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, 1996.
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) (zip code)
(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 -- 2,293,531,782 shares as of April 30,
1996.
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,
1996 1996
ASSETS (Unaudited) (*Note)
<S> <C> <C>
Cash and cash equivalents $ 32 $ 83
Receivables 908 853
Inventories 16,213 15,989
Other current assets 626 406
Total current assets 17,779 17,331
Property, plant and equipment 21,592 20,850
Less accumulated depreciation 4,053 3,752
Net property, plant and equipment 17,539 17,098
Property under capital leases 2,508 2,476
Less accumulated amortization 708 680
Net property under capital leases 1,800 1,796
Other assets and deferred charges 1,131 1,316
Total assets $38,249 $37,541
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ 1,575 $ 2,458
Accounts payable 7,375 6,442
Other current liabilities 2,720 2,554
Total current liabilities 11,670 11,454
Long-term debt 8,508 8,508
Long-term obligations under capital leases 2,111 2,092
Deferred income taxes and other 744 731
Common stock and capital in excess of par value 775 774
Retained earnings 14,843 14,394
Foreign currency translation adjustment ( 402) ( 412)
Total shareholders' equity 15,216 14,756
Total liabilities and shareholders'
equity $38,249 $37,541
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<F2>
*Note: The balance sheet at January 31, 1996, has been taken from the
audited financial statements at that date, and condensed.
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in millions except per share data)
<CAPTION>
Three Months Ended April 30,
1996 1995
<S> <C> <C>
Net sales $22,772 $20,440
Other income - net 229 212
23,001 20,652
Costs and expenses:
Cost of sales 18,064 16,196
Operating, selling and general
and administrative expenses 3,810 3,377
Interest costs:
Debt 169 154
Capital leases 51 46
22,094 19,773
Income before income taxes 907 879
Provision for income taxes 336 326
Net income $ 571 $ 553
Net income per share $ .25 $ .24
Dividends per share $ .0525 $ .05
Beginning of the year shareholders' equity $14,756 $12,726
Return for the period on beginning of
the year shareholders' equity 3.87% 4.35%
Average number of common shares outstanding 2,293 2,297
</TABLE>
[FN]
See accompanying notes to condensed consolidated financial statements.
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions)
<CAPTION>
Three Months Ended April 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 571 $ 553
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 348 276
Increase in inventories ( 217) ( 484)
Increase (decrease) in accounts payable 948 ( 50)
Noncash items and other ( 10) ( 278)
Net cash provided by operating activities 1,640 17
Cash flows from investing activities:
Net capital additions ( 733) ( 759)
Other investing activities 63 21
Net cash used in investing activities ( 670) ( 738)
Cash flows from financing activities:
(Decrease)increase in commercial paper ( 884) 573
Proceeds from issuance of long-term debt - 250
Dividends paid ( 120) ( 115)
Other financing activities ( 17) ( 18)
Net cash (used in) provided by financing
activities ( 1,021) 690
Net decrease in cash and
cash equivalents ( 51) ( 31)
Cash and cash equivalents at beginning
of year 83 45
Cash and cash equivalents at end of
first quarter $ 32 $ 14
Supplemental Disclosure of Cash Flow Information:
Income tax paid $ 105 $ 356
Interest paid 225 206
Capital lease obligations incurred 35 59
</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, 1996, and
the related condensed consolidated statements of income and cash flows
for the three month periods ended April 30, 1996 and 1995 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 results
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, 1996 would have been $316 million higher than reported, an
increase in the LIFO reserve of $5 million from January 31, 1996. If the
FIFO method had been used at April 30, 1995, inventories would have been
$359 million higher than reported, an increase in the LIFO reserve of $8
million from January 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The quarter ended April 30, 1996, consisted of 90 days compared to
89 days in the quarter ended April 30, 1995. Increased sales during the
quarter ended April 30, 1996, were attributable to the extra day of
sales, an increase in comparable store sales of 4% and to the Company's
continuing expansion activities. Domestic expansion activity in the first
quarter of fiscal 1997 included eight new Wal-Mart stores, two new
Supercenters, three new Sam's Clubs, the conversion of 26 Wal-Mart stores
to Supercenters and the relocation or expansion of four Wal-Mart stores.
International expansion included the addition of three Wal-Mart stores in
Canada and four units in Mexico. International sales accounted for 4% of
total sales this quarter compared to 3% in last year's first quarter.
Sam's Clubs sales as a percentage of total sales fell from 22% in last
year's quarter to 20% this quarter.
At April 30, 1996, the Company had 1,977 Wal-Mart stores, 267
Supercenters, and 432 Sam's Clubs in the United States, along with 134
Canadian Wal-Mart stores, 130 units in Mexico, 11 units in Puerto Rico,
five units in Brazil, and three units in Argentina. This compares with
1,979 Wal-Mart stores, 162 Supercenters, and 428 Sam's Clubs in the
United States, and 126 Canadian Wal-Mart stores, 106 units in Mexico, and
eight units in Puerto Rico at the same time last year.
The Company's gross profit as a percentage of sales decreased from
20.76% in the first quarter of fiscal 1996 to 20.67% during the first
quarter of fiscal 1997. The net change is comprised of an increase in
the percentage of total sales in consumable goods which have lower markon
percents. This decrease in gross profit is partially offset because Sam's
Clubs comprised a lower percentage of consolidated sales in fiscal 1997
at a lower contribution to gross margin than the stores.
Operating, selling, general, and administrative expenses increased
as a percentage of sales from 16.52% during the first quarter of fiscal
1996 to 16.73% for the first quarter of fiscal 1997. The increase in the
expenses as a percentage of sales is primarily due to the change in the
percentage of sales by operating units discussed above. Because Sam's
Clubs 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.
In the first quarter of fiscal 1997, the Company adopted Statement
of Financial Accounting Standard (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." The statement requires entities to review long-lived assets and
certain intangible assets in certain circumstances, and if the value of
the assets is impaired, an impairment loss shall be recognized. Due to
the Company's previous accounting policies this pronouncement had no
effect on the Company's financial position or results of operations.
The Company also adopted SFAS No. 123 "Accounting for Stock-Based
Compensation" in the first quarter of fiscal 1997. The statement relates
to the measurement of compensation of stock options issued to employees.
The statement gives entities a choice of recognizing related compensation
expense by adopting a new fair value method determination or to continue
to measure compensation using the former standard. If the former standard
for measurement is elected, SFAS No. 123 requires supplemental disclosure
to show the effects of using the new measurement criteria. The Company
elected to continue to use the measurement prescribed by the former
standard, and accordingly, the pronouncement had no effect on the
Company's financial position or results of operations. The Company will
present the supplemental disclosure in the fiscal 1997 annual report.
Interest expense increased $20 million in the first quarter of
fiscal 1997 compared to the same period in fiscal 1996. The increase is
due to the additional long-term borrowings which have been used to
finance the Company's expansion. Interest on short term borrowings
decreased slightly due to lower borrowing rates and a decreasing
commercial paper balance.
Liquidity and Capital Resources
Cash flows provided by operating activities were $1,640 million in
the first quarter of fiscal 1997 compared to $17 million in the first
quarter of fiscal 1996. The increase is primarily due to an increase in
accounts payable and accrued liabilities and a smaller increase in
inventory in the first quarter of fiscal 1997. The increased operating
cash flow provided an excess of $787 million after investing $733 million
in capital assets and paying dividends of $120 million.
Under shelf registration statements previously filed with the
Securities and Exchange Commission the Company may issue debt securities
aggregating $751 million. Cash flow provided by operations along with
available debt under the shelf registration statements and the Company's
ability to obtain short-term financing should be adequate to fund the
Company's expansion program, operational and other cash needs.
At April 30, 1996, the Company had total assets of $38,249 million
compared with $37,541 million at January 31, 1996. Working capital at
April 30, 1996 was $6,109 million up $232 million from January 31, 1996.
The ratio of current assets to current liabilities was 1.5 to 1.0 at
April 30, 1996, January 31, 1996, and April 30, 1995.
PART II. OTHER INFORMATION
Item 5. Other Information
The Private Securities Litigation Reform Act of 1995 ("the Act")
provides a safe harbor for forward-looking statements made by or on
behalf of the Company. All statements, other than statements of
historical facts, 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. To take advantage of the
safe harbor provided by the Act, Wal-Mart is identifying certain factors
that 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: competitive pressures, inflation, consumer debt levels, currency
exchange fluctuations, trade restrictions, changes in tariff and freight
rates, political instability, interest rate fluctuations and other
capital market conditions. Forward-looking statements made by or on
behalf of the Company are based on a knowledge of its business and the
environment in which it operates, but because of the factors listed above
actual results may differ from those in the forward-looking statements.
Consequently, all of the forward-looking statements made are qualified by
these 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.
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, 1996.
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 11, 1996 /s/David D. Glass________________
David D. Glass
President and
Chief Executive Officer
Date: June 11, 1996 /s/John B. Menzer________________
John B. Menzer
Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 908
<ALLOWANCES> 0
<INVENTORY> 16,213
<CURRENT-ASSETS> 17,779
<PP&E> 21,592
<DEPRECIATION> 4,053
<TOTAL-ASSETS> 38,249
<CURRENT-LIABILITIES> 11,670
<BONDS> 0
0
0
<COMMON> 229
<OTHER-SE> 14,987
<TOTAL-LIABILITY-AND-EQUITY> 38,249
<SALES> 22,772
<TOTAL-REVENUES> 23,001
<CGS> 18,064
<TOTAL-COSTS> 22,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 220
<INCOME-PRETAX> 907
<INCOME-TAX> 336
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<NET-INCOME> 571
<EPS-PRIMARY> .25
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</TABLE>
