Walmart 2015 Annual Report Download - page 31

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2015 Annual Report
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Company Share Repurchase Program
From time to time, we repurchase shares of our common stock under
share repurchase programs authorized by the Board of Directors. The
current $15.0 billion share repurchase program has no expiration date or
other restrictions limiting the period over which we can make share
repurchases. At January 31, 2015, authorization for $10.3 billion of share
repurchases remained under the current share repurchase program.
Any repurchased shares are constructively retired and returned to an
unissued status.
We regularly review share repurchase activity and consider several factors
in determining when to execute share repurchases, including, among
other things, current cash needs, capacity for leverage, cost of borrowings,
our results of operations and the market price of our common stock.
The following table provides, on a settlement date basis, the number of
shares repurchased, average price paid per share and total cash paid for
share repurchases for fiscal 2015, 2014 and 2013:
(Amounts in millions, Fiscal Years Ended January 31,
except per share data) 2015 2014 2013
Total number of shares repurchased 13.4 89.1 113.2
Average price paid per share $75.82 $74.99 $67.15
Total cash paid for share repurchases $1,015 $6,683 $7,600
We decreased the total cash paid for share repurchases by $5.7 billion
for fiscal 2015, compared to the previous fiscal year, as a result of current
cash needs, capacity for leverage and increased cash used in transactions
with noncontrolling interests described further below. In addition, our
results of operations influenced our share repurchase activity.
Transactions with Noncontrolling Interests
As described in Note 13 to our Consolidated Financial Statements,
during fiscal 2015, we completed the purchase of substantially all of the
remaining noncontrolling interest in Walmart Chile for approximately
$1.5 billion, using existing cash to complete this transaction.
Capital Resources
We believe cash flows from continuing operations, our current cash
position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, including to fund seasonal
buildups in merchandise inventories, and to fund our capital expenditures,
dividend payments and share repurchases.
We have strong commercial paper and long-term debt ratings that have
enabled and should continue to enable us to refinance our debt as it
becomes due at favorable rates in capital markets. At January 31, 2015,
the ratings assigned to our commercial paper and rated series of our
outstanding long-term debt were as follows:
Rating agency Commercial paper Long-term debt
Standard & Poor’s A-1+ AA
Moody’s Investors Service P-1 Aa2
Fitch Ratings F1+ AA
Credit rating agencies review their ratings periodically and, therefore, the
credit ratings assigned to us by each agency may be subject to revision
at any time. Accordingly, we are not able to predict whether our current
credit ratings will remain consistent over time. Factors that could affect
our credit ratings include changes in our operating performance, the
general economic environment, conditions in the retail industry, our
financial position, including our total debt and capitalization, and
changes in our business strategy. Any downgrade of our credit ratings
by a credit rating agency could increase our future borrowing costs or
impair our ability to access capital and credit markets on terms com-
mercially acceptable to us. In addition, any downgrade of our current
short-term credit ratings could impair our ability to access the commer-
cial paper markets with the same flexibility that we have experienced
historically, potentially requiring us to rely more heavily on more
expensive types of debt financing. The credit rating agency ratings are
not recommendations to buy, sell or hold our commercial paper or debt
securities. Each rating may be subject to revision or withdrawal at
any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is
specific to the security to which it applies.
We monitor our credit rating and our capacity for long-term financing
using various qualitative and quantitative factors, including our debt-to-
total capitalization, as support for our long-term financing decisions. For
the purpose of the debt-to-total capitalization calculation, debt is defined
as the sum of short-term borrowings, long-term debt due within one year,
obligations under capital leases due within one year, long-term debt and
long-term obligations under capital leases. Total capitalization is defined as
debt plus total Walmart shareholders’ equity. At January 31, 2015 and 2014,
the ratio of our debt-to-total capitalization was 38.2% and 42.6%, respec-
tively. The decrease in our debt-to-total capitalization ratio was the result
of using less cash for share repurchases and capital expenditures during
fiscal 2015, which allowed us to minimize our short-term borrowings at
January 31, 2015. The reduced share repurchases also resulted in increased
growth in retained earnings. These impacts were partially offset by
additional currency translation losses recorded in accumulated other
comprehensive income (loss).