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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT No. 1 to
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 27, 1999
Wal-Mart Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
001-06991 |
71-0415188 |
(State or other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
702 S.W. 8th Street
Bentonville, Arkansas 72716
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code:
(501) 273-4000
Page 1 of 28
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The financial statements of Asda Group plc included in item 7(a) are prepared in
accordance with generally accepted accounting principles of the United Kingdom. These are
not Asda Group plc statutory accounts within the meaning of section 240 of the Companies
act of 1985 of Great Britain. Statutory accounts for the 52 weeks ended May 1, 1999,
of which the auditors have given an unqualified opinion, will be delivered to the
Registrar of Companies for England and Wales.
Page 2 of 28
REPORT OF INDEPENDENT AUDITORS
To: The Directors
ASDA Group plc
We have audited the accompanying consolidated balance sheet of ASDA Group plc as of May 1, 1999, and the related consolidated profit and loss account and consolidated cash flow statement for the 52 weeks then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with United Kingdom auditing standards which are similar to those generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ASDA Group plc as at May 1, 1999, and the consolidated results of its operations and its consolidated cash flows for the 52 weeks then ended in conformity with accounting principles generally accepted in the United Kingdom.
Ernst & Young
London, England
September 27, 1999
Page 3 fo 28
ASDA Group plc
PROFIT AND LOSS ACCOUNT
for the 52 weeks ended 1 May 1999
Note |
1999 |
|
| SALES | 8,866.7 | |
| Value added tax | 668.4 | |
| TURNOVER | 1 | 8,198.3 |
| Operating costs | 2 | 7,762.7 |
| PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST | 435.6 | |
| Net interest payable | 3 | (12.7) |
| PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION | 422.9 | |
| Taxation | 4 | (105.9) |
| PROFIT FOR THE FINANCIAL YEAR | 317.0 | |
| Dividends | 5 | (28.8) |
| RETAINED PROFIT FOR THE FINANCIAL YEAR | 21 | 288.2 |
There were no other recognised gains or losses for the period other
than the profit for the 52 weeks of
GBP317.0 m.
ASDA Group plc
RECONCILIATION OF MOVEMENTS IN SHARHOLDERS' FUNDS
for the 52 weeks ended 1 May 1999
| 1999 GBPm |
|
| Total recognised gains and losses | 317.0 |
| Dividends | (28.8) |
| 288.2 | |
| Shares issued | 7.4 |
| Total movements during the year | 295.6 |
| Shareholders’ funds at beginning of the year | 2,279.8 |
| Shareholders’ funds at end of the year | 2,575.4 |
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the 52 weeks ended 1 May 1999
| 1999 GBPm |
|
| Reported profit on ordinary activities before taxation | 422.9 |
| Adjustment of depreciation to historical cost basis | (3.0) |
| Historical cost profit on ordinary activities before taxation | 419.9 |
| Historical cost retained profit | 285.2 |
Page 5 of 28
ASDA Group plc
BALANCE SHEET
as at 1 May 1999
| Note | 1999 GBPm |
|
| FIXED ASSETS | ||
| Tangible assets | 7 | 3,574.8 |
| Investments | 8 | 9.3 |
| Colleague Share Ownership Plan | 18 | 57.1 |
| 3,641.2 | ||
| CURRENT ASSETS | ||
| Stocks | 10 | 426.7 |
| Debtors | 11 | 121.6 |
| Investments | 12 | 103.2 |
| Cash at bank and in hand | 17.1 | |
| 668.6 | ||
| CREDITORS: amounts falling due within one year | ||
| Borrowings | 16 | (81.8) |
| Other creditors | 13 | (1,099.3) |
| (1,181.1) | ||
| NET CURRENT (LIABILITIES)/ASSETS | (512.5) | |
| TOTA ASSETS LESS CURRENT LIABILITIES | 3,128.7 | |
| CREDITORS: amounts falling due after more than one year | ||
| Borrowings | 16 | (512.5) |
| Provisions | 14 | (40.8) |
| 2,575.4 | ||
| CAPITAL AND RESERVES | ||
| Called up share capital | 19 | 763.2 |
| Share premium account | 21 | 408.8 |
| Revaluation reserve | 21 | 229.4 |
| Profit and loss account | 21 | 1,174.0 |
| EQUITY SHAREHOLDERS' FUNDS | 2,575.4 | |
Page 6 of 28
ASDA Group plc| Notes | 1999 GBPm |
|
| Net cash inflow from operating activities | 22 | 565.1 |
| Returns on investment and servicing of finance | 22 | (22.2) |
| Taxation | 22 | (90.2) |
| Capital expenditure and financial investment | 22 | (511.2) |
| Equity dividends paid | (106.8) | |
| Cash outflow before use of liquid resources and financing | (165.3) | |
| Management of liquid resources | 22 | 10.9 |
| Financing | ||
| Issue of ordinary share capital | 8.7 | |
| Borrowings and lease financing | 22 | 144.1 |
| 152.8 | ||
| Decrease in cash in period | (1.6) |
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
| Notes | 1999 GBPm |
|
| Decrease in cash in period | (1.6) | |
| Cash (inflow)/outflow from borrowings and lease financing | 22 | (144.1) |
| Cash inflow from management of liquid resources | 22 | (10.9) |
| Change in net debt resulting from cash flows | (156.6) | |
| Opening net debt | 22 | (317.4) |
| Closing net debt | 22 | (474.0) |
Page 7 of 28
ASDA Group plc
ACCOUNTING POLICIES
ACCOUNTING BASIS
The accounts are prepared under the historical cost convention modified to include the
revaluation of certain fixed assets. The accounts are prepared in accordance with
applicable accounting standards.
CONSOLIDATED ACCOUNTS
GOODWILL
Positive goodwill arising on acquisitions since 2 May 1998 is ordinarily capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its useful economic life up to a presumed maximum of 20 years. It is reviewed for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable.
If a subsidiary, associate or business is subsequently sold or closed, any goodwill arising on acquisition that was written off directly to reserves or that has not been amortised through the profit and loss account is taken into account in determining the profit or loss on sale or closure.
TURNOVER
TANGIBLE FIXED ASSETS
DEPRECIATION
Freehold and long leasehold property 20 - 50
years
Short leasehold property
Over
period of lease
Plant, fixtures and fittings
3
- 20 years
The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable.
Page 8 of 28
ASDA Group plc
ACCOUNTING POLICIES
LEASED ASSETS
The capitalised cost of leased assets is written off over the shorter of their estimated useful lives or the lease terms.
The costs of operating leases are charged to the profit and loss account on a straight line basis over the lease term.
CAPITALISATION OF INTEREST
Interest costs incurred in funding land and construction work in progress in respect of property development projects are capitalised during development.
STOCKS
DEFERRED TAXATION
INVESTMENTS
Short term investments are stated at the lower of cost and net realisable value. All income from these investments is included in the profit and loss account as interest receivable and similar income.
FOREIGN CURRENCIES
PENSIONS
Page 9 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
1. TURNOVER AND SEGMENTAL ANALYSIS
Turnover comprises the value of sales excluding value added tax.
The group operated in two principal areas of activity, categorised as follows:
| 52 weeks 1999 GBPm |
|
| TURNOVER | |
| ASDA | 8,178.0 |
| Gazeley | 20.3 |
8,198.3 |
|
| PROFIT | |
| ASDA | 426.9 |
| Gazeley | 8.7 |
| Operating profit | 435.6 |
| Net interest payable | (12.7) |
| Profit on ordinary activities before taxation | 422.9 |
| NET ASSETS | |
| ASDA | 2,949.4 |
| Gazeley | 59.9 |
| 3,009.3 | |
| Unallocated net liabilities | (433.9) |
| Total net assets | 2,575.4 |
Unallocated net liabilities comprise balances in respect of investments, dividends and borrowings.
Page 10 of 28
ASDA Group plc2. OPERATING COSTS
| 52 weeks 1999 GBPm |
|
| Change in stocks | (61.7) |
| Other operating income | (36.8) |
| Raw materials and consumables | 6,367.3 |
| Employment costs | 758.3 |
| Depreciation of tangible fixed assets | 145.3 |
| Other operating charges | 590.3 |
| 7,762.7 | |
| WITHIN OTHER OPERATING CHARGES: | |
| OPERATING LEASE CHARGES | |
| - land and buildings | 41.2 |
| - plant and machinery | 12.7 |
| AMOUNTS PAID TO AUDITORS | |
| Fees charged to profit and loss account in respect of: | |
| Audit | 0.3 |
| Other | 0.2 |
| 0.5 | |
| EMPLOYMENT COSTS | |
| Wages and salaries | 697.9 |
| Social security costs | 45.0 |
| Pension costs | 15.4 |
| 758.3 | |
Page 11 of 28
ASDA Group plc
2. OPERATING COSTS (continued)
| Total 1999 |
Full time equivalents 1999 |
|
| ASDA | 83,280 | 51,270 |
| Gazeley | 23 | 22 |
| 83,303 | 51,292 |
3. NET INTEREST PAYABLE
| 52 weeks 1999 GBPm |
|
| Bank loans and overdrafts | (7.9) |
| Finance leases | (0.6) |
| Bonds | (38.9) |
| (47.4) | |
| Interest capitalised before tax relief of GBPnil | 17.2 |
| (30.2) | |
| Interest receivable and similar income | 17.5 |
| (12.7) |
Page 12 of 28
ASDA Group plc
4. TAXATION
| 52 weeks 1999 GBPm |
|
| On profit for the year: | |
| Current | (128.0) |
| Deferred | 20.0 |
| Adjustments in respect of prior years: | |
| Current | 9.8 |
| Deferred | (7.7) |
| (105.9) |
At 25.0% the effective rate is lower than the standard rate of 30.9% as a result of the impact of partial provision for the deferred taxation on fixed assets timing differences and the release of corporate tax provisions following the agreement of prior year liabilities.
5. DIVIDENDS
| 52 weeks 1999 GBPm |
|
| Ordinary - interim paid | 28.8 |
| - final proposed | - |
| 28.8 |
On 14 June 1999, Wal-Mart Stores (UK) Limited, a subsidiary of Wal-Mart Stores, Inc.,
announced a cash offer for 100% of the issued share capital of ASDA Group plc. The offer
became fully unconditional on 27 July 1999 and Wal-Mart Stores, Inc. is now the ultimate
parent undertaking of Asda Group plc.
Page 13 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
6. DIRECTORS' REMUNERATION
The total remuneration of the directors is as follows:
| 52 weeks 1999 GBP000 |
|
| Total directors’ remuneration excluding pension | 2,277 |
| Aggregate gains on the exercise of share options | 2,859 |
| No. | |
| Number of directors who are members of the defined benefit scheme | 8 |
Amounts in respect of the highest paid director are as follows:
| 52 weeks 1999 GBP000 |
|
| Total remuneration excluding pension and including gains on exercise of share options | 1,486 |
| 1 May 1999 GBP000 |
|
| Accumulated total accrued pension | 20 |
The highest paid director exercised 779,390 share options during the year, 250,000 of which related to qualifying services under a long term incentive scheme.
Page 14 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
7. TANGIBLE FIXED ASSETS
Freehold properties GBPm |
Leasehold properties GBPm |
Plant |
Total GBPm |
|
| COST OR VALUATION | ||||
| At beginning of the year | 2,139.1 | 731.5 | 759.6 | 3,630.2 |
| Reclassification | 99.7 | (101.6) | 1.9 | - |
| Additions | 391.9 | 53.1 | 163.5 | 608.5 |
| Disposals | (61.3) | (39.4) | (75.8) | (176.5) |
| At end of the year | 2,569.4 | 643.6 | 849.2 | 4,062.2 |
| COST OR VALUATION AT END OF THE
YEAR IS REPRESENTED BY: |
||||
| Valuation | 1,502.3 | 536.7 | - | 2,039.0 |
| Cost | 1,067.1 | 106.9 | 849.2 | 2,023.2 |
| 2,569.4 | 643.6 | 849.2 | 4,062.2 | |
| DEPRECIATION | ||||
| At beginning of the year | 167.1 | 155.2 | 412.7 | 735.0 |
| Reclassification | 29.3 | (29.4) | 0.1 | - |
| Charge for the year | 33.0 | 16.1 | 96.2 | 145.3 |
| Disposals | (41.9) | (35.6) | (65.2) | (142.7) |
| At end of the year | 187.5 | 106.3 | 443.8 | 737.6 |
| Net book amounts at end of the year | 2,381.9 | 537.3 | 405.4 | 3,324.6 |
| Assets under construction | 250.2 | |||
| NET BOOK AMOUNTS AT END OF THE YEAR | 3,574.8 | |||
| NET BOOK AMOUNTS AT BEGINNING OF THE YEAR | 3,196.3 | |||
Page 15 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
7. TANGIBLE FIXED ASSETS
(continued)The cumulative amount of capitalised interest included in the net book
value of fixed assets is
GBP40.7 million. Detaiils of interest capitalised during the year are given in note 3 on
page 19.
The historical cost of food retailing properties included at valuation is as follows:
| 1999 GBPm |
|
| Freehold properties | 1,428.6 |
| Leasehold properties | 573.5 |
| 2,002.1 |
The net book amount of plant, fixtures and fittings for the group includes 1.5 million British Pounds in respect of leased assets after charging depreciation of GBP5.9 million.
| 1999 GBPm |
|
| Leases with 50 years or more unexpired | 460.6 |
| Leases with less than 50 years unexpired | 76.8 |
| 537.4 |
8. FIXED ASSET INVESTMENTS
| 1999 GBPm |
|
| Subsidiary undertakings (note 9) | - |
| Qualifying Employee Share Ownership Trust | 9.3 |
| 9.3 |
The Qualifying Employee Share Ownership Trust (‘QUEST’) was established for the
purposes of the Sharesave Scheme. As at 1 May 1999, 2,239,545 of the ordinary shares
issued to the QUEST had been transferred to the option holders exercising options under
the Sharesave Scheme and the option money received by QUEST used to repay part of the
loan. The remaining 19,660,455 shares held by the QUEST, over which options have been
granted, are included in fixed asset investments at a cost of GBP9.3 million.
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
9. SUBSIDIARY UNDERTAKINGS
As at 1 May 1999, the following companies, being those whose results principally affect
the financial position of the group, were subsidiary undertakings whose ordinary share
capital was wholly owned, and which were registered in England and Wales and operating in
the UK.
| Principal activities | Holding Company | |
| ASDA Stores Limited | Retailing | ASDA Group plc |
| Gazeley Properties Limited | Property Development | Gazeley Holdings Limited |
| McLagan Investments Limited | Property Investment | ASDA Group plc |
| The Burwood House Group Plc | Property Investment | McLagan Investments Limited |
A complete list of subsidiary undertakings will be annexed to the next annual return to the Registrar of Companies.
10. STOCKS
| 1999 GBPm |
|
| Goods held for resale | 385.5 |
| Development properties | 41.2 |
| 426.7 |
11. DEBTORS
| 1999 GBPm |
|
| Amounts owed by subsidiary undertakings | - |
| Other debtors | 48.9 |
| Prepayments and accrued income | 72.7 |
| 121.6 |
Page 17 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
12. INVESTMENTS
Investments are in short term instruments with approved counterparties.
13. OTHER CREDITORS
| 1999 GBPm |
|
| AMOUNTS FALLING DUE WITHIN ONE YEAR | |
| Bank overdraft | - |
| Trade creditors | 689.3 |
| Amounts owed to subsidiaries | - |
| Taxation | 156.7 |
| Social security | 12.4 |
| Other creditors | 94.5 |
| Accruals | 146.4 |
| Proposed dividend | - |
| 1,099.3 |
14. PROVISIONS FOR LIABILITIES AND CHARGES
| 1999 GBPm |
|
| Provisions (note 15) | 11.2 |
| Deferred taxation (note 17) | 29.6 |
| 40.8 |
15. PROVISIONS
| Onerous lease provision GBPm |
|
| At beginning of the year | 36.7 |
| Utilised during the year | (25.5) |
| At end of the year | 11.2 |
The onerous lease provision represents provisions for lease obligations arising from discontinued activities.
Page 18 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
16. BORROWINGS
| 1999 GBPm |
|
| AMOUNTS FALLING DUE WITHIN ONE YEAR | |
| Bank finance (a) | 79.1 |
| Obligations under finance leases | 2.7 |
| 81.8 | |
| AMOUNTS REPAYABLE BETWEEN ONE AND TWO YEARS | |
| Bank finance (a) | 30.5 |
| Obligations under finance leases | 2.0 |
| AMOUNTS REPAYABLE BETWEEN TWO AND FIVE YEARS | |
| Bank finance (a) | - |
| Obligations under finance leases | - |
| Bonds due 2002 (b) | 58.3 |
| AMOUNTS REPAYABLE IN FIVE YEARS OR MORE | |
| Bonds due 2007 (c) | 197.5 |
| Bonds due 2010 (d) | 75.9 |
| Bonds due 2015 (e) | 148.3 |
| 512.5 | |
(a) Bank finance includes bank borrowings and the factoring of certain rental commitments.
(b) On 15 May 1986, the company issued GBP100 million of unsecured 9 5/8 % bonds at 99 1/2% of nominal value redeemable at par on 25 April 2002 unless previously redeemed at the company’s request.
(c) On 24 April 1997, the company issued GBP200 million of unsecured 8 3/8 % bonds at 98.872% of nominal value redeemable at par on 24 April 2007 unless previously redeemed at the company’s request.
(d) On 31 March 1989, the company issued GBP125 million of unsecured 10 7/8% bonds at 101.753% of nominal value redeemable at par on 20 April 2010, unless previously redeemed at the company’s request, at the higher of par or a price calculated to provide a yield equal to that earned on 12% Exchequer Stock 2013/2017.
Page 19 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
16. BORROWINGS (continued)
(e) On 17 July 1998, the company issued GBP150 million of unsecured 6 5/8% bonds at 99.441% of nominal value redeemable at par on 17 July 2015 unless previously redeemed at the company’s request.
As at 1 May 1999 all gross borrowings were in sterling at fixed rates of interest.
The average interest rate of fixed rate debt is 8.7% for which the rate is fixed on average for 7 years.
17. DEFERRED TAXATION
Depreciation allowances GBPm |
Short term timing differences GBPm |
Total |
|
| AMOUNT PROVIDED | |||
| At beginning of the year | 59.4 | (17.5) | 41.9 |
| Provision charged through profit and loss account | (19.0) | 6.7 | (12.3) |
| At end of the year | 40.4 | (10.8) | 29.6 |
Provision has been made at the anticipated rate of corporation tax on timing differences which are expected to reverse in the foreseeable future.
Depreciation allowances GBPm |
Short term timing differences GBPm |
Total |
|
| POTENTIAL LIABILITY | |||
| At beginning of the year | 89.2 | (17.5) | 71.7 |
| Provision charged through profit and loss account | 16.0 | 6.7 | 22.7 |
| At end of the year | 105.2 | (10.8) | 94.4 |
Any capital gains tax arising on the disposal of properties at their revalued amounts would be covered by indexation, rollover relief and capital losses.
Page 20 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
18. COLLEAGUE SHARE OWNERSHIP PLAN
| GBPm | |
| At beginning of the year | 53.1 |
| Additions during the year | 24.6 |
| Issued during the year | (20.6) |
| At end of the year | 57.1 |
The Colleague Share Ownership Plan ("CSOP") is designed to extend share option participation throughout the business and the directors consider that the CSOP is an important factor in motivating and retaining colleagues. Options are granted over shares equal in value to 25% of salary and are exercisable three and six years after grant, provided that the colleague remains employed by ASDA. Option prices are based on market prices prevailing at the date of grant. At 1 May 1999, 61.7 million shares were under option.
The CSOP is administered by an independent professional trust company resident in Jersey. The trust holds sufficient ordinary shares in the company to meet the anticipated future obligations of the CSOP, funded by a direct loan from the company. The costs of the CSOP are charged to the profit and loss account as they accrue. There is a dividend waiver in place in respect of shares held by the trust.
At 1 May 1999 the trust held 46.1 million ordinary shares of the company at an aggregate cost of GBP57.1 million the related loan from the company being included within fixed assets on the balance sheet. The market value of the shares at 1 May 1999 was GBP95.3 million.
Page 21 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
19. CALLED UP SHARE CAPITAL
| Ordinary shares of 25p each 1999 GBPm |
|
| Authorised | 1,250.0 |
| Allotted and fully paid: | |
| At beginning of the year | 761.1 |
| Issued in relation to share option schemes | 2.1 |
| 763.2 |
At 1 May 1999 there were 3,052,784,731 ordinary shares in issue. 8,334,195 share options with a nominal value of GBP2,083,549 were exercised during the year for a total consideration of GBP7,326,717.
In addition to the CSOP referred to above which uses shares acquired in the market, the group operates a number of share schemes for colleagues. Details of options outstanding under each of the schemes as at 1 May 1999 are summarised as follows:
Number of participants |
Number of options |
Price per ordinary share (range) pence |
Exercisable by |
|
| Executive share option scheme 1984 | 143 | 1,841,331 | 25 - 170 | July 2004 |
| Executive share option scheme 1994 | 2,203 | 36,566,689 | 66 - 209.5 | January 2009 |
| Sharesave scheme 1994 | 54,554 | 84,717,333 | 47 - 146.5 | October 2004 |
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
20. FIANACIAL COMMITMENTS
| 1999 GBPm |
|
| Contracted | 53.3 |
The annual commitments under non-cancellable operating leases, which relate primarily to land and buildings, are as follows:
| 1999 GBPm |
|
| Leases expiring: | |
| After five years | 40.1 |
21. RESERVES
| Share premium account GBPm |
Revaluation reserve GBPm |
Profit and loss account GBPm |
|
| At beginning of the year | 403.5 | 229.4 | 885.8 |
| Retained profit for the year | - | - | 288.2 |
| Premium on ordinary shares in relation to share option schemes | 5.3 | - | - |
| At end of the year | 408.8 | 229.4 | 1,174.0 |
The cumulative amount of goodwill written off to reserves since 1 January 1989 is GBP114.5
million.
Page 23 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
22. CASH FLOW
| 1999 GBPm |
|
| (a) Reconciliation of operating profit to net cash inflow from operating activities | |
| Operating profit | 435.6 |
| Depreciation | 145.3 |
| Loss/(profit) on disposal of assets | 4.1 |
| Utilisation of provisions | (25.5) |
| Increase in stock | (61.7) |
| (Increase)/decrease in debtors | (25.6) |
| Increase in creditors | 92.9 |
| Net cash inflow from operating activities | 565.1 |
| (b) Analysis of cash flows for headings netted in the cash flow statement | |
| 1999 GBPm |
|
| Returns on investment and servicing of finance | |
| Interest paid | (39.0) |
| Interest received | 16.8 |
| Net cash outflow from returns on investments and servicing of finance | (22.2) |
| Taxation | |
| Corporation tax paid (including advance corporation tax) | (90.2) |
| Capital expenditure and financial investments | |
| Disposal of tangible fixed assets | 24.6 |
| Purchase of tangible fixed assets | (531.8) |
| Colleague share ownership plan | (4.0) |
| Net cash outflow from capital expenditure and financial investment | (511.2) |
| Management of liquid resources | |
| Net cash inflow from short term investments | 10.9 |
Page 24 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
22. CASH FLOW (continued)
| 1999 GBPm |
|
| Borrowings and lease financing | |
| Repayment of US private placement | - |
| Issue of bonds due 2015 | 148.2 |
| Decrease in other borrowings | (4.1) |
| Net cash inflow/(outflow) from borrowings and lease financing | 144.1 |
(c) Analysis of net debt
At 2 May 1998 GBPm |
Cash flow GBPm |
Other non cash changes GBPm |
At 1 May 1999 GBPm |
|
| Cash in hand and at bank | 18.7 | (1.6) | - | 17.1 |
| Debt due within one year | (28.1) | 3.7 | (57.4) | (81.8) |
| Debt due after one year | (422.1) | (147.8) | 57.4 | (512.5) |
| Current asset investments | 114.1 | (10.9) | - | 103.2 |
| (317.4) | (156.6) | - | (474.0) |
23. PENSIONS
The group operates a final salary scheme open to all full time and part time salaried
colleagues and a money purchase plan open to all hourly paid colleagues. These schemes
provide a pension in addition to the basic state pension together with other benefits such
as life assurance.
The assets of the money purchase plan are invested with the Prudential Life Assurance Company whilst the assets of the final salary scheme are placed by the trustees under the management of professional fund managers. The assets of these schemes are held separate from the group’s assets.
The trustees of these schemes have been selected to represent the wide range of members and consist of eight colleagues (nine for the money purchase plan) performing a range of roles in both stores and ASDA House. In addition there is one pensioner trustee and an independent trustee who is a solicitor specialising in pensions work.
The pension cost relating to the final salary scheme is assessed in accordance with the advice of an independent qualified actuary who conducted a triennial valuation as at 6 April 1998 using the projected unit method.
Page 25 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
23. PENSIONS (continued)
The key actuarial assumptions are that the long term rate of investment return will exceed
the rate of increase in salaries by 2% per annum and exceed the rate of increase in
pensions by 4.25% per annum. The rate of growth of equity dividends is 4.75% per annum. At
6 April 1998, the market value of the scheme’s assets was GBP317.2 million and the
actuarial value of these assets represented 102% of the benefits that had accrued to
members, after allowing for expected future increases in salaries. To derive the pension
cost, the surplus is being spread on a straight line basis over the future working
lifetime of the existing members.
There is no prepayment of contributions to the final salary scheme.
The group has no significant exposure to any other post-retirement benefit obligations.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
The following pro forma financial information is unaudited. The pro forma income statement is prepared as if the combination of the Company and Asda Group plc occurred as of February 1, 1998, the first day of the Company’s fiscal year 1999. Asda results are reported for an annual period ended January 7, 1999 which corresponds to the Company's fiscal year ended January 31, 1999. Pro forma adjustments include only items with a continuing impact on operations and include amortization of goodwill as well as the incremental interest cost associated with financing the acquisition. The goodwill is amortized over an estimated useful life of 40 years.
The Quarterly report on Form 10-Q filed by the Company as of July 31, 1999 includes the consolidation of the Asda balance sheet as of that date and the unaudited condensed pro forma operating results for the three and six month periods ended July 31, 1999 and 1998. Accordingly, a pro forma balance sheet and interim pro forma operating results are not included in this filing.
Page 26 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
| Consolidated Statements of Income | ||||||
| (Unaudited) | ||||||
(Amounts
in millions except per share data) |
|
|
Pro
forma |
Pro
forma |
||
| Revenues: | ||||||
Net sales |
$ 137,634 |
$ 13,177 |
$ 150,811 |
|||
Other income-net |
1,574 |
12 |
1,586 |
|||
139,208 |
13,189 |
152,397 |
||||
| Costs and Expenses: | ||||||
Cost of sales |
108,725 |
9,944 |
118,669 |
|||
|
||||||
22,363 |
2,537 |
185 |
25,085 |
|||
Interest Costs: |
797 |
18 |
600 |
1,415 |
||
131,885 |
12,499 |
785 |
145,169 |
|||
| Income Before Income Taxes, Minority Interest and Equity in Unconsolidated Subsidiaries |
|
|
|
|
||
| Provision for Income Taxes | 2,740 |
207 |
(301) |
2,646 |
||
| Income Before Minority Interest and Equity in Unconsolidated Subsidiaries |
|
|
|
|
||
| Minority Interest and Equity in Unconsolidated Subsidiaries |
|
|
||||
| Net Income | $ 4,430 |
$ 483 |
$ (484) |
$ 4,429 |
||
| Net Income Per Share - Basic and Dilutive | $0.99 |
$0.99 |
||||
| Average Number of Common Shares: | ||||||
| Basic | 4,464 |
4,464 |
||||
| Dilutive | 4,485 |
4,485 |
||||
Page 27 of 28
ASDA Group plc
NOTES TO THE ACCOUNTS
at 1 May 1999
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.
Dated: October 5, 1999 WAL-MART STORES, INC.
By: /s/ James A. Walker, Jr.
James A. Walker, Jr.
Senior Vice President and Controller
(Co. Chief Financial Officer and
Chief Accounting Officer)
Page 28 of 28
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|