-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lspE9d8mAHQDeZexmd6Vc1TfsHJ80VLY/meP4NU+FillUn3gi1VjaLhv5RVag8OL w5PbeMrbnVDABVKI9yPH0Q== 0000104169-95-000004.txt : 19950428 0000104169-95-000004.hdr.sgml : 19950428 ACCESSION NUMBER: 0000104169-95-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950427 SROS: NYSE SROS: PSE 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: 1934 Act SEC FILE NUMBER: 001-06991 FILM NUMBER: 95531801 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 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X]Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended January 31, 1995, or [ ]Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______to______ Commission file number 1-6991. WAL-MART STORES, INC. (Exact name of registrant as specified in its charter) Delaware 71-0415188 (State of 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, 1995, was $36,044,647,699. 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 has 2,297,580,232 shares of Common Stock outstanding as of March 31, 1995. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended January 31, 1995, are incorporated by reference into Part II of this Form 10-K. Portions of the Registrant's Proxy Statement for the Annual Meeting of Shareholdes to be held June 2, 1995, are incorporated by reference into Part III of this Form 10-K. WAL-MART STORES, INC. FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED JANUARY 31, 1995 PART I ITEM 1. BUSINESS (a) General Development of Business Wal-Mart Stores, Inc. (together with its subsidiaries hereinafter referred to as the "Company") has become America's largest retailer and during the fiscal year ended January 31, 1995, had net sales of $82,494,000,000. The Company serves customers domestically and in Puerto Rico primarily through the operation of Wal-Mart stores (discount department stores), Sam's Clubs (warehouse membership clubs), and Wal-Mart Supercenters (a combination full-line supermarket and discount department store). As of January 31, 1995, the Company operated 1,990 Wal-Mart stores, 428 Sam's Clubs, and 143 Wal-Mart Supercenters. A table summarizing information concerning Wal-Mart stores, Sam's Clubs, Wal-Mart Supercenters, and other stores operated since January 31, 1990 is set forth in Schedule A to Item I found on page 9 of this annual report. In fiscal 1992, the Company entered into a joint venture, in which it has 50% interest, with CIFRA, Mexico's largest retailer, to develop and expand retailing services in Mexico. At January 31, 1995, the joint venture operated 22 warehouse clubs, 23 discount stores, four combination stores, three supermarkets, four specialty department stores, 29 restaurants, and 11 Wal-Mart Supercenters. In March 1994, the Company completed the acquisition of 122 Woolco department stores located in Canada from Woolworth Canada, Inc., a subsidiary of Woolworth Corporation. The acquisition included all inventory, leasehold interests and other assets at each location. At January 31, 1995, the Company operated 123 Canadian Wal-Mart stores. In fiscal 1995, the Company entered into a joint venture in which it has a 50% interest with Ek Chor Distribution System Co., Ltd., a subsidiary of C.P. Pokphand Co. Ltd. of the Charoen Pokphand Group, to develop and operate warehouse clubs and Supercenters in Hong Kong and the People's Republic of China. At January 31, 1995, the joint venture operated three warehouse clubs in Hong Kong. In fiscal 1995, the Company entered into a joint venture in which it has a 60% interest with Lojas Americanas, a leading retailer in Brazil, to develop and operate Supercenters and warehouse clubs in Brazil. Also during fiscal 1995, the Company announced plans to operate wholly-owned Supercenters and warehouse clubs in Argentina. At January 31, 1995 there were no operations in Argentina or Brazil. The entry into these markets will not have a significant impact on the Company's operations or financial position in fiscal 1996. (b) Financial Information About Industry Segments Sales of merchandise through stores which include Wal-Mart stores, Sam's Clubs, and Wal-Mart Supercenters, is the only significant industry segment of which the Company is a part. Reference is made to the financial information incorporated by reference in this report for the financial results of the Company's operations. (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 (referred to herein as "Wal-Mart store") was opened. In fiscal 1984, the Company opened its first three Sam's Clubs, and in fiscal 1989, its first Wal-Mart Supercenter. Through the years, the Company has made certain strategic acquisitions that have supported the growth of the Wal-Mart stores, clubs and Supercenters, such as the acquisition of ten full service and four specialty distribution centers through the purchase of McLane Company, Inc., which sells and distributes merchandise to the convenience store industry and a variety of other retailers, the acquisition of selected assets of Pace Membership Warehouse, Inc., and the acquisition of selected assets related to 122 Woolco stores in Canada from Woolworth Canada, Inc., a subsidiary of Woolworth Corporation. General. The Company operates Wal-Mart stores in 49 states and Puerto Rico. The average size of a Wal-Mart store is approximately 87,600 square feet, and store sizes generally range between 30,000 and 150,000 square feet of building area. The Company operates Wal-Mart Supercenter stores in 19 states and the average size of a Supercenter store is 181,000 square feet. The Company operates Sam's Clubs in 48 states and Puerto Rico. The average size of a Sam's Club is approximately 121,000 square feet, and club sizes generally range between 90,000 and 150,000 square feet of building area. During the last fiscal year, no single location accounted for as much as 1% of sales or net income. Merchandise. Wal-Mart stores 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 curtains, fabrics and notions, shoes, housewares, hardware, electronics, home furnishings, small appliances, automotive accessories, garden equipment and supplies, sporting goods, toys, cameras and supplies, health and beauty aids, pharmaceuticals, and jewelry. Nationally advertised merchandise accounts for a majority of sales of the stores. The Company markets lines of merchandise under the store brands "Sam's American Choice", "Great Value", "House Beautiful", "Sports Afield", "Ol' Roy", "Equate", "Popular Mechanics", and "Better Homes & Gardens". During the fiscal year ended January 31, 1995, domestic sales of general merchandise at Wal-Mart stores (which are subject to seasonal variance), including licensed departments, by product category were as follows: PERCENTAGE CATEGORY OF SALES Softgoods/domestics................. 26% Hardgoods............................ 24 Stationery and candy................. 11 Records and electronics.............. 10 Pharmaceuticals...................... 9 Sporting goods and toys.............. 9 Health and beauty aids............... 7 Shoes................................ 2 Jewelry.............................. 2 100% Sales in pharmaceuticals are a combination of owned and licensed departments. While these percentages include sales of licensed departments, the Company records as other income only rentals received from such departments. Sam's offers bulk displays of name brand hardgood merchandise, some softgoods, and institutional size grocery items. Each Sam's also carries jewelry, sporting goods, toys, tires, stationery, and books. Most clubs have fresh food departments which include bakery, meat, and produce. 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 is a wholesale distributor that sells its merchandise to a variety of retailers, including the Company's Wal-Mart stores, Supercenters, and Sam's Clubs. Operations. Except for extended hours during certain holiday seasons, the majority of the Wal-Mart stores are open from 9:00 a.m. to 9:00 p.m. six (6) days a week, and from 12:30 p.m. to 5:30 p.m. on Sundays, with the remainder of the stores being closed on Sunday. Some Wal-Mart stores and most of the Supercenter stores are currently open 24 hours each day. Wal-Mart stores 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. Wal-Mart stores and Supercenters maintain a "satisfaction guaranteed" program to promote customer goodwill and acceptance. 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 is available to qualifying business members. Club members include businesses and those individuals who are members of certain qualifying organizations, such as government and state employees and credit union members. Both business and individual members have an annual membership fee of $25 for the primary membership card. Operating hours vary among Sam's clubs, but generally, they are open Monday through Friday from 10:00 a.m. to 8:30 p.m. Most Sam's are open weekend hours of 9:30 a.m. to 7:00 p.m. on Saturday and 12:00 noon to 6:00 p.m. on Sunday. Sam's, which offers a limited number of items, attempts to maximize sales volume and inventory turnover and to minimize expenses. Distribution. During the 1995 fiscal year, approximately 84% of the Wal-Mart stores' and Supercenters' purchases were shipped from Wal-Mart's 30 distribution centers, six located in Arkansas; four in Texas; two in California, Indiana, Pennsylvania, and South Carolina; and one each in Alabama, Arizona, Colorado, Florida, Georgia, Iowa, Mississippi, New York, Ohio, Utah, Virginia, and Wisconsin. The balance was shipped directly to the stores from suppliers. Each of the distribution centers is designed to serve the distribution needs of approximately 150 stores. The average size of these distribution centers is approximately 1,000,000 square feet. Sam's Clubs receive the majority of their merchandise via direct shipments from suppliers, rather than from the Company's distribution centers. The McLane distribution centers buy, sell, and distribute merchandise primarily to the convenience store industry, and they also service Wal-Mart stores, Supercenters and Sam's Clubs. The McLane Company has 20 distribution centers with three located in Texas, two located in Arizona, California, Utah, and Virginia, and one each in Colorado, Florida, Georgia, Illinois, Mississippi, Missouri, New York, Washington, and Mexico. Merchandising. Substantially all purchasing and merchandising for all stores is controlled from the home offices of the Company through centralized buying and planning practices. During the fiscal year 1995, no single supplier to the stores accounted for more than 3.7% of the Company's purchases. Store Management. Every retail outlet is managed by a store manager or club general manager and one or more assistant store or club managers. The Company maintains training programs for managers, assistant managers and department managers. The Company is committed to an ongoing training program in an effort to assure well trained future store management. Expansion Plans. In fiscal 1996, the Company plans to open 90 to 100 new Wal-Mart stores, nine new Sam's Clubs, and 12 new Wal-Mart Supercenters. The Company plans to expand or relocate approximately 70 older Wal-Mart stores and four Sam's Clubs along with the conversion of approximately 80 to 85 older Wal-Mart stores into Wal-Mart Supercenters. Also planned is the construction of three full-line distribution centers. The Company plans to continue to develop its interests in Hong Kong, China, Argentina, Brazil, and Canada with the planned addition of approximately 20 to 25 new units. The Company expenses its start-up costs for each new unit during the first full month of operation. Delays may be experienced in projected opening dates because of construction problems, weather and other reasons. There can be no assurance that planned expansion will proceed as scheduled. Seasonal Aspects of Operations. The Company's business is seasonal to a certain extent. Generally, the highest volume of sales and net income occurs in the fourth fiscal quarter and the lowest volume occurs during the first fiscal quarter. Competition. The Company's Wal-Mart stores compete with other discount, department, drug, variety, and specialty stores, many of which are national chains. Sam's Clubs compete with wholesale clubs, as well as with discount retailers, wholesale grocers, and general merchandise wholesalers and distributors. The Wal-Mart Supercenters compete with other supercenter type stores, discount stores, supermarkets, and specialty stores, many of which are national or regional chains. The Company also competes for new store sites. As of January 31, 1995, based on net sales, the Company 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 the Company's 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 the "Everyday Low Price", "Item Merchandising", "Store-within-a-Store", "Our Business is Saving Your Business Money", 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. Employees (Associates). As of January 31, 1995, the Company had approximately 622,000 full- and part-time associates, an increase of approximately 94,000 associates for the year. Part-time associates are primarily sales personnel. Associates who are in supervisory and management positions are compensated on a salaried basis; store managers and club general managers receive additional compensation based on their unit's profits. All other store associates are compensated on an hourly basis with the opportunity of receiving additional incentive bonuses based upon the Company's productivity and profitability. The Company maintains profit sharing plans under which most full- and many part-time associates become participants following one year of employment with the Company. Annual contributions, based on the profitability of the Company, are made at the sole discretion of the Company. For the fiscal years ended January 31, 1990 through 1995, contributions of approximately $90,000,000, $98,000,000, $130,000,000, $166,000,000, $166,000,000, and $175,000,000, respectively, have been made. The Company also offers an associate stock ownership plan that provides for the voluntary purchase of the Company's common stock, with a 15% match by the Company on up to $1,800 of annual stock purchases. The Company also has stock option plans that provide certain management associates an opportunity to share in the long-term success of the Company. At January 31, 1995, there were approximately 5,000 management associates who had been granted stock options by the Company. WAL-MART STORES, INC. AND SUBSIDIARIES SCHEDULE A TO ITEM 1 - UNITED STATES STORE COUNT AND NET SQUARE FOOTAGE GROWTH YEARS ENDED JANUARY 31, 1990 THROUGH 1995
STORE COUNT Fiscal Year Wal-Mart Total** Ended Wal-Mart Stores Sam's Clubs Supercenters Beginning Ending January 31, Opened Closed Relocated* Total Opened Closed Total Opened Total Balance Opened Closed Balance Balance Forward 1,257 105 2 1,364 1990 145 2 1 1,399 18 0 123 1 3 1,364 163 2 1,525 1991 176 5 2 1,568 25 0 148 2 5 1,525 201 5 1,721 1992 148 1 1 1,714 61 1 208 1 6 1,721 209 2 1,928 1993 161 1 24 1,850 48 0 256 24 30 1,928 209 1 2,136 1994 142 2 37 1,953 164 1 419 38 68 2,136 307 3 2,440 1995 111 5 69 1,990 22 13 428 75 143 2,440 139 18 2,561
NET SQUARE FOOTAGE Fiscal Year Ended Wal-Mart Stores Sam's Clubs Wal-Mart Supercenters Total Sales Per Jan 31, Net Additions Total Net Additions Total Net Additions Total Net Additions Sq.Ft. Sq. Ft.*** Balance Forward 79,766,689 11,053,456 210,493 91,030,638 $251.67 1990 12,881,367 92,648,056 2,010,716 13,064,172 183,492 393,985 15,075,575 106,106,213 272.75 1991 17,737,917 110,385,973 2,874,918 15,939,090 423,255 817,240 21,036,090 127,142,303 292.40 1992 17,729,395 128,115,368 7,320,510 23,259,600 180,545 997,785 25,230,450 152,372,753 306.33 1993 19,480,707 147,596,075 7,444,530 30,704,130 4,037,493 5,035,278 30,962,730 183,335,483 319.52 1994 16,312,500 163,908,575 19,882,754 50,586,884 6,762,080 11,797,358 42,957,334 226,292,817 300.33 1995 10,372,791 174,281,366 1,370,074 51,956,958 14,056,859 25,854,217 25,799,724 252,092,541 300.80
[FN] * Wal-Mart Stores locations relocated or expanded as Wal-Mart Supercenters. ** The Company also operated 75 Bud's Warehouse Outlets, 10 Food-4-Less stores, and four Hypermart*USA stores at January 31, 1995. *** Includes only stores and clubs that were open at least twelve months as of January 31 of the previous year. ITEM 2. PROPERTIES The number and location of Wal-Mart stores, Supercenters, and Sam's Clubs is incorporated by reference of the table under the caption "Operating Units" of Page 2 of the Annual Report to Shareholders for the year ended January 31, 1995. The Company leases most of the buildings in which its present stores are located. These stores 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. The Company owns 911 properties on which Wal-Mart stores and Supercenters are located and 249 of the properties on which 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 Company operated 30 Wal-Mart distribution facilities and 20 McLane distribution facilities at January 31, 1995. These distribution facilities are primarily owned by the Company, and several are subject to mortgage securing 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 and owns additional office facilities in Temple, Texas. 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, 1995. 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 59 Officer. S. Robson Walton Chairman. From 1985 until his 1992 50 election as Chairman in 1992, he served as Vice Chairman. Donald G. Soderquist Vice Chairman and Chief Operating 1988 61 Officer. Paul R. Carter Executive Vice President and 1988 54 Chief Financial Officer. William R. Fields Executive Vice President - 1992 45 Wal-Mart Stores, Inc. and President and Chief Executive Officer of Wal-Mart Stores Division. Prior to 1992, he served as Executive Vice President - Merchandise and Sales. Dean L. Sanders Executive Vice President - 1992 44 Wal-Mart Stores, Inc. and President and Chief Executive Officer of Sam's Club Division. Prior to 1992, he served as Executive Vice President - Operations. Nicholas J. White Executive Vice President - 1989 50 Wal-Mart Supercenter Division. Prior to 1989, he served as Executive Vice President - Sam's Wholesale Club. Joseph S. Hardin, Jr. Executive Vice President - 1995 49 Wal-Mart Stores, Inc. and Chief Operating Officer of Wal-Mart Stores Division. Prior to 1995, he served as President and Chief Executive Officer of McLane Company, Inc. Prior to 1993, he served as Executive Vice President - Logistics and Personnel Administration. Prior to 1992, he held the position of Senior Vice President - Distribution and Transportation. Bob L. Martin Executive Vice President - 1993 46 Wal-Mart Stores, Inc., and President and Chief Executive Officer of Wal-Mart International Division. Prior to 1993, he served as Executive Vice President - Corporate Information Systems. Prior to 1992, he served the Company as Senior Vice President - Information Systems. H. Lee Scott, Jr. Executive Vice President - 1995 46 Logistics. Prior to 1995, he served as Senior Vice President - Logistics. Prior to 1992, he served as Vice President - Distribution. Thomas P. Seay Executive Vice President - 1992 53 Real Estate and Construction. Prior to 1992, he served as Senior Vice President - Real Estate and Construction. Robert K. Rhoads Senior Vice President, Secretary 1992 40 and General Counsel. Prior to 1992, he served as Vice President, Secretary and General Counsel. William G. Rosier President and Chief Executive 1995 46 Officer of McLane Company, Inc. Prior to 1995, he served as Senior Vice President - Marketing and Customer Services for McLane. Prior to 1991, he served as Senior Vice President - Purchasing and Distribution for McLane. Prior to 1990, he served as Vice President - Eastern Region for McLane. James A. Walker, Jr. Senior Vice President and 1995 48 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 12, and 13, and all the information under the captions "Market Price of Common Stock" and "Dividends Paid Per Share" on page 27 of the Annual Report to Shareholders for the year ended January 31, 1995. 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 12 and 13 of the Annual Report to Shareholders for the year ended January 31, 1995. 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 14, 15, and 16 on the Annual Report to Shareholders for the year ended January 31, 1995. 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", and "Notes to Consolidated Financial Statements" on Pages 17 through 25 of the Annual Report to Shareholders for the year ended January 31, 1995. 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 "Election of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's Proxy Statement for its Annual Meeting of the Shareholders to be held on June 2, 1995. The information required by this item with respect to the Company's executive officers appears at Item 4A of Part I of this Form 10K. 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" in the Company's 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 "Equity Securities and Principal Holders Thereof" in the Company's 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" in the Company's Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. & 2. Consolidated Financial Statements and Schedules The financial statements listed in the Index to Consolidated Financial Statements and Schedules, which appears on Page 18, 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 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 Boatmen's Trust Company (formerly Centerre Trust Company) of St. Louis, Trustee, 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 Boatmen's Trust Company (formerly Centerre Trust Company) of St. Louis, Trustee, is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-3 (File Number 2-99162). 4(c) Form of Indenture dated as of August 15, 1985 between the Company and Bankers Trust Company, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 2-99485). 4(d) 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(e) 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(f) 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(g) 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 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 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 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 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 the registration statement on Form S-8 (File Number 33-5325). 10(g) Exchange Agreement by and between Wal-Mart Stores, Inc. and Walton Enterprises, Inc., dated May 23, 1990, is incorporated herein by reference to Current Report on Form 8-K dated June 14, 1990. +10(h) 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 third paragraph under the caption "Compensation of Directors" in the Company's definitive Proxy Statement to be filed in connection with the Annual Meeting of the Shareholders to be held on June 2, 1995. +10(i) Wal-Mart Stores, Inc. Directors Deferred Compensation Plan is incorporated herein by reference to Exhibit 4(d) to Registration Statement on Form S-8 (File Number 33-55178). *13 All information incorporated by reference in Items 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, 1995. *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 During the last quarter of the fiscal year ended January 31, 1995, the Company filed two reports on Form 8-K with the Securities and Exchange Commission (the "Commission") as described below: (1) Form 8-K dated November 11, 1994 and filed with the Commission on November 14, 1994. The Form 8-K was filed for the purpose of filing certain documents as exhibits under Item 7 of Form 8-K in connection with, and for incorporation by reference into, the Company's Registration Statement on Form S-3 (File No. 33-55725). The documents related to the closing on November 10, 1994, of the issuance of certain Pass Through Certificates described in the Prospectus Supplement dated November 3, 1994. (2) Form 8-K dated December 28, 1994 and filed with the Commission on December 28, 1994. The Form 8-K was filed for the purpose of filing certain documents as exhibits under Item 7 of Form 8-K in connection with, and for incorporation by reference into, the Company's Registration Statement on Form S-3 (File No. 33-55725). The documents related to the closing on December 22, 1994, of the issuance of certain Pass Through Certificates described in the Prospectus Supplement dated December 15, 1994. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES 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, 1995 17 Consolidated Balance Sheets at January 31, 1995 and 1994 18 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended January 31, 1995 19 Consolidated Statements of Cash Flows for each of the three years in the period ended January 31, 1995 20 Notes to Consolidated Financial Statements, except Note 8 21-25 Not Covered by Report of Independent Auditors: Note 8 - Quarterly Financial Data (unaudited) 25 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 21, 1995 WAL-MART STORES, INC. 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 21, 1995 /s/S. Robson Walton S. Robson Walton Chairman of the Board DATE: April 21, 1995 /s/David D. Glass David D. Glass President, Chief Executive Officer and Director DATE: April 21, 1995 /s/Donald G. Soderquist Donald G. Soderquist Vice Chairman, Chief Operating Officer and Director DATE: April 21, 1995 /s/Paul R. Carter Paul R. Carter Executive Vice President, Chief Financial Officer and Director DATE: April 21, 1995 /s/James A. Walker, Jr. James A. Walker, Jr. Senior Vice President and Controller (Principal Accounting Officer) DATE: April 21, 1995 /s/David R. Banks David R. Banks Director DATE: April 21, 1995 John A. Cooper, Jr. Director DATE: April 21, 1995 Robert H. Dedman Director DATE: April 21, 1995 /s/Frederick S. Humphries Frederick S. Humphries Director DATE: April 21, 1995 /s/F. Kenneth Iverson F. Kenneth Iverson Director DATE: April 21, 1995 /s/Elizabeth A. Sanders Elizabeth A. Sanders Director DATE: April 21, 1995 /s/Jack Shewmaker Jack Shewmaker Director DATE: April 21, 1995 /s/John Walton John Walton Director EX-13 2
11-Year Financial Summary (Dollar amounts in millions except per share data.) 1995 1994 1993 1992 1991 1990 Operating Results Net sales $82,494 $67,344 $55,484 $43,887 $32,602 $25,811 Net sales increase 22% 21% 26% 35% 26% 25% Comparative store sales increase 7% 6% 11% 10% 10% 11% Other income - net 918 641 501 403 262 175 Cost of sales 65,586 53,444 44,175 34,786 25,500 20,070 Operating, selling, and general and administra- tive expenses 12,858 10,333 8,321 6,684 5,152 4,070 Interest costs: Debt 520 331 143 113 43 20 Capital leases 186 186 180 153 126 118 Provision for federal and state income taxes 1,581 1,358 1,171 945 752 632 Net income 2,681 2,333 1,995 1,609 1,291 1,076 Per share of common stock: Net income 1.17 1.02 .87 .70 .57 .48 Dividends .17 .13 .11 .09 .07 .06 Financial Position Current assets $15,338 $12,114 $10,198 $ 8,575 $ 6,415 $ 4,713 Inventories at replacement cost 14,415 11,483 9,780 7,857 6,207 4,751 Less LIFO reserve 351 469 512 473 399 323 Inventories at LIFO cost 14,064 11,014 9,268 7,384 5,808 4,428 Net property, plant, equip- ment and capital leases 15,874 13,176 9,793 6,434 4,712 3,430 Total assets 32,819 26,441 20,565 15,443 11,389 8,198 Current liabilities 9,973 7,406 6,754 5,004 3,990 2,845 Long-term debt 7,871 6,156 3,073 1,722 740 185 Long-term obligations under capital leases 1,838 1,804 1,772 1,556 1,159 1,087 Preferred stock with mandatory redemption provisions --- --- --- --- --- --- Shareholders' equity 12,726 10,753 8,759 6,990 5,366 3,966 Financial Ratios Current ratio 1.5 1.6 1.5 1.7 1.6 1.7 Inventories/working capital 2.6 2.3 2.7 2.1 2.4 2.4 Return on assets* 10.1% 11.3% 12.9% 14.1% 15.7% 16.9% Return on shareholders' equity* 24.9% 26.6% 28.5% 30.0% 32.6% 35.8% Other Year-End Data Number of Wal-Mart Stores 1,990 1,953 1,850 1,714 1,568 1,399 Number of Supercenters 143 68 30 6 5 3 Number of Sam's Clubs 428 419 256 208 148 123 Average Wal-Mart Store size 87,600 83,900 79,800 74,700 70,700 66,400 Number of Associates 622,000 528,000 434,000 371,000 328,000 271,000 Number of Shareholders 259,286 257,946 180,584 150,242 122,414 79,929
[FN] * On beginning of year balances.
11-Year Financial Summary (Dollar amounts in millions except per share data.) 1989 1988 1987 1986 1985 Operating Results Net Sales $20,649 $15,959 $11,909 $ 8,451 $ 6,401 Net sales increase 29% 34% 41% 32% 37% Comparative store sales increase 12% 11% 13% 9% 15% Other income - net 137 105 85 55 52 Cost of sales 16,057 12,282 9,053 6,361 4,722 Operating, selling, and general and administra- tive expenses 3,268 2,599 2,008 1,485 1,181 Interest costs: Debt 36 25 10 2 5 Capital leases 99 89 76 55 43 Provision for federal and state income taxes 488 441 396 276 231 Net income 838 628 451 327 271 Per share of common stock: Net income .37 .28 .20 .15 .12 Dividends .04 .03 .02 .02 .01 Financial Position Current assets $ 3,631 $ 2,905 $ 2,353 $ 1,784 $ 1,303 Inventories at replacement cost 3,642 2,855 2,185 1,528 1,227 Less LIFO reserve 291 203 154 140 123 Inventories at LIFO cost 3,351 2,652 2,031 1,388 1,104 Net property, plant, equip- ment and capital leases 2,662 2,145 1,676 1,303 870 Total assets 6,360 5,132 4,049 3,104 2,205 Current liabilities 2,066 1,744 1,340 993 689 Long-term debt 184 186 179 181 41 Long-term obligations under capital leases 1,009 867 764 595 450 Preferred stock with mandatory redemption provisions --- --- --- 5 6 Shareholders' equity 3,008 2,257 1,690 1,278 985 Financial Ratios Current ratio 1.8 1.7 1.8 1.8 1.9 Inventories/working capital 2.1 2.3 2.0 1.8 1.8 Return on assets* 16.3% 15.5% 14.5% 14.8% 16.4% Return on shareholders' equity* 37.1% 37.1% 35.2% 33.3% 36.7% Other Year-End Data Number of Wal-Mart Stores 1,259 1,114 980 859 745 Number of Supercenters -- -- -- -- -- Number of Sam's Clubs 105 84 49 23 11 Average Wal-Mart Store size 63,500 61,500 59,000 57,000 55,000 Number of Associates 223,000 183,000 141,000 104,000 81,000 Number of Shareholders 80,270 79,777 32,896 21,828 14,799
[FN] * On beginning of year balances. Management's Discussion and Analysis Results of Operations Revenues Sales for the three fiscal years ended January 31 and the respective total and comparable store percentage increases over the prior year were: Total Comparable Fiscal Sales Company Store Year (in millions) Increases Increases 1995 $82,494 22% 7% 1994 67,344 21% 6% 1993 55,484 26% 11% The sales increase of 22% in fiscal 1995 compared with fiscal 1994 was attributable to 111 new stores, 6 new Supercenters, and 22 new Sam's Clubs; sales from the relocation or expansion of 69 existing Wal-Mart stores into Supercenters; comparative store sales increases of 7%; and the entry into the Canadian market through the purchase of 122 stores from Woolworth Canada, Inc., a subsidiary of Woolworth Corporation. Sam's Clubs sales as a percentage of total sales increased by 1.1%, part of which is attributable to the PACE units acquired in the fourth quarter of fiscal 1994. Supercenter sales as a percentage of total sales increased by .5% and Canada store sales accounted for 1.5% of total sales. The sales increase of 21% in fiscal 1994 compared with fiscal 1993 was attributable to 142 new stores, 1 new Supercenter, and 65 new Sam's Clubs; sales from the relocation or expansion of 37 existing Wal-Mart stores into Supercenters; comparative store sales increases of 6%; a 37% growth in the sales of the McLane Company, and the acquisition of 99 PACE Clubs in the fourth quarter. Sam's Clubs sales as a percentage of total sales decreased by .3% while the McLane Company sales as a percentage of total sales increased by .7%. New Wal-Mart Stores and Sam's Clubs 1995 1994 1993 New Wal-Mart stores 111 142 161 New Supercenters 6 1 Wal-Mart stores relocated or expanded to Supercenters 69 37 24 New Sam's Clubs 22 65 48 Acquired PACE clubs 99 Acquired Canada Woolco stores 122 New Canada stores 1 Costs and Expenses Cost of sales as a percentage of sales increased .1% in fiscal 1995 as compared with fiscal 1994 and decreased .3% in fiscal 1994 as compared with fiscal 1993. The increase in fiscal 1995 is primarily due to a larger percentage of consolidated sales attributable to Sam's Clubs resulting in part from the addition of the PACE Clubs. The cost of sales in Sam's Clubs is significantly higher as a percentage of sales than in Wal-Mart stores due to a lower markup on purchases. The decrease in fiscal 1994 as compared with fiscal 1993 was due to a larger percentage of consolidated sales attributed to departments within Wal-Mart stores which have higher markon percents and increases in markon percents in Sam's Clubs and McLane Company. Operating, selling, and general and administrative expenses as a percentage of sales increased .2% and .3%, respectively, in each of the last two fiscal years when compared with the previous year. The increase in fiscal 1995 was primarily attributable to the acquisition of the Canada stores and higher payroll and payroll-related benefit costs. The increase in fiscal 1994 was due principally to higher payroll and payroll-related benefit cost, depreciation costs and certain occupancy costs in part attributable to the Company's expansion program. Interest Cost Interest cost increased in fiscal 1995 and 1994 due primarily to increased indebtedness in each of the years, which is attributable to the expansion program. The cost of short-term borrowing increased as average short-term borrowing rates increased approximately 1.4% in fiscal 1995 compared with fiscal 1994. Interest cost will increase in fiscal 1996 with the additional borrowing required to finance the expansion program. The Company may use short-term borrowing arrangements to take advantage of the most favorable financing rates. See Note 2 of Notes to Consolidated Financial Statements for additional information on interest and debt. Income Taxes The effective income tax rate was 37.1% and 36.8% in fiscal 1995 and 1994 respectively. See Note 4 of Notes to Consolidated Financial Statements for additional information on income taxes. Liquidity and Capital Resources Cash Flow Information Cash flow provided from operations was $2.9 billion in fiscal 1995. These funds, combined with the long-term borrowings of $1.3 billion and proceeds from sale/leaseback transactions of $.5 billion, were used to finance capital expenditures of $3.7 billion, acquire the assets of 122 Canada Woolco stores, invest in international operations, pay dividends, provide working capital, and fund the operation of subsidiaries. Borrowing Information The Company had committed lines of credit of $1,175 million with 11 banks and informal lines with various banks totaling an additional $1,050 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 interim financing requirements for stores developed with sale/leaseback or other long- term financing objectives. The Company has aggressively expanded during the past three years. Even though interest rates increased throughout fiscal 1995, the Company has taken advantage of interest rates in the past three years which have been substan- tially lower than those available in recent history. These favorable debt market conditions, combined with the Company's ability to generate significant cash flows from operations, have allowed it to continue this expansion and position itself to continue as the world's largest retailer. These increased borrowings to support the expansion programs have caused the Company's debt (including obligations under capital leases) to equity ratios to increase to .77:1 at the end of fiscal 1995, as compared with .75:1 and .56:1 at the end of fiscal 1994 and 1993, respectively. In view of the Company's significant working capital, its consistent ability to generate working capital from operations and the availability of external financing, the Company foresees no difficulty in providing funds necessary to fulfill its working capital needs and to finance its expansion plans. Foreign Currency Translation The Company has operations in Mexico through a joint venture with CIFRA, Mexico's largest retailer. In fiscal 1995 the value of the peso dropped significantly in relation to the dollar, and accordingly the Company's investment and shareholders' equity were reduced due to a foreign currency translation adjustment of approximately $235 million related to the joint venture in Mexico. The Company also had a foreign currency translation reduction of approximately $21 million related to its Canadian operation. The Company is evaluating strategies to reduce the risk of currency devaluation. Although the Company is currently exposed to this risk, any further devaluation of the peso or other currencies should not significantly impact the Company's consolidated operations or financial position. Expansion The Company plans to continue to enhance its position as the world's largest retailer through expansion in fiscal 1996. Expansion plans include 90 to 100 new Wal-Mart stores, 12 new Supercenters and 9 new Sam's Clubs along with the expansion or relocation of approximately 70 Wal-Mart stores and 4 Sam's Clubs, and the conversion of approximately 80 Wal-Mart stores into Supercenters. The Company will continue to develop its interests in Hong Kong, China, Argentina, Brazil and Canada with the planned addition of 20 to 25 new units. With the recent devaluation of the peso, the Company has slowed its planned expansion program in Mexico and will continue to evaluate future opportunities. Also included in expansion plans for fiscal 1996 are three distribution centers. Total planned capital expenditures for 1996 approximate $4 billion. The Company may sell $1,051 million of public debt utilizing shelf registra- tion statements previously filed with the Securities and Exchange Commission. Long-term and short-term borrowings along with cash provided from operations should provide adequate funding for the Company's fiscal 1996 expansion program. Consolidated Statements of Income (Amounts in millions except per share data.) Fiscal years ended January 31, 1995 1994 1993 Revenues: Net sales $82,494 $67,344 $55,484 Other income_net 918 641 501 83,412 67,985 55,985 Costs and Expenses: Cost of sales 65,586 53,444 44,175 Operating, selling, and general and administrative expenses 12,858 10,333 8,321 Interest Costs: Debt 520 331 143 Capital leases 186 186 180 79,150 64,294 52,819 Income Before Income Taxes 4,262 3,691 3,166 Provision for Income Taxes: Current 1,572 1,325 1,137 Deferred 9 33 34 1,581 1,358 1,171 Net Income $ 2,681 $ 2,333 $ 1,995 Net Income Per Share $ 1.17 $ 1.02 $ .87 See accompanying notes. Net Income (Millions of Dollars) (Graph) 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 327 451 628 838 1,076 1,291 1,609 1,995 2,333 2,681 Consolidated Balance Sheets (Amounts in millions.) January 31, 1995 1994 Assets Current Assets: Cash and cash equivalents $ 45 $ 20 Receivables 700 690 Recoverable costs from sale/leaseback 200 208 Inventories: At replacement cost 14,415 11,483 Less LIFO reserve 351 469 Inventories at LIFO cost 14,064 11,014 Prepaid expenses and other 329 182 Total Current Assets 15,338 12,114 Property, Plant, and Equipment, at Cost: Land 3,036 2,741 Buildings and improvements 8,973 6,818 Fixtures and equipment 4,768 3,981 Transportation equipment 313 260 17,090 13,800 Less accumulated depreciation 2,782 2,173 Net property, plant, and equipment 14,308 11,627 Property under capital leases 2,147 2,059 Less accumulated amortization 581 510 Net property under capital leases 1,566 1,549 Other Assets and Deferred Charges 1,607 1,151 Total Assets $32,819 $26,441 Liabilities and Shareholders' Equity Current Liabilities: Commercial paper $ 1,795 $ 1,575 Accounts payable 5,907 4,104 Accrued liabilities 1,819 1,473 Accrued federal and state income taxes 365 183 Long-term debt due within one year 23 20 Obligations under capital leases due within one year 64 51 Total Current Liabilities 9,973 7,406 Long-Term Debt 7,871 6,156 Long-Term Obligations Under Capital Leases 1,838 1,804 Deferred Income Taxes 411 322 Shareholders' Equity: Preferred stock ($.10 par value; 100 shares authorized, none issued) Common stock ($.10 par value; 5,500 shares authorized, 2,297 and 2,299 issued and outstanding in 1995 and 1994, respectively) 230 230 Capital in excess of par value 539 536 Retained earnings 12,213 9,987 Foreign currency translation adjustment (256) _ Total Shareholders' Equity 12,726 10,753 Total Liabilities and Shareholders' Equity $32,819 $26,441 See accompanying notes. Consolidated Statements of Shareholders' Equity
Foreign Capital in currency Number Common excess of Retained translation of shares stock par value earnings adjustment Total (Amounts in millions except per share data.) Balance - January 31, 1992 1,149 $115 $626 $ 6,249 $ -- $6,990 Net Income 1,995 1,995 Cash dividends ($.11 per share) (241) (241) Two-for-one stock split 1,150 115 (115) -- Other 1 16 16 Balance - January 31, 1993 2,300 230 527 8,003 -- 8,760 Net Income 2,333 2,333 Cash dividends ($.13 per share) (299) (299) Other (1) 9 (50) (41) Balance - January 31, 1994 2,299 230 536 9,987 -- 10,753 Net Income 2,681 2,681 Cash dividends ($.17 per share) (391) (391) Foreign currency translation adjustment (256) (256) Other (2) 3 (64) (61) Balance - January 31, 1995 2,297 $230 $539 $12,213 $(256) $12,726
See accompanying notes. Consolidated Statements of Cash Flows (Amounts in millions.) Fiscal years ended January 31, 1995 1994 1993 Cash flows from operating activities: Net income $2,681 $2,333 $1,995 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,070 849 649 Increase in accounts receivable (84) (165) (106) Increase in inventories (3,053) (1,324) (1,884) Increase in accounts payable 1,914 230 420 Increase in accrued liabilities 496 327 176 Other (118) (55) 28 Net cash provided by operating activities 2,906 2,195 1,278 Cash flows from investing activities: Payments for property, plant, and equipment (3,734) (3,644) (3,756) Acquisition of assets from PACE Membership Warehouses, Inc. _ (830) _ Acquisition of assets from Woolworth Canada, Inc. (352) _ _ Sale/leaseback arrangements and other property sales 502 272 416 Investment in international operations (434) (198) (106) Other investing activities 226 (86) (60) Net cash used in investing activities (3,792) (4,486) (3,506) Cash flows from financing activities: Increase (decrease) in commercial paper 220 (14) 1,135 Proceeds from issuance of long-term debt 1,250 3,108 1,367 Dividends paid (391) (299) (241) Payment of long-term debt (37) (19) (8) Payment of capital lease obligations (70) (437) (60) Other financing activities (61) (40) 16 Net cash provided by financing activities 911 2,299 2,209 Net increase (decrease) in cash and cash equivalents 25 8 (19) Cash and cash equivalents at beginning of year 20 12 31 Cash and cash equivalents at end of year $ 45 $ 20 $ 12 Supplemental disclosure of cash flow information: Income tax paid $1,390 $1,366 $1,173 Interest paid 658 450 317 Capital lease obligations incurred 193 162 286 See accompanying notes. Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies Segment information The Company and its subsidiaries are principally engaged in the operation of mass merchandising stores. 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 Inventories are stated principally at cost (last-in, first- out), which is not in excess of market, using the retail method for inventories in stores. 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. Recoverable costs from sale/leaseback All costs of acquisition and construction of properties for which the Company plans to sell and leaseback within one year are accumulated in current assets until properties are sold. 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 $70 million, $65 million and $80 million in 1995, 1994, and 1993, respectively. Depreciation and Amortization Depreciation and amortization for financial statement purposes is 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. Operating, selling, and general and administrative expenses Buying, warehousing, and occupancy costs are included in operating, selling, and general and administrative expenses. Income taxes In fiscal 1994, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) prospectively as a change in accounting principle effective February 1, 1993. Under SFAS 109, the deferred tax provision is determined under the liability method, whereby deferred tax assets and liabilities are recognized based on differences between financial statement and tax bases of assets and liabilities using presently enacted tax rates. In fiscal year 1993, deferred income taxes were provided on timing differences between financial statement and taxable income. Net income per share Net income per share is based on the weighted average outstanding common shares. The dilutive effect of stock options is insignificant and consequently has been excluded from the earnings per share computations. Stock options Proceeds from the sale of common stock issued under the stock option plans and related tax benefits which accrue to the Company are accounted for as capital transactions, and no charges or credits are made to income in connection with the plans. 2. Commercial Paper and Long-term Debt Information on short-term borrowings and interest rates is as follows (dollar amounts in millions): Fiscal year ended January 31, 1995 1994 1993 Maximum amount outstanding at month-end $2,729 $2,395 $2,315 Average daily short-term borrowings 1,693 1,247 1,184 Weighted average interest rate 4.4% 3.0% 3.5% At January 31, 1995, the Company had committed lines of credit of $1,175 million with 11 banks and informal lines of credit with various banks totaling an additional $1,050 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): 1995 1994 8 5\8% Notes due April 2001 $ 750 $ 750 5 7\8% Notes due October 2005 750 750 9 1\10% Notes due July 2000 500 500 5 1\2% Notes due September 1997 500 500 6 1\8% Notes due October 1999 500 500 5 1\2% Notes due March 1998 500 500 6 1\2% Notes due June 2003 500 500 7 1\4% Notes due June 2013 500 500 7 1\2% Notes due May 2004 500 _ 7 8\10%-8 1\4% Obligations from sale/ leaseback transactions due 2014 484 -- 7%-8% Obligations from sale/ leaseback transactions due 2013 322 335 8% Notes due May 1996 250 250 6 3\8% Notes due March 2003 250 250 6 3\4% Notes due October 2023 250 250 8% Notes due September 2006 250 _ 8 1\2% Notes due September 2024 250 _ 6 7\8% Eurobond due June 1999 250 _ 5 1\8% Eurobond due October 1998 250 250 10 7\8% Debentures due August 2000 100 100 Other 215 221 $7,871 $6,156 Long-term debt is unsecured except for $220 million which is collateralized by property with an aggregate carrying value of approximately $358 million. Annual maturities on long-term debt during the next five years are (in millions): Fiscal years ending Annual January 31, maturity 1996 $ 23 1997 268 1998 523 1999 774 2000 806 Thereafter 5,500 The Company observes certain covenants under the terms of its note and debenture 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 underlying 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, 1995 are (in millions): Fiscal years ending Minimum January 31, Rentals 1996 $ 81 1997 72 1998 76 1999 76 2000 104 Thereafter 1,109 The fair value of the Company's long-term debt approximates $7,530 million based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying amount of the short-term borrowings approximates fair value. At January 31, 1995 and 1994, the Company had letters of credit outstanding totaling $580 and $808 million, respectively. These letters of credit were issued primarily for the purchase of inventory. The Company has guaranteed the indebtedness of a joint venture for the development of real estate in Puerto Rico. At January 31, 1995, the amount guaranteed was approximately $54 million. The Company does not anticipate any joint venture defaults. Under shelf registration statements previously filed with the Securities and Exchange Commission, the Company may issue debt securities aggregating $1,051 million. 3. Defined Contribution Plan The Company maintains a profit sharing plan under which most full and many part-time Associates become participants following one year of employment. Annual contributions, based on the profitability of the Company, are made at the sole discretion of the Company. Contributions were $175 million, $166 million, and $166 million in 1995, 1994, and 1993, respectively. 4. Income Taxes The Company prospectively adopted SFAS 109 as a change in accounting principle effective February 1, 1993; consequently, prior years' financial statements have not been restated. Due to the nature of the predominant cumulative differences in the Company's book and tax bases of assets and liabilities, which relate to items that were both timing differences under Accounting Principles Board Opinion 11, "Accounting for Income Taxes" (APB 11), and temporary differences under SFAS 109, the cumulative impact of adoption was insignificant. The income tax provision consists of the following (in millions): 1995 1994 1993 Current: Federal $1,394 $1,193 $1,002 State and local 178 132 135 Total current tax provision 1,572 1,325 1,137 Deferred: Federal 7 30 31 State and local 2 3 3 Total deferred tax provision 9 33 34 Total provision for income taxes $1,581 $1,358 $1,171 Deferred income taxes under SFAS 109 reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Items that give rise to significant portions of the deferred tax accounts at January 31 are as follows (in millions): 1995 1994 Deferred tax liabilities: Property, plant, and equipment $518 $408 Inventory 88 38 Other 8 9 Total deferred tax liabilities 614 455 Deferred tax assets: Amounts accrued for financial reporting purposes not yet deductible for tax purposes 230 114 Capital leases 114 95 Other 33 18 Total deferred tax assets 377 227 Net deferred tax liabilities $237 $228 The components of the provision for deferred income taxes under APB11 for the years ended January 31, 1993 are (in millions): 1993 Depreciation $ 68 Capital leases (21) Other (12) $ 35 A reconciliation of the significant differences between the effective income tax rate and the federal statutory rate on pretax income follows: 1995 1994 1993 Statutory tax rate 35.0% 35.0% 34.0% State income taxes, net of federal income tax benefit 2.7% 2.4% 2.9% Other (0.6%) (0.6%) 0.1% Effective tax rate 37.1% 36.8% 37.0% 5. Acquisitions In two unrelated cash transactions during fiscal 1994, the Company acquired selected assets of PACE Membership Warehouses, Inc., including the right to operate 107 of PACE's former locations, for $830 million, recording $336 million of goodwill which is being amortized over 25 years. In fiscal 1995, the Company acquired selected assets related to 122 Woolco stores in Canada from Woolworth Canada, Inc., a subsidiary of Woolworth Corporation, for approximately $352 million, recording $221 million of leasehold and location value which is being amortized over 20 years. These transactions have been accounted for as purchases, and the results of operations for the acquired units since the dates of their acquisitions have been included in the Company's results. Pro forma results of operations are not presented due to insignificant differences from the historical results. 6. Stock Option Plans At January 31, 1995, 76 million shares of common stock were reserved for issuance under stock option plans. The options granted under the stock option plans expire 10 years from date of grant and may be exercised in nine annual installments. Further information concerning the options is as follows: Option price Shares per share Total Shares under option January 31, 1992 13,618,000 $ .67-27.25 $142,763,000 Options Granted 4,072,000 $25.75-30.82 118,430,000 Options Cancelled (1,134,000) $ .67-30.82 (13,560,000) Options Exercised (2,092,000) $ .67-27.25 (12,773,000) January 31, 1993 14,464,000 $ 1.43-30.82 $234,860,000 Options Granted 3,550,000 $25.00-27.25 90,377,000 Options Cancelled (803,000) $ 1.43-30.82 (17,325,000) Options Exercised (1,335,000) $ 1.43-30.82 (9,664,000) January 31, 1994 15,867,000 $ 1.43-30.82 $298,248,000 Options Granted 4,125,000 $21.63-26.75 95,689,000 Options Cancelled (1,013,000) $ 1.43-30.82 (23,127,000) Options Exercised (1,019,000) $ 2.08-27.25 (7,829,000) January 31, 1995 17,969,000 $ 2.78-30.82 $362,981,000 (4,223,000 shares exercisable) Shares available for option: January 31, 1994 11,502,000 January 31, 1995 58,107,000 7. 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 $479 million in 1995, $361 million in 1994, and $313 million in 1993. Aggregate minimum annual rentals at January 31, 1995, under non-cancelable leases are as follows (in millions): Fiscal Operating Capital years leases leases 1996 $ 386 $ 252 1997 403 251 1998 386 251 1999 334 249 2000 318 247 Thereafter 3,155 2,785 Total minimum rentals $4,982 4,035 Less estimated executory costs 80 Net minimum lease payments 3,955 Less imputed interest at rates ranging from 6.1% to 14.0% 2,053 Present value of net minimum lease payments $1,902 Certain of the leases provide for contingent additional rentals based on percentage of sales. Such additional rentals amounted to $42 million, $27 million, and $30 million in 1995, 1994, and 1993, respectively. Substantially all of the store leases have renewal options for additional terms from five to 25 years at the same or lower minimum rentals. The Company has entered into lease commitments for land and buildings for 62 future locations. These lease commitments with real estate developers or through sale/leaseback arrangements provide for minimum rentals for 20 to 25 years, excluding renewal options, which, if consummated based on current cost estimates, will approximate $58 million annually over the lease terms. 8. Quarterly Financial Data (Unaudited) Amounts in millions (except per share information) Quarters ended April 30, July 31, October 31, January 31, 1995 Net sales $17,686 $19,942 $20,418 $24,448 Cost of sales 14,063 15,960 16,201 19,362 Net income 498 565 588 1,030 Net income per share $ .22 $ .25 $ .26 $ .45 1994 Net sales $13,920 $16,237 $16,827 $20,360 Cost of sales 11,017 12,963 13,308 16,156 Net income 451 496 519 867 Net income per share $ .20 $ .22 $ .23 $ .38 Market Price of Common Stock Fiscal years ended January 31, 1995 1994 Quarter High Low High Low April 30 $29.13 $24.00 $34.00 $26.38 July 31 25.88 22.75 28.50 24.88 October 31 26.00 22.75 27.25 23.50 January 31 24.13 20.88 29.88 24.38 Dividends Paid Per Share Fiscal years ended January 31, Quarterly 1995 1994 April 14 $0.0425 April 9 $0.0325 July 8 0.0425 July 9 0.0325 October 3 0.0425 October 4 0.0325 January 5 0.0425 January 5 0.0325 EX-21 3 SUBSIDIARIES OF WAL-MART STORES, INC. NAME UNDER PERCENT OF WHICH DOING EQUITY BUSINESS STATE OF SECURITIES OTHER THAN SUBSIDIARY INCORPORATION OWNED SUBSIDIARY'S North Arkansas Arkansas 100 Wal-Mart Wholesale Co., Inc., and its subsidiaries McLane Company, Inc., Texas 100 Wal-Mart and its subsidiaries Exhibit 21 EX-23 4 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, 1995, included in the 1995 Annual Report to Shareholders of Wal-Mart Stores, Inc. We also consent to the incorporation by reference of our report dated March 24, 1995, 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, 1995, in the following registration statements and related prospectuses. The Wholesale Club, Inc. Incentive Stock Option Plan of Wal-Mart Stores, Form S-8 File No. 33-42617 Inc. Associate Stock Purchase Plan of Wal-Mart Stores, Inc. Form S-8 File No. 2-64662 Stock Option Plan of 1984 of Wal-Mart Stores, Inc., as amended Form S-8 File No. 2-94358 and 33-43315 Stock Option Plan of 1994 of Wal-Mart Stores, Inc. Form S-8 File No. 33-55235 Debt Securities and Pass- Through Certificates of Wal-Mart Stores, Inc. Form S-3 File No. 33-55725 Directors Deferred Compensation Plan of Wal-Mart Stores, Inc. Form S-8 File No. 33-55178 Debt Securities of Wal-Mart Stores, Inc. Form S-3 File No. 33-53125 ERNST & YOUNG LLP Tulsa, Oklahoma April 21, 1995 Exhibit 23 EX-27 5
5 1,000,000 YEAR JAN-31-1995 JAN-31-1995 45 0 700 0 14,064 15,338 17,090 2,782 32,819 9,973 0 230 0 0 12,496 32,819 82,496 83,412 65,586 79,150 0 0 706 4,262 1,581 2,681 0 0 0 2,681 1.17 1.17
-----END PRIVACY-ENHANCED MESSAGE-----