-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UpMcfv4xA9J4KtJ0R61bvufkH0BEqcx3MOZYLt9OWzohz3iY/8a4DAbKoomX+lmz NtSquVdJ0s17Rc++dw9gMQ== 0000104169-98-000003.txt : 19980424 0000104169-98-000003.hdr.sgml : 19980424 ACCESSION NUMBER: 0000104169-98-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980423 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WAL MART STORES INC CENTRAL INDEX KEY: 0000104169 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 710415188 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-06991 FILM NUMBER: 98599371 BUSINESS ADDRESS: STREET 1: 702 SOUTHWEST 8TH ST CITY: BENTONVILLE STATE: AR ZIP: 72716 BUSINESS PHONE: 5012734000 MAIL ADDRESS: STREET 1: 702 SOUTHWEST 8TH STREET CITY: BENTONVILLE STATE: AR ZIP: 72716 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended January 31, 1998, or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 1-6991. WAL-MART STORES, INC. (Exact name of registrant as specified in its charter) Delaware 71-0415188 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) Bentonville, Arkansas 72716 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (501) 273-4000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, par value $.10 New York Stock Exchange per share Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the closing price of these shares on the New York Stock Exchange on March 31, 1998, was $67,141,204,191. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of the registrant's common stock are the affiliates of the registrant. The registrant had 2,239,826,615 shares of Common Stock outstanding as of March 31, 1998. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended January 31, 1998, are incorporated by reference into Parts I and II of this Form 10-K. Portions of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held June 5, 1998, are incorporated by reference into Part III and IV of this Form 10-K. FORWARD-LOOKING STATEMENTS OR INFORMATION This Form 10-K includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements included or incorporated by reference in this Form 10-K which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), expansion and other development trends of industry segments in which the Company is active, business strategy, expansion and growth of the Company's business and operations and other such matters are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of its knowledge of its business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by or on behalf of the Company. Many of these factors have previously been identified in filings or statements made by or on behalf of the Company. All phases of the Company's operations are subject to influences outside its control. Any one, or a combination, of these factors could materially affect the results of the Company's operations. These factors include: the cost of goods, competitive pressures, inflation, consumer debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, interest rate fluctuations and other capital market conditions. Forward-looking statements made by or on behalf of the Company are based on a knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results may differ from those in the forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these and other cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business or operations. WAL-MART STORES, INC. FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED JANUARY 31, 1998 PART I ITEM 1. BUSINESS Wal-Mart Stores, Inc. (together with its subsidiaries hereinafter referred to as the "Company") is the United States' largest retailer measured by total revenues. During the fiscal year ended January 31, 1998, the Company had net sales of $117,958,000,000. (a) Historical Development of Business Domestically, at January 31, 1998, the Company operated 1,921 discount stores and 441 Supercenters, and 443 Sam's Clubs. A table summarizing information concerning additions of units and square footage for domestic discount stores, Supercenters and Sam's Clubs since January 31, 1993, is included as Schedule A to Item I found on page 11 of this annual report. During fiscal 1998, a merger of the Mexican joint venture companies owned by the Company and Cifra, S.A. de C.V. ("Cifra") with and into Cifra was consummated with an effective merger date of September 1, 1997. The Company received voting shares of Cifra equaling approximately 33.5% of the outstanding voting shares of Cifra in exchange for the Company's joint venture interests. The Company then acquired 593,100,000 shares of the Series "A" Common Shares and Series "B" Common Shares of Cifra in a cash tender offer. As a result of the merger and tender offer, the Company holds approximately 51% of the outstanding voting shares of Cifra. The results of operations for Cifra since the effective merger date are included in the Company's results. Prior to the merger, the joint venture units controlled by the Company were consolidated while those units controlled by Cifra were accounted for under the equity method. See Note 6 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our acquisitions. At January 31, 1998, Cifra operated 28 warehouse clubs, 27 Supercenters, 36 Superamas (traditional supermarkets), 62 Bodegas (discount stores), 33 Aurreras (combination stores including both general merchandise and grocery), 38 Suburbias (specialty department stores) and 178 Vips (restaurants) throughout Mexico. In fiscal 1998, the Company's subsidiary, Wal-Mart Brasil Participacoes S.A. acquired the 40% interest of its minority joint venture partner, Lojas Americanas S.A.(Lojas). On the same day that the minority interest was acquired, a 5% minority interest was sold to Carlos Alberto Sicupira, a principal in Banco de Investimentos Garantia S.A., which indirectly controls Lojas, at the same price per share at which Lojas sold its minority interest. Because the transaction closed on December 30, 1997, which was the joint venture's fiscal year end, the Company's results of operations for fiscal 1998 include only the financial results of the joint venture attributable to the Company's original ownership percentage. See Note 6 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our acquisitions. In fiscal 1998, the Company along with joint-venture partner, Dongguan Donghu Industrial Corporation, added one unit in the People's Republic of China. With the addition of this unit, at January 31, 1998, we operated three units under various joint venture agreements in the People's Republic of China. In fiscal 1998, the Company acquired the Wertkauf hypermarket chain in Germany, as well as certain real estate. The 21 acquired hypermarkets are one-stop shopping centers that offer a broad assortment of high quality general merchandise and food and are similar to the Wal-Mart Supercenter format in the United States. The transaction closed on December 30, 1997, Wertkauf's fiscal year end. Therefore, the acquired assets are included in the January 31, 1998, consolidated balance sheet and the results of operations will be included beginning in fiscal 1999. See Note 6 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our acquisitions. At January 31, 1998, the Company operated 21 hypermarkets in Germany. Internationally, at January 31, 1998, we operated nine units in Argentina, eight units in Brazil, 144 units in Canada, three units in China, 21 units in Germany, 402 units in Mexico and 14 units in Puerto Rico. A table summarizing information concerning additions of units and square footage for international units operated since fiscal 1993 is included as Schedule B to Item 1 found on page 12 of this annual report. (b) Financial information about the Company's industry segments The Company is principally engaged in the operation of mass merchandising stores which serve our customers primarily through the operation of three segments. In June 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information," which the Company has adopted in the current year. We identify our segments based on management responsibility within the United States and geographically for all international units. The Wal-Mart Stores segment includes the Company's discount stores and Supercenters in the United States. The Sam's Club segment includes the warehouse membership clubs in the United States. The international segment includes all operations in Argentina, Brazil, Canada, China, Germany, Mexico and Puerto Rico. For the financial results of the Company's operating segments, see Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report. (c) Narrative Description of Business The Company, a Delaware corporation, has its principal offices in Bentonville, Arkansas. Although the Company was incorporated in October 1969, the businesses conducted by its predecessors began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, the Company's business was devoted entirely to the operation of variety stores. In that year, the first Wal- Mart Discount City (discount store) was opened. In fiscal 1984, the Company opened its first three Sam's Clubs, and in fiscal 1988, its first Wal-Mart Supercenter (combination full-line supermarket and discount store). In fiscal 1992, the Company began its first international initiative when the Company entered into a joint venture in which it had a 50% interest with Cifra. Our international presence has continued to expand and at January 31, 1998, we had operations in six countries and Puerto Rico. WAL-MART STORES OPERATING SEGMENT The Wal-Mart Stores segment which includes the Company's discount stores and Supercenters in the United States had sales of $83,820,000,000, $74,840,000,000 and $66,271,000,000 for the three years ended January 31, 1998, 1997, and 1996, respectively. During the most recent fiscal year, no single discount store or Supercenter location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our segments. General. We operate Wal-Mart discount stores in all 50 states. The average size of a discount store is approximately 93,400 square feet. Wal-Mart Supercenters are located in 28 states and the average size of a Supercenter is 182,200 square feet. Our Supercenter prototypes range in size from 110,000 square feet to 234,000 square feet. Merchandise. Wal-Mart discount stores and the general merchandise area of the Supercenters are generally organized with 40 departments and offer a wide variety of merchandise, including apparel for women, girls, men, boys and infants. Each store also carries domestics, fabrics and notions, stationery and books, shoes, housewares, hardware, electronics, home furnishings, small appliances, automotive accessories, horticulture and accessories, sporting goods, toys, pet food and accessories, cameras and supplies, health and beauty aids, pharmaceuticals and jewelry. In addition, the stores offer an assortment of grocery merchandise, with the assortment in Supercenters being broader and including meat, produce, deli, bakery, dairy, frozen foods and dry grocery. Nationally advertised merchandise accounts for a majority of sales in the stores. The Company markets lines of merchandise under store brands including but not limited to "Sam's American Choice", "One Source", "Great Value", "Ol' Roy" and "Equate". The Company also markets lines of merchandise under licensed brands; some of which include "Faded Glory", "Kathie Lee", "White Stag", "Better Homes & Gardens", "Popular Mechanics", "Catalina", "McKids", "Basic Equipment" and "House Beautiful". During the fiscal year ended January 31, 1998, sales in discount stores and Supercenters (which are subject to seasonal variance) by product category were as follows: PERCENTAGE CATEGORY OF SALES Hardgoods........................ 23 Softgoods/domestics.............. 21 Grocery, candy and tobacco....... 14 Pharmaceuticals.................. 9 Records and electronics.......... 9 Sporting goods and toys.......... 8 Health and beauty aids........... 7 Stationery ...................... 5 Shoes............................ 2 Jewelry.......................... 2 100% Operations. Hours of operations vary by location, but generally range from 7:00 a.m. to 11:00 p.m. six days a week, and from 10:00 a.m. to 8:00 p.m. on Sunday for discount stores and Supercenters. In addition, an increasing number of discount stores and almost all of the Supercenters are open 24 hours each day. Wal-Mart discount stores and Supercenters maintain uniform prices, except where lower prices are necessary to meet local competition. Sales are primarily on a self-service, cash-and-carry basis with the objective of maximizing sales volume and inventory turnover while minimizing expenses. Bank credit card programs, operated without recourse to the Company, are available in all stores. Seasonal Aspects of Operations. The Wal-Mart Stores operating segment's business is seasonal to a certain extent. Generally, the highest volume of sales occurs in the fourth fiscal quarter and the lowest volume occurs during the first fiscal quarter. Competition. Our discount stores compete with other discount, department, drug, variety and specialty stores, many of which are national chains. The Wal-Mart Supercenters compete with other supercenter-type stores, discount stores, supermarkets and specialty stores, many of which are national or regional chains. As of January 31, 1998, based on net sales, the Wal-Mart Stores segment ranked first among all retail department store chains and among all discount department store chains. The Company's competitive position within the industry is largely determined by its ability to offer value and service to its customers. The Company has many programs designed to meet the competitive needs of its industry. These include "Everyday Low Price", "Item Merchandising", "Store- Within-a-Store" and "Buy America" programs. Although the Company believes it has had a major influence in most of the retail markets in which its stores are located, there is no assurance that this will continue. Distribution. During the 1998 fiscal year, approximately 83% of the Wal-Mart discount stores' and Supercenters' purchases were shipped from Wal-Mart's 38 distribution centers, seven of which are grocery distribution centers. The balance of merchandise purchased was shipped directly to the stores from suppliers. The 38 centers are located throughout the continental United States. Five distribution centers are located in each of Arkansas and Texas; three in South Carolina; two in each of California, Florida, Indiana, Mississippi and New York; and one in each of Alabama, Colorado, Georgia, Iowa, Illinois, Kansas, Kentucky, New Hampshire, North Carolina, Ohio, Pennsylvania, Tennessee, Utah, Virginia and Wisconsin. Each distribution center serves the distribution needs of approximately 80 to 100 stores, depending on the size of the center. The size of these distribution centers ranges from approximately 600,000 to 1,700,000 square feet. SAM'S CLUB OPERATING SEGMENT The Sam's Club segment which includes the warehouse membership clubs in the United States had sales of $20,668,000,000, $19,785,000,000 and $19,068,000,000 for the three years ended January 31, 1998, 1997, and 1996, respectively. During the most recent fiscal year, no single club location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our segments. General. The Company operates Sam's Clubs in 48 states. The average size of a Sam's Club is approximately 120,900 square feet, and club sizes generally range between 90,000 and 150,000 square feet of building area. Merchandise. Sam's offers bulk displays of name brand hardgood merchandise, some softgoods and institutional size grocery items. Each Sam's also carries software and electronic goods, jewelry, sporting goods, toys, tires, stationery and books. Most clubs have fresh food departments which include bakery, meat and produce. Operations. Operating hours vary among Sam's Clubs, but they are generally open Monday through Friday from 10:00 a.m. to 8:30 p.m. Most Sam's are open Saturday from 9:30 a.m. to 8:30 p.m. and on Sunday from 11:00 a.m. to 6:00 p.m. Sam's Clubs are membership only, cash-and-carry operations. However, a financial service credit card program (Discover Card) is available in all clubs and the "Sam's Direct" commercial finance program and "Business Revolving Credit" are available to qualifying business members. Also, a "Personal Credit" program is available to qualifying club members. Any credit issued under these programs is without recourse to the Company. Club members include businesses and those individuals who are members of certain qualifying organizations, such as government and state employees and credit union members. In fiscal 1998, both business and individual members paid an annual membership fee of $25 for the primary membership card with a spouse card available for an additional $10. Beginning in fiscal 1999, the annual membership fee for a business member increased to $30 for the primary membership card with a spouse card available at no additional cost. The annual membership fee for an individual member increased to $35 for the primary membership card with a spouse card available at no additional cost. Seasonal Aspects of Operations. The Sam's Club operating segment's business is seasonal to a certain extent. Generally, the highest volume of sales occurs in the fourth fiscal quarter and the lowest volume occurs during the first fiscal quarter. Competition. Sam's Clubs compete with warehouse clubs, as well as with discount retailers, wholesale grocers and general merchandise wholesalers and distributors. The Company also competes with others for new store sites. As of January 31, 1998, based on net sales, the Sam's Club segment ranked second among all warehouse clubs. Distribution. During fiscal 1998, approximately 60% of the Sam's Club purchases were shipped from distribution facilities, eight of which are food distribution facilities. The balance was shipped directly to the clubs from suppliers. A combination of Company owned and operated facilities and third-party facilities comprises the overall distribution structure. INTERNATIONAL OPERATING SEGMENT The International Segment includes operations of the Company's wholly-owned subsidiaries in Argentina, Canada, Germany and Puerto Rico, joint ventures in China and majority-owned subsidiaries in Brazil and Mexico. Sales for the three years ended January 31, 1998, 1997, and 1996 were $7,517,000,000, $5,002,000,000 and $3,712,000,000, respectively. During the most recent fiscal year, no single location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report for additional information regarding our segments. General. Operating formats vary by country, but include Wal-Mart discount stores in Canada and Puerto Rico; Supercenters in Argentina, Brazil, Mexico and under joint venture agreements in China; Sam's Clubs in Argentina, Brazil, Mexico, Puerto Rico and under joint venture agreements in China; Hypermarkets in Germany and Superamas, Bodegas, Aurreras, Suburbias and Vips in Mexico. Merchandise. The merchandising strategy in the International operating segment is similar to that of domestic segments in the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of sales, several store brands not found in the United States have been developed to serve customers in the different markets in which the International segment operates. In addition, steps have been taken to develop relationships with local vendors in each country to ensure reliable sources of quality merchandise. Operations. The hours of operation for operating units in the international division vary by country and by individual markets within countries depending upon local and national ordinances governing hours of operation. While sales are primarily on a cash-and-carry basis, credit cards or other consumer finance programs exist in certain markets to facilitate the purchase of goods by the customer. Seasonal Aspects of Operations. The International operating segment's business is seasonal to a certain extent. Generally, the highest volume of sales occurs in the fourth fiscal quarter. The seasonality of the business varies by country due to different national and religious holidays, festivals and customs, as well as different climatic conditions. Competition. The International operating segment competes with a variety of local national and international chains in the discount, department, drug, variety, specialty and wholesale sectors of the retail market. The segment's competitive position is determined, to a large extent, by its ability to offer its customers everyday low prices on quality merchandise that offers exceptional value. In Supercenters, our ability to effectively operate the food departments has a major impact on the segment's competitive position in the markets where we operate. Distribution. The International segment operates export consolidation facilities in Miami, Florida; Seattle, Washington; and Laredo, Texas in support of product flow to its Mexican, Asian, and Latin American markets. In addition, distribution facilities are located in Argentina, Brazil, Canada, China and Mexico which process and flow both imported and domestic product to the operating units. Operationally, the principle focus is on crossdocking product, while maintaining stored inventory is minimized. During fiscal 1998, approximately 70% of the International merchandise purchases flowed through these distribution facilities. The balance was shipped directly to the stores from suppliers. A combination of Company owned and operated facilities and third-party facilities comprises the overall distribution structure for International logistics. OTHER The sales reported in the "Other" category included in Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 16 of this annual report result from sales to third parties by McLane Company, Inc. (McLane). McLane is a wholesale distributor that sells its merchandise to a variety of retailers, primarily to the convenience store industry and it also services Wal-Mart discount stores, Supercenters and Sam's Clubs. Sales to third parties for the three years ended January 31, 1998, 1997, and 1996 were $5,953,000,000, $5,232,000,000 and $4,576,000,000 respectively. McLane offers a wide variety of grocery and non-grocery products, including perishable and non- perishable items. The non-grocery products consist primarily of tobacco products, hardgood merchandise, health and beauty aids, toys and stationery. McLane has 19 distribution centers from which its customers, including the Company, are served. The distribution centers are located in the continental United States with two located in each of Arizona, California, Texas and Virginia, and one each in Colorado, Florida, Georgia, Illinois, Kentucky, Mississippi, Missouri, New York, North Carolina, Utah and Washington. Employees (Associates). As of January 31, 1998, the Company employed approximately 825,000 associates worldwide, with approximately 720,000 in the United States and 105,000 internationally. Most associates participate in incentive programs which provide the opportunity to receive additional compensation based upon the Company's productivity or profitability. WAL-MART STORES, INC. AND SUBSIDIARIES SCHEDULE A TO ITEM 1 - DOMESTIC STORE COUNT AND NET SQUARE FOOTAGE GROWTH YEARS ENDED JANUARY 31, 1993 THROUGH 1998
STORE COUNT Fiscal Year Wal-Mart Wal-Mart Ended Discount Stores Supercenters Sam's Clubs Total Ending Jan 31, Opened Closed Conversions*1) Total Opened Total Opened Closed Total Opened*2) Closed Balance Balance Forward 1,714 10 208 1,932 1993 159 1 24 1,848 24 34 48 0 256 207 1 2,138 1994 141 2 37 1,950 38 72 162 1 417 304 3 2,439 1995 109 5 69 1,985 75 147 21 12 426 136 17 2,558 1996 92 2 80 1,995 92 239 9 2 433 113 4 2,667 1997 59 2 92 1,960 105 344 9 6 436 81 8 2,740 1998 37 1 75 1,921 97 441 8 1 443 67 2 2,805
NET SQUARE FOOTAGE Fiscal Year Wal-Mart Wal-Mart Ended Discount Stores Supercenters Sam's Clubs Total Sales Per Jan 31, Net Additions Total Net Additions Total Net Additions Total Net Additions Sq. Ft. Sq.Ft.*3) Balance Forward 128,115,368 1,914,246 23,259,348 153,288,962 1993 19,251,060 147,366,428 4,037,493 5,951,739 7,444,530 30,703,878 30,733,083 184,022,045 325.86 1994 16,185,442 163,551,870 6,762,080 12,713,819 19,670,804 50,374,682 42,618,326 226,640,371 324.42 1995 10,109,978 173,661,848 14,087,725 26,801,544 1,335,742 51,710,424 25,533,445 252,173,816 336.10 1996 8,188,223 181,850,071 16,791,559 43,593,103 825,020 52,535,444 25,804,802 277,978,618 335.13 1997 ( 103,486) 181,746,585 19,661,948 63,255,051 298,692 52,834,136 19,857,154 297,835,772 337.35 1998 (2,411,149) 179,335,436 17,076,582 80,331,633 716,150 53,550,286 15,381,583 313,217,355 348.49
[FN] *1) Wal-Mart discount store locations relocated or expanded as Wal-Mart Supercenters. *2) Total opened net of conversions of Wal-Mart discount stores to Wal-Mart Supercenters. *3) Includes only stores and clubs that were open at least twelve months as of January 31 of the previous year. WAL-MART STORES, INC. AND SUBSIDIARIES SCHEDULE B TO ITEM 1 - INTERNATIONAL STORE COUNT AND NET SQUARE FOOTAGE GROWTH YEARS ENDED JANUARY 31, 1993 THROUGH 1998
STORE COUNT Fiscal ARGENTINA BRAZIL CANADA CHINA Year Wal-Mart Sam's Wal-Mart Sam's Wal-Mart Wal-Mart Sam's Ended Supercenters Clubs Total Supercenters Clubs Total Stores Supercenters Clubs Total 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 123 0 0 0 1996 1 2 3 2 3 5 131 0 0 0 1997 3 3 6 2 3 5 136 1 1 2 1998 6 3 9 5 3 8 144 2 1 3 Fiscal GERMANY MEXICO PUERTO RICO Year Wal-Mart Sam's Wal-Mart Sam's Ended Hypermarkets Supercenters Clubs Other* Total Supercenters Clubs Total 1993 0 0 3 0 3 2 0 2 1994 0 2 7 0 9 3 2 5 1995 0 11 22 0 33 5 2 7 1996 0 13 28 0 41 7 4 11 1997 0 18 28 0 46 7 4 11 1998 21 27 28 347 402 9 5 14
NET SQUARE FOOTAGE Fiscal ARGENTINA BRAZIL CANADA CHINA Year Ended Net Additions Total Net Additions Total Net Additions Total Net Additions Total 1993 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 1995 0 0 0 0 14,606,880 14,606,880 0 0 1996 444,621 444,621 761,581 761,581 868,518 15,475,398 0 0 1997 625,369 1,069,990 0 761,581 578,508 16,053,906 316,656 316,656 1998 506,884 1,576,874 540,056 1,301,637 914,365 16,968,271 145,558 462,214 Fiscal GERMANY MEXICO PUERTO RICO Year Ended Net Additions Total Net Additions Total Net Additions Total 1993 0 0 143,000 305,535 229,647 229,647 1994 0 0 946,028 1,251,563 339,260 568,907 1995 0 0 3,718,910 4,970,473 266,279 835,186 1996 0 0 1,012,734 5,983,207 470,266 1,305,452 1997 0 0 1,032,603 7,015,810 0 1,305,452 1988 2,449,369 2,449,369 10,766,004* 17,781,814 342,888 1,648,340
[FN] * "Other" includes 33 Aurreras (combination stores), 62 Bodegas (discount stores), 38 Suburbias (specialty department stores), 36 Superamas (traditional supermarkets), and 178 Vips (restaurants). ITEM 2. PROPERTIES The number and location of domestic Wal-Mart discount stores, Supercenters and Sam's Clubs is incorporated by reference to the table under the caption "Fiscal 1998 End of Year Store Counts" on Page 15 of the Annual Report to Shareholders for the year ended January 31, 1998. The Company owns 1,318 properties on which domestic discount stores and Supercenters are located and 288 of the properties on which domestic Sam's are located. In some cases, the Company owns the land associated with leased buildings. New buildings, both leased and owned, are constructed by independent contractors. The remaining buildings in which its present domestic locations are located are either leased from a commercial property developer, leased pursuant to a sale/leaseback arrangement or leased from a local governmental entity through an industrial revenue bond transaction. All of the Company's leases for its stores provide for fixed annual rentals and, in many cases, the leases provide for additional rent based on sales volume. Domestically, the Company operated 38 Wal-Mart distribution facilities and 19 McLane distribution facilities at January 31, 1998. These distribution facilities are primarily owned by the Company, and several are subject to mortgage secured loans. Some of the distribution facilities are leased under industrial development bond financing arrangements and provide the option of purchasing these facilities at the end of the lease term for nominal amounts. The Company owns office facilities in Bentonville, Arkansas that serve as the home office for the Company and owns an office facility in Temple, Texas which serves as the home office for McLane. The number and location of international Wal-Mart discount stores, Supercenters and Sam's Clubs is incorporated by reference to the table under the caption "Fiscal 1998 End of Year Store Counts" on Page 15 of the Annual Report to Shareholders for the year ended January 31, 1998. The Company owns properties on which all operating units in Argentina and Brazil are located. In Canada, China, Germany, Mexico and Puerto Rico, the Company has a combination of owned and leased properties in which the operating units are located. The Company owns three properties in Canada, one property in China, 18 properties in Germany, 167 properties in Mexico, and four properties in Puerto Rico in which the operating units are located, with the remaining units in each country being leased. The Company utilizes both owned and leased properties for office facilities in each country in which we conduct business. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any material pending legal proceedings and no properties of the Company are subject to any material pending legal proceeding, other than routine litigation incidental to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Company's security holders during the last quarter of the year ended January 31, 1998. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT The following information is furnished with respect to each of the executive officers of the Company, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience shown for each officer has been his principal occupation for at least the past five years. Current Position Name Business Experience Held Since Age David D. Glass President and Chief Executive 1988 62 Officer. S. Robson Walton Chairman of the Board. 1992 53 Donald G. Soderquist Vice Chairman of the Board and 1988 64 Chief Operating Officer. Paul R. Carter Executive Vice President 1995 57 and President - Wal-Mart Realty Company. Prior to 1995, he served as Executive Vice President and Chief Financial Officer. Robert F. Connolly Executive Vice President - 1998 54 Merchandising. Prior to January 1998, he served as Senior Vice President - General Merchandise Manager. Prior to October 1996, he served as Vice President - Jewelry and Shoes. Prior to February 1996,he served as Executive Vice President of Montgomery Ward. Prior to January 1994, he served as Senior Vice President - General Merchandise Manager of Wal-Mart Stores, Inc. Thomas M. Coughlin Executive Vice President and 1998 49 Chief Operating Officer of Wal-Mart Stores Division. Prior to January 1998, he served as Executive Vice President - Store Operations. Prior to 1995, he served as Senior Vice President - Specialty Divisions. David Dible Executive Vice President 1995 50 Specialty Divisions. Prior to 1995, he served as Senior Vice President - Merchandising. Mark S. Hansen Executive Vice President and 1997 43 President and Chief Executive Officer of Sam's Club Division. Prior to June 1997, he served as President and Chief Executive Officer of Phoenix-based PETsMART, Inc. Bob L. Martin Executive Vice President 1993 49 and President and Chief Executive Officer of Wal-Mart International Division. John B. Menzer Executive Vice President and 1995 47 Chief Financial Officer since September 1995. Prior to September 1995, he served as President and Chief Operating Officer of Ben Franklin Retail Stores, Inc. H. Lee Scott, Jr. Executive Vice President 1998 49 and President and Chief Executive Officer of Wal-Mart Stores Division. Prior to January 1998, he served as Executive Vice President - Merchandising. Prior to October 1995, he served as Executive Vice President Logistics. Prior to that, he served as Senior Vice President - Logistics. Nicholas J. White Executive Vice President - 1989 53 Food Division. William G. Rosier President and Chief Executive 1995 49 Officer of McLane Company, Inc. Prior to 1995, he served as Senior Vice President - Marketing and Customer Services for McLane. James A. Walker, Jr. Senior Vice President and 1995 51 Controller. Prior to 1995, he served as Vice President and Controller. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The information required by this item is incorporated by reference of the information "Number of Shareholders" under the caption "11- Year Financial Summary" on Pages 20 and 21, and all the information under the captions "Market Price of Common Stock", "Listings - Stock Symbol: WMT" and "Dividends Paid Per Share" on page 39 of the Annual Report to Shareholders for the year ended January 31, 1998. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated by reference of all information under the caption "11-Year Financial Summary" on Pages 20 and 21 of the Annual Report to Shareholders for the year ended January 31, 1998. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is furnished by incorporation by reference of all information under the caption "Management's Discussion and Analysis" on Pages 22 through 25 of the Annual Report to Shareholders for the year ended January 31, 1998. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is furnished by incorporation by reference of all information under the captions "Consolidated Statements of Income", "Consolidated Balance Sheets", "Consolidated Statements of Shareholders' Equity", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements" and "Report of Independent Auditors" on Pages 26 through 38 of the Annual Report to Shareholders for the year ended January 31, 1998. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information required by this item with respect to the Company's directors and compliance by the Company's directors, executive officers and certain beneficial owners of the Company's Common Stock with Section 16(a) of the Securities Exchange Act of 1934 is furnished by incorporation by reference of all information under the captions entitled "Item 1:Election of Directors" on Pages 1 and 2 and "Section 16(a) Beneficial Ownership Reporting Compliance" on Page 7 of the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on Friday, June 5, 1998 (the "Proxy Statement"). The information required by this item with respect to the Company's executive officers is included as Item 4A of Part I found on pages 14 through 16 of this annual report. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is furnished by incorporation by reference of all information under the caption entitled "Executive Compensation", subcaptions "Summary Compensation Table", "Option Grants for Fiscal Year Ended January 31, 1998", and "Option Exercises and Fiscal Year End Option Values" on Pages 3 and 4, "Compensation and Nominating Committee Report on Executive Compensation" on page 5 and 6, "Compensation Committee Interlocks and Insider Participation" and "Compensation of Directors" on Page 6 of the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is furnished by incorporation by reference of all information under the caption "Amount and Nature of Beneficial Ownership" and "Holdings of Officers and Directors" and "Amount and Nature of Beneficial Ownership of Wal-Mart Stock" on Pages 7 and 8 of the Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is furnished by incorporation by reference of all information under the caption "Interest of Management in Certain Transactions" on Pages 6 and 7 of the Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. & 2. Consolidated Financial Statements The financial statements listed in the Index to Consolidated Financial Statements, which appears on Page 21 of this annual report, are incorporated by reference herein or filed as part of this Form 10-K. 3. Exhibits The following documents are filed as exhibits to this Form 10-K: 3(a) Restated Certificate of Incorporation of the Company is incorporated herein by reference to Exhibit 3(a) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1989, and the Certificate of Amendment to the Restated Certificate of Incorporation is incorporated herein by reference to Registration Statement on Form S-8 (File Number 33-43315). 3(b) By-Laws of the Company, as amended June 3, 1993, are incorporated herein by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended January 31, 1994. 4(a) Form of Indenture dated as of June 1, 1985, between the Company and Bank of New York, Trustee, (formerly Boatmen's Trust Company and Centerre Trust Company) is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-3 (File Number 2-97917). 4(b) Form of Indenture dated as of August 1, 1985, between the Company and Bank of New York, Trustee, (formerly Boatmen's Trust Company and Centerre Trust Company) is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-3 (File Number 2-99162). 4(c) Form of Amended and Restated Indenture, Mortgage and Deed of Trust, Assignment of Rents and Security Agreement dated as of December 1, 1986, among the First National Bank of Boston and James E. Mogavero, Owner Trustees, Rewal Corporation I, Estate for Years Holder, Rewal Corporation II, Remainderman, the Company and the First National Bank of Chicago and R.D. Manella, Indenture Trustees, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-11394). 4(d) Form of Indenture dated as of July 15, 1990, between the Company and Harris Trust and Savings Bank, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-35710). 4(e) Indenture dated as of April 1, 1991, between the Company and The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on Form S-3 (File Number 33-51344). 4(f) First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991, between the Company and The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344). +10(a) Form of individual deferred compensation agreements is incorporated herein by reference to Exhibit 10(b)from the Annual Report on Form 10-K of the Company, as amended, for the year ended January 31, 1986. +10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Registration Statement on Form S-8 (File Number 2-94358). +10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(h) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1987. +10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(h) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1992. +10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(i) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1993. +10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-8 (File Number 33-55325). +10(g) A written description of a consulting agreement by and between Wal-Mart Stores, Inc. and Jack C. Shewmaker, is incorporated herein by reference to the description contained in the second paragraph under the caption "Compensation of Directors" on Page 6 in the Company's definitive Proxy Statement to be filed in connection with the Annual Meeting of the Shareholders to be held on June 5, 1998. +10(h) Wal-Mart Stores, Inc. Director Compensation Plan is incorporated herein by reference to Exhibit 4(d) to Registration Statement on Form S-8 (File Number 333-24259). +10(i) Wal-Mart Stores, Inc. Officer Deferred Compensation Plan is incorporated herein by reference to Exhibit 10(i) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1996. +10(j) Wal-Mart Stores, Inc. Restricted Stock Plan is incorporated herein by reference to Exhibit 10(j) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1997. *+10(k) 1996 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 is filed herewith as an Exhibit to this Form 10- K. *+10(l) 1997 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 is filed herewith as an Exhibit to this Form 10- K. *13 All information incorporated by reference in Items 1, 2, 5, 6, 7 and 8 of this Annual Report on Form 10-K from the Annual Report to Shareholders for the year ended January 31, 1998. *21 List of the Company's Subsidiaries *23 Consent of Independent Auditors *27 Financial Data Schedule *Filed herewith as an Exhibit. +Management contract or compensatory plan or arrangement. (b) Reports on Form 8-K The Company did not file a report on Form 8-K during the last quarter of the fiscal year ended January 31, 1998. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Annual Report to Shareholders (page) Covered by Report of Independent Auditors: Consolidated Statements of Income for each of the three years in the period ended January 31, 1998 26 Consolidated Balance Sheets at January 31, 1998 and 1997 27 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended January 31, 1998 28 Consolidated Statements of Cash Flows for each of the three years in the period ended January 31, 1998 29 Notes to Consolidated Financial Statements, except Note 10 30-37 Not Covered by Report of Independent Auditors: Note 10 - Quarterly Financial Data (Unaudited) 37 All schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements, including the notes thereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATE: April 16, 1998 BY:/s/David D. Glass David D. Glass President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: DATE: April 16, 1998 /s/S. Robson Walton S. Robson Walton Chairman of the Board DATE: April 16, 1998 /s/David D. Glass David D. Glass President, Chief Executive Officer and Director DATE: April 16, 1998 /s/Donald G. Soderquist Donald G. Soderquist Vice Chairman of the Board, Chief Operating Officer and Director DATE: April 16, 1998 /s/Paul R. Carter Paul R. Carter Executive Vice President, President - Wal-Mart Realty Company and Director DATE: April 16, 1998 /s/John B. Menzer John B. Menzer Executive Vice President and Chief Financial Officer (Principal Financial Officer) DATE: April 16, 1998 /s/James A. Walker, Jr. James A. Walker, Jr. Senior Vice President and Controller (Principal Accounting Officer) Date: April 16, 1998 /s/Jeronimo Arango Jeronimo Arango Chairman of the Board of Cifra, S. A. de C.V. and Director DATE: April 16, 1998 /s/John A. Cooper, Jr. John A. Cooper, Jr. Director DATE: April 16, 1998 /s/Stephen Friedman Stephen Friedman Director DATE: April 16, 1998 /s/Stanley C. Gault Stanley C. Gault Director DATE: April 16, 1998 /s/Frederick S. Humphries Frederick S. Humphries Director DATE: April 16, 1998 /s/E. Stanley Kroenke E. Stanley Kroenke Director DATE: April 16, 1998 /s/Elizabeth A. Sanders Elizabeth A. Sanders Director DATE: April 16, 1998 /s/Jack C. Shewmaker Jack C. Shewmaker Director DATE: April 16, 1998 /s/Paula Stern Paula Stern Director DATE: April 16, 1998 /s/John T. Walton John T. Walton Director EX-10 2 1996 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 The last Paragraph of Section 2 of the Stock Option Plan of 1994 is hereby stricken from the Stock Option Plan of 1994. The following language is hereby inserted as the last Paragraph of Section 2 of the Stock Option Plan of 1994: Notwithstanding anything in this Paragraph 2 to the contrary, this Plan shall be administered, as to those officers and key employees otherwise eligible pursuant to Paragraph 4 hereof who, in their relationship to the Company, are described in subsection 16(a) of the Securities Exchange Act of 1934, as amended, and the rules issued thereunder, and/or who are "covered employees" as such term is defined at Section 162(m) of the Code, by the Compensation Committee of the Board (the "Compensation Committee") consisting of not less than two members of the Board, all of whom shall be both (1) "non-employee directors" within the meaning of the applicable rules and regulations promulgated by the Securities and Exchange Commission and (2) "outside directors" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder. The Compensation Committee shall be appointed, governed, indemnified and authorized as is the Committee hereinabove described. However, such Compensation Committee shall have absolute discretion as to all matters concerning those officers and key employees described above, subject to the express provisions of the Plan. The term "Committee" shall refer herein to the Committee or the Compensation Committee. EX-10 3 1997 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 The language of Section 10 of the Stock Option Plan is hereby stricken and the following language is hereby inserted: STOCK OPTION GRANTS: Records maintained by the Stock option Department and the minutes of the Stock Option Committee and the minutes of the Compensation and Nominating Committee for Section 16 officers shall be conclusive evidence of the grant of stock options. Individual written stock option agreements shall not be necessary. The following {bracketed} language is hereby inserted in the first Paragraph of Section 8: EXERCISE OF OPTION RIGHTS UPON TERMINATION OF {OR ADMINISTRATIVE SUSPENSION FROM} EMPLOYMENT OR CESSATION AS A FULL-TIME OFFICER OR ELIGIBLE KEY EMPLOYEE: If an Optionee (i) whose employment with the Company and/or one of its Subsidiaries is terminated for any reason other that death, or (ii) ceases for any reason to be a full-time officer or eligible key employee as determined by Committee in its discretion, then such Optionee may exercise his or her option, to the extent exercisable as of the date the Optionee's employment is terminated or such Optionee ceases to be a full-time officer or an eligible key employee, whichever is earlier, at any time within three months after the earlier of such dates, but in no event may an option be exercised after the expiration of the term of the option; provided, however, that if the Optionee's employment shall be terminated for cause, said option shall terminate immediately. As used herein, "cause" shall mean the commission of any act deemed inimical to the best interest of the Company as determined at the sole discretion of the Committee. {During a period of administrative suspension, the Optionee's right to exercise options is suspended and will terminate if the Optionee is terminated for cause.} EX-13 4 Wal-Mart Stores, Inc. Annual Report - Page 15 Fiscal 1998 End of Year Store Counts
Discount Sam's Stores Supercenters Club Alabama 50 27 8 Alaska 3 0 3 Arizona 34 0 7 Arkansas 50 27 4 California 100 0 24 Colorado 31 5 10 Connecticut 14 0 3 Delaware 2 1 1 Florida 102 33 31 Georgia 62 25 16 Hawaii 5 0 1 Idaho 9 0 1 Illinois 95 11 24 Indiana 60 15 14 Iowa 43 2 7 Kansas 40 8 5 Kentucky 45 23 5 Louisiana 56 19 9 Maine 19 0 3 Maryland 22 1 10 Massachusetts 27 0 3 Michigan 45 0 21 Minnesota 34 0 9 Mississippi 42 14 4 Missouri 79 30 12 Montana 9 0 1 Nebraska 13 5 3 Nevada 13 0 2 New Hampshire 17 0 4 New Jersey 16 0 6 New Mexico 16 3 3 New York 51 5 18 North Carolina 78 8 14 North Dakota 8 0 2 Ohio 77 4 23 Oklahoma 57 21 6 Oregon 23 0 0 Pennsylvania 49 12 18 Rhode Island 6 0 1 South Carolina 41 12 9 South Dakota 8 0 2 Tennessee 57 30 11 Texas 169 72 52 Utah 14 0 5 Vermont 3 0 0 Virginia 31 21 10 Washington 20 0 2 West Virginia 12 6 3 Wisconsin 55 1 11 Wyoming 9 0 2 U.S. TOTAL 1,921 441 443 Alberta 16 0 0 British Columbia 12 0 0 Manitoba 9 0 0 New Brunswick 4 0 0 Newfoundland 7 0 0 Nova Scotia 7 0 0 NW Territories 1 0 0 Ontario 52 0 0 Quebec 28 0 0 Saskatchewan 8 0 0 CANADA TOTAL 144 0 0 Argentina 0 6 3 Brazil 0 5 3 Mexico 347* 27 28 Puerto Rico 9 0 5 China 0 2 1 Germany 0 21 0 INT'L. TOTAL 500 61 40 GRAND TOTAL 2,421 502 483
[FN] *Includes 36 Superamas, 62 Bodegas, 33 Aurreras, 178 Vips and 38 Suburbias Wal-Mart Stores, Inc. Annual Report - Pages 20 and 21 11-YEAR FINANCIAL SUMMARY (Dollar amounts in millions except per share data)
1998 1997 1996 1995 1994 Net sales $117,958 $104,859 $ 93,627 $ 82,494 $ 67,344 Net sales increase 12% 12% 13% 22% 21% Comparative store sales increase 6% 5% 4% 7% 6% Other income-net 1,341 1,319 1,146 914 645 Cost of sales 93,438 83,510 74,505 65,586 53,444 Operating, selling and general and administrative expenses 19,358 16,946 15,021 12,858 10,333 Interest costs: Debt 555 629 692 520 331 Capital leases 229 216 196 186 186 Provision for income taxes 2,115 1,794 1,606 1,581 1,358 Minority interest and equity in unconsolidated subsidiaries (78) (27) (13) 4 (4) Net income 3,526 3,056 2,740 2,681 2,333 Per share of common stock: Net income - Basic and Dilutive $1.56 1.33 1.19 1.17 1.02 Dividends 0.27 0.21 .20 .17 .13 Financial Position Current assets $ 19,352 $ 17,993 $ 17,331 $ 15,338 $ 12,114 Inventories at replacement cost 16,845 16,193 16,300 14,415 11,483 Less LIFO reserve 348 296 311 351 469 Inventories at LIFO cost 16,497 15,897 15,989 14,064 11,014 Net property, plant and equipment and capital leases 23,606 20,324 18,894 15,874 13,176 Total assets 45,384 39,604 37,541 32,819 26,441 Current liabilities 14,460 10,957 11,454 9,973 7,406 Long-term debt 7,191 7,709 8,508 7,871 6,156 Long-term obligations under capital leases 2,483 2,307 2,092 1,838 1,804 Shareholders' equity 18,503 17,143 14,756 12,726 10,753 Financial Ratios Current ratio 1.3 1.6 1.5 1.5 1.6 Inventories/working capital 3.4 2.3 2.7 2.6 2.3 Return on assets* 8.5% 7.9% 7.8% 9.0% 9.9% Return on shareholders' equity** 19.8% 19.2% 19.9% 22.8% 23.9% Other Year-End Data Number of domestic Wal-Mart stores 1,921 1,960 1,995 1,985 1,950 Number of domestic Supercenters 441 344 239 147 72 Number of domestic SAM'S Club units 443 436 433 426 417 International units 601 314 276 226 24 Number of associates 825,000 728,000 675,000 622,000 528,000 Number of shareholders 245,884 257,215 244,483 259,286 257,946
[FN] * Net income before minority interest and equity in unconsolidated subsidiaries/average assets ** Net income/average shareholders' equity 11-YEAR FINANCIAL SUMMARY (Dollar amounts in millions except per share data)
1993 1992 1991 1990 1989 1988 Net sales $ 55,484 $ 43,887 $ 32,602 $ 25,811 $ 20,649 $ 15,959 Net sales increase 26% 35% 26% 25% 29% 34% Comparative store sales increase 11% 10% 10% 11% 12% 11% Other income-net 497 404 262 175 137 105 Cost of sales 44,175 34,786 25,500 20,070 16,057 12,282 Operating, selling and general and administrative expenses 8,321 6,684 5,152 4,070 3,268 2,599 Interest costs: Debt 143 113 43 20 36 25 Capital leases 180 153 126 118 99 89 Provision for income taxes 1,171 945 752 632 488 441 Minority interest and equity in unconsolidated subsidiaries 4 (1) Net income 1,995 1,609 1,291 1,076 838 628 Per share of common stock: Net income - Basic and Dilutive .87 .70 .57 .48 .37 .28 Dividends .11 .09 .07 .06 .04 .03 Financial Position Current assets $ 10,198 $ 8,575 $ 6,415 $ 4,713 $ 3,631 $ 2,905 Inventories at replacement cost 9,780 7,857 6,207 4,751 3,642 2,855 Less LIFO reserve 512 473 399 323 291 203 Inventories at LIFO cost 9,268 7,384 5,808 4,428 3,351 2,652 Net property, plant and equipment and capital leases 9,793 6,434 4,712 3,430 2,662 2,145 Total assets 20,565 15,443 11,389 8,198 6,360 5,132 Current liabilities 6,754 5,004 3,990 2,845 2,066 1,744 Long-term debt 3,073 1,722 740 185 184 186 Long-term obligations under capital leases 1,772 1,556 1,159 1,087 1,009 867 Shareholders' equity 8,759 6,990 5,366 3,966 3,008 2,257 Financial Ratios Current ratio 1.5 1.7 1.6 1.7 1.8 1.7 Inventories/working capital 2.7 2.1 2.4 2.4 2.1 2.3 Return on assets* 11.1% 12.0% 13.2% 14.8% 14.6% 13.7% Return on shareholders' equity** 25.3% 26.0% 27.7% 30.9% 31.8% 31.8% Other Year-End Data Number of domestic Wal-Mart stores 1,848 1,714 1,568 1,399 1,259 1,114 Number of domestic Supercenters 34 10 9 6 3 2 Number of domestic SAM'S Club units 256 208 148 123 105 84 International units 10 Number of associates 434,000 371,000 328,000 271,000 223,000 183,000 Number of shareholders 180,584 150,242 122,414 79,929 80,270 79,777
[FN] * Net income before minority interest and equity in unconsolidated subsidiaries/average assets ** Net income/average shareholders' equity Wal-Mart Stores, Inc. Annual Report - Page 22 MANAGEMENT'S DISCUSSION AND ANALYSIS Net Sales Sales (in millions) by operating segment for the three fiscal years ended January 31, are as follows:
Total Fiscal Wal-Mart SAM'S Other Total Company Year Stores Club International (McLane) Company Increase 1998 $83,820 $20,668 $7,517 $5,953 $117,958 12% 1997 74,840 19,785 5,002 5,232 104,859 12% 1996 66,271 19,068 3,712 4,576 93,627 13%
The Company sales growth of 12% in fiscal 1998, when compared to fiscal 1997, was attributable to our expansion program and comparative store sales increases of 6%. Expansion for fiscal 1998 included the opening of 37 Wal-Mart stores, 97 Supercenters (including the conversion of 75 Wal-Mart stores), eight SAM'S Club units and the opening or acquisition of 289 international units. International sales accounted for approximately 6.4% of total sales in fiscal 1998 compared with 4.8% in fiscal 1997. The growth in International is partially due to the acquisition of controlling interest in Cifra, S.A de C.V. during the third quarter. See Note 6 of Notes to Consolidated Financial Statements for additional information on our acquisitions. SAM'S Club sales, as a percentage of total sales, decreased from 18.9% in fiscal 1997 to 17.5% in fiscal 1998. The sales increase in fiscal 1997 when compared to fiscal 1996 was attributable to our expansion program and comparative store sales increases of 5%. Expansion for fiscal 1997 included the opening of 59 Wal-Mart stores, 105 Supercenters (including the conversion of 92 Wal-Mart stores), nine SAM'S Club units and 38 international units. The majority of the sales increase resulted from Wal-Mart stores and Supercenters while international sales grew to approximately 4.8% of the total sales in fiscal 1997 from 4.0% in fiscal 1996. SAM'S Club sales, as a percentage of total sales, decreased from 20.4% in fiscal 1996 to 18.9% in fiscal 1997. Costs and Expenses Cost of sales, as a percentage of sales, decreased .4% in fiscal 1998 when compared to fiscal 1997 and increased .1% in fiscal 1997, when compared with fiscal 1996. The decrease in fiscal 1998 resulted from improvements in the mix of merchandise sold and from better inventory management. Operating efficiencies and the strong emphasis placed on inventory management has reduced markdowns and shrinkage. Approximately .1% of the decrease in cost of sales was a result of the sales contribution of SAM'S Club. As its sales became a smaller percentage of total Company sales, the cost of sales is positively impacted since their gross margin contribution is lower than the stores. The increase in fiscal 1997 when compared to fiscal 1996 is due in part to one-time markdowns in the third quarter resulting from a strategic decision to reduce the merchandise assortment in selected categories. Cost of sales also increased approximately .3% due to a larger percentage of consolidated sales from departments within Wal-Mart stores which have lower markon percents, and to our continuing commitment of always providing low prices. These increases were offset by approximately .2% because SAM'S Club comprised a lower percentage of consolidated sales in 1997 at a lower contribution to gross margin than Wal-Mart stores. Operating, selling, general and administrative expenses increased .3%, as a percentage of sales, in fiscal 1998 when compared with fiscal 1997, and were flat in fiscal 1997 when compared to fiscal 1996. Approximately .2% of the increase in fiscal 1998 was due to increases in payroll and related benefit costs. Additionally, a contributing factor in the increase for the year is a charge of $50 million for closing the majority of the Bud's Discount City stores during the second quarter of fiscal 1998. This charge was reflected in operating income due to its immateriality to our results of operations and because we continue to operate eight Bud's Discount City stores. In fiscal 1997, operating, selling, general and administrative expenses increased approximately .1% due to a lower expense to sales percentage at SAM'S Club compared to Wal-Mart Stores. This increase was offset through expense control in all of the operating formats. Historically, computer software has been programmed to make assumptions about the century when given a date that only uses two digits to represent the year. Although these assumptions have been perfectly acceptable the past few decades, they are potential cause for concern for software used in the year 2000 and beyond. Specifically,this abbreviated date format makes it difficult for an application or computer user to distinguish between dates starting with 19xx and 20xx. The Company has initiated a project to address the year 2000 compliance issue for technology hardware, software and equipment. The assessment phase of our project is substantially complete. The majority of the compliance is expected to be performed by Company associates. Approximately 67% of the required conversions have occurred. We anticipate completing all remaining conversions during fiscal 1999. The total estimated cost of the conversion is $12 million, which is being expensed as incurred. The cost of the conversions and the completion dates are based on management's best estimates and may be u pdated as additional information becomes available. In addition, communications are ongoing with other companies with which our systems interface or rely on to determine the extent to which those companies are addressing their year 2000 compliance. Interest Costs Interest costs decreased in fiscal 1998 compared to fiscal 1997 due primarily to lower short-term borrowings. Enhanced operating cash flows and lower capital spending enabled the Company to meet cash requirements without short-term borrowings throughout most of fiscal 1998. Interest costs decreased in fiscal 1997 compared to fiscal 1996 due to lower average daily short-term borrowings and through retirement of maturing debt. See Note 2 of Notes to Consolidated Financial Statements for additional information on interest and debt. Wal-Mart Stores, Inc. Annual Report - Page 23 Market Risk Market risks relating to the Company's operations result primarily from changes in interest rates and changes in foreign exchange rates. We enter into interest rate swaps to minimize the risk and costs associated with our financial activities. The swap agreements are contracts to exchange fixed or variable rates for floating interest rate payments periodically over the life of the instruments. The following table provides information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted-aver age interest rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and average interest rates by contractual maturity dates. For variable rate instruments, we have indicated the applicable floating rate index. Interest Rate Sensitivity Principal (Notional) Amount by Expected Maturity Average Interest (Swap) Rate
Fair value (Amounts in millions) 1999 2000 2001 2002 2003 Thereafter Total 1/31/98 Liabilities Long-term debt Including current portion Fixed rate debt $1,039 $815 $2,018 $52 $559 $3,747 $8,230 $8,639 Average interest rate 7.1% 7.2% 7.2% 7.1% 6.9% 7.2% 7.2% Long-term obligation related to real estate investment trust Fixed rate obligation 36 39 43 46 50 382 596 560 Average interest rate 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% Interest Rate Derivative Financial Instruments Related to Debt Interest rate swaps Pay variable/receive fixed - 500 - - - - 500 - Average pay rate - 30-day commercial paper non-financial plus .134% Average receive rate - 5.7% - - - - 5.7% - Interest Rate Derivative Financial Instruments Related to Real Estate Investment Trust Obligation Interest rate swaps Pay variable/receive fixed 35 37 41 45 49 378 585 17 Average pay rate - 30-day commercial paper non-financial Average receive rate 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Interest Rate Derivative Financial Instrument on Currency Swap German Deutschmarks Pay variable/receive variable - - - - 1,101 - 1,101 (1) Average Pay Rate - 3-month Deutschmark LIBOR minus .0676% Average receive rate - 30-day commercial paper non-financial
Wal-Mart Stores, Inc. Annual Report - Page 24 The Company routinely enters into forward currency exchange contracts in the regular course of business to manage its exposure against foreign currency fluctuations on inventory purchases denominated in foreign currencies. These contracts are for short durations, generally less than six months. In addition, we have entered into a foreign currency swap to hedge our investment in Germany. Under the agreement, the Company will pay 1,960 million in German Deutschmarks in 2003 and will receive $1,101 million in United States Dollars. The following table provides information about the Company's derivative financial instruments, including foreign currency forward exchange agreements and currency swap agreements by functional currency and presents the information in U.S. dollar equivalents. For foreign currency forward exchange agreements, the table presents the notional amounts and average exchange rates by contractual maturity dates. Foreign Currency Exchange Rate Sensitivity Principal (Notional) Amount by Expected Maturity
Fair value (Amounts in millions) 1999 2000 2001 2002 2003 Thereafter Total 1/31/98 Forward Contracts to Sell Foreign Currencies for US $ Canadian Dollars Notional amount 24 - - - - - 24 - Average contract rate 1.4 - - - - - 1.4 - German Deutschmarks Notional amount 2 - - - - - 2 - Average contract rate 1.8 - - - - - 1.8 - Forward Contracts to Sell Foreign Currencies for Hong Kong $ German Deutschmarks (DEM) Notional amount 1 - - - - - 1 - Average contract rate 0.2 - - - - - 0.2 - Average currency exchange rate (DEM to US$) 1.8 - - - - - 1.8 - Currency Swap Agreements Payment of German Deutschmarks Notional amount - - - - 1,101 - 1,101 30 Average contract rate - - - - 1.8 - 1.8 -
International Operations A portion of our operations consists of sales activities in foreign jurisdictions. We operate wholly owned operations in Argentina, Canada, Germany and Puerto Rico, through joint ventures in China and through majority-owned subsidiaries in Brazil and Mexico. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we do business. We minimize the exposure to the risk of devaluation of foreign currencies by operating in local currencies and through buying forward contracts, where feasible, on known transactions. All foreign operations are measured in their local currencies with the exception of Brazil and Mexico, which operate in highly-inflationary economies and report operations using U.S. Dollars. Beginning in fiscal 1999, Brazil will no longer be considered a highly-inflationary economy and will begin reporting its operations in its local currency. In fiscal 1998, the foreign currency translation adjustment increased by $73 million to $473 million primarily due to the exchange rate in Canada. In fiscal 1997, the foreign currency translation adjustment decreased by $12 million to $400 million primarily due to a favorable exchange rate in Canada. The cumulative foreign currency translation adjustment of $412 million in fiscal 1996 was due primarily to operations in Mexico. Wal-Mart Stores, Inc. Annual Report - Page 25 Liquidity and Capital Resources Cash Flows Information Cash flows from operating activities were $7,123 million in fiscal 1998, up from $5,930 million in fiscal 1997. In fiscal 1998, the Company invested $2,636 million in capital assets and paid dividends of $611 million and had a net cash outlay of $1,865 million for acquisitions. Acquisitions include the Wertkauf hypermarket chain in Germany, a controlling interest in Cifra, S.A. de C. V. (Cifra) and the minority interest in our Brazilian joint venture from Lojas Americanas. See Note 6 of Notes to Consolidated Financial Statements for additional information on our acquisitions. Company Stock Purchase and Common Stock Dividends In fiscal 1998, the Company repurchased over 47 million shares of its common stock for $1.6 billion. Subsequent to January 31, 1998, the Company announced plans to repurchase up to $2 billion of its common stock over the next 12 to 18 months. Additionally, the Company increased the dividend 15% to $.31 per share for fiscal 1999. Borrowing Information The Company had committed lines of credit with 77 banks, aggregating $1,873 million and informal lines of credit with various other banks, totaling an additional $1,950 million, which were used to support short-term borrowing and commercial paper. These lines of credit and their anticipated cyclical increases will be sufficient to finance the seasonal buildups in merchandise inventories and for other cash requirements. We anticipate generating sufficient operating cash flow to fund all capital expenditures and our Company stock repurchase program. Accordingly, we do not plan to finance future capital expenditures with debt. However, we do plan to refinance existing long-term debt as it matures and may desire to obtain additional long-term financing for other uses of cash or for strategic reasons. We anticipate no difficulty in obtaining long-term financing in view of our excellent credit rating and favorable experiences in the debt market in the recent past. In addition to the available credit lines mentioned above, we may sell up to $251 million of public debt under shelf registration statements on file with the Securities and Exchange Commission. Expansion Domestically, we plan to open approximately 50 new Wal-Mart stores and between 120 and 125 new Supercenters. Approximately 90 of the Supercenters will come from relocations or expansions of existing Wal-Mart stores. Also planned for next fiscal year are ten new SAM'S Club units and three distribution centers. Internationally, plans are to develop 50 to 60 new retail units. These stores are planned in Argentina, Brazil, Canada, China, Germany, Mexico and Puerto Rico. Total planned growth represents approximately 26 million square feet of additional retail space. Total planned capital expenditures for fiscal 1999 approximate $4 billion. We plan to finance our expansion primarily with operating cash flows. Forward-Looking Statements Certain statements contained in Management's Discussion and Analysis, and elsewhere in this annual report, are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. The forward-looking statements are subject to risks and uncertainties, including, but not limited to, competitive pressures, inflation, consumer debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, capital market conditions and other risks indicated in our filings with the Securities and Exchange Commission. Actual results may materially differ from anticipated results described in these statements. Wal-Marat Stores, Inc. Annual Report - Page 26 CONSOLIDATED STATEMENTS OF INCOME (Amounts in millions except per share data)
Fiscal years ended January 31, 1998 1997 1996 Revenues: Net sales $117,958 $104,859 $93,627 Other income-net 1,341 1,319 1,146 119,299 106,178 94,773 Costs and Expenses: Cost of sales 93,438 83,510 74,505 Operating, selling and general and administrative expenses 19,358 16,946 15,021 Interest Costs: Debt 555 629 692 Capital leases 229 216 196 113,580 101,301 90,414 Income Before Income Taxes, Minority Interest and Equity in Unconsolidated Subsidiaries 5,719 4,877 4,359 Provision for Income Taxes Current 2,095 1,974 1,530 Deferred 20 (180) 76 2,115 1,794 1,606 Income Before Minority Interest and Equity in Unconsolidated Subsidiaries 3,604 3,083 2,753 Minority Interest and Equity in Unconsolidated Subsidiaries (78) (27) (13) Net Income $ 3,526 $ 3,056 $ 2,740 Net Income Per Share - Basic and Dilutive $1.56 $1.33 $1.19 See accompanying notes.
Wal-Mart Stores, Inc. Annual Report - Page 27 CONSOLIDATED BALANCE SHEETS (Amounts in millions)
January 31, 1998 1997 Assets Current Assets: Cash and cash equivalents $ 1,447 $ 883 Receivables 976 845 Inventories At replacement cost 16,845 16,193 Less LIFO reserve 348 296 Inventories at LIFO cost 16,497 15,897 Prepaid expenses and other 432 368 Total Current Assets 19,352 17,993 Property, Plant and Equipment, at Cost: Land 4,691 3,689 Building and improvements 14,646 12,724 Fixtures and equipment 7,636 6,390 Transportation equipment 403 379 27,376 23,182 Less accumulated depreciation 5,907 4,849 Net property, plant and equipment 21,469 18,333 Property Under Capital Lease: Property under capital lease 3,040 2,782 Less accumulated amortization 903 791 Net property under capital leases 2,137 1,991 Other Assets and Deferred Charges 2,426 1,287 Total Assets $45,384 $39,604 Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 9,126 $ 7,628 Accrued liabilities 3,628 2,413 Accrued income taxes 565 298 Long-term debt due within one year 1,039 523 Obligations under capital leases due within one year 102 95 Total Current Liabilities 14,460 10,957 Long-Term Debt 7,191 7,709 Long-Term Obligations Under Capital Leases 2,483 2,307 Deferred Income Taxes and Other 809 463 Minority Interest 1,938 1,025 Shareholders' Equity Preferred stock ($.10 par value; 100 shares authorized, none issued) Common stock ($.10 par value; 5,500 shares authorized, 2,241 and 2,285 issued and outstanding in 1998 and 1997, respectively) 224 228 Capital in excess of par value 585 547 Retained earnings 18,167 16,768 Foreign currency translation adjustment (473) (400) Total Shareholders' Equity 18,503 17,143 Total Liabilities and Shareholders' Equity $45,384 $39,604 See accompanying notes.
Wal-Mart Stores, Inc. Annual Report - Page 28 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Foreign Capital in currency (Amounts in millions Number Common excess of Retained translation except per share data) of shares stock par value earnings adjustment Total Balance - January 31, 1995 2,297 $ 230 $ 539 $12,213 ($ 256) $12,726 Net income 2,740 2,740 Cash dividends ($.20 per share) (458) (458) Purchase of Company stock (5) (4) (101) (105) Foreign currency translation adjustment (156) (156) Stock options exercised and other 1 (1) 10 9 Balance - January 31, 1996 2,293 229 545 14,394 (412) 14,756 Net income 3,056 3,056 Cash dividends ($.21 per share) (481) (481) Purchase of Company stock (8) (7) (201) (208) Foreign currency translation adjustment 12 12 Stock options exercised and other (1) 9 8 Balance - January 31, 1997 2,285 228 547 16,768 (400) 17,143 Net income 3,526 3,526 Cash dividends ($.27 per share) (611) (611) Purchase of Company stock (47) (5) (48) (1,516) (1,569) Foreign currency translation adjustment (73) (73) Stock options exercised and other 3 1 86 87 Balance - January 31, 1998 2,241 $224 $585 $18,167 ($ 473) $18,503 See accompanying notes.
Wal-Mart Stores, Inc. Annual Report - Page 29 CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in millions)
Fiscal years ended January 31, 1998 1997 1996 Cash flows from operating activities Net Income $ 3,526 $ 3,056 $ 2,740 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,634 1,463 1,304 Increase in accounts receivable (78) (58) (61) (Increase)/decrease in inventories (365) 99 (1,850) Increase in accounts payable 1,048 1,208 448 Increase in accrued liabilities 1,329 430 29 Deferred income taxes 20 (180) 76 Other 9 (88) (303) Net cash provided by operating activities 7,123 5,930 2,383 Cash flows from investing activities Payments for property, plant and equipment (2,636) (2,643) (3,566) Proceeds from sale of photo finishing plants 464 Acquisitions (1,865) Other investing activities 80 111 234 Net cash used in investing activities (4,421) (2,068) (3,332) Cash flows from financing activities (Decrease)/increase in commercial paper (2,458) 660 Proceeds from issuance of long-term debt 547 1,004 Net proceeds from formation of Real Estate Investment Trust (REIT) 632 Purchase of Company stock (1,569) (208) (105) Dividends paid (611) (481) (458) Payment of long-term debt (554) (541) (126) Payment of capital lease obligations (94) (74) (81) Other financing activities 143 68 93 Net cash (used in)/provided by financing activities (2,138) (3,062) 987 Net increase in cash and cash equivalents 564 800 38 Cash and cash equivalents at beginning of year 883 83 45 Cash and cash equivalents at end of year $ 1,447 $ 883 $ 83 Supplemental disclosure of cash flow information Income tax paid $ 1,971 $ 1,791 $ 1,785 Interest paid 796 851 866 Capital lease obligations incurred 309 326 365 Investment in unconsolidated subsidiary exchanged in acquisition 226 See accompanying notes.
Wal-Mart Stores, Inc. Annual Report - Page 30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of subsidiaries. Significant intercompany transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers investments with a maturity of three months or less when purchased to be cash equivalents. Inventories The Company uses the retail last-in, first-out (LIFO) method for domestic Wal-Mart discount stores and Supercenters and cost LIFO for SAM'S Clubs. International inventories are on other cost methods. Inventories are not in excess of market value. Pre-opening costs Costs associated with the opening of stores are expensed during the first full month of operations. The costs are carried as prepaid expenses prior to the store opening. If the Company had expensed these costs as incurred, net income would have been reduced by $2 million, $9 million and $2 million in fiscal 1998, 1997 and 1996, respectively. Interest during construction In order that interest costs properly reflect only that portion relating to current operations, interest on borrowed funds during the construction of property, plant and equipment is capitalized. Interest costs capitalized were $33 million, $44 million and $50 million in 1998, 1997 and 1996, respectively. Financial instruments The Company uses derivative financial instruments for purposes other than trading to reduce its exposure to fluctuations in foreign currencies and to minimize the risk and cost associated with financial and global operating activities. Settlements of interest rate swaps are accounted for by recording the net interest received or paid as an adjustment to interest expense on a current basis. Gains or losses resulting from market movements are not recognized. Contracts that effectively meet risk reduction and correlation criteria are recorded using hedge accounting. Hedges of firm commitments or anticipated transactions are deferred and recognized when the hedged transaction occurs. Advertising costs Advertising costs are expensed as incurred and were $292 million, $249 million and $219 million in 1998, 1997 and 1996, respectively. Operating, selling and general and administrative expenses Buying, warehousing and occupancy costs are included in operating, selling and general and administrative expenses. Depreciation and amortization Depreciation and amortization for financial statement purposes are provided on the straight-line method over the estimated useful lives of the various assets. For income tax purposes, accelerated methods are used with recognition of deferred income taxes for the resulting temporary differences. Estimated useful lives are as follows: Building and improvements 5-33 years Fixtures and equipment 5-12 years Transportation equipment 2-5 years Goodwill 20-40 years Long-lived assets In fiscal 1997, the Company adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. The statement requires entities to review long-lived assets and certain intangible assets in certain circumstances, and if the value of the assets is impaired, an impairment loss shall be recognized. Due to the Company's previous accounting policies, this pronouncement had no material effect on the Company's financial position or results of operations. Comprehensive income In June 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 130, "Reporting Comprehensive Income," which is effective for fiscal years beginning after December 15, 1997. This statement establishes standards for reporting and display of comprehensive income and its components. The Company anticipates adopting this Statement in fiscal 1999. Since this Statement requires only additional disclosure, there will be no effect on the Company's results of operations or financial position. Net income per share In fiscal 1998, the Company adopted Statement of Financial Accounting Standards No. 128, Earnings Per Share. Statement 128 replaces primary and fully dilutive earnings per share with basic and dilutive earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effect of options. Basic earnings per share for all periods presented are the same as previously reported. Basic net income per share is based on the weighted average outstanding common shares. Dilutive net income per share is based on the weighted average outstanding shares reduced by the effect of stock options. The shares used in the computations for basic and dilutive net income per share are as follows (in millions): 1998 1997 1996 Basic 2,258 2,292 2,296 Dilutive 2,267 2,296 2,299 Wal-Mart Stores, Inc. Annual Report - Page 31 Foreign currency translation The assets and liabilities of most foreign subsidiaries are translated at current exchange rates and any related translation adjustments are recorded in Consolidated Shareholders' Equity. Operations in Brazil and Mexico operate in highly inflationary economies and certain assets are translated at historical exchange rates and all translation adjustments are reflected in the Consolidated Income Statements. Estimates and assumptions The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to prior periods to conform to current presentation. 2 Commercial Paper and Long-term Debt Information on short-term borrowings and interest rates is as follows (dollar amounts in millions):
Fiscal years ended January 31, 1998 1997 1996 Maximum amount outstanding at month-end $ 1,530 $ 2,209 $ 3,686 Average daily short-term borrowings 212 1,091 2,106 Weighted average interest rate 5.6% 5.3% 5.9%
At January 31, 1998 and 1997, there were no short-term borrowings outstanding. At January 31, 1998, the Company had committed lines of credit of $1,873 million with 77 banks and informal lines of credit with various banks totaling an additional $1,950 million, which were used to support short-term borrowings and commercial paper. Short-term borrowings under these lines of credit bear interest at or below the prime rate. Long-term debt at January 31, consists of (amounts in millions):
1998 1997 8.625% Notes due April 2001 $ 750 $ 750 5.875% Notes due October 2005 597 597 5.614% Notes due February 2010 with biannual put options 500 - 7.500% Notes due May 2004 500 500 9.100% Notes due July 2000 500 500 6.125% Notes due October 1999 500 500 7.800% - 8.250% Obligations from sale/leaseback transactions due 2014 458 466 6.500% Notes due June 2003 454 454 7.250% Notes due June 2013 445 445 7.000% - 8.000% Obligations from sale/leaseback transactions due 2013 306 314 6.750% Notes due May 2002 300 300 8.500% Notes due September 2024 250 250 6.750% Notes due October 2023 250 250 8.000% Notes due September 2006 250 250 6.125% Eurobond due November 2000 250 250 6.875% Eurobond due June 1999 250 250 6.375% Notes due March 2003 228 228 6.750% Eurobond due May 2002 200 200 5.500% Notes due March 1998 - 500 5.125% Eurobond due October 1998 - 250 7.000% Eurobond due April 1998 - 250 Other 203 205 $7,191 $7,709
Wal-Mart Stores, Inc. Annual Report - Page 32 In fiscal 1998, the Company borrowed $500 million due in 2010 with put options imbedded. Beginning in 2000, and every second year, thereafter until 2010, the holders of the debt may require the Company to repurchase the debt at face value. Long-term debt is unsecured except for $202 million, which is collateralized by property with an aggregate carrying value of approximately $349 million. Annual maturities of long-term debt during the next five years are (in millions):
Fiscal year ending Annual January 31, maturity 1999 $ 1,039 2000 815 2001 2,018 2002 52 2003 559 Thereafter 3,747
The Company has agreed to observe certain covenants under the terms of its note agreements, the most restrictive of which, relates to amounts of additional secured debt and long-term leases. The Company has entered into sale/leaseback transactions involving buildings while retaining title to the undering land. These transactions were accounted for as financings and are included in long-term debt and the annual maturities schedules above. The resulting obligations are amortized over the lease terms. Future minimum lease payments for each of the five succeeding years, as of January 31, 1998, are (in millions):
Fiscal years ending Minimum January 31, rentals 1999 $ 76 2000 104 2001 100 2002 94 2003 98 Thereafter 817
At January 31, 1998 and 1997, the Company had letters of credit outstanding totaling $673 million and $811 million, respectively. These letters of credit were issued primarily for the purchase of inventory. Under shelf registration statements previously filed with the Securities and Exchange Commission, the Company may issue debt securities aggregating $251 million. 3 Financial Instruments: Interest rate instruments The Company enters into interest rate swaps to minimize the risks and costs associated with its financial activities. The swap agreements are contracts to exchange fixed or variable rates for floating interest rate payments periodically over the life of the instruments. The notional amounts are used to measure interest to be paid or received and do not represent the exposure to credit loss. The rates paid on these swaps range from 3-month Deutschmark LIBOR minus .0676% to 30-day Commercial Paper Non-Financial plus .134%. These instruments are not recorded on the balance sheet, and as of January 31, 1998 and 1997, are as follows:
January 31, 1998 Notional amount Maturity Rate Fair (in millions) received value $ 585 2006 6.97% $17 $ 500 2000 5.65% - $1,101 2003 30-day commercial ($1) paper non-financial
January 31, 1997 Notional amount Maturity Rate (in millions) received >C> $630 2006 6.97%
Foreign exchange instruments The Company has entered into a foreign currency swap to hedge its investment in Germany. Under the agreement, the Company will pay $1,960 million in German Deutschmarks in 2003 and will receive $1,101 million in United States Dollars. At January 31, 1998, the fair value of this swap was $30 million. The Company enters routinely into forward currency exchange contracts in the regular course of business to manage its exposure against foreign currency fluctuations on inventory purchases denominated in foreign currencies. These contracts are for short durations (six months or less) and are insignificant to the Company's operations or financial position. (There were approximately $27 million outstanding at January 31, 1998.) Fair value of financial instruments Cash and cash equivalents: The carrying amount approximates fair value due to the short maturity of these instruments. Long-term debt: The fair value of the Company's long-term debt, including current maturities, approximates $8,639 million at January 31, 1998 and is based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. Interest rate instruments: The fair values are estimated amounts the Company would receive or pay to terminate the agreements as of the reporting dates. Foreign currency contracts: The fair value of foreign currency contracts are estimated by obtaining quotes from brokers. Wal-Mart Stores, Inc. Annual Report - Page 33 4 Defined Contribution Plans The Company maintains profit sharing plans under which most full-time, and many part-time associates become participants following one year of employment. In fiscal 1998, the Company add ed 401(k) plans in which the same associates may elect to contribute up to 10% of their earnings. The Company will make annual contributions to these plans on behalf of all eligible associates, including those who have not elected to contribute to the 401(k) plan. Annual Company contributions are made at the sole discretion of the Company, and were $321 million, $247 million and $204 million in 1998, 1997 and 1996, respectively. 5 Income Taxes The income tax provision consists of the following (in millions):
1998 1997 1996 Current Federal $1,891 $1,769 $1,342 State and local 186 201 188 International 18 4 Total current tax provision 2,095 1,974 1,530 Deferred Federal (5) (97) 119 State and local (2) (9) 15 International 27 (74) (58) Total deferred tax provision 20 (180) 76 Total provision for income taxes $2,115 $1,794 $1,606
Items that give rise to significant portions of the deferred tax accounts at January 31, are as follows (in millions):
1998 1997 1996 Deferred tax liabilities: Property, plant and equipment $ 797 $ 721 $ 617 Inventory 275 145 135 International, principally asset basis differences 387 83 62 Other 33 45 19 Total deferred tax liabilities 1,492 994 833 Deferred tax assets: Amounts accrued for financial reporting purposes not yet deductible for tax purposes 441 295 204 International, asset basis and loss carryforwards 258 314 163 Capital leases 190 169 147 Deferred revenue 89 113 Other 108 68 49 Total deferred tax assets 1,086 959 563 Net deferred tax liabilities $ 406 $ 35 $ 270
A reconciliation of the significant differences between the effective income tax rate and the federal statutory rate on pretax income follows:
1998 1997 1996 Statutory tax rate 35.0% 35.0% 35.0% State income taxes, net of federal income tax benefit 2.1% 2.2% 3.1% International (0.3%) (1.5%) (1.0%) Other 0.2% 1.1% (0.3%) 37.0% 36.8% 36.8%
Wal-Mart Stores, Inc. Annual Report - Page 34 6 Acquisitions A merger of the Mexican joint venture companies owned by Wal-Mart Stores, Inc. and Cifra, S.A. de C.V. (Cifra) with, and into Cifra, was consummated with an effective merger date of September 1, 1997. The Company received voting shares of Cifra equaling approximately 33.5% of the outstanding voting shares of Cifra in exchange for the Company's joint venture interests having a net book value of approximately $644 million. No gain or loss was recognized on the exchange of the joint venture interest. The Company then acquired 593,100,000 shares of the Series "A" Common Shares and Series "B" Common Shares of Cifra, in a cash tender offer. The transaction has been accounted for as a purchase. The net assets and liabilities acquired are recorded at fair value. Resulting goodwill is being amortized over 40 years. As a result of the merger and tender offer, Wal-Mart holds approximately 51% of the outstanding voting shares of Cifra. The results of operations for Cifra, since the effective merger date, have been included in the Company's results. In December 1997, the Company acquired the Wertkauf hypermarket chain in Germany, as well as certain real estate. The 21 hypermarkets are one-stop shopping centers that offer a broad assortment of high-quality general merchandise and food and are similar to the Wal-Mart Supercenter format in the United States. The transaction has been accounted for as a purchase. Net assets and liabilities of Wertkauf and the real estate are recorded at fair value. The goodwill is being amortized over 40 years. The transaction closed on December 30, 1997; therefore, the assets are included in the January 31, 1998 consolidated balance sheet and the results of operations will be included beginning in fiscal 1999. In December 1997, the Company acquired the 40% minority interest in its Brazilian joint venture from Lojas Americanas, and then sold a 5% share to an individual. The purchase price of the minority interest approximated book value. Because the transaction closed on December 30, 1997, the results of operations for fiscal 1998 include the Company's original ownership percentage of the joint venture. Pro forma results of operations are not presented due to the insignificant differences from historical results, both individually and in the aggregate. The fair value of the assets and liabilities recorded as a result of these transactions is as follows (in millions):
Cash and cash equivalents $ 500 Receivables 97 Inventories 266 Net property, plant and equipment 2,105 Goodwill 1,213 Accounts payable (431) Accrued liabilities (132) Deferred income taxes (353) Minority interest (705) Other 31 2,591 Investment in unconsolidated Mexican subsidiary exchanged (226) Total cash purchase price $ 2,365
7 Stock Option Plans At January 31, 1998, 70 million shares of common stock were reserved for issuance under stock option plans. The options granted under the stock option plans expire ten years from the date of grant. Options granted prior to November 17, 1995, may be exercised in nine annual installments. Options granted on or after November 17, 1995, may be exercised in seven annual installments. The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related interpretations in accounting for its employee stock options because the alternative fair value accounting, provided under FASB Statement 123, "Accounting for Stock-Based Compensation," requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. Pro forma information, regarding net income and income per share, is required by Statement 123 and has been determined as if the Company had accounted for its associate stock option plans under the fair value method of that statement. The fair value of these options was estimated at the date of the grant using the Black-Scholes option pricing model with the following assumption ranges: risk-free interest rates between 7.2% and 5.6%, dividend yields between 0.7% and 1.0%, volatility factors between .23 and .27, and an expected life of the option of 7.4 years for the options issued prior to November 17, 1995 and 5.8 years for options issued thereafter. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferrable. In addition, option valuation methods require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's associate stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimates, in management's opinion, the existing models do not necessarily provide a reliable Wal-Mart Stores, Inc. Annual Report - Page 35 single measure of the fair value of its associate stock options. Using the Black-Scholes option valuation model, the weighted average grant date value of options granted during the year ended January 31, 1998, was $13 per option. The effect of applying the fair value method of Statement 123 to the Company's option plan does not result in net income and net income per share that are materially different from the amounts reported in the Company's consolidated financial statements as demonstrated below: (Amounts in millions except per share data)
1998 1997 1996 Pro forma net income $3,504 $3,042 $2,737 Pro forma earnings per share - basic $ 1.55 $ 1.33 $ 1.19 Pro forma earnings per share - dilutive $ 1.55 $ 1.32 $ 1.19
Further information concerning the options is as follows:
Weighted Option price average Shares per share per share Total January 31, 1995 17,969,000 $ 2.78-30.62 $20.20 $362,981,000 Options granted 7,114,000 23.50-24.75 23.61 167,959,000 Options canceled (1,953,000) 3.75-30.82 22.46 (43,873,000) Options exercised (1,101,000) 2.78-25.38 8.79 (9,678,000) January 31, 1996 22,029,000 4.94-30.82 21.67 477,389,000 (5,011,000 shares exerciseable) Options granted 11,466,000 22.25-25.25 23.19 265,931,000 Options canceled (2,110,000) 5.78-30.82 23.27 (49,109,000) Options exercised (999,000) 4.94-25.75 10.34 (10,327,000) January 31, 1997 30,386,000 6.50-30.82 22.51 683,884,000 (6,448,000 shares exerciseable) Options granted 5,263,000 24.88-39.94 37.87 199,309,000 Options canceled (1,802,000) 6.50-35.06 23.45 (42,251,000) Options exercised (3,519,000) 6.50-30.82 19.25 (67,729,000) January 31, 1998 30,328,000 $ 7.19-39.94 $25.50 $773,213,000 (6,731,000 shares exerciseable) The weighted average remaining life of options outstanding as of January 31, 1998 was 7.5 years. Shares available for option grants: January 31, 1997 43,590,000 January 31, 1998 40,129,000
The following table summarizes information about stock options outstanding as of January 31, 1998.
Weighted Weighted Weighted Range of Number of Average Remaining Average Options Average Exercise Prices Options Life (Years) Exercise Price Exerciseable Exercise Price $ 7.19 to 10.66 1,593,000 1.8 $10.23 1,233,000 $10.13 13.25 to 17.69 898,000 2.9 14.44 550,000 14.46 20.00 to 24.88 17,998,000 8.0 23.29 3,000,000 23.32 25.00 to 29.75 4,513,000 5.4 27.25 1,887,000 27.62 30.82 to 39.94 5,326,000 9.8 37.89 61,000 30.82 30,328,000 6,731,000
Wal-Mart Stores, Inc. Annual Report - Page 36 8 Long-term Lease Obligations The Company and certain of its subsidiaries have long-term leases for stores and equipment. Rentals (including, for certain leases, amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under all operating leases were $596 million, $561 million and $531 million in 1998, 1997 and 1996, respectively. Aggregate minimum annual rentals at January 31, 1998, under non-cancelable leases are as follows (in millions):
Fiscal Operating Capital year leases leases 1999 $ 404 $ 347 2000 384 345 2001 347 344 2002 332 343 2002 315 340 Thereafter 2,642 3,404 Total minimum rentals $ 4,424 5,123 Less estimated executory costs 73 Net minimum lease payments 5,050 Less imputed interest at rates ranging from 6.1% to 14.0% 2,465 Present value of minimum lease payments $ 2,585
Certain of the leases provide for contingent additional rentals based on percentage of sales. Such additional rentals amounted to $46 million, $51 million and $41 million in 1998, 1997 and 1996, respectively. Substantially all of the store leases have renewal options for additional terms from five to 25 years at comparable rentals. The Company has entered into lease commitments for land and buildings for 38 future locations. These lease commitments with real estate developers provide for minimum rentals for 20 to 25 years, excluding renewal options, which if consummated based on current cost estimates, will approximate $38 million annually over the lease terms. 9 Segments The Company and its subsidiaries are principally engaged in the operation of mass merchandising stores located in all 50 states, Argentina, Brazil, Canada, Germany, Mexico and Puerto Rico, and through joint ventures in China. In June 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information," which the Company has adopted in the current year. The Company identifies such segments based on management responsibility within the United States and geographically for all international units. The Wal-Mart Stores segment includes the Company's discount stores and Supercenters in the United States. The SAM'S Club segment includes the warehouse membership clubs in the United States. The Company's operations in Argentina, Brazil, Germany, Mexico and China are consolidated using a December fiscal year end, generally due to statutory reporting requirements. There were no significant intervening events which materially affected the financial statements. The Company measures segment profit as operating profit, which is defined as income before interest expense, income taxes and minority interest. Information on segments and a reconciliation to income, before income taxes and minority interest, are as follows (in millions):
Fiscal year ended January 31,1998 Wal-Mart Stores SAM'S Club International Other Consolidated Revenues from external customers $ 83,820 $ 20,668 $ 7,517 $ 5,953 $ 117,958 Intercompany real estate charge (income) 1,375 349 (1,724) Depreciation and amortization 674 104 118 738 1,634 Operating income 5,833 616 262 (208) 6,503 Interest expense 784 Income before income taxes and minority interest 5,719 Total assets $ 22,002 $ 3,864 $ 7,390 $ 12,128 $ 45,384
Wal-Mart Stores, Inc. Annual Report - Page 37
Fiscal year ended January 31,1997 Wal-Mart Stores SAM'S Club International Other Consolidated Revenues from external customers $ 74,840 $ 19,785 $ 5,002 $ 5,232 $ 104,859 Intercompany real estate charge (income) 1,250 346 (1,596) Depreciation and amortization 628 99 70 666 1,463 Operating income 5,033 557 24 108 5,722 Interest expense 845 Income before income taxes and minority interest 4,877 Total assets $ 20,905 $ 3,927 $ 2,887 $ 11,885 $ 39,604
Fiscal year ended January 31,1996 Wal-Mart Stores SAM'S Club International Other Consolidated Revenues from external customers $ 66,271 $ 19,068 $ 3,712 $ 4,576 $ 93,627 Intercompany real estate charge (income) 1,075 339 (1,414) Depreciation and amortization 561 95 52 596 1,304 Operating income 4,562 480 (16) 221 5,247 Interest expense 888 Income before income taxes and minority interest 4,359 Total assets $ 19,292 $ 3,875 $ 2,305 $ 12,069 $ 37,541
International long-lived assets excluding goodwill are $3,537 million, $1,199 million and $952 million in 1998, 1997 and 1996, respectively. Additions to international long-lived assets are $2,401 million, $317 million and $747 million in 1998, 1997 and 1996, respectively. The international segment includes all international real estate. All of the real estate in the United States is included in the "Other" category and is leased to Wal-Mart Stores and SAM'S Club. The revenues in the "other" category result from sales to third parties by McLane Company, Inc., a wholesale distributor. McLane offers a wide variety of grocery and non-grocery products, which it sells to a variety of retailers including the Company's Wal-Mart Stores and SAM'S Club. McLane is not a significant segment and, therefore, results are not presented separately. 10 Quarterly Financial Data (unaudited)
Quarters ended Amounts in millions (except per share information) April 30, July 31, October 31, January 31, 1998 Net sales $25,409 $28,386 $28,777 $35,386 Cost of sales 20,127 22,478 22,680 28,153 Net income 652 795 792 1,287 Net income per share, basic and dilutive $.29 $.35 $.35 $.57 1997 Net sales $22,772 $25,587 $25,644 $30,856 Cost of sales 18,032 20,336 20,416 24,726 Net income 571 706 684 1,095 Net income per share, basic and dilutive $.25 $.31 $.30 $.48
Wal-Mart Stores, Inc. Annual Report - Page 38 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders, Wal-Mart Stores, Inc. We have audited the accompanying consolidated balance sheets of Wal-Mart Stores, Inc. and Subsidiaries as of January 31, 1998 and 1997, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wal- Mart Stores, Inc. and Subsidiaries at January 31, 1998 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 31, 1998, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Ernst & Young LLP Tulsa, Oklahoma March 24, 1998 Wal-Mart Stores, Inc. Annual Report - Page 39 Listings- Stock Symbol: WMT New York Stock Exchange Pacific Stock Exchange
Market Price of Common Stock Fiscal years ended January 31, 1998 1997 Quarter Ended Hi Low Hi Low April 30 $29.88 $23.13 $24.50 $20.88 July 31 $38.56 $28.25 $26.25 $22.88 October 31 $38.75 $32.19 $28.13 $24.50 January 31 $41.75 $36.06 $27.00 $22.13
Dividends Paid Per Share Fiscal years ended January 31, Quarterly 1998 1997 April 9 $0.0675 April 8 $0.0525 July 14 $0.0675 July 8 $0.0525 October 14 $0.0675 October 7 $0.0525 January 12 $0.0675 January 17 $0.0525
EX-21 5 EXHIBIT 21 SUBSIDIARIES OF WAL-MART STORES, INC. NAME UNDER PERCENT OF WHICH DOING EQUITY BUSINESS ORGANIZED OR SECURITIES OTHER THAN SUBSIDIARY INCORPORATED OWNED SUBSIDIARY'S Wal-Mart Stores East, Inc. Delaware, U. S. 100% Wal-Mart Sam's West, Inc. Delaware, U. S. 100% Sam's Club Sam's East, Inc. Delaware, U. S. 100% Sam's Club Wal-Mart Property Company Delaware, U. S. 100% NA Sam's Property Company Delaware, U. S. 100% NA McLane Company, Inc., Texas, U. S. 100% Wal-Mart and its subsidiaries Cifra, S.A. de C.V. Mexico 51% EX-23 6 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Wal-Mart Stores, Inc. of our report dated March 24, 1998, included in the 1998 Annual Report to Shareholders of Wal-Mart Stores, Inc. We also consent to the incorporation by reference of our report dated March 24, 1998, with respect to the consolidated financial statements of Wal-Mart Stores, Inc. incorporated by reference in this Annual Report (Form 10-K) for the year ended January 31, 1998, in the following registration statements and related prospectuses. Associate Stock Purchase Plan Form S-8 File No. 2-64662 of Wal-Mart Stores, Inc. Stock Option Plan of 1984 of Form S-8 File No. 2-94358 Wal-Mart Stores, Inc., as and 33-43315 amended Stock Option Plan of 1994 of Form S-8 File No. 33-55325 Wal-Mart Stores, Inc., as amended Debt Securities and Pass-Through Form S-3 File No. 33-55725 Certificates of Wal-Mart Stores, Inc. Director Compensation Plan Form S-8 File No. 333-24259 of Wal-Mart Stores, Inc. Debt Securities of Wal-Mart Form S-3 File No. 33-53125 Stores, Inc. Dividend Reinvestment and Form S-3 File No. 333-2089 Stock Purchase Plan of Wal-Mart Stores, Inc. 401(k) Retirement Savings Form S-8 File No. 333-29847 Plan of Wal-Mart Stores, Inc. 401(k) Retirement Savings Form S-8 File No. 33-44659 Plan of Wal-Mart Puerto Rico, Inc. /s/ Ernst & Young LLP Ernst & Young LLP Tulsa, Oklahoma April 21, 1998 EX-27 7
5 YEAR JAN-31-1998 JAN-31-1998 1,447 0 976 0 16,497 19,352 27,376 5,907 45,384 14,460 0 0 0 224 18,279 45,384 117,958 119,299 93,438 113,580 0 0 784 5,719 2,115 3,526 0 0 0 3,526 1.56 1.56
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