Walmart 2006 Annual Report Download - page 28

Management’s Discussion and Analysis of Results of Operations
and Financial Condition
WAL-MART
26
Company Share Repurchase Program
From time to time, we repurchase shares of our common stock
under a $10.0 billion share repurchase program authorized by our
Board of Directors in September 2004. During the fi rst half of fi scal
2006, we repurchased $3.6 billion of shares under this repurchase
program. No shares of our common stock were repurchased under
this program in the third or fourth quarters of fi scal 2006. During
fi scal 2005, we repurchased $4.5 billion of shares under the cur-
rent and past authorizations. At January 31, 2006, approximately
$6.1 billion of additional shares may be repurchased under the
current authorization.
There is no expiration date for or other restriction limiting the
period over which we can make our share repurchases under the
program, which will expire only when and if we have repurchased
$10.0 billion of our shares under the program. Under the program,
repurchased shares are constructively retired and returned to
unissued status. We consider several factors in determining when
to make share repurchases, including among other things, our
current cash needs, the ratio of our debt to our total capitalization,
our cost of borrowings, and the market price of the stock.
Common Stock Dividends
We paid dividends totaling approximately $2.5 billion or $0.60
per share in fi scal 2006. The dividends paid in fi scal 2006 repre-
sent a 15.4% increase over fi scal 2005. The fi scal 2005 dividend
of $0.52 per share represented a 44.4% increase over fi scal 2004.
We have increased our dividend every year since the fi rst dividend
was declared in March 1974.
On March 2, 2006, the Company’s Board of Directors approved an
increase in annual dividends to $0.67 per share. The annual divi-
dend will be paid in four quarterly installments on April 3, 2006,
June 5, 2006, September 5, 2006, and January 2, 2007 to holders
of record on March 17, May 19, August 18 and December 15,
2006, respectively.
Contractual Obligations and Other Commercial Commitments
The following table sets forth certain information concerning our obligations and commitments to make contractual future payments,
such as debt and lease agreements, and contingent commitments:
Payments due during fi scal years ending January 31,
(In millions) Total 2007 2008-2009 2010-2011 Thereafter
Recorded Contractual Obligations
Long-term debt $31,024 $ 4,595 $ 6,178 $ 7,516 $ 12,735
Commercial paper 3,754 3,754 – – –
Capital lease obligations 6,380 592 1,138 1,040 3,610
Unrecorded Contractual Obligations:
Non-cancelable operating leases 9,683 797 1,461 1,220 6,205
Interest on long-term debt 14,823 1,419 2,374 1,848 9,182
Undrawn lines of credit 5,296 5,296 – – –
Trade letters of credit 2,593 2,593 – – –
Standby letters of credit 2,800 2,800 – – –
Purchase obligations 19,872 10,519 9,023 218 112
Total commercial commitments $96,225 $32,365 $20,174 $11,842 $31,844
Purchase obligations include all legally binding contracts such
as fi rm commitments for inventory purchases, utility purchases,
as well as commitments to make capital expenditures, software
acquisition/license commitments and legally binding service con-
tracts. Purchase orders for the purchase of inventory and other
services are not included in the table above. Purchase orders rep-
resent authorizations to purchase rather than binding agreements.
For the purposes of this table, contractual obligations for purchase
of goods or services are defi ned as agreements that are enforce -
able and legally binding and that specify all signifi cant terms,
including: fi xed or minimum quantities to be purchased; fi xed,
minimum or variable price provisions; and the approximate timing
of the transaction. Our purchase orders are based on our current
inventory needs and are fulfi lled by our suppliers within short
time periods. We also enter into contracts for outsourced services;
however, the obligations under these contracts are not signifi cant
and the contracts generally contain clauses allowing for cancella-
tion without signifi cant penalty.
The expected timing for payment of the obligations discussed
above is estimated based on current information. Timing of pay-
ments and actual amounts paid may be different depending on the
timing of receipt of goods or services or changes to agreed-upon
amounts for some obligations.
Off Balance Sheet Arrangements
In addition to the unrecorded contractual obligations discussed and
presented above, the Company has made certain guarantees as dis-
cussed below for which the timing of payment, if any, is unknown.
In connection with certain debt fi nancing, we could be liable
for early termination payments if certain unlikely events were to
occur. At January 31, 2006, the aggregate termination payment
was $89 million. These two arrangements expire in fi scal 2011
and fi scal 2019.