Wal-Mart Reports Record Second Quarter Sales and Earnings

BENTONVILLE, Ark., Aug. 16 /PRNewswire-FirstCall/ -- Wal-Mart Stores, Inc. reported record second quarter sales and earnings for the quarter ended July 31, 2005. Net sales were $76.8 billion, an increase of 10.2 percent over the second quarter of fiscal 2005. Net income for the quarter was $2.8 billion, an increase of 5.8 percent from $2.7 billion in the second quarter of fiscal 2005. Earnings per share were $0.67, up from $0.62 per share in the same prior year quarter.

Net sales for the six months ended July 31, 2005, were $147.7 billion, an increase of 9.8 percent over the first six months of fiscal 2005. Net income for the six months ended July 31, 2005, increased 9.3 percent to a record $5.3 billion, up from $4.8 billion in the same prior year period. Diluted earnings per share for the six months ended July 31, 2005, were $1.25, up from $1.12 in the same prior year period. Net income for the six months ended July 31, 2005, was favorably impacted by two items totaling $145 million after tax or $0.03 per share: an increase due to favorable tax resolutions of $77 million and positive legal developments of $68 million after-tax.

Lee Scott, President and CEO, said, "I am proud that the hard work of our associates allowed us to report another record quarter. Early in the quarter, our results were disappointing; however, July came in stronger than expected. Wal-Mart Stores did miss their plan as our customer continues to be impacted by higher gas prices and it is difficult to improve our expense leverage in the current environment."

Net sales were as follows (dollars in billions): Three Months Ended July 31, Six Months Ended July 31, Percent Percent 2005 2004 Change 2005 2004 Change Wal-Mart Stores $51.809 $46.914 10.4% $99.449 $90.485 9.9% SAM'S CLUB 9.969 9.416 5.9% 19.124 18.057 5.9% International 15.033 13.392 12.3% 29.145 25.943 12.3% Total Company $76.811 $69.722 10.2% $147.718 $134.485 9.8%

Total U.S. comparable sales for the quarter increased 3.5 percent, which is represented by a 3.6 percent comp increase for Wal-Mart Stores and a 2.9 percent comp increase for SAM'S CLUB. Total U.S. comparable sales for the six month period were up 3.2 percent, which is comprised of a 3.2 percent comp increase for Wal-Mart Stores and a 3.2 percent comp increase for SAM'S CLUB.

We forecast earnings per share for the third quarter to come in between $0.55 to $0.59 and for the year, our forecast is $2.63 to $2.70.

Wal-Mart Stores Segment:

For the second quarter of fiscal 2006, the Wal-Mart Stores segment, including Supercenters, had segment operating income (income before net interest expense, income taxes, unallocated corporate overhead and minority interest) of $3.992 billion, an increase of 8.3 percent, compared with $3.685 billion in the second quarter of fiscal 2005.

For the six months ended July 31, 2005, the Wal-Mart Stores segment, including Supercenters, had segment operating income of $7.298 billion, an increase of 7.2 percent, as compared with segment operating income of $6.806 billion in the similar period in the prior year.

SAM'S CLUB Segment:

The SAM'S CLUB segment had segment operating income for the second quarter of fiscal 2006 of $371 million, an increase of 5.4 percent, compared with $352 million in the second quarter of fiscal 2005.

For the six months ended July 31, 2005, the SAM'S CLUB segment had segment operating income of $666 million, an increase of 7.6 percent, as compared with segment operating income of $619 million in the similar period in the prior year.

International Segment:

The International segment had segment operating income of $750 million for the most recent quarter, an increase of 0.3 percent, compared with $748 million in the second quarter of fiscal 2005. The international segment's operating income in the second quarter of fiscal 2006 was impacted by a non-recurring charge of $36 million to restructure our operations in the United Kingdom.

The International segment had segment operating income of $1.417 billion for the first six months of fiscal 2006, an increase of 8.1 percent, compared with $1.311 billion for the similar period in fiscal 2005.

After this earnings release has been furnished to the SEC, a pre-recorded call offering additional comments on the quarter will be available to all investors. You may listen to this call by dialing 203-369-1090. The information included in this release and our pre-recorded phone call will be available in the investor information area on our web site at http://www.walmartstores.com/ under earnings and dividends.

Wal-Mart Stores, Inc. operates Wal-Mart Stores, Supercenters, Neighborhood Markets and SAM'S CLUB locations in the United States. Internationally, the company operates in Argentina, Brazil, Canada, China, Germany, Japan, Mexico, Puerto Rico, South Korea and the United Kingdom. The company's securities are listed on the New York and Pacific stock exchanges under the symbol WMT. More information about Wal-Mart can be found by visiting http://www.walmartfacts.com/ . Online merchandise sales are available at http://www.walmart.com/ .

This release contains statements as to management's forecast of earnings per share for the third quarter and fiscal year 2006 that Wal-Mart believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. These forward-looking statements are subject to risks, uncertainties and other factors, domestically and internationally, including, the cost of goods, competitive pressures, geopolitical conditions, inflation, consumer spending patterns and debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, changes in gasoline, diesel fuel and other energy costs, labor costs, health care costs and accident costs, interest rate fluctuations and other capital market conditions and other risks. We discuss certain of these factors more fully in other of our filings with the SEC, including our last Annual Report on Form 10-K filed with the SEC, and this release should be read in conjunction with that Annual Report on Form 10-K, and together with all our other filings, including current reports on Form 8-K, made with the SEC through the date of this report. We urge you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, including changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from historical results or from anticipated results implied in the forward-looking statements contained in this release. These forward-looking statements are made only as of the date of this report and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

WAL-MART STORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in millions except per share data) Three Months Ended Six Months Ended July 31, July 31, 2005 2004 2005 2004 Revenues: Net sales $76,811 $69,722 $147,718 $134,485 Other income, net 709 737 1,480 1,408 77,520 70,459 149,198 135,893 Costs and expenses: Cost of sales 58,787 53,533 113,357 103,503 Operating, selling, general and administrative expenses 14,054 12,522 27,221 24,382 Operating income 4,679 4,404 8,620 8,008 Interest: Debt 301 216 500 400 Capital leases 60 67 114 132 Interest income (59) (44) (112) (85) Interest, net 302 239 502 447 Income before income taxes and minority interest 4,377 4,165 8,118 7,561 Provision for income taxes 1,503 1,458 2,715 2,646 Income before minority interest 2,874 2,707 5,403 4,915 Minority interest (69) (56) (137) (98) Net income $2,805 $2,651 $5,266 $4,817 Net income per common share: Basic $0.67 $0.62 $1.25 $1.13 Diluted $0.67 $0.62 $1.25 $1.12 Weighted-average number of common shares: Basic 4,175 4,264 4,201 4,279 Diluted 4,180 4,272 4,206 4,287 Certain reclassifications have been made to the prior period to conform to the current presentation. WAL-MART STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in millions) SUBJECT TO RECLASSIFICATION July 31, July 31, January 31, 2005 2004 2005 ASSETS Cash and cash equivalents $5,673 $4,709 $5,488 Receivables 1,682 1,280 1,715 Inventories 30,918 28,266 29,762 Prepaid expenses and other 2,120 1,585 1,841 Total current assets 40,393 35,840 38,806 Property, plant and equipment, at cost 88,979 77,342 84,066 Less accumulated depreciation 20,369 17,478 18,637 Property, plant and equipment, net 68,610 59,864 65,429 Property under capital leases, net 3,029 2,651 2,718 Goodwill 10,413 10,124 10,803 Other assets and deferred charges 2,320 2,303 2,427 Total assets $124,765 $110,782 $120,183 LIABILITIES AND SHAREHOLDERS' EQUITY Commercial paper $9,054 $6,827 $3,812 Accounts payable 22,624 19,771 21,987 Dividends payable 1,269 1,088 --- Accrued liabilities 11,884 10,825 12,149 Accrued income taxes 1,021 637 1,281 Long-term debt due within one year 3,080 4,415 3,759 Obligations under capital leases due within one year 233 202 223 Total current liabilities 49,165 43,765 43,211 Long-term debt 20,209 17,044 20,087 Long-term obligations under capital leases 3,499 3,100 3,171 Deferred income taxes and other 2,792 2,277 2,978 Minority interest 1,379 1,229 1,340 Commitments and contingencies Common stock and capital in excess of par value 2,874 2,643 2,848 Retained earnings 43,122 39,427 43,854 Other accumulated comprehensive income 1,725 1,297 2,694 Total shareholders' equity 47,721 43,367 49,396 Total liabilities and shareholders' equity $124,765 $110,782 $120,183 Certain reclassifications have been made to the prior period to conform to the current presentation. WAL-MART STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in millions) SUBJECT TO RECLASSIFICATION Six Months Ended July 31, 2005 2004 Cash flows from operating activities: Net income $5,266 $4,817 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,383 2,068 Other (250) 28 Changes in certain assets and liabilities, net of effects of acquisitions: Decrease in accounts receivable 61 70 Increase in inventories (1,112) (1,290) Increase (decrease) in accounts payable 749 (17) Decrease in accrued liabilities (556) (803) Net cash provided by operating activities 6,541 4,873 Cash flows from investing activities: Payments for property, plant and equipment (6,473) (5,694) Disposal of assets 415 507 Investment in international operations --- (315) Other investing activities (107) (232) Net cash used in investing activities (6,165) (5,734) Cash flows from financing activities: Increase in commercial paper 5,242 3,559 Proceeds from issuance of long-term debt 2,000 2,034 Dividends paid (1,262) (1,112) Payment of long-term debt (2,041) (578) Purchase of Company stock (3,580) (3,508) Other financing activities (461) (35) Net cash provided by (used in) financing activities (102) 360 Effect of exchange rates on cash (89) 11 Net increase (decrease) in cash and cash equivalents 185 (490) Cash and cash equivalents at beginning of year 5,488 5,199 Cash and cash equivalents at end of period $5,673 $4,709 Certain reclassifications have been made to the prior period to conform to the current presentation.