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, 1999, 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, 1999, was $121,319,774,111. For the
purposes of this disclosure only, the registrant has assumed that its
directors, 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 4,449,818,854 shares of Common Stock outstanding as
of March 31, 1999, restated to reflect the two-for-one stock split
announced March 4, 1999. The record date for the stock split was March 19,
1999 and it is payable on April 19, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the
fiscal year ended January 31, 1999, are incorporated by reference into
Parts I and II of this Form 10-K.
Portions of the registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held June 4, 1999, 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, Year 2000 issues, unemployment levels, interest
rate fluctuations and other capital market and economic 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, 1999
PART I
ITEM 1. BUSINESS
Wal-Mart Stores, Inc. (together with its subsidiaries hereinafter
referred to as the "Company") is the world's largest retailer measured by
total revenues. During the fiscal year ended January 31, 1999, the Company
had net sales of $137,634,000,000.
(a) Development of Business
Domestically, at January 31, 1999, the Company operated 1,869
discount stores and 564 Supercenters, and 451 SAM'S Clubs. Tables
summarizing information concerning additions of units and square footage
for domestic discount stores, Supercenters and SAM'S Clubs since January
31, 1994, are included as Schedules A and B to Item 1 found on pages 10 and
11 of this annual report.
In fiscal 1999, the Company took possession of 74 units from the
Interspar hypermarket chain in Germany. The units were acquired from Spar
Handels AG, a German company that owns multiple retail formats and
wholesale operations throughout Germany. The transaction closed on
December 29, 1998, Interspar's fiscal year end. Therefore, the acquired
assets are included in the Company's consolidated balance sheet as of
January 31, 1999, and the results of operations will be included beginning
in fiscal 2000.
In fiscal 1999, the Company extended its presence in Asia with an
investment in Korea. The Company acquired a majority interest in four
existing units as well as six undeveloped sites. The four acquired units
were previously operated by Korea Makro. The results of operations since
the effective date of the acquisition have been included in the Company's
results of operations.
See Note 6 of Notes to Consolidated Financial Statements
incorporated by reference in Item 8 of Part II found on page 17 of this
annual report for additional information regarding our acquisitions.
Internationally, at January 31, 1999, the Company operated units
in Argentina(13), Brazil(14), Canada(154), Germany(95), Mexico(416), and
Puerto Rico(15), and, under joint venture agreements, in China(5) and
Korea(4). A table summarizing information concerning additions of units
and square footage for international units operated since fiscal 1994, is
included as Schedule C to Item 1 found on page 12 of this annual report.
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(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.
The Company identifies 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, Korea, 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 17 of this annual report.
(c) Narrative Description of Business
The Company, a Delaware corporation, has its principal offices in
Bentonville, Arkansas. Although the Company was incorporated in October
1969, the businesses conducted by its predecessors began in 1945 when Sam
M. Walton opened a franchise Ben Franklin variety store in Newport,
Arkansas. In 1946, his brother, James L. Walton, opened a similar store in
Versailles, Missouri. Until 1962, the Company's business was devoted
entirely to the operation of variety stores. In that year, the first Wal-
Mart Discount City (discount store) was opened. In fiscal 1984, the
Company opened its first three SAM'S Clubs, and in fiscal 1988, its first
Wal-Mart Supercenter (combination full-line supermarket and discount
store). In fiscal 1992, the Company began its first international
initiative when the Company entered into a joint venture in which it had a
50% interest with Cifra S.A. de C.V. (Cifra). The Company's international
presence has continued to expand and at January 31, 1999, the Company had
operations in seven 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
$95,395,000,000, $83,820,000,000 and $74,840,000,000 for the three fiscal
years ended January 31, 1999, 1998, and 1997, 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 17 of this annual report for additional
information regarding our segments.
General. The Company operates Wal-Mart discount stores in all 50
states. The average size of a discount store is approximately 94,300
square feet. Wal-Mart Supercenters are located in 29 states and the average
size of a Supercenter is 181,200 square feet. The Supercenter prototypes
range in size from 110,000 square feet to 234,000 square feet.
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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", "Puritan", "Better Homes & Gardens", "Popular
Mechanics", "Catalina", "McKids", "Basic Equipment" and "House Beautiful".
During the fiscal year ended January 31, 1999, sales in discount
stores and Supercenters (which are subject to seasonal variance) by product
category were as follows:
PERCENTAGE
CATEGORY OF SALES
Hardgoods........................ 22
Softgoods/domestics.............. 21
Grocery, candy and tobacco....... 16
Pharmaceuticals.................. 9
Electronics...................... 9
Sporting goods and toys.......... 7
Health and beauty aids........... 7
Stationery ...................... 4
Shoes............................ 2
Jewelry.......................... 2
One-hour photo................... 1
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
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volume of sales occurs in the fourth fiscal quarter and the lowest volume
occurs during the first fiscal quarter.
Competition. Wal-Mart discount stores compete with other
discount, department, drug, variety and specialty stores, many of which are
national chains. 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 with others for
new club sites. As of January 31, 1999, 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 "Price Rollbacks" 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 1999 fiscal year, approximately 84% of
the Wal-Mart discount stores' and Supercenters' purchases were shipped from
Wal-Mart's 43 distribution centers, nine of which are grocery distribution
centers, and two of which are import distribution centers. The balance of
merchandise purchased was shipped directly to the stores from suppliers.
The 43 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, Georgia, Indiana,
Mississippi, New York and Pennsylvania; and one in each of Alabama,
Arizona, Colorado, Iowa, Illinois, Kansas, Kentucky, New Hampshire, New
Mexico, North Carolina, Ohio, Oregon, Tennessee, Utah, Virginia and
Wisconsin.
SAM'S CLUB OPERATING SEGMENT
The SAM'S Club segment, which includes the warehouse membership
clubs in the United States, had sales of $22,881,000,000, $20,668,000,000
and $19,785,000,000 for the three fiscal years ended January 31, 1999,
1998, and 1997, 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 17 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 121,200 square feet, and club
sizes generally range between 90,000 and 150,000 square feet of building
area.
Merchandise. SAM'S Clubs offer bulk displays of name brand
hardgood merchandise, some softgoods and institutional size grocery items,
and selected items under the "Member's Mark" store brand. Generally each
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SAM'S Club 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. In addition, some
clubs offer one-hour photo, embroidery departments, pharmaceuticals and gas
stations.
During the fiscal year ended January 31, 1999, sales in the clubs
(which are subject to seasonal variance) by product category were as
follows:
PERCENTAGE
CATEGORY OF SALES
Sundries.......................... 31.6
Food ............................. 32.8
Hardlines ........................ 22.1
Softlines ........................ 5.7
Service Businesses................ 7.8
100.0%
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 Clubs 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 1999, business members paid
an annual membership fee of $30 for the primary membership card with a
spouse card available at no additional cost. The annual membership fee for
an individual member is $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
club sites. As of January 31, 1999, based on domestic U.S. net sales, the
SAM'S Club segment ranked first among all warehouse clubs.
Distribution. During fiscal 1999, approximately 61% of the SAM'S
Club purchases were shipped from distribution facilities. The balance was
shipped directly to the clubs from suppliers. Operationally, the principle
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focus is on crossdocking product, while maintaining stored inventory is
minimized. A combination of Company owned and operated facilities and
third-party facilities comprise the overall distribution structure.
INTERNATIONAL OPERATING SEGMENT
The Company's International Segment is comprised of wholly owned
operations in Argentina, Canada, Germany and Puerto Rico; through joint
ventures in China and Korea; and through majority-owned subsidiaries in
Brazil and Mexico. Sales for the three fiscal years ended January 31, 1999,
1998, and 1997 were $12,247,000,000, $7,517,000,000 and $5,002,000,000,
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 17 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, China, Korea and Mexico; SAM'S Clubs in Argentina, Brazil, China,
Mexico, and Puerto Rico; Hypermarkets in Germany and Superamas (traditional
supermarket,) Bodegas (discount store,) Aurreras (combination store,)
Suburbias (specialty department store) and Vips (restaurant) in Mexico.
Merchandise. The merchandising strategy in the International
operating segment is similar to that of domestic segments in the breadth
and scope of merchandise offered for sale. While brand name merchandise
accounts for a majority of sales, several store brands not found in the
United States have been developed to serve customers in the different
markets in which the International segment operates. In addition, steps
have been taken to develop relationships with local vendors in each country
to ensure reliable sources of quality merchandise.
Operations. The hours of operation for operating units in the
international division vary by country and by individual markets within
countries, depending upon local and national ordinances governing hours of
operation. While sales are primarily on a cash-and-carry basis, credit
cards or other consumer finance programs exist in certain markets to
facilitate the purchase of goods by the customer.
Seasonal Aspects of Operations. The International operating
segment's business is seasonal to a certain extent. Generally, the highest
volume of sales occurs in the fourth fiscal quarter. The seasonality of
the business varies by country due to different national and religious
holidays, festivals and customs, as well as different climatic conditions.
Competition. The International operating segment competes with a
variety of local, national and international chains in the discount,
department, drug, variety, specialty and wholesale sectors of the retail
market. The segment's competitive position is determined, to a large
extent, by its ability to offer its customers low prices on quality
merchandise that offers exceptional value. In Supercenters, our ability to
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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 Jacksonville, 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 1999, approximately 50% 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 17 of this annual report result from sales
to third parties by McLane Company, Inc. (McLane). McLane is a wholly owned
wholesale distributor that sells its merchandise to a variety of retailers,
primarily to the convenience store industry. McLane also services Wal-Mart
discount stores, Supercenters and SAM'S Clubs. Sales to third parties for
the three fiscal years ended January 31, 1999, 1998, and 1997 were
$7,111,000,000, $5,953,000,000 and $5,232,000,000 respectively. McLane
offers a wide variety of grocery and non-grocery products, including
perishable and non-perishable items. The non-grocery products consist
primarily of tobacco products, hardgood merchandise, health and beauty
aids, toys and stationery.
McLane has 19 distribution centers from which its customers,
including the Company, are served. The distribution centers are located in
the continental United States with two located in each of Arizona,
California, Texas and Virginia, and one each in Colorado, Florida, Georgia,
Illinois, Kentucky, Mississippi, Missouri, New York, North Carolina, Utah
and Washington.
Employees (Associates).
As of January 31, 1999, the Company employed approximately 910,000
associates worldwide, with approximately 780,000 in the United States and
130,000 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 - WAL-MART STORES SEGMENT STORE COUNT AND NET SQUARE
FOOTAGE GROWTH
YEARS ENDED JANUARY 31, 1994 THROUGH 1999
STORE COUNT
Fiscal Year Wal-Mart Wal-Mart
Ended discount stores Supercenters Total
Ending
Jan 31, Opened Closed Conversions(1) Total Opened (2) Total Opened(2) Closed Balance
Balance Forward 1,848 34 1,882
1994 141 2 37 1,950 38 72 142 2 2,022
1995 109 5 69 1,985 75 147 115 5 2,132
1996 92 2 80 1,995 92 239 104 2 2,234
1997 59 2 92 1,960 105 344 72 2 2,304
1998 37 1 75 1,921 97 441 59 1 2,362
1999 37 1 88 1,869 123 564 72 1 2,433
NET SQUARE FOOTAGE
Fiscal Year Wal-Mart Wal-Mart
Ended discount stores Supercenters Total
Jan 31, Net Additions Total Net Additions Total Net Additions Square Footage
Balance Forward 147,366,428 5,951,739 153,318,167
1994 16,185,442 163,551,870 6,762,080 12,713,819 22,947,522 176,265,689
1995 10,109,978 173,661,848 14,087,725 26,801,544 24,197,703 200,463,392
1996 8,188,223 181,850,071 16,791,559 43,593,103 24,979,782 225,443,174
1997 ( 103,486) 181,746,585 19,661,948 63,255,051 19,558,462 245,001,636
1998 (2,411,149) 179,335,436 17,076,582 80,331,633 14,665,433 259,667,069
1999 (3,062,418) 176,273,018 21,892,838 102,224,471 18,830,420 278,497,489
[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.
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WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE B TO ITEM 1 - SAM'S CLUB SEGMENT CLUB COUNT AND NET SQUARE FOOTAGE
GROWTH
YEARS ENDED JANUARY 31, 1994 THROUGH 1999
STORE COUNT
Fiscal Year
Ended SAM'S Clubs
Jan 31, Opened Closed Total
Balance Forward 256
1994 162(1) 1 417
1995 21 12 426
1996 9 2 433
1997 9 6 436
1998 8 1 443
1999 8 0 451
NET SQUARE FOOTAGE
Fiscal Year
Ended SAM'S Clubs
Jan 31, Net Additions Total
Balance Forward 30,703,878
1994 19,670,804 50,374,682
1995 1,335,742 51,710,424
1996 825,020 52,535,444
1997 298,692 52,834,136
1998 716,150 53,550,286
1999 1,099,144 54,649,430
[FN]
<F1>
(1) Includes 147 clubs acquired in PACE acquisition.
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WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE C TO ITEM 1 - INTERNATIONAL SEGMENT UNIT COUNT AND NET SQUARE FOOTAGE
GROWTH
YEARS ENDED JANUARY 31, 1994 THROUGH 1999
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
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
1999 10 3 13 9 5 14 154 4 1 5
Fiscal Germany Mexico Korea Puerto Rico
Year Wal-Mart SAM'S Wal-Mart Wal-Mart SAM'S
Ended Hypermarkets Supercenters Clubs Other* Total Supercenters Supercenters Clubs Total
1994 0 2 7 0 9 0 3 2 5
1995 0 11 22 0 33 0 5 2 7
1996 0 13 28 0 41 0 7 4 11
1997 0 18 28 0 46 0 7 4 11
1998 21 27 28 330 385 0 9 5 14
1999 95 27 31 358 416 4 9 6 15
NET SQUARE FOOTAGE
Fiscal Argentina Brazil Canada China
Year
Ended Net Additions Total Net Additions Total Net Additions Total Net Additions Total
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
1999 663,986 2,240,860 914,618 2,216,255 981,261 17,949,532 224,827 687,041
Fiscal Germany Mexico Korea Puerto Rico
Year
Ended Net Additions Total Net Additions Total Net Additions Total Net Additions Total
1994 0 0 946,028 1,251,563 0 0 339,260 568,907
1995 0 0 3,718,910 4,970,473 0 0 266,279 835,186
1996 0 0 1,012,734 5,983,207 0 0 470,266 1,305,452
1997 0 0 1,032,603 7,015,810 0 0 0 1,305,452
1998 2,449,369 2,449,369 10,292,640* 17,308,450 0 0 342,888 1,648,340
1999 6,845,491 9,294,860 714,459 18,022,909 553,683 553,683 100,250 1,748,590
[FN]
<F1>
* In fiscal 1998, includes 33 Aurreras (combination stores), 62 Bodegas
(discount stores), 38 Suburbias (specialty department stores), 36 Superamas
(traditional supermarkets), and 178 Vips (restaurants), the majority of which
were acquired in 1998 in the Cifra acquisition.
<F2>
* In fiscal 1999, includes 33 Aurreras (combination stores), 63 Bodegas
(discount stores), 43 Suburbias (specialty department stores), 36 Superamas
(traditional supermarkets), and 183 Vips (restaurants).
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ITEM 2. PROPERTIES
The number and location of domestic and international Wal-Mart
discount stores, Supercenters and SAM'S Clubs is incorporated by reference
to the table under the caption "Fiscal 1999 End of Year Store Counts" on
Page 17 of the Annual Report to Shareholders for the year ended January 31,
1999.
The Company owns 1,488 properties on which domestic discount
stores and Supercenters are located and 214 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 43 Wal-Mart distribution
facilities and 19 McLane distribution facilities at January 31, 1999.
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.
Internationally, the Company has a combination of owned and
leased properties in each country in which the operating units are located.
The Company owns ten properties in Argentina, eight properties in Brazil,
seven properties in Canada, one property in China under joint venture, 21
properties in Germany, four properties in Korea under joint venture, 242
properties in Mexico, and four properties in Puerto Rico in which the
operating units are located, with the remaining units in each country being
leased.
The Company utilizes both owned and leased properties for office
facilities in each country in which we conduct business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and no properties of the Company are subject to any material
pending legal proceeding, other than routine litigation incidental to its
business.
</PAGE 13>
<PAGE 14>
The Company recently opened a Supercenter in Honesdale,
Pennsylvania. In February of 1999, the Company settled claims made by the
Pennsylvania Department of Environmental Protection that the construction
activities led to excess erosion and sedimentation of a nearby creek. In
the settlement, Wal-Mart agreed to pay a fine of $25,000 and to perform a
$75,000 community environmental project in the Honesdale area. The Company
is negotiating settlement of a claim by the United States Army Corps of
Engineers that the construction resulted in the filling of approximately
0.76 acres in excess of the permitted fill area of waters and wetlands at
the site. The proposed settlement with the Corps will require Wal-Mart to
pay $200,000 to a non-profit corporation for the purchase of local wetlands
conservation areas and easements. Under contracts with third parties,
Wal-Mart has received reimbursement for the $75,000 community environmental
project and the $25,000 fine. Wal-Mart also expects to be reimbursed under
third party contracts for the $200,000 proposed settlement amount.
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, 1999.
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 63
Officer.
S. Robson Walton Chairman of the Board. 1992 54
Donald G. Soderquist Senior Vice Chairman of the Board. 1999 65
Prior to January 1999, he served
as Vice Chairman and Chief
Operating Officer.
H. Lee Scott, Jr. Vice Chairman and Chief Operating 1999 50
Officer. Prior to January 1999,
he served as 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.
</PAGE 14>
<PAGE 15>
Paul R. Carter Executive Vice President 1995 58
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 55
Merchandising. Prior to January
1998, he served as Senior Vice
President - General Merchandise
Manager. Prior to October 1996,
he served as Vice President -
Jewelry and Shoes. Prior to
February 1996,he served as
Executive Vice President of
Montgomery Ward. Prior to January
1994, he served as Senior Vice
President - General Merchandise
Manager of Wal-Mart Stores, Inc.
Thomas M. Coughlin Executive Vice President and 1999 50
President and Chief Executive
Officer of Wal-Mart Stores
Division. Prior to January 1999,
he served as Executive Vice
President and 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 51
Specialty Divisions. Prior to
1995, he served as Senior Vice
President - Merchandising.
Thomas R. Grimm Executive Vice President and 1998 54
President and Chief Executive
Officer of SAM'S Club Division.
Prior to October 1998, he was
retired and served as a consultant
to various organizations. Prior
to June 1994, he served as
President and Chief Executive
Officer of Pace Membership
Warehouse, a Division of K-Mart
Corporation.
</PAGE 15>
<PAGE 16>
Bob L. Martin Executive Vice President 1993 50
and President and Chief Executive
Officer of Wal-Mart International
Division.
John B. Menzer Executive Vice President and 1995 48
Chief Financial Officer.
Prior to September 1995, he served
as President and Chief Operating
Officer of Ben Franklin Retail
Stores, Inc.
Nicholas J. White Executive Vice President - 1989 54
Food Division.
William G. Rosier President and Chief Executive 1995 50
Officer of McLane Company, Inc.
Prior to 1995, he served as Senior
Vice President - Marketing and
Customer Services for McLane.
James A. Walker, Jr. Senior Vice President and 1995 52
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 to the information "Number of Shareholders" under the caption "11-
Year Financial Summary" on Pages 18 and 19, 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, 1999.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by
reference to all information under the caption "11-Year Financial Summary"
on Pages 18 and 19 of the Annual Report to Shareholders for the year ended
January 31, 1999.
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 to all information under the caption
</PAGE 16>
<PAGE 17>
"Management's Discussion and Analysis" on Pages 20 through 25 of the Annual
Report to Shareholders for the year ended January 31, 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is furnished by
incorporation by reference to 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, 1999.
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 to all information under the captions entitled "Nominees for
Directors" on Pages 2 and 3 and "Section 16(a) Beneficial Ownership
Reporting Compliance" on Page 12 of the Company's definitive Proxy
Statement for its Annual Meeting of Shareholders to be held on Friday, June
4, 1999 (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 to all information under the caption entitled
"Compensation of Directors" on Page 4, "Compensation and Nominating
Committee Report on Executive Compensation" on page 5 through 7, and
"Summary Compensation", "Option Grants In Last Fiscal Year", and "Option
Exercises and Fiscal Year End Option Values" on Pages 8 through 10 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 to all information under the caption entitled
"Stock Ownership", subcaptions "Ownership of Major Shareholders (1)" and
"Holdings of Officers and Directors" on Pages 10 through 12 of the Proxy
Statement.
</PAGE 17>
<PAGE 18>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is furnished by
incorporation by reference to all information under the caption "Related-
Party Transactions with Wal-Mart" on Page 5 of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) 1. & 2. Consolidated Financial Statements
The financial statements listed in the Index to Consolidated
Financial Statements, which appears on Page 21 of this annual report, are
incorporated by reference herein or filed as part of this Form 10-K.
3. Exhibits
The following documents are filed as exhibits to this Form 10-K:
3(a) Restated Certificate of Incorporation of the Company is
incorporated herein by reference to Exhibit 3(a) from the
Annual Report on Form 10-K of the Company for the year ended
January 31, 1989, and the Certificate of Amendment to the
Restated Certificate of Incorporation is incorporated herein
by reference to Registration Statement on Form S-8 (File
Number 33-43315).
3(b) By-Laws of the Company, as amended June 3, 1993, are
incorporated herein by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1994.
4(a) Form of Indenture dated as of June 1, 1985, between the
Company and Bank of New York, Trustee, (formerly Boatmen's
Trust Company and Centerre Trust Company) is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-97917).
4(b) Form of Indenture dated as of August 1, 1985, between the
Company and Bank of New York, Trustee, (formerly Boatmen's
Trust Company and Centerre Trust Company) is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-99162).
4(c) Form of Amended and Restated Indenture, Mortgage and Deed of
Trust, Assignment of Rents and Security Agreement dated as
of December 1, 1986, among the First National Bank of Boston
and James E. Mogavero, Owner Trustees, Rewal Corporation I,
Estate for Years Holder, Rewal Corporation II, Remainderman,
the Company and the First National Bank of Chicago and R.D.
Manella, Indenture Trustees, is incorporated herein by
</PAGE 18>
<PAGE 19>
reference to Exhibit 4(b) to Registration Statement on Form
S-3 (File Number 33-11394).
4(d) Form of Indenture dated as of July 15, 1990, between the
Company and Harris Trust and Savings Bank, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-35710).
4(e) Indenture dated as of April 1, 1991, between the Company and
The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(a) to Registration
Statement on Form S-3 (File Number 33-51344).
4(f) First Supplemental Indenture dated as of September 9, 1992,
to the Indenture dated as of April 1, 1991, between the
Company and The First National Bank of Chicago, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-51344).
+10(a) Form of individual deferred compensation agreements is
incorporated herein by reference to Exhibit 10(b)from the
Annual Report on Form 10-K of the Company, as amended, for
the year ended January 31, 1986.
+10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is
incorporated herein by reference to Registration Statement
on Form S-8 (File Number 2-94358).
+10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1987.
+10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1992.
+10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(i) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1993.
+10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is
incorporated herein by reference to Exhibit 4(c) to
Registration Statement on Form S-8 (File Number 33-55325).
+10(g) 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).
</PAGE 19>
<PAGE 20>
+10(h) 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(i) Wal-Mart Stores, Inc. Restricted Stock Plan is incorporated
herein by reference to Exhibit 10(j) from the Annual Report
on Form 10-K of the Company for the year ended January 31,
1997.
+10(j) 1996 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1994 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, 1998.
+10(k) 1997 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1994 is incorporated herein by reference to Exhibit
10(k) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1998.
*+10(l) Wal-Mart Stores, Inc. Stock Incentive Plan of
1998 is filed herewith as an Exhibit to this Form 10-K.
*+10(m) Wal-Mart Stores, Inc. Management Incentive Plan of 1998 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,
1999.
*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, 1999.
</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, 1999 26
Consolidated Balance Sheets at
January 31, 1999 and 1998 27
Consolidated Statements of
Shareholders' Equity for each of the
three years in the period ended
January 31, 1999 28
Consolidated Statements of Cash
Flows for each of the three
years in the period ended
January 31, 1999 29
Notes to Consolidated Financial
Statements, except Note 10 30-37
Not Covered by Report of Independent
Auditors:
Note 10 - Quarterly Financial Data
(Unaudited) 38
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 15, 1999 /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 15, 1999 ____________________
S. Robson Walton
Chairman of the Board
DATE: April 15, 1999 /s/David D. Glass
David D. Glass
President, Chief Executive
Officer and Director
DATE: April 15, 1999 /s/Donald G. Soderquist
Donald G. Soderquist
Senior Vice Chairman of the
Board and Director
DATE: April 15, 1999 /s/John B. Menzer
John B. Menzer
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
DATE: April 15, 1999 /s/James A. Walker, Jr.
James A. Walker, Jr.
Senior Vice President and
Controller
(Principal Accounting Officer)
Date: April 15, 1999 /s/Jeronimo Arango
Jeronimo Arango
Founder of Cifra S.A. de C.V.
and Director of Wal-Mart
Stores, Inc.
</PAGE 22>
<PAGE 23>
DATE: April 15, 1999 /s/John A. Cooper, Jr.
John A. Cooper, Jr.
Director
DATE: April 15, 1999 ____________________
Stephen Friedman
Director
DATE: April 15, 1999 ____________________
Stanley C. Gault
Director
DATE: April 15, 1999 /s/Roland A. Hernandez
Roland A. Hernandez
Director
DATE: April 15, 1999 ______________________
Frederick S. Humphries
Director
DATE: April 15, 1999 /s/E. Stanley Kroenke
E. Stanley Kroenke
Director
DATE: April 15, 1999 /s/Elizabeth A. Sanders
Elizabeth A. Sanders
Director
DATE: April 15, 1999 /s/Jack C. Shewmaker
Jack C. Shewmaker
Director
DATE: April 15, 1999 ____________________
Paula Stern
Director
DATE: April 15, 1999 /s/Jose H. Villarreal
Jose H. Villarreal
Director
DATE: April 15, 1999 /s/John T. Walton
John T. Walton
Director
</PAGE 23>