Walmart Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE - May 19, 2015

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8-K - FORM 8-K - Walmart Inc.form8-kx4302015.htm
Exhibit 99.1

Walmart reports Q1 FY 16 EPS of $1.03
Q1 diluted EPS from continuing operations was $1.03, within guidance of $0.95 to $1.10.
 
 
"We had a solid first quarter. We took some important strategic steps to strengthen the foundation of our business for the future. We need to continue to get better at consistently running great stores, clubs and e-commerce everywhere we operate...and we are."

Doug McMillon, President and CEO, Wal-Mart Stores, Inc.
 
Currency negatively impacted EPS by approximately $0.03.
 
 
 
Walmart U.S. 1.1% comp includes positive traffic for the second consecutive quarter. Customer experience scores improved in all formats. Customers benefited from lower gas prices.
 
 
 
E-commerce sales globally increased approximately 17%.
 
 
 
Consolidated operating income declined 8.3%, due to impacts from currency fluctuations and investments in associate wages & training and e-commerce.
 
 
 
 
(Amounts in billions, except as noted)
 
 
 
 
(Consolidated)
Revenue
Revenue ex. fx1
Operating income
-0.1%
2.7%
-8.3%
 
fx impact -$3.3 billion
-6.1
 %
ex. fx 1
(U.S.)
Net Sales
Comp Sales2
Operating income
3.5%
Traffic: -1.4%
Traffic: 1.0%
-6.8%
 
Ticket: 1.3%
Ticket: 0.1%
 
 
E-commerce 30 bps
E-commerce 20 bps
 
1 See additional information at the end of this release regarding non-GAAP financial measures.
2 13-week period ended May 1, 2015, compared to 13-week period ended May 2, 2014.
NYSE: WMT
May 19, 2015
stock.walmart.com



2

Net Sales
Net Sales ex. fx1
Operating income
-6.6%
3.4%
-11.0%
 
 
0.1
%
ex. fx 1
Net Sales
Comp sales w/o fuel1,2
Operating income
-3.0%
Traffic: -0.2%
Traffic: -0.2%
-10.9%
1.2% ex. fuel 1
Ticket: -0.3%
Ticket: 0.6%
-8.6
 %
ex. fuel 1
 
E-commerce 20 bps
E-commerce 40 bps
 
 

Dividends paid
Share repurchases
Return on investment1
Free cash flow1
$1.5 billion LY
$626 million LY
16.7% LY
$3.8 billion LY





1 See additional information at the end of this release regarding non-GAAP financial measures.
2 13-week period ended May 1, 2015, compared to 13-week period ended May 2, 2014.
NYSE: WMT
May 19, 2015
stock.walmart.com



3

 
"Based on our views of the global macro-economic environment, and assuming currency exchange rates remain at current levels, we expect second quarter fiscal 2016 earnings per share to range between $1.06 and $1.18. Our second quarter guidance includes the impact of approximately $0.04 per share from our previously announced investments in both U.S. associate wages and training, as well as $0.04 per share from currency."

Charles Holley, Executive Vice President and CFO, Wal-Mart Stores, Inc.
 
 
 
 
EPS
Q2 FY16
Walmart U.S.
comp2
Sam’s Club comp
w/o fuel1,2
 
 
$1.06 - $1.18
LY: $1.21
Around 1%
LY: Flat
Flat to +2%
LY: Flat
 

Wal-Mart Stores, Inc. (NYSE: WMT) helps people around the world save money and live better - anytime and anywhere - in retail stores, online, and through their mobile devices. Each week, nearly 260 million customers and members visit our 11,489 stores under 72 banners in 27 countries and e-commerce websites in 11 countries. With fiscal year 2015 revenue of $485.7 billion, Walmart employs approximately 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://corporate.walmart.com on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmart.

Investor Relations contact
Carol Schumacher (479) 277-1498

Media Relations contact
Randy Hargrove (800) 331-0085

Along with this press release, Walmart makes available a recorded call with executive leaders to review the business results, to provide strategic updates and to comment on expectations for the future. We provide that call in both audio form and in a written transcript. Details on accessing the call are as follows:

•
877-523-5612 (U.S. and Canada)
•
201-689-8483 (other countries)
•
Passcode: 9256278 (Walmart)
•
MP3 @ stock.walmart.com

The call is archived at stock.walmart.com


###





1 See additional information at the end of this release regarding non-GAAP financial measures.
2 13-week period ending July 31, 2015, compared to 13-week period ended Aug. 1, 2014.
NYSE: WMT
May 19, 2015
stock.walmart.com



4

Forward Looking Statements
 
This release contains statements as to Walmart management's guidance regarding the diluted earnings per share from continuing operations attributable to Walmart for the three months ending July 31, 2015 (and assumptions underlying such guidance) and Walmart U.S.'s comparable store sales and Sam's Club's comparable club sales excluding fuel for the 13 weeks ending July 31, 2015. Walmart believes such statements, which address future operating results by Walmart and the assumptions underlying Walmart's expectations regarding future operating results, are "forward-looking statements" as defined in, and intended to enjoy the protection of the safe harbor for forward-looking statements provided by, the Private Securities Litigation Reform Act of 1995, as amended. Walmart's actual results may differ materially from the guidance provided as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including:
•
economic, geo-political and business conditions, trends and events, globally and in the markets in which Walmart operates;
•
currency exchange rate fluctuations;
•
the amount of Walmart's net sales denominated in U.S. and in foreign currencies;
•
Walmart's effective tax rate;
•
changes in market interest rates;
•
unemployment levels;
•
inflation or deflation, generally and in certain product categories;
•
competitive pressures;
•
consumer confidence, disposable income, credit availability, spending levels, shopping patterns, and demand for certain merchandise;
•
customer traffic and average ticket in Walmart's stores and clubs and on its e-commerce websites;
•
the availability of investment opportunities in the e-commerce sector;
•
the mix of merchandise Walmart sells and disruptions in seasonal buying patterns;
•
consumer acceptance of Walmart's stores and clubs, e-commerce websites, mobile apps, programs and merchandise offerings;
•
the level of public assistance payments;
•
natural disasters, public health emergencies, civil disturbances, and terrorist attacks;
•
commodity prices and Walmart's cost of goods sold;
•
transportation, energy and utility costs, as well as selling prices of gasoline and diesel fuel;
•
delays in opening new, expanded or relocated units;
•
supply chain disruptions;
•
cybersecurity events affecting Walmart and related costs;
•
trade restrictions and tariff rates;
•
Walmart's labor costs, including healthcare and other benefit costs;
•
Walmart's casualty and accident-related costs and insurance costs;
•
turnover in Walmart's workforce;
•
changes in tax, labor and other laws and changes in tax rates;
•
Walmart's expenditures for FCPA and compliance-related costs;
•
outcomes of and costs incurred in legal proceedings to which Walmart is a party; and
•
the risks relating to Walmart's operations and financial performance discussed in Walmart's most recent annual report on Form 10-K filed with the SEC.
You should read this release in conjunction with that annual report on Form 10-K and Walmart's quarterly reports on Form 10-Q and current reports on Form 8-K subsequently filed with the SEC. You should consider all of the risks, uncertainties and other factors identified above and in those SEC reports carefully when evaluating the forward-looking statements in this release. Walmart cannot assure you that the future results reflected in or implied by any such forward-looking statement will be realized or, even if substantially realized, will have the forecast or expected consequences and effects for or on Walmart's operations or financial performance. Such forward-looking statements are made as of the date of this release, and Walmart undertakes no obligation to update such statements to reflect subsequent events or circumstances.



5

Wal-Mart Stores, Inc.
Consolidated Statements of Income
(Unaudited) 
 
 
Three Months Ended
SUBJECT TO RECLASSIFICATION
 
April 30,
(Dollars in millions, except per share data)
 
2015

2014
 
Percent Change
Revenues:
 
 
 
 
 
 
Net sales
 
$
114,002


$
114,167

 
(0.1
)%
Membership and other income
 
824


793

 
3.9
 %
Total revenues
 
114,826


114,960

 
(0.1
)%
Costs and expenses:
 





 


Cost of sales
 
86,483


86,714

 
(0.3
)%
Operating, selling, general and administrative expenses
 
22,663


22,053

 
2.8
 %
Operating income
 
5,680


6,193

 
(8.3
)%
Interest:
 





 


Debt
 
523


531

 
(1.5
)%
Capital lease and financing obligations
 
320


61

 
424.6
 %
Interest income
 
(19
)

(24
)
 
(20.8
)%
Interest, net
 
824


568

 
45.1
 %
Income from continuing operations before income taxes
 
4,856


5,625

 
(13.7
)%
Provision for income taxes
 
1,573


1,914

 
(17.8
)%
Income from continuing operations
 
3,283


3,711

 
(11.5
)%
Income from discontinued operations, net of income taxes
 
—


15

 
(100.0
)%
Consolidated net income
 
3,283


3,726

 
(11.9
)%
Consolidated net income attributable to noncontrolling interest
 
58


(133
)
 
(143.6
)%
Consolidated net income attributable to Walmart
 
$
3,341


$
3,593

 
(7.0
)%
 
 
 
 
 
 
 
Income from continuing operations attributable to Walmart:
 
 
 
 
 
 
Income from continuing operations
 
$
3,283


$
3,711

 
(11.5
)%
Income from continuing operations attributable to noncontrolling interest
 
58


(129
)
 
(145.0
)%
Income from continuing operations attributable to Walmart
 
$
3,341


$
3,582

 
(6.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per common share:
 
 
 
 
 
 
Basic income per common share from continuing operations attributable to Walmart
 
$
1.03


$
1.10

 
(6.4
)%
Basic income per common share from discontinued operations attributable to Walmart
 
—


0.01

 
(100.0
)%
Basic net income per common share attributable to Walmart
 
$
1.03


$
1.11

 
(7.2
)%
 
 
 
 
 
 
 
Diluted net income per common share:
 
 
 
 
 
 
Diluted income per common share from continuing operations attributable to Walmart
 
$
1.03


$
1.10

 
(6.4
)%
Diluted income per common share from discontinued operations attributable to Walmart
 
—


0.01

 
(100.0
)%
Diluted net income per common share attributable to Walmart
 
$
1.03


$
1.11

 
(7.2
)%
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
Basic
 
3,231


3,233

 
 
Diluted
 
3,243


3,248

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
1.96

 
$
1.92

 
 



6

Wal-Mart Stores, Inc.
Consolidated Balance Sheets
(Unaudited)
SUBJECT TO RECLASSIFICATION
 
 
 
 
 
 
(Dollars in millions)
 
April 30,
 
January 31,
 
April 30,
ASSETS
 
2015
 
2015
 
2014
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
7,759

 
$
9,135

 
$
6,012

Receivables, net
 
5,813

 
6,778

 
6,096

Inventories
 
46,310

 
45,141

 
45,315

Prepaid expenses and other
 
2,251

 
2,224

 
1,811

Current assets of discontinued operations
 
—

 
—

 
453

Total current assets
 
62,133

 
63,278

 
59,687

Property and equipment:
 

 

 

Property and equipment
 
176,403

 
177,395

 
174,731

Less accumulated depreciation
 
(64,252
)
 
(63,115
)
 
(59,585
)
Property and equipment, net
 
112,151

 
114,280

 
115,146

Property under capital lease and financing obligations:
 

 

 

Property under capital lease and financing obligations
 
7,090

 
5,239

 
5,529

Less accumulated amortization
 
(3,556
)
 
(2,864
)
 
(3,032
)
Property under capital lease and financing obligations, net
 
3,534

 
2,375

 
2,497

 
 


 


 


Goodwill
 
17,531

 
18,102

 
19,515

Other assets and deferred charges
 
5,398

 
5,455

 
5,672

Total assets
 
$
200,747

 
$
203,490

 
$
202,517

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Short-term borrowings
 
$
799

 
$
1,592

 
$
3,517

Accounts payable
 
37,224

 
38,410

 
36,347

Dividends payable
 
4,741

 
—

 
4,648

Accrued liabilities
 
18,685

 
19,152

 
17,807

Accrued income taxes
 
1,707

 
1,021

 
1,966

Long-term debt due within one year
 
6,041

 
4,791

 
3,266

Capital lease and financing obligations due within one year
 
427

 
287

 
300

Current liabilities of discontinued operations
 
—

 
—

 
70

Total current liabilities
 
69,624

 
65,253

 
67,921

 
 


 


 


Long-term debt
 
38,867

 
40,889

 
45,491

Long-term capital lease and financing obligations
 
4,097

 
2,606

 
2,742

Deferred income taxes and other
 
8,169

 
8,805

 
8,164

 
 

 

 

Commitments and contingencies
 

 

 

 
 

 

 

Equity:
 

 

 

Common stock
 
323

 
323

 
323

Capital in excess of par value
 
2,354

 
2,462

 
2,111

Retained earnings
 
82,492

 
85,777

 
73,366

Accumulated other comprehensive income (loss)
 
(8,595
)
 
(7,168
)
 
(2,712
)
Total Walmart shareholders’ equity
 
76,574

 
81,394

 
73,088

Nonredeemable noncontrolling interest
 
3,416

 
4,543

 
5,111

Total equity
 
79,990

 
85,937

 
78,199

Total liabilities and equity
 
$
200,747

 
$
203,490

 
$
202,517




7

Wal-Mart Stores, Inc.
Consolidated Statements of Cash Flows
(Unaudited) 

 
Three Months Ended
SUBJECT TO RECLASSIFICATION
 
April 30,
(Dollars in millions)
 
2015

2014
Cash flows from operating activities:
 
 
 
 
Consolidated net income
 
$
3,283


$
3,726

(Income) loss from discontinued operations, net of income taxes
 
—


(15
)
Income from continuing operations
 
3,283


3,711

Adjustments to reconcile consolidated net income to net cash provided by operating activities:
 



Depreciation and amortization
 
2,319


2,250

Deferred income taxes
 
(159
)

26

Other operating activities
 
239


543

Changes in certain assets and liabilities:
 



Receivables, net
 
782


613

Inventories
 
(1,475
)

(423
)
Accounts payable
 
(319
)

(831
)
Accrued liabilities
 
(919
)

(942
)
Accrued income taxes
 
695


992

Net cash provided by operating activities
 
4,446


5,939

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Payments for property and equipment
 
(2,203
)

(2,157
)
Proceeds from the disposal of property and equipment
 
68


48

Other investing activities
 
22


(12
)
Net cash used in investing activities
 
(2,113
)

(2,121
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
(741
)

(4,129
)
Proceeds from issuance of long-term debt
 
43


4,519

Payments of long-term debt
 
(915
)

(1,574
)
Dividends paid
 
(1,579
)

(1,547
)
Purchase of Company stock
 
(280
)

(626
)
Dividends paid to noncontrolling interest
 
(69
)

(28
)
Purchase of noncontrolling interest
 
(70
)

(1,626
)
Other financing activities
 
(84
)

(166
)
Net cash used in financing activities
 
(3,695
)

(5,177
)
 
 





Effect of exchange rates on cash and cash equivalents
 
(14
)

90

 
 





Net increase (decrease) in cash and cash equivalents
 
(1,376
)
 
(1,269
)
Cash and cash equivalents at beginning of year
 
9,135

 
7,281

Cash and cash equivalents at end of period
 
$
7,759

 
$
6,012




8

Wal-Mart Stores, Inc.
Supplemental Financial Information
(Unaudited)

Net sales and operating income
 
Net Sales
 
Operating Income
 
Three Months Ended
 
Three Months Ended
 
April 30,
 
April 30,
(dollars in millions)
2015
2014
Percent Change
 
2015
2014
Percent Change
Walmart U.S.
$
70,245

$
67,852

3.5
 %
 
$
4,639

$
4,975

-6.8
 %
Walmart International
30,278

32,424

-6.6
 %
 
1,070

1,202

-11.0
 %
Sam's Club
13,479

13,891

-3.0
 %
 
427

479

-10.9
 %
Corporate and support
—

—

—
 %
 
-456

-463

1.5
 %
Consolidated
$
114,002

$
114,167

-0.1
 %
 
$
5,680

$
6,193

-8.3
 %

U.S. comparable store sales results
 
 
Without Fuel
 
With Fuel
 
Fuel Impact
 
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
 
 
5/1/2015
 
5/2/2014
 
5/1/2015
 
5/2/2014
 
5/1/2015
 
5/2/2014
Walmart U.S.
 
1.1%
 
-0.1%
 
1.1%
 
-0.1%
 
0.0%
 
0.0%
Sam's Club
 
0.4%
 
-0.5%
 
-3.8%
 
-0.8%
 
-4.2%
 
-0.3%
Total U.S.
 
1.0%
 
-0.2%
 
0.2%
 
-0.2%
 
-0.8%
 
0.0%

Shareholder Returns
 
Consolidated
 
Three Months Ended
 
April 30,
(dollars in millions)
2015
2014
Dividends Paid
$
1,579

$
1,547

Share Repurchases
$
280

$
626





9

Wal-Mart Stores, Inc.
Reconciliations of and Other Information Regarding Non-GAAP Financial Measures
(Unaudited)

The following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the non-GAAP financial information presented in the press release, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies.
Calculation of Return on Investment and Return on Assets
Management believes return on investment (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.
ROI was 16.6 percent for the trailing 12 months ended Apr. 30, 2015, which was relatively flat compared to ROI for the trailing 12 months ended Apr. 30, 2014. The slight change in ROI was primarily due to continued investments in stores and e-commerce initiatives, offset by currency exchange rate fluctuations.
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. 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 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. We consider return on assets (ROA) to be the financial measure computed in accordance with generally accepted accounting principles (GAAP) that is the most directly comparable financial measure to our calculation of ROI. ROI differs from ROA (which is consolidated income from continuing operations for the period divided by average total assets of continuing operations for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets of continuing operations 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.
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. We urge you to understand the methods used by other companies to calculate their ROI before comparing our ROI to that of such other companies.



10

The calculation of ROI, along with a reconciliation to the calculation of ROA, the most comparable GAAP financial measure, is as follows:
Wal-Mart Stores, Inc.
Return on Investment and Return on Assets
 
 
 
 
Trailing Twelve Months Ended
 
 
 
 
April 30,
(Dollars in millions)
 
 
 
2015

2014
CALCULATION OF RETURN ON INVESTMENT
Numerator
 
 
 
 
 
 
Operating income
 
 
 
$
26,634


$
26,627

+ Interest income
 
 
 
108


100

+ Depreciation and amortization
 
 
 
9,242


8,933

+ Rent
 
 
 
2,763


2,859

Adjusted operating income
 
 
 
$
38,747


$
38,519


 
 
 

 

Denominator
 
 
 

 

Average total assets of continuing operations1
 
 
 
$
201,406


$
202,019

+ Average accumulated depreciation and amortization1
 
 
 
65,213


59,583

- Average accounts payable1
 
 
 
36,786


36,559

- Average accrued liabilities1
 
 
 
18,246


17,545

+ Rent x 8
 
 
 
22,104


22,872

 Average invested capital
 
 
 
$
233,691


$
230,370

Return on investment (ROI)
 
 
 
16.6
%

16.7
%
 
 
 
 
 
 
 
CALCULATION OF RETURN ON ASSETS
Numerator
 
 
 
 
 
 
Income from continuing operations
 
 
 
$
16,386


$
16,330

Denominator
 
 
 

 

Average total assets of continuing operations1
 
 
 
$
201,406


$
202,019

Return on assets (ROA)
 
 
 
8.1
%

8.1
%
 
 
 
 
 
 
 
 
 
As of April 30,
Certain Balance Sheet Data
 
2015

2014

2013
Total assets of continuing operations
 
$
200,747


$
202,064


$
201,973

Accumulated depreciation and amortization
 
67,808


62,617


56,549

Accounts payable
 
37,224


36,347


36,770

Accrued liabilities
 
18,685


17,807


17,282


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.




11

Free Cash Flow
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. Free cash flow was $2.2 billion and $3.8 billion for the fiscal years ended Apr. 30, 2015 and 2014, respectively. The decrease in free cash flow was due to lower income from continuing operations and the impact of the timing of payments for inventory, as well as the timing of income tax payments.
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 income from continuing operations as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
Additionally, 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. We urge you to understand the methods used by other companies to calculate their free cash flow before comparing our free cash flow to that of such other companies.
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.
 
 
Three Months Ended
 
 
April 30,
(Dollars in millions)
 
2015

2014
Net cash provided by operating activities
 
$
4,446


$
5,939

Payments for property and equipment
 
(2,203
)

(2,157
)
Free cash flow
 
$
2,243


$
3,782

 
 





Net cash used in investing activities1
 
$
(2,113
)

$
(2,121
)
Net cash used in financing activities
 
$
(3,695
)

$
(5,177
)

1 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.



12

Constant Currency
In discussing our operating results, the term currency exchange rates refers 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. 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. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, this means operating results without the impact of the currency exchange rate fluctuations and without the impact of acquisitions, if any, until the acquisitions are included in both comparable periods. The disclosure of constant currency amounts or results permits investors to understand better Walmart's underlying performance without the effects of currency exchange rate fluctuations or acquisitions.
The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three months ended Apr. 30, 2015 and 2014.
 
 
Three Months Ended April 30,
 
 
Walmart International

Consolidated
(Dollars in millions)
 
2015
2014
Percent Change

2015
2014
Percent Change
Total revenues:
 
 
 
 
 
 
 
 
As reported
 
$
30,549

$
32,697

(6.6
)%

$
114,826

$
114,960

(0.1
)%
Currency exchange rate fluctuations1
 
3,280

—



3,280

—



 
 
33,829

32,697



118,106

114,960



Total revenues from acquisitions
 
—

—



—

—



Constant currency total revenues
 
$
33,829

$
32,697

3.5
 %

$
118,106

$
114,960

2.7
 %
 
 
 
 
 
 
 
 
 
Net sales:
 

 




 


As reported
 
$
30,278

$
32,424

(6.6
)%

$
114,002

$
114,167

(0.1
)%
Currency exchange rate fluctuations1
 
3,256

—



3,256

—



 
 
33,534

32,424



117,258

114,167



Net sales from acquisitions
 
—

—



—

—



Constant currency net sales
 
$
33,534

$
32,424

3.4
 %

$
117,258

$
114,167

2.7
 %
 
 

 




 


Operating income:
 

 




 


As reported
 
$
1,070

$
1,202

(11.0
)%

$
5,680

$
6,193

(8.3
)%
Currency exchange rate fluctuations1
 
133

—



133

—



 
 
1,203

1,202



5,813

6,193



Operating income (loss) from acquisitions
 
—

—



—

—



Constant currency operating income
 
$
1,203

$
1,202

0.1
 %

$
5,813

$
6,193

(6.1
)%
1 Excludes currency exchange rate fluctuations related to acquisitions until the acquisitions are included in both comparable periods.








13

Comparable Sales Measures and Sam's Club Measures
The following financial measures presented in the press release to which this reconciliation is attached are non-GAAP financial measures as defined by the SEC's rules:

•
the comparable club sales of the company's Sam's Club operating segment (Sam's Club) for the 13-week period ended May 1, 2015 and the 13-week period ended May 2, 2014, the projected comparable club sales of Sam's Club for the 13 weeks ending July 31, 2015 and the comparable club sales of Sam's Club for the 13 weeks ended Aug. 1, 2014, in each case calculated by excluding Sam's Club's fuel sales for such periods (the "Sam's Club Comparable Sales Measures");

•
the net sales of Sam's Club for the three months ended Apr. 30, 2015 and the percentage increase in the net sales of Sam's Club for the three months ended Apr. 30, 2015 over the net sales of Sam's Club for the three months ended Apr. 30, 2014 in each case calculated by excluding Sam's Club's fuel sales for the relevant period; and

•
the segment operating income of Sam's Club for the three months ended Apr. 30, 2015, and the percentage increase in the segment operating income of Sam's Club for the three months ended Apr. 30, 2015 over the segment operating income of Sam's Club for the three months ended Apr. 30, 2014, in each case calculated by excluding Sam's Club's fuel sales for the relevant period (collectively with the financial measures described in the immediately preceding bullet point, the "Sam's Club Measures").

We believe the Sam's Club comparable club sales for the historical periods for which the corresponding Sam's Club Comparable Sales Measures are presented calculated by including fuel sales are the financial measures computed in accordance with GAAP most directly comparable to the respective Sam’s Club Comparable Sales Measures. We believe Sam's Club's projected comparable club sales for the 13-week period ending July 31, 2015 calculated by including fuel sales is the financial measure computed in accordance with GAAP most directly comparable to the projected comparable club sales of Sam's Club for the 13-week period ending July 31, 2015 calculated by excluding fuel sales. We believe the reported Sam's Club's net sales, percentage increase in net sales, segment operating income and percentage increase in segment operating income for the periods for which the corresponding Sam's Club Measures are presented are the most directly comparable financial measures computed in accordance with GAAP to the respective Sam’s Club Measures.

We believe that the presentation of the Sam's Club Comparable Sales Measures and the Sam's Club Measures provides useful information to investors regarding the company's financial condition and results of operations because that information permits investors to understand the effect of the fuel sales of Sam's Club, which are affected by the volatility of fuel prices, on Sam's Club's comparable club sales and on Sam's Club's net sales and operating income for the periods presented.

###



Walmart Inc. Reports