FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X]Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended January 31, 1995, or
[ ]Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______to______
Commission file number 1-6991.
WAL-MART STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0415188
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Bentonville, Arkansas 72716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 273-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.10 New York Stock Exchange
per share Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for at least the past 90 days.
Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the closing price of these shares on the New
York Stock Exchange on March 31, 1995, was $36,044,647,699. For the
purposes of this disclosure only, the registrant has assumed that its
directors, executive officers, and beneficial owners of 5% or more of the
registrant's common stock are the affiliates of the Registrant.
The registrant has 2,297,580,232 shares of Common Stock outstanding as
of March 31, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended January 31, 1995, are incorporated by reference into Part
II of this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholdes to be held June 2, 1995, are incorporated by reference into
Part III of this Form 10-K.
WAL-MART STORES, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED JANUARY 31, 1995
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Wal-Mart Stores, Inc. (together with its subsidiaries
hereinafter referred to as the "Company") has become America's largest
retailer and during the fiscal year ended January 31, 1995, had net sales
of $82,494,000,000. The Company serves customers domestically and in
Puerto Rico primarily through the operation of Wal-Mart stores (discount
department stores), Sam's Clubs (warehouse membership clubs), and Wal-Mart
Supercenters (a combination full-line supermarket and discount department
store). As of January 31, 1995, the Company operated 1,990 Wal-Mart
stores, 428 Sam's Clubs, and 143 Wal-Mart Supercenters. A table
summarizing information concerning Wal-Mart stores, Sam's Clubs, Wal-Mart
Supercenters, and other stores operated since January 31, 1990 is set forth
in Schedule A to Item I found on page 9 of this annual report.
In fiscal 1992, the Company entered into a joint venture, in
which it has 50% interest, with CIFRA, Mexico's largest retailer, to
develop and expand retailing services in Mexico. At January 31, 1995, the
joint venture operated 22 warehouse clubs, 23 discount stores, four
combination stores, three supermarkets, four specialty department stores,
29 restaurants, and 11 Wal-Mart Supercenters.
In March 1994, the Company completed the acquisition of 122
Woolco department stores located in Canada from Woolworth Canada, Inc., a
subsidiary of Woolworth Corporation. The acquisition included all
inventory, leasehold interests and other assets at each location. At
January 31, 1995, the Company operated 123 Canadian Wal-Mart stores.
In fiscal 1995, the Company entered into a joint venture in
which it has a 50% interest with Ek Chor Distribution System Co., Ltd.,
a subsidiary of C.P. Pokphand Co. Ltd. of the Charoen Pokphand Group, to
develop and operate warehouse clubs and Supercenters in Hong Kong and the
People's Republic of China. At January 31, 1995, the joint venture operated
three warehouse clubs in Hong Kong.
In fiscal 1995, the Company entered into a joint venture
in which it has a 60% interest with Lojas Americanas, a leading retailer
in Brazil, to develop and operate Supercenters and warehouse clubs in
Brazil. Also during fiscal 1995, the Company announced plans to operate
wholly-owned Supercenters and warehouse clubs in Argentina. At January
31, 1995 there were no operations in Argentina or Brazil. The entry
into these markets will not have a significant impact on the Company's
operations or financial position in fiscal 1996.
(b) Financial Information About Industry Segments
Sales of merchandise through stores which include Wal-Mart
stores, Sam's Clubs, and Wal-Mart Supercenters, is the only significant
industry segment of which the Company is a part. Reference is made to the
financial information incorporated by reference in this report for the
financial results of the Company's operations.
(c) Narrative Description of Business
The Company, a Delaware corporation, has its principal offices in
Bentonville, Arkansas. Although the Company was incorporated in October
1969, the businesses conducted by its predecessors began in 1945 when Sam
M. Walton opened a franchise Ben Franklin variety store in Newport,
Arkansas. In 1946, his brother, James L. Walton, opened a similar store in
Versailles, Missouri. Until 1962, the Company's business was devoted
entirely to the operation of variety stores. In that year, the first
Wal-Mart Discount City (referred to herein as "Wal-Mart store") was opened.
In fiscal 1984, the Company opened its first three Sam's Clubs, and in
fiscal 1989, its first Wal-Mart Supercenter. Through the years, the
Company has made certain strategic acquisitions that have supported the
growth of the Wal-Mart stores, clubs and Supercenters, such as the
acquisition of ten full service and four specialty distribution centers
through the purchase of McLane Company, Inc., which sells and distributes
merchandise to the convenience store industry and a variety of other
retailers, the acquisition of selected assets of Pace Membership Warehouse,
Inc., and the acquisition of selected assets related to 122 Woolco stores
in Canada from Woolworth Canada, Inc., a subsidiary of Woolworth
Corporation.
General. The Company operates Wal-Mart stores in 49 states and
Puerto Rico. The average size of a Wal-Mart store is approximately 87,600
square feet, and store sizes generally range between 30,000 and 150,000
square feet of building area. The Company operates Wal-Mart Supercenter
stores in 19 states and the average size of a Supercenter store is 181,000
square feet.
The Company operates Sam's Clubs in 48 states and Puerto Rico.
The average size of a Sam's Club is approximately 121,000 square feet, and
club sizes generally range between 90,000 and 150,000 square feet of
building area.
During the last fiscal year, no single location accounted for as
much as 1% of sales or net income.
Merchandise. Wal-Mart stores are generally organized with 40
departments and offer a wide variety of merchandise, including apparel for
women, girls, men, boys, and infants. Each store also carries curtains,
fabrics and notions, shoes, housewares, hardware, electronics, home
furnishings, small appliances, automotive accessories, garden equipment and
supplies, sporting goods, toys, cameras and supplies, health and beauty
aids, pharmaceuticals, and jewelry.
Nationally advertised merchandise accounts for a majority of
sales of the stores. The Company markets lines of merchandise under the
store brands "Sam's American Choice", "Great Value", "House Beautiful",
"Sports Afield", "Ol' Roy", "Equate", "Popular Mechanics", and "Better
Homes & Gardens".
During the fiscal year ended January 31, 1995, domestic sales of
general merchandise at Wal-Mart stores (which are subject to seasonal
variance), including licensed departments, by product category were as
follows:
PERCENTAGE
CATEGORY OF SALES
Softgoods/domestics................. 26%
Hardgoods............................ 24
Stationery and candy................. 11
Records and electronics.............. 10
Pharmaceuticals...................... 9
Sporting goods and toys.............. 9
Health and beauty aids............... 7
Shoes................................ 2
Jewelry.............................. 2
100%
Sales in pharmaceuticals are a combination of owned and licensed
departments. While these percentages include sales of licensed
departments, the Company records as other income only rentals received from
such departments.
Sam's offers bulk displays of name brand hardgood merchandise,
some softgoods, and institutional size grocery items. Each Sam's also
carries jewelry, sporting goods, toys, tires, stationery, and books.
Most clubs have fresh food departments which include bakery, meat, and
produce.
McLane offers a wide variety of grocery and non-grocery products,
including perishable and non-perishable items. The non-grocery products
consist primarily of tobacco products, hardgood merchandise, health and
beauty aids, toys, and stationery. McLane is a wholesale distributor that
sells its merchandise to a variety of retailers, including the Company's
Wal-Mart stores, Supercenters, and Sam's Clubs.
Operations. Except for extended hours during certain holiday
seasons, the majority of the Wal-Mart stores are open from 9:00 a.m. to
9:00 p.m. six (6) days a week, and from 12:30 p.m. to 5:30 p.m. on Sundays,
with the remainder of the stores being closed on Sunday. Some Wal-Mart
stores and most of the Supercenter stores are currently open 24 hours each
day. Wal-Mart stores maintain uniform prices, except where lower prices
are necessary to meet local competition. Sales are primarily on a
self-service, cash-and-carry basis with the objective of maximizing sales
volume and inventory turnover while minimizing expenses. Bank credit card
programs, operated without recourse to the Company, are available in all
stores. Wal-Mart stores and Supercenters maintain a "satisfaction
guaranteed" program to promote customer goodwill and acceptance.
Sam's clubs are membership only, cash-and-carry operations.
However, a financial service credit card program (Discover Card) is
available in all clubs and the "Sam's Direct" commercial finance program is
available to qualifying business members. Club members include businesses
and those individuals who are members of certain qualifying organizations,
such as government and state employees and credit union members. Both
business and individual members have an annual membership fee of $25 for
the primary membership card.
Operating hours vary among Sam's clubs, but generally, they are
open Monday through Friday from 10:00 a.m. to 8:30 p.m. Most Sam's are
open weekend hours of 9:30 a.m. to 7:00 p.m. on Saturday and 12:00 noon to
6:00 p.m. on Sunday. Sam's, which offers a limited number of items,
attempts to maximize sales volume and inventory turnover and to minimize
expenses.
Distribution. During the 1995 fiscal year, approximately 84% of
the Wal-Mart stores' and Supercenters' purchases were shipped from
Wal-Mart's 30 distribution centers, six located in Arkansas; four in Texas;
two in California, Indiana, Pennsylvania, and South Carolina; and one each
in Alabama, Arizona, Colorado, Florida, Georgia, Iowa, Mississippi, New
York, Ohio, Utah, Virginia, and Wisconsin. The balance was shipped
directly to the stores from suppliers. Each of the distribution centers is
designed to serve the distribution needs of approximately 150 stores. The
average size of these distribution centers is approximately 1,000,000
square feet. Sam's Clubs receive the majority of their merchandise via
direct shipments from suppliers, rather than from the Company's
distribution centers.
The McLane distribution centers buy, sell, and distribute
merchandise primarily to the convenience store industry, and they also
service Wal-Mart stores, Supercenters and Sam's Clubs. The McLane Company
has 20 distribution centers with three located in Texas, two located in
Arizona, California, Utah, and Virginia, and one each in Colorado, Florida,
Georgia, Illinois, Mississippi, Missouri, New York, Washington, and Mexico.
Merchandising. Substantially all purchasing and merchandising
for all stores is controlled from the home offices of the Company through
centralized buying and planning practices. During the fiscal year 1995, no
single supplier to the stores accounted for more than 3.7% of the Company's
purchases.
Store Management. Every retail outlet is managed by a store
manager or club general manager and one or more assistant store or club
managers. The Company maintains training programs for managers, assistant
managers and department managers. The Company is committed to an ongoing
training program in an effort to assure well trained future store
management.
Expansion Plans. In fiscal 1996, the Company plans to open 90 to
100 new Wal-Mart stores, nine new Sam's Clubs, and 12 new Wal-Mart
Supercenters. The Company plans to expand or relocate approximately 70
older Wal-Mart stores and four Sam's Clubs along with the conversion of
approximately 80 to 85 older Wal-Mart stores into Wal-Mart Supercenters.
Also planned is the construction of three full-line distribution centers.
The Company plans to continue to develop its interests in Hong Kong, China,
Argentina, Brazil, and Canada with the planned addition of approximately 20
to 25 new units. The Company expenses its start-up costs for each new
unit during the first full month of operation. Delays may be experienced
in projected opening dates because of construction problems, weather and
other reasons. There can be no assurance that planned expansion will
proceed as scheduled.
Seasonal Aspects of Operations. The Company's business is
seasonal to a certain extent. Generally, the highest volume of sales and
net income occurs in the fourth fiscal quarter and the lowest volume occurs
during the first fiscal quarter.
Competition. The Company's Wal-Mart stores compete with other
discount, department, drug, variety, and specialty stores, many of which
are national chains. Sam's Clubs compete with wholesale clubs, as well as
with discount retailers, wholesale grocers, and general merchandise
wholesalers and distributors. The Wal-Mart Supercenters compete with other
supercenter type stores, discount stores, supermarkets, and specialty
stores, many of which are national or regional chains. The Company also
competes for new store sites. As of January 31, 1995, based on net sales,
the Company ranked first among all retail department store chains and among
all discount department store chains.
The Company's competitive position within the industry is largely
determined by the Company's ability to offer value and service to its
customers. The Company has many programs designed to meet the competitive
needs of its industry. These include the "Everyday Low Price", "Item
Merchandising", "Store-within-a-Store", "Our Business is Saving Your
Business Money", and "Buy America" programs. Although the Company believes
it has had a major influence in most of the retail markets in which its
stores are located, there is no assurance that this will continue.
Employees (Associates). As of January 31, 1995, the Company had
approximately 622,000 full- and part-time associates, an increase of
approximately 94,000 associates for the year. Part-time associates are
primarily sales personnel. Associates who are in supervisory and
management positions are compensated on a salaried basis; store managers
and club general managers receive additional compensation based on their
unit's profits. All other store associates are compensated on an hourly
basis with the opportunity of receiving additional incentive bonuses based
upon the Company's productivity and profitability.
The Company maintains profit sharing plans under which most full-
and many part-time associates become participants following one year of
employment with the Company. Annual contributions, based on the
profitability of the Company, are made at the sole discretion of the
Company. For the fiscal years ended January 31, 1990 through 1995,
contributions of approximately $90,000,000, $98,000,000, $130,000,000,
$166,000,000, $166,000,000, and $175,000,000, respectively, have been made.
The Company also offers an associate stock ownership plan that
provides for the voluntary purchase of the Company's common stock, with a
15% match by the Company on up to $1,800 of annual stock purchases. The
Company also has stock option plans that provide certain management
associates an opportunity to share in the long-term success of the Company.
At January 31, 1995, there were approximately 5,000 management associates
who had been granted stock options by the Company.
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE A TO ITEM 1 - UNITED STATES STORE COUNT AND NET SQUARE FOOTAGE GROWTH
YEARS ENDED JANUARY 31, 1990 THROUGH 1995
<CAPTION>
STORE COUNT
Fiscal Year Wal-Mart Total**
Ended Wal-Mart Stores Sam's Clubs Supercenters Beginning Ending
January 31, Opened Closed Relocated* Total Opened Closed Total Opened Total Balance Opened Closed Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward 1,257 105 2 1,364
1990 145 2 1 1,399 18 0 123 1 3 1,364 163 2 1,525
1991 176 5 2 1,568 25 0 148 2 5 1,525 201 5 1,721
1992 148 1 1 1,714 61 1 208 1 6 1,721 209 2 1,928
1993 161 1 24 1,850 48 0 256 24 30 1,928 209 1 2,136
1994 142 2 37 1,953 164 1 419 38 68 2,136 307 3 2,440
1995 111 5 69 1,990 22 13 428 75 143 2,440 139 18 2,561
</TABLE>
<TABLE>
<CAPTION>
NET SQUARE FOOTAGE
Fiscal Year
Ended Wal-Mart Stores Sam's Clubs Wal-Mart Supercenters Total Sales Per
Jan 31, Net Additions Total Net Additions Total Net Additions Total Net Additions Sq.Ft. Sq. Ft.***
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward 79,766,689 11,053,456 210,493 91,030,638 $251.67
1990 12,881,367 92,648,056 2,010,716 13,064,172 183,492 393,985 15,075,575 106,106,213 272.75
1991 17,737,917 110,385,973 2,874,918 15,939,090 423,255 817,240 21,036,090 127,142,303 292.40
1992 17,729,395 128,115,368 7,320,510 23,259,600 180,545 997,785 25,230,450 152,372,753 306.33
1993 19,480,707 147,596,075 7,444,530 30,704,130 4,037,493 5,035,278 30,962,730 183,335,483 319.52
1994 16,312,500 163,908,575 19,882,754 50,586,884 6,762,080 11,797,358 42,957,334 226,292,817 300.33
1995 10,372,791 174,281,366 1,370,074 51,956,958 14,056,859 25,854,217 25,799,724 252,092,541 300.80
</TABLE>
[FN]
<F1>
* Wal-Mart Stores locations relocated or expanded as Wal-Mart Supercenters.
<F2>
** The Company also operated 75 Bud's Warehouse Outlets, 10 Food-4-Less stores,
and four Hypermart*USA stores at January 31, 1995.
<F3>
*** Includes only stores and clubs that were open at least twelve months as of
January 31 of the previous year.
ITEM 2. PROPERTIES
The number and location of Wal-Mart stores, Supercenters, and
Sam's Clubs is incorporated by reference of the table under the caption
"Operating Units" of Page 2 of the Annual Report to Shareholders for the
year ended January 31, 1995.
The Company leases most of the buildings in which its present
stores are located. These stores are either leased from a commercial
property developer, leased pursuant to a sale/leaseback arrangement, or
leased from a local governmental entity through an industrial revenue bond
transaction. All of the Company's leases for its stores provide for fixed
annual rentals and, in many cases, the leases provide for additional rent
based on sales volume.
The Company owns 911 properties on which Wal-Mart stores and
Supercenters are located and 249 of the properties on which Sam's are
located. In some cases, the Company owns the land associated with leased
buildings. New buildings, both leased and owned, are constructed by
independent contractors.
The Company operated 30 Wal-Mart distribution facilities and 20
McLane distribution facilities at January 31, 1995. These distribution
facilities are primarily owned by the Company, and several are subject to
mortgage securing loans. Some of the distribution facilities are leased
under industrial development bond financing arrangements and provide the
option of purchasing these facilities at the end of the lease term for
nominal amounts.
The Company owns office facilities in Bentonville, Arkansas that
serve as the home office and owns additional office facilities in Temple,
Texas.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and no properties of the Company are subject to any material
pending legal proceeding, other than routine litigation incidental to its
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security
holders during the last quarter of the year ended January 31, 1995.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to each of
the executive officers of the Company, each of whom is elected by and
serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his principal occupation for at least the
past five years.
Current
Position
Name Business Experience Held Since Age
David D. Glass President and Chief Executive 1988 59
Officer.
S. Robson Walton Chairman. From 1985 until his 1992 50
election as Chairman in 1992,
he served as Vice Chairman.
Donald G. Soderquist Vice Chairman and Chief Operating 1988 61
Officer.
Paul R. Carter Executive Vice President and 1988 54
Chief Financial Officer.
William R. Fields Executive Vice President - 1992 45
Wal-Mart Stores, Inc. and
President and Chief Executive
Officer of Wal-Mart Stores
Division. Prior to 1992, he
served as Executive Vice
President - Merchandise and
Sales.
Dean L. Sanders Executive Vice President - 1992 44
Wal-Mart Stores, Inc. and
President and Chief Executive
Officer of Sam's Club Division.
Prior to 1992, he served as
Executive Vice President -
Operations.
Nicholas J. White Executive Vice President - 1989 50
Wal-Mart Supercenter Division.
Prior to 1989, he served as
Executive Vice President -
Sam's Wholesale Club.
Joseph S. Hardin, Jr. Executive Vice President - 1995 49
Wal-Mart Stores, Inc. and Chief
Operating Officer of Wal-Mart
Stores Division. Prior to 1995,
he served as President and Chief
Executive Officer of McLane
Company, Inc. Prior to 1993,
he served as Executive Vice
President - Logistics and Personnel
Administration. Prior to 1992,
he held the position of Senior
Vice President - Distribution and
Transportation.
Bob L. Martin Executive Vice President - 1993 46
Wal-Mart Stores, Inc., and
President and Chief Executive
Officer of Wal-Mart International
Division. Prior to 1993, he
served as Executive Vice President -
Corporate Information Systems.
Prior to 1992, he served the
Company as Senior Vice President -
Information Systems.
H. Lee Scott, Jr. Executive Vice President - 1995 46
Logistics. Prior to 1995, he
served as Senior Vice President -
Logistics. Prior to 1992, he
served as Vice President -
Distribution.
Thomas P. Seay Executive Vice President - 1992 53
Real Estate and Construction.
Prior to 1992, he served as
Senior Vice President - Real
Estate and Construction.
Robert K. Rhoads Senior Vice President, Secretary 1992 40
and General Counsel. Prior to
1992, he served as Vice President,
Secretary and General Counsel.
William G. Rosier President and Chief Executive 1995 46
Officer of McLane Company, Inc.
Prior to 1995, he served as Senior
Vice President - Marketing and
Customer Services for McLane.
Prior to 1991, he served as Senior
Vice President - Purchasing and
Distribution for McLane. Prior to
1990, he served as Vice President -
Eastern Region for McLane.
James A. Walker, Jr. Senior Vice President and 1995 48
Controller. Prior to 1995, he
served as Vice President and
Controller
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED SHAREHOLDER MATTERS
The information required by this item is incorporated by
reference of the information "Number of Shareholders" under the caption "11
Year Financial Summary" on Pages 12, and 13, and all the information under
the captions "Market Price of Common Stock" and "Dividends Paid Per Share"
on page 27 of the Annual Report to Shareholders for the year ended January
31, 1995.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by
reference of all information under the caption "11 Year Financial Summary"
on Pages 12 and 13 of the Annual Report to Shareholders for the year ended
January 31, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item is furnished by
incorporation by reference of all information under the caption
"Management's Discussion and Analysis" on Pages 14, 15, and 16 on the
Annual Report to Shareholders for the year ended January 31, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is furnished by
incorporation by reference of all information under the captions
"Consolidated Statements of Income", "Consolidated Balance Sheets",
"Consolidated Statements of Shareholders' Equity", "Consolidated Statements
of Cash Flows", and "Notes to Consolidated Financial Statements" on Pages
17 through 25 of the Annual Report to Shareholders for the year ended
January 31, 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item with respect to the Company's directors
and compliance by the Company's directors, executive officers and certain
beneficial owners of the Company's Common Stock with Section 16(a) of the
Securities Exchange Act of 1934 is furnished by incorporation by reference
of all information under the captions entitled "Election of Directors" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" in
the Company's Proxy Statement for its Annual Meeting of the Shareholders to
be held on June 2, 1995. The information required by this item with
respect to the Company's executive officers appears at Item 4A of Part I of
this Form 10K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is furnished by
incorporation by reference of all information under the caption entitled
"Executive Compensation" in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by this item is furnished by
incorporation by reference of all information under the caption "Equity
Securities and Principal Holders Thereof" in the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is furnished by
incorporation by reference of all information under the caption "Interest
of Management in Certain Transactions" in the Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)
1. & 2. Consolidated Financial Statements and Schedules
The financial statements listed in the Index to Consolidated
Financial Statements and Schedules, which appears on Page 18, are
incorporated by reference herein or filed as part of this Form 10-K.
3. Exhibits
The following documents are filed as exhibits to this Form 10-K:
3(a) Restated Certificate of Incorporation of the Company is
incorporated herein by reference from the Annual Report on
Form 10-K of the Company for the year ended January 31,
1989, and the Certificate of Amendment to the Restated
Certificate of Incorporation is incorporated herein by
reference to Registration Statement on Form S-8 (File
Number 33-43315).
3(b) By-Laws of the Company, as amended June 3, 1993, are
incorporated herein by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1994.
4(a) Form of Indenture dated as of June 1, 1985 between the
Company and Boatmen's Trust Company (formerly Centerre
Trust Company) of St. Louis, Trustee, is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-97917).
4(b) Form of Indenture dated as of August 1, 1985 between the
Company and Boatmen's Trust Company (formerly Centerre
Trust Company) of St. Louis, Trustee, is incorporated
herein by reference to Exhibit 4(c) to Registration
Statement on Form S-3 (File Number 2-99162).
4(c) Form of Indenture dated as of August 15, 1985 between the
Company and Bankers Trust Company, Trustee, is incorporated
herein by reference to Exhibit 4(b) to Registration
Statement on Form S-3 (File Number 2-99485).
4(d) Form of Amended and Restated Indenture, Mortgage and Deed
of Trust, Assignment of Rents and Security Agreement dated
as of December 1, 1986, among the First National Bank of
Boston and James E. Mogavero, Owner Trustees, Rewal
Corporation I, Estate for Years Holder, Rewal Corporation
II, Remainderman, the Company and the First National Bank
of Chicago and R.D. Manella, Indenture Trustees, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-11394).
4(e) Form of Indenture dated as of July 15, 1990 between the
Company and Harris Trust and Savings Bank, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-35710).
4(f) Indenture dated as of April 1, 1991, between the Company
and The First National Bank of Chicago, Trustee, is
incorporated herein by reference to Exhibit 4(a) to
Registration Statement on Form S-3 (File Number 33-51344).
4(g) First Supplemental Indenture dated as of September 9, 1992,
to the Indenture dated as of April 1, 1991, between the
Company and The First National Bank of Chicago, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-51344).
+10(a) Form of individual deferred compensation agreements is
incorporated herein by reference from the Annual Report on
Form 10-K of the Company, as amended, for the year ended
January 31, 1986.
+10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is
incorporated herein by reference to Registration Statement
on Form S-8 (File Number 2-94358).
+10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference from the
Annual Report on Form 10-K of the Company for the year
ended January 31, 1987.
+10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference from the
Annual Report on Form 10-K of the Company for the year
ended January 31, 1992.
+10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference from the
Annual Report on Form 10-K of the Company for the year
ended January 31, 1993.
+10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is
incorporated herein by reference to Exhibit 4(c) to the
registration statement on Form S-8 (File Number 33-5325).
10(g) Exchange Agreement by and between Wal-Mart Stores, Inc. and
Walton Enterprises, Inc., dated May 23, 1990, is
incorporated herein by reference to Current Report on Form
8-K dated June 14, 1990.
+10(h) A written description of a consulting agreement by and
between Wal-Mart Stores, Inc. and Jack C. Shewmaker, is
incorporated herein by reference to the description
contained in the third paragraph under the caption
"Compensation of Directors" in the Company's definitive
Proxy Statement to be filed in connection with the Annual
Meeting of the Shareholders to be held on June 2, 1995.
+10(i) Wal-Mart Stores, Inc. Directors Deferred Compensation Plan
is incorporated herein by reference to Exhibit 4(d) to
Registration Statement on Form S-8 (File Number 33-55178).
*13 All information incorporated by reference in Items 5, 6, 7
and 8 of this Annual Report on Form 10-K from the Annual
Report to Shareholders for the year ended January 31, 1995.
*21 List of the Company's Subsidiaries
*23 Consent of Independent Auditors
*27 Financial Data Schedule
*Filed herewith as an Exhibit.
+Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
During the last quarter of the fiscal year ended January
31, 1995, the Company filed two reports on Form 8-K with the
Securities and Exchange Commission (the "Commission") as described
below:
(1) Form 8-K dated November 11, 1994 and filed with the
Commission on November 14, 1994. The Form 8-K was filed
for the purpose of filing certain documents as exhibits
under Item 7 of Form 8-K in connection with, and for
incorporation by reference into, the Company's Registration
Statement on Form S-3 (File No. 33-55725). The documents
related to the closing on November 10, 1994, of the
issuance of certain Pass Through Certificates described in the
Prospectus Supplement dated November 3, 1994.
(2) Form 8-K dated December 28, 1994 and filed with the
Commission on December 28, 1994. The Form 8-K was filed
for the purpose of filing certain documents as exhibits
under Item 7 of Form 8-K in connection with, and for
incorporation by reference into, the Company's Registration
Statement on Form S-3 (File No. 33-55725). The documents
related to the closing on December 22, 1994, of the
issuance of certain Pass Through Certificates described in
the Prospectus Supplement dated December 15, 1994.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Annual
Report to
Shareholders
(page)
Covered by Report of Independent
Auditors:
Consolidated Statements of Income
for each of the three years in the
period ended January 31, 1995 17
Consolidated Balance Sheets at
January 31, 1995 and 1994 18
Consolidated Statements of
Shareholders' Equity for each
of the three years in the
period ended January 31, 1995 19
Consolidated Statements of Cash
Flows for each of the three
years in the period ended
January 31, 1995 20
Notes to Consolidated Financial
Statements, except Note 8 21-25
Not Covered by Report of Independent
Auditors:
Note 8 - Quarterly Financial Data
(unaudited) 25
All schedules have been omitted because the required information is not
present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
financial statements, including the notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: April 21, 1995 WAL-MART STORES, INC.
BY:/s/David D. Glass
David D. Glass
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:
DATE: April 21, 1995 /s/S. Robson Walton
S. Robson Walton
Chairman of the Board
DATE: April 21, 1995 /s/David D. Glass
David D. Glass
President, Chief Executive
Officer and Director
DATE: April 21, 1995 /s/Donald G. Soderquist
Donald G. Soderquist
Vice Chairman, Chief
Operating Officer
and Director
DATE: April 21, 1995 /s/Paul R. Carter
Paul R. Carter
Executive Vice President,
Chief Financial Officer and
Director
DATE: April 21, 1995 /s/James A. Walker, Jr.
James A. Walker, Jr.
Senior Vice President and
Controller (Principal
Accounting Officer)
DATE: April 21, 1995 /s/David R. Banks
David R. Banks
Director
DATE: April 21, 1995
John A. Cooper, Jr.
Director
DATE: April 21, 1995
Robert H. Dedman
Director
DATE: April 21, 1995 /s/Frederick S. Humphries
Frederick S. Humphries
Director
DATE: April 21, 1995 /s/F. Kenneth Iverson
F. Kenneth Iverson
Director
DATE: April 21, 1995 /s/Elizabeth A. Sanders
Elizabeth A. Sanders
Director
DATE: April 21, 1995 /s/Jack Shewmaker
Jack Shewmaker
Director
DATE: April 21, 1995 /s/John Walton
John Walton
Director
<TABLE>
<CAPTION>
11-Year Financial Summary
(Dollar amounts in millions except per share data.)
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Operating Results
Net sales $82,494 $67,344 $55,484 $43,887 $32,602 $25,811
Net sales increase 22% 21% 26% 35% 26% 25%
Comparative store sales
increase 7% 6% 11% 10% 10% 11%
Other income - net 918 641 501 403 262 175
Cost of sales 65,586 53,444 44,175 34,786 25,500 20,070
Operating, selling, and
general and administra-
tive expenses 12,858 10,333 8,321 6,684 5,152 4,070
Interest costs:
Debt 520 331 143 113 43 20
Capital leases 186 186 180 153 126 118
Provision for federal
and state income taxes 1,581 1,358 1,171 945 752 632
Net income 2,681 2,333 1,995 1,609 1,291 1,076
Per share of common stock:
Net income 1.17 1.02 .87 .70 .57 .48
Dividends .17 .13 .11 .09 .07 .06
Financial Position
Current assets $15,338 $12,114 $10,198 $ 8,575 $ 6,415 $ 4,713
Inventories at
replacement cost 14,415 11,483 9,780 7,857 6,207 4,751
Less LIFO reserve 351 469 512 473 399 323
Inventories at LIFO cost 14,064 11,014 9,268 7,384 5,808 4,428
Net property, plant, equip-
ment and capital leases 15,874 13,176 9,793 6,434 4,712 3,430
Total assets 32,819 26,441 20,565 15,443 11,389 8,198
Current liabilities 9,973 7,406 6,754 5,004 3,990 2,845
Long-term debt 7,871 6,156 3,073 1,722 740 185
Long-term obligations
under capital leases 1,838 1,804 1,772 1,556 1,159 1,087
Preferred stock with
mandatory redemption
provisions --- --- --- --- --- ---
Shareholders' equity 12,726 10,753 8,759 6,990 5,366 3,966
Financial Ratios
Current ratio 1.5 1.6 1.5 1.7 1.6 1.7
Inventories/working capital 2.6 2.3 2.7 2.1 2.4 2.4
Return on assets* 10.1% 11.3% 12.9% 14.1% 15.7% 16.9%
Return on shareholders'
equity* 24.9% 26.6% 28.5% 30.0% 32.6% 35.8%
Other Year-End Data
Number of Wal-Mart Stores 1,990 1,953 1,850 1,714 1,568 1,399
Number of Supercenters 143 68 30 6 5 3
Number of Sam's Clubs 428 419 256 208 148 123
Average Wal-Mart Store size 87,600 83,900 79,800 74,700 70,700 66,400
Number of Associates 622,000 528,000 434,000 371,000 328,000 271,000
Number of Shareholders 259,286 257,946 180,584 150,242 122,414 79,929
</TABLE>
[FN]
* On beginning of year balances.
<TABLE>
<CAPTION>
11-Year Financial Summary
(Dollar amounts in millions except per share data.)
1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C>
Operating Results
Net Sales $20,649 $15,959 $11,909 $ 8,451 $ 6,401
Net sales increase 29% 34% 41% 32% 37%
Comparative store sales
increase 12% 11% 13% 9% 15%
Other income - net 137 105 85 55 52
Cost of sales 16,057 12,282 9,053 6,361 4,722
Operating, selling, and
general and administra-
tive expenses 3,268 2,599 2,008 1,485 1,181
Interest costs:
Debt 36 25 10 2 5
Capital leases 99 89 76 55 43
Provision for federal
and state income taxes 488 441 396 276 231
Net income 838 628 451 327 271
Per share of common stock:
Net income .37 .28 .20 .15 .12
Dividends .04 .03 .02 .02 .01
Financial Position
Current assets $ 3,631 $ 2,905 $ 2,353 $ 1,784 $ 1,303
Inventories at
replacement cost 3,642 2,855 2,185 1,528 1,227
Less LIFO reserve 291 203 154 140 123
Inventories at LIFO cost 3,351 2,652 2,031 1,388 1,104
Net property, plant, equip-
ment and capital leases 2,662 2,145 1,676 1,303 870
Total assets 6,360 5,132 4,049 3,104 2,205
Current liabilities 2,066 1,744 1,340 993 689
Long-term debt 184 186 179 181 41
Long-term obligations
under capital leases 1,009 867 764 595 450
Preferred stock with
mandatory redemption
provisions --- --- --- 5 6
Shareholders' equity 3,008 2,257 1,690 1,278 985
Financial Ratios
Current ratio 1.8 1.7 1.8 1.8 1.9
Inventories/working capital 2.1 2.3 2.0 1.8 1.8
Return on assets* 16.3% 15.5% 14.5% 14.8% 16.4%
Return on shareholders'
equity* 37.1% 37.1% 35.2% 33.3% 36.7%
Other Year-End Data
Number of Wal-Mart Stores 1,259 1,114 980 859 745
Number of Supercenters -- -- -- -- --
Number of Sam's Clubs 105 84 49 23 11
Average Wal-Mart Store size 63,500 61,500 59,000 57,000 55,000
Number of Associates 223,000 183,000 141,000 104,000 81,000
Number of Shareholders 80,270 79,777 32,896 21,828 14,799
</TABLE>
[FN]
* On beginning of year balances.
Management's Discussion and Analysis
Results of Operations
Revenues
Sales for the three fiscal years ended January 31 and the respective total and
comparable store percentage increases over the prior year were:
Total Comparable
Fiscal Sales Company Store
Year (in millions) Increases Increases
1995 $82,494 22% 7%
1994 67,344 21% 6%
1993 55,484 26% 11%
The sales increase of 22% in fiscal 1995 compared with fiscal 1994 was
attributable to 111 new stores, 6 new Supercenters, and 22 new Sam's Clubs;
sales from the relocation or expansion of 69 existing Wal-Mart stores into
Supercenters; comparative store sales increases of 7%; and the entry into
the Canadian market through the purchase of 122 stores from Woolworth
Canada, Inc., a subsidiary of Woolworth Corporation. Sam's Clubs sales as
a percentage of total sales increased by 1.1%, part of which is attributable
to the PACE units acquired in the fourth quarter of fiscal 1994. Supercenter
sales as a percentage of total sales increased by .5% and Canada store sales
accounted for 1.5% of total sales.
The sales increase of 21% in fiscal 1994 compared with fiscal 1993 was
attributable to 142 new stores, 1 new Supercenter, and 65 new Sam's Clubs;
sales from the relocation or expansion of 37 existing Wal-Mart stores into
Supercenters; comparative store sales increases of 6%; a 37% growth in the
sales of the McLane Company, and the acquisition of 99 PACE Clubs in the
fourth quarter. Sam's Clubs sales as a percentage of total sales decreased
by .3% while the McLane Company sales as a percentage of total sales increased
by .7%.
New Wal-Mart Stores and Sam's Clubs
1995 1994 1993
New Wal-Mart stores 111 142 161
New Supercenters 6 1
Wal-Mart stores relocated or expanded
to Supercenters 69 37 24
New Sam's Clubs 22 65 48
Acquired PACE clubs 99
Acquired Canada Woolco stores 122
New Canada stores 1
Costs and Expenses
Cost of sales as a percentage of sales increased .1% in fiscal 1995 as
compared with fiscal 1994 and decreased .3% in fiscal 1994 as compared with
fiscal 1993. The increase in fiscal 1995 is primarily due to a larger
percentage of consolidated sales attributable to Sam's Clubs resulting in
part from the addition of the PACE Clubs. The cost of sales in Sam's Clubs
is significantly higher as a percentage of sales than in Wal-Mart stores
due to a lower markup on purchases. The decrease in fiscal 1994 as compared
with fiscal 1993 was due to a larger percentage of consolidated sales
attributed to departments within Wal-Mart stores which have higher markon
percents and increases in markon percents in Sam's Clubs and McLane Company.
Operating, selling, and general and administrative expenses as a
percentage of sales increased .2% and .3%, respectively, in each of the last
two fiscal years when compared with the previous year. The increase in fiscal
1995 was primarily attributable to the acquisition of the Canada stores and
higher payroll and payroll-related benefit costs. The increase in fiscal
1994 was due principally to higher payroll and payroll-related benefit cost,
depreciation costs and certain occupancy costs in part attributable to the
Company's expansion program.
Interest Cost
Interest cost increased in fiscal 1995 and 1994 due primarily to increased
indebtedness in each of the years, which is attributable to the expansion
program. The cost of short-term borrowing increased as average short-term
borrowing rates increased approximately 1.4% in fiscal 1995 compared with
fiscal 1994. Interest cost will increase in fiscal 1996 with the additional
borrowing required to finance the expansion program. The Company may use
short-term borrowing arrangements to take advantage of the most favorable
financing rates. See Note 2 of Notes to Consolidated Financial Statements
for additional information on interest and debt.
Income Taxes
The effective income tax rate was 37.1% and 36.8% in fiscal 1995 and 1994
respectively. See Note 4 of Notes to Consolidated Financial Statements for
additional information on income taxes.
Liquidity and Capital Resources
Cash Flow Information
Cash flow provided from operations was $2.9 billion in fiscal 1995. These
funds, combined with the long-term borrowings of $1.3 billion and proceeds
from sale/leaseback transactions of $.5 billion, were used to finance capital
expenditures of $3.7 billion, acquire the assets of 122 Canada Woolco stores,
invest in international operations, pay dividends, provide working capital,
and fund the operation of subsidiaries.
Borrowing Information
The Company had committed lines of credit of $1,175 million with 11 banks and
informal lines with various banks totaling an additional $1,050 million which
were used to support short-term borrowing and commercial paper. These lines
of credit and their anticipated cyclical increases will be sufficient to
finance the seasonal buildups in merchandise inventories and interim
financing requirements for stores developed with sale/leaseback or other long-
term financing objectives.
The Company has aggressively expanded during the past three years. Even
though interest rates increased throughout fiscal 1995, the Company has taken
advantage of interest rates in the past three years which have been substan-
tially lower than those available in recent history. These favorable debt
market conditions, combined with the Company's ability to generate significant
cash flows from operations, have allowed it to continue this expansion and
position itself to continue as the world's largest retailer. These increased
borrowings to support the expansion programs have caused the Company's debt
(including obligations under capital leases) to equity ratios to increase
to .77:1 at the end of fiscal 1995, as compared with .75:1 and .56:1 at the
end of fiscal 1994 and 1993, respectively. In view of the Company's
significant working capital, its consistent ability to generate working
capital from operations and the availability of external financing, the
Company foresees no difficulty in providing funds necessary to fulfill its
working capital needs and to finance its expansion plans.
Foreign Currency Translation
The Company has operations in Mexico through a joint venture with CIFRA,
Mexico's largest retailer. In fiscal 1995 the value of the peso dropped
significantly in relation to the dollar, and accordingly the Company's
investment and shareholders' equity were reduced due to a foreign currency
translation adjustment of approximately $235 million related to the joint
venture in Mexico. The Company also had a foreign currency translation
reduction of approximately $21 million related to its Canadian operation.
The Company is evaluating strategies to reduce the risk of currency
devaluation. Although the Company is currently exposed to this risk, any
further devaluation of the peso or other currencies should not significantly
impact the Company's consolidated operations or financial position.
Expansion
The Company plans to continue to enhance its position as the world's largest
retailer through expansion in fiscal 1996. Expansion plans include 90 to
100 new Wal-Mart stores, 12 new Supercenters and 9 new Sam's Clubs along
with the expansion or relocation of approximately 70 Wal-Mart stores and
4 Sam's Clubs, and the conversion of approximately 80 Wal-Mart stores into
Supercenters.
The Company will continue to develop its interests in Hong Kong, China,
Argentina, Brazil and Canada with the planned addition of 20 to 25 new units.
With the recent devaluation of the peso, the Company has slowed its planned
expansion program in Mexico and will continue to evaluate future
opportunities.
Also included in expansion plans for fiscal 1996 are three distribution
centers. Total planned capital expenditures for 1996 approximate $4 billion.
The Company may sell $1,051 million of public debt utilizing shelf registra-
tion statements previously filed with the Securities and Exchange Commission.
Long-term and short-term borrowings along with cash provided from operations
should provide adequate funding for the Company's fiscal 1996 expansion
program.
Consolidated Statements of Income
(Amounts in millions except per share data.)
Fiscal years ended January 31,
1995 1994 1993
Revenues:
Net sales $82,494 $67,344 $55,484
Other income_net 918 641 501
83,412 67,985 55,985
Costs and Expenses:
Cost of sales 65,586 53,444 44,175
Operating, selling, and
general and administrative
expenses 12,858 10,333 8,321
Interest Costs:
Debt 520 331 143
Capital leases 186 186 180
79,150 64,294 52,819
Income Before Income Taxes 4,262 3,691 3,166
Provision for Income Taxes:
Current 1,572 1,325 1,137
Deferred 9 33 34
1,581 1,358 1,171
Net Income $ 2,681 $ 2,333 $ 1,995
Net Income Per Share $ 1.17 $ 1.02 $ .87
See accompanying notes.
Net Income
(Millions of Dollars) (Graph)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
327 451 628 838 1,076 1,291 1,609 1,995 2,333 2,681
Consolidated Balance Sheets
(Amounts in millions.)
January 31, 1995 1994
Assets
Current Assets:
Cash and cash equivalents $ 45 $ 20
Receivables 700 690
Recoverable costs from
sale/leaseback 200 208
Inventories:
At replacement cost 14,415 11,483
Less LIFO reserve 351 469
Inventories at LIFO cost 14,064 11,014
Prepaid expenses and other 329 182
Total Current Assets 15,338 12,114
Property, Plant, and Equipment, at Cost:
Land 3,036 2,741
Buildings and improvements 8,973 6,818
Fixtures and equipment 4,768 3,981
Transportation equipment 313 260
17,090 13,800
Less accumulated depreciation 2,782 2,173
Net property, plant, and equipment 14,308 11,627
Property under capital leases 2,147 2,059
Less accumulated amortization 581 510
Net property under capital leases 1,566 1,549
Other Assets and Deferred Charges 1,607 1,151
Total Assets $32,819 $26,441
Liabilities and Shareholders' Equity
Current Liabilities:
Commercial paper $ 1,795 $ 1,575
Accounts payable 5,907 4,104
Accrued liabilities 1,819 1,473
Accrued federal and state
income taxes 365 183
Long-term debt due within one year 23 20
Obligations under capital
leases due within one year 64 51
Total Current Liabilities 9,973 7,406
Long-Term Debt 7,871 6,156
Long-Term Obligations Under
Capital Leases 1,838 1,804
Deferred Income Taxes 411 322
Shareholders' Equity:
Preferred stock ($.10 par value;
100 shares authorized, none issued)
Common stock ($.10 par value;
5,500 shares authorized, 2,297
and 2,299 issued and outstanding
in 1995 and 1994, respectively) 230 230
Capital in excess of par value 539 536
Retained earnings 12,213 9,987
Foreign currency translation
adjustment (256) _
Total Shareholders' Equity 12,726 10,753
Total Liabilities and Shareholders'
Equity $32,819 $26,441
See accompanying notes.
<TABLE>
Consolidated Statements of Shareholders' Equity
<CAPTION>
Foreign
Capital in currency
Number Common excess of Retained translation
of shares stock par value earnings adjustment Total
(Amounts in millions except per share data.)
<S> <C> <C> <C> <C> <C> <C>
Balance - January 31, 1992 1,149 $115 $626 $ 6,249 $ -- $6,990
Net Income 1,995 1,995
Cash dividends
($.11 per share) (241) (241)
Two-for-one stock split 1,150 115 (115) --
Other 1 16 16
Balance - January 31, 1993 2,300 230 527 8,003 -- 8,760
Net Income 2,333 2,333
Cash dividends
($.13 per share) (299) (299)
Other (1) 9 (50) (41)
Balance - January 31, 1994 2,299 230 536 9,987 -- 10,753
Net Income 2,681 2,681
Cash dividends
($.17 per share) (391) (391)
Foreign currency translation
adjustment (256) (256)
Other (2) 3 (64) (61)
Balance - January 31, 1995 2,297 $230 $539 $12,213 $(256) $12,726
</TABLE>
See accompanying notes.
Consolidated Statements of Cash Flows
(Amounts in millions.)
Fiscal years ended January 31,
1995 1994 1993
Cash flows from
operating activities:
Net income $2,681 $2,333 $1,995
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 1,070 849 649
Increase in accounts receivable (84) (165) (106)
Increase in inventories (3,053) (1,324) (1,884)
Increase in accounts payable 1,914 230 420
Increase in accrued liabilities 496 327 176
Other (118) (55) 28
Net cash provided by operating
activities 2,906 2,195 1,278
Cash flows from investing activities:
Payments for property, plant,
and equipment (3,734) (3,644) (3,756)
Acquisition of assets from PACE
Membership Warehouses, Inc. _ (830) _
Acquisition of assets from
Woolworth Canada, Inc. (352) _ _
Sale/leaseback arrangements
and other property sales 502 272 416
Investment in international
operations (434) (198) (106)
Other investing activities 226 (86) (60)
Net cash used in investing
activities (3,792) (4,486) (3,506)
Cash flows from financing activities:
Increase (decrease) in
commercial paper 220 (14) 1,135
Proceeds from issuance of
long-term debt 1,250 3,108 1,367
Dividends paid (391) (299) (241)
Payment of long-term debt (37) (19) (8)
Payment of capital lease
obligations (70) (437) (60)
Other financing activities (61) (40) 16
Net cash provided by financing
activities 911 2,299 2,209
Net increase (decrease) in cash
and cash equivalents 25 8 (19)
Cash and cash equivalents at
beginning of year 20 12 31
Cash and cash equivalents at
end of year $ 45 $ 20 $ 12
Supplemental disclosure of cash flow information:
Income tax paid $1,390 $1,366 $1,173
Interest paid 658 450 317
Capital lease obligations incurred 193 162 286
See accompanying notes.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Segment information
The Company and its subsidiaries are principally engaged in
the operation of mass merchandising stores.
Consolidation
The consolidated financial statements include the accounts
of subsidiaries. Significant intercompany transactions have
been eliminated in consolidation.
Cash and cash equivalents
The Company considers investments with a maturity of three
months or less when purchased to be "cash equivalents."
Inventories
Inventories are stated principally at cost (last-in, first-
out), which is not in excess of market, using the retail
method for inventories in stores.
Pre-opening costs
Costs associated with the opening of stores are expensed
during the first full month of operations. The costs are
carried as prepaid expenses prior to the store opening.
Recoverable costs from sale/leaseback
All costs of acquisition and construction of properties for
which the Company plans to sell and leaseback within one
year are accumulated in current assets until properties are
sold.
Interest during construction
In order that interest costs properly reflect only that
portion relating to current operations, interest on borrowed
funds during the construction of property, plant, and
equipment is capitalized. Interest costs capitalized were
$70 million, $65 million and $80 million in 1995, 1994, and
1993, respectively.
Depreciation and Amortization
Depreciation and amortization for financial statement
purposes is provided on the straight-line method over the
estimated useful lives of the various assets. For income tax
purposes, accelerated methods are used with recognition of
deferred income taxes for the resulting temporary
differences.
Operating, selling, and general and administrative expenses
Buying, warehousing, and occupancy costs are included in
operating, selling, and general and administrative expenses.
Income taxes
In fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS 109) prospectively as a change in accounting principle
effective February 1, 1993. Under SFAS 109, the deferred tax
provision is determined under the liability method, whereby
deferred tax assets and liabilities are recognized based on
differences between financial statement and tax bases of
assets and liabilities using presently enacted tax rates. In
fiscal year 1993, deferred income taxes were provided on
timing differences between financial statement and taxable
income.
Net income per share
Net income per share is based on the weighted average
outstanding common shares. The dilutive effect of stock
options is insignificant and consequently has been excluded
from the earnings per share computations.
Stock options
Proceeds from the sale of common stock issued under the
stock option plans and related tax benefits which accrue to
the Company are accounted for as capital transactions, and
no charges or credits are made to income in connection with
the plans.
2. Commercial Paper and Long-term Debt
Information on short-term borrowings and interest rates is
as follows (dollar amounts in millions):
Fiscal year ended January 31, 1995 1994 1993
Maximum amount outstanding at
month-end $2,729 $2,395 $2,315
Average daily short-term
borrowings 1,693 1,247 1,184
Weighted average interest rate 4.4% 3.0% 3.5%
At January 31, 1995, the Company had committed lines of
credit of $1,175 million with 11 banks and informal lines of
credit with various banks totaling an additional $1,050
million, which were used to support short-term borrowings
and commercial paper. Short-term borrowings under these
lines of credit bear interest at or below the prime rate.
Long-term debt at January 31 consists of (amounts in
millions):
1995 1994
8 5\8% Notes due April 2001 $ 750 $ 750
5 7\8% Notes due October 2005 750 750
9 1\10% Notes due July 2000 500 500
5 1\2% Notes due September 1997 500 500
6 1\8% Notes due October 1999 500 500
5 1\2% Notes due March 1998 500 500
6 1\2% Notes due June 2003 500 500
7 1\4% Notes due June 2013 500 500
7 1\2% Notes due May 2004 500 _
7 8\10%-8 1\4% Obligations from sale/
leaseback transactions
due 2014 484 --
7%-8% Obligations from sale/
leaseback transactions
due 2013 322 335
8% Notes due May 1996 250 250
6 3\8% Notes due March 2003 250 250
6 3\4% Notes due October 2023 250 250
8% Notes due September 2006 250 _
8 1\2% Notes due September 2024 250 _
6 7\8% Eurobond due June 1999 250 _
5 1\8% Eurobond due October 1998 250 250
10 7\8% Debentures due August 2000 100 100
Other 215 221
$7,871 $6,156
Long-term debt is unsecured except for $220 million
which is collateralized by property with an aggregate
carrying value of approximately $358 million. Annual
maturities on long-term debt during the next five years
are (in millions):
Fiscal years ending Annual
January 31, maturity
1996 $ 23
1997 268
1998 523
1999 774
2000 806
Thereafter 5,500
The Company observes certain covenants under the terms
of its note and debenture agreements, the most restrictive
of which relates to amounts of additional secured debt and
long-term leases. The Company has entered into
sale/leaseback transactions involving buildings while
retaining title to the underlying land. These transactions
were accounted for as financings and are included in long-
term debt and the annual maturities schedules above. The
resulting obligations are amortized over the lease terms.
Future minimum lease payments for each of the five
succeeding years as of January 31, 1995 are (in millions):
Fiscal years ending Minimum
January 31, Rentals
1996 $ 81
1997 72
1998 76
1999 76
2000 104
Thereafter 1,109
The fair value of the Company's long-term debt
approximates $7,530 million based on the Company's current
incremental borrowing rate for similar types of borrowing
arrangements. The carrying amount of the short-term
borrowings approximates fair value.
At January 31, 1995 and 1994, the Company had letters of
credit outstanding totaling $580 and $808 million,
respectively. These letters of credit were issued primarily
for the purchase of inventory.
The Company has guaranteed the indebtedness of a joint
venture for the development of real estate in Puerto Rico.
At January 31, 1995, the amount guaranteed was approximately
$54 million. The Company does not anticipate any
joint venture defaults.
Under shelf registration statements previously filed
with the Securities and Exchange Commission, the Company may
issue debt securities aggregating $1,051 million.
3. Defined Contribution Plan
The Company maintains a profit sharing plan under which most
full and many part-time Associates become participants
following one year of employment. Annual contributions,
based on the profitability of the Company, are made at the
sole discretion of the Company. Contributions were $175
million, $166 million, and $166 million in 1995, 1994, and
1993, respectively.
4. Income Taxes
The Company prospectively adopted SFAS 109 as a change in
accounting principle effective February 1, 1993;
consequently, prior years' financial statements have not
been restated. Due to the nature of the predominant
cumulative differences in the Company's book and tax bases
of assets and liabilities, which relate to items that were
both timing differences under Accounting Principles Board
Opinion 11, "Accounting for Income Taxes" (APB 11), and
temporary differences under SFAS 109, the cumulative impact
of adoption was insignificant.
The income tax provision consists of the following (in
millions):
1995 1994 1993
Current:
Federal $1,394 $1,193 $1,002
State and local 178 132 135
Total current tax provision 1,572 1,325 1,137
Deferred:
Federal 7 30 31
State and local 2 3 3
Total deferred tax provision 9 33 34
Total provision for income taxes $1,581 $1,358 $1,171
Deferred income taxes under SFAS 109 reflect the net
tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Items
that give rise to significant portions of the deferred tax
accounts at January 31 are as follows (in millions):
1995 1994
Deferred tax liabilities:
Property, plant, and equipment $518 $408
Inventory 88 38
Other 8 9
Total deferred tax liabilities 614 455
Deferred tax assets:
Amounts accrued for financial
reporting purposes not yet
deductible for tax purposes 230 114
Capital leases 114 95
Other 33 18
Total deferred tax assets 377 227
Net deferred tax liabilities $237 $228
The components of the provision for deferred income
taxes under APB11 for the years ended January 31, 1993
are (in millions):
1993
Depreciation $ 68
Capital leases (21)
Other (12)
$ 35
A reconciliation of the significant differences between
the effective income tax rate and the federal statutory
rate on pretax income follows:
1995 1994 1993
Statutory tax rate 35.0% 35.0% 34.0%
State income taxes, net of
federal income tax benefit 2.7% 2.4% 2.9%
Other (0.6%) (0.6%) 0.1%
Effective tax rate 37.1% 36.8% 37.0%
5. Acquisitions
In two unrelated cash transactions during fiscal 1994, the
Company acquired selected assets of PACE Membership
Warehouses, Inc., including the right to operate 107 of
PACE's former locations, for $830 million, recording $336
million of goodwill which is being amortized over 25 years.
In fiscal 1995, the Company acquired selected assets
related to 122 Woolco stores in Canada from Woolworth
Canada, Inc., a subsidiary of Woolworth Corporation, for
approximately $352 million, recording $221 million of
leasehold and location value which is being amortized over
20 years. These transactions have been accounted for as
purchases, and the results of operations for the acquired
units since the dates of their acquisitions have been
included in the Company's results. Pro forma results of
operations are not presented due to insignificant
differences from the historical results.
6. Stock Option Plans
At January 31, 1995, 76 million shares of common stock were
reserved for issuance under stock option plans. The options
granted under the stock option plans expire 10 years from
date of grant and may be exercised in nine annual
installments. Further information concerning the options is
as follows:
Option price
Shares per share Total
Shares under option
January 31, 1992 13,618,000 $ .67-27.25 $142,763,000
Options Granted 4,072,000 $25.75-30.82 118,430,000
Options Cancelled (1,134,000) $ .67-30.82 (13,560,000)
Options Exercised (2,092,000) $ .67-27.25 (12,773,000)
January 31, 1993 14,464,000 $ 1.43-30.82 $234,860,000
Options Granted 3,550,000 $25.00-27.25 90,377,000
Options Cancelled (803,000) $ 1.43-30.82 (17,325,000)
Options Exercised (1,335,000) $ 1.43-30.82 (9,664,000)
January 31, 1994 15,867,000 $ 1.43-30.82 $298,248,000
Options Granted 4,125,000 $21.63-26.75 95,689,000
Options Cancelled (1,013,000) $ 1.43-30.82 (23,127,000)
Options Exercised (1,019,000) $ 2.08-27.25 (7,829,000)
January 31, 1995 17,969,000 $ 2.78-30.82 $362,981,000
(4,223,000 shares exercisable)
Shares available for option:
January 31, 1994 11,502,000
January 31, 1995 58,107,000
7. Long-term Lease Obligations
The Company and certain of its subsidiaries have long-term
leases for stores and equipment. Rentals (including, for
certain leases, amounts applicable to taxes, insurance,
maintenance, other operating expenses, and contingent
rentals) under all operating leases were $479 million in
1995, $361 million in 1994, and $313 million in 1993.
Aggregate minimum annual rentals at January 31, 1995, under
non-cancelable leases are as follows (in millions):
Fiscal Operating Capital
years leases leases
1996 $ 386 $ 252
1997 403 251
1998 386 251
1999 334 249
2000 318 247
Thereafter 3,155 2,785
Total minimum rentals $4,982 4,035
Less estimated executory costs 80
Net minimum lease payments 3,955
Less imputed interest at rates
ranging from 6.1% to 14.0% 2,053
Present value of net minimum lease payments $1,902
Certain of the leases provide for contingent additional
rentals based on percentage of sales. Such additional
rentals amounted to $42 million, $27 million, and $30
million in 1995, 1994, and 1993, respectively. Substantially
all of the store leases have renewal options for additional
terms from five to 25 years at the same or lower minimum
rentals.
The Company has entered into lease commitments for land
and buildings for 62 future locations. These lease
commitments with real estate developers or through
sale/leaseback arrangements provide for minimum rentals for
20 to 25 years, excluding renewal options, which, if
consummated based on current cost estimates, will
approximate $58 million annually over the lease terms.
8. Quarterly Financial Data (Unaudited)
Amounts in millions
(except per share information) Quarters ended
April 30, July 31, October 31, January 31,
1995
Net sales $17,686 $19,942 $20,418 $24,448
Cost of sales 14,063 15,960 16,201 19,362
Net income 498 565 588 1,030
Net income per share $ .22 $ .25 $ .26 $ .45
1994
Net sales $13,920 $16,237 $16,827 $20,360
Cost of sales 11,017 12,963 13,308 16,156
Net income 451 496 519 867
Net income per share $ .20 $ .22 $ .23 $ .38
Market Price of Common Stock
Fiscal years ended January 31,
1995 1994
Quarter High Low High Low
April 30 $29.13 $24.00 $34.00 $26.38
July 31 25.88 22.75 28.50 24.88
October 31 26.00 22.75 27.25 23.50
January 31 24.13 20.88 29.88 24.38
Dividends Paid Per Share
Fiscal years ended January 31,
Quarterly
1995 1994
April 14 $0.0425 April 9 $0.0325
July 8 0.0425 July 9 0.0325
October 3 0.0425 October 4 0.0325
January 5 0.0425 January 5 0.0325
SUBSIDIARIES OF WAL-MART STORES, INC.
NAME UNDER
PERCENT OF WHICH DOING
EQUITY BUSINESS
STATE OF SECURITIES OTHER THAN
SUBSIDIARY INCORPORATION OWNED SUBSIDIARY'S
North Arkansas Arkansas 100 Wal-Mart
Wholesale Co.,
Inc., and its
subsidiaries
McLane Company, Inc., Texas 100 Wal-Mart
and its subsidiaries
Exhibit 21
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Wal-Mart Stores, Inc. of our report dated March 24,
1995, included in the 1995 Annual Report to Shareholders of
Wal-Mart Stores, Inc.
We also consent to the incorporation by reference of our report
dated March 24, 1995, with respect to the consolidated financial
statements of Wal-Mart Stores, Inc. incorporated by reference in
this Annual Report (Form 10-K) for the year ended January 31, 1995,
in the following registration statements and related prospectuses.
The Wholesale Club, Inc.
Incentive Stock Option
Plan of Wal-Mart Stores, Form S-8 File No. 33-42617
Inc.
Associate Stock Purchase
Plan of Wal-Mart Stores,
Inc. Form S-8 File No. 2-64662
Stock Option Plan of 1984
of Wal-Mart Stores, Inc.,
as amended Form S-8 File No. 2-94358
and 33-43315
Stock Option Plan of 1994
of Wal-Mart Stores, Inc. Form S-8 File No. 33-55235
Debt Securities and Pass-
Through Certificates of
Wal-Mart Stores, Inc. Form S-3 File No. 33-55725
Directors Deferred Compensation
Plan of Wal-Mart Stores,
Inc. Form S-8 File No. 33-55178
Debt Securities of Wal-Mart
Stores, Inc. Form S-3 File No. 33-53125
ERNST & YOUNG LLP
Tulsa, Oklahoma
April 21, 1995
Exhibit 23
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<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> JAN-31-1995
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 700
<ALLOWANCES> 0
<INVENTORY> 14,064
<CURRENT-ASSETS> 15,338
<PP&E> 17,090
<DEPRECIATION> 2,782
<TOTAL-ASSETS> 32,819
<CURRENT-LIABILITIES> 9,973
<BONDS> 0
<COMMON> 230
0
0
<OTHER-SE> 12,496
<TOTAL-LIABILITY-AND-EQUITY> 32,819
<SALES> 82,496
<TOTAL-REVENUES> 83,412
<CGS> 65,586
<TOTAL-COSTS> 79,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 706
<INCOME-PRETAX> 4,262
<INCOME-TAX> 1,581
<INCOME-CONTINUING> 2,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,681
<EPS-PRIMARY> 1.17
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