Expand Your Critical Thinking 7-03 a1-a3 (Part Level Submission) Amazon.com, Inc.'s financial statements are presented in Appendix D. Click here to view Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Click here to view Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes to the financial statements, are also provided in Appendices D and E, respectively. Based on the information contained in these financial statements, determine each of the following for each company: (a1) Cash and cash equivalents balance at December 31, 2015, for Amazon and at January 31, 2016, for Wal-Mart. (Enter the amounts in millions.) Amazon Wal-Mart Cash and Cash Equivalents million $ million AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2015 2014 14,557 $ 8,658 $ 2013 8,084 596 (241) 274 6,281 2,119 155 4,746 1,497 129 (3) 3,253 1,134 114 245 62 166 81 (119) (316) (6) (156) (78) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income (loss) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs Stock-based compensation Other operating expense (income), net Losses (gains) on sales of marketable securities, net Other expense (income), net Deferred income taxes Excess tax benefits from stock-based compensation Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Additions to unearned revenue Amortization of previously unearned revenue Net cash provided by (used in) operating activities INVESTING ACTIVITIES: Purchases of property and equipment, including internal-use software and website development, net Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities (2.187) (1,755) 4,294 913 7,401 (6,109) (1.193) (1,039) 1,759 706 4,433 (3,692) 6,842 (1,410) (846) 1,888 736 2,691 (2.292) 5,475 11.920 (4,589) (795) 3,025 (4,091) (4.893) (979) 3,349 (2,542) (3,444) (312) 2,306 (2,826) AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS in millions, except per share data) Year Ended December 31, 2015 2014 79,268 $ 70,080 $ 27,738 18.908 107,006 88,988 2013 60,903 13,549 74,452 Net product sales Net service sales Total net sales Operating expenses (1): Cost of sales Fulfillment Marketing Technology and content General and administrative Other operating expense (income), net Total operating expenses Income from operations Interest income Interest expense Other income (expense), net Total non-operating income (expense) Income (loss) before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income (loss) Basic earnings per share Diluted earnings per share 71,651 13,410 5,254 12,540 1,747 171 104.773 2,233 50 62,752 10,766 4,332 9,275 1,552 133 88,810 178 39 (210) (118) (289) (111) (167) 37 (241) $ (0.52) $ (0.52) $ 54,181 8,585 3,133 6,565 1,129 114 73,707 745 38 (141) (136) (239) 506 (161) (71) 274 0.60 (459) (256) (665) 1,568 (950) (22) 596 $ 1.28 $ 1.25 $ 0.59 Weighted average shares used in computation of earnings per share: Basic 467 462 457 465 Diluted 477 462 (1) Includes stock-based compensation as follows: Fulfillment Marketing Technology and content General and administrative 482 $ 190 1,224 223 375 $ 125 804 193 See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) in millions) 2015 Year Ended December 31, 2014 596 $ (241) $ 2013 274 (210) (2 Net income (loss) Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of $10, $(3), and $(20) Net change in unrealized gains (losses) on available-for-sale securities: Unrealized gains (losses), net of tax of $(5), $1, and $3 Reclassification adjustment for losses (gains) included in "Other income (expense), net, net of tax of $0, $(1), and $(1) Net unrealized gains (losses) on available-for-sale securities Total other comprehensive income (loss) (326) Comprehensive income (loss) s 3645 (5675 328 See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2015 2014 ASSETS Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities 15,890 $ 3,918 10,243 6,423 36,474 21,838 3,759 3,373 65,444 $ 14,557 2,859 8,299 5,612 31,327 16,967 3,319 2,892 54,505 $ 20,397 $ 10,384 3.118 33 899 9,807 1.823 28 089 33,899 8,235 9,926 28,089 8,265 7,410 Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares none Common stock, $0.01 par value: Authorized shares 5,000 Issued shares 494 and 488 Outstanding shares 471 and 465 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity (1,837) 13,394 (723) 2,545 13,384 65,444 $ (1,837) 11,135 (511) 1,949 10,741 54,505 $ See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) Common Stock Common Stock Shares 454 $ Amount 5$ Accumulated Additional Other Treasury Paid-In Comprehensive Stock Capital Income (Loss) (1,837) $ 8,347 $ (239) $ Total Retained Stockholders Earnings Equity 1,916 $ 8,192 274 274 54 13 1,149 9,573 (1,837) 2,190 1,149 9,746 (241) (326) (241 Balance as of January 1, 2013 Net income Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2013 Net loss Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2014 Net income Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Illalli I Lalli Tall III||uli II || | ull |||| 1,510 1,510 44 44 (1,837) 11,135 1,949 596 10,741 596 (212) III E III 119 119 2,131 2,131 1,149 9,5 1,149 9,746 (241) (326) 1,510 Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2013 Net loss Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2014 Net income Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2015 1,510 44 837) 11,135 44 10,741 596 (212) 119 119 2,131 2,131 471 $ 5 $ (1,837) $ 13,394 $ (723) $ 2,545 $ 13,384 See accompanying notes to consolidated financial statements. Consolidated Statements of Income Fiscal Years Ended January 31, 2016 2015 2014 $478,614 3,516 482,130 $482,229 3,422 485,651 $473,076 3,218 476,294 360,984 97,041 24,105 365,086 93,418 27,147 358,069 91,353 26,872 2,072 263 (119) (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Capital lease and financing obligations Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes: Current Deferred Total provision for income taxes Income from continuing operations Income from discontinued operations, net of income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart 2,027 521 (81) 2,467 21,638 2,161 300 (113) 2,348 24,799 2,216 24,656 7,584 (1,026) 6,558 8,619 (514) 8,105 15,080 16,551 8,504 (519) 7,985 16,814 285 17,099 (736) $ 16,363 - 144 15,080 (386) $ 14,694 16,695 (673) $ 16,022 $ 4.58 $ $ Basic net income per common share: Basic income per common share from continuing operations attributable to Walmart Basic income per common share from discontinued operations attributable to Walmart Basic net income per common share attributable to Walmart 5.01 0.06 5.07 487 0.03 4.90 $ 4.58 $ $ Diluted net income per common share: Diluted income per common share from continuing operations attributable to Walmart 4.57 499 $ 485 10,110 155 12,381 (190) Comprehensive income, net of income taxes Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest Less comprehensive income (loss) attributable to redeemable noncontrolling interest Comprehensive income attributable to Walmart 13,909 (295 (1 $13,613 $10,265 $12,191 See accompanying notes. Consolidated Balance Sheets Fiscal Years Ended January 31, 2016 2015 (Amounts in millions) $ ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other 8,705 5,624 44,469 1,441 60,239 $ 9,135 6,778 45,141 2,224 63,278 176,958 (66,787) 110,171 177,395 (63,115) 114,280 Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other assets and deferred charges 5,239 11,096 (4,751) 6,345 16,695 (2,864) 2,375 18,102 5,455 6,131 Total assets $199,581 $203,490 $ LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities 2,708 38,487 19,607 521 2,745 551 $ 1,592 38,410 19,152 1,021 4,791 287 64,619 65,253 Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other 38,214 5,816 7,321 40,889 2,606 8,805 Commitments and contingencies 317 Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive income (loss) Total Walmart shareholders' equity Nonredeemable noncontrolling interest 323 2,462 85,777 (7,168) 1,805 90,021 (11,597) 80,546 3,065 83,611 $199,581 81,394 4,543 85,937 $203,490 Total equity Total liabilities and equity See accompanying notes Consolidated Statements of Shareholders' Equity Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest Retained Earnings $72,978 16,022 Accumulated Other Comprehensive Income (Loss) $ (587) Total Walmart Shareholders Equity $ 76,343 16,022 Nonredeemable Noncontrolling Interest $5,395 595 Total Equity $81,738 16,617 Redeemable Noncontrolling Interest $ 519 78 (2,409) (2,409) (311) (2,720) (66) (6,139) (6,254) TL (6,139) (6,557) (6,139) (6,557) Capital in Common Stock Excess of (Amounts in millions) Shares Amount Par Value Balances as of February 1, 2013 3,314 $332 $3,620 Consolidated net income Other comprehensive income, net of income taxes Cash dividends declared ($1.88 per share) Purchase of Company stock (9) (294) Redemption value adjustment of redeemable noncontrolling interest (1,019) Other 55 Balances as of January 31, 2014 3,233 2,362 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($1.92 per share) Purchase of Company stock (29) Purchase of redeemable noncontrolling interest Other (1,019) 14 1,019 (59) 1 (41) 76,566 16,363 (1,019) (581) 81,339 17,099 (2,996) (595) 5,084 736 76,255 16,363 1,491 - II 18 LET I 12 I II (4,172) (4,172) (546) (4,718) (6,185) (950) 6,185) (980) (6,185) (980) (1,491) 113 3,228 (17) 85,777 14,694 (7,168) 81,394 14,694 (731) 4,543 386 (618) 85,937 15,080 Balances as of January 31, 2015 Consolidated net income Other comprehensive income, net of income taxes (4,429) (4,429) (541) (4,970) (4,429) (4,429) (541) (4,970) Other comprehensive income, net of income taxes Cash dividends declared ($1.96 per share) Purchase of Company stock Cash dividend declared to noncontrolling interest Other Balances as of January 31, 2016 (65) (6) (102) (6,294) (4,148) TL (6,294) (4,256) (6,294) (4,256) (8) (555) $1,805 (563) $80,546 (691) (632) $3,065 (691) (1,195) $83,611 3,162 $317 $90,021 $(11,597) $ - See accompanying notes. Consolidated Statements of Cash Flows Fiscal Years Ended January 31, 2016 2015 2014 (Amounts in millions) Cash flows from operating activities: Consolidated net income Income from discontinued operations, net of income taxes $ 15,080 $ 17,099 (285) $ 16,695 (144) 16,551 15,080 16,814 Income from continuing operations Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net Inventories Accounts payable Accrued liabilities 9,454 (672) 1,410 9,173 (503) 785 8,870 (279) 938 (19) (703) 2,008 1,303 (569) (1,229) 2,678 1,249 (566) (1,667) 531 103 Accrued income taxes Net cash provided by operating activities (472) 27,389 166 28,564 (1,224) 23,257 (12,174) (13,115) 727 570 Cash flows from investing activities: Payments for property and equipment Proceeds from disposal of property and equipment Proceeds from disposal of certain operations Other investing activities Net cash used in investing activities (11,477) 635 246 (79) 671 (192) (138) (12,526) (10,675) 1,235 39 Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities (4,432) (6,294) (4,112) (719) (1,326) (513) (6,288) 5,174 (3,904) (6,185) (1,015) (600) (1,844) (409) 911 7,072 (4,968) (6,139) (6,683) (426) (296) (260) (10,789) (16,122) (15,071) (442) Effect of exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of period (1,022) (430) 9,135 $ 8,705 (514) 1,854 7,281 9,135 (500) 7,781 $ 7,281 $ Supplemental disclosure of cash flow information: Income taxes paid Interest paid 8,111 2,540 8,169 2,433 122 8,641 2,362