SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended April 30, 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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 S.W. Eighth Street
Bentonville, Arkansas 72716
(Address of principal executive offices)
(501) 273-4000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 such shorter periods that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court.
Yes No
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $.10 Par Value -- 2,297,345,364 shares as of April 30,
1995.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions)
<CAPTION>
April 30, January 31,
1995 1995
ASSETS (Unaudited) (*Note)
<S> <C> <C>
Cash and cash equivalents $ 14 $ 45
Receivables 823 700
Recoverable costs from sale/leaseback 203 200
Inventories 14,682 14,064
Other current assets 439 329
Total current assets 16,161 15,338
Property, plant and equipment 18,276 17,090
Less accumulated depreciation 3,038 2,782
Net property, plant and equipment 15,238 14,308
Property under capital leases 2,194 2,147
Less accumulated amortization 605 581
Net property under capital leases 1,589 1,566
Other assets and deferred charges 1,394 1,607
Total assets $34,382 $32,819
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ 2,372 $ 1,795
Accounts payable 5,954 5,907
Other current liabilities 2,169 2,271
Total current liabilities 10,495 9,973
Long-term debt 8,119 7,871
Long-term obligations under
capital leases 1,873 1,838
Deferred income taxes and other 779 411
Common stock and paid-in capital 770 769
Retained earnings 12,651 12,213
Foreign currency translation adjustment ( 305) ( 256)
Total shareholders' equity 13,116 12,726
Total liabilities and
shareholders' equity $34,382 $32,819
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<F2>
*Note: The balance sheet at January 31, 1995, has been taken from the
audited financial statements at that date, and condensed.
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in millions except per share data)
<TABLE>
<CAPTION>
Three Months Ended April 30,
1995 1994
<S> <C> <C>
Net sales $20,440 $17,686
Other income 212 167
20,652 17,853
Costs and expenses:
Cost of sales 16,196 14,064
Operating, selling and general
and administrative expenses 3,377 2,846
Interest costs:
Debt 154 103
Capital leases 46 54
19,773 17,067
Income before taxes 879 786
Provision for taxes on income 326 288
Net income $ 553 $ 498
Net income per share $ .24 $ .22
Dividends per share $ .05 $ .0425
Beginning of the year
shareholders' equity $12,726 $10,753
Return for the period on beginning
of the year shareholders' equity 4.35% 4.64%
Average number of common shares
outstanding 2,297 2,299
<FN>
See accompanying notes to condensed consolidated financial statements.
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions)
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended April 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 553 $ 498
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 276 231
Increase in inventories ( 484) ( 1,167)
Increase (decrease) in accounts payable ( 50) 1,300
Noncash items and other ( 278) 61
Net cash provided by operating activities 17 923
Cash flows from investing activities:
Net capital additions ( 759) ( 673)
Acquisition of Woolworth Canada, Inc.
assets - ( 358)
Other investing activities 21 ( 67)
Net cash used in investing activities ( 738) ( 1,098)
Cash flows from financing activities:
Increase in commercial paper 573 122
Proceeds from issuance of long-term debt 250 245
Dividends paid ( 115) ( 98)
Other financing activities ( 18) ( 38)
Net cash provided by financing activities 690 231
Net increase (decrease) in cash and
cash equivalents ( 31) 56
Cash and cash equivalents at
beginning of year 45 20
Cash and cash equivalents at end
of first quarter $ 14 $ 76
Supplemental Disclosure of Cash Flow Information:
Income tax paid $ 356 $ 122
Interest paid 206 174
Capital lease obligations incurred 59 71
</TABLE>
[FN]
See accompanying notes to condensed consolidated financial statements.
WAL-MART STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of April 30, 1995,
and the related condensed consolidated statements of income and cash
flows for the three month periods ended April 30, 1995 and 1994 are
unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of such financial statements have been
included. Such adjustments consisted only of normal recurring items.
Interim reports are not necessarily indicative of results for a full
year.
The financial statements and notes are presented in accordance
with the rules and regulations of the Securities and Exchange
Commission, and do not contain certain information included in the
Company's annual report. Therefore, the interim statements should be
read with the annual report.
NOTE B. INVENTORIES
Inventories are valued at the lower of cost or market value,
using the last-in, first-out (LIFO) method for substantially all
inventories. Quarterly inventory determinations under LIFO are
partially based on assumptions as to inventory levels at the end of
the fiscal year, sales, and the rate of inflation for the year. If
the first-in, first-out (FIFO) method of accounting had been used by
the Company, inventories at April 30, 1995 would have been $359
million higher than reported, an increase in the LIFO reserve of $8
million from January 31, 1995. If the FIFO method had been used at
April 30, 1994, inventories would have been $479 million higher than
reported, an increase in the LIFO reserve of $10 million from January
31, 1994.
NOTE C. LONG-TERM DEBT
During the quarter ended April 30, 1995, the Company sold $250
million in aggregate principal amount of 7.00% notes due April 27,
1998 outside the United States in the European market. Subsequent to
April 30, 1995, the Company sold $200 million in aggregate principal
amount of 6.75% notes due May 24, 2002 outside the United States in
the European market. In addition, the Company sold $300 million in
aggregate principal amount of 6.75% notes due May 15, 2002 under the
Company's available shelf registration statements filed with the
Securities and Exchange Commission. Pursuant to these shelf
registration statements, the Company has registered debt securities,
after giving effect to the sale of notes in the aggregate principal
amount of $300 million mentioned above, aggregating $751 million which
it may issue in the future from time to time. The notes sold outside
the United States have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Increased sales during the quarter ended April 30, 1995, were
attributable to an increase in comparable Wal-Mart and Supercenter
store sales of 7%, an increase in Sam's Clubs comparable sales of 3%,
and to the Company's recent expansion activities. Domestic expansion
activity in the first quarter included 5 new Wal-Mart stores, 5 new
Supercenters, 2 new Sam's Clubs, along with the conversion of 10
Wal-Mart stores to Supercenters and the relocation or expansion of 13
Wal-Mart stores. International expansion included the addition of 3
Wal-Mart stores in Canada and 10 units in Mexico. International sales
accounted for 3% of total sales this quarter compared to 1% in last
year's first quarter. Sam's Clubs sales as a percentage of total
sales fell from 23% in last year's first quarter to 21% this quarter.
At April 30, 1995, the Company had 1,984 Wal-Mart stores, 162
Supercenters, and 430 Sam's Clubs in the United States and Puerto
Rico, along with 126 Canadian Wal-Mart stores, 3 Hong Kong Value
Clubs, and 106 units in Mexico compared to 1,960 Wal-Mart stores, 77
Supercenters, 427 Sam's Clubs, 122 Canadian Wal-Mart stores, and 31
units in Mexico at the same time last year.
The Company's gross profit as a percentage of sales increased
from 20.48% in the first quarter of fiscal 1995 to 20.76% during the
first quarter of fiscal 1996. The increase was primarily due to
changes in the percentage of total sales generated by certain
operating units. The decrease in Sam's sales as a percentage of total
sales and the increase in international sales favorably impacts the
gross profit percentage as Sam's gross profit percentage is lower than
the Company's overall gross profit percentage and international gross
profit percentage is higher than the overall gross profit percentage.
Operating, selling, general, and administrative expenses
increased as a percentage of sales from 16.09% during the first
quarter of fiscal 1995 to 16.52% for the first quarter in fiscal 1996.
The increase in the expenses as a percentage of sales is primarily due
to the changes in the percentage of sales by operating units discussed
above. Because Sam's expenses as a percentage of sales are lower than
the overall expense rate and because international expenses as a
percentage of sales are higher than the overall rate, the expense rate
has increased.
Interest expense increased $43 million in the first quarter of
fiscal 1996 compared to the same period in fiscal 1995. Approximately
67% of the increase is due to additional borrowings used to finance
the Company's expansion program while 33% of the increase is due to
higher borrowing rates. The weighted average short-term borrowing
rate for the quarter was approximately 2.5% higher than the short-term
borrowing rate for the first quarter of fiscal 1995.
Liquidity and Capital Resources
Cash flows provided by operating activities were $17 million in
the first quarter of 1996 compared to $923 million in the first
quarter of 1995. The decrease is primarily due to an increase in
inventories without a corresponding increase in accounts payable in
the first quarter of 1996. Commercial paper increases of $573 million
and long-term debt proceeds of $250 million were used to finance
capital expenditures of $759 million, invest in international
operations, and pay dividends.
Subsequent to April 30, 1995, the Company took advantage of
favorable long-term debt interest rates and sold $200 million in
aggregate principal amount of 6.75% notes due May 24, 2002 outside the
United States in the European market. In addition, the Company sold
$300 million in aggregate principal amount of 6.75% notes due May 15,
2002 under the Company's available shelf registration statements on
file with the Securities and Exchange Commission. The notes sold
outside the United States have not been registered under the
Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an applicable exemption from
registration requirements. The Company may sell an additional $751
million of public debt utilizing shelf registration statements
previously filed with the Securities and Exchange Commission. Cash
flow provided by operations along with the available debt under the
shelf registration statements should be adequate to fund the Company's
expansion program, operating, and other cash needs.
At April 30, 1995, the Company had total assets of $34,382
million compared with $32,819 million at January 31, 1995, primarily
due to property additions of $759 million and an increase in inventory
of $618 million. Working capital at April 30, 1995 was $5,666
million, up $301 million from January 31, 1995. The ratio of current
assets to current liabilities was 1.5 to 1.0 at April 30, 1995,
January 31, 1995, and April 30, 1994.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following document is filed as an exhibit to this Form
10-Q:
Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the quarter
ended April 30, 1995.
SIGNATURES
Pursuant to the requirements 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.
WAL-MART STORES, INC.
Date: June 9, 1995 /s/David D. Glass
David D. Glass
President and
Chief Executive Officer
Date: June 9, 1995 /s/Paul R. Carter
Paul R. Carter
Executive Vice President
and Chief Financial Officer
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> APR-30-1995
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 823
<ALLOWANCES> 0
<INVENTORY> 14,682
<CURRENT-ASSETS> 16,161
<PP&E> 18,276
<DEPRECIATION> 3,038
<TOTAL-ASSETS> 34,382
<CURRENT-LIABILITIES> 10,495
<BONDS> 0
<COMMON> 230
0
0
<OTHER-SE> 12,886
<TOTAL-LIABILITY-AND-EQUITY> 34,382
<SALES> 20,440
<TOTAL-REVENUES> 20,652
<CGS> 16,196
<TOTAL-COSTS> 19,773
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 200
<INCOME-PRETAX> 879
<INCOME-TAX> 326
<INCOME-CONTINUING> 553
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<CHANGES> 0
<NET-INCOME> 553
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
