.65%, (iii) $500 million of senior notes bearing an interest rate of 3.875%, (iv) $500 million of senior notes bearing an interest rate of 1.5%, (v) increases in commercial paper borrowings and (vi) increases in capital lease obligations due to additional leased locations, partially offset by payments of $1.4 billion on maturing long-term debt obligations. Liquidity Needs

We estimate our liquidity needs over the next twelve-month period to approximate $6.9 billion, which includes anticipated

requirements for working capital, capital investments, interest payments and scheduled principal payments of debt and commercial paper, offset by cash and temporary cash investments on hand at the end of 2017. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to the capital markets. Based on current operating trends, we believe that cash flows from operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility, will be adequate to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. We have approximately $2.1 billion of commercial paper and $1.3 billion of senior notes maturing in the next twelve months, which is included in the $6.9 billion of estimated liquidity needs. We expect to refinance this debt, in 2018, by issuing additional senior notes, a term loan or commercial paper on favorable terms based on our past experience. We currently plan to continue repurchases of common shares under the Company’s share repurchase programs and have a growing dividend, subject to Board approval. We believe we have adequate coverage of our debt covenants to continue to maintain our current debt ratings and to respond effectively to competitive conditions. Factors Affecting Liquidity

We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At February 3,

2018, we had $2.1 billion of commercial paper borrowings outstanding. Commercial paper borrowings are backed by our credit facility, and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to borrow under our current commercial paper program could be adversely affected for a period of time and increase our interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline, we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500 million on a daily basis. Although our ability to borrow under the credit facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility could be affected by a downgrade in our Public Debt Rating. As of March 29, 2018, we had $1.1 billion of commercial paper borrowings outstanding.

· Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 2.45 to 1 as of February 3, 2018. If this ratio were to exceed 3.50 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

· Our Fixed Charge Coverage Ratio (the ratio of Adjusted EBITDA plus Consolidated Rental Expense to Consolidated

Cash Interest Expense plus Consolidated Rental Expense, as defined in the credit facility) was 4.49 to 1 as of February 3, 2018. If this ratio fell below 1.70 to 1, we would be in default of our credit facility and our ability to borrow under the facility would be impaired.

Our credit facility is more fully described in Note 6 to the Consolidated Financial Statements. We were in compliance with

our financial covenants at year-end 2017.

The tables below illustrate our significant contractual obligations and other commercial commitments, based on year of maturity or settlement, as of February 3, 2018 (in millions of dollars):

2018 2019 2020 2021 2022 Thereafter Total Contractual Obligations Long-term debt $3,509 $1,243 $ 721 $ 795 $ 897 $ 7,622 $14,787 Interest on long-term debt 427 496 440 396 364 4,411 6,534 Capital lease obligations 88 78 74 71 68 692 1,071 Operating lease obligations 992 936 838 736 606 3,664 7,772 Financed lease obligations 8 8 9 9 9 43 86 Self-insurance liability 234 142 98 65 41 115 695 Construction commitments 616 — — — — — 616 Purchase obligations 455 129 88 44 37 48 801 Total $6,329 $3,032 $2,268 $2,116 $2,022 $ 16,595 $32,362 Other Commercial Commitments Standby letters of credit $ 222 $ — $ — $ — $ — $ — $ 222 Surety bonds 412 — — — — — 412 Total $ 634 $ — $ — $ — $ — $ — $ 634

(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which totaled approximately $1.0 billion in 2017. This table also excludes contributions under various multi-employer pension plans, which totaled $954 million in 2017.

(3) As of February 3, 2018, we had $2.1 billion of commercial paper and no borrowings under our credit facility. (4) Amounts include contractual interest payments using the interest rate as of February 3, 2018, and stated fixed and swapped

interest rates, if applicable, for all other debt instruments. (5) The amounts included in the contractual obligations table for self-insurance liability related to workers’ compensation claims

have been stated on a present value basis. (6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected in other

current liabilities in our Consolidated Balance Sheets. (7) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of business, such

facility that, unless extended, terminates on August 29, 2022. Outstanding borrowings under the credit facility, the commercial paper borrowings, and some outstanding letters of credit, reduce funds available under the credit facility. As of February 3, 2018, we had $2.1 billion of outstanding commercial paper and no borrowings under our credit facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $6 million as of February 3, 2018.

In addition to the available credit mentioned above, as of February 3, 2018, we had authorized for issuance $2.5 billion of securities remaining under a shelf registration statement filed with the SEC and effective on December 14, 2016.

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This discussion and analysis contains certain forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words such as “will,” “would,” “could,” “continue,” “targeting,” “range,” “guidance,” “assume,” “possible,” “estimate,” “may,” “expect,” “goal,” “should,” “intend,” “believe,” “anticipate,” “plan,” and similar words or phrases. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially.

Statements elsewhere in this report and below regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. While we believe that the statements are accurate, uncertainties about the general economy, our labor relations, our ability to execute our plans on a timely basis and other uncertainties described below could cause actual results to differ materially.

· We are targeting identical supermarket sales growth, excluding fuel, to range from 1.5% to 2.0% in 2018.

· We expect net earnings to range from $1.95 to $2.15 per diluted share for 2018.

· We expect capital investments, excluding mergers, acquisitions, and purchases of leased facilities, to be approximately $3.0 billion in 2018.

· We expect our 2018 tax rate to be approximately 22%.

Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward- looking statements. These include:

· The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state of the financial markets and the effect that such condition has on our ability to issue commercial paper at acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities, could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual obligation to lend to us, or in the event that natural disasters or weather conditions interfere with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state of the financial markets.

 · Our ability to achieve sales, earnings and cash flow goals may be affected by: labor negotiations or disputes; changes in

the types and numbers of businesses that compete with us; pricing and promotional activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; our response to these actions; the state of the economy, including interest rates, the inflationary and deflationary trends in certain commodities, and the unemployment rate; the effect that fuel costs have on consumer spending; volatility of fuel margins; changes in government-funded benefit programs; manufacturing commodity costs; diesel fuel costs related to our logistics operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing in response to economic conditions; the inconsistent pace of the economic recovery; changes in inflation or deflation in product and operating costs; stock repurchases; our ability to retain pharmacy sales from third party payors; consolidation in the healthcare industry, including pharmacy benefit managers; our ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the potential costs and risks associated with potential cyber-attacks or data security breaches; the success of our future growth plans; the successful integration of our acquired companies; and the successful completion of the sale of our convenience stores business. Our ability to achieve sales and earnings goals may also be affected by our ability to manage the factors identified above. Our ability to execute our financial strategy may be affected by our ability to generate cash flow.

 · Our effective tax rate may differ from the expected rate due to changes in laws, the status of pending items with various

taxing authorities, and the deductibility of certain expenses.

We cannot fully foresee the effects of changes in economic conditions on our business. We have assumed economic and competitive situations will not change significantly in 2018.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Financial Risk Management

We use derivative financial instruments primarily to manage our exposure to fluctuations in interest rates. We do not enter

into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are straightforward instruments with liquid markets.

We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the strategic use of our commercial paper program, variable and fixed rate debt, and interest rate swaps. Our current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, we use the following guidelines: (i) use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount of debt subject to interest rate reset and the amount of floating rate debt to a combined total of $2.5 billion or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive or sensitivity to current mark-to-market status.

As of February 3, 2018, we maintained two interest rate swap agreements, with an aggregate notional amount totaling $100 million, to manage our exposure to changes in the fair value of our fixed rate debt resulting from interest rate movements by effectively converting a portion of our debt from fixed to variable rates. These agreements mature in December 2018, and coincide with our scheduled debt maturities. The differential between fixed and variable rates to be paid or received is accrued as interest rates change in accordance with the agreements as an adjustment to interest expense. These interest rate swap agreements are being accounted for as fair value hedges.

As of February 3, 2018, we maintained 14 forward-starting interest rate swap agreements with maturity dates of January 15, 2019 and January 15, 2020 with an aggregate notional amount totaling $1.0 billion. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. We entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on our forecasted issuances of debt in fiscal years 2018 and 2019. The fixed interest rates for these forward-starting interest rate swaps range from 2.15% to 2.48%. The variable rate component on the forward-starting interest rate swaps is 3 month LIBOR. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 3, 2018, the fair value of the interest rate swaps was recorded in other assets for $103 million and accumulated other comprehensive income for $73 million, net of tax.

Annually, we review with the Financial Policy Committee of our Board of Directors compliance with the guidelines described above. The guidelines may change as our business needs dictate.

The tables below provide information about our interest rate derivatives classified as fair value hedges and underlying debt portfolio as of February 3, 2018 and January 28, 2017. The amounts shown for each year represent the contractual maturities of long-term debt, excluding capital leases, and the average outstanding notional amounts of interest rate derivatives classified as fair value hedges as of February 3, 2018 and January 28, 2017. Interest rates reflect the weighted average rate for the outstanding instruments. The variable component of each interest rate derivative and the variable rate debt is based on U.S. dollar LIBOR using the forward yield curve as of February 3, 2018 and January 28, 2017. The Fair Value column includes the fair value of our debt instruments and interest rate derivatives classified as fair value hedges as of February 3, 2018 and January 28, 2017. See Notes 6, 7 and 8 to the Consolidated Financial Statements.

February 3, 2018 Expected Year of Maturity

2018 2019 2020 2021 2022 Thereafter Total Fair Value

(in millions) Debt Fixed rate $ (1,332) $ (1,243) $ (696) $ (795) $ (897) $ (7,494) $ (12,457) $ (12,837) Average interest rate 4.48 % 4.65 % 4.58 % 4.57 % 4.65 % 4.60 % Variable rate $ (2,177) $ — $ (25) $ — $ — $ (128) $ (2,330) $ (2,330) Average interest rate 1.73 % — 3.15 % — — —

February 3, 2018 February

3, February

3, Average Notional Amounts Outstanding 2018 2018 2018 2019 2020 2021 2022 Thereafter Total Fair Value (in millions) Interest Rate Derivatives Classified as Fair Value Hedges Fixed to variable $ 88 $ — $ — $ — $ — $ — $ 88 $ (1) Average pay rate 7.63 % — — — — — Average receive rate 6.80 % — — — — —

January 28, 2017 Expected Year of Maturity

2017 2018 2019 2020 2021 Thereafter Total Fair Value

(in millions) Debt Fixed rate $ (716) $ (1,298) $ (1,246) $ (699) $ (797) $ (6,955) $ (11,711) $ (12,301) Average interest rate 4.94 % 4.54 % 4.68 % 4.62 % 4.63 % 4.57 % Variable rate $ (1,481) $ (17) $ — $ (25) $ — $ (81) $ (1,604) $ (1,604) Average interest rate 0.93 % 3.53 % — 5.00 % — 3.73 %

January 28, 2017 January

28, January

28, Average Notional Amounts Outstanding 2017 2017

2017 2018 2019 2020 2021 Thereafter Total Fair Value

(in millions) Interest Rate Derivatives Classified as Fair Value Hedges Fixed to variable $ 100 $ 88 $ — $ — $ — $ — $ 100 $ (1) Average pay rate 6.71 % 7.20 % — — — — Average receive rate 6.80 % 6.80 % — — — —

Based on our year-end 2017 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See Note 7 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of The Kroger Co. Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries as of February 3, 2018 and January 28, 2017, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended February 3, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of February 3, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 3, 2018 and January 28, 2017, and the results of their operations and their cash flows for each of the three years in the period ended February 3, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 3, 2018 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principles

As discussed in Note 19 to the consolidated financial statements, the Company changed the manner in which it accounts for deferred income taxes and the manner in which it accounts for goodwill impairments in 2017. Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting , included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A . Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits i n accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Definition and Limitations of Internal Control over Financial Reporting

THE KROGER CO. CONSOLIDATED BALANCE SHEETS

February 3, January 28, (In millions, except par amounts) 2018 2017 ASSETS Current assets

Cash and temporary cash investments $ 347 $ 322 Store deposits in-transit 1,161 910 Receivables 1,637 1,649 FIFO inventory 7,781 7,852 LIFO reserve (1,248) (1,291) Assets held for sale 604 — Prepaid and other current assets 835 898 Total current assets 11,117 10,340

Property, plant and equipment, net 21,071 21,016 Intangibles, net 1,100 1,153 Goodwill 2,925 3,031 Other assets 984 965

Total Assets $ 37,197 $ 36,505 LIABILITIES Current liabilities

Current portion of long-term debt including obligations under capital leases and financing obligations $ 3,560 $ 2,252

Trade accounts payable 5,858 5,818 Accrued salaries and wages 1,099 1,234 Deferred income taxes — 251 Liabilities held for sale 259 — Other current liabilities 3,421 3,305 Total current liabilities 14,197 12,860

Long-term debt including obligations under capital leases and financing obligations 12,029 11,825 Deferred income taxes 1,568 1,927 Pension and postretirement benefit obligations 792 1,524 Other long-term liabilities 1,706 1,659

Total Liabilities 30,292 29,795 Commitments and contingencies (see Note 13) SHAREHOLDERS’ EQUITY Preferred shares, $100 per share, 5 shares authorized and unissued — — Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2017 and 2016 1,918 1,918 Additional paid-in capital 3,161 3,070 Accumulated other comprehensive loss (471) (715) Accumulated earnings 17,007 15,543 Common shares in treasury, at cost, 1,048 shares in 2017 and 994 shares in 2016 (14,684) (13,118)

Total Shareholders’ Equity - The Kroger Co. 6,931 6,698 Noncontrolling interests (26) 12

Total Equity 6,905 6,710

Total Liabilities and Equity $ 37,197 $ 36,505

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended February 3, 2018, January 28, 2017 and January 30, 2016

2017 2016 2015 (In millions, except per share amounts) (53 weeks) (52 weeks) (52 weeks) Sales $ 122,662 $ 115,337 $ 109,830 Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 95,662 89,502 85,496

Operating, general and administrative 21,568 19,178 17,946 Rent 911 881 723 Depreciation and amortization 2,436 2,340 2,089

Operating profit 2,085 3,436 3,576 Interest expense 601 522 482

Net earnings before income tax (benefit) expense 1,484 2,914 3,094 Income tax (benefit) expense (405) 957 1,045

Net earnings including noncontrolling interests 1,889 1,957 2,049 Net earnings (loss) attributable to noncontrolling interests (18) (18) 10

Net earnings attributable to The Kroger Co. $ 1,907 $ 1,975 $ 2,039

Net earnings attributable to The Kroger Co. per basic common share $ 2.11 $ 2.08 $ 2.09

Average number of common shares used in basic calculation 895 942 966

Net earnings attributable to The Kroger Co. per diluted common share $ 2.09 $ 2.05 $ 2.06

Average number of common shares used in diluted calculation 904 958 980

Dividends declared per common share $ 0.495 $ 0.465 $ 0.408

The accompanying notes are an integral part of the consolidated financial statements.

THE KROGER CO. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended February 3, 2018, January 28, 2017 and January 30, 2016

2017 2016 2015 (In millions) (53 weeks) (52 weeks) (52 weeks) Net earnings including noncontrolling interests $ 1,889 $ 1,957 $ 2,049 Other comprehensive income (loss)

Realized and unrealized gains and losses on available for sale securities, net of income tax 4 (20) 3

Change in pension and other postretirement defined benefit plans, net of income tax 214 (64) 131 Unrealized gains and losses on cash flow hedging activities, net of income tax 23 47 (3) Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax 3 2 1

Total other comprehensive income (loss) 244 (35) 132

Comprehensive income 2,133 1,922 2,181 Comprehensive gain (loss) attributable to noncontrolling interests (18) (18) 10

Comprehensive income attributable to The Kroger Co. $ 2,151 $ 1,940 $ 2,171

(1) Amount is net of tax expense (benefit) of $1 in 2017, $( 16) in 2016 and $2 in 2015 . (2) Amount is net of tax expense (benefit) of $83 in 2017, $ (39) in 2016 and $77 in 2015. (3) Amount is net of tax expense (benefit) of $0 in 2017, $ 27 in 2016 and $(2) in 2015. (4) Amount is net of tax expense of $3 in 2017.

The accompanying notes are an integral part of the consolidated financial statements.

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THE KROGER CO. CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended February 3, 2018, January 28, 2017 and January 30, 2016

2017 2016 2015 (In millions) (53 weeks) (52 weeks) (52 weeks) Cash Flows from Operating Activities:

Net earnings including noncontrolling interests $ 1,889 $ 1,957 $ 2,049 Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: Depreciation and amortization 2,436 2,340 2,089 Asset impairment charge 71 26 46 LIFO (credit) charge (8) 19 28 Stock-based employee compensation 151 141 165 Expense for company-sponsored pension plans 591 94 103 Goodwill impairment charge 110 — — Deferred income taxes (694) 201 317 Other 8 (28) 54 Changes in operating assets and liabilities net of effects from mergers of businesses:

Store deposits in-transit (265) 13 95 Receivables 61 (110) (59) Inventories (23) (382) (184) Prepaid and other current assets 41 (172) (28) Trade accounts payable 158 16 440 Accrued expenses (40) (118) 275 Income taxes receivable and payable (96) 261 (359) Contribution to company-sponsored pension plans (1,000) — (5) Other 23 14 (109)

Net cash provided by operating activities 3,413 4,272 4,917

Cash Flows from Investing Activities:

Payments for property and equipment, including payments for lease buyouts (2,809) (3,699) (3,349) Proceeds from sale of assets 138 132 45 Payments for mergers, net of cash acquired (16) (401) (168) Other (20) 93 (98)

Net cash used by investing activities (2,707) (3,875) (3,570)

Cash Flows from Financing Activities:

Proceeds from issuance of long-term debt 1,523 2,781 1,181 Payments on long-term debt (788) (1,355) (1,245) Net borrowings (payments) on commercial paper 696 435 (285) Dividends paid (443) (429) (385) Excess tax benefits on stock-based awards — — 97 Proceeds from issuance of capital stock 51 68 120 Treasury stock purchases (1,633) (1,766) (703) Investment in the remaining equity of a noncontrolling interest — — (26) Other (87) (86) (92)

Net cash used by financing activities (681) (352) (1,338)

Net increase in cash and temporary cash investments 25 45 9 Cash and temporary cash investments:

Beginning of year 322 277 268 End of year $ 347 $ 322 $ 277

Reconciliation of capital investments:

Payments for property and equipment, including payments for lease buyouts $ (2,809) $ (3,699) $ (3,349) Payments for lease buyouts 13 5 35 Changes in construction-in-progress payables (188) 72 (35) Total capital investments, excluding lease buyouts $ (2,984) $ (3,622) $ (3,349)

Disclosure of cash flow information:

Cash paid during the year for interest $ 656 $ 505 $ 474 Cash paid during the year for income taxes $ 348 $ 557 $ 1,001

The accompanying notes are an integral part of the consolidated financial statements

THE KROGER CO.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY Years Ended February 3, 2018, January 28, 2017 and January 30, 2016

Accumulated Additional Other Common Stock Paid-In Treasury Stock Comprehensive Accumulated Noncontrolling (In millions, except per share amounts) Shares Amount Capital Shares Amount Gain (Loss) Earnings Interest Total Balances at January 31, 2015 1,918 $ 1,918 $ 2,748 944 $ (10,809) $ (812) $ 12,367 $ 30 $ 5,442 Issuance of common stock:

Stock options exercised — — — (9) 120 — — — 120 Restricted stock issued — — (122) (5) 37 — — — (85)

Treasury stock activity: Treasury stock purchases, at cost — — — 14 (500) — — — (500) Stock options exchanged — — — 7 (203) — — — (203)

Share-based employee compensation — — 165 — — — — — 165 Other comprehensive gain net of income tax of $77 — — — — — 132 — — 132 Investment in the remaining equity of a non- controlling interest — — 26 — — — — (57) (31) Other — — 163 — (54) — — (5) 104 Cash dividends declared ($0.408 per common share) — — — — — — (395) — (395) Net earnings including non-controlling interests — — — — — — 2,039 10 2,049 Balances at January 30, 2016 1,918 $ 1,918 $ 2,980 951 $ (11,409) $ (680) $ 14,011 $ (22) $ 6,798 Issuance of common stock:

Stock options exercised — — (1) (5) 68 — — — 67 Restricted stock issued — — (116) (3) 57 — — — (59)

Treasury stock activity: Treasury stock purchases, at cost — — — 47 (1,661) — — — (1,661) Stock options exchanged — — — 4 (105) — — — (105)

Share-based employee compensation — — 141 — — — — — 141 Other comprehensive loss net of income tax of $(28) — — — — — (35) — — (35) Other — — 66 — (68) — — 52 50 Cash dividends declared ($0.465 per common share) — — — — — — (443) — (443) Net earnings (loss) including non-controlling interests — — — — — — 1,975 (18) 1,957 Balances at January 28, 2017 1,918 $ 1,918 $ 3,070 994 $ (13,118) $ (715) $ 15,543 $ 12 $ 6,710 Issuance of common stock:

Stock options exercised — — — (4) 51 — — — 51 Restricted stock issued — — (119) (2) 85 — — — (34)

Treasury stock activity: Treasury stock purchases, at cost — — — 58 (1,567) — — — (1,567) Stock options exchanged — — — 2 (66) — — — (66)

Share-based employee compensation — — 151 — — — — — 151 Other comprehensive gain net of income tax of $87 — — — — — 244 — — 244 Other — — 59 — (69) — — (20) (30) Cash dividends declared ($0.495 per common share) — — — — — — (443) — (443) Net earnings (loss) including non-controlling interests — — — — — — 1,907 (18) 1,889 Balances at February 3, 2018 1,918 $ 1,918 $ 3,161 1,048 $ (14,684) $ (471) $ 17,007 $ (26) $ 6,905

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All amounts in the Notes to Consolidated Financial Statements are in millions except per share amounts. 1. ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in preparing these financial statements. Description of Business, Basis of Presentation and Principles of Consolidation

The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. As of February 3, 2018, the Company was

one of the largest retailers in the world based on annual sales. The Company also manufactures and processes food for sale by its supermarkets. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and the variable interest entities in which the Company is the primary beneficiary. Intercompany transactions and balances have been eliminated.

On June 25, 2015, the Company’s Board of Directors approved a two-for-one stock split of the Company’s common shares in the form of a 100% stock dividend, which was effective July 13, 2015. All share and per share amounts in the Company’s Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the stock split for all periods presented.

Refer to Note 19 for a description of changes to the Consolidated Statement of Operations and Consolidated Statement of

Cash Flows for a recently adopted accounting standard regarding the presentation of employee share-based compensation payments. Fiscal Year

The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 53-week period

ended February 3, 2018 and 52-week periods ended January 30, 2016 and January 31, 2015. Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ from those estimates.

Cash, Temporary Cash Investments and Book Overdrafts Cash and temporary cash investments represent store cash and short-term investments with original maturities of less than

three months. Book overdrafts are included in “Trade accounts payable” and “Accrued salaries and wages” in the Consolidated Balance Sheets.

Deposits In-Transit Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year related to sales,

a majority of which were paid for with debit cards, credit cards and checks, to which the Company does not have immediate access but settle within a few days of the sales transaction.

Inventories

Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, approximately

93% of inventories in 2017 and 89% of inventories in 2016 were valued using the LIFO method. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1,248 at February 3, 2018 and $1,291 at January 28, 2017. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its LIFO charge or credit.

Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at fair value.

Depreciation and amortization expense, which includes the depreciation of assets recorded under capital leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the asset. Food production plant and distribution center equipment is depreciated over lives varying from three to 15 years. Information technology assets are generally depreciated over five years. Depreciation and amortization expense was $2,436 in 2017, $2,340 in 2016 and $2,089 in 2015.

The Company recognizes rent holidays, including the time period during which the Company has access to the property for

construction of buildings or improvements and escalating rent provisions on a straight-line basis over the term of the lease. The deferred amount is included in “Other current liabilities” and “Other long-term liabilities” on the Company’s Consolidated Balance Sheets. Goodwill

The Company reviews goodwill for impairment during the fourth quarter of each year, and also upon the occurrence of a

triggering event. The Company performs reviews of each of its operating divisions and variable interest entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the carrying value of the reporting unit’s goodwill over the fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Results of the goodwill impairment reviews performed during 2017, 2016 and 2015 are summarized in Note 3.

Impairment of Long-Lived Assets

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether

certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairments in the normal course of business totaling $71, $26 and $46 in 2017, 2016 and 2015, respectively. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as “Operating, general and administrative” expense. Store Closing Costs

The Company provides for closed store liabilities relating to the present value of the estimated remaining non-cancellable

lease payments after the closing date, net of estimated subtenant income. The Company estimates the net lease liabilities using a discount rate to calculate the present value of the remaining net rent payments on closed stores. The closed store lease liabilities usually are paid over the lease terms associated with the closed stores, which generally have remaining terms ranging from one to 20 years. Adjustments to closed store liabilities primarily relate to changes in subtenant income and actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known. Store closing liabilities are reviewed quarterly to ensure that any accrued amount that is not a sufficient estimate of future costs is adjusted to income in the proper period.

is included in “Other long-term liabilities” in the Consolidated Balance Sheets. Interest Rate Risk Management

The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The Company’s

current program relative to interest rate protection and the methods by which the Company accounts for its derivative instruments are described in Note 7. Benefit Plans and Multi-Employer Pension Plans

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or

losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). All plans are measured as of the Company’s fiscal year end.

The determination of the obligation and expense for company-sponsored pension plans and other post-retirement benefits is

dependent on the selection of assumptions used by actuaries and the Company in calculating those amounts. Those assumptions are described in Note 15 and include, among others, the discount rate, the expected long-term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense and recorded obligation in future periods. While the Company believes that the assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the pension and other post-retirement obligations and future expense.

The Company administers and makes contributions to the employee 401(k) retirement savings accounts. Contributions to the employee 401(k) retirement savings accounts are expensed when contributed. Refer to Note 15 for additional information regarding the Company’s benefit plans. Share Based Compensation

The Company accounts for stock options under fair value recognition provisions . Under this method, the Company

recognizes compensation expense for all share-based payments granted. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. In addition, the Company records expense for restricted stock awards in an amount equal to the fair market value of the underlying stock on the grant date of the award, over the period the awards lapse. Excess tax benefits related to share-based payments are recognized in the provision for income taxes. Refer to Note 12 for additional information regarding the Company’s stock based compensation.

Deferred Income Taxes

Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and

liabilities and their financial reporting basis. Refer to Note 5 for the types of differences that give rise to significant portions of deferred income tax assets and liabilities. Beginning in 2017, the Company classified all deferred tax liabilities and assets as noncurrent (see Note 5). Uncertain Tax Positions

The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent

a benefit can be recognized in its consolidated financial statements. Refer to Note 5 for the amount of unrecognized tax benefits and other related disclosures related to uncertain tax positions.

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. As of February 3, 2018, the Internal Revenue Service had concluded its examination of our 2012 and 2013 federal tax returns.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Self-Insurance Costs

The Company is primarily self-insured for costs related to workers’ compensation and general liability claims. Liabilities are

actuarially determined and are recognized based on claims filed and an estimate of claims incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim basis. The Company is insured for covered costs in excess of these per claim limits.

The following table summarizes the changes in the Company’s self-insurance liability through February 3, 2018.

2017 2016 2015 Beginning balance $ 682 $ 639 $ 599 Expense 247 263 234 Claim payments (234) (220) (225) Assumed from mergers —  —  31 Ending balance 695 682 639 Less: Current portion (234) (229) (223) Long-term portion $ 461 $ 453 $ 416

Revenues from the sale of products are recognized at the point of sale. Discounts provided to customers by the Company at

the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. Pharmacy sales are recorded when product is provided to the customer. Sales taxes are recorded as other accrued liabilities and not as a component of sales. The Company does not recognize a sale when it sells its own gift cards and gift certificates. Rather, it records a deferred liability equal to the amount received. A sale is then recognized when the gift card or gift certificate is redeemed to purchase the Company’s products. In 2016, the Company began recognizing gift card and gift certificate breakage under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards and gift certificates. Prior to 2016, gift card and gift certificate breakage was recognized under the remote method, where breakage income is recognized when redemption is unlikely to occur and there is no legal obligation to remit the value of the unredeemed gift cards or gift certificates. The amount of breakage was not material for 2017, 2016 and 2015. Merchandise Costs

The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of discounts and

allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, purchasing management salaries and administration costs are included in the “Operating, general and administrative” line item along with most of the Company’s other managerial and administrative costs. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations.

Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and

maintenance, utilities, inbound freight and, where applicable, third party warehouse management fees. These costs are recognized in the periods the related expenses are incurred.

The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in the

“Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s pre-tax advertising costs totaled $707 in 2017, $717 in 2016 and $679 in 2015. The Company does not record vendor allowances for co-operative advertising as a reduction of advertising expense.

Operating, General and Administrative Expenses

Operating, general and administrative (“OG&A”) expenses include all operating costs of the Company, except merchandise

costs, as described above, and rent and depreciation and amortization. Certain other income items are classified as a reduction of OG&A costs. These include items such as gift card and lottery commissions, coupon processing and vending machine fees, check cashing, money order and wire transfer fees, and baled salvage credits. Consolidated Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments

purchased with an original maturity of three months or less to be temporary cash investments. Segments

The Company operates supermarkets, multi-department stores, jewelry stores, and convenience stores throughout the United

States. The Company’s retail operations, which represent over 97% of the Company’s consolidated sales are its only reportable segment. The Company’s operating divisions have been aggregated into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in the operating division. The geographical separation is the primary differentiation between these operating divisions. The Company’s geographic basis of organization reflects the manner in which the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker, assesses performance internally. All of the Company’s operations are domestic.

The following table presents sales revenue by type of product for 2017, 2016 and 2015.

2017 2016 2015 Amount % of total Amount % of total Amount % of total Non Perishable $ 62,378 50.9 % $ 60,220 52.2 % $ 57,187 52.1 % Perishable 29,145 23.8 % 27,666 24.0 % 25,726 23.4 % Fuel 16,246 13.2 % 13,979 12.1 % 14,802 13.5 % Pharmacy 10,752 8.8 % 10,432 9.0 % 9,778 8.9 % Other 4,141 3.3 % 3,040 2.7 % 2,337 2.1 %

Total Sales and other revenue $ 122,662 100 % $ 115,337 100 % $ 109,830 100 %

(1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to jewelry stores, food production plants to outside customers, data analytic services,

variable interest entities, specialty pharmacy, in-store health clinics, digital coupon services and online sales by Vitacost.com.

2. MERGERS

On September 2, 2016, the Company closed its merger with Modern HC Holdings, Inc. (“ModernHEALTH”) by purchasing 100% of the outstanding shares of ModernHEALTH for $407. This merger allows the Company to expand its specialty pharmacy services by significantly increasing geographic reach and patient therapies. The merger was accounted for under the purchase method of accounting and was financed through the issuance of commercial paper. In a business combination, the purchase price is allocated to assets acquired and liabilities assumed based on their fair values, with any excess of purchase price over fair value recognized as goodwill. In addition to recognizing the assets and liabilities on the acquired company’s balance sheet, the Company reviews supply contracts, leases, financial instruments, employment agreements and other significant agreements to identify potential assets or liabilities that require recognition in connection with the application of acquisition accounting under Accounting Standards Codification (“ASC”) 805. Intangible assets are recognized apart from goodwill when the asset arises from contractual or other legal rights, or are separable from the acquired entity such that they may be sold, transferred, licensed, rented or exchanged either on a standalone basis or in combination with a related contract, asset or liability.

(1)

(2)

(3)

The Company’s purchase price allocation was finalized in the third quarter of 2017. The changes in the fair values assumed

from the preliminary amounts determined as of September 2, 2016 were a decrease in goodwill of $2, a decrease in current liabilities of $2. The table below summarizes the final fair value of the assets acquired and liabilities assumed:

September 2, 2016 ASSETS Total current assets $ 82 Property, plant and equipment 8 Intangibles 136

Total Assets, excluding Goodwill 226 LIABILITIES

Total current liabilities (68) Fair-value of long-term debt including obligations under capital leases and financing obligations (1) Deferred income taxes (33)

Total Liabilities (102)

Total Identifiable Net Assets 124 Goodwill 283

Total Purchase Price $ 407 Of the $136 allocated to intangible assets, the Company recorded $131 and $5 related to pharmacy prescription files and

distribution agreements, respectively. The Company will amortize the pharmacy prescription files and distribution agreements, using the straight line method, over 10 years. The goodwill recorded as part of the merger was attributable to the assembled workforce of ModernHEALTH and operational synergies expected from the merger, as well as any intangible assets that did not qualify for separate recognition. The merger was treated as a stock purchase for income tax purposes. The assets acquired and liabilities assumed as part of the merger did not result in a step up of tax basis and goodwill is not expected to be deductible for tax purposes.

On December 18, 2015, the Company closed its merger with Roundy’s by purchasing 100% of Roundy’s outstanding common stock for $3.60 per share and assuming Roundy’s outstanding debt, for a purchase price of $866. The merger brings a complementary store base in communities throughout Wisconsin and a stronger presence in the greater Chicagoland area. The merger was accounted for under the purchase method of accounting and was financed through a combination of commercial paper and long-term debt.

The Company’s purchase price allocation was finalized in the fourth quarter of 2016. The changes in the fair values assumed

from the preliminary amounts determined as of December 18, 2015 were a decrease in goodwill of $13, a decrease in current liabilities of $8 and a decrease in deferred tax liabilities of $5. The table below summarizes the final fair value of the assets acquired and liabilities assumed:

December 18, 2015 ASSETS Cash and temporary cash investments $ 20 Store deposits in-transit 30 Receivables 43 FIFO inventory 323 Prepaid and other current assets 19

Total current assets 435 Property, plant and equipment 342 Intangibles 324 Other assets 4

Total Assets, excluding Goodwill 1,105 LIABILITIES Current portion of obligations under capital leases and financing obligations (9) Trade accounts payable (236) Accrued salaries and wages (40) Other current liabilities (81)

Total current liabilities (366)

Fair-value of long-term debt (678) Fair-value of long-term obligations under capital leases and financing obligations (20) Deferred income taxes (107) Pension and postretirement benefit obligations (36) Other long-term liabilities (111)

Total Liabilities (1,318)

Total Identifiable Net Liabilities (213) Goodwill 401

Total Purchase Price $ 188

Of the $324 allocated to intangible assets, $211 relates to the Mariano’s®, Pick ‘n Save®, Metro Market and Copps™ trade

names, to which was assigned an indefinite life and, therefore, will not be amortized. The Company also recorded $69 , $38, and $6 related to favorable leasehold interests, pharmacy prescription files and customer lists, respectively. The Company will amortize the favorable leasehold interests over a weighted average of twelve years. The Company will amortize the pharmacy prescription files and customer lists over seven and two years, respectively, on a straight-line basis. The goodwill recorded as part of the merger was attributable to the assembled workforce of Roundy’s and operational synergies expected from the merger, as well as any intangible assets that do not qualify for separate recognition. The transaction was treated as a stock purchase for income tax purposes. The assets acquired and liabilities assumed as part of the merger did not result in a step up of the tax basis and goodwill is not expected to be deductible for tax purposes.

Pro forma results of operations for 2016 and 2015, assuming the Roundy’s transaction had taken place at the beginning of

2014 and the ModernHEALTH merger had taken place at the beginning of 2015, are included in the following table. 2017 is not included in the following table as the entities are included within the Company’s consolidated results for the entire fiscal year. The pro forma information includes historical results of operations of Roundy’s and ModernHEALTH, as well as adjustments for interest expense that would have been incurred due to financing the mergers, depreciation and amortization of the assets acquired and excludes the pre-merger transaction related expenses incurred by Roundy’s and ModernHEALTH and the Company. The pro forma information does not include efficiencies, cost reductions, synergies or investments in lower prices for our customers expected to result from the mergers. The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the Roundy’s merger completed at the beginning of 2014 or the ModernHEALTH merger completed at beginning of 2015.

Fiscal year ended Fiscal year ended January 28, 2017 January 30, 2016 Sales $ 115,994 $ 114,341 Net earnings including noncontrolling interests 1,958 2,059 Net earnings (loss) attributable to noncontrolling interests (18) 10

Net earnings attributable to The Kroger Co. $ 1,976 $ 2,049

3. GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through February 3, 2018.

2017 2016 Balance beginning of year

Goodwill $ 5,563 $ 5,256 Accumulated impairment losses (2,532) (2,532)

3,031 2,724 Activity during the year

Mergers 18 307 Impairment losses (110) — Held for sale adjustment (14) —

Balance end of year

Goodwill 5,567 5,563 Accumulated impairment losses (2,642) (2,532)

$ 2,925 $ 3,031

In 2017, certain assets and liabilities including goodwill totaling $14 , primarily those related to the Company’s convenience store business, were classified as held for sale in the Consolidated Balance Sheet as a result of the exploration of strategic alternatives (see Note 17).

In 2016, the Company acquired all of the outstanding shares of ModernHEALTH (see Note 2) resulting in additional

goodwill totaling $285. In 2017, the Company finalized its ModernHEALTH purchase allocation resulting in a decrease in goodwill before impairment consideration of $2 (see Note 2).

Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or a

change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount, in accordance with the newly adopted Accounting Standards Update (“ASU”) 2017-04 "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The annual evaluations of goodwill and indefinite-lived intangible assets performed during the fourth quarter of 2016 and 2015 did not result in impairment.

Based on the results of the Company’s impairment assessment in the fourth quarter of 2017, the Kroger Specialty Pharmacy

reporting unit was the only reporting unit for which there was a potential impairment. In the fourth quarter of 2017, the operating performance of the Kroger Specialty Pharmacy reporting unit began to be affected by reduced margins as a result of compression in reimbursement by third party payers and a reduction of certain types of revenue. As a result of this decline, particularly in future expected cash flows, along with comparable fair value information, management concluded that the carrying value of goodwill for Kroger Specialty Pharmacy reporting unit exceeded its fair value, resulting in a pre-tax impairment charge of $110 ($74 after-tax). The pre-impairment goodwill balance for Kroger Specialty Pharmacy was $353, as of the fourth quarter 2017. Based on current and future expected cash flows, the Company believes additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of the Company’s reporting units would not indicate a potential for impairment of the Company’s recorded goodwill balance.

In 2016, the Company acquired definite and indefinite lived intangible assets totaling approximately $136 as a result of the

merger with ModernHEALTH (see Note 2). The following table summarizes the Company’s intangible assets balance through February 3, 2018.

2017 2016 Gross carrying Accumulated Gross carrying Accumulated amount amortization amount amortization Definite-lived favorable leasehold interests $ 174 $ (53) $ 167 $ (41) Definite-lived pharmacy prescription files 238 (70) 254 (56) Definite-lived customer relationships 93 (67) 93 (55) Definite-lived other 99 (44) 97 (33) Indefinite-lived trade name 641 — 641 — Indefinite-lived liquor licenses 89 — 86 — Total $ 1,334 $ (234) $ 1,338 $ (185)

(1) Favorable leasehold interests are amortized to rent expense, pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to operating, general and administrative (“OG&A”) expense and depreciation and amortization expense.

Amortization expense associated with intangible assets totaled approximately $59, $63 and $51, during fiscal years 2017,

2016 and 2015, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2017 is estimated to be approximately:

2018 $ 55 2019 50 2020 47 2021 36 2022 33 Thereafter 149 Total future estimated amortization associated with definite-lived intangible assets $ 370

(1) (1)

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of:

2017 2016 Land $ 3,201 $ 3,197 Buildings and land improvements 12,072 11,643 Equipment 13,635 13,495 Leasehold improvements 9,773 9,342 Construction-in-progress 2,050 1,979 Leased property under capital leases and financing obligations 1,000 932

Total property, plant and equipment 41,731 40,588 Accumulated depreciation and amortization (20,660) (19,572)

Property, plant and equipment, net $ 21,071 $ 21,016

Accumulated depreciation and amortization for leased property under capital leases was $354 at February 3, 2018 and $330 at January 28, 2017.

Approximately $177 and $219, net book value, of property, plant and equipment collateralized certain mortgages at February 3, 2018 and January 28, 2017, respectively. 5. TAXES BASED ON INCOME

The provision for taxes based on income consists of:

2017 2016 2015 Federal

Current $ 309 $ 721 $ 723 Deferred (747) 158 266

Subtotal federal (438) 879 989 State and local

Current 15 51 37 Deferred 18 27 19

Subtotal state and local 33 78 56 Total $ (405) $ 957 $ 1,045

A reconciliation of the statutory federal rate and the effective rate follows:

2017 2016 2015 Statutory rate 33.7 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 1.7 % 1.6 % 1.2 % Credits (2.5)% (1.1)% (1.2)% Favorable resolution of issues — % (0.5)% (0.2)% Domestic manufacturing deduction (1.1)% (0.7)% (0.7)% Excess tax benefits from share-based payments (0.4)% (1.6)% — % Effect of Tax Cuts and Jobs Act (60.8)% — % — % Impairment of Goodwill 2.3 % — — Other changes, net (0.2)% 0.1 % (0.3)% (27.3)% 32.8 % 33.8 %

The 2017 tax rate differed from the federal statutory rate primarily as a result of re-measuring deferred taxes due to the Tax

Cuts and Jobs Act, the Domestic Manufacturing Deduction and other changes, partially offset by non-deductible goodwill impairment charges and the effect of state income taxes. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act which made changes to the tax code including, but not limited to, reducing the federal statutory corporate tax rate from 35% to 21% and eliminating the domestic manufacturing deduction. GAAP requires the recognition of the impact of tax laws in the period in which they are enacted. The benefit recognized in 2017 from the Tax Cuts and Jobs Act is $922, primarily from the re- measurement of deferred taxes.

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of GAAP in

situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to finalize the calculations for certain income tax effects of the Tax Cuts and Jobs Act. Under the guidance in SAB 118, the income tax effects, for which the accounting under GAAP is incomplete, are reported as a provisional amount based on a reasonable estimate. The reasonable estimate is subject to adjustment during a "measurement period", not to exceed one year, until the accounting is complete. In accordance with SAB 118, the Company has determined that the net tax benefit of $922 recorded in connection with the Tax Cuts and Jobs Act includes provisional amounts related to depreciation and the application of provisions of the Tax Cuts and Jobs Act related to accelerated depreciation.

The 2015 rate for state income taxes is less than 2017 and 2016 due to filing amended returns to claim additional benefits in

years still under review, the favorable resolution of state issues and an increase in state credits.

The tax effects of significant temporary differences that comprise tax balances were as follows:

2017 2016 Current deferred tax assets:

Net operating loss and credit carryforwards $ — $ 23 Compensation related costs — 67 Other —  50

Subtotal — 140 Valuation allowance — (11)

Total current deferred tax assets — 129

Current deferred tax liabilities:

Insurance related costs — (52) Inventory related costs — (328)

Total current deferred tax liabilities — (380)

Current deferred taxes $ — $ (251) Long-term deferred tax assets:

Compensation related costs $ 348 $ 783 Lease accounting 78 121 Closed store reserves 45 46 Insurance related costs — 7 Net operating loss and credit carryforwards 146 101 Other  54 1

Subtotal 671 1,059 Valuation allowance (62) (39)

Total long-term deferred tax assets 609 1,020

Long-term deferred tax liabilities:

Depreciation and amortization (1,892) (2,947) Insurance related costs (32)  — Inventory related costs (253)  —

Total long-term deferred tax liabilities (2,177) (2,947)

Long-term deferred taxes $ (1,568) $ (1,927)

The Company adopted ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which

requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. The Company adopted the standard in 2017 prospectively and as a result of the implementation the 2017, as compared to 2016, current deferred tax liabilities were reclassified as non-current.

At February 3, 2018, the Company had net operating loss carryforwards for state income tax purposes of $1,578. These net

operating loss carryforwards expire from 2018 through 2037. The utilization of certain of the Company’s state net operating loss carryforwards may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state net operating losses.

At February 3, 2018, the Company had state credit carryforwards of $55, most of which expire from 2018 through 2027. The

utilization of certain of the Company’s credits may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state credits.

At February 3, 2018, the Company had federal net operating loss carryforwards of $20. These net operating loss

carryforwards expire from 2034 through 2035. The utilization of certain of the Company’s federal net operating loss carryforwards may be limited in a given year. Further, based on the analysis described below, the Company has not recorded a valuation allowance against the deferred tax assets resulting from its federal net operating losses.

The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether these assets are more likely than not to be realized based on all available evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of February 3, 2018, January 28, 2017 and January 30, 2016, the total valuation allowance was $62, $50 and $52, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting only the

timing of tax benefits, is as follows:

2017 2016 2015 Beginning balance $ 177 $ 204 $ 246 Additions based on tax positions related to the current year 11 10 11 Reductions based on tax positions related to the current year (1) (1) (11) Additions for tax positions of prior years 6 3 4 Reductions for tax positions of prior years (8) (30) (27) Settlements — (2) (17) Lapse of statute (5) (7) (2) Ending balance $ 180 $ 177 $ 204

The Company does not anticipate that changes in the amount of unrecognized tax benefits over the next twelve months will have a significant impact on its results of operations or financial position.

As of February 3, 2018, January 28, 2017 and January 30, 2016, the amount of unrecognized tax benefits that, if recognized,

would impact the effective tax rate was $88, $73 and $83 respectively. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such

amounts have been accrued and classified as a component of income tax expense. During the years ended February 3, 2018, January 28, 2017 and January 30, 2016, the Company recognized approximately $8, $(1) and $(5), respectively, in interest and penalties (recoveries). The Company had accrued approximately $28, $20 and $25 for the payment of interest and penalties as of February 3, 2018, January 28, 2017 and January 30, 2016.

As of February 3, 2018 , the Internal Revenue Service had concluded its examination of our 2012 and 2013 federal tax returns.

6. DEBT OBLIGATIONS

Long-term debt consists of:

February 3, January 28, 2018 2017 1.50% to 8.00% Senior Notes due through 2048 $ 12,201 $ 11,311 5.63% to 12.75% Mortgages due in varying amounts through 2027 22 38 0.91% to 1.68% Commercial paper borrowings due through February 2018 2,121 1,425 Other 443 541

Total debt, excluding capital leases and financing obligations 14,787 13,315 Less current portion (3,509) (2,197)

Total long-term debt, excluding capital leases and financing obligations $ 11,278 $ 11,118

In 2017, the Company issued $400 of senior notes due in fiscal year 2022 bearing an interest rate of 2.80%, $600 of senior notes due in fiscal year 2027 bearing an interest rate of 3.70% and $500 of senior notes due in fiscal year 2048 bearing an interest rate of 4.65%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $600. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the second quarter of 2017. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $20, $12 net of tax, has been deferred in Accumulated Other Comprehensive Loss, the Company will continue to amortize to earnings as the interest payments are made. The Company also repaid, upon maturity, $600 of senior notes bearing an interest rate of 6.40%, with proceeds from the senior notes issuances.

In 2016, the Company issued $1,000 of senior notes due in fiscal year 2047 bearing an interest rate of 4.45%, $500 of senior

notes due in fiscal year 2046 bearing an interest rate of 3.88%, $750 of senior notes due in fiscal year 2026 bearing an interest rate of 2.65% and $500 of senior notes due in fiscal year 2019 bearing an interest rate of 1.50%. The Company also repaid $450 of senior notes bearing an interest rate of 2.20%, $500 of senior notes bearing an interest rate of 3-month London Inter-Bank Offering Rate plus 53 basis points and $300 of senior notes bearing an interest rate of 1.20%.

On August 29, 2017, the Company entered into an amended, extended and restated its $2,750 unsecured revolving credit facility (the “Credit Agreement”), with a termination date of August 29, 2022, unless extended as permitted under the Credit Agreement. This Credit Agreement amended the Company’s $2,750 credit facility that would otherwise have terminated on June 30, 2019. The Company has the ability to increase the size of the Credit Agreement by up to an additional $1,000, subject to certain conditions.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) LIBOR plus a market spread,

based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the Federal Funds Rate plus 0.5%, (b) the Bank of America prime rate, and (c) one-month LIBOR plus 1.0%, plus a market rate spread based on the Company’s Public Debt Rating. The Company will also pay a Commitment Fee based on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced long- term senior unsecured debt issued by the Company.

The Credit Agreement contains covenants, which, among other things, require the maintenance of a Leverage Ratio of not

greater than 3.50:1.00 and a Fixed Charge Coverage Ratio of not less than 1.70:1.00. The Company may repay the Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed by the Company’s subsidiaries.

As of February 3, 2018, the Company had $2,121 of commercial paper borrowings, with a weighted average interest rate of

1.68% and no borrowings under the Credit Agreement. As of January 28, 2017, the Company had $1,425 of borrowings of commercial paper, with a weighted average interest rate of 0.91%, and no borrowings under the Credit Agreement.

As of February 3, 2018, the Company had outstanding letters of credit in the amount of $222, of which $6 reduces funds

available under the Credit Agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the option

of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group, together with any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of Directors, in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a change of control and a below investment grade rating.

The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2017, and for the years subsequent to 2017 are:

2018 $ 3,509 2019 1,243 2020 721 2021 795 2022 897 Thereafter 7,622 Total debt $ 14,787

7. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to interest

rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest rate reset and the amount of floating rate debt to a combined total of $2,500 or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive or sensitivity to current mark-to-market status.

The Company reviews compliance with these guidelines annually with the Financial Policy Committee of the Board of Directors. These guidelines may change as the Company’s needs dictate.

Fair Value Interest Rate Swaps

The table below summarizes the outstanding interest rate swaps designated as fair value hedges as of February 3, 2018 and

January 28, 2017.

2017 2016 Pay Pay Pay Pay Floating Fixed Floating Fixed Notional amount $ 100 $ — $ 100 $ — Number of contracts 2 — 2 — Duration in years 0.88 — 1.92 — Average variable rate 7.23 % — 6.37 % — Average fixed rate 6.80 % — 6.80 % — Maturity December 2018 December 2018

The gain or loss on these derivative instruments as well as the offsetting gain or loss on the hedged items attributable to the hedged risk is recognized in current earnings as “Interest expense.” These gains and losses for 2017 and 2016 were as follows:

Year-To-Date February 3, 2018 January 28, 2017 Gain/(Loss) on Gain/(Loss) on Gain/(Loss) on Gain/(Loss) on Consolidated Statements of Operations Classification Swaps Borrowings Swaps Borrowings Interest Expense $ — $ — $ (2) $ 2

The following table summarizes the location and fair value of derivative instruments designated as fair value hedges on the Company’s Consolidated Balance Sheets:

Asset Derivatives Fair Value February 3, January 28, Derivatives Designated as Fair Value Hedging Instruments 2018 2017 Balance Sheet Location Interest Rate Hedges $ (1) $ (1) Other long-term liabilities

Cash Flow Forward-Starting Interest Rate Swaps As of February 3, 2018, the Company had nine forward-starting interest rate swap agreements with a maturity date of

January 2019 with an aggregate notional amount totaling $750 and five forward-starting interest rate swap agreements with maturity dates of January 2020 with an aggregate notional amount totaling $250. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuance of debt in January 2019 and January 2020. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 3, 2018, the fair value of the interest rate swaps was recorded in other assets for $103 and accumulated other comprehensive income for $73 net of tax.

As of January 28, 2017, the Company had eleven forward-starting interest rate swap agreements with maturity dates of

August 2017 with an aggregate notional amount totaling $600, nine forward-starting interest rate swap agreements with maturity dates of January 2019 with an aggregate notional amount totaling $750 and five forward-starting interest rate swap agreements with maturity dates of January 2020 with an aggregate notional amount totaling $250. The Company entered into these forward- starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuance of debt in August 2017, January 2019 and January 2020. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of January 28, 2017, the fair value of the interest rate swaps was recorded in other assets and other long-term liabilities for $67 and $7, respectively, and accumulated other comprehensive income for $38 net of tax.

During 2017, the Company terminated eleven forward-starting interest rate swaps with maturity dates of August 2017, with

an aggregate notional amount totaling $600. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the third quarter of 2017. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $20, $12 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made.

During 2016, the Company terminated forward-starting interest rate swaps with maturity dates of October 2016, with an

aggregate notional amount totaling $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued in 2016. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $13, $8 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made.

The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges for 2017 and 2016:

Year-To-Date Amount of Gain/(Loss) in Amount of Gain/(Loss)

AOCI on Derivative Reclassified from AOCI into Location of Gain/(Loss) Derivatives in Cash Flow Hedging (Effective Portion) Income (Effective Portion) Reclassified into Income Relationships 2017 2016 2017 2016 (Effective Portion) Forward-Starting Interest Rate Swaps, net of tax* $ 24 $ (2) $ (3) $ (2) Interest expense

For the above fair value and cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives

Association master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or of the Company under these master netting agreements. As of February 3, 2018 and January 28, 2017, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances upon an

event of default or termination event is as follows as of February 3, 2018 and January 28, 2017:

Gross Amounts Not Offset in the Net Amount Balance Sheet Gross Amount Gross Amounts Offset Presented in the Financial February 3, 2018 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount Assets Cash Flow Forward- Starting Interest Rate Swaps $ 103 $ — $ 103 $ — $ — $ 103

Liabilities Fair Value Interest Rate Swaps $ 1 $ — $ 1 $ — $ — $ 1

Gross Amounts Not Offset in the Net Amount Balance Sheet Gross Amount Gross Amounts Offset Presented in the Financial January 28, 2017 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount Assets Cash Flow Forward- Starting Interest Rate Swaps $ 67 $ — $ 67 $ — $ — $ 67 Liabilities Fair Value Interest Rate Swaps $ 1 $ — $ 1 $ — $ — $ 1 Cash Flow Forward- Starting Interest Rate Swaps 7 — 7 — — 7

Total $ 8 $ — $ 8 $ — $ — $ 8

8. FAIR VALUE MEASUREMENTS

GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable;

For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the

fair value of these instruments at February 3, 2018 and January 28, 2017:

February 3, 2018 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ 64 $ — $ — $ 64 Available-For-Sale Securities 25 — — 25 Long-Lived Assets — — 27 27 Interest Rate Hedges — 102 — 102 Total $ 89 $ 102 $ 27 $ 218

January 28, 2017 Fair Value Measurements Using

Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ 50 $ — $ — $ 50 Long-Lived Assets — — 3 3 Interest Rate Hedges — 59 — 59 Total $ 50 $ 59 $ 3 $ 112

In 2017, unrealized gains on Level 1, available-for-sale securities totaled $5. The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as

Level 2 inputs.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 3 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company’s policies and recorded amounts for impairments of long-lived assets and valuation of store lease exit costs. In 2017, long-lived assets with a carrying amount of $98 were written down to their fair value of $27, resulting in an impairment charge of $71. In 2016, long-lived assets with a carrying amount of $29 were written down to their fair value of $3, resulting in an impairment charge of $26.

Mergers are accounted for using the acquisition method of accounting, which requires that the purchase price paid for a

merger be allocated to the assets and liabilities acquired based on their estimated fair values as of the effective date of the merger, with the excess of the purchase price over the net assets being recorded as goodwill. See Note 2 for further discussion related to accounting for mergers.

Fair Value of Other Financial Instruments Current and Long-term Debt The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market

prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at respective year-ends. At February 3, 2018, the fair value of total debt was $15,167 compared to a carrying value of $14,787. At January 28, 2017, the fair value of total debt was $13,905 compared to a carrying value of $13,315.

Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Trade

Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value. Other Assets

In 2016, the Company entered into agreements with a third party. As part of the consideration for entering these agreements,

the Company received a financial instrument that derives its value from the third party’s business operations. The Company used the Monte-Carlo simulation method to determine the fair value of this financial instrument. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of this financial instrument. The assumptions used in the Monte-Carlo simulation are classified as Level 3 inputs. The financial instrument was valued at $335 and recorded in “Other assets” within the Consolidated Balance Sheets. As the financial instrument was obtained in exchange for certain obligations, the Company also recognized offsetting deferred revenue liabilities in “Other current liabilities” and “Other long-term liabilities” within the Consolidated Balance Sheets. The deferred revenue will be amortized to “Sales” within the Consolidated Statements of Operations over the term of the agreements. Post inception, the Company received a distribution of $59, which was recorded as a reduction of the cost method investment.

The fair values of certain investments recorded in “other assets” within the Consolidated Balance Sheets were estimated based on quoted market prices for those or similar investments, or estimated cash flows, if appropriate. At February 3, 2018 and January 28, 2017, the carrying and fair value of long-term investments for which fair value is determinable was $176 and $151, respectively. At February 3, 2018 and January 28, 2017, the carrying value of notes receivable for which fair value is determinable was $170 and $182, respectively.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the changes in AOCI by component for the years ended February 3, 2018 and January 28, 2017:

Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities Securities Plans Total Balance at January 30, 2016 $ (51) $ 20 $ (649) $ (680) OCI before reclassifications 47 (6) (97) (56) Amounts reclassified out of AOCI 2 (14) 33 21 Net current-period OCI 49 (20) (64) (35) Balance at January 28, 2017 $ (2) $ — $ (713) $ (715) Balance at January 28, 2017 $ (2) $ — $ (713) $ (715) OCI before reclassifications 23 4 165 192 Amounts reclassified out of AOCI 3 — 49 52 Net current-period OCI 26 4 214 244 Balance at February 3, 2018 $ 24 $ 4 $ (499) $ (471)

(1) All amounts are net of tax. (2) Net of tax of $ 27 , $( 3) and $ (59) for cash flow hedging activities, available for sale securities and pension and

postretirement defined benefit plans, respectively, as of January 28, 2017. Net of tax of $0, $ 1 and $ 63 for cash flow hedging activities, available for sale securities and pension and postretirement defined benefit plans, respectively, as of February 3, 2018.

(3) Net of tax of $ 20 and $(13) for pension and postretirement defined benefit plans and available for sale securities, respectively, as of January 28, 2017. Net of tax of $ 20 and $ 3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of February 3, 2018.

The following table represents the items reclassified out of AOCI and the related tax effects for the years ended February 3,

2018, January 28, 2017 and January 30, 2016:

For the year ended For the year ended For the year ended

February 3, 2018 January 28, 2017 January 30, 2016

Cash flow hedging activity items

Amortization of gains and losses on cash flow hedging activities

$ 6 $ 2 $ 1 Tax expense

(3) — — Net of tax

3 2 1

Available for sale security items

Realized gains on available for sale securities

— (27) — Tax expense

— 13 — Net of tax

— (14) —

Pension and postretirement defined benefit plan items

Amortization of amounts included in net periodic pension expense

69 53 85 Tax expense

(20) (20) (32) Net of tax

49 33 53 Total reclassifications, net of tax

$ 52 $ 21 $ 54

(1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into operating, general and administrative expense. (3) Reclassified from AOCI into merchandise costs and OG&A expense. These components are included in the computation of

net periodic pension costs.

(1) (1) (1) (1)

(2)

(3)

(2)

(3)

(1)

(2)

(3)

10. LEASES AND LEASE-FINANCED TRANSACTIONS

While the Company’s current strategy emphasizes ownership of store real estate, the Company operates primarily in leased facilities. Lease terms generally range from 10 to 20 years with options to renew for varying terms. Terms of certain leases include escalation clauses, percentage rent based on sales or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis beginning with the earlier of the lease commencement date or the date the Company takes possession. Portions of certain properties are subleased to others for periods generally ranging from one to 20 years.

Rent expense (under operating leases) consists of:

2017 2016 2015 Minimum rentals $ 1,005 $ 973 $ 807 Contingent payments 19 16 18 Tenant income (113) (108) (102)

Total rent expense $ 911 $ 881 $ 723

Minimum annual rentals and payments under capital leases and lease-financed transactions for the five years subsequent to 2017 and in the aggregate are:

Lease- Capital Operating Financed Leases Leases Transactions 2018 $ 88 $ 992 $ 8 2019 78 936 8 2020 74 838 9 2021 71 736 9 2022 68 606 9 Thereafter 692 3,664 43 Total $ 1,071 $ 7,772 $ 86

Less estimated executory costs included in capital leases — Net minimum lease payments under capital leases 1,071 Less amount representing interest 355 Present value of net minimum lease payments under capital leases $ 716

Total future minimum rentals under noncancellable subleases at February 3, 2018 were $213.

11. EARNINGS PER COMMON SHARE

For the year ended For the year ended For the year ended February 3, 2018 January 28, 2017 January 30, 2016 Per Per Per Earnings Shares Share Earnings Shares Share Earnings Shares Share (in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 1,890 895 $ 2.11 $ 1,959 942 $ 2.08 $ 2,021 966 $ 2.09

Dilutive effect of stock options 9 16 14 Net earnings attributable to The Kroger Co. per diluted common share $ 1,890 904 $ 2.09 $ 1,959 958 $ 2.05 $ 2,021 980 $ 2.06

The Company had combined undistributed and distributed earnings to participating securities totaling $17, $16 and $18 in

2017, 2016 and 2015, respectively. The Company had options outstanding for approximately 15.6 million, 7.1 million and 1.9 million shares, respectively, for

the years ended February 3, 2018, January 28, 2017 and January 30, 2016, which were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per diluted share.

12. STOCK OPTION PLANS

The Company grants options for common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of the stock at the date of grant. The Company accounts for stock options under the fair value recognition provisions. Under this method, the Company recognizes compensation expense for all share-based payments granted. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award.

Stock options typically expire 10 years from the date of grant. Stock options vest between one and five years from the date

of grant. At February 3, 2018, approximately 27 million common shares were available for future option grants under the 2008, 2011 and 2014 Long-Term Incentive Plans (the “Plans”).

In addition to the stock options described above, the Company awards restricted stock to employees and non-employee directors under various plans. The restrictions on these awards generally lapse between one and five years from the date of the awards. The Company records expense for restricted stock awards in an amount equal to the fair market value of the underlying shares on the grant date of the award, over the period the awards lapse. As of February 3, 2018, approximately 12 million common shares were available under the Plans for future restricted stock awards or shares issued to the extent performance criteria are achieved. The Company has the ability to convert shares available for stock options under the Plans to shares available for restricted stock awards. Under the Plans, four shares available for option awards can be converted into one share available for restricted stock awards.

Equity awards granted are based on the aggregate value of the award on grant date. This can affect the number of shares

granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring shortly after the Company’s release of quarterly earnings. The 2017 primary grant was made in conjunction with the June meeting of the Company’s Board of Directors.

All awards become immediately exercisable upon certain changes of control of the Company.

Stock Options

Changes in options outstanding under the stock option plans are summarized below:

Shares Weighted- subject average to option exercise (in millions) price Outstanding, year-end 2014 40.8 $ 15.56

Granted 3.4 $ 38.40 Exercised (8.9) $ 13.54 Canceled or Expired (0.4) $ 19.98

Outstanding, year-end 2015 34.9 $ 18.26

Granted 4.8 $ 37.10 Exercised (4.9) $ 14.20 Canceled or Expired (0.5) $ 28.35

Outstanding, year-end 2016 34.3 $ 21.32

Granted 7.0 $ 23.00 Exercised (3.8) $ 14.08 Canceled or Expired (0.8) $ 28.29

Outstanding, year-end 2017 36.7 $ 22.23

A summary of options outstanding, exercisable and expected to vest at February 3, 2018 follows:

Weighted-average Aggregate remaining Weighted-average intrinsic Number of shares contractual life exercise price value (in millions) (in years) (in millions) Options Outstanding 36.7 6.09 $ 22.23 324 Options Exercisable 22.5 4.66 $ 18.50 265 Options Expected to Vest 13.8 8.37 $ 28.18 57

Restricted stock

Changes in restricted stock outstanding under the restricted stock plans are summarized below:

Restricted shares Weighted-average outstanding grant-date (in millions) fair value Outstanding, year-end 2014 10.2 $ 21.04

Granted 3.2 $ 38.34 Lapsed (5.4) $ 21.49 Canceled or Expired (0.4) $ 22.80

Outstanding, year-end 2015 7.6 $ 28.01

Granted 3.6 $ 37.03 Lapsed (3.5) $ 28.52 Canceled or Expired (0.3) $ 30.70

Outstanding, year-end 2016 7.4 $ 32.09

Granted 5.8 $ 23.04 Lapsed (3.6) $ 31.05 Canceled or Expired (0.4) $ 29.26

Outstanding, year-end 2017 9.2 $ 26.78

The weighted-average grant date fair value of stock options granted during 2017, 2016 and 2015 was $4.71, $7.48 and $9.78, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option- pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes accounting judgment and financial estimates, including the term option holders are expected to retain their stock options before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations. The decrease in the fair value of the stock options granted during 2017, compared to 2016, resulted primarily from a decrease in the Company’s share price, which increased the expected dividend yield, partially offset by an increase in the weighted average expected volatility and the weighted average risk-free interest rate. The decrease in the fair value of the stock options granted during 2016, compared to 2015, resulted primarily from a decrease in the market price per share of the Company’s common shares, which increased the expected dividend yield, and decreases in the weighted average expected volatility and the weighted average risk free discount rate.

The following table reflects the weighted-average assumptions used for grants awarded to option holders:

2017 2016 2015 Weighted average expected volatility 22.78 % 21.40 % 24.07 % Weighted average risk-free interest rate 2.21 % 1.29 % 2.12 % Expected dividend yield 2.20 % 1.40 % 1.20 % Expected term (based on historical results) 7.2 years 7.2 years 7.2 years

The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date, continuously

compounded, which matures at a date that approximates the expected term of the options. The dividend yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon historical exercise and cancellation experience.

Total stock compensation recognized in 2017, 2016 and 2015 was $151, $141 and $165, respectively. Stock option compensation recognized in 2017, 2016, and 2015 was $32, $28 and $31, respectively. Restricted shares compensation recognized in 2017, 2016 and 2015 was $119, $113 and $134, respectively.

The total intrinsic value of stock options exercised was $55, $105 and $217 in 2017, 2016 and 2015, respectively. The total amount of cash received in 2017 by the Company from the exercise of stock options granted under share-based payment arrangements was $51. As of February 3, 2018, there was $214 of total unrecognized compensation expense remaining related to non-vested share-based compensation arrangements granted under Plans. This cost is expected to be recognized over a weighted- average period of approximately two years. The total fair value of options that vested was $29, $28 and $33 in 2017, 2016 and 2015, respectively.

Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2017, the Company repurchased approximately two million common shares in such a manner. 13. COMMITMENTS AND CONTINGENCIES

The Company continuously evaluates contingencies based upon the best available evidence. The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of

contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited.

The principal contingencies are described below: Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other workers’

compensation risks and certain levels of insured general liability risks are based on retrospective premium plans, deductible plans, and self-insured retention plans. The liability for workers’ compensation risks is accounted for on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss allowances, based upon actuarially determined estimates.

Litigation — Various claims and lawsuits arising in the normal course of business, including suits charging violations of

certain antitrust, wage and hour, or civil rights laws, as well as product liability cases, are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Any damages that may be awarded in antitrust cases will be automatically trebled. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and

believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Assignments — The Company is contingently liable for leases that have been assigned to various third parties in connection

with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote. 14. STOCK Preferred Shares The Company has authorized five million shares of voting cumulative preferred shares; two million shares were available for

issuance at February 3, 2018. The shares have a par value of $100 per share and are issuable in series.

Common Shares The Company has authorized two billion common shares, $1 par value per share. On June 25, 2015, the Company’s Board of Directors approved a two-for-one stock split of The Kroger Co.’s common shares

in the form of a 100% stock dividend, which was effective July 13, 2015. All share and per share amounts in the Company’s Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the stock split for all periods presented.

Common Stock Repurchase Program

The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934 to

allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made open market purchases totaling $1,567, $1,661 and $500 under these repurchase programs in 2017, 2016 and 2015, respectively. In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds from stock option exercises and the related tax benefit. The Company repurchased approximately $66, $105 and $203 under the stock option program during 2017, 2016 and 2015, respectively.

15. COMPANY- SPONSORED BENEFIT PLANS

In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. The

majority of the Company’s employees may become eligible for these benefits if they reach normal retirement age while employed by the Company. Funding of retiree health care benefits occurs as claims or premiums are paid.

The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or

losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of AOCI. All plans are measured as of the Company’s fiscal year end.

Amounts recognized in AOCI as of February 3, 2018 and January 28, 2017 consists of the following (pre-tax):

Pension Benefits Other Benefits Total 2017 2016 2017 2016 2017 2016 Net actuarial loss (gain) $ 1,040 $ 1,308 $ (130) $ (120) $ 910 $ 1,188 Prior service credit — — (77) (58) (77) (58) Total $ 1,040 $ 1,308 $ (207) $ (178) $ 833 $ 1,130

Amounts in AOCI expected to be recognized as components of net periodic pension or postretirement benefit costs in the

next fiscal year are as follows (pre-tax):

Pension Benefits Other Benefits Total 2018 2018 2018 Net actuarial loss (gain) $ 82 $ (10) $ 72 Prior service credit — (11) (11) Total $ 82 $ (21) $ 61

Other changes recognized in other comprehensive income in 2017, 2016 and 2015 were as follows (pre-tax):

Pension Benefits Other Benefits Total 2017 2016 2015 2017 2016 2015 2017 2016 2015 Incurred net actuarial loss (gain) $ 322 $ 165 $ (83) $ (20) $ (9) $ (39) $ 302 $ 156 $ (122) Amortization of prior service credit — — — 8 8 11 8 8 11 Amortization of net actuarial gain (loss) (88) (71) (102) 11 10 7 (77) (61) (95) Settlement recognition of net actuarial loss (502) — — — — — (502) — — Other — — — (28) — (2) (28) — (2) Total recognized in other comprehensive income (loss) (268) 94 (185) (29) 9 (23) (297) 103 (208) Total recognized in net periodic benefit cost and other comprehensive income $ 323 $ 188 $ (82) $ (30) $ 10 $ (22) $ 293 $ 198 $ (104)

Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans recorded in the

Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted average assumptions and components of net periodic benefit cost follow:

Pension Benefits

Qualified Plans Non-

Qualified Plans Other Benefits 2017 2016 2017 2016 2017 2016 Change in benefit obligation: Benefit obligation at beginning of fiscal year $ 4,140 $ 3,922 $ 316 $ 290 $ 243 $ 244

Service cost 53 68 2 2 8 9 Interest cost 163 177 13 14 9 10 Plan participants’ contributions — — — — 12 12 Actuarial (gain) loss 126 186 15 29 (20) (9) Plan settlements (1,040) — — — — — Benefits paid (202) (211) (21) (19) (23) (23) Other (5) (2) 3 — (27) —

Benefit obligation at end of fiscal year $ 3,235 $ 4,140 $ 328 $ 316 $ 202 $ 243 Change in plan assets: Fair value of plan assets at beginning of fiscal year $ 3,138 $ 3,045 $ — $ — $ — $ —

Actual return on plan assets 210 302 — — — — Employer contributions 1,000 3 21 19 11 11 Plan participants’ contributions — — — — 12 12 Plan settlements (1,198) — — — — — Benefits paid (202) (211) (21) (19) (23) (23) Other (5) (1) — — — —

Fair value of plan assets at end of fiscal year $ 2,943 $ 3,138 $ — $ — $ — $ — Funded status and net liability recognized at end of fiscal year $ (292) $ (1,002) $ (328) $ (316) $ (202) $ (243)

As of February 3, 2018 and January 28, 2017, other current liabilities include $30 and $37, respectively, of net liability recognized for the above benefit plans.

In 2017, the Company settled certain company-sponsored pension plan obligations using existing assets of the plan and a

$1,000 contribution made to the plan in the third quarter of 2017. The Company recognized a settlement charge of approximately $502, $335 net of tax, associated with the settlement of the Company’s obligations for the eligible participants’ pension balances that were distributed out of the plan via a transfer to other qualified retirement plan options, a lump sum payout, or the purchase of an annuity contract, based on each participant’s election.

As of February 3, 2018 and January 28, 2017, pension plan assets do not include common shares of The Kroger Co.

Pension Benefits Other Benefits Weighted average assumptions 2017 2016 2015 2017 2016 2015 Discount rate — Benefit obligation 4.00 % 4.25 % 4.62 % 3.93 % 4.18 % 4.44 % Discount rate — Net periodic benefit cost 4.25 % 4.62 % 3.87 % 4.18 % 4.44 % 3.74 % Expected long-term rate of return on plan assets 7.50 % 7.40 % 7.44 %

Rate of compensation increase — Net periodic benefit cost 3.07 % 2.71 % 2.85 %

Rate of compensation increase — Benefit obligation 3.03 % 3.07 % 2.71 %

The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be

effectively settled. They take into account the timing and amount of benefits that would be available under the plans. The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that produce the same present value of cash flows. The selection of the 4.00% and 3.93% discount rates as of year-end 2017 for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better rating constructed with the assistance of an outside consultant. A 100 basis point increase in the discount rate would decrease the projected pension benefit obligation as of February 3, 2018, by approximately $426.

The Company’s 2017 assumed pension plan investment return rate was 7.50% compared to 7.40% in 2016 and 7.44% in

2015. The value of all investments in the company-sponsored defined benefit pension plans during the calendar year ending December 31, 2017, net of investment management fees and expenses, increased 8.7%. Historically, the Company’s pension plans’ average rate of return was 5.7% for the 10 calendar years ended December 31, 2017, net of all investment management fees and expenses. For the past 20 years, the Company’s pension plans’ average annual rate of return has been 7.10%. At the beginning of 2017, to determine the expected rate of return on pension plan assets held by the Company for 2017, the Company considered current and forecasted plan asset allocations as well as historical and forecasted rates of return on various asset categories. Based on this information and forward looking assumptions for investments made in a manner consistent with its target allocations, which contemplates the Company’s transition to a liability driven investment (“LDI”) strategy, the Company believed a 7.50% rate of return assumption was reasonable for 2017.

The Company calculates its expected return on plan assets by using the market-related value of plan assets. The market-

related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each plan year. Gains or losses on plan assets are recognized evenly over a five year period. Using a different method to calculate the market-related value of plan assets would provide a different expected return on plan assets.

On January 31, 2015, the Company adopted new industry specific mortality tables based on mortality experience and

assumptions for generational mortality improvement in determining the Company’s benefit obligations. On January 28, 2017, the Company adopted an updated assumption for generational mortality improvement, based on additional years of published mortality experience.

The funded status increased in 2017, compared to 2016, due primarily to the $1,000 in contributions made in 2017 to the

qualified plans, partially offset by the decrease in discount rates from 2016 to 2017.

The following table provides the components of the Company’s net periodic benefit costs for 2017, 2016 and 2015:

Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits 2017 2016 2015 2017 2016 2015 2017 2016 2015 Components of net periodic benefit cost:

Service cost $ 53 $ 68 $ 62 $ 2 $ 2 $ 3 $ 8 $ 9 $ 10 Interest cost 163 177 154 13 14 12 9 10 9 Expected return on plan assets (233) (238) (230) — — — — — — Amortization of: Prior service credit — — — — — — (8) (8) (11) Actuarial (gain) loss 79 60 93 9 8 9 (11) (10) (7) Settlement loss recognized 502 — — — — — — — — Other — 3 — 3 — — 1 — —

Net periodic benefit cost $ 564 $ 70 $ 79 $ 27 $ 24 $ 24 $ (1) $ 1 $ 1

The following table provides the projected benefit obligation (“PBO”), accumulated benefit obligation (“ABO”) and the fair

value of plan assets for the company-sponsored pension plans with accumulated benefit obligations in excess of plan assets. 3

Qualified Plans Non-

Qualified Plans 2017 2016 2017 2016 PBO at end of fiscal year $ 3,051 $ 4,140 $ 328 $ 316 ABO at end of fiscal year $ 2,916 $ 3,997 $ 313 $ 297 Fair value of plan assets at end of year $ 2,755 $ 3,138 $ — $ —

The following table provides information about the Company’s estimated future benefit payments.

Pension Other Benefits Benefits 2018 $ 187 $ 12 2019 $ 199 $ 14 2020 $ 210 $ 15 2021 $ 206 $ 15 2022 $ 218 $ 16 2023 —2027 $ 1,217 $ 83

The following table provides information about the target and actual pension plan asset allocations as of February 3, 2018.

Actual Target allocations Allocations 2017 2017 2016 Pension plan asset allocation

Global equity securities 8.0 % 2.2 % 14.3 % Emerging market equity securities 3.0 1.7 6.5 Investment grade debt securities 55.0 53.3 12.0 High yield debt securities — 3.7 14.2 Private equity 6.0 9.6 7.5 Hedge funds 17.0 17.4 35.2 Real estate 3.0 3.2 2.8 Other 8.0 8.9 7.5

Total 100.0 % 100.0 % 100.0 %

Investment objectives, policies and strategies are set by the Pension Investment Committee (the “Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the investment objectives is long-term in nature and plan assets are managed on a going-concern basis.

The target allocations shown for 2017 were established in 2017 in conjunction with the start of the Company’s transition to a

LDI strategy. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. This LDI strategy will be phased in over time as the Company is able to transition out of illiquid investments. During this transition, the Company’s target allocation will change by increasing the Company’s fixed income instruments. Cash flow from employer contributions and redemption of plan assets to fund participant benefit payments can be used to fund underweight asset classes and divest overweight asset classes, as appropriate. The Company expects that cash flow will be sufficient to meet most rebalancing needs.

In 2017, the Company contributed $1,000 to the company-sponsored defined benefit plans and the Company is not required

to make any contributions to these plans in 2018. If the Company does make any contributions in 2018, the Company expects these contributions will decrease its required contributions in future years. Among other things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations, and future changes in legislation, will determine the amounts of any contributions. The Company expects 2018 expense for company-sponsored pension plans to be approximately $94.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The

Company used a 5.90% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.50% ultimate health care cost trend rate in 2037, to determine its expense. A one-percentage-point change in the assumed health care cost trend rates would have the following effects:

1% Point 1% Point Increase Decrease Effect on total of service and interest cost components $ 2 $ (2) Effect on postretirement benefit obligation $ 19 $ (16)

The following tables, which both reflect the adoption of ASU 2015-07 (see Note 19), set forth by level, within the fair value hierarchy, the Qualified Plans’ assets at fair value as of February 3, 2018 and January 28, 2017:

Assets at Fair Value as of February 3, 2018

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 414 $ — $ — $ — $ 414 Corporate Stocks 61 — — — 61 Corporate Bonds — 900 — — 900 U.S. Government Securities — 222 — — 222 Mutual Funds/Collective Trusts 1 — — — 1 Partnerships/Joint Ventures — — — 271 271 Hedge Funds — — 56 545 601 Private Equity — — — 278 278 Real Estate — — 68 22 90 Other — — — 105 105 Total $ 476 $ 1,122 $ 124 $ 1,221 $ 2,943

Assets at Fair Value as of January 28, 2017

Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 183 $ — $ — $ — $ 183 Corporate Stocks 240 — — — 240 Corporate Bonds — 57 — — 57 U.S. Government Securities — 37 — — 37 Mutual Funds/Collective Trusts 122 4 — 827 953 Partnerships/Joint Ventures — 156 — — 156 Hedge Funds — — 67 1,034 1,101 Private Equity — — — 245 245 Real Estate — — 65 22 87 Other — 35 — 44 79 Total $ 545 $ 289 $ 132 $ 2,172 $ 3,138

The fair value of asset groupings changed significantly in 2017, as compared to 2016, due to the LDI transition that began

in 2017 as described above. For measurements using significant unobservable inputs (Level 3) during 2017 and 2016, a reconciliation of the beginning

and ending balances is as follows:

Hedge Funds Real Estate Ending balance, January 30, 2016 $ 61 79 Contributions into Fund 10 9 Realized gains 1 12 Unrealized losses (1) (2) Distributions (4) (32) Other — (1) Ending balance, January 28, 2017 67 65 Contributions into Fund 13 11 Realized gains 1 3 Unrealized gains 5 8 Distributions (30) (19) Ending balance, February 3, 2018 $ 56 $ 68

See Note 8 for a discussion of the levels of the fair value hierarchy. The assets’ fair value measurement level above is based

on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in the

above tables:

· Cash and cash equivalents: The carrying value approximates fair value. · Corporate Stocks: The fair values of these securities are based on observable market quotations for identical assets and

are valued at the closing price reported on the active market on which the individual securities are traded. · Corporate Bonds: The fair values of these securities are primarily based on observable market quotations for similar

bonds, valued at the closing price reported on the active market on which the individual securities are traded. When such quoted prices are not available, the bonds are valued using a discounted cash flow approach using current yields on similar instruments of issuers with similar credit ratings, including adjustments for certain risks that may not be observable, such as credit and liquidity risks.

· U.S. Government Securities: Certain U.S. Government securities are valued at the closing price reported in the active

market in which the security is traded. Other U.S. government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for similar securities, the security is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

· Mutual Funds/Collective Trusts: The mutual funds/collective trust funds are public investment vehicles valued using a

Net Asset Value (NAV) provided by the manager of each fund. The NAV is based on the underlying net assets owned by the fund, divided by the number of shares outstanding. The NAV’s unit price is quoted on a private market that is not active. However, t he NAV is based on the fair value of the underlying securities within the fund, which are traded on an active market, and valued at the closing price reported on the active market on which those individual securities are traded.

· Partnerships/Joint Ventures: These funds consist primarily of U.S. government securities, Corporate Bonds, Corporate

Stocks, and derivatives, which are valued in a manner consistent with these types of investments, noted above. · Hedge Funds: Hedge funds are private investment vehicles valued using a Net Asset Value (NAV) provided by the

manager of each fund. The NAV is based on the underlying net assets owned by the fund, divided by the number of shares outstanding. The NAV’s unit price is quoted on a private market that is not active. T he NAV is based on the fair value of the underlying securities within the funds, which may be traded on an active market, and valued at the closing price reported on the active market on which those individual securities are traded. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on audits of the Hedge Fund financial statements; such adjustments are reflected in the fair value of the plan’s assets.

· Private Equity: Private Equity investments are valued based on the fair value of the underlying securities within the

fund, which include investments both traded on an active market and not traded on an active market. For those investments that are traded on an active market, the values are based on the closing price reported on the active market on which those individual securities are traded. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on audits of the private equity fund financial statements; such adjustments are reflected in the fair value of the plan’s assets.

· Real Estate: Real estate investments include investments in real estate funds managed by a fund manager. These

investments are valued using a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or

reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement.

The Company contributed and expensed $219, $215 and $196 to employee 401(k) retirement savings accounts in 2017, 2016

and 2015, respectively. The 401(k) retirement savings account plans provide to eligible employees both matching contributions and automatic contributions from the Company based on participant contributions, compensation as defined by the plan and length of service. 16. MULTI-EMPLOYER PENSION PLANS

The Company recognizes expense in connection with these plans as contributions are funded or when commitments are

probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans of $954 in 2017, $289 in 2016 and $426 in 2015. The increase in 2017, compared to 2016, is primarily due to the $467 pre-tax payment to satisfy withdrawal obligations to the Central States Pension Fund and the 2017 UFCW Contribution.

The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans as it

relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since these off balance sheet commitments are typically considered in the Company’s investment grade debt rating.

The Company is currently designated as the named fiduciary of the UFCW Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and has sole investment authority over these assets. The Company became the fiduciary of the IBT Consolidated Pension Fund in 2017 due to the ratification of a new labor contract with IBT that provided the Company’s withdrawal from the Central States Pension Fund. Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are:

· In 2017, the Company incurred a $550 charge, $360 net of tax, for obligations related to withdrawals from and

settlements of withdrawal liabilities for certain multi-employer pension plan funds, of which $467 was contributed to the Central States Pension Plan in 2017.

· In 2017, the Company contributed $111, $71 net of tax, to the UFCW Consolidated Pension Plan.

· In 2016, the Company incurred a charge of $111, $71 net of tax, due to commitments and withdrawal liabilities arising from the restructuring of certain multi-employer pension plan obligations, of which $28 was contributed to the UFCW Consolidated Pension Plan in 2016.

· In 2015, the Company contributed $190 to the UFCW Consolidated Pension Plan. The Company had previously

accrued $60 of the total contributions at January 31, 2015 and recorded expense for the remaining $130 at the time of payment in 2015.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer

pension plans in the following respects: a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other

participating employers. b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such

withdrawing employer may be borne by the remaining participating employers. c. If the Company stops participating in some of its multi-employer pension plans, the Company may be required to pay

those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to as a withdrawal liability.

The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan Number

column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent Pension Protection Act Zone Status available in 2017 and 2016 is for the plan’s year-end at December 31, 2016 and December 31, 2015, respectively. Among other factors, generally, plans in the red zone are less than 65 percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80 percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2016 and December 31, 2015. The multi-employer contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years 2017, 2016 and 2015.

The following table contains information about the Company’s multi-employer pension plans:

FIP/RP Pension Protection Status EIN / Pension Act Zone Status Pending/ Multi-Employer Contributions Surcharge Pension Fund Plan Number 2017 2016 Implemented 2017 2016 2015 Imposed SO CA UFCW Unions & Food Employers Joint Pension Trust Fund 95-1939092 - 001 Yellow Red Implemented $ 66 $ 60 $ 55 No

Desert States Employers & UFCW Unions Pension Plan 84-6277982 - 001 Green Green No 18 18 18 No

Sound Retirement Trust (formerly Retail Clerks Pension Plan) 91-6069306 – 001 Green Red Implemented 20 18 17 No

Rocky Mountain UFCW Unions and Employers Pension Plan 84-6045986 - 001 Green Green No 19 16 17 No

Oregon Retail Employees Pension Plan 93-6074377 - 001 Green Green No 9 8 9 No Bakery and Confectionary Union & Industry International Pension Fund 52-6118572 - 001 Red Red Implemented 11 10 11 No

Retail Food Employers & UFCW Local 711 Pension 51-6031512 - 001 Yellow Red Implemented 10 9 9 No

Denver Area Meat Cutters and Employers Pension Plan 84-6097461 - 001 Green Green No — 3 7 No

United Food & Commercial Workers Intl Union — Industry Pension Fund 51-6055922 - 001 Green Green No 33 37 35 No

Western Conference of Teamsters Pension Plan 91-6145047 - 001 Green Green No 34 33 31 No

Central States, Southeast & Southwest Areas Pension Plan 36-6044243 - 001 Red Red Implemented 492 23 16 No

UFCW Consolidated Pension Plan 58-6101602 – 001 Green Green No 201 34 190 No Other 41 20 11 Total Contributions $ 954 $ 289 $ 426

(1) The Company’s multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension funds.

(2) The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at March 31, 2017 and March 31, 2016. (3) The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at September 30, 2016 and September 30, 2015. (4) The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at June 30, 2016 and June 30, 2015. (5) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at April 30, 2017 and April 30, 2016. (6) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is

not in compliance with a rehabilitation plan. As of February 3, 2018, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund.

(7) The increase in the "Other" funds in 2017, compared to 2016 and 2015, is due primarily to withdrawal settlement payments for certain multi- employer funds.

(8) In 2017, the Company ratified a new contract with the IBT that provided the company to withdrawal from this pension fund and form the IBT consolidated pension fund. The company did not have any contributions in 2017 to the IBT consolidated pension fund.

(6)

(1) (2)

(1)

(1) (3)

(1)(5)

(1)

(1) (4)

(8)

(1)

(7)

The following table describes (a) the expiration date of the Company’s collective bargaining agreements and (b) the

expiration date of the Company’s most significant collective bargaining agreements for each of the material multi-employer funds in which the Company participates.

Expiration Date Most Significant Collective of Collective Bargaining Agreements Bargaining (not in millions) Pension Fund Agreements Count Expiration SO CA UFCW Unions & Food Employers Joint Pension Trust Fund March 2019 to June 2020 2 March 2019 to June 2020

UFCW Consolidated Pension Plan June 2018 to August 2021 8 February 2019 to August

2021 Desert States Employers & UFCW Unions Pension Plan June 2018 to October 2020 1 October 2020 Sound Retirement Trust (formerly Retail Clerks Pension Plan) April 2019 to January 2020 2 May 2019 to August 2019 Rocky Mountain UFCW Unions and Employers Pension Plan January 2019 to February 2019 1 January 2019 Oregon Retail Employees Pension Plan August 2018 to April 2022 3 August 2018 to June 2019 Bakery and Confectionary Union & Industry International Pension Fund June 2018 to July 2022 4 July 2018 to May 2020 Retail Food Employers & UFCW Local 711 Pension April 2017 (2) to March 2019 1 March 2019 Denver Area Meat Cutters and Employers Pension Plan January 2019 to February 2019 1 January 2019 United Food & Commercial Workers Intl Union — Industry Pension Fund June 2018 to June 2021 2 April 2019 to March 2021 Western Conference of Teamsters Pension Plan April 2018 to July 2021 5 April 2019 to July 2021 International Brotherhood of Teamsters Consolidated Pension Fund September 2022 2 September 2022

(2) Certain collective bargaining agreements for each of these pension funds are operating under an extension. Based on the most recent information available to it, the Company believes the present value of actuarial accrued liabilities in

most of these multi-employer plans substantially exceeds the value of the assets held in trust to pay benefits. Moreover, if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could trigger a substantial withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be reasonably estimated.

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits to

active and retired participants. Total contributions made by the Company to these other multi-employer health and welfare plans were approximately $1,247 in 2017, $1,143 in 2016 and $1,192 in 2015.

17. HELD FOR SALE

In the third quarter of 2017, the Company announced that as a result of a review of its assets, the Company had decided to

explore strategic alternatives, including a potential sale, of its convenience store business. On February 5, 2018, the Company announced a definitive agreement for the sale of the Company’s convenience store business for $2,150.

As of February 3, 2018, certain assets and liabilities , primarily those related to the Company’s convenience store business,

were classified as held for sale in the Consolidated Balance Sheet. The Company expects to complete the sale of these disposal groups within the next year. The businesses classified as held for sale will not be reported as discontinued operations as the dispositions do not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

(1)

The following table presents information related to the major classes of assets and liabilities that were classified as assets and

liabilities held for sale in the Consolidated Balance Sheet as of February 3, 2018:

February 3, (In millions) 2018 Assets held for sale: Cash and temporary cash investments $ 1 Store deposits in-transit 15 Receivables 49 FIFO inventory 95 LIFO reserve (36) Prepaid and other current assets 13 Property, plant and equipment, net 441 Intangibles, net 11 Goodwill 14 Other assets 1

Total assets held for sale $ 604 Liabilities held for sale: Trade accounts payable $ 119 Accrued salaries and wages 14 Other current liabilities 85 Other long-term liabilities 41

Total liabilities held for sale $ 259

18. VOLUNTARY RETIREMENT OFFERING

In 2016, the Company announced a Voluntary Retirement Offering (“VRO”) for certain non-store associates. Approximately

1,300 associates irrevocably accepted the VRO in the first quarter of 2017. Due to the employee acceptances, the Company recognized a VRO charge of $184, $117 net of tax, in the first quarter of 2017, which was comprised of $165 for severance and other benefits, as well as $19 of other non-cash charges. This charge was recorded in the OG&A caption within the Consolidated Statements of Operations for 2017. The Company paid $162 of the severance and other benefits in 2017. 19. RECENTLY ADOPTED ACCOUNTING STANDARDS

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” This amendment eliminates the requirement to retrospectively account for adjustments made to provisional amounts recognized in a business combination. This amendment became effective for the Company beginning January 31, 2016, and was adopted prospectively in accordance with the standard. The adoption of this amendment did not have a material effect on the Consolidated Balance Sheets or Consolidated Statements of Operations.

During the second quarter of 2016, the Company adopted ASU 2016-09, “Compensation-Stock Compensation (Topic 718):

Improvements to Employee Share-Based Payment Accounting.” This amendment addresses several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As a result of the adoption, the Company recognized $49 of excess tax benefits related to share-based payments in the Company’s provision for income taxes in 2016. These items were historically recorded in additional paid-in capital. In addition, for 2016, cash flows related to excess tax benefits are classified as an operating activity. Cash paid on employees’ behalf related to shares withheld for tax purposes is classified as a financing activity. Retrospective application of the cash flow presentation requirements resulted in increases to both “Net cash provided by operating activities” and “Net cash used by financing activities” of $59 for 2016 and $84 for 2015. The Company’s stock compensation expense continues to reflect estimated forfeitures.

During 2016, the Company adopted ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a

Going Concern (Topic 205)”. This standard requires the Company to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the Consolidated Financial Statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around the Company’s plan to alleviate these doubts are required. The adoption of this standard did not affect the Consolidated Financial Statements.

During 2016, the Company adopted ASU 2015-07, “Fair Value Measurement - Disclosures for Investments in Certain

Entities that Calculate Net Asset Value per Share (or Its Equivalent) (Topic 820)”. This standard requires the Company to disclose which assets the Company values using net asset value as a practical expedient, and ends the requirement to classify these assets within the GAAP fair value hierarchy. See Note 15 of the Consolidated Financial Statements for disclosures of assets the Company values using net asset value as a practical expedient.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred

Taxes.” This amendment requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. This amendment became effective for the Company beginning January 29, 2017, and was adopted prospectively in accordance with the standard. The implementation of this amendment resulted in the reclassification of current deferred tax liabilities as non-current and had no effect on the Consolidated Statements of Operations.

During the fourth quarter of 2017, the Company adopted ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. ASU 2017-04 requires applying a one-step quantitative test and recording the amount of goodwill impairment as the excess of the reporting unit's carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. The Company performed its annual evaluation of goodwill in accordance with this standard, which resulted in a goodwill impairment charge of $110, $74 net of tax, related to the Company’s Kroger Specialty Pharmacy reporting unit.

20. RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, as amended by several subsequent ASUs, which provides guidance for revenue recognition. The standard’s overarching principle is that revenue must be recognized when goods and services are transferred to the customer in an amount that is proportionate to what has been delivered at that point and that reflects the consideration to which the company expects to be entitled for those goods or services. Per ASU 2015-14, “Deferral of Effective Date,” this guidance will be effective for the Company in the first quarter of fiscal year ending February 2, 2019. The Company formed a project team to assess and document the accounting policies related to the new revenue guidance. As of the end of 2017, the Company has completed this assessment and documentation. Based on this project, the Company does not expect that the implementation of the new standard will have a material effect on the Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows. The Company intends to adopt the new standard on a modified retrospective basis and will be addressing new disclosures regarding revenue recognition policies as required by the new standard at adoption. During the assessment, the Company identified and will be implementing changes, at the beginning of the first quarter of 2018, to the Company’s accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which provides guidance for the recognition of lease agreements. The standard’s core principle is that a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This guidance will be effective for the Company in the first quarter of fiscal year ending February 1, 2020. Early adoption is permitted. The adoption of this ASU will result in a significant increase to the Company’s Consolidated Balance Sheets for lease liabilities and right-of-use assets, and the Company is currently evaluating the other effects of adoption of this ASU on the Consolidated Financial Statements. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to the Company’s lease accounting information technology system in order to determine the best implementation strategy. The Company believes the current off-balance sheet leasing commitments are reflected in the investment grade debt rating.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715 ): Improving the

Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 requires an employer to report the service cost component of retiree benefits in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit costs are required to be presented separately from the service cost component and outside a subtotal of income from operations. ASU 2017-07 is effective for years, and interim periods within those years, beginning after December 15, 2017, and requires retrospective application to all periods presented. This ASU will impact the Company’s Operating Profit subtotal as reported in its Consolidated Statement of Operations by excluding interest expense, investment returns, settlements and other non-service cost components of retiree benefit expenses. Information about interest expense, investment returns and other components of retiree benefit expenses can be found in Note 15 of the Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other

Comprehensive Income.” ASU 2018-02 amends ASC 220, “Income Statement - Reporting Comprehensive Income,” to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. In addition, under the ASU 2018-02, the Company may be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of the standard on its Consolidated Financial Statements.

21. QUARTERLY DATA (UNAUDITED)

The two tables that follow reflect the unaudited results of operations for 2017 and 2016.

Quarter First Second Third Fourth Total Year 2017 (16 Weeks) (12 Weeks) (12 Weeks) (13 Weeks) (53 Weeks) Sales $ 36,285 $ 27,597 $ 27,749 $ 31,031 $ 122,662 Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 28,281 21,609 21,532 24,240 95,662

Operating, general and administrative 6,376 4,523 4,708 5,962 21,568 Rent 270 225 196 220 911 Depreciation and amortization 736 562 573 565 2,436 Operating profit 622 678 740 44 2,085 Interest expense 177 138 136 148 601 Earnings (loss) before income tax expense 445 540 604 (104) 1,484 Income tax expense (benefit) 148 189 215 (957) (405) Net earnings including noncontrolling interests 297 351 389 853 1,889 Net loss attributable to noncontrolling interests (6) (2) (8) (1) (18) Net earnings attributable to The Kroger Co. $ 303 $ 353 $ 397 $ 854 $ 1,907 Net earnings attributable to The Kroger Co. per basic common share $ 0.33 $ 0.39 $ 0.44 $ 0.97 $ 2.11

Average number of shares used in basic calculation 914 897 887 875 895 Net earnings attributable to The Kroger Co. per diluted common share $ 0.32 $ 0.39 $ 0.44 $ 0.96 $ 2.09

Average number of shares used in diluted calculation 925 905 893 884 904 Dividends declared per common share $ 0.120 $ 0.125 $ 0.125 $ 0.125 $ 0.495 Annual amounts may not sum due to rounding.

Net earnings for the first quarter of 2017 include $199, $126 net of tax, related to the withdrawal liability for certain multi-

employer pension funds and $184, $117 net of tax, related to the voluntary retirement offering. Net earnings for the fourth quarter of 2017 include charges to operating, general and administrative expenses of $351, $234

net of tax, related to obligations from withdrawing from and settlements of withdrawal liabilities for certain multi-employer pension funds, $110, $74 net of tax, related to the Kroger Specialty Pharmacy goodwill impairment and $502, $335 net of tax, related to a company-sponsored pension plan termination.

Net earnings for the fourth quarter of 2017 include a reduction to depreciation and amortization expenses of $19, $13 net of

tax, related to held for sale assets. Net earnings for the fourth quarter 2017 include a reduction to income tax expense of $922 primarily due to the re-measurement of deferred tax liabilities and the reduction of the statutory rate for the last five weeks of the fiscal year from the Tax Cuts and Jobs Act . In addition, net earnings include $119, $79 net of tax, due to a 53 week in fiscal year 2017.

Quarter First Second Third Fourth Total Year 2016 (16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks) (52 Weeks) Sales $ 34,604 $ 26,565 $ 26,557 $ 27,611 $ 115,337 Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below 26,669 20,697 20,653 21,483 89,502

Operating, general and administrative 5,779 4,473 4,443 4,483 19,178 Rent 262 205 199 215 881 Depreciation and amortization 694 525 549 572 2,340 Operating profit 1,200 665 713 858 3,436 Interest expense 155 116 124 126 522 Earnings before income tax expense 1,045 549 589 732 2,914 Income tax expense 350 171 206 230 957 Net earnings including noncontrolling interests 695 378 383 502 1,957 Net loss attributable to noncontrolling interests (1) (5) (8) (4) (18) Net earnings attributable to The Kroger Co. $ 696 $ 383 $ 391 $ 506 $ 1,975 Net earnings attributable to The Kroger Co. per basic common share $ 0.72 $ 0.40 $ 0.41 $ 0.54 $ 2.08

Average number of shares used in basic calculation 954 943 940 929 942 Net earnings attributable to The Kroger Co. per diluted common share $ 0.71 $ 0.40 $ 0.41 $ 0.53 $ 2.05

Average number of shares used in diluted calculation 966 959 953 943 958 Dividends declared per common share $ 0.105 $ 0.120 $ 0.120 $ 0.120 $ 0.465 Annual amounts may not sum due to rounding.

In the second quarter of 2016, the Company incurred a $111 charge to OG&A expenses for commitments and withdrawal liabilities associated with the restructuring of certain multi-employer pension plan agreements. 22. SUBSEQUENT EVENTS

Sale of Convenience Store Business On February 5, 2018, the Company announced that it has entered into a definitive agreement to sell its convenience store

business for $2,150. Debt On March 16, 2018, the Company obtained a $1,000 term loan facility with a maturity date of March 16, 2019. The funds

were drawn on March 26, 2018 and were used to reduce outstanding commercial paper borrowings. Under the terms of the agreement, interest rates are adjusted monthly based on the Company's Public Debt Rating and prevailing LIBOR rates. At the Company’s current Public Debt Rating, as of March 26, 2018, the term loan bears a variable interest rate of 2.72%.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE.

None. ITEM 9A. CONTROLS AND PROCEDURES.

As of February 3, 2018, our Chief Executive Officer and Chief Financial Officer, together with a disclosure review committee appointed by the Chief Executive Officer, evaluated the Company’s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of February 3, 2018. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There was no change in our internal control over financial reporting during the fiscal quarter ended February 3, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of February 3, 2018.

The effectiveness of the Company’s internal control over financial reporting as of February 3, 2018, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which can be found in Item 8 of this Form 10-K. ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item not otherwise set forth below is set forth under the headings Election of Directors, Information Concerning the Board of Directors — Committees of the Board, Information Concerning the Board of Directors — Audit Committee, Information Concerning the Board of Directors — Code of Ethics and Section 16(a) Beneficial Ownership Reporting Compliance in the definitive proxy statement to be filed by the Company with the Securities and Exchange Commission before within 120 days after the end of the fiscal year 2017 (the “2018 proxy statement”) and is hereby incorporated by reference into this Form 10-K.

EXECUTIVE OFFICERS OF THE COMPANY

Name Age Recent Employment History Mary E. Adcock 42 Ms. Adcock was elected Group Vice President of Retail Operations, effective June

2016. Prior to this, she served as Vice President of Operations for Kroger’s Columbus Division from November 2015 to May 2016 and as Vice President of Merchandising for the Columbus Division from March 2014 to November 2015. From February 2012 to March 2014, Ms. Adcock served as Vice President of Natural Foods Merchandising and from October 2009 to February 2012, she served as Vice President of Deli/Bakery Manufacturing. Prior to that, Ms. Adcock held several leadership positions in the manufacturing department, including human resources manager, general manager and division operations manager. Ms. Adcock joined Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in Bowling Green, Kentucky.

Jessica C. Adelman 42 Ms. Adelman joined Kroger in November 2015 as Group Vice President of Corporate

Affairs. Prior to joining Kroger, she served as senior vice president of corporate affairs for Syngenta North America, a leading agriculture company, since 2008. Prior to that, Ms. Adelman held several strategic leadership roles with other companies, including director of Cargill Government Solutions. Ms. Adelman has 20 years of experience as a public affairs executive in the food industry.

Stuart W. Aitken 46 Mr. Aitken was elected Group Vice President in June 2015 and is responsible for leading

Kroger’s data analytics subsidiary, 84.51° LLC. Prior to joining Kroger, he served as the chief executive officer of dunnhumby USA, LLC from July 2010 to June 2015. Mr. Aitken has over 15 years of marketing, academic and technical experience across a variety of industries, and held various leadership roles with other companies, including Michaels Stores and Safeway, Inc.

Robert W. Clark 52 Mr. Clark was elected Senior Vice President of Merchandising in March 2016. Prior to this,

he served as Group Vice President of Non-Perishables from March 2013 to March 2016. Prior to that, he served as Vice President of Merchandising for Kroger’s Fred Meyer division from October 2011 to March 2013. From August 2010 to October 2011 he served as Vice President of Operations for Kroger’s Columbus division. Prior to that, from May 2002 to August 2010, he served as Vice President of Merchandising for Kroger’s Fry’s division. From 1985 to 2002, Mr. Clark held various leadership positions in store and district management, as well as grocery merchandising. Mr. Clark began his career with Kroger in 1985 as a courtesy clerk at Fry’s.

Yael Cosset 45 Mr. Cosset was elected Group Vice President and Chief Digital Officer in January 2017 and

is responsible for leading Kroger’s digital strategy, focused on building Kroger’s presence in the marketplace in digital channels, personalization and e-commerce. Prior to this, he served as Chief Commercial Officer and Chief Information Officer of 84.51° LLC from April 2015 to December 2016. Prior to joining Kroger, Mr. Cosset served in several leadership roles at dunnhumby USA, LLC from 2009 to 2015, including Executive Vice President of Consumer Markets and Global Chief Information Officer.

Michael J. Donnelly 59 Mr. Donnelly was elected Executive Vice President and Chief Operating Officer in

December 2017. Prior to this, he was Executive Vice President of Merchandising from September 2015 to December 2017, and Senior Vice President of Merchandising from July 2011 to September 2015. Prior to that, Mr. Donnelly held a variety of key management positions with Kroger, including President of Ralphs Grocery Company, President of Fry’s Food Stores, and Senior Vice President, Drug/GM Merchandising and Procurement. Mr. Donnelly joined Kroger in 1978 as a clerk.

Carin L. Fike 50 Ms. Fike was elected Vice President and Treasurer effective June 2017. Prior to this, she

served as Assistant Treasurer from March 2011 to June 2017. Prior to that, Ms. Fike served as Director of Investor Relations from December 2003 to March 2011. Ms. Fike began her career with Kroger in 1999 as a manager in the Financial Reporting department after working with PricewaterhouseCoopers from 1995 to 1999, where most recently she was an audit manager.

Todd A. Foley 48 Mr. Foley was elected Vice President and Corporate Controller effective June 2017. Before

that, he served as Vice President and Treasurer from June 2013 to June 2017. Prior to this, Mr. Foley served as Assistant Corporate Controller from March 2006 to June 2013, and Controller of Kroger’s Cincinnati/Dayton division from October 2003 to March 2006. Mr. Foley began his career with Kroger in 2001 as an audit manager in the Internal Audit Department after working for PricewaterhouseCoopers from 1991 to 2001, where most recently he was a senior audit manager.

Christopher T. Hjelm 56 Mr. Hjelm was elected Executive Vice President and Chief Information Officer in September

2015. Prior to this, he served as Senior Vice President and Chief Information Officer from August 2005 to September 2015. From February 2005 to July 2005, he was Chief Information Officer of Travel Distribution Services for Cendant Corporation. From July 2003 to November 2004, Mr. Hjelm served as Chief Technology Officer for Orbitz LLC, which was acquired by Cendant Corporation in November 2004. Mr. Hjelm served as Senior Vice President for Technology at eBay Inc. from March 2002 to June 2003, and served as Executive Vice President for Broadband Network Services for Excite@Home from June 2001 to February 2002. From January 2000 to June 2001, Mr. Hjelm served as Chairman, President and Chief Executive Officer of ZOHO Corporation. Prior to that, he held various key roles for 14 years with Federal Express Corporation, including that of Senior Vice President and Chief Information Officer.

Calvin J. Kaufman 55 Mr. Kaufman was elected Senior Vice President in June 2017, and is responsible for the

oversight of several Kroger retail divisions. Prior to this, he served as President of the Louisville division from July 2013 to June 2017. Prior to that, he served as President of Kroger Manufacturing and Our Brands from June 2008 to June 2013, and Group Vice President of Fred Meyer Logistics from September 2005 to May 2008. Mr. Kaufman held various positions in Logistics after joining Kroger in the Fred Meyer division in September 1994.

Timothy A. Massa 51 Mr. Massa was elected Group Vice President of Human Resources and Labor Relations in

June 2014. He joined Kroger in October 2010 as Vice President, Corporate Human Resources and Talent Development. Prior to joining Kroger, he served in various Human Resources leadership roles for 21 years at Procter & Gamble, most recently serving as Global Human Resources Director of Customer Business Development.

Stephen M. McKinney 61 Mr. McKinney was elected Senior Vice President in March 2018, and is responsible for the

oversight of several Kroger retail divisions. Prior to this, he served as President of Kroger’s Fry’s Food Stores division from October 2013 to March 2018. Prior to that, he served as Vice President of Operations for the Ralphs division from October 2007 to September 2013, and Vice President of Operations for the Southwest division from October 2006 to September 2007. From 1988 to 1998, Mr. McKinney served in various leadership positions in the Fry’s Food Stores division, including store manager, deli director, and executive director of operations. From 1981 to 1998, Mr. McKinney held several roles with Florida Choice Supermarkets, a former Kroger banner, including store manager, buyer, and field representative. He started his career with Kroger in 1981 as a clerk with Florida Choice.

W. Rodney McMullen 57 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and Chief

Executive Officer effective January 1, 2014. Prior to this, he served as President and Chief Operating Officer from August 2009 to December 2013. Prior to that he was elected Vice Chairman in June 2003, Executive Vice President, Strategy, Planning and Finance in January 2000, Executive Vice President and Chief Financial Officer in May 1999, Senior Vice President in October 1997, and Group Vice President and Chief Financial Officer in June 1995. Before that he was appointed Vice President, Control and Financial Services in March 1993, and Vice President, Planning and Capital Management in December 1989. Mr. McMullen joined Kroger in 1978 as a part-time stock clerk.

J. Michael Schlotman 60 Mr. Schlotman was elected Executive Vice President and Chief Financial Officer in September 2015. Prior to this, he was elected Senior Vice President and Chief Financial Officer in June 2003, and Group Vice President and Chief Financial Officer in January 2000. Prior to that he was elected Vice President and Corporate Controller in 1995, and served in various positions in corporate accounting since joining Kroger in 1985.

Erin S. Sharp 60 Ms. Sharp has served as Group Vice President of Manufacturing since June 2013. She joined Kroger in 2011 as Vice President of Operations for Kroger’s Manufacturing division. Before joining Kroger, Ms. Sharp served as Vice President of Manufacturing for the Sara Lee Corporation. In that role, she led the manufacturing and logistics operations for the central region of their U.S. Fresh Bakery Division. Ms. Sharp has over 30 years of experience supporting food manufacturing operations.

Alessandro Tosolini 51 Mr. Tosolini was elected Senior Vice President of New Business Development in December 2014. Before joining Kroger, he held numerous leadership positions with Procter & Gamble for 24 years, in the U.S. and internationally, most recently serving as senior vice president of Global e Business and vice president of Global eCommerce.

Mark C. Tuffin 58 Mr. Tuffin has served as Senior Vice President since January 2014, and is responsible for the oversight of several of Kroger’s retail divisions. Prior to this, he served as President of Kroger’s Smith’s division from July 2011 to January 2014. From September 2009 to July 2011, Mr. Tuffin served as Vice President of Transition, where he was responsible for implementing an organizational restructuring initiative for Kroger’s retail divisions. He joined Kroger’s Smith’s division in 1996 and served in a series of leadership roles, including Vice President of Merchandising from September 1999 to September 2009. Mr. Tuffin held various positions with other supermarket retailers before joining Smith’s in 1996.

Christine S. Wheatley 47 Ms. Wheatley was elected Group Vice President, Secretary and General Counsel in May 2014. She joined Kroger in February 2008 as Corporate Counsel, and became Senior Attorney in 2010, Senior Counsel in 2011, and Vice President in 2012. Before joining Kroger, Ms. Wheatley was engaged in the private practice of law for 11 years, most recently as a partner at Porter Wright Morris & Arthur in Cincinnati.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is set forth in the sections entitled Compensation Discussion and Analysis, Compensation Committee Report, and Compensation Tables in the 2018 proxy statement and is hereby incorporated by reference into this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS.

The following table provides information regarding shares outstanding and available for issuance under our existing equity compensation plans.

Equity Compensation Plan Information

(a) (b) (c) Number of securities remaining for future Number of securities to Weighted-average issuance under equity be issued upon exercise exercise price of compensation plans of outstanding options, outstanding options, (excluding securities Plan Category warrants and rights (1) warrants and rights (1) reflected in column (a)) Equity compensation plans approved by security holders 38,340,512 $ 22.23 38,226,331 Equity compensation plans not approved by security holders — $ — — Total 38,340,512 $ 22.23 38,226,331

(1) The total number of securities reported includes the maximum number of common shares, 1,655,455, that may be issued under performance units granted under our long-term incentive plans. The nature of the awards is more particularly described in the Compensation Discussion and Analysis section of the definitive 2018 proxy statement and is hereby incorporated by reference into this Form 10-K. The weighted-average exercise price in column (b) does not take these performance unit awards into account. Based on historical data, or in the case of the award made in 2015 and earned in 2017 the actual payout percentage, our best estimate of the number of common shares that will be issued under the performance unit grants is approximately 560,353. The remainder of the information required by this Item is set forth in the section entitled Beneficial Ownership of Common

Stock in the 2018 proxy statement and is hereby incorporated by reference into this Form 10-K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE.

This information required by this Item is set forth in the sections entitled Related Person Transactions and Information Concerning the Board of Directors-Independence in the 2018 proxy statement and is hereby incorporated by reference into this Form 10-K. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is set forth in the section entitled Ratification of the Appointment of Kroger’s Independent Auditor in the 2018 proxy statement and is hereby incorporated by reference into this Form 10-K.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)1. Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017 Consolidated Statements of Operations for the years ended February 3, 2018, January 28, 2017 and January 30,

2016 Consolidated Statements of Comprehensive Income for the years ended February 3, 2018, January 28, 2017 and

January 30, 2016 Consolidated Statements of Cash Flows for the years ended February 3, 2018, January 28, 2017 and January 30, 2016

Consolidated Statement of Changes in Shareholders’ Equity for the years ended February 3, 2018, January 28, 2017 and January 30, 2016

Notes to Consolidated Financial Statements (a)2. Financial Statement Schedules: There are no Financial Statement Schedules included with this filing for the reason that they are not applicable or

are not required or the information is included in the financial statements or notes thereto. (a)3.(b) Exhibits 3.1 Amended Articles of Incorporation are hereby incorporated by reference to Exhibit 3.1 of the Company’s Quarterly

Report on Form 10-Q for the quarter ended May 22, 2010, as amended by the Amendment to Amended Articles of Incorporation, which is hereby incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 23, 2015.

3.2 The Company’s Regulations are hereby incorporated by reference to Exhibit 3.2 of the Company’s Quarterly

Report on Form 10-Q for the quarter ended May 26, 2007. 4.1 Instruments defining the rights of holders of long-term debt of the Company and its subsidiaries are not filed as

Exhibits because the amount of debt under each instrument is less than 10% of the consolidated assets of the Company. The Company undertakes to file these instruments with the SEC upon request.

10.1* The Kroger Co. Deferred Compensation Plan for Independent Directors. Incorporated by reference to Exhibit 10.2

of the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016. 10.2* The Kroger Co. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.4 of the

Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005. 10.3* The Kroger Co. 401(k) Retirement Savings Account Restoration Plan. Incorporated by reference to Exhibit 10.4 of

the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007. 10.4* The Kroger Co. Supplemental Retirement Plans for Certain Retirement Benefit Plan Participants. Incorporated by

reference to Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

10.5* The Kroger Co. Employee Protection Plan dated January 13, 2017. Incorporated by reference to Exhibit 10.5 of the

Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017. 10.6 Amended and Restated Credit Agreement dated August 29, 2017, among The Kroger Co., the initial lenders named

therein, and Bank of America, N.A. and Wells Fargo Bank National Association, as co-administrative agents, Citibank, N.A., as syndication agent, and Mizuho Bank, Ltd. and U.S. Bank National Association, as co- documentation agents, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 29, 2017.

10.7* The Kroger Co. 2008 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the

Company’s Form S-8 filed with the SEC on June 26, 2008.

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10.8* The Kroger Co. 2011 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the

Company’s Form S-8 filed with the SEC on June 23, 2011. 10.9* The Kroger Co. 2014 Long-Term Incentive and Cash Bonus Plan. Incorporated by reference to Exhibit 4.2 of the

Company’s Form S-8 filed with the SEC on July 29, 2014. 10.10* Form of Restricted Stock Grant Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by

reference to Exhibit 10.9 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007.

10.11* Form of Non-Qualified Stock Option Grant Agreement under Long-Term Incentive and Cash Bonus Plans.

Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 24, 2008.

10.12* Form of Performance Unit Award Agreement under Long-Term Incentive and Cash Bonus Plans. Incorporated by

reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended August 12, 2017. 10.13* The Kroger Co. 2015 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 of the Company’s

Quarterly Report on Form 10-Q for the quarter ended May 23, 2015. 10.14* The Kroger Co. 2016 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.18 of the Company’s

Annual Report on Form 10-K for the fiscal year ended January 30, 2016. 10.15* The Kroger Co. 2017 Long-Term Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 of the Company’s

Quarterly Report on Form 10-Q for the quarter ended May 20, 2017. 12.1 Schedule of Computation of Ratio of Earnings to Fixed Charges. 21.1 Subsidiaries of the Registrant. 23.1 Consent of Independent Registered Public Accounting Firm. 24.1 Powers of Attorney. 31.1 Rule 13a-14(a)/15d-14(a) Certification. 31.2 Rule 13a-14(a)/15d-14(a) Certification. 32.1 Section 1350 Certifications. 101.INS XBRL Instance Document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

* Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused

this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE KROGER CO. Dated: April 3, 2018 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

/s/ J. Michael Schlotman Executive Vice President and Chief Financial Officer J. Michael Schlotman (principal financial officer) /s/ Todd A. Foley Vice President & Corporate Controller Todd A Foley (principal accounting officer) * Director Nora A. Aufreiter * Director Robert D. Beyer * Director Anne Gates * Director Susan J. Kropf * Chairman of the Board and Chief Executive Officer W. Rodney McMullen * Director Jorge P. Montoya * Director Clyde R. Moore * Director James A. Runde * Director Ronald L. Sargent * Director Bobby S. Shackouls * Director Mark S. Sutton

* By: /s/ Christine S. Wheatley Christine S. Wheatley Attorney-in-fact

EXHIBIT 12.1

EXHIBIT 12.1 SCHEDULE OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE KROGER CO. AND

CONSOLIDATED SUBSIDIARY COMPANIES FOR THE FIVE FISCAL YEARS ENDED FEBRUARY 3, 2018

February 3, January 28, January 30, January 31, February 1, 2018 2017 2016 2015 2014 (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks) (In millions, except ratio) Earnings: Earnings before tax expense $ 1,484 $ 2,914 $ 3,094 $ 2,649 $ 2,282 Fixed charges 1,132 1,037 903 896 797 Capitalized interest (12) (13) (9) (5) (5)

Pre-tax earnings before fixed charges $ 2,604 $ 3,938 $ 3,988 $ 3,540 $ 3,074

Fixed charges: Interest $ 613 $ 535 $ 491 $ 493 $ 448 Portion of rental payments deemed to be interest 519 502 412 403 349

Total fixed charges $ 1,132 $ 1,037 $ 903 $ 896 $ 797 Ratio of earnings to fixed charges 2.3 3.8 4.4 4.0 3.9

EXHIBIT 21.1

SUBSIDIARIES OF THE KROGER CO. 84.51 LLC [Ohio] 84.51 HQ Building Company, LLC [Ohio] Agri-Products, Inc. [Arkansas] Alpha Beta Company [California] Ansonborough Square Investors I, LLC [Delaware] Ansonborough Square Retail, LLC [South Carolina] Ardrey Kell Investments, LLC [North Carolina] Bay Area Warehouse Stores, Inc. [California] Beech Tree Holdings, LLC [Delaware] Bell Markets, Inc. [California] Bleecker Ventures LLC [New York] Bluefield Beverage Company [Ohio] Box Cutter, Inc. [New York] Brier Creek Arbors Drive Retail, LLC [North Carolina] Cala Co. [Delaware] Cala Foods, Inc. [California] CB&S Advertising Agency, Inc. [Oregon] Cheeses of All Nations, Inc. [New York] Country Oven, Inc. [Ohio] Crawford Stores, Inc. [California] Creedmoor Retail, LLC [North Carolina] Dillon Companies, Inc. [Kansas] Also Doing Business As: Baker's Supermarkets City Market Dillon Food Stores Dillon Stores Division, Inc. Food 4 Less Gerbes Supermarkets Inter-American Products King Soopers Peyton’s Fountain Dillon Real Estate Co., Inc. [Kansas] Distribution Trucking Company [Oregon] Dotto, Inc. [Indiana] Edgewood Plaza Holdings, LLC [Ohio] Embassy International, Inc. [Ohio] Farmacia Doral, Inc. [Puerto Rico] FM, Inc. [Utah] FMJ, Inc. [Delaware] Also Doing Business As: FMJ Ecommerce Fred Meyer Jewelers Mail Order fredmeyerjewelers.com littmanjewelers.com Food 4 Less GM, Inc. [California] Food 4 Less Holdings, Inc. [Delaware]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Food 4 Less Merchandising, Inc. [California] Food 4 Less of California, Inc. [California] Food 4 Less of Southern California, Inc. [Delaware] Fred Meyer, Inc. [Delaware] Fred Meyer Jewelers, Inc. [California] Also Doing Business As: Fred Meyer Jewelers Littman Jewelers Fred Meyer Stores, Inc. [Ohio] Also Doing Business As: Fred Meyer Inter-American Products QFC Quality Food Centers Swan Island Dairy Glendale/Goodwin Realty I, LLC [Ohio] Grubstake Investments, LLC [Oregon] Harris Teeter, LLC [North Carolina] Harris Teeter Properties, LLC [North Carolina] Harris-Teeter Services, Inc. [North Carolina] Harris Teeter Supermarkets, Inc. [North Carolina] Healthy Options Inc. [Delaware] Also Doing Business As: Postal Prescription Services Henpil, Inc. [Texas] Hood-Clayton Logistics LLC [Georgia] HT Fuel DE, LLC [Delaware] HT Fuel MD, LLC [Maryland] HT Fuel NC, LLC [North Carolina] HT Fuel SC, LLC [North Carolina] HT Fuel VA, LLC [Virginia] HTGBD, LLC [North Carolina] HTP Bluffton, LLC [North Carolina] HTP Plaza LLC [North Carolina] HTP Relo, LLC [North Carolina] HTPS, LLC [North Carolina] HTTAH, LLC [North Carolina] Hughes Markets, Inc. [California] Hughes Realty, Inc. [California] Infusion Solutions of Puerto Rico, LLC [Puerto Rico] Inter-American Foods, Inc. [Ohio] Inter-American Products, Inc. [Ohio] IRP, LLC [Wisconsin] I.T.A., Inc. [Wisconsin] ITAC 119, LLC [North Carolina] ITAC 265, LLC [North Carolina] Jondex Corp. [Wisconsin] Jubilee Carolina, LLC [North Carolina]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Junior Food Stores of West Florida, Inc. [Florida] Also Doing Business As: Kwik Shop Kwik Shop Market Tom Thumb Food Stores J.V. Distributing, Inc. [Michigan] KCDE-2 LLC [Ohio] KCDE-3 LLC [Ohio] KCDE-4 LLC [Ohio] KCDE-5 LLC [Ohio] KCDE – 2012, LLC [Ohio] KCDE – 2013, LLC [Ohio] Kee Trans, Inc. [Wisconsin] Kessel FP, L.L.C. [Michigan] Kessel RCD, L.L.C. [Michigan] Kessel Saginaw, L.L.C. [Michigan] KGO LLC [Ohio] Kiosk Medicine Kentucky, LLC [Kentucky] Also Doing Business As: The Little Clinic Kirkpatrick West Retail, LLC [Virginia] KPF Insurance Services LLC [Ohio] KPF, LLC [Delaware] KPS, LLC [Ohio] KP SOURCING, LLC [Colorado] KRGP Inc. [Ohio] KRLP Inc. [Ohio] Kroger 017 Operator, Inc. [Ohio] Kroger 509 Operator, Inc. [Ohio] The Kroger Co. of Michigan [Michigan] Also Doing Business As: Inter-American Products Kessel Food Markets Kessel Pharmacies Kroger Kroger Fresh Fare Kroger Community Development Entity, LLC [Ohio] Kroger Dedicated Logistics Co. [Ohio] Also Doing Business As: KDL Kroger G.O. LLC [Ohio] Kroger Limited Partnership I [Ohio] Also Doing Business As: Chef’s Choice Catering Foods Plus Gene Maddy Drugs Inter-American Products JayC Food Stores Kentucky Distribution Center Kroger Food Stores Kroger Marketplace Owen's Supermarket

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Pay Less Super Markets Peyton's Southeastern Queen City Centre Ruler Discount Foods Ruler Foods Scott’s Food & Pharmacy Kroger Limited Partnership II [Ohio] Also Doing Business As: Country Oven Bakery Crossroad Farms Dairy Inter-American Products K. B. Specialty Foods Kenlake Foods Pace Dairy of Indiana Peyton's Northern Winchester Farms Dairy Kroger Management Co. [Michigan] Kroger Management – Corryville, LLC [Ohio] Kroger Management – NMTC Athens I, LLC [Ohio] Kroger Management – NMTC Champaign I, LLC [Ohio] Kroger Management – NMTC Champaign II, LLC [Ohio] Kroger Management – NMTC Cincinnati I, LLC [Ohio] Kroger Management – NMTC Dallas I, LLC [Ohio] Kroger Management – NMTC Danville I, LLC [Ohio] Kroger Management – NMTC Griffin I, LLC [Ohio] Kroger Management – NMTC Logansport I, LLC [Ohio] Kroger Management – NMTC Missouri I, LLC [Ohio] Kroger Management – NMTC Oak Ridge I, LLC [Ohio] Kroger Management – NMTC Olney I, LLC [Ohio] Kroger Management – NMTC Omaha I, LLC [Ohio] Kroger Management – NMTC Portsmouth I, LLC [Ohio] Kroger Management – NMTC Starkville I, LLC [Ohio] Kroger Management – NMTC Topeka I, LLC [Ohio] Kroger Management – NMTC Warrenton I, LLC [Ohio] Kroger MC Holdings, LLC [Ohio] Kroger MTL Management, LLC [Ohio] Kroger Prescription Plans, Inc. [Ohio] Kroger Specialty Infusion AL, LLC [Alabama] Kroger Specialty Infusion CA, LLC [California] Kroger Specialty Infusion Holdings, Inc. [Delaware] Kroger Specialty Infusion TX, LLC [Texas] Kroger Specialty Pharmacy CA, LLC [Delaware] Kroger Specialty Pharmacy CA 2 LLC [Delaware] Kroger Specialty Pharmacy FL 2 LLC [Delaware] Kroger Specialty Pharmacy Holdings, Inc. [Delaware] Kroger Specialty Pharmacy Holdings I, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 2, Inc. [Delaware] Kroger Specialty Pharmacy Holdings 3, Inc. [Delaware] Kroger Specialty Pharmacy, Inc. [Florida] Kroger Specialty Pharmacy LA, LLC [Louisiana] Kroger Texas L.P. [Ohio] Also Doing Business As:

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

America's Beverage Company Inter-American Products Kroger Vandervoort Dairy Foods Company KR Plaza Holdings, LLC [Delaware] Kwik Shop, Inc. [Kansas] The Little Clinic LLC [Delaware] The Little Clinic Management Services LLC [Delaware] The Little Clinic of Arizona LLC [Delaware] The Little Clinic of Colorado LLC [Delaware] The Little Clinic of IN LLC [Delaware] The Little Clinic of Kansas LLC [Delaware] The Little Clinic of Mississippi LLC [Delaware] The Little Clinic of Ohio LLC [Ohio] The Little Clinic of Tennessee LLC [Delaware] The Little Clinic of TX LLC [Delaware] The Little Clinic of VA LLC [Delaware] Local Mkt LLC [Ohio] Main & Vine LLC [Ohio] Matthews Property 1, LLC [North Carolina] Mega Marts, LLC [Wisconsin] Also Doing Business As: Metro Market Pick ‘n Save Michigan Dairy, L.L.C. [Michigan] Mini Mart, Inc. [Wyoming] Also Doing Business As: Loaf ‘N Jug Murray’s Cheese LLC [New York] Murray’s Table LLC [New York] Pace Dairy Foods Company [Ohio] Paramount Logistics, LLC [Ohio] Pay Less Super Markets, Inc. [Indiana] Peyton's-Southeastern, Inc. [Tennessee] Also Doing Business As: Peyton's Mid-South Company Plum Labs LLC [Ohio] Pontiac Foods, Inc. [South Carolina] Queen City Assurance, Inc. [Vermont] Quik Stop Markets, Inc. [California] Ralphs Grocery Company [Ohio] Also Doing Business As: Food 4 Less Food 4 Less Midwest Foods Co. Inter-American Products Ralphs Ralphs Fresh Fare Ralphs Marketplace RBF, LLC [Wisconsin] Rocket Newco, Inc. [Texas] Roundy’s Acquisition Corp. [Delaware]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

Roundy’s Illinois, LLC [Wisconsin] Also Doing Business As: Mariano’s Roundy’s, Inc. [Delaware] Roundy’s Supermarkets, Inc. [Wisconsin] Second Story, Inc. [Washington] Shop-Rite, LLC [Wisconsin] Also Doing Business As: Metro Market Pick ‘n Save Smith’s Beverage of Wyoming, Inc. [Wyoming] Smith’s Food & Drug Centers, Inc. [Ohio] Also Doing Business As: Fry’s Food Stores Fry’s Marketplace Fry’s Mercado Inter-American Products Peyton’s Phoenix Smith’s Express Smith’s Food & Drug Stores Smith’s Fuel Centers Smith’s Marketplace Southern Ice Cream Specialties, Inc. [Ohio] Stallings Investors I, LLC [North Carolina] Sunrise R&D Holdings, LLC [Ohio] THGP Co., Inc. [Pennsylvania] THLP Co., Inc. [Pennsylvania] TH Midwest, Inc. [Ohio] Also Doing Business As: Turkey Hill Minit Markets TLC Corporate Services LLC [Delaware] TLC Immunization Clinic LLC [Delaware] TLC of Georgia LLC [Delaware] Also Doing Business As: The Little Clinic Topvalco, Inc. [Ohio] Turkey Hill, L.P. [Pennsylvania] Also Doing Business As: Inter-American Products Turkey Hill Dairy, Inc. Turkey Hill Minit Markets Ultimate Mart, LLC [Wisconsin] Also Doing Business As: Copps Pick ‘n Save Ultra Mart Foods, LLC [Wisconsin] Also Doing Business As: Pick ‘n Save Vine Court Assurance Incorporated [Vermont] Vitacost.com, Inc. [Delaware] Woodmont Holdings, LLC [North Carolina] You Technology, LLC [Ohio]

[ ] Brackets indicate state or country of incorporation or organization and do not form part of corporate name.

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (No. 333-215085) and S-8 (Nos. 033-55501, 333-27211, 333-78935, 333-91354, 333-126076, 333-151967, 333-164951, 333-175086, 333-185446, 333- 197711, 333-197712, 333-206531 and 333-206532) of The Kroger Co. of our report dated April 3, 2018 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Cincinnati, Ohio April 3, 2018

Exhibit 24.1 POWER OF ATTORNEY

/s/ Nora A. Aufreiter /s/ Clyde R. Moore Nora A. Aufreiter Clyde R. Moore /s/ Robert D. Beyer /s/ James A. Runde Robert D. Beyer James A. Runde /s/ Anne Gates /s/ Ronald L. Sargent Anne Gates Ronald L. Sargent /s/ Susan J. Kropf /s/ Bobby S. Shackouls Susan J. Kropf Bobby S. Shackouls /s/ W. Rodney McMullen /s/ Mark S. Sutton W. Rodney McMullen Mark S. Sutton /s/ Jorge P. Montoya Jorge P. Montoya

EXHIBIT 31.1

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 3, 2018 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer (principal executive officer)

EXHIBIT 31.2

CERTIFICATION I, J. Michael Schlotman, certify that: 1. I have reviewed this annual report on Form 10-K of The Kroger Co.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over

Date: April 3, 2018 /s/ J. Michael Schlotman J. Michael Schlotman Executive Vice President and Chief Financial Officer (principal financial officer)

EXHIBIT 32.1

CERTIFICATIONS NOTE: The referenced officers, based on their knowledge, furnish the following certification, pursuant to 18 U.S.C. §1350. We, W. Rodney McMullen, Chief Executive Officer and Chairman of the Board, and J. Michael Schlotman, Executive Vice President and Chief Financial Officer, of The Kroger Co. (the “Company”), do hereby certify in accordance with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Annual Report on Form 10-K of the Company for the period ending February 3, 2018 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or 78o(d)); and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

Dated: April 3, 2018 /s/ W. Rodney McMullen W. Rodney McMullen Chairman of the Board and Chief Executive Officer /s/ J. Michael Schlotman J. Michael Schlotman Executive Vice President and Chief Financial Officer A signed original of this written statement as required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to The Kroger Co., and will be retained by The Kroger Co. and furnished to the SEC or its staff upon request.

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