UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended January 31, 1998, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-6991.
WAL-MART STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0415188
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Bentonville, Arkansas 72716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 273-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.10 New York Stock Exchange
per share Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for at least the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the closing price of these shares on the New
York Stock Exchange on March 31, 1998, was $67,141,204,191. For the
purposes of this disclosure only, the registrant has assumed that its
directors, executive officers and beneficial owners of 5% or more of the
registrant's common stock are the affiliates of the registrant.
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The registrant had 2,239,826,615 shares of Common Stock outstanding as
of March 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended January 31, 1998, are incorporated by reference into
Parts I and II of this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held June 5, 1998, are incorporated by reference into
Part III and IV of this Form 10-K.
FORWARD-LOOKING STATEMENTS OR INFORMATION
This Form 10-K includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements included or incorporated by
reference in this Form 10-K which address activities, events or
developments that the Company expects or anticipates will or may occur in
the future, including such things as future capital expenditures (including
the amount and nature thereof), expansion and other development trends of
industry segments in which the Company is active, business strategy,
expansion and growth of the Company's business and operations and other
such matters are forward-looking statements. Although the Company believes
the expectations expressed in such forward-looking statements are based on
reasonable assumptions within the bounds of its knowledge of its business,
a number of factors could cause actual results to differ materially from
those expressed in any forward-looking statements, whether oral or written,
made by or on behalf of the Company. Many of these factors have previously
been identified in filings or statements made by or on behalf of the
Company.
All phases of the Company's operations are subject to influences
outside its control. Any one, or a combination, of these factors could
materially affect the results of the Company's operations. These factors
include: the cost of goods, competitive pressures, inflation, consumer debt
levels, currency exchange fluctuations, trade restrictions, changes in
tariff and freight rates, interest rate fluctuations and other capital
market conditions. Forward-looking statements made by or on behalf of the
Company are based on a knowledge of its business and the environment in
which it operates, but because of the factors listed above, actual results
may differ from those in the forward-looking statements. Consequently, all
of the forward-looking statements made are qualified by these and other
cautionary statements and there can be no assurance that the actual results
or developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on the Company or its business or operations.
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WAL-MART STORES, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED JANUARY 31, 1998
PART I
ITEM 1. BUSINESS
Wal-Mart Stores, Inc. (together with its subsidiaries hereinafter
referred to as the "Company") is the United States' largest retailer
measured by total revenues. During the fiscal year ended January 31, 1998,
the Company had net sales of $117,958,000,000.
(a) Historical Development of Business
Domestically, at January 31, 1998, the Company operated 1,921
discount stores and 441 Supercenters, and 443 Sam's Clubs. A table
summarizing information concerning additions of units and square footage
for domestic discount stores, Supercenters and Sam's Clubs since January
31, 1993, is included as Schedule A to Item I found on page 11 of this
annual report.
During fiscal 1998, a merger of the Mexican joint venture
companies owned by the Company and Cifra, S.A. de C.V. ("Cifra") with and
into Cifra was consummated with an effective merger date of September 1,
1997. The Company received voting shares of Cifra equaling approximately
33.5% of the outstanding voting shares of Cifra in exchange for the
Company's joint venture interests. The Company then acquired 593,100,000
shares of the Series "A" Common Shares and Series "B" Common Shares of
Cifra in a cash tender offer. As a result of the merger and tender offer,
the Company holds approximately 51% of the outstanding voting shares of
Cifra. The results of operations for Cifra since the effective merger date
are included in the Company's results. Prior to the merger, the joint
venture units controlled by the Company were consolidated while those units
controlled by Cifra were accounted for under the equity method. See Note 6
of Notes to Consolidated Financial Statements incorporated by reference in
Item 8 of Part II found on page 16 of this annual report for additional
information regarding our acquisitions. At January 31, 1998, Cifra
operated 28 warehouse clubs, 27 Supercenters, 36 Superamas (traditional
supermarkets), 62 Bodegas (discount stores), 33 Aurreras (combination
stores including both general merchandise and grocery), 38 Suburbias
(specialty department stores) and 178 Vips (restaurants) throughout Mexico.
In fiscal 1998, the Company's subsidiary, Wal-Mart Brasil
Participacoes S.A. acquired the 40% interest of its minority joint venture
partner, Lojas Americanas S.A.(Lojas). On the same day that the minority
interest was acquired, a 5% minority interest was sold to Carlos Alberto
Sicupira, a principal in Banco de Investimentos Garantia S.A., which
indirectly controls Lojas, at the same price per share at which Lojas sold
its minority interest. Because the transaction closed on December 30,
1997, which was the joint venture's fiscal year end, the Company's results
of operations for fiscal 1998 include only the financial results of the
joint venture attributable to the Company's original ownership percentage.
See Note 6 of Notes to Consolidated Financial Statements incorporated by
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reference in Item 8 of Part II found on page 16 of this annual report for
additional information regarding our acquisitions.
In fiscal 1998, the Company along with joint-venture partner,
Dongguan Donghu Industrial Corporation, added one unit in the People's
Republic of China. With the addition of this unit, at January 31, 1998, we
operated three units under various joint venture agreements in the People's
Republic of China.
In fiscal 1998, the Company acquired the Wertkauf hypermarket
chain in Germany, as well as certain real estate. The 21 acquired
hypermarkets are one-stop shopping centers that offer a broad assortment of
high quality general merchandise and food and are similar to the Wal-Mart
Supercenter format in the United States. The transaction closed on December
30, 1997, Wertkauf's fiscal year end. Therefore, the acquired assets are
included in the January 31, 1998, consolidated balance sheet and the
results of operations will be included beginning in fiscal 1999. See Note 6
of Notes to Consolidated Financial Statements incorporated by reference in
Item 8 of Part II found on page 16 of this annual report for additional
information regarding our acquisitions. At January 31, 1998, the Company
operated 21 hypermarkets in Germany.
Internationally, at January 31, 1998, we operated nine units in
Argentina, eight units in Brazil, 144 units in Canada, three units in
China, 21 units in Germany, 402 units in Mexico and 14 units in Puerto
Rico. A table summarizing information concerning additions of units and
square footage for international units operated since fiscal 1993 is
included as Schedule B to Item 1 found on page 12 of this annual report.
(b) Financial information about the Company's industry segments
The Company is principally engaged in the operation of mass
merchandising stores which serve our customers primarily through the
operation of three segments.
In June 1997, the Financial Accounting Standards Board (FASB)
issued Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information," which the Company has adopted in the current year.
We identify our segments based on management responsibility within the
United States and geographically for all international units. The Wal-Mart
Stores segment includes the Company's discount stores and Supercenters in
the United States. The Sam's Club segment includes the warehouse membership
clubs in the United States. The international segment includes all
operations in Argentina, Brazil, Canada, China, Germany, Mexico and Puerto
Rico. For the financial results of the Company's operating segments, see
Note 9 of Notes to Consolidated Financial Statements incorporated by
reference in Item 8 of Part II found on page 16 of this annual report.
(c) Narrative Description of Business
The Company, a Delaware corporation, has its principal offices in
Bentonville, Arkansas. Although the Company was incorporated in October
1969, the businesses conducted by its predecessors began in 1945 when Sam
M. Walton opened a franchise Ben Franklin variety store in Newport,
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Arkansas. In 1946, his brother, James L. Walton, opened a similar store in
Versailles, Missouri. Until 1962, the Company's business was devoted
entirely to the operation of variety stores. In that year, the first Wal-
Mart Discount City (discount store) was opened. In fiscal 1984, the
Company opened its first three Sam's Clubs, and in fiscal 1988, its first
Wal-Mart Supercenter (combination full-line supermarket and discount
store). In fiscal 1992, the Company began its first international
initiative when the Company entered into a joint venture in which it had a
50% interest with Cifra. Our international presence has continued to
expand and at January 31, 1998, we had operations in six countries and
Puerto Rico.
WAL-MART STORES OPERATING SEGMENT
The Wal-Mart Stores segment which includes the Company's discount
stores and Supercenters in the United States had sales of $83,820,000,000,
$74,840,000,000 and $66,271,000,000 for the three years ended January 31,
1998, 1997, and 1996, respectively. During the most recent fiscal year, no
single discount store or Supercenter location accounted for as much as 1%
of total Company sales or net income. See Note 9 of Notes to Consolidated
Financial Statements incorporated by reference in Item 8 of Part II found
on page 16 of this annual report for additional information regarding our
segments.
General. We operate Wal-Mart discount stores in all 50 states.
The average size of a discount store is approximately 93,400 square feet.
Wal-Mart Supercenters are located in 28 states and the average size of a
Supercenter is 182,200 square feet. Our Supercenter prototypes range in
size from 110,000 square feet to 234,000 square feet.
Merchandise. Wal-Mart discount stores and the general
merchandise area of the Supercenters are generally organized with 40
departments and offer a wide variety of merchandise, including apparel for
women, girls, men, boys and infants. Each store also carries domestics,
fabrics and notions, stationery and books, shoes, housewares, hardware,
electronics, home furnishings, small appliances, automotive accessories,
horticulture and accessories, sporting goods, toys, pet food and
accessories, cameras and supplies, health and beauty aids, pharmaceuticals
and jewelry. In addition, the stores offer an assortment of grocery
merchandise, with the assortment in Supercenters being broader and
including meat, produce, deli, bakery, dairy, frozen foods and dry grocery.
Nationally advertised merchandise accounts for a majority of
sales in the stores. The Company markets lines of merchandise under store
brands including but not limited to "Sam's American Choice", "One Source",
"Great Value", "Ol' Roy" and "Equate". The Company also markets lines of
merchandise under licensed brands; some of which include "Faded Glory",
"Kathie Lee", "White Stag", "Better Homes & Gardens", "Popular Mechanics",
"Catalina", "McKids", "Basic Equipment" and "House Beautiful".
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During the fiscal year ended January 31, 1998, sales in discount
stores and Supercenters (which are subject to seasonal variance) by product
category were as follows:
PERCENTAGE
CATEGORY OF SALES
Hardgoods........................ 23
Softgoods/domestics.............. 21
Grocery, candy and tobacco....... 14
Pharmaceuticals.................. 9
Records and electronics.......... 9
Sporting goods and toys.......... 8
Health and beauty aids........... 7
Stationery ...................... 5
Shoes............................ 2
Jewelry.......................... 2
100%
Operations. Hours of operations vary by location, but generally
range from 7:00 a.m. to 11:00 p.m. six days a week, and from 10:00 a.m. to
8:00 p.m. on Sunday for discount stores and Supercenters. In addition, an
increasing number of discount stores and almost all of the Supercenters are
open 24 hours each day. Wal-Mart discount stores and Supercenters maintain
uniform prices, except where lower prices are necessary to meet local
competition. Sales are primarily on a self-service, cash-and-carry basis
with the objective of maximizing sales volume and inventory turnover while
minimizing expenses. Bank credit card programs, operated without recourse
to the Company, are available in all stores.
Seasonal Aspects of Operations. The Wal-Mart Stores operating
segment's business is seasonal to a certain extent. Generally, the highest
volume of sales occurs in the fourth fiscal quarter and the lowest volume
occurs during the first fiscal quarter.
Competition. Our discount stores compete with other discount,
department, drug, variety and specialty stores, many of which are national
chains. The Wal-Mart Supercenters compete with other supercenter-type
stores, discount stores, supermarkets and specialty stores, many of which
are national or regional chains. As of January 31, 1998, based on net
sales, the Wal-Mart Stores segment ranked first among all retail department
store chains and among all discount department store chains.
The Company's competitive position within the industry is largely
determined by its ability to offer value and service to its customers. The
Company has many programs designed to meet the competitive needs of its
industry. These include "Everyday Low Price", "Item Merchandising", "Store-
Within-a-Store" and "Buy America" programs. Although the Company believes
it has had a major influence in most of the retail markets in which its
stores are located, there is no assurance that this will continue.
Distribution. During the 1998 fiscal year, approximately 83% of
the Wal-Mart discount stores' and Supercenters' purchases were shipped from
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Wal-Mart's 38 distribution centers, seven of which are grocery distribution
centers. The balance of merchandise purchased was shipped directly to the
stores from suppliers. The 38 centers are located throughout the
continental United States. Five distribution centers are located in each of
Arkansas and Texas; three in South Carolina; two in each of California,
Florida, Indiana, Mississippi and New York; and one in each of Alabama,
Colorado, Georgia, Iowa, Illinois, Kansas, Kentucky, New Hampshire, North
Carolina, Ohio, Pennsylvania, Tennessee, Utah, Virginia and Wisconsin. Each
distribution center serves the distribution needs of approximately 80 to
100 stores, depending on the size of the center. The size of these
distribution centers ranges from approximately 600,000 to 1,700,000 square
feet.
SAM'S CLUB OPERATING SEGMENT
The Sam's Club segment which includes the warehouse membership
clubs in the United States had sales of $20,668,000,000, $19,785,000,000
and $19,068,000,000 for the three years ended January 31, 1998, 1997, and
1996, respectively. During the most recent fiscal year, no single club
location accounted for as much as 1% of total Company sales or net income.
See Note 9 of Notes to Consolidated Financial Statements incorporated by
reference in Item 8 of Part II found on page 16 of this annual report for
additional information regarding our segments.
General. The Company operates Sam's Clubs in 48 states. The
average size of a Sam's Club is approximately 120,900 square feet, and club
sizes generally range between 90,000 and 150,000 square feet of building
area.
Merchandise. Sam's offers bulk displays of name brand hardgood
merchandise, some softgoods and institutional size grocery items. Each
Sam's also carries software and electronic goods, jewelry, sporting goods,
toys, tires, stationery and books. Most clubs have fresh food departments
which include bakery, meat and produce.
Operations. Operating hours vary among Sam's Clubs, but they are
generally open Monday through Friday from 10:00 a.m. to 8:30 p.m. Most
Sam's are open Saturday from 9:30 a.m. to 8:30 p.m. and on Sunday from
11:00 a.m. to 6:00 p.m.
Sam's Clubs are membership only, cash-and-carry operations.
However, a financial service credit card program (Discover Card) is
available in all clubs and the "Sam's Direct" commercial finance program
and "Business Revolving Credit" are available to qualifying business
members. Also, a "Personal Credit" program is available to qualifying club
members. Any credit issued under these programs is without recourse to the
Company. Club members include businesses and those individuals who are
members of certain qualifying organizations, such as government and state
employees and credit union members. In fiscal 1998, both business and
individual members paid an annual membership fee of $25 for the primary
membership card with a spouse card available for an additional $10.
Beginning in fiscal 1999, the annual membership fee for a business member
increased to $30 for the primary membership card with a spouse card
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available at no additional cost. The annual membership fee for an
individual member increased to $35 for the primary membership card with a
spouse card available at no additional cost.
Seasonal Aspects of Operations. The Sam's Club operating
segment's business is seasonal to a certain extent. Generally, the highest
volume of sales occurs in the fourth fiscal quarter and the lowest volume
occurs during the first fiscal quarter.
Competition. Sam's Clubs compete with warehouse clubs, as well
as with discount retailers, wholesale grocers and general merchandise
wholesalers and distributors. The Company also competes with others for new
store sites. As of January 31, 1998, based on net sales, the Sam's Club
segment ranked second among all warehouse clubs.
Distribution. During fiscal 1998, approximately 60% of the Sam's
Club purchases were shipped from distribution facilities, eight of which
are food distribution facilities. The balance was shipped directly to the
clubs from suppliers. A combination of Company owned and operated
facilities and third-party facilities comprises the overall distribution
structure.
INTERNATIONAL OPERATING SEGMENT
The International Segment includes operations of the Company's
wholly-owned subsidiaries in Argentina, Canada, Germany and Puerto Rico,
joint ventures in China and majority-owned subsidiaries in Brazil and
Mexico. Sales for the three years ended January 31, 1998, 1997, and 1996
were $7,517,000,000, $5,002,000,000 and $3,712,000,000, respectively.
During the most recent fiscal year, no single location accounted for as
much as 1% of total Company sales or net income. See Note 9 of Notes to
Consolidated Financial Statements incorporated by reference in Item 8 of
Part II found on page 16 of this annual report for additional information
regarding our segments.
General. Operating formats vary by country, but include Wal-Mart
discount stores in Canada and Puerto Rico; Supercenters in Argentina,
Brazil, Mexico and under joint venture agreements in China; Sam's Clubs in
Argentina, Brazil, Mexico, Puerto Rico and under joint venture agreements
in China; Hypermarkets in Germany and Superamas, Bodegas, Aurreras,
Suburbias and Vips in Mexico.
Merchandise. The merchandising strategy in the International
operating segment is similar to that of domestic segments in the breadth
and scope of merchandise offered for sale. While brand name merchandise
accounts for a majority of sales, several store brands not found in the
United States have been developed to serve customers in the different
markets in which the International segment operates. In addition, steps
have been taken to develop relationships with local vendors in each country
to ensure reliable sources of quality merchandise.
Operations. The hours of operation for operating units in the
international division vary by country and by individual markets within
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countries depending upon local and national ordinances governing hours of
operation. While sales are primarily on a cash-and-carry basis, credit
cards or other consumer finance programs exist in certain markets to
facilitate the purchase of goods by the customer.
Seasonal Aspects of Operations. The International operating
segment's business is seasonal to a certain extent. Generally, the highest
volume of sales occurs in the fourth fiscal quarter. The seasonality of
the business varies by country due to different national and religious
holidays, festivals and customs, as well as different climatic conditions.
Competition. The International operating segment competes with a
variety of local national and international chains in the discount,
department, drug, variety, specialty and wholesale sectors of the retail
market. The segment's competitive position is determined, to a large
extent, by its ability to offer its customers everyday low prices on
quality merchandise that offers exceptional value. In Supercenters, our
ability to effectively operate the food departments has a major impact on
the segment's competitive position in the markets where we operate.
Distribution. The International segment operates export
consolidation facilities in Miami, Florida; Seattle, Washington; and
Laredo, Texas in support of product flow to its Mexican, Asian, and Latin
American markets. In addition, distribution facilities are located in
Argentina, Brazil, Canada, China and Mexico which process and flow both
imported and domestic product to the operating units. Operationally, the
principle focus is on crossdocking product, while maintaining stored
inventory is minimized. During fiscal 1998, approximately 70% of the
International merchandise purchases flowed through these distribution
facilities. The balance was shipped directly to the stores from suppliers.
A combination of Company owned and operated facilities and third-party
facilities comprises the overall distribution structure for International
logistics.
OTHER
The sales reported in the "Other" category included in Note 9 of
Notes to Consolidated Financial Statements incorporated by reference in
Item 8 of Part II found on page 16 of this annual report result from sales
to third parties by McLane Company, Inc. (McLane). McLane is a wholesale
distributor that sells its merchandise to a variety of retailers, primarily
to the convenience store industry and it also services Wal-Mart discount
stores, Supercenters and Sam's Clubs. Sales to third parties for the three
years ended January 31, 1998, 1997, and 1996 were $5,953,000,000,
$5,232,000,000 and $4,576,000,000 respectively. McLane offers a wide
variety of grocery and non-grocery products, including perishable and non-
perishable items. The non-grocery products consist primarily of tobacco
products, hardgood merchandise, health and beauty aids, toys and
stationery.
McLane has 19 distribution centers from which its customers,
including the Company, are served. The distribution centers are located in
the continental United States with two located in each of Arizona,
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California, Texas and Virginia, and one each in Colorado, Florida, Georgia,
Illinois, Kentucky, Mississippi, Missouri, New York, North Carolina, Utah
and Washington.
Employees (Associates).
As of January 31, 1998, the Company employed approximately 825,000
associates worldwide, with approximately 720,000 in the United States and
105,000 internationally. Most associates participate in incentive programs
which provide the opportunity to receive additional compensation based upon
the Company's productivity or profitability.
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WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE A TO ITEM 1 - DOMESTIC STORE COUNT AND NET SQUARE FOOTAGE GROWTH
YEARS ENDED JANUARY 31, 1993 THROUGH 1998
STORE COUNT
Fiscal Year Wal-Mart Wal-Mart
Ended Discount Stores Supercenters Sam's Clubs Total
Ending
Jan 31, Opened Closed Conversions*1) Total Opened Total Opened Closed Total Opened*2) Closed Balance
Balance Forward 1,714 10 208 1,932
1993 159 1 24 1,848 24 34 48 0 256 207 1 2,138
1994 141 2 37 1,950 38 72 162 1 417 304 3 2,439
1995 109 5 69 1,985 75 147 21 12 426 136 17 2,558
1996 92 2 80 1,995 92 239 9 2 433 113 4 2,667
1997 59 2 92 1,960 105 344 9 6 436 81 8 2,740
1998 37 1 75 1,921 97 441 8 1 443 67 2 2,805
NET SQUARE FOOTAGE
Fiscal Year Wal-Mart Wal-Mart
Ended Discount Stores Supercenters Sam's Clubs Total Sales Per
Jan 31, Net Additions Total Net Additions Total Net Additions Total Net Additions Sq. Ft. Sq.Ft.*3)
Balance Forward 128,115,368 1,914,246 23,259,348 153,288,962
1993 19,251,060 147,366,428 4,037,493 5,951,739 7,444,530 30,703,878 30,733,083 184,022,045 325.86
1994 16,185,442 163,551,870 6,762,080 12,713,819 19,670,804 50,374,682 42,618,326 226,640,371 324.42
1995 10,109,978 173,661,848 14,087,725 26,801,544 1,335,742 51,710,424 25,533,445 252,173,816 336.10
1996 8,188,223 181,850,071 16,791,559 43,593,103 825,020 52,535,444 25,804,802 277,978,618 335.13
1997 ( 103,486) 181,746,585 19,661,948 63,255,051 298,692 52,834,136 19,857,154 297,835,772 337.35
1998 (2,411,149) 179,335,436 17,076,582 80,331,633 716,150 53,550,286 15,381,583 313,217,355 348.49
[FN]
<F1>
*1) Wal-Mart discount store locations relocated or expanded as Wal-Mart
Supercenters.
<F2>
*2) Total opened net of conversions of Wal-Mart discount stores to Wal-Mart
Supercenters.
<F3>
*3) Includes only stores and clubs that were open at least twelve months as of
January 31 of the previous year.
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WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE B TO ITEM 1 - INTERNATIONAL STORE COUNT AND NET SQUARE FOOTAGE GROWTH
YEARS ENDED JANUARY 31, 1993 THROUGH 1998
STORE COUNT
Fiscal ARGENTINA BRAZIL CANADA CHINA
Year Wal-Mart Sam's Wal-Mart Sam's Wal-Mart Wal-Mart Sam's
Ended Supercenters Clubs Total Supercenters Clubs Total Stores Supercenters Clubs Total
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 123 0 0 0
1996 1 2 3 2 3 5 131 0 0 0
1997 3 3 6 2 3 5 136 1 1 2
1998 6 3 9 5 3 8 144 2 1 3
Fiscal GERMANY MEXICO PUERTO RICO
Year Wal-Mart Sam's Wal-Mart Sam's
Ended Hypermarkets Supercenters Clubs Other* Total Supercenters Clubs Total
1993 0 0 3 0 3 2 0 2
1994 0 2 7 0 9 3 2 5
1995 0 11 22 0 33 5 2 7
1996 0 13 28 0 41 7 4 11
1997 0 18 28 0 46 7 4 11
1998 21 27 28 347 402 9 5 14
NET SQUARE FOOTAGE
Fiscal ARGENTINA BRAZIL CANADA CHINA
Year
Ended Net Additions Total Net Additions Total Net Additions Total Net Additions Total
1993 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0
1995 0 0 0 0 14,606,880 14,606,880 0 0
1996 444,621 444,621 761,581 761,581 868,518 15,475,398 0 0
1997 625,369 1,069,990 0 761,581 578,508 16,053,906 316,656 316,656
1998 506,884 1,576,874 540,056 1,301,637 914,365 16,968,271 145,558 462,214
Fiscal GERMANY MEXICO PUERTO RICO
Year
Ended Net Additions Total Net Additions Total Net Additions Total
1993 0 0 143,000 305,535 229,647 229,647
1994 0 0 946,028 1,251,563 339,260 568,907
1995 0 0 3,718,910 4,970,473 266,279 835,186
1996 0 0 1,012,734 5,983,207 470,266 1,305,452
1997 0 0 1,032,603 7,015,810 0 1,305,452
1988 2,449,369 2,449,369 10,766,004* 17,781,814 342,888 1,648,340
[FN]
* "Other" includes 33 Aurreras (combination stores), 62 Bodegas (discount
stores), 38 Suburbias (specialty department stores), 36 Superamas (traditional
supermarkets), and 178 Vips (restaurants).
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ITEM 2. PROPERTIES
The number and location of domestic Wal-Mart discount stores,
Supercenters and Sam's Clubs is incorporated by reference to the table
under the caption "Fiscal 1998 End of Year Store Counts" on Page 15 of the
Annual Report to Shareholders for the year ended January 31, 1998.
The Company owns 1,318 properties on which domestic discount
stores and Supercenters are located and 288 of the properties on which
domestic Sam's are located. In some cases, the Company owns the land
associated with leased buildings. New buildings, both leased and owned,
are constructed by independent contractors.
The remaining buildings in which its present domestic locations
are located are either leased from a commercial property developer, leased
pursuant to a sale/leaseback arrangement or leased from a local
governmental entity through an industrial revenue bond transaction. All of
the Company's leases for its stores provide for fixed annual rentals and,
in many cases, the leases provide for additional rent based on sales
volume.
Domestically, the Company operated 38 Wal-Mart distribution
facilities and 19 McLane distribution facilities at January 31, 1998.
These distribution facilities are primarily owned by the Company, and
several are subject to mortgage secured loans. Some of the distribution
facilities are leased under industrial development bond financing
arrangements and provide the option of purchasing these facilities at the
end of the lease term for nominal amounts.
The Company owns office facilities in Bentonville, Arkansas that
serve as the home office for the Company and owns an office facility in
Temple, Texas which serves as the home office for McLane.
The number and location of international Wal-Mart discount
stores, Supercenters and Sam's Clubs is incorporated by reference to the
table under the caption "Fiscal 1998 End of Year Store Counts" on Page 15
of the Annual Report to Shareholders for the year ended January 31, 1998.
The Company owns properties on which all operating units in
Argentina and Brazil are located. In Canada, China, Germany, Mexico and
Puerto Rico, the Company has a combination of owned and leased properties
in which the operating units are located. The Company owns three properties
in Canada, one property in China, 18 properties in Germany, 167 properties
in Mexico, and four properties in Puerto Rico in which the operating units
are located, with the remaining units in each country being leased.
The Company utilizes both owned and leased properties for office
facilities in each country in which we conduct business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and no properties of the Company are subject to any material
</PAGE 13>
<PAGE 14>
pending legal proceeding, other than routine litigation incidental to its
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security
holders during the last quarter of the year ended January 31, 1998.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to each of
the executive officers of the Company, each of whom is elected by and
serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his principal occupation for at least the
past five years.
Current
Position
Name Business Experience Held Since Age
David D. Glass President and Chief Executive 1988 62
Officer.
S. Robson Walton Chairman of the Board. 1992 53
Donald G. Soderquist Vice Chairman of the Board and 1988 64
Chief Operating Officer.
Paul R. Carter Executive Vice President 1995 57
and President - Wal-Mart Realty
Company. Prior to 1995, he
served as Executive Vice
President and Chief Financial
Officer.
Robert F. Connolly Executive Vice President - 1998 54
Merchandising. Prior to January
1998, he served as Senior Vice
President - General Merchandise
Manager. Prior to October 1996,
he served as Vice President -
Jewelry and Shoes. Prior to
February 1996,he served as
Executive Vice President of
Montgomery Ward. Prior to January
1994, he served as Senior Vice
President - General Merchandise
Manager of Wal-Mart Stores, Inc.
</PAGE 14>
<PAGE 15>
Thomas M. Coughlin Executive Vice President and 1998 49
Chief Operating Officer of
Wal-Mart Stores Division. Prior
to January 1998, he served as
Executive Vice President - Store
Operations. Prior to 1995, he
served as Senior Vice President -
Specialty Divisions.
David Dible Executive Vice President 1995 50
Specialty Divisions. Prior to
1995, he served as Senior Vice
President - Merchandising.
Mark S. Hansen Executive Vice President and 1997 43
President and Chief Executive
Officer of Sam's Club Division.
Prior to June 1997, he served as
President and Chief Executive Officer
of Phoenix-based PETsMART, Inc.
Bob L. Martin Executive Vice President 1993 49
and President and Chief Executive
Officer of Wal-Mart International
Division.
John B. Menzer Executive Vice President and 1995 47
Chief Financial Officer since
September 1995. Prior to September
1995, he served as President and
Chief Operating Officer of Ben
Franklin Retail Stores, Inc.
H. Lee Scott, Jr. Executive Vice President 1998 49
and President and Chief Executive
Officer of Wal-Mart Stores Division.
Prior to January 1998, he served as
Executive Vice President -
Merchandising. Prior to October 1995,
he served as Executive Vice President
Logistics. Prior to that, he served
as Senior Vice President - Logistics.
Nicholas J. White Executive Vice President - 1989 53
Food Division.
William G. Rosier President and Chief Executive 1995 49
Officer of McLane Company, Inc.
Prior to 1995, he served as Senior
Vice President - Marketing and
Customer Services for McLane.
</PAGE 15>
<PAGE 16>
James A. Walker, Jr. Senior Vice President and 1995 51
Controller. Prior to 1995, he
served as Vice President and
Controller.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED SHAREHOLDER MATTERS
The information required by this item is incorporated by
reference of the information "Number of Shareholders" under the caption "11-
Year Financial Summary" on Pages 20 and 21, and all the information under
the captions "Market Price of Common Stock", "Listings - Stock Symbol: WMT"
and "Dividends Paid Per Share" on page 39 of the Annual Report to
Shareholders for the year ended January 31, 1998.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by
reference of all information under the caption "11-Year Financial Summary"
on Pages 20 and 21 of the Annual Report to Shareholders for the year ended
January 31, 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item is furnished by
incorporation by reference of all information under the caption
"Management's Discussion and Analysis" on Pages 22 through 25 of the Annual
Report to Shareholders for the year ended January 31, 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is furnished by
incorporation by reference of all information under the captions
"Consolidated Statements of Income", "Consolidated Balance Sheets",
"Consolidated Statements of Shareholders' Equity", "Consolidated Statements
of Cash Flows", "Notes to Consolidated Financial Statements" and "Report of
Independent Auditors" on Pages 26 through 38 of the Annual Report to
Shareholders for the year ended January 31, 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
</PAGE 16>
<PAGE17>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item with respect to the Company's
directors and compliance by the Company's directors, executive officers and
certain beneficial owners of the Company's Common Stock with Section 16(a)
of the Securities Exchange Act of 1934 is furnished by incorporation by
reference of all information under the captions entitled "Item 1:Election
of Directors" on Pages 1 and 2 and "Section 16(a) Beneficial Ownership
Reporting Compliance" on Page 7 of the Company's Proxy Statement for its
Annual Meeting of Shareholders to be held on Friday, June 5, 1998 (the
"Proxy Statement"). The information required by this item with respect to
the Company's executive officers is included as Item 4A of Part I found on
pages 14 through 16 of this annual report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is furnished by
incorporation by reference of all information under the caption entitled
"Executive Compensation", subcaptions "Summary Compensation Table", "Option
Grants for Fiscal Year Ended January 31, 1998", and "Option Exercises and
Fiscal Year End Option Values" on Pages 3 and 4, "Compensation and
Nominating Committee Report on Executive Compensation" on page 5 and 6,
"Compensation Committee Interlocks and Insider Participation" and
"Compensation of Directors" on Page 6 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is furnished by
incorporation by reference of all information under the caption "Amount and
Nature of Beneficial Ownership" and "Holdings of Officers and Directors"
and "Amount and Nature of Beneficial Ownership of Wal-Mart Stock" on Pages
7 and 8 of the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is furnished by
incorporation by reference of all information under the caption "Interest
of Management in Certain Transactions" on Pages 6 and 7 of the Proxy
Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) 1. & 2. Consolidated Financial Statements
The financial statements listed in the Index to Consolidated
Financial Statements, which appears on Page 21 of this annual report, are
incorporated by reference herein or filed as part of this Form 10-K.
</PAGE 17>
<PAGE 18>
3. Exhibits
The following documents are filed as exhibits to this Form 10-K:
3(a) Restated Certificate of Incorporation of the Company is
incorporated herein by reference to Exhibit 3(a) from the
Annual Report on Form 10-K of the Company for the year ended
January 31, 1989, and the Certificate of Amendment to the
Restated Certificate of Incorporation is incorporated herein
by reference to Registration Statement on Form S-8 (File
Number 33-43315).
3(b) By-Laws of the Company, as amended June 3, 1993, are
incorporated herein by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1994.
4(a) Form of Indenture dated as of June 1, 1985, between the
Company and Bank of New York, Trustee, (formerly Boatmen's
Trust Company and Centerre Trust Company) is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-97917).
4(b) Form of Indenture dated as of August 1, 1985, between the
Company and Bank of New York, Trustee, (formerly Boatmen's
Trust Company and Centerre Trust Company) is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-99162).
4(c) Form of Amended and Restated Indenture, Mortgage and Deed of
Trust, Assignment of Rents and Security Agreement dated as
of December 1, 1986, among the First National Bank of Boston
and James E. Mogavero, Owner Trustees, Rewal Corporation I,
Estate for Years Holder, Rewal Corporation II, Remainderman,
the Company and the First National Bank of Chicago and R.D.
Manella, Indenture Trustees, is incorporated herein by
reference to Exhibit 4(b) to Registration Statement on Form
S-3 (File Number 33-11394).
4(d) Form of Indenture dated as of July 15, 1990, between the
Company and Harris Trust and Savings Bank, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-35710).
4(e) Indenture dated as of April 1, 1991, between the Company and
The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(a) to Registration
Statement on Form S-3 (File Number 33-51344).
4(f) First Supplemental Indenture dated as of September 9, 1992,
to the Indenture dated as of April 1, 1991, between the
Company and The First National Bank of Chicago, Trustee, is
</PAGE 18>
<PAGE 19>
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-51344).
+10(a) Form of individual deferred compensation agreements is
incorporated herein by reference to Exhibit 10(b)from the
Annual Report on Form 10-K of the Company, as amended, for
the year ended January 31, 1986.
+10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is
incorporated herein by reference to Registration Statement
on Form S-8 (File Number 2-94358).
+10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1987.
+10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1992.
+10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(i) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1993.
+10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is
incorporated herein by reference to Exhibit 4(c) to
Registration Statement on Form S-8 (File Number 33-55325).
+10(g) A written description of a consulting agreement by and
between Wal-Mart Stores, Inc. and Jack C. Shewmaker, is
incorporated herein by reference to the description
contained in the second paragraph under the caption
"Compensation of Directors" on Page 6 in the Company's
definitive Proxy Statement to be filed in connection with
the Annual Meeting of the Shareholders to be held on June 5,
1998.
+10(h) Wal-Mart Stores, Inc. Director Compensation Plan is
incorporated herein by reference to Exhibit 4(d) to
Registration Statement on Form S-8 (File Number 333-24259).
+10(i) Wal-Mart Stores, Inc. Officer Deferred Compensation Plan is
incorporated herein by reference to Exhibit 10(i) from the
Annual Report on Form 10-K of the Company for the year ended
January 31, 1996.
+10(j) Wal-Mart Stores, Inc. Restricted Stock Plan is incorporated
herein by reference to Exhibit 10(j) from the Annual Report
on Form 10-K of the Company for the year ended January 31,
1997.
</PAGE 19>
<PAGE 20>
*+10(k) 1996 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1994 is filed herewith as an Exhibit to this Form 10-
K.
*+10(l) 1997 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1994 is filed herewith as an Exhibit to this Form 10-
K.
*13 All information incorporated by reference in Items 1, 2, 5,
6, 7 and 8 of this Annual Report on Form 10-K from the
Annual Report to Shareholders for the year ended January 31,
1998.
*21 List of the Company's Subsidiaries
*23 Consent of Independent Auditors
*27 Financial Data Schedule
*Filed herewith as an Exhibit.
+Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the last
quarter of the fiscal year ended January 31, 1998.
</PAGE 20>
<PAGE 21>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Annual
Report to
Shareholders
(page)
Covered by Report of Independent
Auditors:
Consolidated Statements of Income
for each of the three years in the
period ended January 31, 1998 26
Consolidated Balance Sheets at
January 31, 1998 and 1997 27
Consolidated Statements of
Shareholders' Equity for each
of the three years in the
period ended January 31, 1998 28
Consolidated Statements of Cash
Flows for each of the three
years in the period ended
January 31, 1998 29
Notes to Consolidated Financial
Statements, except Note 10 30-37
Not Covered by Report of Independent
Auditors:
Note 10 - Quarterly Financial Data
(Unaudited) 37
All schedules have been omitted because the required information is not
present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
financial statements, including the notes thereto.
</PAGE 21>
<PAGE 22>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: April 16, 1998 BY:/s/David D. Glass
David D. Glass
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:
DATE: April 16, 1998 /s/S. Robson Walton
S. Robson Walton
Chairman of the Board
DATE: April 16, 1998 /s/David D. Glass
David D. Glass
President, Chief Executive
Officer and Director
DATE: April 16, 1998 /s/Donald G. Soderquist
Donald G. Soderquist
Vice Chairman of the Board,
Chief Operating Officer
and Director
DATE: April 16, 1998 /s/Paul R. Carter
Paul R. Carter
Executive Vice President,
President - Wal-Mart Realty
Company and Director
DATE: April 16, 1998 /s/John B. Menzer
John B. Menzer
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
DATE: April 16, 1998 /s/James A. Walker, Jr.
James A. Walker, Jr.
Senior Vice President and
Controller
(Principal Accounting Officer)
</PAGE 22>
<PAGE 23>
Date: April 16, 1998 /s/Jeronimo Arango
Jeronimo Arango
Chairman of the Board of Cifra,
S. A. de C.V. and Director
DATE: April 16, 1998 /s/John A. Cooper, Jr.
John A. Cooper, Jr.
Director
DATE: April 16, 1998 /s/Stephen Friedman
Stephen Friedman
Director
DATE: April 16, 1998 /s/Stanley C. Gault
Stanley C. Gault
Director
DATE: April 16, 1998 /s/Frederick S. Humphries
Frederick S. Humphries
Director
DATE: April 16, 1998 /s/E. Stanley Kroenke
E. Stanley Kroenke
Director
DATE: April 16, 1998 /s/Elizabeth A. Sanders
Elizabeth A. Sanders
Director
DATE: April 16, 1998 /s/Jack C. Shewmaker
Jack C. Shewmaker
Director
DATE: April 16, 1998 /s/Paula Stern
Paula Stern
Director
DATE: April 16, 1998 /s/John T. Walton
John T. Walton
Director
</PAGE 23>