Jeffery Davis - Senior Vice President and Treasurer Mike Duke - Chief Executive Officer, President, Director, Chairman of Global Compensation Committee and Chairman of Executive Committee Carol Schumacher - Vice President of Investor Relations William S. Simon - Executive Vice President, Chief Executive Officer of Walmart U S and President of Walmart U S Charles M. Holley - Chief Financial Officer and Executive Vice President Brian Cornell - Chief Executive Officer of Sam's Club and President of Sam's Club Doug McMillon - Executive Vice President, Chief Executive Officer of International Operations and President of International Operations

Welcome to the Walmart earnings call for the third quarter of fiscal year 2012. The date of this call is November 15, 2011. This call is the property for Wal-Mart Stores Inc. and is intended for the use of Walmart shareholders and the investment community. It should not be reproduced in any way. [Operator Instructions]. This call will contain statements that Walmart believes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and that are intended to enjoy the protection of the Safe Harbor for forward-looking statements provided by that Act. These forward-looking statements generally are identified by the use of the words or phrases anticipate, are forecasting, assumed, continue to see, continuing, expect, goal, guidance, is not expected, may be impacted, plan, planned, plans, will allow, will be, will continue, will ensure, will expand, will fall, will feature, will have, will help, will improve, will keep, will have leveraged, will lead, will leave, will make, will recruit and develop, will reduce, will remain, will see and hear and will take or a variation of one of those words or phrases in those statements or by the use of words and phrases of similar import. Similarly, descriptions of Walmart's objectives, plans, goals, targets or expectations are forward-looking statements. The forward-looking statements made in this call discuss, among other matters, management's forecasts of: Walmart's diluted earnings per share from continuing operations attributable to Walmart for the 3 months and the year ending January 31, 2012; and the assumption underlying such forecasts, the currency exchange rates will remain at current levels. And the comparable store sales of Walmart's Walmart U.S. operating segment and the comparable club sales, without fuel, of Walmart's Sam's Club operating segment for the 13-week period from October 29, 2011, through…

Hello, this is Carol Schumacher, Vice President of Investor Relations for Wal-Mart Stores, Inc. Thanks for joining us today for our earnings call to review the third quarter of fiscal year 2012. All information for this quarter, including our unit count, square footage and financial metrics is available on our website at www.walmartstores.com/investors. A full transcript of this call will be available on the website after 7:00 a.m. Central Time today, that's November 15, 2011. Mike Duke, President and CEO of Wal-Mart Stores Inc., will open the call with his thoughts about the quarter. Jeff Davis, SVP of Finance and Treasurer, will cover the consolidated financial details, then we'll go to the operating segments. First, Bill Simon, President and CEO of Walmart U.S., will begin our segment discussions. Doug McMillon, President and CEO of Wal-Mart International, will follow Bill. And then we'll close with Brian Cornell, President and CEO of Sam's Club. Charles Holley, our CFO, will wrap up with his thoughts, as well as EPS guidance for the fourth quarter and the full year. A few reminders. You're familiar with the fact that Wal-Mart U.S. has made layaway services available to our customers beginning October 17. Please note, for financial reporting purposes, layaway transactions are included in revenue when the sale is completed and the merchandise is picked up. Customers are required to pick up merchandise by December 16. Therefore, the majority of revenue from layaway transactions will fall in the fourth quarter. And our comp sales that are reported today do not include the effect of layaway sales. All comp sales discussions for the U.S. businesses are on the 4-5-4 retail calendar. Details on comp sales for the countries within Wal-Mart International are on a calendar basis. Our fiscal calendars for international differ from that of our corporate time line. With the exception of Canada and Massmart, our International operations end their fiscal year on December 31 and report on a one-month lag. Canada, like the U.S., reports results based on a fiscal year end of January 31. Massmart currently reports on a June 30 fiscal year end, but is consolidated into our results on a calendar year basis with a one-month lag. Please mark your calendars for next October. We're announcing today that the fiscal year 2013 Annual Meeting for the Investment Community, commonly referred to as Walmart's Analyst Meeting, will be on Wednesday, October 10, 2012. The meeting will kick off with dinner with management on Tuesday, October 9, 2012. Now Mike, let's get started with our Q3 results. Mike?

Thanks, Carol. Good morning, everyone. Let me start with 3 key takeaways for the third quarter. First, Walmart reported earnings per share from continuing operations of $0.97 within our guidance. Second, both Wal-Mart U.S. and Sam's Club exceeded comp guidance for the third quarter, with Wal-Mart U.S. increasing comp sales 1.3% and Sam's Club posting a comp, without fuel, of 5.7%. Third, the company leveraged operating expenses with each of the 3 operating segments achieving this goal as well. We remain committed to leveraging expenses again this year. Here are some additional third quarter highlights. Net sales increased 8.2% to $109.5 billion. International reported net sales of more than $32 billion, approximately a 20% increase over last year's third quarter. This includes our acquisitions and currency impact. Consolidated operating income grew 4.8%. Walmart ended the quarter with free cash flow of $3.4 billion. The company returned $2.7 billion to shareholders through dividends and share repurchases for the quarter. These results continue to reinforce our strong financial position. Every business segment is stronger than it was a year ago and we delivered solid earnings growth. I'm really pleased with our top line performance and our momentum going into the fourth quarter. Our overall performance reflects the Walmart strategy of driving the productivity loop, leveraging expenses and investing in price leadership. Now let's review our individual segments. Wal-Mart U.S. has said consistently that its goal was positive comps by year end, and the team delivered on this goal in the third quarter. Operating income also grew faster than sales. The Wal-Mart U.S. team has aggressively executed its plan to broaden assortment, improve merchandising and reaffirm Walmart's price leadership. The plan is working, customers are responding favorably and it's good to see that reflected in our comp store sales improvement. While we feel…

Thank you, Mike. For the third quarter of fiscal 2012, Walmart reported diluted earnings per share from continuing operations of $0.97, which was within our guidance of $0.95 to $1. This compares to $0.95 for the third quarter of last year, which included a $191 million tax benefit related to a favorable adjustment to transfer pricing policies after negotiations with a foreign tax jurisdiction. This benefit represented approximately $0.05 per share. Consolidated net sales increased 8.2%, or $8.3 billion, to $109.5 billion for the quarter. The increase included $2.1 billion in sales from the acquisitions of Netto stores in the U.K. and the Massmart operations in sub-Saharan Africa, and a currency exchange benefit of $1.3 billion. Excluding the effects of acquisitions and currency, consolidated net sales increased 4.8% over last year's third quarter sales of $101.2 billion. Total U.S. comp sales, without fuel, for the 13-week period ended October 28 were 1.9%. This was driven by both Wal-Mart U.S. and Sam's Club exceeding guidance for the reporting period. Bill and Brian will provide more details on Wal-Mart U.S. and Sam's Club later in the call. For the third quarter, gross profit margin on net sales was 24.6%, a 52-basis point reduction compared to the same time last year. All 3 operating segments realized a decline in gross profit margin from the impact of price investment and cost inflation. You will hear more from our segment CEOs later in the call. Now let's move our attention to leverage. We remain focused on growing operating expenses at a rate less than net sales growth and growing operating income at a rate greater than net sales growth. The company leveraged operating expenses as a percentage of sales by 40 basis points for the quarter. All 3 operating segments contributed to the leverage. Operating…

Thank you, Jeff. Let's get right to the good news. As Mike mentioned earlier, Wal-Mart U.S. achieved a 1.3% comp in the third quarter, a full quarter ahead of our goal. We continue to diligently execute on our core initiatives and we see clear signs that our strategy is working. We're encouraged by the continued response we're receiving from our customers. Following a positive comp in July, we continue to gain momentum, achieving positive comps for each successive month, with the strongest results in October. Comp sales for the 13-week period ending October 28 were above our guidance, and this comp increase represents more than $750 million in additional same-store sales for the third quarter over last year. Net sales rose 2.7% to $63.8 billion in the third quarter versus the prior year's comparable period. Clearly, upward momentum. The comp was driven by growth in average ticket. While overall comp traffic was negative for the third quarter, our Supercenters and discount stores had more than 125-basis point consecutive improvement in comp traffic from Q2. Neighborhood Markets continued to post strong positive comp traffic for the quarter. In fact, our overall Walmart comp traffic improved 160 basis points sequentially over the second quarter, with October traffic relatively flat. Traffic also benefited from the extension of our gas rollback program, as well as our holiday layaway service, which launched on October 17. Three key elements drove the third quarter improvement. First, merchandise initiatives focused on expanded assortments, product innovation and local relevance that are recapturing trips to the store. Customers are responding to our SKU add-back program, which is now almost complete. As you know, we're always working on our assortment so you'll continue to see ongoing improvement in our merchandise. Second, our integration of technology with associate productivity programs has improved…

Thanks, Bill. We have good third quarter results to report. But before I get into the numbers, let me begin with our plans for growing the business. Over the long term, we will drive aggressive, disciplined growth while reducing costs in the business to improve profitability. To help our markets achieve these goals, we have a 4-pronged approach. First, is growing comp sales. Our strategies across markets are delivering EDLP and developing strong merchants. We're rolling out merchant academies throughout International to further develop their skills. The second pillar is new store growth, and we have a strong new store development program. We've added 12.7 million square feet of organic growth since the beginning of this year and we're on track to meet our forecast of 24 million to 27 million square feet. The third pillar is eCommerce and multichannel, and we're developing our skills in this area. We will leverage our brand and customer loyalty further in developed markets like Canada and U.K., as well as our emerging markets. In Brazil, eCommerce is growing at twice the pace of the market, and we have an award-winning website for customer friendliness. The fourth pillar is strategic acquisitions. We're encouraged by the successful integration work in Chile and now in South Africa, and I'm very excited about the management teams in each of these markets. We continue to evaluate expansion opportunities around the world and within existing markets. Now let's get to the numbers. Wal-Mart International reported third quarter net sales of $32.4 billion, an increase of 20.3% over last year. Changes in currency translation increased our reported net sales by $1.3 billion. On a constant currency basis, net sales were $31 billion, an increase of 15.3% over last year's third quarter and 7.5% excluding acquisitions. All of our markets had…

Thanks, Doug. Consistent with the overall club channel, our top line performance this quarter was exceptional. Comp sales, excluding fuel, increased by 5.7%. This is our seventh quarter of sequentially increasing comps. Membership renewals and members joining at the Plus level continue to grow and we leveraged expenses again this quarter. We opened a new club, expanded a club and relocated 3 clubs during the period. This added over 190,000 square feet to our footprint. Similar to the first half of the year, our third quarter fuel business was strong. Fuel provides Sam's Club a great first price impression and is clearly a traffic driver for existing and potential members. We continue to pump more gallons of fuel and generate more sales dollars per gallon this year when compared to last year. Fuel prices in this year's third quarter were approximately 34% higher than a year ago and gallons sold were up 11%. Including fuel, third quarter net sales were $13.3 billion, a 9.5% increase over last year. Gross profit increased by 5%. SG&A expense as a percentage of sales decreased by 62 basis points and operating income increased 6.3% to $390 million for the quarter. Volatility in fuel prices can have a notable impact on our financial results. The remainder of our discussion today, therefore, is focused on our core business and excludes fuel for comparative purposes unless otherwise noted. Now let's look at the financial results and our performance for the quarter. Net sales for the third quarter were $11.8 billion, up 6.2% from last year. Comp club sales for the 13-week period increased 5.7% and were strong across all 3 geographic operating divisions, led by the west division. Comp traffic and ticket increased for the 13-week period by 2.3% and 3.4%, respectively. Comp traffic and ticket increased…

Thanks, Brian. As Mike said, our business is stronger today than it was a year ago. We continue to be encouraged by the ongoing sales momentum at Sam's and by the Wal-Mart U.S. improvement in comps during the last 4 months. We still have a lot of work to do to increase traffic in many of our international markets, but we are confident in the plans that the country management teams have in place. We recognize that the global economy is still weak and consumers continue to behave conservatively. Looking back over the last 5 years, comp store sales were a relatively small contributor to our overall growth. It's important that comp sales growth is a priority for our company going forward. Investing in new stores is also important. Remember, these are future comp sales and profit generators, which in turn, add to future returns for shareholders. One of the most important keys to growing our sales is to have the lowest possible price. Keeping our expenses low will allow us to invest in prices going forward. I'm proud of the progress that we're making in expense leverage. At the end of this fiscal year, we will have levered SG&A expenses for 2 consecutive years. Throughout the company, we continue to be focused on improving processes and productivity, eliminating waste and reducing SG&A expenses. Not only will leveraging expenses allow us to invest in prices, but it will help improve returns in our emerging markets like Brazil and China. Emerging markets provide great opportunities for Walmart to serve customers with assortment and prices they have never had access to before. These markets will also provide some great returns down the road for our company. At our meeting for the investment community last month, I outlined our goal to reduce SG&A…