EX-99.1 2 earningsrelease-7312016.htm PRESS RELEASE Exhibit


Walmart reports Q2 FY17 EPS of $1.21, adjusted EPS1 of $1.07,
Raises full-year adjusted EPS1 guidance range to $4.15 to $4.35
Diluted EPS was $1.21. Currency negatively impacted EPS by approximately $0.03.
 
 
"We're pleased with the positive momentum in our business. Our strategy in the U.S. is working as we delivered an eighth consecutive quarter of positive comps, and international also performed well. We remain focused on building e-commerce capabilities globally and executing our omni-channel plan, as evidenced by our recent alliance with JD.com in China and agreement to acquire Jet.com in the U.S. Walmart is uniquely positioned to provide customers with a seamless shopping experience where we save them time and money."

Doug McMillon, President and CEO, Wal-Mart Stores, Inc.
 
Adjusted EPS1 of $1.07 excludes a non-cash gain of $0.14, net of tax, from the sale of Yihaodian in China.
 
 
 
Total revenue was $120.9 billion, an increase of 0.5%. On a constant currency basis1, total revenue was $123.6 billion, an increase of 2.8%.
 
 
 
Walmart U.S. delivered positive comp sales for the eighth consecutive quarter, up 1.6%, driven by the seventh consecutive quarter of positive traffic, up 1.2%. Neighborhood Market comp sales increased approximately 6.5%.
 
 
 
Net sales at Walmart International were $28.6 billion. Excluding currency1 impacts, net sales were $31.3 billion, an increase of 2.2%.
 
 
 
Globally, on a constant currency basis, e-commerce sales and GMV increased 11.8% and 13.0%, respectively, representing an acceleration from the first quarter.
 
 
 
Consolidated operating income increased 1.6%, including a gain of $535 million from the sale of Yihaodian. Excluding this gain, consolidated operating income declined 7.2%. As expected, investments in people and technology, as well as currency exchange rate fluctuations negatively impacted results.
 
 
 
Year to date operating cash flow was $14.9 billion and free cash flow1 was $10.3 billion, both approximately $5.0 billion higher than last year primarily due to improved working capital management, including significant inventory improvement, and timing of payments.
The company now estimates fiscal year 2017 adjusted EPS1 of $4.15 to $4.35, or GAAP EPS of $4.29 to $4.49, both of which include an estimated dilutive impact to EPS of approximately $0.05, primarily in the fourth quarter, as a result of expected operating losses and one-time transaction expenses related to the planned acquisition of Jet.com. The adjusted EPS guidance excludes the non-cash gain of $0.14, net of tax, from the sale of Yihaodian.
 
(Amounts in millions, except as noted)
Key results
 
Q2 FY17
Q2 FY16
Change
 
 
Revenue2
$120,854
$120,229
$625
0.5%
 
Revenue (constant currency)1,2
$123,593
$120,229
$3,364
2.8%
 
Operating income2
$6,165
$6,069
$96
1.6%
 
Operating income (constant currency)1,2
$6,322
$6,069
$253
4.2%
Free Cash Flow
YTD
$ Change
 
Returns to Shareholders
Q2 FY17
% Change
Operating cash flow
$14,931
$4,829
 
Dividends
$1,560
-1.1%
Capital expenditures
$4,619
-$425
 
Share repurchases3
$2,117
111.1%
Free cash flow1
$10,312
$5,254
 
Total
$3,677
42.5%

1 See additional information at the end of this release regarding non-GAAP financial measures.
2 Q2 FY17 includes the gain from the sale of Yihaodian, which was $535 million on a reported basis and $568 million on a constant currency basis.
3 $12.7 billion remaining of $20 billion authorization approved in October 2015. The company repurchased approximately 30 million shares in Q2 FY17.
NYSE: WMT
August 18, 2016
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2

Guidance
The company's guidance for adjusted earnings per share for fiscal year 2017 assumes currency exchange rates remain at today's levels. This guidance also includes an estimated dilutive impact to EPS of approximately $0.05, primarily in the fourth quarter, as a result of expected operating losses and one-time transaction expenses related to the planned acquisition of Jet.com, assuming the transaction is closed near the beginning of the fourth quarter of FY17. Also, the guidance excludes the non-cash gain of $0.14, net of tax, from the sale of Yihaodian in China to JD.com. Additionally, this updated guidance assumes that our full year effective tax rate is expected to be at the low end of our previously stated range of 31.5% to 33.5%.

•
Fiscal year 2017 adjusted EPS1: $4.15 to $4.35 (previously $4.00 to $4.30)
◦
Third quarter fiscal year 2017 EPS: $0.90 to $1.00
•
Comp sales for the 13-week period ending Oct. 28, 20162:
◦
Walmart U.S.: 1.0% to 1.5%
◦
Sam's Club (ex. fuel): Slightly positive

 U.S.
Q2 FY17
Q2 FY16
Change
Net sales
$76,241
$73,959
$2,282
3.1%
Comp sales3
1.6%
1.5%
10 bps
N/A
Traffic
1.2%
1.3%
-10 bps
N/A
Ticket
0.4%
0.2%
20 bps
N/A
E-commerce
~40 bps
~20 bps
~20 bps
N/A
Operating income
$4,519
$4,819
-$300
-6.2%

 
Q2 FY17
Q2 FY16
Change
 
 
Net sales
$28,621
$30,637
-$2,016
-6.6%
 
Net sales (constant currency)1
$31,309
$30,637
$672
2.2%
 
Operating income4
$1,727
$1,277
$450
35.2%
 
Operating income (constant currency)1,4
$1,884
$1,277
$607
47.5%

 
Q2 FY17
Q2 FY16
Change
 
 
Net sales
$14,543
$14,734
-$191
-1.3%
 
Comp sales (ex. fuel)1,3
0.6%
1.3%
-70 bps
N/A
 
Traffic
-0.4%
0.5%
-90 bps
N/A
 
Ticket
1.0%
0.8%
20 bps
N/A
 
E-commerce
~60 bps
~60 bps
~0 bps
N/A
 
Operating income
$472
$428
$44
10.3%





1 See additional information at the end of this release regarding non-GAAP financial measures.
2 Compared to 13-week period ended Oct. 30, 2015.
3 13-week period ended July 29, 2016, compared to 13-week period ended July 31, 2015.
4 Q2 FY17 includes the gain from the sale of Yihaodian, which was $535 million on a reported basis and $568 million on a constant currency basis.
NYSE: WMT
August 18, 2016
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3

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 11,539 stores under 63 banners in 28 countries and e-commerce websites in 11 countries. With fiscal year 2016 revenue of $482.1 billion, Walmart employs approximately 2.3 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
Steve Schmitt (479) 258-7172

Media Relations contact
Randy Hargrove (800) 331-0085

Along with this press release, Walmart makes available a recorded call with executive leaders and a financial presentation to review business results, provide strategic updates, and 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



### 




































NYSE: WMT
August 18, 2016
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4

Forward-Looking Statements
 
This release contains statements as to Walmart management's guidance regarding earnings per share for the three months ending October 31, 2016, adjusted earnings per share for the year ending January 31, 2017, the impact to earnings per share related to the planned acquisition of Jet.com, and Walmart U.S.'s comparable store sales and Sam's Club's comparable club sales, excluding fuel, for the 13 weeks ending October 28, 2016. Assumptions on which such forward-looking statements are based are also forward-looking statements. Walmart believes such statements are "forward-looking statements" as defined in, and are 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, 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 interest rates and commodity prices;
•
unemployment levels;
•
competitive pressures;
•
inflation or deflation, generally and in particular product categories;
•
consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels and demand for certain merchandise;
•
consumer enrollment in health and drug insurance programs and such programs' reimbursement rates;
•
the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies;
•
the financial performance of Walmart and each of its segments;
•
Walmart's effective tax rate for the quarter ending October 31, 2016 and factors affecting Walmart's effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law, administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations;
•
customer traffic and average ticket in Walmart's stores and clubs and on its e-commerce websites;
•
the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences;
•
the amount of Walmart's total sales and operating expenses in the various markets in which it operates;
•
transportation, energy and utility costs and the selling prices of gasoline and diesel fuel;
•
supply chain disruptions and disruptions in seasonal buying patterns;
•
consumer acceptance of and response to Walmart's stores, clubs, e-commerce websites, mobile apps, initiatives, programs and merchandise offerings;
•
cyber security events affecting Walmart and related costs;
•
developments in, outcomes of, and costs incurred in legal proceedings to which Walmart is a party;
•
casualty and accident-related costs and insurance costs;
•
the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs;
•
changes in accounting estimates or judgments;
•
changes in existing tax, labor and other laws and changes in tax rates, trade restrictions and tariff rates;
•
the level of public assistance payments;
•
natural disasters, public health emergencies, civil disturbances, and terrorist attacks;
•
Walmart's expenditures for FCPA and other compliance related costs; and
•
outcomes of and costs incurred in legal proceedings to which Walmart is a party.

Such risks, uncertainties and factors also include 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 subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K. 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 forecasted 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.
Condensed Consolidated Statements of Income
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
 
July 31,
 
July 31,
(Dollars in millions, except per share data)
 
2016

2015
 
Percent Change
 
2016

2015

Percent Change
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
119,405


$
119,330

 
0.1
 %
 
$
234,391


$
233,332


0.5
 %
Membership and other income
 
1,449


899

 
61.2
 %
 
2,367


1,723


37.4
 %
Total revenues
 
120,854


120,229

 
0.5
 %
 
236,758


235,055


0.7
 %
Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
 
89,485


90,056

 
(0.6
)%
 
176,029


176,539


(0.3
)%
Operating, selling, general and administrative expenses
 
25,204


24,104

 
4.6
 %
 
49,289


46,767


5.4
 %
Operating income
 
6,165


6,069

 
1.6
 %
 
11,440


11,749


(2.6
)%
Interest:
 
 
 
 
 
 
 
 
 
 
 
 
Debt
 
509


523

 
(2.7
)%
 
1,008


1,046


(3.6
)%
Capital lease and financing obligations
 
79


44

 
79.5
 %
 
165


364


(54.7
)%
Interest income
 
(22
)

(24
)
 
(8.3
)%
 
(46
)

(43
)

7.0
 %
Interest, net
 
566


543

 
4.2
 %
 
1,127


1,367


(17.6
)%
Income before income taxes
 
5,599


5,526

 
1.3
 %
 
10,313


10,382


(0.7
)%
Provision for income taxes
 
1,710


1,891

 
(9.6
)%
 
3,208


3,464


(7.4
)%
Consolidated net income
 
3,889


3,635

 
7.0
 %
 
7,105


6,918


2.7
 %
Consolidated net income attributable to noncontrolling interest
 
(116
)

(160
)
 
(27.5
)%
 
(253
)

(102
)

148.0
 %
Consolidated net income attributable to Walmart
 
$
3,773


$
3,475

 
8.6
 %
 
$
6,852


$
6,816


0.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per common share attributable to Walmart
 
$
1.21


$
1.08

 
12.0
 %
 
$
2.19


$
2.11


3.8
 %
Diluted net income per common share attributable to Walmart
 
$
1.21


$
1.08

 
12.0
 %
 
$
2.18


$
2.11


3.3
 %
 
 
 
 
 
 
 
 








Weighted-average common shares outstanding:
 
 
 
 
 
 
 








Basic
 
3,109


3,221

 
 
 
3,126


3,226


 
Diluted
 
3,119


3,231

 
 
 
3,136


3,237


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
—

 
$
—

 
 
 
$
2.00


$
1.96


 



6

Wal-Mart Stores, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
 
(Dollars in millions)
 
July 31,
 
January 31,
 
July 31,
ASSETS
 
2016
 
2016
 
2015
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
7,676

 
$
8,705

 
$
5,751

Receivables, net
 
5,275

 
5,624

 
5,275

Inventories
 
43,453

 
44,469

 
45,007

Prepaid expenses and other
 
1,828

 
1,441

 
2,099

Total current assets
 
58,232

 
60,239

 
58,132

Property and equipment:
 
 
 
 
 
 
Property and equipment
 
178,596

 
176,958

 
178,899

Less accumulated depreciation
 
(69,729
)
 
(66,787
)
 
(66,075
)
Property and equipment, net
 
108,867

 
110,171

 
112,824

Property under capital lease and financing obligations:
 
 
 
 
 
 
Property under capital lease and financing obligations
 
11,544

 
11,096

 
7,194

Less accumulated amortization
 
(5,001
)
 
(4,751
)
 
(3,507
)
Property under capital lease and financing obligations, net
 
6,543

 
6,345

 
3,687

 
 
 
 
 
 
 
Goodwill
 
16,339

 
16,695

 
17,799

Other assets and deferred charges
 
7,905

 
6,131

 
6,178

Total assets
 
$
197,886

 
$
199,581

 
$
198,620

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Short-term borrowings
 
$
1,932

 
$
2,708

 
$
1,725

Accounts payable
 
39,902

 
38,487

 
37,225

Dividends payable
 
3,101

 
—

 
3,162

Accrued liabilities
 
19,651

 
19,607

 
18,290

Accrued income taxes
 
720

 
521

 
373

Long-term debt due within one year
 
2,265

 
2,745

 
4,024

Capital lease and financing obligations due within one year
 
551

 
551

 
463

Total current liabilities
 
68,122

 
64,619

 
65,262

 
 
 
 
 
 
 
Long-term debt
 
36,673

 
38,214

 
38,581

Long-term capital lease and financing obligations
 
6,070

 
5,816

 
4,262

Deferred income taxes and other
 
7,877

 
7,321

 
8,391

 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Common stock
 
310

 
317

 
321

Capital in excess of par value
 
1,915

 
1,805

 
1,979

Retained earnings
 
85,972

 
90,021

 
84,959

Accumulated other comprehensive income (loss)
 
(11,672
)
 
(11,597
)
 
(8,388
)
Total Walmart shareholders’ equity
 
76,525

 
80,546

 
78,871

Nonredeemable noncontrolling interest
 
2,619

 
3,065

 
3,253

Total equity
 
79,144

 
83,611

 
82,124

Total liabilities and equity
 
$
197,886

 
$
199,581

 
$
198,620




7

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

 
Six Months Ended

 
July 31,
(Dollars in millions)
 
2016

2015
Cash flows from operating activities:
 
 
 
 
Consolidated net income
 
$
7,105


$
6,918

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



Depreciation and amortization
 
4,905


4,658

Deferred income taxes
 
33


(396
)
Other operating activities
 
(361
)

532

Changes in certain assets and liabilities:
 



Receivables, net
 
443


683

Inventories
 
1,055


(227
)
Accounts payable
 
1,864


(562
)
Accrued liabilities
 
(387
)

(860
)
Accrued income taxes
 
274


(644
)
Net cash provided by operating activities
 
14,931


10,102

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Payments for property and equipment
 
(4,619
)

(5,044
)
Proceeds from the disposal of property and equipment
 
260


287

Proceeds from disposal of certain operations
 
—

 
246

Other investing activities
 
(57
)

(91
)
Net cash used in investing activities
 
(4,416
)

(4,602
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
(857
)

274

Proceeds from issuance of long-term debt
 
130


42

Payments of long-term debt
 
(2,026
)

(3,159
)
Dividends paid
 
(3,133
)

(3,157
)
Purchase of Company stock
 
(4,852
)

(1,283
)
Dividends paid to noncontrolling interest
 
(270
)

(434
)
Purchase of noncontrolling interest
 
(103
)

(847
)
Other financing activities
 
(103
)

(210
)
Net cash used in financing activities
 
(11,214
)

(8,774
)
 
 





Effect of exchange rates on cash and cash equivalents
 
(330
)

(110
)
 
 





Net increase (decrease) in cash and cash equivalents
 
(1,029
)
 
(3,384
)
Cash and cash equivalents at beginning of year
 
8,705

 
9,135

Cash and cash equivalents at end of period
 
$
7,676

 
$
5,751




8

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

Net sales and operating income
 
Net Sales
 
Operating Income
 
Three Months Ended
 
Three Months Ended
 
July 31,
 
July 31,
(dollars in millions)
2016
2015
Percent Change
 
2016
2015
Percent Change
Walmart U.S.
$
76,241

$
73,959

3.1
 %
 
$
4,519

$
4,819

-6.2
 %
Walmart International
28,621

30,637

-6.6
 %
 
1,727

1,277

35.2
 %
Sam's Club
14,543

14,734

-1.3
 %
 
472

428

10.3
 %
Corporate and support
—

—

0.0
 %
 
-553

-455

-21.5
 %
Consolidated
$
119,405

$
119,330

0.1
 %
 
$
6,165

$
6,069

1.6
 %

U.S. comparable store sales results
 
 
Without Fuel
 
With Fuel
 
Fuel Impact
 
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
 
 
7/29/2016
 
7/31/2015
 
7/29/2016
 
7/31/2015
 
7/29/2016
 
7/31/2015
Walmart U.S.
 
1.6%
 
1.5%
 
1.6%
 
1.5%
 
0.0%
 
0.0%
Sam's Club1
 
0.6%
 
1.3%
 
-1.2%
 
-2.3%
 
-1.8%
 
-3.6%
Total U.S.
 
1.4%
 
1.5%
 
1.1%
 
0.9%
 
-0.3%
 
-0.6%





























1 See additional information at the end of this release regarding non-GAAP financial measures.



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.
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 $10.3 billion and $5.1 billion for the six months ended July 31, 2016 and 2015, respectively. The increase in free cash flow was primarily due to improved working capital management, including significant inventory improvement, and timing of 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 net income 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.
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.
 
 
Six Months Ended
 
 
July 31,
(Dollars in millions)
 
2016

2015
Net cash provided by operating activities
 
$
14,931


$
10,102

Payments for property and equipment (capital expenditures)
 
-4,619


-5,044

Free cash flow
 
$
10,312


$
5,058

 
 





Net cash used in investing activities1
 
$
-4,416


$
-4,602

Net cash used in financing activities
 
$
-11,214


$
-8,774

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



10

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 and six months ended July 31, 2016.
 
Three Months Ended July 31,

Six Months Ended July 31,
 
Walmart International

Consolidated

Walmart International
 
Consolidated
(Dollars in millions)
2016
Percent Change

2016
Percent Change

2016
Percent Change

2016
Percent Change
Total revenues:
 
 
 
 
 
 
 
 
 
 
 
As reported
$
29,431

-4.8
 %

$
120,854

0.5
%

$
57,787

-6.0
 %

$
236,758

0.7
 %
Currency exchange rate fluctuations1
2,739

N/A


2,739

N/A


6,261

N/A


6,261

N/A

Constant currency total revenues
$
32,170

4.0
 %

$
123,593

2.8
%

$
64,048

4.2
 %

$
243,019

3.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 

 
 
 
 
 
As reported
$
28,621

-6.6
 %

$
119,405

0.1
%

$
56,704

-6.9
 %

$
234,391

0.5
 %
Currency exchange rate fluctuations1
2,688

N/A


2,688

N/A


6,186

N/A


6,186

N/A

Constant currency net sales
$
31,309

2.2
 %

$
122,093

2.3
%

$
62,890

3.2
 %

$
240,577

3.1
 %
 
 
 
 
 
 

 
 
 
 
 
Operating income:
 
 
 
 
 

 
 
 
 
 
As reported
$
1,727

35.2
 %

$
6,165

1.6
%

$
2,891

23.2
 %

$
11,440

-2.6
 %
Currency exchange rate fluctuations1
157

N/A


157

N/A


298

N/A


298

N/A

Constant currency operating income
$
1,884

47.5
 %

$
6,322

4.2
%

$
3,189

35.9
 %

$
11,738

-0.1
 %
1 Excludes currency exchange rate fluctuations related to acquisitions until the acquisitions are included in both comparable periods.




11

Comparable Sam's Club Sales Measures
The comparable club sales of the company's Sam's Club operating segment ("Sam's Club") for the 13-week and 26-week periods ended July 29, 2016 and July 31, 2015, and for the 13-week period ending Oct. 28, 2016, in each case calculated by excluding Sam's Club's fuel sales for such periods (the "Sam's Club Comparable Sales Measures"), are non-GAAP financial measures as defined by the SEC's rules. 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 that the presentation of the Sam's Club Comparable Sales 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, which are affected by the volatility of fuel prices, on Sam's Club's comparable club sales for the periods presented.

Adjusted EPS
The adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) for the three-month period ended July 31, 2016 is considered a non-GAAP financial measure under the SEC's rules because the Adjusted EPS excludes certain amounts not excluded in the diluted earnings per share from continuing operations attributable to Walmart calculated in accordance with GAAP (EPS) for the three-month period ended July 31, 2016. Management believes that the Adjusted EPS for the three-month period ended July 31, 2016 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items recorded in the period, is the metric that best allows comparison of the performance for the comparable period. In addition, the metric affords investors a view of what management considers Walmart's core earnings performance for the three-month period ended July 31, 2016 and also affords investors the ability to make a more informed assessment of the core earnings performance for the comparable period.
We have calculated the Adjusted EPS for the three-month period ended July 31, 2016 by adjusting the EPS for the amount of the impact of the gain of $0.14, net of tax, from the sale of Yihaodian in China.
Adjusted EPS for the three months ended July 31, 2016 is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three months ended July 31, 2016.
Adjusted EPS - Three Months Ended July 31, 2016
 
Three Months Ended July 31, 2016
Diluted net income per share:
 
 
 
Adjusted EPS
$
1.07

 
 
Adjustment - Gain from the sale of Yihaodian in China, net of tax
0.14

 
 
EPS
$
1.21


Forecasted Adjusted EPS (Forecasted Adjusted EPS) is also considered a non-GAAP financial measure. Management believes that Forecasted Adjusted EPS for Fiscal 2017 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items recorded in the period, is the metric that best allows comparison of the expected performance for Fiscal 2017 performance to the comparable



12

period. In addition, the metric affords investors a view of what management is forecasting for Walmart's core earnings performance for Fiscal 2017 and also affords investors the ability to make a more informed assessment of the core earnings performance for the comparable period.
We have calculated Forecasted Adjusted EPS for Fiscal 2017 by adjusting Forecasted EPS for the amount of the impact of the gain of $0.14, net of tax, from the sale of Yihaodian in China.
Forecasted Adjusted EPS - Fiscal 2017
 
Fiscal 2017
Diluted net income per share:
 
 
 
Forecasted Adjusted EPS
$4.15 - $4.35
 
 
Adjustment - Gain from the sale of Yihaodian in China, net of tax
$0.14
 
 
Forecasted EPS
$4.29 - $4.49



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