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