How strong was Wal-Mart's revenue and earnings growth in fiscal 1997?

Net sales grew 12% to $104.9 billion, and net income grew 12% to $3.06 billion, or $1.33 per share. Growth came from new store openings and a 5% increase in comparative store sales. Earnings growth matched sales growth, so margins held roughly steady.

Why did operating cash flow increase so sharply?

Operating cash flow rose to $5.9 billion from $2.4 billion, primarily because management focused on inventory discipline. Unit inventory levels fell even as sales grew 12%, and accounts payable increased by $1.2 billion. After $2.6 billion in capital spending, the company had roughly $3.3 billion of excess cash to reduce borrowings, retire debt, and pay dividends.

What are the company's plans for capital returns and dividends?

The board announced a plan to repurchase up to $2 billion of common stock over the next 18 months, following $208 million of repurchases in fiscal 1997. The fiscal 1998 dividend was increased 29% to $.27 per share, up from $.21 in fiscal 1997. Management indicated that excess cash could also fund other investing or financing needs.

How healthy is the company's balance sheet and liquidity?

Total assets were $39.6 billion and shareholders' equity was $17.1 billion. Long-term debt fell to $7.7 billion, the company had no commercial paper outstanding at year-end, and it held $883 million in cash. Committed bank credit lines totaled $2.45 billion, with an additional $2.45 billion in informal lines, and the company holds an excellent credit rating. Minority interest rose to $1.0 billion, largely due to a REIT formation that raised $632 million.

What does this amended filing change, and what should investors expect for fiscal 1998?

Amendment 1 adds the Ernst & Young audit report, which was inadvertently omitted, and restates Items 8 and 14. It does not change the reported financial results. For fiscal 1998, management plans about $3 billion in capital expenditures, primarily funded from operating cash flow, along with roughly 50 new Wal-Mart stores, 100 Supercenters, 5 to 10 Sam's Clubs, and 30 to 35 international units.

WMT 10-K FY1997 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K/A filed June 20, 1997. Cited figures are marked; the original filing is the authoritative source.

Wal-Mart Stores, Inc. reported strong fiscal 1997 results (year ended January 31, 1997).

Net sales rose 12% to $104.9 billion^a, driven by expansion and a 5% comparative store sales increase. Net income grew 12% to $3.06 billion, or $1.33 per share, and return on shareholders' equity was 19.2%, down from 19.9% in fiscal 1996 as equity grew faster than earnings. Operating cash flow more than doubled to $5.9 billion, mainly from tighter inventory management, which allowed the company to fund $2.6 billion of capital expenditures, retire commercial paper, pay dividends, and end the year with $883 million in cash and no short-term borrowings.

The balance sheet strengthened. Total assets reached $39.6 billion, long-term debt fell to $7.7 billion^b from $8.5 billion, and shareholders' equity rose to $17.1 billion. Minority interest jumped to $1.0 billion from $331 million, reflecting the formation of a real estate investment trust that raised $632 million.

Management announced a plan to repurchase up to $2 billion^c of stock over 18 months and raised the fiscal 1998 dividend 29% to $.27 per share, while planning about $3 billion in fiscal 1998 capital spending, to be funded primarily from operating cash flow. International operations remain immaterial to consolidated results, though their sales growth outpaced the other formats. This filing is Amendment 1 to the original 10-K.

It was filed to add the Report of Independent Auditors (Ernst & Young, dated March 21, 1997), which had been inadvertently omitted, and it amends Items 8 and 14 in their entirety. The core financial information is incorporated by reference from the Annual Report to Shareholders.

02—Key points

Key Highlights

Net sales increased 12% to $104.9 billion, with comparative store sales up 5%, and the company opened 59 Wal-Mart stores, 105 Supercenters, 9 Sam's Clubs, and 38 international units during the year.
Net income rose 12% to $3.06 billion ($1.33 per share), with the effective tax rate steady at 37.0%.
Operating cash flow surged to $5.9 billion from $2.4 billion, largely from inventory management that lowered unit inventory levels, allowing the company to eliminate short-term borrowings and end the year with $883 million in cash.
Long-term debt declined to $7.7 billion from $8.5 billion, and shareholders' equity grew 16% to $17.1 billion, with return on equity at 19.2%.
Management announced a plan to buy back up to $2 billion of common stock over 18 months and increased the fiscal 1998 dividend 29% to $.27 per share.
Store base at year-end included 1,960 domestic Wal-Mart stores, 344 Supercenters, and 436 Sam's Clubs, plus 314 international units, with plans for about 50 new Wal-Mart stores and 100 Supercenters in fiscal 1998.
The filing is an amendment that adds the previously omitted Ernst & Young audit report; the financial statements themselves are incorporated by reference from the annual report.

03—Questions

Frequently Asked Questions

How strong was Wal-Mart's revenue and earnings growth in fiscal 1997?
Net sales grew 12% to $104.9 billion, and net income grew 12% to $3.06 billion, or $1.33 per share. Growth came from new store openings and a 5% increase in comparative store sales. Earnings growth matched sales growth, so margins held roughly steady.
Why did operating cash flow increase so sharply?
Operating cash flow rose to $5.9 billion from $2.4 billion, primarily because management focused on inventory discipline. Unit inventory levels fell even as sales grew 12%, and accounts payable increased by $1.2 billion. After $2.6 billion in capital spending, the company had roughly $3.3 billion of excess cash to reduce borrowings, retire debt, and pay dividends.
What are the company's plans for capital returns and dividends?
The board announced a plan to repurchase up to $2 billion of common stock over the next 18 months, following $208 million of repurchases in fiscal 1997. The fiscal 1998 dividend was increased 29% to $.27 per share, up from $.21 in fiscal 1997. Management indicated that excess cash could also fund other investing or financing needs.
How healthy is the company's balance sheet and liquidity?
Total assets were $39.6 billion and shareholders' equity was $17.1 billion. Long-term debt fell to $7.7 billion, the company had no commercial paper outstanding at year-end, and it held $883 million in cash. Committed bank credit lines totaled $2.45 billion, with an additional $2.45 billion in informal lines, and the company holds an excellent credit rating. Minority interest rose to $1.0 billion, largely due to a REIT formation that raised $632 million.
What does this amended filing change, and what should investors expect for fiscal 1998?
Amendment 1 adds the Ernst & Young audit report, which was inadvertently omitted, and restates Items 8 and 14. It does not change the reported financial results. For fiscal 1998, management plans about $3 billion in capital expenditures, primarily funded from operating cash flow, along with roughly 50 new Wal-Mart stores, 100 Supercenters, 5 to 10 Sam's Clubs, and 30 to 35 international units.

04—Continue

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