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, 1996, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Commission file number 1-6991.
WAL-MART STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0415188
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Bentonville, Arkansas 72716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 273-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.10 New York Stock Exchange
per share Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for at least the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the closing price of these shares on the New
York Stock Exchange on March 29, 1996, was $31,355,857,289. 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 2,293,548,492 shares of Common Stock outstanding as
of March 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended January 31, 1996, are incorporated by reference into Part
II of this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held June 7, 1996, are incorporated by reference into
Part III of this Form 10-K.
FORWARD-LOOKING STATEMENTS OR INFORMATION
Certain statements contained in this Form 10-K are not based on
historical facts, but are forward-looking statements that are based upon a
number of assumptions concerning future conditions that may ultimately
prove to be inaccurate. Actual events and results may materially differ
from anticipated results described in such statements. The Company's
ability to achieve such results is subject to certain risks and
uncertainties, including, but not limited to, the general economy, adverse
changes in consumer spending, continued availability of capital and
financing, competitive factors and other factors affecting the Company's
business beyond the Company's control.
WAL-MART STORES, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED JANUARY 31, 1996
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, 1996, had net sales
of $93,627,000,000. The Company serves customers 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). Domestically, the Company
operated 1,995 Wal-Mart stores, 433 Sam's Clubs, and 239 Wal-Mart
Supercenters as of January 31, 1996. A table summarizing information
concerning domestic Wal-Mart stores, Sam's Clubs, Wal-Mart Supercenters,
and other stores operated since January 31, 1991 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 a 50% interest with CIFRA, Mexico's largest retailer, to
develop and expand retailing services in Mexico. At January 31, 1996, the
joint venture operated 28 warehouse clubs, 25 discount stores, 13 Wal-Mart
Supercenters, four combination stores, three supermarkets, five specialty
department stores, and 48 restaurants.
In fiscal 1993, the Company entered the Puerto Rico market,
and at January 31, 1996, operated seven Wal-Mart stores and four Sam's
Clubs.
In fiscal 1995, 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, 1996, the Company operated 131 Canadian Wal-Mart stores.
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.
At January 31, 1996, the joint venture operated two Supercenters and three
warehouse clubs.
In fiscal 1996, the Company entered Argentina, and at
January 31, 1996, the Company operated one Supercenter and two warehouse
clubs.
In fiscal 1996, the Company and Lippo Group of Indonesia
signed an agreement to open Indonesia's first Wal-Mart Supercenter in early
1996. The Company will provide retail expertise and management services
for the operation of the store, and ownership will be held by the Lippo
Group.
A table summarizing information concerning international
units operated since fiscal 1992 is set forth in Schedule B to Item 1 found
on page 10 of this annual report.
(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 1988, 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 all 50 states.
The average size of a Wal-Mart store is approximately 91,100 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 22
states, and the average size of a Supercenter store is 182,000 square feet.
The Company operates Sam's Clubs in 48 states. 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.
The Company operates Wal-Mart stores, Sam's Clubs and Wal-Mart
Supercenters in Argentina, Canada and Puerto Rico, and through joint
ventures in Brazil and Mexico.
During the last fiscal year, no single store or club 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", "Ol' Roy", and
"Equate". The Company also markets lines of merchandise under licensed
brands; some of which include "Sports Afield", "House Beautiful", "Popular
Mechanics", "Better Homes & Gardens", "Kathie Lee", and "Bobbie Brooks".
During the fiscal year ended January 31, 1996, domestic sales of
general merchandise at Wal-Mart stores and Supercenters (which are subject
to seasonal variance), including licensed departments, by product category
were as follows:
PERCENTAGE
CATEGORY OF SALES
Softgoods/domestics.............. 25%
Hardgoods........................ 25
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
and "Business Revolving Credit" are available to qualifying business
members. Also, a "Personal Credit" program is available to qualifying club
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.
Distribution. During the 1996 fiscal year, approximately 85% of
the Wal-Mart stores' and Supercenters' purchases were shipped from Wal-
Mart's 31 distribution centers, five located in Arkansas; five in Texas;
two in California, Indiana, New York, and South Carolina; and one each in
Alabama, Colorado, Florida, Georgia, Iowa, Kansas, Kentucky, Mississippi,
Ohio, Pennsylvania, 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 80 to 140 stores
depending on the size of the center. The size of these distribution
centers range from approximately 700,000 to 1,600,000 square feet. Sam's
Clubs receive the majority of their merchandise via direct shipment 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 23 distribution centers with five located in Texas, two located in
Arizona, California, Utah, and Virginia, and one each in Colorado, Florida,
Georgia, Illinois, Kentucky, 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 1996, no
single supplier to the stores accounted for more than 4.3% 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. Domestically, the Company plans to open 60 to
70 new Wal-Mart stores and 100 to 110 Supercenters. Approximately 90 of
the Supercenters will come from relocations or expansions of existing Wal-
Mart stores. The Company also plans to open 10 new Sam's Clubs and three
distribution centers. International expansion includes 25 to 30 new Wal-
Mart stores, Supercenters and Sam's Clubs in Argentina, Brazil, Canada,
China, Indonesia, Mexico and Puerto Rico. 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
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, 1996, 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, 1996, the Company had
approximately 675,000 associates, an increase of approximately 53,000
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, 1991 through 1996,
contributions of approximately $98,000,000, $130,000,000, $166,000,000,
$166,000,000, $175,000,000 and $204,000,000, 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, 1996, 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
YEAR ENDED JANUARY 31, 1991 THROUGH 1996
<CAPTION>
STORE COUNT
Wal-Mart
Fiscal Year Wal-Mart Stores Sam's Clubs Supercenters Total**
ended Ending
Jan 31, Opened Closed Conversions* Total Opened Closed Total Opened Total Opened Closed Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward 1,399 123 6 1,528
1991 176 5 2 1,568 25 0 148 3 9 202 5 1,725
1992 148 1 1 1,714 61 1 208 1 10 209 2 1,932
1993 159 1 24 1,848 48 0 256 24 34 207 1 2,138
1994 141 2 37 1,950 162 1 417 38 72 304 3 2,439
1995 109 5 69 1,985 21 12 426 75 147 136 17 2,558
1996 92 2 80 1,995 9 2 433 92 239 113 4 2,667
</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 92,648,056 13,064,172 1,049,932 106,762,160 $272.75
1991 17,737,917 110,385,973 2,874,666 15,938,838 683,769 1,733,701 21,296,352 128,058,512 292.40
1992 17,729,395 128,115,368 7,320,510 23,259,348 180,545 1,914,246 25,230,450 153,288,962 306.33
1993 19,251,060 147,366,428 7,444,530 30,703,878 4,037,493 5,951,739 30,733,083 184,022,045 325.86
1994 16,185,442 163,551,870 19,670,804 50,374,682 6,762,080 12,713,819 42,618,326 226,640,371 324.42
1995 10,109,978 173,661,848 1,335,742 51,710,424 14,087,725 26,801,544 25,533,445 252,173,816 336.10
1996 8,189,400 181,851,248 825,020 52,535,444 16,791,559 43,593,103 25,805,979 277,979,795 338.53
</TABLE>
[FN]
<F1>
* Wal-Mart stores locations relocated or expanded as Wal-Mart Supercenters.
<F2>
** The Company also operated 78 Bud's Discount City units at January 31, 1996.
<F3>
*** Includes only stores and clubs that were open at least twelve months as of
January 31 of the previous year.
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
SCHEDULE B TO ITEM 1 - INTERNATIONAL STORE COUNT AND NET SQUARE FOOTAGE GROWTH
YEAR ENDED JANUARY 31, 1992 THROUGH 1996
<CAPTION>
STORE COUNT
Fiscal MEXICO CANADA PUERTO RICO ARGENTINA BRAZIL
Year Wal-Mart Sam's Wal-Mart Wal-Mart Sam's Wal-Mart Sam's Wal-Mart Sam's
Ended Supercenters Clubs Total* Stores Total Stores Clubs Total Supercenters Clubs Total Supercenters Clubs Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 0 2 2 0 0 0 0 0 0 0 0 0 0 0
1993 0 3 3 0 0 2 0 2 0 0 0 0 0 0
1994 2 7 9 0 0 3 2 5 0 0 0 0 0 0
1995 11 22 33 123 123 5 2 7 0 0 0 0 0 0
1996 13 28 41 131 131 7 4 11 1 2 3 2 3 5
</TABLE>
<TABLE>
NET SQUARE FOOTAGE
<CAPTION>
Fiscal MEXICO CANADA PUERTO RICO ARGENTINA BRAZIL
Year
Ended Net Additions Total* Net Additions Total Net Additions Total Net Additions Total Net Additions Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 162,535 162,535 0 0 0 0 0 0 0 0
1993 143,000 305,535 0 0 229,647 229,647 0 0 0 0
1994 946,717 1,252,252 0 0 339,260 568,907 0 0 0 0
1995 3,537,080 4,789,332 14,651,969 14,651,969 266,279 835,186 0 0 0 0
1996 1,091,123 5,880,455 872,446 15,524,415 478,848 1,314,034 438,787 438,787 772,221 772,221
</TABLE>
[FN]
* The Company also operated 25 discount stores, four combination stores, three
supermarkets, five specialty department stores, and 48 restaurants as of January
31, 1996. These units are not included in square footage totals.
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 8 of the Annual Report to Shareholders for the
year ended January 31, 1996.
The Company owns 1,123 properties on which domestic Wal-Mart
stores and Supercenters are located and 268 of the properties on which
domestic Sam's are located. In some cases, the Company owns the land
associated with leased buildings. New buildings, both leased and owned,
are constructed by independent contractors.
The remaining buildings in which its present stores are located
are either leased from a commercial property developer, leased pursuant to
a sale/leaseback arrangement, or leased from a local governmental entity
through an industrial revenue bond transaction. All of the Company's
leases for its stores provide for fixed annual rentals and, in many cases,
the leases provide for additional rent based on sales volume.
The Company operated 31 Wal-Mart distribution facilities and 23
McLane distribution facilities at January 31, 1996. 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 leases properties on which Canadian Wal-Mart stores
and Puerto Rico Wal-Mart stores and Sam's Clubs are located. The Company
owns properties on which the operating units in Argentina, Brazil and
Mexico are located.
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, 1996.
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 60
Officer.
S. Robson Walton Chairman. From 1985 until his 1992 51
election as Chairman in 1992,
he served as Vice Chairman.
Donald G. Soderquist Vice Chairman and Chief Operating 1988 62
Officer.
Paul R. Carter Executive Vice President - 1995 55
Wal-Mart Stores, Inc. and
President - Wal-Mart Realty
Company. Prior to 1995, he
served as Executive Vice
President and Chief Financial
Officer.
Thomas M. Coughlin Executive Vice President - 1995 47
Store Operations. Prior to
1995, he served as Senior Vice
President - Specialty Divisions.
David Dible Executive Vice President 1995 49
Specialty Divisions. Prior to
1995, he served as Senior Vice
President - Merchandising.
Joseph S. Hardin, Jr. Executive Vice President - 1995 50
Wal-Mart Stores, Inc. and
President and Chief Executive
Officer of Sam's Club Division.
Prior to October 1995, he served
as Executive Vice President -
Wal-Mart Stores, Inc. and Chief
Operating Officer of Wal-Mart
Stores Division. Prior to 1993, he
served as Executive Vice President -
Logistics and Personnel Adminis-
tration. Prior to 1992, he held the
position of Senior Vice President -
Distribution and Transportation.
Bob L. Martin Executive Vice President - 1993 47
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 as Senior Vice President -
Information Systems.
John B. Menzer Executive Vice President and 1995 45
Chief Financial Officer since
September 1995. Prior to September
1995, he served as President and
Chief Operating Officer of Ben
Franklin Retail Stores, Inc.
H. Lee Scott, Jr. Executive Vice President - 1995 47
Merchandising. Prior to October
1995, he served as Executive Vice
President - Logistics. Prior to
that, he served as Senior Vice
President - Logistics. Prior to
1992, he served as Vice President -
Distribution.
Thomas P. Seay Executive Vice President - Real 1992 54
Estate and Construction. Prior
to 1992, he served as Senior Vice
President - Real Estate and
Construction.
Nicholas J. White Executive Vice President - 1989 51
Wal-Mart Supercenter Division.
Prior to 1989, he served as
Executive Vice President -
Sam's Clubs.
Robert K. Rhoads Senior Vice President, Secretary 1992 41
and General Counsel. Prior to
1992, he served as Vice President,
Secretary and General Counsel.
William G. Rosier President and Chief Executive 1995 47
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.
James A. Walker, Jr. Senior Vice President and 1995 49
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 of Record" under the
caption "11 Year Financial Summary" on Pages 18 and 19, and all the
information under the captions "Market Price of Common Stock" and
"Dividends Paid Per Share" on page 33 of the Annual Report to Shareholders
for the year ended January 31, 1996.
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 18 and 19 of the Annual Report to Shareholders for the year ended
January 31, 1996.
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 20 through 22 of the Annual
Report to Shareholders for the year ended January 31, 1996.
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
23 through 31 of the Annual Report to Shareholders for the year ended
January 31, 1996.
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" on Pages 1 through 3 and "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" on Page 8 of the Company's Proxy Statement
for its Annual Meeting of Shareholders to be held on June 7, 1996. The
information required by this item with respect to the Company's executive
officers appears at Item 4A of Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is furnished by
incorporation by reference of all information under the caption entitled
"Executive Compensation", subcaptions "Summary Compensation Table", "Option
Grants in Fiscal Year Ended January 31, 1996", and "Option Exercises and
Fiscal Year End Option Values" on Pages 3 through 5, and "Compensation of
Directors" on Page 7 of 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" on Pages 8 and 9 of 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" on Page 8 of 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
The financial statements listed in the Index to Consolidated
Financial Statements, which appears on Page 19, are incorporated by
reference herein or filed as part of this Form 10-K.
3. Exhibits
The following documents are filed as exhibits to this Form 10-K:
3(a) Restated Certificate of Incorporation of the Company is
incorporated herein by reference to Exhibit 3(a) from the
Annual Report on Form 10-K of the Company for the year ended
January 31, 1989, and the Certificate of Amendment to the
Restated Certificate of Incorporation is incorporated herein
by reference to Registration Statement on Form S-8 (File
Number 33-43315).
3(b) By-Laws of the Company, as amended June 3, 1993, are
incorporated herein by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1994.
4(a) Form of Indenture dated as of June 1, 1985, between the
Company and 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 Amended and Restated Indenture, Mortgage and Deed of
Trust, Assignment of Rents and Security Agreement dated as
of December 1, 1986, among the First National Bank of Boston
and James E. Mogavero, Owner Trustees, Rewal Corporation I,
Estate for Years Holder, Rewal Corporation II, Remainderman,
the Company and the First National Bank of Chicago and R.D.
Manella, Indenture Trustees, is incorporated herein by
reference to Exhibit 4(b) to Registration Statement on Form
S-3 (File Number 33-11394).
4(d) Form of Indenture dated as of July 15, 1990, between the
Company and Harris Trust and Savings Bank, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-35710).
4(e) Indenture dated as of April 1, 1991, between the Company and
The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(a) to Registration
Statement on Form S-3 (File Number 33-51344).
4(f) First Supplemental Indenture dated as of September 9, 1992,
to the Indenture dated as of April 1, 1991, between the
Company and The First National Bank of Chicago, Trustee, is
incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-3 (File Number 33-51344).
+10(a) Form of individual deferred compensation agreements is
incorporated herein by reference to Exhibit 10(b) from the
Annual Report on Form 10-K of the Company, as amended, for
the year ended January 31, 1986.
+10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is
incorporated herein by reference to Registration Statement
on Form S-8 (File Number 2-94358).
+10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1987.
+10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(h) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1992.
+10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option
Plan of 1984 is incorporated herein by reference to Exhibit
10(i) from the Annual Report on Form 10-K of the Company for
the year ended January 31, 1993.
+10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is
incorporated herein by reference to Exhibit 4(c) to the
registration statement on Form S-8 (File Number 33-5325).
+10(g) A written description of a consulting agreement by and
between Wal-Mart Stores, Inc. and Jack C. Shewmaker, is
incorporated herein by reference to the description
contained in the second paragraph under the caption
"Compensation of Directors" on Page 7 in the Company's
definitive Proxy Statement to be filed in connection with
the Annual Meeting of the Shareholders to be held on June 7,
1996.
+10(h) 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).
*+10(i) Wal-Mart Stores, Inc. Officer Deferred Compensation Plan.
*13 All information incorporated by reference in Items 2, 5, 6,
7 and 8 of this Annual Report on Form 10-K from the Annual
Report to Shareholders for the year ended January 31, 1996.
*21 List of the Company's Subsidiaries
*23 Consent of Independent Auditors
*27 Financial Data Schedule
*Filed herewith as an Exhibit.
+Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the last
quarter of the fiscal year ended January 31, 1996.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Annual
Report to
Shareholders
(page)
Covered by Report of Independent
Auditors:
Consolidated Statements of Income
for each of the three years in the
period ended January 31, 1996 23
Consolidated Balance Sheets at
January 31, 1996 and 1995 24
Consolidated Statements of
Shareholders' Equity for each
of the three years in the
period ended January 31, 1996 25
Consolidated Statements of Cash
Flows for each of the three
years in the period ended
January 31, 1996 26
Notes to Consolidated Financial
Statements, except Note 8 27-31
Not Covered by Report of Independent
Auditors:
Note 8 - Quarterly Financial Data
(unaudited) 31
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 22, 1996 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 22, 1996 _________________________________
S. Robson Walton
Chairman of the Board
DATE: April 22, 1996 /s/David D. Glass
David D. Glass
President, Chief Executive
Officer and Director
DATE: April 22, 1996 /s/Donald G. Soderquist
Donald G. Soderquist
Vice Chairman, Chief
Operating Officer
and Director
DATE: April 22, 1996 /s/Paul R. Carter
Paul R. Carter
Executive Vice President,
President - Wal-Mart Realty
Company and Director
DATE: April 22, 1996 /s/John B. Menzer
John B. Menzer
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
DATE: April 22, 1996 /s/James A. Walker, Jr.
James A. Walker, Jr.
Senior Vice President and
Controller
(Principal Accounting Officer)
DATE: April 22, 1996 /s/John A. Cooper, Jr.
John A. Cooper, Jr.
Director
DATE: April 22, 1996 ________________________________
Robert H. Dedman
Director
DATE: April 22, 1996 /s/Frederick S. Humphries
Frederick S. Humphries
Director
DATE: April 22, 1996 /s/F. Kenneth Iverson
F. Kenneth Iverson
Director
DATE: April 22, 1996 ________________________________
E. Stanley Kroenke
Director
DATE: April 22, 1996 /s/Elizabeth A. Sanders
Elizabeth A. Sanders
Director
DATE: April 22, 1996 /s/Jack C. Shewmaker
Jack C. Shewmaker
Director
DATE: April 22, 1996 ________________________________
Paula Stern
Director
DATE: April 22, 1996 ________________________________
John T. Walton
Director
WAL-MART STORES, INC.
OFFICER DEFERRED COMPENSATION PLAN
Effective Date: February 1, 1996
TABLE OF CONTENTS
Page
ARTICLE I
GENERAL................................................ 1
1.1 Purpose...................................... 1
1.2 Effective Date -- Applicability to Prior
Deferred Compensation Agreements............. 1
1.3 Nature of Plan............................... 1
ARTICLE II
DEFINITIONS............................................ 2
2.1 Definitions.................................. 2
ARTICLE III
DEFERRED COMPENSATION AND BONUSES -- ESTABLISHMENT OF
ACCOUNTS............................................... 5
3.1 Deferred Compensation........................ 5
3.2 Deferred Bonuses............................. 5
3.3 Establishment of Accounts.................... 6
3.4 Nature of Accounts........................... 6
3.5 Annual Valuation of Accounts................. 6
ARTICLE IV
ADDITIONS TO ACCOUNTS -- CREDITED EARNINGS AND INCENTIVE
PAYMENTS............................................... 7
4.1 Credited Annual Earnings..................... 7
4.2 Incentive Payments........................... 7
ARTICLE V
PAYMENT OF PLAN BENEFITS............................... 11
5.1 Distribution Restrictions.................... 11
5.2 Termination Benefits......................... 11
5.3 Retirement, Early Retirement, and Disability
Benefits..................................... 12
5.4 Death Benefits............................... 13
5.5 Designation of Beneficiary................... 15
5.6 Form of Distribution......................... 15
5.7 Reductions Arising from a Participant's Gross
Misconduct................................... 16
5.8 Distributions for Unforeseeable Emergencies.. 16
ARTICLE VI
ADMINISTRATION......................................... 18
6.1 General...................................... 18
ARTICLE VII
CLAIMS PROCEDURE....................................... 19
7.1 General...................................... 19
7.2 Appeals Procedure............................ 19
ARTICLE VIII
MISCELLANEOUS PROVISIONS............................... 20
8.1 Amendment, Suspension or Termination of Plan. 20
8.2 Non-Alienability............................. 20
8.3 No Employment Rights......................... 20
8.4 No Right to Bonus............................ 20
8.5 Withholding and Employment Taxes............. 20
8.6 Income and Excise Taxes...................... 21
8.7 Successors and Assigns....................... 21
8.8 Governing Law................................ 21
WAL-MART STORES, INC.
OFFICER DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
1.1 Purpose
The purpose of the Wal-Mart Stores, Inc. Officer Deferred
Compensation Plan ("Plan") is to: (a) attract and retain the
valuable services of certain officers; (b) recognize, reward, and
encourage contributions by such officers to the success of Wal-
Mart Stores, Inc. ("Wal-Mart"); and (c) enable such officers to
defer certain compensation and bonuses and to be credited with
earnings and Incentive Payments with respect to such amounts.
1.2 Effective Date -- Applicability to Prior Deferred
Compensation Agreements.
This Plan is effective February 1, 1996 with respect to
compensation and bonuses deferred (and credited earnings thereon)
under the Plan on or after February 1, 1996.
In addition, prior to February 1, 1995, certain Eligible
Officers entered into deferred compensation agreements ("Prior
Agreements") with Wal-Mart containing terms similar to those
contained in this Plan. Except as expressly provided in Sections
5.5 and 5.6 below, effective February 1, 1996 the Prior
Agreements are amended and restated in the form of this Plan and
thereafter the terms of this Plan will govern all benefits
previously governed by the Prior Agreements.
1.3 Nature of Plan.
The Plan is intended to be (and will be administered as) an
unfunded employee pension plan benefiting a select group of
management or highly compensated employees under the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
It is intended that the Plan be "unfunded" for federal tax
purposes and for purposes of Title I of ERISA. Any and all
payments to a Participant under the Plan will be made solely from
Wal-Mart's general assets. A Participant's interests under the
Plan do not represent or create a claim against specific assets
of Wal-Mart or any Related Affiliate. Nothing herein shall be
deemed to create a trust of any kind or create any fiduciary
relationship between Wal-Mart, any Related Affiliate or the
Committee, and a Participant, the Participant's beneficiary or
any other person. To the extent any person acquires a right to
receive payments from Wal-Mart under this Plan, such right is no
greater than the right of any other unsecured general creditor of
Wal-Mart.
ARTICLE II
DEFINITIONS
2.1 Definitions.
Whenever used in this Plan, the following words and phrases
have the meaning set forth below unless the context plainly
requires a different meaning:
(a) Account means the bookkeeping account established
by Wal-Mart to reflect a Participant's Deferred
Compensation, Deferred Bonuses, Incentive Payments, and
credited earnings thereon.
(b) Code means the Internal Revenue Code of 1986, as
amended from time to time.
(c) Committee means the Executive Committee of the Wal-
Mart Stores, Inc. Board of Directors.
(d) Deferred Bonuses means the amount deferred from
bonuses payable to a Participant under the Wal-Mart Stores,
Inc. Management Incentive Plan for Officers.
(e) Deferred Compensation means: (1) the compensation
deferred by a Participant under Section 3.1 below; and (2)
amounts deferred by a Participant under a Prior Agree
ment(s).
(f) Disability means a Total and Permanent Disability
as from time to time defined in the Wal-Mart Stores, Inc.
Profit Sharing Plan. A Participant must establish to the
satisfaction of the Committee that a Disability exists. A
Participant shall be treated as having a Disability only if
such illness or injury results in the Participant's
Termination of Employment.
(g) Early Retirement means a Participant's Termination
of Employment on or after the date the Participant has been
continuously employed with Wal-Mart or a Related Affiliate
twenty (20) or more years.
(h) Eligible Officer means an individual who is a
corporate officer of Wal-Mart and who holds the title of
Vice President or above, Treasurer, Controller, or an
officer title of similar rank as determined by the
Committee. In addition, Eligible Officer shall include a
divisional officer of Wal-Mart and who holds the title of
Vice President or above or an officer title of similar rank
as determined by the Committee. Notwithstanding the
preceding sentences, the term "Eligible Officer" shall not
include an individual who entered into a Prior Agreement
with Wal-Mart unless such individual consents to
participation in the Plan on the terms and conditions herein
set forth.
(i) Fiscal Year means the twelve (12)-month period
commencing on February 1 and ending on January 31.
(j) A Participant is deemed to have engaged in Gross
Misconduct if the Committee determines that the Participant
has engaged in conduct inimical to the best interests of Wal-
Mart or any Related Affiliate. Examples of conduct inimical
to the best interests of Wal-Mart or its Related Affiliates
include, without limitation, disclosure of confidential
information in violation of Wal-Mart's Statement of Ethics,
theft, the commission of a felony or a crime of moral
turpitude, gross misconduct or similar serious offenses.
(k) Incentive Payments means the amounts credited to a
Participant's Account: (1) in accordance with Section 4.2
below; and (2) a Participant's Prior Agreement(s).
(l) Participant means any Eligible Officer who defers
compensation or bonuses under the Plan. An individual
remains a Participant in the Plan until the Participant's
Plan benefits have been fully distributed.
(m) Related Affiliates means a business or entity that
is, directly or indirectly, eighty percent (80%) or more
owned by Wal-Mart.
(n) Retirement means a Participant's Termination of
Employment on or after the Participant's attainment of age
fifty-five (55).
(o) Termination of Employment means a Participant
ceasing to be actively employed by Wal-Mart and its Related
Affiliates. Termination of Employment does not include the
transfer of a Participant from the employ of Wal-Mart to a
Related Affiliate or vice versa, or a transfer between Wal-
Mart's Related Affiliates.
(p) Unforeseeable Emergency means a severe financial
hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or a
Participant's dependent (as defined in Code Section 152(a)),
the loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the
Participant. An Unforeseeable Emergency does not exist to
the extent such hardship is or may be relieved:
(1) through reimbursement or compensation by
insurance or otherwise;
(2) by liquidation of the Participant's assets,
to the extent the liquidation of such assets would
itself not cause severe financial hardship; or
(3) by cessation of deferrals under this Plan.
The need to send a Participant's child to college or the
desire to purchase a home does not constitute an
Unforeseeable Emergency. The existence of an Unforeseeable
Emergency will be determined by the Committee, in its sole
discretion, based upon the Participant's facts and
circumstance and in accordance with restrictions imposed by
the Code or guidance thereunder.
(q) Valuation Date means the January 31 of each Fiscal
Year.
ARTICLE III
DEFERRED COMPENSATION AND BONUSES --
ESTABLISHMENT OF ACCOUNTS
3.1 Deferred Compensation.
Prior to each Fiscal Year, each Eligible Officer may elect
to defer all or a portion of the Eligible Officer's base
compensation to be paid by Wal-Mart for such Fiscal Year.
Amounts deferred (the "Deferred Compensation") will be deferred
pro ratably for each payroll period of the Fiscal Year. All
deferral elections made under this Section 3.1 must be: (a) made
on forms approved by the Committee; and (b) filed with Wal-Mart
no later than the January 31 preceding the Fiscal Year for which
the deferral election is to be effective. Once made for a Fiscal
Year, a deferral election may not be revoked, changed or
modified. Notwithstanding the preceding sentence, in the event
an Eligible Officer ceases to be employed as an Eligible Officer,
such former Eligible Officer's deferral election shall
automatically cease with respect to compensation earned on or
after the individual ceases to be an Eligible Officer. A
deferral election for one (1) Fiscal Year will not automatically
be given effect for a subsequent Fiscal Year, so that if
deferrals are desired for a subsequent Fiscal Year, a separate
election must be made by the Eligible Officer for such Fiscal
Year.
3.2 Deferred Bonuses.
Prior to each Fiscal Year, each Eligible Officer may elect
to defer all or a portion of the Eligible Officer's bonus (if
any) for such Fiscal Year under the Wal-Mart Stores, Inc.
Management Incentive Plan for Officers. All bonus deferral
elections made under this Section 3.2 must be: (a) made on forms
approved by the Committee; and (b) filed with Wal-Mart no later
than the January 31 preceding the Fiscal Year in which falls the
period of service for which such bonus (if any) is payable,
regardless of the Fiscal Year in which such bonus is paid. Once
made for a Fiscal Year, a bonus deferral election may not be
revoked, changed or modified. Notwithstanding the preceding
sentence, in the event an Eligible Officer ceases to be employed
as an Eligible Officer, such former Eligible Officer's bonus
deferral election shall automatically cease with respect to that
portion of a bonus earned on or after the date the individual
ceases to be an Eligible Officer. For this purpose, the portion
of a bonus earned on or after ceasing to be an Eligible Officer
shall be determined by multiplying the bonus by a fraction, the
numerator of which is the number of calendar days in such Fiscal
Year in which the individual ceased to be an Eligible Officer,
and the denominator of which is the total calendar days in such
Fiscal Year. A bonus deferral election for one (1) Fiscal Year
will not automatically be given effect for a subsequent Fiscal
Year, so that if deferrals are desired for a subsequent Fiscal
Year, a separate election must be made by the Eligible Officer
for such Fiscal Year.
3.3 Establishment of Accounts.
The Deferred Compensation, Deferred Bonuses, and Incentive
Payments will be credited to a bookkeeping account ("Account")
established by Wal-Mart on behalf of each Participant. The
Deferred Compensation will be credited to the Participant's
Account as of the last day of the Fiscal Year during which the
Deferred Compensation would otherwise be payable to the
Participant. The Deferred Bonus will be credited to the
Participant's Account as of the February 1 following the Fiscal
Year in which falls the period of service for which such bonus is
payable. The Incentive Payments will be credited to the
Participant's Account as of the last day of the Fiscal Year
specified in Section 4.2 or the Participant's Prior Agreement(s).
A Participant's Account, including earnings credited thereto,
will be maintained by Wal-Mart until all of the Plan
Participant's benefits have been paid in full.
3.4 Nature of Accounts.
Each Participant's Account will be used solely as a
measuring device to determine the amount to be paid a Participant
under this Plan. The Accounts do not constitute, nor will they
be treated as, property or a trust fund of any kind. All amounts
at any time attributable to a Participant's Account will be, and
remain, the sole property of Wal-Mart. A Participant's rights
hereunder are limited to the right to receive Plan benefits as
provided herein. The Plan represents an unsecured promise by Wal-
Mart to pay the benefits provided by the Plan.
3.5 Annual Valuation of Accounts.
Each Participant's Account will be valued annually as of
each Valuation Date. The value of an Account as of any
applicable Valuation Date is the sum of the Account value as of
the immediately preceding Valuation Date, the Deferred
Compensation and Incentive Payments allocated as of the
applicable Valuation Date, the Deferred Bonuses allocated as of
the February 1 following the preceding Valuation Date, and the
equivalent of interest credited to the Account under Section 4.1
as of the applicable Valuation Date, less any distributions for
Unforeseeable Emergencies since the preceding Valuation Date but
on or before the applicable Valuation Date.
ARTICLE IV
ADDITIONS TO ACCOUNTS -- CREDITED EARNINGS
AND INCENTIVE PAYMENTS
4.1 Credited Annual Earnings.
For each Fiscal Year a Participant's Account will be
credited with the equivalent of interest at the per annum rate
established for such Fiscal Year by the Compensation Committee of
the Wal-Mart Board of Directors. The per annum rate may be
increased or decreased for any Fiscal Year to reflect changes in
prevailing interest rates, as determined at the sole discretion
of the Compensation Committee. Except for a Fiscal Year in which
a Participant receives a distribution due to an Unforeseeable
Emergency, the amount to be credited to a Participant's Account
as of any Valuation Date is the sum of: (a) the applicable per
annum rate multiplied by the Participant's Account value as of
the immediately preceding Valuation Date; and (b) fifty percent
(50%) of the applicable per annum rate multiplied by the sum of
(1) the Participant's Deferred Compensation for the Fiscal Year
ending on the Valuation Date and (2) the Participant's Deferred
Bonuses allocated on the February 1 of the Fiscal Year ending on
the Valuation Date.
For a Fiscal Year in which a Participant receives a distri-
bution due to an Unforeseeable Emergency, the amount to be
credited to the Participant's Account as of the applicable
Valuation Date is the sum of: (a) an equivalent amount of pro
rata interest on the Participant's Account value as of the
preceding Valuation Date based upon the number of full calendar
months in the Fiscal Year which the Account was not reduced due
to the distribution; (b) an equivalent amount of pro rata
interest on the Account value immediately after the distribution
based upon the number of calendar months in the Fiscal Year in
which the Participant's Account was reduced; and (c) fifty
percent (50%) of the applicable per annum rate multiplied by the
sum of (1) the Participant's Deferred Compensation for the Fiscal
Year ending on the Valuation Date and (2) the Participant's
Deferred Bonuses allocated on the February 1 of the Fiscal Year
ending on the Valuation Date.
4.2 Incentive Payments.
The Incentive Payments described below will be credited to a
Participant's Account. Incentive Payments awarded and credited
to a Participant's Account under a Prior Agreement (such
Incentive Payments were previously referred to as "incentive
bonuses" under the Prior Agreements), and credited interest
thereon, will remain credited to a Participant's Account
hereunder as of January 31, 1996. Thereafter, a Participant's
entitlement to an Incentive Payment will be governed by this
Section 4.2, including any Incentive Payment which may be awarded
with respect to recognized Deferred Compensation (and credited
earnings thereon) deferred under a Prior Agreement. Incentive
Payments hereunder shall not duplicate any Incentive Payment
awarded and credited under a Prior Agreement as of January 31,
1996.
(a) The Incentive Payments provided in this Section
apply to a Participant's recognized Deferred Compensation
for a Fiscal Year and credited Plan earnings thereon. Incen-
tive Payments are separately awarded based upon a
Participant's recognized Deferred Compensation for a given
Fiscal Year and credited Plan earnings thereon.
(b) The amount of an Incentive Payment is based on the
Participant's recognized Deferred Compensation for a Fiscal
Year, plus credited Plan earnings on such sums through and
including the Incentive Payment award date. The amount by
which a Participant's Deferred Compensation for a Fiscal
Year exceeds twenty percent (20%) of the Participant's base
compensation will not be recognized in computing an
Incentive Payment. Base compensation for this purpose means
the Participant's annual base rate of compensation for such
Fiscal Year. Credited Plan earnings on such nonrecognized
Deferred Compensation are likewise not taken into account in
determining the amount of an Incentive Payment. In
addition, a Participant's Deferred Bonuses or credited Plan
earnings thereon are not taken into account in computing the
Participant's Incentive Payments.
(c) If a Participant remains continuously employed
with Wal-Mart or its Related Affiliates for a period of ten
(10) consecutive full Fiscal Years, beginning with the
February 1 of the first Fiscal Year in which the Participant
had a Deferred Compensation election in effect under this
Plan or a Prior Agreement, and ending with the January 31 of
the tenth (10th) Fiscal Year of such period, an Incentive
Payment will be credited to the Participant's Account as of
the January 31 of such tenth (10th) Fiscal Year. The
Incentive Payment will be equal to twenty percent (20%) of
the Participant's recognized Deferred Compensation for ten
(10), but not less than five (5), Fiscal Years (i.e., the
first six (6) Fiscal Years of such ten (10)-year period),
plus credited Plan earnings thereon through the award date.
For each full Fiscal Year thereafter in which the
Participant remains continuously employed with Wal-Mart or
its Related Affiliates, an Incentive Payment will be
credited to the Participant's Account as of the January 31
of such Fiscal Year. Such Incentive Payment will be equal
to twenty percent (20%) of the Participant's recognized
Deferred Compensation for the first Fiscal Year of the five
(5)- consecutive Fiscal Year period ending on the January 31
award date, plus credited Plan earnings thereon through the
award date.
(d) If a Participant remains continuously employed
with Wal-Mart or its Related Affiliates for a period of
fifteen (15) consecutive full Fiscal Years, beginning with
the February 1 of the first Fiscal Year in which the
Participant had a Deferred Compensation election in effect
under this Plan or a Prior Agreement, and ending with the
January 31 of the fifteenth (15th) Fiscal Year of such
period, an Incentive Payment will be credited to the
Participant's Account as of the January 31 of such fifteenth
(15th) Fiscal Year. The Incentive Payment will be equal to
ten percent (10%) of the Participant's recognized Deferred
Compensation for fifteen (15), but not less than ten (10),
Fiscal Years (i.e., the first six (6) Fiscal Years of such
fifteen (15)-year period), plus credited Plan earnings
thereon through the award date. For each full Fiscal Year
thereafter in which the Participant remains continuously
employed with Wal-Mart or its Related Affiliates, an
Incentive Payment will be credited to the Participant's
Account as of the January 31 of such Fiscal Year. Such
Incentive Payment will be equal to ten percent (10%) of the
Participant's recognized Deferred Compensation for the first
Fiscal Year of a ten (10)-consecutive Fiscal Year period
ending on the January 31 award date, plus credited Plan
earnings thereon through the award date. The Incentive
Payments provided in this Section 4.2(d) shall not take into
account Incentive Payments credited under Section 4.2(c) or
credited Plan earnings thereon.
(e) The Incentive Payments provided in this Section
4.2(e) only apply if a Participant has been a Participant
under the Plan (or a Prior Agreement) for five (5) or more
full Fiscal Years and if the Participant incurs a
Retirement, Early Retirement, death or Disability before
satisfaction of the ten (10)- or fifteen (15)-year periods
described in Sections 4.2 (c) and (d) above. In that event,
only the Incentive Payment next to be credited (i.e., twenty
percent (20%) or ten percent (10%)) will be credited to the
Participant's Account as provided in this Section 4.2(e).
In the event the Participant had not yet been awarded or
credited with a twenty percent (20%) Incentive Payment under
Section 4.2(c), the Incentive Payment provided by this
Section 4.2(e) will be based upon the ratio of (1) the
number of full Fiscal Years worked since and including the
first Fiscal Year in which the Participant had a Deferred
Compensation election in effect under this Plan or a Prior
Agreement, to (2) ten (10), multiplied by twenty percent
(20%). Such Incentive Payment will be based upon recognized
amounts for the Fiscal Years which would otherwise have been
considered in calculating the Participant's first Incentive
Payment under Section 4.2(c). If the Participant has been
awarded a twenty percent (20%) Incentive Payment provided in
Section 4.2 (c), the Incentive Payment provided by this
Section 4.2(e) will be based upon the ratio of (1) the
number of full Fiscal Years worked since the award date of
the initial twenty percent (20%) Incentive Payment, to (2)
five (5), multiplied by ten percent (10%). Such Incentive
Payment will be based upon recognized amounts for the Fiscal
Years which would otherwise have been considered in
calculating the Participant's first Incentive Payment under
Section 4.2(d). The Incentive Payment provided under this
Section 4.2(e) will be determined and credited to the
Participant's Account as of the date the Participant's Plan
benefits are distributed in a lump sum payment. If,
however, a Participant's benefits are to be distributed in
installments, the amounts provided under this Section 4.2(e)
will be determined and credited to the Participant's Account
as of the Valuation Date on which installments are based.
ARTICLE V
PAYMENT OF PLAN BENEFITS
5.1 Distribution Restrictions.
Except in the event of a Participant's Unforeseeable Emergency,
Plan benefits will not be payable to a Participant prior to the
earliest occurrence of the Participant's Retirement, Early
Retirement, Termination of Employment, Disability or death.
5.2 Termination Benefits.
(a) General.
In the event of a Participant's Termination of Employment for
reasons other than the Participant's Retirement, Early Retirement,
Disability or death, the Participant's Plan benefits will be
distributed in a lump sum within sixty (60) days after the end of the
calendar month in which the Termination of Employment occurs.
(b) Termination on Last Business Day of Fiscal Year.
If the Participant's Termination of Employment occurs on the
last business day (excluding for this purpose, Saturday and Sunday)
of a Fiscal Year, the lump sum amount will be the sum of: (a) the
value of the Participant's Account, as determined under Section 3.5,
as of the Valuation Date coincident with or immediately following the
Participant's Termination of Employment; (b) the Participant's
Deferred Bonus allocated as of the February 1 following such
Valuation Date; and (c) a pro rata amount of interest equivalent
(determined at the per annum rate in effect for the Fiscal Year in
which distribution occurs) on the sum of the amounts determined in
(a) and (b) through the date of distribution based upon the number of
calendar days since such Valuation Date.
(c) Termination on Other Than Last Business Day of Fiscal
Year.
If the Participant's Termination of Employment occurs on a date
other than the last business day (excluding for this purpose,
Saturday and Sunday) of a Fiscal Year, the lump sum amount will equal
the sum of: (a) the value of the Participant's Account as of the
Valuation Date immediately preceding Termination of Employment; (b) a
pro rata amount of interest equivalent (determined at the per annum
rate in effect for a Fiscal Year under Section 4.1) on the
Participant's Account value as of such immediately preceding
Valuation Date based upon the number of calendar days since such
Valuation Date through the date of distribution; (c) the sum of the
Participant's Deferred Compensation for the Fiscal Year in which
Termination of Employment occurs and the Participant's Deferred Bonus
allocated as of the February 1 of the Fiscal year in which
Termination of Employment occurs; and (d) a pro rata amount of
interest equivalent (determined at one-half (1/2) the per annum rate
in effect for a Fiscal Year under Section 4.1) on the amount
determined in (c) based upon the number of calendar days since the
Valuation Date immediately preceding Termination of Employment
through date of distribution.
(d) Death.
In the event of a Participant's death before payment of the
amounts provided by this Section 5.2, such amounts will be paid in a
lump sum to the Participant's beneficiary designated under Section
5.5 at the time provided herein.
5.3 Retirement, Early Retirement, and Disability Benefits.
(a) General.
In the event of a Participant's Termination of Employment due to
the Participant's Retirement, Early Retirement or Disability, the
Participant's Plan benefits will be distributed in a lump sum or in
substantially equal annual installments over a period not to exceed
fifteen (15) years, in accordance with the Participant's distribution
election given effect under the provisions of Section 5.6 below.
(b) Lump Sum Distributions.
If distribution is to be made in the form of a lump sum, the
Participant's Plan benefits will be distributed within sixty (60)
days after the end of the calendar month in which the Retirement,
Early Retirement or Disability occurs. If the Participant's
Retirement, Early Retirement or Disability occurs on the last
business day (excluding for this purpose Saturday and Sunday) of a
Fiscal Year, the lump sum amount will be the sum of: (1) the value
of the Participant's Account, as determined under Section 3.5, as of
the Valuation Date coincident with or immediately following the
Participant's Retirement, Early Retirement or Disability; (2) the
Participant's Deferred Bonus allocated as of the February 1 following
such Valuation Date; (3) a pro rata amount of interest equivalent
(determined at the per annum rate in effect for the Fiscal Year in
which distribution occurs) on the sum of the amounts determined in
(1) and (2) through the date of distribution based upon the number of
calendar days since such Valuation Date; and (4) the Participant's
Incentive Payment (if any) as provided in Section 4.2(e).
If the Participant's Retirement, Early Retirement or Disability
occurs on a date other than the last business day (excluding for this
purpose Saturday and Sunday) of a Fiscal Year, the lump sum amount
will equal the sum of: (1) the value of the Participant's Account as
of the Valuation Date immediately preceding Retirement, Early
Retirement or Disability; (2) a pro rata amount of interest
equivalent (determined at the per annum rate in effect for a Fiscal
Year under Section 4.1) on the Participant's Account value as of such
immediately preceding Valuation Date based upon the number of
calendar days since such Valuation Date through the date of
distribution; (3) the Participant's Deferred Compensation for the
Fiscal Year in which Retirement, Early Retirement or Disability
occurs and the Participant's Deferred Bonus allocated as of the
February 1 of the Fiscal Year in which Retirement, Early Retirement
or Disability occurs; (4) the Participant's Incentive Payment (if
any) as provided in Section 4.2(e); and (5) a pro rata amount of
interest equivalent (determined at one-half (1/2) the per annum rate
in effect for a Fiscal Year under Section 4.1) on the amount deter-
mined in (3) based upon the number of calendar days since the
Valuation Date immediately preceding Retirement, Early Retirement or
Disability through the date of distribution.
(c) Installment Distributions.
If distribution is to be made in the form of annual install-
ments, the Participant's installments will be based upon the value of
the Participant's Account, as determined under Section 3.5, as of the
Valuation Date coincident with or immediately following the
Participant's Retirement, Early Retirement or Disability, plus any
Deferred Bonus allocated as of the following February 1. The Plan
benefits determined above will be paid in equal annual installments
in an amount which would fully amortize a loan equal to such Plan
benefits over the period covered by the installment period (such
period commencing on the February 1 following the Valuation Date the
Participant's Account is valued under this Section), with interest
calculated at the per annum rate in effect for the Fiscal Year in
which the Participant's Retirement, Early Retirement or Disability
occurs. The first installment will be paid on the second January 31
coincident with or following the Participant's Retirement, Early
Retirement or Disability, and continue on each successive January 31
until the Participant's benefits are distributed in full.
(d) Death.
In the event of a Participant's death before full payment of
Plan benefits under this Section 5.3, payment shall be made (or
continue to be made) to the Participant's beneficiary designated
under Section 5.5 in the same form as elected by the Participant for
distribution of Retirement, Early Retirement or Disability benefits.
5.4 Death Benefits.
(a) General.
In the event of a Participant's Termination of Employment due to
the Participant's death, the Participant's Plan benefits will be
distributed in a lump sum or in substantially equal annual
installments over a period not to exceed fifteen (15) years, in
accordance with the Participant's distribution election given effect
under the provisions of Section 5.6 below. Amounts will be
distributed to the beneficiary designated under 5.5 below.
(b) Lump Sum Distributions.
If distribution is to be made in the form of a lump sum, the
Participant's Plan benefits will be distributed within sixty (60)
days after the end of the calendar month in which the Participant's
death occurs. If the Participant's death occurs on the last business
day (excluding for this purpose Saturday and Sunday) of a Fiscal
Year, the lump sum amount will be the sum of: (1) the value of the
Participant's Account, as determined under Section 3.5, as of the
Valuation Date coincident with or immediately following the
Participant's death; (2) the Participant's Deferred Bonus allocated
as of the February 1 following such Valuation Date; (3) a pro rata
amount of interest equivalent (determined at the per annum rate in
effect for the Fiscal Year in which distribution occurs) on the sum
of the amounts determined in (1) and (2) through the date of
distribution based upon the number of calendar days since such
Valuation Date; and (4) the Participant's Incentive Payment (if any)
as provided in Section 4.2(e).
If the Participant's death occurs on a date other the last
business day (excluding for this purpose Saturday and Sunday) of a
Fiscal Year, the lump sum amount will equal the sum of: (1) the
value of the Participant's Account as of the Valuation Date immedi-
ately preceding the Participant's death; (2) a pro rata amount of
interest equivalent (determined at the per annum rate in effect for a
Fiscal Year on the Participant's Account value as of the immediately
preceding Valuation Date based upon the number of full calendar days
since such Valuation Date through date of distribution; (3) the
Participant's Deferred Compensation for the Fiscal Year in which the
Participant's death occurs and the Participant's Deferred Bonus
allocated as of the February 1 of the Fiscal Year in which the
Participant's death occurs; (4) the Participant's Incentive Payment
(if any) as provided in Section 4.2(e); and (5) a pro rata amount of
interest equivalent (determined at one-half (1/2) the per annum rate
in effect for a Fiscal Year on the amount determined in (3) based
upon the number of calendar days since the Valuation Date immediately
preceding the Participant's death through the date of distribution.
(c) Installment Distributions.
If distribution is to be made in the form of annual install
ments, the installments will be based upon the value of the
Participant's Account, as determined under Section 3.5, as of the
Valuation Date coincident with or immediately following the
Participant's death, plus any Deferred Bonus allocated as of the
following February 1. The Plan benefits determined above will be
paid in equal annual installments in an amount which would fully
amortize a loan equal to such Plan benefits over the period covered
by the installment period (such period commencing on the February 1
following the Valuation Date the Participant's Account is valued
under this Section), with interest calculated at the per annum rate
in effect for the Fiscal Year in which the Participant's death
occurs. The first installment will be paid on the second January 31
coincident with or following the Participant's death, and continue on
each successive January 31 until the Participant's benefits are
distributed in full.
5.5 Designation of Beneficiary.
A Participant may, by written instrument delivered to Wal-Mart
on forms prescribed by the Committee, designate primary and
contingent beneficiaries to receive any benefit payments which may be
payable under this Plan following the Participant's death, and may
designate the proportions in which such beneficiaries are to receive
such payments. A Participant may change such designations from time
to time and the last written designation filed with Wal-Mart prior to
the Participant's death will control. In the event no beneficiary is
designated, or if the designated beneficiary predeceases the
Participant, payment shall be payable to the Participant's estate.
For this purpose, a Participant's most recent written beneficiary
designation properly filed under a Prior Agreement shall continue to
be given effect until otherwise modified in accordance with the
provisions of this Section.
5.6 Form of Distribution.
If a Participant's Termination of Employment is due to the
Participant's Retirement, Early Retirement, Disability or death, at
the Participant's election distribution may be made in a lump sum or
in substantially equal annual installments over a period not to
exceed fifteen (15) years. A Participant may file a distribution
election with Wal-Mart on forms prescribed by the Committee. A
distribution election, once given effect under this Section 5.6, will
apply to the Participant's total Plan benefits. A Participant may,
however, file a separate election for death benefits payable under
Section 5.4. To be given effect under this Section 5.6, any
distribution election for benefits payable under Section 5.3 must
have been filed with Wal-Mart at least twenty-four (24) full calendar
months before the occurrence of an event entitling the Participant to
a distribution thereunder. If a Participant's distribution election
has not been on file with Wal-Mart for the full twenty-four (24)-
month period, it will not be recognized or given effect by the Plan.
In that event, distribution will be made in accordance with the
Participant's most recent distribution election which was filed with
Wal-Mart at least twenty-four (24) months prior to the Participant's
Retirement, Early Retirement, or Disability. The twenty-four (24)
month period provided above shall not apply to amounts payable under
Section 5.4. For purposes of this Section 5.6, a Participant's last
distribution election filed with Wal-Mart under a Prior Agreement
will be given effect for the Participant's total Plan benefits until
superseded or amended by the Participant in accordance with the
provisions of this Section, except that death benefits under Section
5.4 will be paid in a lump sum unless an affirmative election to the
contrary is filed by the Participant. If the Participant has not
been a Participant in the Plan for at least twenty-four (24) months
prior to the Participant's Retirement, Early Retirement, or Disabili-
ty, the Participant's initial distribution election filed with Wal-
Mart will be given effect.
5.7 Reductions Arising from a Participant's Gross Misconduct.
A Participant's Plan benefits are contingent upon the Partici-
pant not engaging in Gross Misconduct while employed with Wal-Mart or
any Related Affiliate, or during such additional period as provided
in Wal-Mart's Statement of Ethics. Notwithstanding anything herein
to the contrary, in the event the Committee determines that the
Participant has engaged in Gross Misconduct during the prescribed
period: (a) the Participant shall forfeit all Incentive Payments,
and credited Plan earnings thereon; and (b) earnings credited to the
Participant's Account derived from Deferred Compensation and Deferred
Bonuses shall be recalculated for each Fiscal Year to reflect the
amount which would otherwise have been credited if the applicable per
annum rate were fifty percent (50%) of the per annum rate in effect
for such Fiscal Year. Under no circumstances will a Participant
forfeit any portion of the Participant's Deferred Compensation or
Deferred Bonuses. Any payments received hereunder by a Participant
(or the Participant's beneficiary) are contingent upon the Partici-
pant not engaging (or not having engaged) in Gross Misconduct while
employed with Wal-Mart or any Related Affiliate, or during such
additional period as provided in Wal-Mart's Statement of Business
Ethics. If the Committee determines, after payment of amounts
hereunder, that the Participant has engaged in Gross Misconduct
during the prescribed period, the Participant (or the Participant's
beneficiary) shall repay to Wal-Mart any amount in excess of that to
which the Participant is entitled under this Section 5.7.
5.8 Distributions for Unforeseeable Emergencies.
In the event of an Unforeseeable Emergency, the Committee, in
its sole and absolute discretion and upon written application of such
Participant, may direct immediate distribution of all or a portion of
the Participant's Plan benefits. The Committee will permit
distribution because of an Unforeseeable Emergency only to the extent
reasonably needed to satisfy the emergency need.
Notwithstanding anything herein to the contrary, the provisions
of this paragraph apply in the event a Participant receives a
distribution under this Section 5.8, the Participant's Termination of
Employment for any reason occurs on a date other than the last
business day of a Fiscal Year (excluding for this purpose Saturday or
Sunday), and the Participant's benefits hereunder for any reason are
paid in the same Fiscal Year in which the Participant received a
distribution for Unforeseeable Emergencies under this Section 5.8.
In that event, the Participant's lump sum amount calculated under
Sections 5.2, 5.3, or 5.4 will be reduced by the amount distributed
under this Section 5.8 and the applicable interest equivalent will be
calculated in a manner consistent with Section 4.1.
ARTICLE VI
ADMINISTRATION
6.1 General.
The Committee is responsible for the administration of the Plan
and is granted the following rights and duties:
(a) The Committee shall have the exclusive duty, authority
and discretion to interpret and construe the provisions of the
Plan, to determine eligibility for and the amount of any benefit
payable under the Plan, and to decide any dispute which may rise
regarding the rights of Participants (or their beneficiaries)
under this Plan;
(b) The Committee shall have the sole and complete
authority to adopt, alter, and repeal such administrative rules,
regulations, and practices governing the operation of the Plan
as it shall from time to time deem advisable;
(c) The Committee may appoint a person or persons to
assist the Committee in the day-to-day administration of the
Plan;
(d) The decision of the Committee in matters pertaining to
this Plan shall be final, binding, and conclusive upon Wal-Mart,
the Participant, the Participant's beneficiary, and upon any
person affected by such decision, subject to the claims
procedure set forth in Article VII; and
(e) In any matter relating solely to a Committee member's
individual rights or benefits under this Plan, such Committee
member shall not participate in any Committee proceeding
pertaining to, or vote on, such matter.
ARTICLE VII
CLAIMS PROCEDURE
7.1 General.
Any claim for benefits under the Plan must be filed by the
Participant or beneficiary ("claimant") in writing with the Committee
or its delegate. If a claim for a Plan benefit is wholly or
partially denied, notice of the decision will be furnished to the
claimant by the Committee or its delegate within a reasonable period
of time, not to exceed sixty (60) days, after receipt of the claim by
the Committee or its delegate. Any claimant who is denied a claim
for benefits will be furnished written notice setting forth:
(a) the specific reason or reasons for the denial;
(b) specific reference to the pertinent Plan provision
upon which the denial is based;
(c) a description of any additional material or informa-
tion necessary for the claimant to perfect the claim; and
(d) an explanation of the Plan's claim review procedure.
7.2 Appeals Procedure.
To appeal a denial of a claim, a claimant or the claimant's duly
authorized representative:
(a) may request a review by written application to the
Committee not later than sixty (60) days after receipt by the
claimant of the written notification of denial of a claim;
(b) may review pertinent documents; and
(c) may submit issues and comments in writing.
A decision on review of a denied claim will be made by the
Committee not later than sixty (60) days after receipt of a request
for review, unless special circumstances require an extension of time
for processing, in which case a decision will be rendered within a
reasonable period of time, but not later than one hundred twenty
(120) days after receipt of a request for review. The decision on
review will be in writing and shall include the specific reasons for
the denial and the specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Amendment, Suspension or Termination of Plan.
Wal-Mart, by action of the Executive Committee its Board of
Directors, reserves the right to amend, suspend or to terminate the
Plan in any manner that it deems advisable. Notwithstanding the
preceding sentence, the Plan may not be amended, suspended or
terminated to cause a Participant to forfeit the Participant's then-
existing Account.
8.2 Non-Alienability.
The rights of a Participant to the payment of benefits as
provided in the Plan may not be assigned, transferred, pledged or
encumbered or be subject in any manner to alienation or anticipation.
No Participant may borrow against the Participant's interest in the
Plan. No interest or amounts payable under the Plan may be subject
in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, whether voluntary or involuntary, including but not
limited to, any liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative
of any Participant.
8.3 No Employment Rights.
Nothing contained herein shall be construed as conferring upon
the Participant the right to continue in the employ of Wal-Mart or
any of its related affiliates as an officer or in any other capacity.
8.4 No Right to Bonus.
Nothing contained herein shall be construed as conferring upon
the Participant the right to receive a bonus from the Wal-Mart
Stores, Inc. Management Incentive Plan for Officers. A Participant's
entitlement to such a bonus is governed solely by the provisions of
that plan.
8.5 Withholding and Employment Taxes.
To the extent required by law, Wal-Mart will withhold from a
Participant's current compensation or from Plan distributions, as the
case may be, such taxes as are required to be withheld for federal,
state or local government purposes.
8.6 Income and Excise Taxes.
The Participant (or the Participant's beneficiaries or estate)
is solely responsible for the payment of all federal, state and local
income and excise taxes resulting from the Participant's
participation in this Plan.
8.7 Successors and Assigns.
The provisions of this Plan are binding upon and inure to the
benefit of Wal-Mart, its successors and assigns, and the Participant,
the Participant's beneficiaries, heirs, and legal representatives.
8.8 Governing Law.
This Plan shall be subject to and construed in accordance with
the laws of the State of Arkansas to the extent not preempted by
federal law.
<TABLE>
1996 End of Year Store Counts
<CAPTION>
Wal-Mart SAM'S
Stores Supercenters Clubs
<S> <C> <C> <C>
Alabama 65 11 8
Alaska 3 3
Arizona 31 6
Arkansas 58 19 4
California 88 26
Colorado 34 2 9
Connecticut 6 3
Delaware 2 1
Florida 116 16 34
Georgia 79 6 15
Hawaii 4 1
Idaho 7 1
Illinois 101 3 24
Indiana 66 6 14
Iowa 45 6
Kansas 43 3 5
Kentucky 60 8 5
Louisiana 62 13 9
Maine 19 3
Maryland 19 10
Massachusetts 23 5
Michigan 39 21
Minnesota 33 9
Mississippi 47 10 4
Missouri 81 27 11
Montana 6 1
Nebraska 13 4 3
Nevada 9 2
New Hampshire 15 4
New Jersey 14 6
New Mexico 19 3
New York 46 4 17
North Carolina 82 1 13
North Dakota 8 2
Ohio 70 22
Oklahoma 61 17 6
Oregon 17
Pennsylvania 47 5 14
Rhode Island 4 1
South Carolina 49 3 8
South Dakota 8 1
Tennessee 69 19 9
Texas 185 56 51
Utah 13 5
Vermont 1
Virginia 43 4 10
Washington 13 2
West Virginia 12 2 3
Wisconsin 51 11
Wyoming 9 2
TOTAL U.S.A. 1,995 239 433
Argentina 1 2
Brazil 2 3
Mexico 85* 13 28
Puerto Rico 7 4
CANADA
Alberta 14
British Columbia 12
Manitoba 9
New Brunswick 4
Newfoundland 7
Nova Scotia 6
NW Territories 1
Ontario 48
Quebec 22
Saskatchewan 8
TOTAL CANADA 131
GRAND TOTAL 2,218 255 470
</TABLE>
[FN]
* Includes 3 Superamas, 25 Bodegas, 4 Aurreras, 48 Vips and 5 Suburbias
<TABLE>
11-Year Financial Summary
(Dollar amounts in millions except per share data)
<CAPTION>
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Operating Results
Net sales $93,627 $82,494 $67,344 $55,484 $43,887 $32,602
Net sales increase 13% 22% 21% 26% 35% 26%
Comparative store
sales increase 4% 7% 6% 11% 10% 10%
Other income - net 1,122 918 641 501 403 262
Cost of sales 74,564 65,586 53,444 44,175 34,786 25,500
Operating, selling,
and general and
administrative
expenses 14,951 12,858 10,333 8,321 6,684 5,152
Interest costs:
Debt 692 520 331 143 113 43
Capital leases 196 186 186 180 153 126
Provision for income
taxes 1,606 1,581 1,358 1,171 945 752
Net income 2,740 2,681 2,333 1,995 1,609 1,291
Per share of common stock:
Net income 1.19 1.17 1.02 .87 .70 .57
Dividends .20 .17 .13 .11 .09 .07
Financial Position
Current assets $17,331 $15,338 $12,114 $10,198 $ 8,575 $ 6,415
Inventories at
replacement cost 16,300 14,415 11,483 9,780 7,857 6,207
Less LIFO reserve 311 351 469 512 473 399
Inventories at
LIFO cost 15,989 14,064 11,014 9,268 7,384 5,808
Net property, plant,
and equipment and
capital leases 18,894 15,874 13,176 9,793 6,434 4,712
Total assets 37,541 32,819 26,441 20,565 15,443 11,389
Current liabilities 11,454 9,973 7,406 6,754 5,004 3,990
Long-term debt 8,508 7,871 6,156 3,073 1,722 740
Long-term obligations
under capital leases 2,092 1,838 1,804 1,772 1,556 1,159
Shareholders' equity 14,756 12,726 10,753 8,759 6,990 5,366
Financial Ratios
Current ratio 1.5 1.5 1.6 1.5 1.7 1.6
Inventories/
working capital 2.7 2.6 2.3 2.7 2.1 2.4
Return on assets* 8.3% 10.1% 11.3% 12.9% 14.1% 15.7%
Return on shareholders'
equity* 21.5% 24.9% 26.6% 28.5% 30.0% 32.6%
Other Year-End Data
Number of domestic
Wal-Mart Stores 1,995 1,985 1,950 1,848 1,714 1,568
Number of domestic
Supercenters 239 147 72 34 10 9
Number of domestic
SAM'S Clubs 433 426 417 256 208 148
International units 276 226 24 10
Average Wal-Mart
store size 91,100 87,600 83,900 79,800 74,700 70,700
Number of associates 675,000 622,000 528,000 434,000 371,000 328,000
Number of shareholders
of record 244,483 259,286 257,946 180,584 150,242 122,414
</TABLE>
[FN]
* On beginning of year balances.
<TABLE>
11-Year Financial Summary
(Dollar amounts in millions except per share data)
<CAPTION>
1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C>
Operating Results
Net sales $25,811 $20,649 $15,959 $11,909 $ 8,451
Net sales increase 25% 29% 34% 41% 32%
Comparative store
sales increase 11% 12% 11% 13% 9%
Other income - net 175 137 105 85 55
Cost of sales 20,070 16,057 12,282 9,053 6,361
Operating, selling,
and general and
administrative
expenses 4,070 3,268 2,599 2,008 1,485
Interest costs:
Debt 20 36 25 10 2
Capital leases 118 99 89 76 55
Provision for income
taxes 632 488 441 396 276
Net income 1,076 838 628 451 327
Per share of common stock:
Net income .48 .37 .28 .20 .15
Dividends .06 .04 .03 .02 .02
Financial Position
Current assets $ 4,713 $ 3,631 $ 2,905 $ 2,353 $ 1,784
Inventories at
replacement cost 4,751 3,642 2,855 2,185 1,528
Less LIFO reserve 323 291 203 154 140
Inventories at
LIFO cost 4,428 3,351 2,652 2,031 1,388
Net property, plant,
and equipment and
capital leases 3,430 2,662 2,145 1,676 1,303
Total assets 8,198 6,360 5,132 4,049 3,104
Current liabilities 2,845 2,066 1,744 1,340 993
Long-term debt 185 184 186 179 181
Long-term obligations
under capital leases 1,087 1,009 867 764 595
Shareholders' equity 3,966 3,008 2,257 1,690 1,278
Financial Ratios
Current ratio 1.7 1.8 1.7 1.8 1.8
Inventories/
working capital 2.4 2.1 2.3 2.0 1.8
Return on assets* 16.9% 16.3% 15.5% 14.5% 14.8%
Return on shareholders'
equity* 35.8% 37.1% 37.1% 35.2% 33.3%
Other Year-End Data
Number of domestic
Wal-Mart Stores 1,399 1,259 1,114 980 859
Number of domestic
Supercenters 6 3 2
Number of domestic
SAM'S Clubs 123 105 84 49 23
International units
Average Wal-Mart
store size 66,400 63,500 61,500 59,000 57,000
Number of associates 271,000 223,000 183,000 141,000 104,000
Number of shareholders
of record 79,929 80,270 79,777 32,896 21,828
</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
1996 $93,627 13% 4%
1995 82,494 22% 7%
1994 67,344 21% 6%
The sales increase of 13% in fiscal 1996 compared with fiscal 1995 was
attributable to the Company's expansion program and comparative store sales
increases of 4%. Expansion for fiscal 1996 included the opening of 92 Wal-Mart
stores, 92 Supercenters (including the conversion of 80 Wal-Mart stores), 9
SAM'S Clubs and 50 International units. International sales accounted for
approximately 2.1% of the sales increase with the remainder primarily
attributed to Wal-Mart stores and Supercenters. SAM'S Clubs sales as a
percentage of total sales decreased from 22.9% in fiscal 1995 to 20.4% in fiscal
1996.
The sales increase of 22% in fiscal 1995 compared with fiscal 1994 was
attributable to the Company's domestic expansion of 109 Wal-Mart stores, 75
Supercenters (including the conversion of 69 Wal-Mart stores), and 21 SAM'S
Clubs; 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 was attributable to the PACE
units acquired in the fourth quarter of fiscal 1994. Canadian store sales
accounted for 1.5% of total sales in fiscal 1995.
<TABLE>
New Operating Locations 1996 1995 1994
<S> <C> <C> <C>
Domestic units
New Wal-Mart stores 92 109 141
New Supercenters 12 6 1
Wal-Mart stores relocated or expanded to Supercenters 80 69 37
New SAM'S Clubs 9 21 63
Acquired PACE Clubs 99
Total new domestic units 193 205 341
International units
Acquired Canada Woolco stores 122
Other new international units 50 80 14
Total new international units 50 202 14
Total new units 243 407 355
</TABLE>
Costs and Expenses
Cost of sales as a percentage of sales increased .1% in both fiscal 1996
and fiscal 1995 when compared to the preceding year. The change in fiscal
1996 is comprised of an increase of approximately .3% due to a larger
percentage of consolidated sales from departments within Wal-Mart stores
which have lower markon percents, and to the Company's continuing
commitment to always providing low prices. This increase is offset
because the SAM'S Clubs comprised a lower percentage of consolidated
sales in 1996 at a lower contribution to gross margin than the stores.
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 PACEClubs. 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 markon on purchases.
Operating, selling, and general and administrative expenses as a
percentage of sales increased .4% and .2%, respectively, in each of the
last two fiscal years when compared to the previous year. Approximately
.2% of the increase in fiscal 1996 was due to increases in payroll and
related benefit costs. The remainder of the increase resulted primarily
from a lower percentage of sales attributable to SAM'S Clubs and a higher
percentage of sales attributable to international operations. SAM'S Clubs
operating, selling, and general and administrative expenses as a
percentage of sales are lower than the Wal-Mart stores and Supercenters
while international expenses are slightly higher. The increase in fiscal
1995 was primarily attributable to the acquisition of the Canadian stores
and higher payroll and related benefit costs.
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" was issued in March 1995. 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. This statement will be
effective for the Company's fiscal year ending January 31, 1997. The
Company's existing accounting policie s are such that this pronouncement
will not have a material effect on the Company's financial position or
results of operations.
"Accounting for Stock-Based Compensation," SFAS No. 123, was
issued in October 1995 and will be effective for the Company's fiscal
year ending January 31, 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
intends to continue using the measurement prescribed by the former
standard, and accordingly, this pronouncement will not have an effect on
the Company's financial position or results of operations.
Interest Cost
Interest cost increased in fiscal 1996 and 1995 due to increased
indebtedness and increased average short-term borrowing rates in each of
the years. The increased indebtedness is due to the Company's expansion
program. See Note 2 of Notes to Consolidated Financial Statements for
additional information on interest and debt.
Income Taxes
The effective income tax rate was 37.0% and 37.1% in fiscal 1996 and 1995
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 $2.4 billion in fiscal 1996. These
funds combined with long-term borrowings of $1 billion and net short-term
borrowings of $.7 billion were used to finance capital expenditures of
$3.6 billion, to pay dividends, provide working capital, and to fund the
operation of subsidiaries.
Borrowing Information
The Company had committed lines of credit of $1,900 million and informal
lines totaling an additional $2,450 million with 35 banks 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.
Favorable debt market conditions combined with the Company's
ability to generate significant cash flows from operations have allowed
the Company to aggressively expand during the past three years. In fiscal
1996, the Company borrowed $1 billion at interest rates ranging from 6
1/8% to 7% for terms of three to seven years. Although the Company has
borrowed to support the expansion, debt and equity have increased
proportionately during the past three years. The Company's debt
(including obligations under capital leases) to equity ratio was .74:1 at
the end of fiscal 1996 compared to .77:1 and .75:1 at the end of fiscal
1995 and 1994, 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 estimated $3.5 billion capital
expansion plan in fiscal 1997.
Foreign Currency Translation
The Company has operations in Puerto Rico, Canada, and Argentina, and
through joint ventures in Mexico and Brazil. All foreign operations are
measured in their local currencies with the exception of Brazil,
operating in a highly inflationary economy, which reports operations
using U.S. dollars. All foreign operations as a group are insignificant
to the Company's consolidated results of operations and financial
position. The foreign currency translation adjustment of $412 and $256
million in fiscal 1996 and 1995, respectively, is primarily due to
operations in Mexico. In fiscal 1995 the value of the peso dropped
significantly in relation to the dollar and continued to decline in
fiscal 1996. The Company continues to evaluate strategies to minimize the
financial risk of currency devaluation. Although exposure to this risk
exists, any further devaluation of the peso or other currencies should
not significantly impact the Company's consolidated operations or
financial position.
Expansion
Domestically, the Company plans to open 60 to 70 new Wal-Mart stores, and
100 to 110 Supercenters. Approximately 90 of the Supercenters will come
from relocations or expansions of existing Wal-Mart stores. The Company
also plans to open 10 new SAM'S Clubs and three distribution centers.
International expansion includes 25 to 30 new Wal-Mart stores,
Supercenters, and SAM'S Clubs in Argentina, Brazil, Canada, China,
Indonesia, Mexico and Puerto Rico.
Total capital expenditures for 1997 are not expected to exceed $3.5
billion. The Company plans to primarily finance expansion with operating
cash flows. The Company may also provide for cash needs through short-
term borrowings backed up by the credit lines discussed above and also
may sell $751 million of public debt utilizing shelf registration
statements previously filed with the Securities and Exchange Commission
to provide for other cash needs.
<TABLE>
Consolidated Statements of Income
(Amounts in millions except per share data)
<CAPTION>
Fiscal years ended January 31, 1996 1995 1994
<S> <C> <C> <C>
Revenues:
Net sales $93,627 $82,494 $67,344
Other income - net 1,122 918 641
94,749 83,412 67,985
Costs and Expenses:
Cost of sales 74,564 65,586 53,444
Operating, selling, and
general and administrative
expenses 14,951 12,858 10,333
Interest Costs:
Debt 692 520 331
Capital leases 196 186 186
90,403 79,150 64,294
Income Before Income Taxes 4,346 4,262 3,691
Provision for Income Taxes:
Current 1,530 1,572 1,325
Deferred 76 9 33
1,606 1,581 1,358
Net Income $ 2,740 $ 2,681 $ 2,333
Net Income Per Share $ 1.19 $ 1.17 $ 1.02
</TABLE>
[FN]
See accompanying notes.
<TABLE>
<CAPTION>
Net Income
(Millions of Dollars) (Graph)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
451 628 838 1,076 1,291 1,609 1,995 2,333 2,681 2,740
</TABLE>
<TABLE>
Consolidated Balance Sheets
(Amounts in millions)
<CAPTION>
January 31, 1996 1995
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 83 $ 45
Receivables 853 900
Inventories:
At replacement cost 16,300 14,415
Less LIFO reserve 311 351
Inventories at LIFO cost 15,989 14,064
Prepaid expenses and other 406 329
Total Current Assets 17,331 15,338
Property, Plant, and Equipment, at Cost:
Land 3,559 3,036
Buildings and improvements 11,290 8,973
Fixtures and equipment 5,665 4,768
Transportation equipment 336 313
20,850 17,090
Less accumulated depreciation 3,752 2,782
Net property, plant, and equipment 17,098 14,308
Property under capital leases 2,476 2,147
Less accumulated amortization 680 581
Net property under capital leases 1,796 1,566
Other Assets and Deferred Charges 1,316 1,607
Total Assets $37,541 $32,819
Liabilities and Shareholders' Equity
Current Liabilities:
Commercial paper $ 2,458 $ 1,795
Accounts payable 6,442 5,907
Accrued liabilities 2,091 1,819
Accrued federal and state income taxes 123 365
Long-term debt due within one year 271 23
Obligations under capital leases
due within one year 69 64
Total Current Liabilities 11,454 9,973
Long-Term Debt 8,508 7,871
Long-Term Obligations Under Capital Leases 2,092 1,838
Deferred Income Taxes and Other 731 411
Shareholders' Equity:
Preferred stock ($.10 par value;
100 shares authorized, none issued)
Common stock ($.10 par value;
5,500 shares authorized, 2,293 and 2,297
issued and outstanding in 1996 and 1995,
respectively) 229 230
Capital in excess of par value 545 539
Retained earnings 14,394 12,213
Foreign currency translation adjustment (412) (256)
Total Shareholders' Equity 14,756 12,726
Total Liabilities and Shareholders' Equity $37,541 $32,819
</TABLE>
[FN]
See accompanying notes.
<TABLE>
Consolidated Statements of Shareholders'Equity
(Amounts in millions except per share data)
<CAPTION>
Foreign
Capital in currency
Number Common excess of Retained translation
of shares stock par value earnings adjustment Total
<S> <C> <C> <C> <C> <C> <C>
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
Net income 2,740 2,740
Cash dividends
($.20 per share) (458) (458)
Foreign currency
translation adjustment (156) (156)
Other (4) (1) 6 (101) (96)
Balance - January 31, 1996 2,293 $229 $545 $14,394 $(412) $14,756
</TABLE>
[FN]
See accompanying notes.
<TABLE>
Consolidated Statements of Cash Flows
(Amounts in millions)
<CAPTION>
Fiscal years ended January 31, 1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,740 $ 2,681 $ 2,333
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,304 1,070 849
Increase in accounts receivable (61) (84) (165)
Increase in inventories (1,850) (3,053) (1,324)
Increase in accounts payable 448 1,914 230
Increase in accrued liabilities 29 496 327
Other (227) (118) (55)
Net cash provided by operating activities 2,383 2,906 2,195
Cash flows from investing activities:
Payments for property, plant, and equipment (3,566) (3,734) (3,644)
Acquisition of assets from PACE
Membership Warehouses, Inc. - - (830)
Acquisition of assets from Woolworth
Canada, Inc. - (352) -
Sale/leaseback arrangements - 502 272
Investment in international operations (57) (434) (198)
Other investing activities 291 226 (86)
Net cash used in investing activities (3,332) (3,792) (4,486)
Cash flows from financing activities:
Increase (decrease) in commercial paper 660 220 (14)
Proceeds from issuance of long-term debt 1,004 1,250 3,108
Dividends paid (458) (391) (299)
Payment of long-term debt (126) (37) (19)
Payment of capital lease obligations (81) (70) (437)
Other financing activities (12) (61) (40)
Net cash provided by financing activities 987 911 2,299
Net increase in cash and cash equivalents 38 25 8
Cash and cash equivalents at beginning of year 45 20 12
Cash and cash equivalents at end of year $ 83 $ 45 $ 20
Supplemental disclosure of cash flow information:
Income tax paid $ 1,785 $ 1,390 $ 1,366
Interest paid 866 658 450
Capital lease obligations incurred 365 193 162
</TABLE>
[FN]
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 located in all 50 states, Puerto Rico,
Canada, and Argentina, and through joint ventures in Mexico and Brazil.
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.
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 $50 million, $70 million, and $65 million in 1996, 1995,
and 1994, 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.
Long-lived assets
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of, which requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that
are expected to be disposed of. The Company will adopt Statement 121 in
the first quarter of 1997 and, based on current circumstances, does not
believe the effect of adoption will be material.
Operating, selling, and general and administrative expenses
Buying, warehousing, and occupancy costs are included in operating,
selling, and general and administrative expenses.
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.
Estimates and assumptions
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2 Commercial Paper and Long-term Debt
Information on short-term borrowings and interest rates is as follows
(dollar amounts in millions):
Fiscal years ended January 31, 1996 1995 1994
Maximum amount outstanding at month-end $3,686 $2,729 $2,395
Average daily short-term borrowings 2,106 1,693 1,247
Weighted average interest rate 5.9% 4.4% 3.0%
On January 31, 1996, the Company had committed lines of credit of
$1,900 million and informal lines of credit totaling an additional $2,450
million with 35 banks, 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.
<TABLE>
<CAPTION>
Long-term debt at January 31 consists of
(amounts in millions):
1996 1995
<S> <C> <C> <C>
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 500 500
7 8\10%-8 1\4% Obligations from sale/leaseback
transactions due 2014 478 484
7% - 8% Obligations from sale/leaseback
transactions due 2013 318 322
6 3\4% Notes due May 2002 300 -
6 3\8% Notes due March 2003 250 250
6 3\4% Notes due October 2023 250 250
8% Notes due September 2006 250 250
8 1\2% Notes due September 2024 250 250
6 7\8% Eurobond due June 1999 250 250
5 1\8% Eurobond due October 1998 250 250
7% Eurobond due April 1998 250 -
6 1\8% Eurobond due November 2000 250 -
6 3\4% Eurobond due May 2002 200 -
8% Notes due May 1996 - 250
10 7\8% Debentures due August 2000 - 100
Other 212 215
$8,508 $7,871
</TABLE>
Long-term debt is unsecured except for $213 million which is
collateralized by property with an aggregate carrying value of
approximately $351 million. Annual maturities of long-term debt during
the next five years are (in millions):
<TABLE>
<CAPTION>
Fiscal years ending Annual
January 31, maturity
<S> <C>
1997 $ 271
1998 525
1999 1,025
2000 807
2001 2,065
Thereafter 4,086
</TABLE>
The Company has agreed to observe 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, 1996 are
(in millions):
<TABLE>
<CAPTION>
Fiscal years ending Minimum
January 31, Rentals
<S> <C>
1997 $ 72
1998 76
1999 76
2000 104
2001 100
Thereafter 1,009
</TABLE>
The fair value of the Company's long-term debt approximates $8,960
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.
As of January 31, 1996 and 1995, the Company had letters of credit
outstanding totaling $551 and $580 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. On January 31, 1996, the
amount guaranteed was approximately $85 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 $751 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 $204 million, $175 million, and $166 million in 1996, 1995, and 1994,
respectively.
4 Income Taxes
The income tax provision consists of the following
(in millions):
1996 1995 1994
Current:
Federal $1,342 $1,394 $1,193
State and local 188 178 132
Total current tax provision 1,530 1,572 1,325
Deferred:
Federal 61 7 30
State and local 15 2 3
Total deferred tax provision 76 9 33
Total provision for income taxes $1,606 $1,581 $1,358
Items that give rise to significant portions of the deferred
tax accounts at January 31 are as follows (in millions):
1996 1995 1994
Deferred tax liabilities:
Property, plant, and equipment $617 $518 $408
Inventory 135 88 38
Other 19 8 9
Total deferred tax liabilities 771 614 455
Deferred tax assets:
Amounts accrued for financial
reporting purposes not yet
deductible for tax purposes 204 230 114
Capital leases 147 114 95
Other 150 33 18
Total deferred tax assets 501 377 227
Net deferred tax liabilities $270 $237 $228
A reconciliation of the significant differences between
the effective income tax rate and the federal statutory rate
on pretax income follows:
1996 1995 1994
Statutory tax rate 35.0% 35.0% 35.0%
State income taxes,
net of federal income tax benefit 3.1 2.7 2.4
Other (1.1) (0.6) (0.6)
Effective tax rate 37.0% 37.1% 36.8%
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. 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, 1996, 75 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 the date of grant. Options granted
prior to November 1995 may be exercised in nine annual installments.
Options granted after November 1995 may be exercised in seven annual
installments. Further information concerning the options is as follows:
<TABLE>
<CAPTION>
Option price
Shares per share Total
<S> <C> <C> <C>
Shares under option
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 15,876,000 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
Options Granted 7,114,000 23.50-24.75 167,959,000
Options Cancelled (1,953,000) 3.75-30.82 (43,873,000)
Options Exercised (1,101,000) 2.78-25.38 (9,678,000)
January 31, 1996 22,029,000 $ 2.78-30.82 $477,389,000
(5,011,000 shares exerciseable)
Shares available for option
January 31, 1995 58,107,000
January 31, 1996 52,946,000
</TABLE>
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 $531 million in
1996, $479 million in 1995, and $361 million in 1994. Aggregate minimum
annual rentals at January 31, 1996, under non-cancelable leases are as
follows (in millions):
Fiscal Operating Capital
years leases leases
1997 $ 382 $ 263
1998 417 285
1999 358 284
2000 343 282
2001 317 279
Thereafter 3,117 3,087
Total minimum rentals $4,934 4,480
Less estimated executory costs 83
Net minimum lease payments 4,397
Less imputed interest at rates
ranging from 6.1% to 14.0% 2,236
Present value of minimum lease payments $2,161
Certain of the leases provide for contingent additional rentals based on
percentage of sales. Such additional rentals amounted to $41 million, $42
million, and $27 million in 1996, 1995, and 1994, respectively.
Substantially all of the store leases have renewal options for additional
terms from five to 25 years at comparable rentals.
The Company has entered into lease commitments for land and buildings
for 34 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 $32 million
annually over the lease terms.
8 Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Quarters ended
Amounts in millions
(except per share information)
1996 April 30, July 31, October 31, January 31,
<S> <C> <C> <C> <C>
Net sales $20,440 $22,723 $22,913 $27,551
Cost of sales 16,196 18,095 18,176 22,097
Net income 553 633 612 942
Net income per share $ .24 $ .28 $ .27 $ .41
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
</TABLE>
<TABLE>
<CAPTION>
Market Price Of Common Stock
Fiscal years ended January 31,
1996 1995
Quarter High Low High Low
<S> <C> <C> <C> <C>
April 30 $26.00 $23.13 $29.13 $24.00
July 31 27.50 23.00 25.88 22.75
October 31 26.00 21.63 26.00 22.75
January 31 24.75 19.25 24.13 20.88
</TABLE>
<TABLE>
<CAPTION>
Dividends Paid Per Share
Fiscal years ended January 31,
Quarterly
1996 1995
<S> <C> <C> <C>
April 14 $0.0500 April 14 $0.0425
July 10 0.0500 July 8 0.0425
October 3 0.0500 October 3 0.0425
January 5 0.0500 January 5 0.0425
</TABLE>
SUBSIDIARIES OF WAL-MART STORES, INC.
NAME UNDER
PERCENT OF WHICH DOING
EQUITY BUSINESS
STATE OF SECURITIES OTHER THAN
SUBSIDIARY INCORPORATION OWNED SUBSIDIARY'S
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 25, 1996,
included in the 1996 Annual Report to Shareholders of Wal-Mart Stores, Inc.
We also consent to the incorporation by reference of our report dated
March 25, 1996, 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, 1996, in the following registration
statements and related prospectuses.
The Wholesale Club, Inc.
Incentive Stock Option Plan
of Wal-Mart Stores, Inc. Form S-8 File No. 33-42617
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 Form S-8 File No. 2-94358
amended 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 22, 1996
EXHIBIT 23
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 83
<SECURITIES> 0
<RECEIVABLES> 853
<ALLOWANCES> 0
<INVENTORY> 15,989
<CURRENT-ASSETS> 17,331
<PP&E> 20,850
<DEPRECIATION> 3,752
<TOTAL-ASSETS> 37,541
<CURRENT-LIABILITIES> 11,454
<BONDS> 0
0
0
<COMMON> 229
<OTHER-SE> 14,527
<TOTAL-LIABILITY-AND-EQUITY> 37,541
<SALES> 93,627
<TOTAL-REVENUES> 94,749
<CGS> 74,564
<TOTAL-COSTS> 90,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 888
<INCOME-PRETAX> 4,346
<INCOME-TAX> 1,606
<INCOME-CONTINUING> 2,740
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,740
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
