UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT 1
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended October 31, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______to______.
Commission file number 1-6991
WAL-MART STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware ___________71-0415188__________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 S.W. Eighth Street
Bentonville, Arkansas ____________72716______________
(Address of principal executive offices) (Zip Code)
(501) 273-4000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter periods that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X__ No _____
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court.
Yes _____ No _____
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $.10 Par Value -- 2,223,453,506 shares as of October 31,
1998.
<PAGE 2>
The Condensed Consolidated Statements of Income included in Item 1
of Part 1 of Form 10-Q contained a calculation error in the return for
the period on average shareholders' equity. The Condensed Consolidated
Statements of Cash Flows included in Item 1 of Part 1 of Form 10-Q
contained an error due to reclassification of noncash items and other.
Item 1 of Part 1 of the registrant's 10-Q is hereby amended in its
entirety as follows:
<PAGE 3>
PART I. FINANCIAL INFORMATION
<TABLE>
Item 1. Financial Statements
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions)
<CAPTION>
October 31, January 31,
1998 1998
ASSETS (Unaudited) (*Note)
<S> <C> <C>
Cash and cash equivalents $ 1,009 $ 1,447
Receivables 1,401 976
Inventories 20,620 16,497
Other current assets 488 432
Total current assets 23,518 19,352
Property, plant and equipment 30,071 27,376
Less accumulated depreciation 7,030 5,907
Net property, plant and equipment 23,041 21,469
Property under capital leases 3,248 3,040
Less accumulated amortization 998 903
Net property under capital leases 2,250 2,137
Other assets and deferred charges 2,430 2,426
Total assets $ 51,239 $45,384
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ 1,976 $ -
Accounts payable 11,424 9,126
Accrued liabilities 4,969 3,628
Other current liabilities 984 1,706
Total current liabilities 19,353 14,460
Long-term debt 6,953 7,191
Long-term obligations under capital leases 2,637 2,483
Deferred income taxes and other 771 809
Minority Interest 1,811 1,938
Common stock and capital in excess of par value 805 809
Retained earnings 19,437 18,167
Other accumulated comprehensive income ( 528) ( 473)
Total shareholders' equity 19,714 18,503
Total liabilities and shareholders'
equity $ 51,239 $45,384
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements
<F2>
*Note: The balance sheet at January 31, 1998, has been derived from the
audited financial statements at that date, and condensed.
<PAGE 4>
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in millions except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Net sales $33,509 $28,777 $96,849 $82,572
Other income - net 415 350 1,112 954
33,924 29,127 97,961 83,526
Costs and expenses:
Cost of sales 26,380 22,680 76,328 65,285
Operating, selling
and general and
administrative
expenses 5,691 4,958 16,341 14,058
Interest costs:
Debt 135 142 380 413
Capital leases 67 56 201 166
32,273 27,836 93,250 79,922
Income before income taxes,
minority interest and
equity in unconsolidated
subsidiaries 1,651 1,291 4,711 3,604
Provision for income taxes 611 483 1,743 1,333
Income before minority
interest and equity in
unconsolidated
subsidiaries 1,040 808 2,968 2,271
Minority interest and
equity in unconsolidated
subsidiaries ( 31) ( 16) ( 97) ( 32)
Net income $ 1,009 $ 792 $ 2,871 $ 2,239
Net income per share -
Basic and dilutive $ .45 $ .35 $ 1.28 $ .99
Dividends per share $ .0775 $ .0675 $ .2325 $ .2025
Average shareholders'
equity $19,629 $17,409 $19,109 $17,349
Return for the period
on average
shareholders' equity 5.14% 4.55% 15.02% 12.91%
Average number of common shares:
Basic 2,231 2,253 2,235 2,262
Dilutive 2,246 2,263 2,251 2,266
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<PAGE 5>
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions)
<CAPTION>
Nine Months Ended October 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,871 $ 2,239
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,400 1,178
Increase in inventories ( 4,136) ( 3,221)
Increase in accounts payable 2,304 2,405
Increase in accrued liabilities 741 1,027
Noncash items and other ( 504) ( 380)
Net cash provided by operating activities 2,676 3,248
Cash flows from investing activities:
Payments for property, plant & equipment ( 2,652) ( 1,894)
Acquisitions ( 47) ( 770)
Other investing activities 69 72
Net cash used in investing activities ( 2,630) ( 2,592)
Cash flows from financing activities:
Increase in commercial paper 1,890 1,523
Proceeds from issuance of long-term debt 521 -
Dividends paid ( 520) ( 459)
Payment of long-term debt ( 1,046) ( 523)
Purchase of Company stock ( 1,117) ( 1,367)
Other financing activities ( 212) 15
Net cash used in financing activities ( 484) ( 811)
Net decrease in cash and cash equivalents ( 438) ( 155)
Cash and cash equivalents at beginning
of year 1,447 883
Cash and cash equivalents at end of
period $ 1,009 $ 728
Supplemental disclosure of cash flow information:
Income tax paid $ 2,227 $ 1,396
Interest paid 581 598
Capital lease obligations incurred 203 176
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<PAGE 6>
WAL-MART STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
The condensed consolidated balance sheet as of October 31, 1998, and
the related condensed consolidated statements of income for the three and
nine month periods ended October 31, 1998, and 1997, and the statements
of cash flow for the nine month periods ended October 31, 1998, and 1997,
are unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of the financial statements have been included.
The adjustments consisted only of normal recurring items. Interim results
are not necessarily indicative of results for a full year. Certain
reclassifications have been made to the prior year's income statements to
conform to current presentation.
The financial statements and notes are presented in accordance with
the rules and regulations of the Securities and Exchange Commission and
do not contain certain information included in the Company's annual
report. Therefore, the interim statements should be read in conjunction
with the Company's annual report for the fiscal year ended January 31,
1998.
NOTE 2. Inventories
The Company uses the retail last-in, first-out (LIFO) method for the
Wal-Mart Stores segment, cost LIFO for the Sam's Club segment, and other
cost methods for the International segment. Inventories are not in excess
of market value. Quarterly inventory determinations under LIFO are
partially based on assumptions as to inventory levels at the end of the
fiscal year, sales and the rate of inflation for the year. If the first-
in, first-out (FIFO) method of accounting had been used by the Company,
inventories at October 31, 1998, would have been $428 million higher than
reported, an increase in the LIFO reserve of $80 million from January 31,
1998, and an increase of $25 million from July 31, 1998. If the FIFO
method had been used at October 31, 1997, inventories would have been
$344 million higher than reported, an increase in the LIFO reserve of $48
million from January 31, 1997, and an increase of $30 million from July
31, 1997.
NOTE 3. Net Income Per Share
The Company presents basic and dilutive net income per share
according to guidance established in Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." Statement 128 replaces primary
and fully dilutive net income per share with basic and dilutive net
income per share. Unlike primary net income per share, basic net income
per share excludes any dilutive effect of stock options. Basic and
dilutive net income per share for all periods presented are the same as
previously reported. Basic net income per share is based on the weighted
average outstanding common shares. Dilutive net income per share is based
on the weighted average outstanding common shares reduced by the dilutive
effect of stock options.
<PAGE 7>
NOTE 4. Segments
The Company is principally engaged in the operation of mass
merchandising stores that serve customers primarily through the operation
of three segments. The Company identifies its segments based on
management responsibility within the United States and geographically for
all international units. The Wal-Mart Stores segment includes the
Company's discount stores and Supercenters in the United States. The
Sam's Club segment includes the warehouse membership clubs in the United
States. The International segment includes all operations in Argentina,
Brazil, Canada, China, Germany, Korea, Mexico and Puerto Rico. The
revenues in the "Corporate and Other" category result from sales to third
parties by McLane Company, Inc., a wholesale distributor.
Revenues by operating segment were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Wal-Mart Stores $23,244 $20,495 $67,214 $59,089
Sam's Club 5,589 5,062 16,316 14,824
International 2,961 1,781 8,514 4,555
Corporate and Other 1,715 1,439 4,805 4,104
Total Revenues $33,509 $28,777 $96,849 $82,572
</TABLE>
Operating profit and reconciliation to income before income taxes,
minority interest and equity in unconsolidated subsidiaries are as
follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Wal-Mart Stores $ 1,640 $ 1,347 $ 4,827 $ 3,863
Sam's Club 172 138 471 398
International 109 52 315 85
Corporate and Other ( 68) ( 48) (321) (163)
Operating profit 1,853 1,489 5,292 4,183
Interest expense 202 198 581 579
Income before income taxes,
minority interest and
equity in unconsolidated
subsidiaries $ 1,651 $ 1,291 $ 4,711 $ 3,604
</TABLE>
<PAGE 8>
NOTE 5. Comprehensive Income
As of February 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This
statement establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income is net
income, plus certain other items that are recorded directly to
shareholders' equity, bypassing net income. The only such item currently
applicable to the Company is foreign currency translation adjustments.
Comprehensive income was $986 million and $766 million for the
quarters ended October 31, 1998 and 1997, respectively, and was $2,816
million and $2,193 million for the nine months ended October 31, 1998 and
1997, respectively.
The adoption of this Statement had no effect on the Company's
results of operations or financial position.
NOTE 6. Acquisition
In July 1998, the Company extended its presence in Asia with an
investment in Korea. The Company acquired a majority interest in four
units as well as six undeveloped sites for approximately $179 million.
The four units were previously operated by Korea Makro. The purchase
price included $130 million for newly issued shares in the acquired
company. The proceeds were used to reduce debt and to provide for
working capital needs. The transaction has been accounted for as a
purchase. The net assets and liabilities acquired are recorded at fair
value. The Company is evaluating the useful life of the resulting
goodwill and will amortize the goodwill over that period. The results of
operations since the effective date of the acquisition have been included
in the Company's results. The transaction should not have a material
impact on the fiscal 1999 consolidated operating results. Pro forma
results of operations are not presented due to the insignificant
differences from the historical results.
NOTE 7. Pre-opening costs
During the second quarter, the Company adopted Statement of Position
(SOP) 98-5, "Reporting on the Costs of Start-Up Activities". The SOP
requires that the costs of start-up activities, including organization
costs, be expensed as incurred. The impact of the adoption of SOP 98-5
was $8 million net of taxes. Due to the immateriality to the Company's
results of operations, the initial application was not reported as a
cumulative effect of a change in an accounting principle.
NOTE 8. Subsequent event
On December 9, 1998, the Company announced that it had reached an
agreement to purchase 74 units of the Interspar hypermarket chain in
Germany. Pending government approval, the agreement is expected to be
final by the end of December. The units are being acquired from Spar
Handels AG, a German company that owns multiple retail formats and
wholesale operations throughout Germany. If consummated, the transaction
<PAGE 9>
should not have a material impact on the fiscal 1999 consolidated
operating results.
<PAGE 10>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WAL-MART STORES, INC.
Date: December 21, 1998 /s/David D. Glass________________
David D. Glass
President and
Chief Executive Officer
Date: December 21, 1998 /s/John B. Menzer________________
John B. Menzer
Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> OCT-31-1998
<CASH> 1,009
<SECURITIES> 0
<RECEIVABLES> 1,401
<ALLOWANCES> 0
<INVENTORY> 20,620
<CURRENT-ASSETS> 23,518
<PP&E> 30,071
<DEPRECIATION> 7,030
<TOTAL-ASSETS> 51,239
<CURRENT-LIABILITIES> 19,353
<BONDS> 0
0
0
<COMMON> 222
<OTHER-SE> 19,492
<TOTAL-LIABILITY-AND-EQUITY> 51,239
<SALES> 96,849
<TOTAL-REVENUES> 97,961
<CGS> 76,328
<TOTAL-COSTS> 93,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 581
<INCOME-PRETAX> 4,711
<INCOME-TAX> 1,743
<INCOME-CONTINUING> 2,871
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,871
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.28
</TABLE>
