<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus in not complete and may be +
+changed. This preliminary prospectus is not an offer to sell nor does it seek +
+an offer to buy these securities in any jurisdiction where that offer or sale +
+is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Filed pursuant to Rule 424(B)(2)
SEC File No. 333-82909
Subject to Completion. Dated November 21, 2000.
Prospectus Supplement to Prospectus dated August 5, 1999.
(Pounds) ,000,000
WAL*MART
% Notes Due 2030
-----------
Wal-Mart Stores, Inc. will pay interest on the notes on June and December
of each year, beginning on June , 2001.
The notes will mature on December , 2030. The notes will be issued only in
denominations of (Pounds)1,000, (Pounds)10,000 and (Pounds)100,000.
We may, at our option, redeem the notes at any time after December , 2003
at the price specified under "Description of the Notes--Optional Redemption."
In addition, we may, at our option, redeem the notes upon the occurrence of
certain events relating to United States taxation as described under
"Description of the Notes--Redemption on Tax Event."
Application has been made to list the notes on the Luxembourg Stock Exchange.
-----------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
-----------
<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Initial public offering price............................ % (Pounds)
Underwriting discount.................................... % (Pounds)
Proceeds, before expenses, to Wal-Mart Stores, Inc....... % (Pounds)
</TABLE>
-----------
We expect to deliver the notes in book-entry form through the facilities of
Clearstream, Luxembourg and Euroclear on or about December , 2000.
Sole Bookrunner and Joint Joint Lead Manager
Lead Manager Deutsche Bank
Goldman Sachs
International
Deutsche Banc Alex. Brown
Goldman, Sachs & Co. -----------
Prospectus Supplement dated December , 2000.
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the attached prospectus. No one
has been authorized to provide you with different information. If this
prospectus supplement is inconsistent with the attached prospectus, you should
rely on this prospectus supplement.
Wal-Mart Stores, Inc. accepts responsibility for the information
contained in this prospectus supplement and the attached prospectus. This
prospectus supplement and the attached prospectus may only be used in
connection with the offering of the notes.
The Luxembourg Stock Exchange takes no responsibility for the contents
of this document, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss however arising
from or in reliance upon the whole or any part of the contents of this
prospectus supplement and the attached prospectus.
The distribution of this prospectus supplement and the attached
prospectus and the offering or sale of the notes in some jurisdictions may be
restricted by law. Persons into whose possession this prospectus supplement
and the attached prospectus come are required by us and the underwriters to
inform themselves about and to observe any applicable restrictions. This
prospectus supplement and the attached prospectus may not be used for or in
connection with an offer or solicitation by any person in any jurisdiction in
which that offer or solicitation is not authorized or to any person to whom it
is unlawful to make that offer or solicitation. See "Underwriting" in this
prospectus supplement.
In connection with this offering, Goldman Sachs International, on behalf
of the underwriters, may over-allot or effect transactions which stabilize or
maintain the market price of the notes at a level which might not otherwise
prevail. Any stabilizing, if commenced, may be discontinued at any time. These
transactions are to be carried out in accordance with applicable laws and
regulations.
This prospectus supplement and the attached prospectus, including the
documents incorporated by reference, will be available free of charge at the
office of Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955
Luxembourg. See "Listing and General Information" in this prospectus
supplement and "Where You Can Find More Information" in the attached
prospectus.
S-2
<PAGE>
WAL-MART STORES, INC.
We are the world's largest retailer as measured by total net sales for
fiscal 2000. We had total net sales of approximately $165 billion in fiscal
2000, over 85% of which was generated in the United States. We operate mass
merchandising stores that serve our customers primarily through the operation
of three segments:
. Wal-Mart stores, which include our discount stores, Supercenters and
Neighborhood Markets in the United States;
. SAM'S Clubs, which include our warehouse membership clubs in the
United States; and
. the international segment of our business.
We currently operate in all 50 states of the United States, Puerto Rico,
Argentina, Brazil, Canada, Germany, Korea, Mexico and the United Kingdom, and
in China under joint venture agreements. In addition, through our subsidiary,
McLane Company, Inc., we provide products and distribution services to retail
industry and institutional food service customers. At October 31, 2000, we
operated in the United States:
. 1,723 Wal-Mart stores;
. 866 Supercenters;
. 15 Neighborhood Markets; and
. 469 SAM'S Clubs.
As of October 31, 2000, we also operated 169 Canadian Wal-Mart stores,
11 units in Argentina, 18 units in Brazil, eight units in China, 95 units in
Germany, six units in Korea, 483 units in Mexico, 15 units in Puerto Rico and
240 units in the United Kingdom. The units operated by our International
Division represent a variety of retail formats. As of October 31, 2000, we
employed more than 885,000 associates in the United States and 255,000
associates internationally.
Wal-Mart Stores, Inc. was incorporated in the State of Delaware on
October 31, 1969.
Wal-Mart Stores, Inc. is the parent company of a group of subsidiary
companies, including McLane Company, Inc., Wal-Mart.com, Inc., Wal-Mart de
Mexico, S.A. de C.V., Asda Group Limited, Sam's West, Inc., Sam's East, Inc.,
Wal-Mart Stores East, Inc., Sam's Property Co., Wal-Mart Property Co., Wal-
Mart Real Estate Business Trust, Sam's Real Estate Business Trust and Wares
Delaware Corporation.
USE OF PROCEEDS OF THE NOTES
We estimate that the net proceeds from the sale of the notes will be
approximately (Pounds) , or $ , after underwriting
discounts and payment of transaction expenses. We have translated the pounds
sterling amount in the preceding sentence to U.S. dollars using the December
, 2000 exchange rate of (Pounds)1.00 = $ .
We will use these net proceeds to reduce our short-term commercial paper
debt.
S-3
<PAGE>
CAPITALIZATION
The following table presents the consolidated capitalization of Wal-Mart
and its subsidiaries at July 31, 2000, and as adjusted to give effect to the
offering of the notes and the application of the estimated net proceeds from
the sale of the notes.
<TABLE>
<CAPTION>
July 31, 2000
-----------------
As
Actual Adjusted
------- --------
(in millions)
<S> <C> <C>
Short-term debt
Commercial paper............................................ $ 5,940 $
Long-term debt due within one year.......................... 1,139 1,139
Obligations under capital leases due within one year........ 130 130
------- ------
Total short-term debt and capital lease obligations........ 7,209
------- ------
Long-term debt
Long-term debt.............................................. 13,716 14,216
% notes due 2030......................................... --
Long-term capital lease obligations......................... 2,968 2,968
------- ------
Total long-term debt and capital lease obligations......... 16,684
------- ------
Shareholders' equity
Common stock ($0.10 par value; 11,000,000,000 shares
authorized; 4,466,335,662 shares issued and outstanding)... 447 447
Capital in excess of par value.............................. 1,270 1,270
Retained earnings........................................... 27,333 27,333
Other accumulated comprehensive income...................... (954) (954)
------- ------
Total shareholders' equity................................. 28,096 28,096
------- ------
Total debt and capital lease obligations and shareholders'
equity.................................................... $51,989 $
======= ======
</TABLE>
The "as adjusted" column in the above table also gives effect to our sale of
$500 million of our Floating Rate Notes due November 30, 2001, which we
completed on November 3, 2000.
Except as noted above, there has been no material change in the
consolidated capitalization of Wal-Mart and its subsidiaries since July 31,
2000.
All of the outstanding common stock of Wal-Mart is fully paid and
nonassessable.
We are offering the substantial portion of the notes outside the United
States. We may offer and sell up to the equivalent of $100 million of the
notes in the United States pursuant to a shelf registration statement that we
have on file with the U. S. Securities and Exchange Commission. After the sale
of those notes, we will have offered or sold an aggregate principal amount of
$8,600 million of debt securities pursuant to registration statements that we
filed with the SEC during the past several years. We are permitted to issue an
additional $1,900.7 million of debt securities under one of those registration
statements. No limit exists on our ability to register additional debt
securities for sale in the future.
S-4
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected financial data of Wal-Mart and its
subsidiaries for the periods specified. We have derived this data from, and
you should read this data in conjunction with, our audited consolidated
financial statements filed as part of our Annual Reports on Form 10-K for our
fiscal years ended January 31, 1998, 1999 and 2000 and our unaudited
consolidated financial statements filed as part of our Quarterly Report on
Form 10-Q for the quarter ended July 31, 2000, which are available as
described under "Where You Can Find More Information" in the attached
prospectus.
<TABLE>
<CAPTION>
Six Months
Ended
Fiscal Years Ended January 31, July 31,
------------------------------------------- ---------------
1996 1997 1998 1999 2000 1999 2000
------- -------- -------- -------- -------- ------- -------
(in millions) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales............... $93,627 $104,859 $117,958 $137,634 $165,013 $73,187 $89,097
Non-interest expense.... 89,526 100,456 112,796 131,088 156,704 69,825 84,652
Interest expense........ 888 845 784 797 1,022 382 674
Total expense........... 90,414 101,301 113,580 131,885 157,726 70,207 85,326
Income before income
taxes, minority
interest, equity in
unconsolidated
subsidiaries and
cumulative effect of
accounting change...... 4,359 4,877 5,719 7,323 9,083 3,835 4,709
Net Income.............. 2,740 3,056 3,526 4,430 5,377 2,167 2,922
<CAPTION>
As of January 31, As of July 31,
------------------------------------------- ---------------
1996 1997 1998 1999 2000 1999 2000
------- -------- -------- -------- -------- ------- -------
(in millions) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 83 $ 883 $ 1,447 $ 1,879 $ 1,856 $ 1,508 $ 1,310
Inventories............. 15,989 15,897 16,497 17,076 19,793 18,793 21,093
Total current assets.... 17,331 17,993 19,352 21,132 24,356 22,833 25,245
Net property, plant and
equipment.............. 17,098 18,333 21,469 23,674 32,839 30,933 34,889
Net property under
capital leases, net
goodwill and other
acquired intangible
assets, and other
assets and deferred
charges................ 3,112 3,278 4,563 5,190 13,154 12,499 13,273
Total assets............ 37,541 39,604 45,384 49,996 70,349 66,265 73,407
Accounts payable........ 6,442 7,628 9,126 10,257 13,105 12,326 12,634
Commercial paper........ 2,458 -- -- -- 3,323 5,121 5,940
Long-term debt due
within one year........ 271 523 1,039 900 1,964 1,219 1,139
Obligations under
capital leases due
within one year........ 69 95 102 106 121 122 130
Total current
liabilities............ 11,454 10,957 14,460 16,762 25,803 24,860 26,736
Long-term debt.......... 8,508 7,709 7,191 6,908 13,672 13,078 13,716
Long-term obligations
under capital leases... 2,092 2,307 2,483 2,699 3,002 2,964 2,968
Total liabilities....... 22,785 22,461 26,881 28,884 44,515 43,510 45,311
Total shareholders'
equity................. 14,756 17,143 18,503 21,112 25,834 22,755 28,096
Total liabilities and
shareholders' equity... 37,541 39,604 45,384 49,996 70,349 66,265 73,407
</TABLE>
Certain balance sheet data as of July 31, 1999 have been adjusted to
reflect the effect of an accounting method change we made in fiscal 2000.
The ratio of our earnings to fixed charges was 6.24x and 6.76x for the
fiscal years ended January 31, 1999 and 2000, respectively, and 6.62x and
5.95x for the six months ended July 31, 1999 and 2000, respectively. The ratio
of earnings to fixed charges for the six months ended July 31, 1999 has been
adjusted to reflect the effect on that six-month period of the accounting
change referred to
S-5
<PAGE>
above. Prior to the adjustment, that ratio was 6.61x for that six-month
period. See "Ratio of Earnings to Fixed Charges" in the attached prospectus.
On November 14, 2000, we reported net sales of $134,773 million and net
income of $4,291 million, or $0.96 per share, for the nine months ended
October 31, 2000.
EXCHANGE RATE INFORMATION
The table below sets forth, for the periods and dates indicated,
information concerning the noon buying rate in New York City for cable
transfers as announced by the U.S. Federal Reserve Bank of New York for pounds
sterling (expressed in U.S. dollars per pound). The rates in this table are
provided for your reference only.
<TABLE>
<CAPTION>
Period Period
Period High Low Average(1) End
------ ------- ------- ---------- -------
<S> <C> <C> <C> <C>
1995......................................... $1.6440 $1.5302 $1.5803 $1.5535
1996......................................... $1.7123 $1.4948 $1.5733 $1.7123
1997......................................... $1.7035 $1.5775 $1.6397 $1.6427
1998......................................... $1.7222 $1.6114 $1.6602 $1.6628
1999......................................... $1.6765 $1.5515 $1.6146 $1.6150
2000 (through November 20)................... $1.6538 $1.4005 $1.5141 $1.4222
</TABLE>
--------
(1) The average of the noon buying rates on the last day of each month during
the period.
S-6
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of Wal-Mart are as follows:
<TABLE>
<CAPTION>
Principal Occupation
Directors --------------------
<C> <S>
John T. Chambers............ President and Chief Executive Officer of Cisco
Systems, Inc.
Stephen Friedman............ Former Chairman of Goldman, Sachs & Co.
Stanley C. Gault............ Former Chairman and Chief Executive Officer of
Goodyear Tire and Rubber Company
David D. Glass.............. Chairman of the Executive Committee of the Board
of Directors of Wal-Mart Stores, Inc.
Roland A. Hernandez......... Chairman and Chief Executive Officer of Telemundo
Group, Inc.
Dr. Frederick S. Humphries.. President of Florida A & M University
E. Stanley Kroenke.......... Chairman of The Kroenke Group
Elizabeth A. Sanders........ Management Consultant with The Sanders Group
H. Lee Scott, Jr............ President and Chief Executive Officer of Wal-Mart
Stores, Inc.
Jack C. Shewmaker........... International Consultant, Rancher and Retired
Wal-Mart Executive
Donald G. Soderquist........ Senior Vice Chairman of the Board of Directors of
Wal-Mart
Stores, Inc.
Dr. Paula Stern............. President of The Stern Group, Inc.
Jose H. Villarreal.......... Partner of Akin, Gump, Strauss, Hauer & Feld,
L.L.P.
John T. Walton.............. Chairman of Quantum Partners, L.L.C.
S. Robson Walton............ Chairman of the Board of Directors of Wal-Mart
Stores, Inc.
Executive Officers
S. Robson Walton............ Chairman of the Board
H. Lee Scott, Jr............ President and Chief Executive Officer
David D. Glass.............. Chairman of the Executive Committee of the Board
of Directors
Thomas M. Coughlin.......... Executive Vice President and Chief Executive
Officer--Wal-Mart Stores Division
Thomas Grimm................ Executive Vice President and President and Chief
Executive
Officer--SAM'S Club Division
John B. Menzer.............. Executive Vice President and President and Chief
Executive
Officer--International Division
Thomas M. Schoewe........... Executive Vice President and Chief Financial
Officer
James A. Walker, Jr......... Senior Vice President and Controller
</TABLE>
S-7
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the terms and conditions of the notes
supplements the more general terms and conditions of Wal-Mart's debt
securities contained in the attached prospectus.
The notes will be issued under the indenture. The notes will be issued
in registered book-entry form, without coupons, only in denominations of
(Pounds)1,000, (Pounds)10,000 and (Pounds)100,000. The notes will constitute
our senior unsecured debt obligations and will rank equally among themselves
and with all of our existing and future senior, unsecured and unsubordinated
debt.
The notes will mature on December , 2030, and will initially be issued
in a total principal amount of (Pounds) million. Unless previously redeemed
or purchased and cancelled, we will repay the notes at 100% of their principal
amount together with accrued and unpaid interest thereon at maturity. We will
pay principal of, interest on and any other amounts payable under the notes in
pounds sterling or, if the United Kingdom adopts the euro, in euro.
We may, without the consent of the holders of the notes, create and
issue additional notes ranking equally with the notes that we are offering and
otherwise similar in all respects to the notes so that these additional notes
will be consolidated and form a single series with the notes that we are
offering. No additional notes may be issued if an event of default under the
indenture has occurred.
The notes will not be subject to a sinking fund. The notes will not be
convertible or exchangeable.
The notes will bear interest from December , 2000, at the annual
interest rate specified on the cover page of this prospectus supplement.
Interest will be payable semi-annually in arrears on June and December of
each year, beginning on June , 2001, to the person in whose name a note is
registered at the close of business on the preceding June or December , as
the case may be.
If interest is required to be calculated for any period other than from
one scheduled interest payment date to the next interest payment date, it will
be calculated on the basis of a 360-day year of twelve 30-day months.
If any interest payment date for the notes would otherwise be a day that
is not a business day, then the interest payment date will be postponed to the
following date that is a business day. Interest will not accrue as a result of
any delayed payment. The term "business day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions are generally authorized or required by law or regulation to
close in The City of New York or London.
If, prior to the maturity of the notes, the United Kingdom adopts the
euro as its lawful currency in accordance with the Treaty establishing the
European Communities, as amended by the Treaty on European Union, the notes
will be re-denominated into euro, and the regulations of the European
Commission relating to the euro shall apply to the notes. The circumstances
and consequences described in this paragraph will not entitle us, the trustee
under the indenture or any holder of the notes to redeem early, rescind, or
receive notice relating to the notes, repudiate the terms of the notes or the
indenture, raise any defense, request any compensation or make any claim, nor
will these circumstances and consequences affect any of our other obligations
under the notes or the indenture.
While the notes are represented by a global note deposited with the
common depositary for Clearstream, Luxembourg, and Euroclear, notices to
holders may be given by delivery to Clearstream, Luxembourg and Euroclear and
such notices shall be deemed to be given on the date of delivery to
Clearstream, Luxembourg and Euroclear. The trustee will mail notices by first-
class mail, postage prepaid, to each registered holder's last known address as
it appears in the security register that the trustee maintains. The trustee
will only mail these notices to the registered holder of the notes. You will
not receive notices regarding the notes directly from us unless we reissue the
notes to you in fully certificated form.
S-8
<PAGE>
The trustee will also publish notices regarding the notes in a daily
newspaper of general circulation in The City of New York and in London. In
addition, if the notes are listed on the Luxembourg Stock Exchange, and so
long as the rules of the Luxembourg Stock Exchange require notice by
publication, the trustee will publish notices regarding the notes in a daily
newspaper of general circulation in Luxembourg. We expect that publication
will be made in The City of New York in The Wall Street Journal, in London in
the Financial Times, and in Luxembourg in the Luxembourger Wort. If
publication in Luxembourg is not practical, the trustee will publish these
notices in an English language newspaper of general circulation elsewhere in
Europe. Published notices will be deemed to have been given on the date they
are published or, if published more than once, on the date of first
publication. If publication as described above becomes impossible, the trustee
may publish sufficient notice by alternate means that approximate the terms
and conditions described in this paragraph.
Bank One Trust Company, NA, as successor in interest to The First
National Bank of Chicago, is the trustee under the indenture governing the
notes and will be the registrar and paying agent in the United States. As long
as the notes are listed on the Luxembourg Stock Exchange, Kredietbank S.A.
Luxembourgeoise will be the listing agent, paying agent and transfer agent for
the notes in Luxembourg. Bank One, NA, London Branch will be the paying agent
and transfer agent in London.
The indenture is, and the notes will be, governed by New York law.
Optional Redemption
The notes will be redeemable as a whole or in part, at our option, at
any time after December , 2003, at a redemption price equal to the greater
of (i) 100% of the principal amount of such notes and (ii) as determined by
the Calculation Agent, the price at which the yield on the outstanding
principal amount of the notes on the Reference Date is equal to the yield on
the Benchmark Gilt as of that date as determined by reference to the middle-
market price on the Benchmark Gilt at 3:00 p.m., London time, on that date, in
either case, plus accrued and unpaid interest on the notes up to, but
excluding, the date specified as the redemption date.
"Reference Date" means the date that is the first dealing day in London
prior to the publication of the notice of redemption referred to below.
"Benchmark Gilt" means the 4.25% Treasury Stock due June, 2032 or such
other U.K. government stock as the Calculation Agent, with the advice of three
brokers and/or U.K. gilt-edged market makers or three other persons operating
in the U.K. gilt-edged market that may be chosen by the Calculation Agent, may
determine from time to time to be the most appropriate benchmark U.K.
government stock for the notes.
"Calculation Agent" means or any successor entity.
We will give notice of any redemption between 30 and 60 days preceding
the redemption date to each holder of the notes to be redeemed as described
above.
In the case of any partial redemption, selection of the notes for
redemption will be made by the trustee under the indenture in compliance with
the requirements of the Luxembourg Stock Exchange or the principal securities
exchange, if any, on which the notes are listed or, if the notes are not so
listed or that exchange prescribes no method of selection, on a pro rata
basis, by lot or by any other method as the trustee in its sole discretion
deems to be fair and appropriate, although no note of (Pounds)1,000 in
original principal amount or less shall be redeemed in part. If any note is to
be redeemed in
S-9
<PAGE>
part only, the notice of redemption relating to the note will state the
portion of the principal amount thereof to be redeemed. A new note in
principal amount equal to the unredeemed portion thereof will be issued and
delivered to the trustee, or its nominee, or, in the case of notes in
definitive form, issued in the name of the holder thereof, in each case upon
cancellation of the original note.
Unless we default in payment of the redemption price of the notes, on and
after the redemption date, interest will cease to accrue on the notes or the
portions of the notes called for redemption.
Payment of Additional Amounts
We will pay to the holder of any note who is a United States Alien, as
defined below, additional amounts as may be necessary so that every net
payment of the principal of, interest on and any other amounts payable under
that note, after deduction or withholding for or on account of any present or
future tax, assessment or other governmental charge imposed upon that holder
by the United States or any taxing authority thereof or therein, will not be
less than the amount provided in that note to be then due and payable. We will
not be required, however, to make any payment of additional amounts for or on
account of:
(a) any tax, assessment or other governmental charge that would not
have been imposed but for (1) the existence of any present or former
connection between that holder, or between a fiduciary, settlor,
beneficiary of, member or shareholder of, or possessor of a power over,
that holder, if that holder is an estate, trust, partnership or
corporation, and the United States including, without limitation, that
holder, or that fiduciary, settlor, beneficiary, member, shareholder or
possessor, being or having been a citizen or resident or treated as a
resident of the United States or being or having been engaged in trade or
business in, or present in, the United States or (2) the presentation of
a note for payment on a date more than 30 days after the later of the
date on which that payment becomes due and payable and the date on which
payment is duly provided for;
(b) any estate, inheritance, gift, sales, transfer, excise, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge imposed by reason
of that holder's past or present status as a passive foreign investment
company, a controlled foreign corporation, a personal holding company or
foreign personal holding company with respect to the United States, or as
a corporation which accumulates earnings to avoid United States federal
income tax;
(d) any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payment of the principal of, interest
on or any other amounts payable under that note;
(e) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of the principal of,
interest on or any other amounts payable under any note if that payment
can be made without withholding by any other paying agent;
(f) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States of
the holder or beneficial owner of that note, if such compliance is
required by statute or by regulation of the U.S. Treasury Department as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
(g) any tax, assessment or other governmental charge imposed on
interest received by (1) a 10% shareholder (as defined in Section
871(h)(3)(B) of the U.S. Internal Revenue Code
S-10
<PAGE>
of 1986 and the regulations that may be promulgated thereunder) of our
company or (2) a controlled foreign corporation with respect to our
company within the meaning of the U.S. Internal Revenue Code; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor will we pay any additional amounts to any holder who is a fiduciary or
partnership other than the sole beneficial owner of that note to the extent
that a beneficiary or settlor with respect to that fiduciary, or a member of
that partnership or a beneficial owner thereof would not have been entitled to
the payment of those additional amounts had that beneficiary, settlor, member
or beneficial owner been the holder of that note.
"United States Alien" means any corporation, partnership, individual or
fiduciary that is, as to the United States, a foreign corporation, a non-
resident alien individual who has not made a valid election to be treated as a
United States resident, a non-resident fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, as to the
United States, a foreign corporation, a non-resident alien individual or a
non-resident fiduciary of a foreign estate or trust.
Redemption Upon Tax Event
The notes may be redeemed at our option in whole, but not in part, on not
more than 60 days' and not less than 30 days' notice, at a redemption price
equal to 100% of their principal amount, if we determine that as a result of
any change or amendment to the laws, treaties, regulations or rulings of the
United States or any political subdivision or taxing authority thereof, or any
proposed change in such laws, treaties, regulations or rulings, or any change
in the official application, enforcement or interpretation of those laws,
treaties, regulations or rulings, including a holding by a court of competent
jurisdiction in the United States, or any other action, other than an action
predicated on law generally known on or before December , 2000 except for
proposals before the Congress before that date, taken by any taxing authority
or a court of competent jurisdiction in the United States, or the official
proposal of any action, whether or not such action or proposal was taken or
made with respect to our company, (A) we have or will become obligated to pay
additional amounts as described under "--Payment of Additional Amounts" on any
note of that series or (B) there is a substantial possibility that we will be
required to pay those additional amounts. Prior to the publication of any
notice of redemption, we will deliver to the trustee (1) an officers'
certificate stating that we are entitled to effect a redemption and setting
forth a statement of facts showing that the conditions precedent to the right
of our company to so redeem have occurred and (2) an opinion of counsel to
that effect based on that statement of facts.
Prescription
Under New York's statute of limitations, any legal action to enforce our
payment obligations evidenced by the notes must be commenced within six years
after payment is due. Thereafter our payment obligations will generally become
unenforceable.
Replacement of Notes
If any mutilated note is surrendered to the trustee, we will execute and
the trustee will authenticate and deliver in exchange for such mutilated note
a new note of the same series and principal amount. If the trustee and we
receive evidence to our satisfaction of the destruction, loss or theft of any
note and any security or indemnity required by them, then we shall execute and
the trustee shall authenticate and deliver, in lieu of such destroyed, lost or
stolen note, a new note of the same series and principal amount. All expense
associated with issuing the new note shall be borne by the owner of the
mutilated, destroyed, lost or stolen note.
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BOOK-ENTRY ISSUANCE
We will issue the notes as one or more global notes registered in the
name of a common depositary for Clearstream Banking, societe anonyme,
Luxembourg, which is known as "Clearstream, Luxembourg," and Morgan Guaranty
Trust Company of New York, Brussels Office, as the operator of the Euroclear
system, which is known as "Euroclear". Investors may hold book-entry interests
in the global notes through organizations that participate, directly or
indirectly, in Clearstream, Luxembourg and/or Euroclear. Book-entry interests
in the notes and all transfers relating to the notes will be reflected in the
book-entry records of Clearstream, Luxembourg and Euroclear.
The distribution of the notes will be cleared through Clearstream,
Luxembourg and Euroclear. Any secondary market trading of book-entry interests
in the notes will take place through participants in Clearstream, Luxembourg
and Euroclear and will settle in same-day funds. Owners of book-entry
interests in the notes will receive payments relating to their notes in pounds
sterling. Clearstream, Luxembourg and Euroclear have established electronic
securities and payment transfer, processing, depositary and custodial links
among themselves and others, either directly or through custodians and
depositaries. These links allow securities to be issued, held and transferred
among the clearing systems without the physical transfer of certificates.
Special procedures to facilitate clearance and settlement have been
established among these clearing systems to trade securities across borders in
the secondary market.
The policies of Clearstream, Luxembourg and Euroclear will govern
payments, transfers, exchange and other matters relating to the investor's
interest in securities held by them. We have no responsibility for any aspect
of the records kept by Clearstream, Luxembourg or Euroclear or any of their
direct or indirect participants. We do not supervise these systems in any way.
Clearstream, Luxembourg and Euroclear and their participants perform
these clearance and settlement functions under agreements they have made with
one another or with their customers. You should be aware that they are not
obligated to perform or continue to perform these procedures and may modify
them or discontinue them at any time.
Except as provided below, owners of beneficial interest in the notes
will not be entitled to have the notes registered in their names, will not
receive or be entitled to receive physical delivery of the notes in definitive
form and will not be considered the owners or holders of the notes under the
indenture governing the notes, including for purposes of receiving any reports
delivered by us or the trustee pursuant to the indenture. Accordingly, each
person owning a beneficial interest in a note must rely on the procedures of
the depositary and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, in order to
exercise any rights of a holder of notes.
This description of the clearing systems reflects our understanding of
the rules and procedures of Clearstream, Luxembourg and Euroclear as they are
currently in effect. These systems could change their rules and procedures at
any time. We have obtained the information in this section concerning
Clearstream, Luxembourg and Euroclear and their book-entry systems and
procedures from sources that we believe to be reliable, but we take no
responsibility for the accuracy of this information.
Clearstream, Luxembourg
Clearstream, Luxembourg is incorporated as a bank under Luxembourg law.
Clearstream, Luxembourg holds securities for its customers and facilitates the
clearance and settlement of securities transactions between Clearstream,
Luxembourg customers through electronic book-entry changes in customer
accounts, thus eliminating the need for physical movement of certificates.
Clearstream,
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Luxembourg provides to its customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream,
Luxembourg interfaces with domestic markets in a number of countries.
Clearstream, Luxembourg has established an electronic bridge with Morgan
Guaranty Trust Co. of New York, the operator of Euroclear, to facilitate
settlement of trades between Clearstream, Luxembourg and Euroclear.
As a registered bank in Luxembourg, Clearstream, Luxembourg is subject
to regulation by the Luxembourg Commission for the Supervision of the
Financial Sector. Clearstream, Luxembourg customers are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. In the United
States, Clearstream, Luxembourg customers are limited to securities brokers
and dealers. Clearstream, Luxembourg customers may include the underwriters.
Other institutions that maintain a custodial relationship with a Clearstream,
Luxembourg customer may obtain indirect access to Clearstream, Luxembourg.
Euroclear
The Euroclear system was created in 1968 to hold securities for
participants of Euroclear and to clear and settle transactions between
Euroclear participants through simultaneous electronic book-entry delivery
against payment, thus eliminating the need for physical movement of
certificates and the risk from lack of simultaneous transfers of securities
and cash. Transactions may now be settled in many currencies, including U.S.
dollars. Euroclear includes various other services including securities
lending and borrowing, and interfaces with domestic markets in several
countries.
Euroclear is operated by the Brussels office of Morgan Guaranty Trust
Company of New York, which is known as the "Euroclear Operator", under a
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation. The Euroclear Operator conducts all operations, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the cooperative. The cooperative establishes
policy for Euroclear on behalf of Euroclear participants. Euroclear
participants include banks, including central banks, securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. The Board of
Governors of the Federal Reserve System, the New York State Banking Department
and the Belgian Banking Commission regulate and examine the Euroclear
Operator.
The "Terms and Conditions Governing Use of Euroclear" and the related
"Operating Procedures of the Euroclear System" and applicable Belgian law
govern securities clearance accounts and cash accounts with the Euroclear
Operator. Specifically, these terms and conditions govern:
. transfers of securities and cash within Euroclear;
. withdrawal of securities and cash from Euroclear; and
. receipts of payments with respect to securities in Euroclear.
All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance
accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear participants and has no record of or relationship with
persons holding securities through Euroclear participants.
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Clearance and Settlement Procedures
We understand that investors that hold their debt securities through
Clearstream, Luxembourg or Euroclear accounts will follow the settlement
procedures that are applicable to eurobonds in registered form. Debt
securities will be credited to the securities custody accounts of Clearstream,
Luxembourg and Euroclear participants on the business day following the
settlement date for value on the settlement date. They will be credited either
free of payment or against payment for value on the settlement date.
We understand that secondary market trading between Clearstream,
Luxembourg and/or Euroclear participants will occur in the ordinary way
following the applicable rules and operating procedures of Clearstream,
Luxembourg and Euroclear. Secondary market trading will be settled using
procedures applicable to eurobonds in registered form.
You should be aware that investors will only be able to make and receive
deliveries, payments and other communications involving the notes through
Clearstream, Luxembourg and Euroclear on business days. Those systems may not
be open for business on days when banks, brokers and other institutions are
open for business in the United States.
In addition, because of time-zone differences, there may be problems
with completing transactions involving Clearstream, Luxembourg and Euroclear
on the same business day as in the United States. U.S. investors who wish to
transfer their interests in the notes, or to make or receive a payment or
delivery of the notes, on a particular day may find that the transactions will
not be performed until the next business day in Luxembourg or Brussels,
depending on whether Clearstream, Luxembourg or Euroclear is used.
Clearstream, Luxembourg or Euroclear will credit payments to the cash
accounts of participants in Clearstream, Luxembourg or Euroclear in accordance
with the relevant systemic rules and procedures, to the extent received by its
depositary. Clearstream, Luxembourg or the Euroclear Operator, as the case may
be, will take any other action permitted to be taken by a holder under the
indenture on behalf of a Clearstream, Luxembourg or Euroclear participant only
in accordance with its relevant rules and procedures.
Clearstream, Luxembourg and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the notes among participants of
Clearstream, Luxembourg and Euroclear. However, they are under no obligation
to perform or continue to perform those procedures, and they may discontinue
those procedures at any time.
Same-Day Settlement and Payment
The underwriters will settle the notes in immediately available funds.
We will make payments of principal, interest and any other amounts payable on
the notes in immediately available funds or the equivalent. Secondary market
trading between Clearstream, Luxembourg and Euroclear participants will occur
in accordance with the applicable rules and operating procedures of
Clearstream, Luxembourg and Euroclear and will be settled using the procedures
applicable to eurobonds in immediately available funds. We can give no
assurance as to the effect, if any, of settlement in immediately available
funds on trading activity, if any, in the notes.
Certificated Notes
We will issue notes to you in certificated registered form only if:
. the depositary is no longer willing or able to discharge its
responsibilities properly, and neither the trustee nor we have
appointed a qualified successor within 90 days; or
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. an event of default has occurred and is continuing under the
indenture; or
. we decide to discontinue the book-entry system.
If any of the three events occurs, the trustee will reissue the notes in fully
certificated registered form and will recognize the registered holders of the
certificated notes as holders under the indenture.
In the event that we issue certificated securities under the limited
circumstances described above, and the notes are listed on the Luxembourg
Stock Exchange at that time, then holders of certificated securities may
transfer their notes in whole or in part upon the surrender of the certificate
to be transferred, together with a completed and executed assignment form
endorsed on the definitive note, at, as the case may be, the offices of the
transfer agent in The City of New York or London or at the main office of the
transfer agent in Luxembourg. Each time that we transfer or exchange a new
note in certificated form for another note in certificated form, and after the
transfer agent receives a completed assignment form, we will make available
for delivery the new definitive note at, as the case may be, the offices of
the transfer agent in The City of New York or London or at the main office of
the transfer agent in Luxembourg. Alternatively, at the option of the person
requesting the transfer or exchange, we will mail, at that person's risk, the
new definitive note to the address of that person that is specified in the
assignment form. In addition, if we issue notes in certificated form and the
notes are listed on the Luxembourg Stock Exchange at that time, then we will
make payments of principal of, interest on and any other amounts payable under
the notes to holders in whose names the notes in certificated form are
registered at the close of business on the record date for these payments. If
the notes are issued in certificated form, we will make payments of principal
and any redemption payments against the surrender of these certificated notes
at, as the case may be, the offices of the paying agent in The City of New
York or London or, as long as the notes are listed on the Luxembourg Stock
Exchange, at the main office of the paying agent in Luxembourg. We will make
payments to holders of notes by check delivered to the addresses of the
holders as their addresses appear on our register or by transfer to an account
maintained by that holder with a bank located in the United Kingdom.
Unless and until we issue the notes in fully certificated, registered
form,
. you will not be entitled to receive a certificate representing your
interest in the notes;
. all references in this prospectus supplement or in the attached
prospectus to actions by holders will refer to actions taken by the
depositary upon instructions from their direct participants; and
. all references in this prospectus supplement or in the attached
prospectus to payments and notices to holders will refer to payments
and notices to the depositary, as the registered holder of the notes,
for distribution to you in accordance with its policies and
procedures.
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TAX CONSEQUENCES TO HOLDERS
U.S. Federal Income Tax Consequences
The following is a discussion of the material U.S. federal income tax
consequences of the ownership of notes as of the date of this prospectus
supplement for beneficial owners of notes that purchase the notes at their
"issue price" on the issue date in connection with this offering. Except where
noted, this discussion deals only with notes held as capital assets and does
not deal with special situations. For example, this discussion does not
address:
. tax consequences to holders who may be subject to special tax
treatment, such as dealers in securities or currencies, financial
institutions, tax-exempt entities, traders in securities that elect
to use a mark-to-market method of accounting for their securities
holdings, corporations that accumulate earnings to avoid federal
income tax or insurance companies, or, in some cases, an expatriate
of the United States or a nonresident alien individual who has made a
valid election to be treated as a United States resident;
. tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction or a
straddle;
. tax consequences to United States holders of notes whose "functional
currency" is not the U.S. dollar;
. tax consequences to United States holders of notes that are
"controlled foreign corporations," "passive foreign investment
companies" or "foreign personal holding companies;"
. alternative minimum tax consequences, if any; or
. any state, local or foreign tax consequences.
If a partnership holds any of the notes, the tax treatment of a partner
will generally depend upon the status of the partner and the activities of the
partnership.
The discussion below is based upon the provisions of the U.S. Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions as of the date of this prospectus supplement. Those authorities may
be changed, perhaps retroactively, so as to result in U.S. federal income tax
consequences different from those discussed below.
You should consult your own tax advisors concerning the U.S. federal
income tax consequences to you and any consequences arising under the laws of
any other taxing jurisdiction.
Consequences to United States Holders
The following is a discussion of the material U.S. federal tax
consequences that will apply to you if you are a United States holder of
notes.
"United States holder" means a beneficial owner of a note that is:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision of the United
States;
. an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
. a trust that (1) is subject to the supervision of a court within the
United States and the control of one or more U.S. persons or (2) has
a valid election in effect under applicable U.S. Treasury regulations
to be treated as a U.S. person.
Payments of Interest. Interest on a note will generally be taxable to
you as ordinary income at the time it is paid or accrued in accordance with
your method of accounting for tax purposes. If you use the cash method of
accounting, you will be required to include in income the U.S. dollar value of
the amount received, determined by translating the pounds sterling received at
the "spot rate" for such
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pounds sterling on the date such payment is received regardless of whether the
payment is in fact converted into U.S. dollars. You will not recognize
exchange gain or loss with respect to the receipt of such payment.
If you use the accrual method of accounting, you may determine the
amount of income recognized with respect to such interest in accordance with
either of two methods. Under the first method, you will be required to include
in income for each taxable year the U.S. dollar value of the pounds sterling
amount of interest that has accrued during such year, determined by
translating such interest at the average rate of exchange for the period or
periods during which such interest accrued. Under the second method, you may
elect to translate interest income at the "spot rate" on:
. the last day of the accrual period,
. the last day of the taxable year if the accrual period straddles your
taxable year, or
. on the date the interest payment is received if such date is within
five days of the end of the accrual period.
Upon receipt of an interest payment on such note (including, upon the
sale of such note, the receipt of proceeds which include amounts attributable
to accrued interest previously included in income), you will recognize
ordinary income or loss in an amount equal to the difference between the U.S.
dollar value of the pounds sterling received (determined by translating the
pounds sterling received at the "spot rate" for such pounds sterling on the
date such payment is received) and the U.S. dollar value of the pounds
sterling interest income you previously included in income with respect to
such payment.
Sale, Exchange and Retirement of Notes. Your tax basis in a note will,
in general, be the U.S. dollar value of the pounds sterling amount paid for
such note determined at the time of your purchase (reduced by any cash
payments on that note other than qualified stated interest). If you purchase
the note with previously owned pounds sterling, you will recognize exchange
gain or loss at the time of the purchase attributable to the difference at the
time of purchase, if any, between your tax basis in the pounds sterling and
the fair market value of the note in U.S. dollars on the date of purchase.
Such gain or loss will be ordinary income or loss.
Upon the sale, exchange, retirement or other disposition of a note, you
will recognize gain or loss equal to the difference between the U.S. dollar
value of the amount you realize upon the sale, exchange, retirement or other
disposition (less an amount equal to any accrued stated interest that you did
not previously include in income, which will be taxable as ordinary income)
and your adjusted tax basis in the note. Except with respect to gain or loss
attributable to changes in exchange rates as discussed below, that gain or
loss will be capital gain or loss. Capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation. The deductibility of capital losses is subject to
limitations.
You will recognize exchange gain or loss, instead of capital gain, with
respect to gain or loss attributable to the movement in exchange rates between
the time of purchase and the time of sale, exchange, retirement or other
disposition of a note. This gain or loss will equal the difference between (i)
the principal amount of the note translated into dollars at the "spot rate" on
the date of disposition and (ii) your tax basis in the note. Such gain or loss
will be treated as ordinary income or loss. The realization of such gain or
loss will be limited to the amount of overall gain or loss realized on the
disposition of a note.
Your tax basis in pounds sterling received as interest on, or received
on the sale, exchange, retirement or other disposition of, a note will be the
U.S. dollar value thereof (determined by translating the pounds sterling
received at the "spot rate" for such pounds sterling on the date such payment
is received). Any gain or loss recognized by you on a sale, exchange or other
disposition of pounds sterling will be ordinary income or loss and will not be
treated as interest income or expense, except to the extent provided in
Treasury Regulations or administrative pronouncements of the U.S. Internal
Revenue Service.
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Information Reporting and Backup Withholding. In general, information
reporting requirements will apply to certain payments of principal, interest
and other amounts paid on notes and to the proceeds of sale of the notes made
to you unless you are an exempt recipient (such as a corporation). A 31%
backup withholding tax will apply to such payments if you fail to provide a
taxpayer identification number or certification of foreign or other exempt
status or fail to report in full dividend and interest income.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability
provided the required information is furnished to the U.S. Internal Revenue
Service.
Consequences to Non-United States Holders
The following is a discussion of material U.S. federal income and estate
tax consequences that generally will apply to you if you are a non-United
States holder of notes. A non-United States holder is a holder other than a
United States holder.
U.S. Federal Withholding Tax. The 30% U.S. federal withholding tax will
not apply to any payment of principal of, interest on and other amounts
payable on the notes, provided that:
. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of Section 871(h)(3) of the U.S. Internal Revenue Code and
related U.S. Treasury regulations;
. you are not a controlled foreign corporation that is related to us
through stock ownership;
. you are not a bank whose receipt of interest on the notes is
described in Section 881(c)(3)(A) of the U.S. Internal Revenue Code;
and
. (1) you provide your name and address on an IRS Form W-8BEN, and
certify, under penalty of perjury, that you are not a U.S. person or
(2) you hold your notes through certain foreign intermediaries or
certain foreign partnerships, and you satisfy the certification
requirements of applicable U.S. Treasury regulations.
If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) IRS Form W-8BEN (or
successor form) claiming an exemption from, or reduction in the rate of,
withholding under the benefit of an applicable tax treaty or (2) IRS Form W-
8ECI (or successor form) stating that interest paid on the notes is not
subject to withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
The 30% U.S. federal withholding tax generally will not apply to any
gain that you realize on the sale, exchange, retirement or other disposition
of the note.
U.S. Federal Estate Tax. Your estate will not be subject to U.S. federal
estate tax on the notes beneficially owned by you at the time of your death,
provided that (1) you do not own, within the meaning of the U.S. Internal
Revenue Code and the U.S. Treasury regulations, 10% or more of the total
combined voting power of all classes of our voting stock and (2) interest on
the notes would not have been, if received at the time of your death,
effectively connected with the conduct by you of a trade or business in the
United States.
U.S. Federal Income Tax. If you are engaged in a trade or business in
the United States and interest on the notes is effectively connected with the
conduct of that trade or business, you will be subject to U.S. federal income
tax on that interest on a net income basis (although exempt from the 30%
withholding tax) in the same manner as if you were a U.S. person as defined
under the Internal
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Revenue Code. In addition, if you are a foreign corporation, you may be
subject to a branch profits tax equal to 30% (or lower applicable treaty rate)
of your earnings and profits for the taxable year, subject to adjustments,
that are effectively connected with the conduct by you of a trade or business
in the United States. For this purpose, interest on notes will be included in
your earnings and profits.
Any gain or income realized on the disposition of a note generally will
not be subject to U.S. federal income tax unless (1) that gain or income is
effectively connected with the conduct of a trade or business in the United
States by you, or (2) in the case of gain, you are an individual who is
present in the United States for 183 days or more in the taxable year of that
disposition and certain other conditions are met.
Information Reporting and Backup Withholding. Under U.S. Treasury
regulations that become effective for payments made on or after January 1,
2001, backup withholding and information reporting will not apply to payments
that we make or any of our paying agents (in its capacity as such) makes to
you if you have provided the required certification that you are a non-United
States holder, as described in "United States Federal Income Tax
Considerations--Consequences to Non-United States Holders," and provided that
neither we nor any of our paying agents has actual knowledge that you are a
United States holder (as described above).
In addition, you will not be subject to backup withholding and
information reporting with respect to the proceeds of the sale of a note
within the United States or conducted through certain U.S.-related financial
intermediaries, if the payor receives the statement described above and does
not have actual knowledge that you are a U.S. person, as defined under the
U.S. Internal Revenue Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability
provided the required information is furnished to the U.S. Internal Revenue
Service.
U.K. Tax Consequences
The following is a summary of the material U.K. withholding taxation
treatment as of the date of this prospectus supplement in relation to payments
of the principal of, interest on and other amounts payable under the notes.
This summary does not address other U.K. tax aspects of acquiring, holding or
disposing of the notes. This summary relates only to the position of persons
who are beneficial owners of the notes. Holders of the notes should consult
their professional advisers.
U.K. Withholding Tax on U.K. Paying Agents.
Where any interest on the notes is payable to any person in the United
Kingdom and is entrusted to any person in the United Kingdom, which we refer
to as "the U.K. paying agent," for payment or distribution, the U.K. paying
agent will be obliged to withhold U.K. income tax at the lower rate (currently
20%), subject to certain exceptions, including the following:
. the relevant notes are held in a recognized clearing system
(Clearstream, Luxembourg and Euroclear have each been designated as
recognized clearing systems) and certain other requirements are met;
or
. the person who is beneficially entitled to the interest and is the
beneficial owner of the notes is not resident in the United Kingdom;
or
. interest arises to trustees of qualifying discretionary and
accumulation trusts, where essentially neither those trustees nor the
beneficiaries are resident in the United Kingdom; or
. the person entitled to the interest is eligible for certain relief in
respect of the interest; or
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. the interest falls to be treated as income of, or of the government
of, a sovereign power or of an international organization.
Except where the notes are held in a recognized clearing system, and payment
is made directly to that system, for the exceptions to be available a
declaration has to be provided to the U.K. paying agent, or the Inland Revenue
has to issue a notice, and, for payment on notes other than registered notes,
a separate declaration or notice is required for each payment. The exception
will then be available unless the Inland Revenue has issued a direction that
it considers that none of the conditions is satisfied.
The U.K. Finance Act 2000 provides that the specific rules set out above
requiring U.K. paying agents to withhold U.K. income tax from payments of
interest on securities issued by companies where these securities are listed
on a recognized stock exchange will not apply to payments of interest on or
after April 1, 2001.
U.K. Withholding Tax on U.K. Collecting Agents
A person in the United Kingdom who in the course of a trade or
profession:
. by means of coupons, collects or secures payment of or receives
interest on the notes for a holder; or
. arranges to collect or secure payment of interest on the notes for a
holder; or
. acts as a custodian of the notes and receives interest on the notes
or directs that interest on the notes be paid to another person or
consents to such payment
(except, in any such case, solely by means of clearing a cheque or arranging
for the clearing of a cheque) may be required to withhold U.K. income tax at
the lower rate (currently, 20%), subject to certain exceptions. These
exceptions are the same as those that apply in the case of U.K. paying agents,
as described under "U.K. Withholding Tax on U.K. Paying Agents," including the
declaration or notice requirements, except that:
. the notice or declaration must be given to the collecting agent; and
. in the case of the "recognized clearing system" exemption, certain
additional requirements may apply.
The exceptions will be available unless the Inland Revenue issues a direction
that it has reason to believe that none of the exceptions applies or that the
depositing or collecting agent has failed to comply with certain requirements.
The U.K. Finance Act 2000 provides that the specific rules set out above
requiring U.K. paying agents to withhold U.K. income tax from payments of
interest on securities issued by companies where those securities are listed
on a recognized stock exchange will not apply to payments of interest on or
after April 1, 2001.
Other Rules Relating to U.K. Withholding Tax
. Any discount element on the notes will not be subject to any U.K.
withholding tax pursuant to these provisions.
. Where interest has been paid under deduction of U.K. income tax,
holders who are not resident in the United Kingdom may be able to
recover all or part of the tax deducted if there is an appropriate
provision in any applicable double taxation treaty.
. The references to "interest" mean "interest" as understood in U.K.
tax law. The statements do not take any account of any different
definitions of "interest" or "principal"' which may prevail under any
other law or which may be created by the notes or any related
documentation.
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Foreign Tax Credits
The amount of tax for which a U.K. paying agent or U.K. collecting agent
is liable to account may be reduced by foreign tax credits which are available
in respect of the relevant income under U.K. tax law.
Proposed European Directive on the Taxation of Savings
In May 1998, the European Commission presented to the Council of
Ministers of the European Union a proposal for a directive on the taxation of
savings which would oblige member states to adopt either a withholding tax
system or an information reporting system in relation to interest, discounts
and premiums. The withholding tax system would require a paying agent
established in a member state to withhold tax from any interest, discount or
premium paid to an individual resident in another member state unless such
individual presents a certificate obtained from the tax authorities of the
member state in which he is resident confirming that those authorities are
aware of the payment due to that individual. The information reporting system
would require a member state to supply to other member states details of any
payment of interest, discount or premium made by U.K. paying agents within its
jurisdiction to an individual resident in another member state. For these
purposes, the term "U.K. paying agent" is widely defined to include an agent
who collects interest, discounts or premiums on behalf of an individual
beneficially entitled thereto.
In June 2000, the Council of Ministers of Finance and Economics, which
is known as "ECOFIN," agreed that the proposal for the directive should be
revised on the basis of a number of principles, including the following:
. an information reporting system would be the ultimate objective of
the European Union, in order to ensure that all citizens resident in
a member state pay the tax due on all their savings income;
. there may, however, be an interim period (not to exceed seven years
from implementation of the directive) during which member states may
either exchange information on savings income with other member
states or operate a withholding tax (currently expected to be at the
rate of at least 20% to 25%);
. discussions are to be held with key third countries to promote the
adoption of equivalent measures in those countries, and member states
are to promote the adoption of the same measures in their dependent
or associated territories; and
. subject to a satisfactory outcome of the discussions described in the
preceding point, ECOFIN will decide on the implementation of the
directive no later than December 31, 2002.
ECOFIN and the European Commission have committed themselves to seeking
agreement on the substantial content of the directive, including the rate of
the withholding tax referred to in the second point above, by the end of 2000.
Pending agreement on the scope and precise text of the directive, it is
not possible to say what effect, if any, the adoption of the proposed
directive would have on the notes or payment in respect thereof.
Capital Gains and Income Profits
The notes will constitute "qualifying corporate bonds" within the
meaning of section 117 Taxation of Chargeable Gains Act 1992. Accordingly,
neither a chargeable gain nor an allowable loss will arise on a disposal or a
redemption of the notes for the purposes of U.K. taxation of chargeable gains.
S-21
<PAGE>
A noteholder within the charge to U.K. corporation tax in respect of a
note, including a noteholder so chargeable in relation to a branch or agency
in the United Kingdom, will generally be liable to corporation tax on any
profits and obtain relief for permitted losses on the notes on an income
basis. Any such profits, including interest, or permitted losses will
generally be chargeable, or allowable, as appropriate, for each accounting
period in accordance with an authorized accruals or mark to market basis. For
these noteholders, the "accrued income scheme" will not apply to the notes.
Accrued Income
A transfer of a note by a holder, other than a holder within the charge
to U.K. corporation tax in respect thereof as described above, resident or
ordinarily resident in the United Kingdom or who carries on a trade in the
United Kingdom through a branch or agency for the purposes of which the note
is used or held may give rise to a charge to U.K. income tax in respect of the
interest on the note which has accrued since the preceding interest payment
date, under the provisions of the accrued income scheme.
----------------
The above discussion of "Tax Consequences to Holders" is not intended to
constitute a complete analysis of all tax consequences relating to the
acquisition, ownership, or disposition of the notes. Prospective purchasers of
the notes should consult their own tax advisers concerning the tax
consequences of their particular situations.
S-22
<PAGE>
UNDERWRITING
Wal-Mart and the underwriters for the offering of the notes named below
have entered into an underwriting agreement and a related pricing agreement
with respect to the notes. Subject to certain conditions, each underwriter has
severally agreed to purchase the principal amount of notes indicated in the
following table.
<TABLE>
<CAPTION>
Underwriters Principal Amount of Notes
------------ -------------------------
<S> <C>
Goldman, Sachs & Co.............................. (Pounds)
Deutsche Bank AG London.......................... (Pounds)
--------------
Total........................................ (Pounds)
==============
</TABLE>
Notes sold by the underwriters to the public will initially be offered
at the initial public offering price set forth on the cover of this
prospectus. Any notes sold by the underwriters to securities dealers may be
sold at a discount from the initial public offering price of up to % of the
principal amount of notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to % of the principal
amount of notes. If all the notes are not sold at the initial offering price,
the underwriters may change the offering price and the other selling terms.
The notes are a new issue of securities with no established trading
market. We have been advised by the underwriters that the underwriters intend
to make a market in the notes but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the notes.
In connection with the offering of the notes, the underwriters may
purchase and sell notes in the open market. These transactions may include
short sales, stabilizing transactions and purchases to cover positions created
by short sales. Short sales involve the sale by the underwriters of a greater
number of notes than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the notes
while this offering is in progress.
These activities by the underwriters may stabilize, maintain or
otherwise affect the market price of the notes. As a result, the price of the
notes may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected in the over-the-
counter market or otherwise.
We estimate that our share of the total expenses of the offering of the
notes, excluding underwriting discounts and commissions, will be approximately
(Pounds) , or $ , based on a December , 2000 exchange rate of
(Pounds)1.00 = $ .
We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the U.S. Securities Act of 1933.
We have applied for the notes to be listed on the Luxembourg Stock
Exchange, although we cannot assure you that the notes will be approved for
listing.
Each underwriter has represented and agreed that (1) it has not offered
or sold and prior to the date six months after the date of issue of the notes
will not offer or sell notes in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments as principal or agent for the purposes of their businesses or
otherwise in circumstances
S-23
<PAGE>
that have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (2) it has complied and will comply with all applicable
provisions of the Financial Services Act of 1986 with respect to anything done
by it in relation to the notes in, from or otherwise involving the United
Kingdom; and (3) it has only issued or passed on, and will only issue or pass
on, in the United Kingdom any document received by it in connection with the
issue of the notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisement) (Exemptions) Order
1996 (as amended) or is a person to whom the document may otherwise lawfully
be issued or passed on.
The notes may not be offered, sold, transferred or delivered in or from
The Netherlands as part of their initial distribution or as part of any
reoffering and neither this prospectus supplement and the attached prospectus
nor any other document relating to this offering may be distributed or
circulated in The Netherlands other than to individuals or legal entities who
or which trade or invest in securities in the conduct of a business or
profession, including, without limitation, banks, brokers, dealers,
institutional investors and entities with a treasury department.
The underwriters and their respective affiliates may from time to time
in the ordinary course of business provide, and have provided in the past,
investment or commercial banking services to Wal-Mart and its affiliates.
VALIDITY OF THE NOTES
The validity of the notes will be passed on for us by Hughes & Luce,
L.L.P., Dallas, Texas, and for the underwriters by Simpson Thacher & Bartlett,
New York, New York.
LISTING AND GENERAL INFORMATION
Application has been made to list the notes on the Luxembourg Stock
Exchange. In connection with the listing application, Wal-Mart has deposited
its certificate of incorporation and by-laws and a legal notice relating to
the issuance of the notes with the Registrar of the District Court of
Luxembourg (Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg),
where copies may be obtained upon request. So long as any of the notes is
outstanding, copies of these documents, together with this prospectus
supplement, the attached prospectus, the indenture governing the notes, a copy
of the global note representing the notes and our current annual and quarterly
reports, and all future annual reports and quarterly reports, will be made
available for inspection at the main office of Kredietbank S.A.
Luxembourgeoise in Luxembourg, our listing agent, paying agent and transfer
agent for the notes in Luxembourg. Kredietbank S.A. Luxembourgeoise will act
as intermediary between the Luxembourg Stock Exchange and Wal-Mart and the
holders of the notes. In addition, copies of our annual reports and quarterly
reports may be obtained free of charge at that office.
Except as disclosed in this prospectus supplement or the attached
prospectus, including the documents incorporated by reference, there has been
no material adverse change in the financial position of Wal-Mart since July
31, 2000.
The independent auditors of Wal-Mart are Ernst & Young LLP, Tulsa,
Oklahoma.
Neither Wal-Mart nor any of its subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the offering of the notes. We are not aware of
any material litigation, arbitration or administrative proceedings pending or
threatened.
S-24
<PAGE>
Resolutions authorizing the issue and sale of the notes were adopted by
the executive committee of Wal-Mart's board of directors effective as of
November 21, 2000.
The notes will be issued pursuant to an exempt transaction under
regulation 13(3) of the United Kingdom's Banking Act 1987 (Exempt
Transactions) Regulations 1997, which we refer to as the "Regulations," and
will constitute longer term debt securities, as defined in the Regulations, in
each case issued in accordance with regulations made under Section 4 of the
Banking Act 1987. We are not an authorized institution or a European
authorized institution, as those terms are defined in the Regulations, and
repayment of the principal and payment of any interest in connection with the
notes will not be guaranteed.
We confirm that we will have complied with our obligations under the
listing rules of the Luxembourg Stock Exchange in relation to the admission to
listing of the notes by the time the notes are admitted. We also confirm that
we have complied and will continue to comply with our obligations under the
Regulations to lodge all relevant information in relation to the notes with
the United Kingdom Listing Authority.
The notes have been accepted for clearance through Clearstream,
Luxembourg and Euroclear and have been assigned the following identification
numbers:
<TABLE>
<S> <C>
Common Code ISIN Number
----------- -----------
</TABLE>
S-25
<PAGE>
[This page has been intentionally left blank.]
<PAGE>
PROSPECTUS
Wal-Mart Stores, Inc.
$10,500,700,000
DEBT SECURITIES
This prospectus forms part of shelf registration statements that we filed
with the SEC. We may use these registration statements to offer and sell, in
one or more offerings at various times, up to a total of $10,500,700,000 of
our debt securities. We may sell the debt securities in different series which
have different terms and conditions.
This prospectus provides you with a general description of the debt
securities that we may offer. When we sell a particular series of the debt
securities, we will provide a prospectus supplement describing the specific
terms and conditions of that series of debt securities, including:
. the public offering price;
. the maturity date;
. the interest rate or rates, which may be fixed or variable;
. the times for payment of principal, interest and any premium; and
. any redemption provisions of the debt securities in the series.
The prospectus supplement may also contain, in the case of some series of
debt securities, important information about U. S. federal income tax
consequences to which you may become subject if you acquire the debt
securities being offered by that prospectus supplement. The prospectus
supplement may also update or change information contained in this prospectus.
You should read both this prospectus and any prospectus supplement
together with the additional information described under the heading "Where
You Can Find More Information."
We maintain our principal executive offices at:
702 S.W. 8th Street
Bentonville, Arkansas 72716
Telephone: (501) 273-4000.
Neither the Securities and Exchange Commission nor any state securities
commission or other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is August 5, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........................................ 2
Special Note Regarding Forward-Looking Statements.......................... 3
Wal-Mart Stores, Inc....................................................... 4
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 5
Description of the Debt Securities......................................... 5
U.S. Federal Income Tax Consequences to Holders............................ 11
Plan of Distribution....................................................... 11
Legal Matters.............................................................. 12
Experts.................................................................... 12
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. We
have not authorized anyone to provide you with different information.
We are not offering the debt securities in any jurisdiction in which the
offer is not permitted.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Instead of repeating the information that we have
already filed with the SEC, the SEC allows us to "incorporate by reference" in
this prospectus information contained in documents we have filed with the SEC.
Those documents form an important part of this prospectus. Any documents that
we file with the SEC in the future will also be considered to be part of this
prospectus and will automatically update and supersede the information
contained in this prospectus.
We incorporate by reference in this prospectus the documents listed below
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until we complete or terminate
the offering of debt securities by this prospectus.
. our Annual Report on Form 10-K for our fiscal year ended January 31,
1999; and
. our Quarterly Report on Form 10-Q for our quarter ended April 30,
1999.
As allowed by the SEC's rules, we have not included in this prospectus
all of the information that is included in the registration statement. At your
request we will provide you, free of charge, with a copy of the registration
statement, any of the exhibits to the registration statement or a copy of any
other filing we have made with the SEC. If you want more information, write in
care of or call:
Allison D. Garrett, Esq.
Assistant General Counsel and Assistant Secretary
Wal-Mart Stores, Inc.
Corporate Offices
702 S.W. 8th Street
Bentonville, Arkansas 72716
Telephone: (501) 273-4505
You may also obtain a copy of any filing we have made with the SEC
directly from the SEC. You may either:
. read and copy any materials we file with the SEC at the SEC's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its offices in New York, New York and Chicago, Illinois; or
2
<PAGE>
. visit the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information
regarding issuers that file electronically.
You can obtain more information about the SEC's public reference room by
calling the SEC at 1-800-SEC-0330.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference certain
statements that may be deemed to be "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements may be included, for example, under "Wal-Mart Stores, Inc."
and "Use of Proceeds," and in certain portions of our reports and other
information incorporated in this prospectus by reference. These forward-
looking statements may include statements that address activities, events or
developments that we expect or anticipate will or may occur in the future,
including:
. future capital expenditures, including the amount and nature of those
expenditures;
. expansion and other development trends of industry segments in which
we are active;
. our business strategy;
. expansion and growth of our business; and
. operations and other similar matters.
Although we believe the expectations expressed in the forward-looking
statements are based on reasonable assumptions within the bounds of our
knowledge of our business, a number of factors could cause actual results to
differ materially from those expressed in any forward-looking statements,
whether oral or written, made by us or on our behalf. Many of these factors
have previously been identified in filings or statements made by us or on our
behalf.
Our business operations are subject to factors outside our control. Any
one, or a combination, of these factors could materially affect our financial
performance. These factors include:
. the costs of goods;
. competitive pressures;
. inflation;
. consumer debt levels;
. currency exchange fluctuations;
. trade restrictions;
. changes in tariff and freight rates;
. Year 2000 issues;
. unemployment levels;
. interest rate fluctuations; and
. other capital market and economic conditions.
Forward-looking statements that we make or that are made by others on
our behalf are based on a knowledge of our business and the environment in
which we operate, but because of the factors listed above, actual results may
differ from those in the forward-looking statements. Consequently, all of the
forward-looking statements made are qualified by these cautionary statements.
We cannot assure you that the actual results or developments anticipated by us
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on us or our business or operations.
Prospective investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. We assume no
obligation to update any of the forward-looking statements.
3
<PAGE>
WAL-MART STORES, INC.
We are the world's largest retailer as measured by total net sales for
fiscal 1999. We had total net sales of $137.6 billion in fiscal 1999, over 90%
of which was generated in the United States. We operate mass merchandising
stores that serve our customers primarily through the operation of three
segments:
. Wal-Mart stores, which include our discount stores and Supercenters in
the United States;
. SAM'S Clubs, which include our warehouse membership clubs in the
United States; and
. the international segment of our business.
We currently operate in all 50 states of the United States, Puerto Rico,
Argentina, Brazil, Canada, Germany and Mexico, and in China and Korea under
joint venture agreements. In addition, through our subsidiary, McLane Company,
Inc., we provide products and distribution services to retail industry and
institutional food service customers. At January 31, 1999, we operated in the
United States:
. 1,869 Wal-Mart stores;
. 564 Supercenters; and
. 451 SAM'S Clubs.
As of January 31, 1999, we also operated 153 Canadian Wal-Mart stores,
13 units in Argentina, 14 units in Brazil, five units in China, 95 units in
Germany, 416 units in Mexico, four units in Korea and 15 units in Puerto Rico.
The units operated by our International Division represent a variety of retail
formats.
Wal-Mart Stores, Inc. was incorporated in the State of Delaware in 1969.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed
charges, for the periods indicated:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three Months
Ended
Year Ended January 31, April 30,
---------------------------------------------------------------- --------------------------
<CAPTION>
1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.62x 4.15x 4.59x 5.33x 6.24x 4.98x 6.11x
</TABLE>
For the purpose of computing our ratios of earnings to fixed charges, we
have defined "earnings" to mean our earnings before income taxes and fixed
charges, excluding capitalized interest and earnings attributable to minority
interests owned by others in our subsidiaries.
We have also defined "fixed charges" to mean:
. the interest that we pay; plus
. the capitalized interest that we show on our accounting records; plus
. the portion of the rental expense for real and personal property that
we believe represents the interest factor in those rentals.
We have not disclosed ratios of earnings to fixed charges and preferred
stock dividends because we do not have any shares of preferred stock
outstanding.
4
<PAGE>
USE OF PROCEEDS
Except as we otherwise specifically describe in the applicable
prospectus supplement, we will use the net proceeds from the sale of the debt
securities:
. to repay the short-term borrowings that we have incurred to acquire
land and construct stores and other facilities;
. to repay short-term borrowings that we have incurred to acquire other
companies and assets; and
. to meet our other general working capital requirements.
Before we apply the net proceeds to one or more of these uses, we may invest
those net proceeds in short-term marketable securities.
We may also incur from time to time additional debt other than through
the offering of debt securities under this prospectus.
DESCRIPTION OF THE DEBT SECURITIES
We will issue the debt securities in one or more series under an
indenture, dated as of April 1, 1991, that was supplemented by a supplemental
indenture dated as of September 9, 1992 (which we refer to together as the
"indenture"), between us and The First National Bank of Chicago, as the
trustee.
The indenture is a contract between us and the trustee. The trustee has
two main roles. First, the trustee can enforce your rights against us if an
"event of default," as that term is described below, occurs. Second, the
trustee performs certain administrative duties for us.
We have summarized below the material provisions of the debt securities
to which this prospectus relates and the indenture. However, you should
understand that this is only a summary, and we have not included all of the
provisions of the indenture. We have filed the indenture with the SEC, and we
suggest that you read the indenture. We are incorporating by reference the
provisions of the indenture referred to in the following summary, whether by
reference to articles, sections or defined terms. The summary is qualified in
its entirety by those provisions of the indenture. The section numbers set
forth below refer to the sections of the indenture.
We will describe the particular terms and conditions of any series of
debt securities offered in the applicable prospectus supplement. The
prospectus supplement, which we will file with the SEC, may or may not modify
the general terms found in this prospectus. For a complete description of any
series of debt securities, you should read both this prospectus and the
prospectus supplement relating to that series of debt securities.
General
As a holder of these debt securities, you will be one of our unsecured
creditors and will have a right to payment equal to that of the other
unsecured creditors of Wal-Mart Stores, Inc.
The debt securities offered by this prospectus will be limited to a
total of $10,500,700,000, or the equivalent amount in any non-U.S. currency.
The indenture, however, does not limit the amount of debt securities that may
be issued under it and provides that debt securities may be issued under it
from time to time in one or more series.
5
<PAGE>
The prospectus supplement will describe the following terms of each
series of debt securities:
. the title of the series;
. the aggregate principal amount of the debt securities of the series;
. the date or dates on which the principal will be paid;
. the percentage of the principal amount at which the debt securities in
the series will be issued and, if less than the face amount, the
portion of the principal amount payable if the holders or the trustee
accelerates the maturity of those debt securities;
. the annual interest rate or rates payable on the debt securities in the
series, which may be fixed or variable;
. the date or dates from which interest, if any, will accrue;
. the dates on which interest will be payable and the record dates for
the interest payment dates;
. the place or places where principal, interest and any premium will be
paid;
. the times when we may redeem some or all of the debt securities in the
series or you may cause us to redeem some or all of those debt
securities and terms of any of those redemptions;
. the price at which we may redeem, at our option, the debt securities in
the series;
. whether we will be obligated to redeem or purchase any of the debt
securities in the series with funds from a sinking fund and the times
and terms, including price, on which we must redeem or purchase, those
debt securities;
. if other than denominations of $1,000 or a multiple of $1,000, the
denominations, which may include other currencies, in which the debt
securities in the series will be issuable and payable;
. the currency of payment of principal of and interest and any premium on
the debt securities in the series;
. any index, formula or other method that we must use to determine the
amount of payment of principal of and interest and any premium on the
debt securities in the series;
. the portion of the principal amount of the debt securities in the
series which will be payable upon the acceleration of their maturity if
the principal amount payable will be less than the total unpaid
principal amount;
. whether you may elect to be paid or we may pay you in a currency other
than the currency in which the debt securities in the series are stated
to be payable, and when and on what terms we must or may make that
payment;
. whether the debt securities in the series will be issued in
certificated or book-entry form;
. the applicability, if any, of the defeasance provisions of the
indenture, or any modification thereof; and
. any other specific terms and conditions of the series of debt
securities.
If we sell any series of debt securities for, that we may pay in, or that
are denominated in, one or more foreign currencies, currency units or
composite currencies, we will disclose applicable restrictions, elections, tax
consequences, specific terms and other information with respect to that series
of debt securities and the relevant currencies, currencies units or composite
currencies in the prospectus supplement relating to the offer of that series.
We may also offer and sell a series of the debt securities as original
issue discount securities, bearing no interest or interest at a rate which at
the time of issuance is below market rates, at a substantial discount below
their stated principal amount. We will describe the U.S. federal income tax
consequences and other special considerations applicable to any original issue
discount securities of that kind described in the prospectus supplement
relating to that series.
6
<PAGE>
Covenants
We summarize below the covenants contained in the indenture. Following
the summary of these covenants, we provide the definitions of the capitalized
terms that are used in the summary.
Restrictions on Liens. We will not, and will not permit any of our
subsidiaries to issue, assume or guarantee any debt for money we borrow if
that debt is secured by any mortgage, deed of trust, security interest,
pledge, lien or other encumbrance upon any Operating Property belonging to us
or of any of our subsidiaries or any shares of stock or indebtedness of any of
our subsidiaries, whether owned at the date of the indenture or thereafter
acquired, without effectively securing the debt securities equally and ratably
with that debt. This restriction does not, however, apply to:
. mortgages on any property acquired, constructed or improved by us or
any of our subsidiaries after January 31, 1991, created or assumed
within 60 months after the acquisition, or construction or improvement
is complete, or within six months after completion pursuant to a firm
commitment for financing arrangement that we enter into within that
60-month period, to secure or provide for the payment of the purchase
price or cost;
. mortgages existing on any property at the time of its acquisition;
. mortgages existing on any property, shares of stock or debt acquired
from a corporation merged with or into us or one of our subsidiaries;
. mortgages on property of any corporation existing at the time it
becomes our subsidiary;
. mortgages to secure debt of any of our subsidiaries to us or to
another of our subsidiaries;
. mortgages in favor of governmental bodies to secure partial progress,
advance or other payments pursuant to any contract or statute or to
secure indebtedness incurred to finance the purchase price or cost of
constructing or improving the property subject to those mortgages; or
. mortgages for extending, renewing or replacing debt secured by any
mortgage referred to in the foregoing items or in this item or any
mortgages existing on January 31, 1991.
This restriction does not apply to the issuance, assumption or guarantee by us
or any of our subsidiaries of debt secured by a mortgage which would otherwise
be subject to the restrictions described above up to an aggregate amount
which, together with all of our and our subsidiaries' secured debt, not
including secured debt permitted under the foregoing exceptions, and the Value
of Sale and Lease-back Transactions existing at that time other than those
Sale and Lease-back Transactions the proceeds of which have been applied to
the retirement of certain long-term debt or to the purchase of other operating
property, and other than those Sale and Lease-back Transactions in which the
property involved would have been permitted to be mortgaged under the
principle described in the first item above, does not exceed the greater of
10% of our Consolidated Net Tangible Assets or 15% of Consolidated
Capitalization. (Section 3.03)
Restrictions on Sale and Lease-back Transactions. We will not and will
not permit any of our subsidiaries to, engage in Sale and Lease-back
Transactions relating to any Operating Property, except for temporary leases
for a term, including renewals, of not more than 48 months and except for
leases between us and one of our subsidiaries or between our subsidiaries.
However, we or our subsidiaries can engage in that type of transaction if the
net proceeds of the Sale and Lease-back Transaction are at least equal to the
sum of all costs incurred by us in connection with the acquisition of, and
construction of any improvement on, the Operating Property to be leased and
either:
. we or our subsidiary would be entitled to incur debt secured by a
mortgage on the property to be leased without securing the debt
securities pursuant to the first exception to the prohibition on liens
stated under "Restrictions on Liens" above; or
7
<PAGE>
. the Value thereof would be an amount permitted under the last sentence
under "Restrictions on Liens" above; or
. we apply an amount equal to the sum of all costs incurred by us in
connection with the acquisition of, and the construction of any
improvements on, that property (1) to the payment or other retirement
of certain of our or one of our subsidiary's long-term debt or (2) to
the purchase of Operating Property, other than that involved in that
Sale and Lease-back Transaction. (Section 3.04)
Mergers, Consolidations and Sale of Our Assets. We may merge with or
consolidate into another corporation or sell or convey all or substantially
all of our property to another corporation that is authorized to purchase and
operate our property, as long as:
. immediately after the merger, consolidation, sale or conveyance, the
surviving or acquiring corporation is not in default under the
indenture;
. the surviving or acquiring corporation is a U.S. corporation; and
. the surviving or acquiring corporation assumes, by a supplemental
indenture satisfactory to the trustee, the obligation to pay the
principal of and interest and any premium on all of the debt
securities and to perform our covenants under the indenture. (Section
10.01)
In the case of a merger or consolidation or a sale or conveyance of all
or substantially all of our assets and the assumption of our liabilities under
the indenture by a successor corporation, the successor corporation will
assume our place in the indenture as if it had originally been a party to the
indenture. The successor corporation may then issue debt securities under the
indenture. (Section 10.02)
Definitions. The indenture contains the following defined terms that are
used in the covenants. (Section 1.01)
"Consolidated Capitalization" means the total of all the assets
appearing on our and our subsidiaries' consolidated balance sheets less
current liabilities and deferred income taxes.
"Consolidated Net Tangible Assets" means the total of all the assets
appearing on our and our subsidiaries' consolidated balance sheets less:
. current liabilities;
. reserves for depreciation and other asset valuation reserves;
. intangible assets such as goodwill, trademarks, trade names, patents,
and unamortized debt discount and expense; and
. appropriate adjustments on account of minority interests of other
persons holding stock in any of our majority-owned subsidiaries.
"Operating Property" means any manufacturing or processing plant, office
facility, retail store, wholesale club, Supercenter, hypermart, warehouse,
distribution center or equipment located within the United States of America
or its territories or possessions and owned and operated now or hereafter by
us or any of our subsidiaries and having a book value on the date as of which
the determination is being made of more than 0.60% of Consolidated Net
Tangible Assets; provided, however, that separate items of equipment with an
aggregate book value in excess of $200,000,000 that are secured pursuant to
the same financing transaction will constitute one "Operating Property."
"Sale and Lease-back Transaction" means any arrangement with any person
providing for the leasing to us or any of our subsidiaries of any Operating
Property, except for temporary leases for a term, including any renewal
thereof, of not more than 48 months and except for leases between us and one
of our subsidiaries or between our subsidiaries, which Operating Property has
been or is to be sold or transferred by us or one of our subsidiaries to that
person.
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"Value" means, with respect to a Sale and Lease-back Transaction, as of
any particular time, the amount equal to the greater of:
. the net proceeds from the sale or transfer of the property leased
pursuant to that Sale and Lease-back Transaction; or
. the sum of all of our costs incurred in connection with the
acquisition of that property and the construction of any improvements
thereon, as determined in good faith by us at the time of entering
into that Sale and Lease-back Transaction,
in either case multiplied by a fraction, the numerator of which shall be equal
to the number of full years of the term of the lease remaining at the time of
determination and the denominator of which shall be equal to the number of
full years of that term, without regard to any renewal or extension options
contained in the lease.
Events of Default, Notice and Waiver
An event of default with respect to any series of debt securities is:
. a default in payment of principal or premium, if any, at maturity;
. a default for 30 days in payment of any interest;
. our failure for 60 days after notice to perform any other of the
covenants or agreements in the indenture;
. our default in the payment of any of our debt or acceleration of any
of that debt under the terms of the instrument under which that debt
is issued, if that default in payment is not cured or that
acceleration is not annulled within 10 days after written notice;
. certain events in the case of our bankruptcy, insolvency or
reorganization; or
. any other event of default provided with respect to any series of debt
securities. (Section 5.01)
If an event of default occurs and is continuing with respect to any
series of debt securities, either the trustee or the holders of 25% in
principal amount then outstanding of the debt securities of that series may
declare the principal of all the debt securities to be due and payable
immediately, but upon certain conditions that declaration may be annulled. The
holders of a majority in principal amount then outstanding of the debt
securities of a series may waive defaults, except an uncured default in the
payment of principal of or interest or any premium on the debt securities.
(Sections 5.01 and 5.06)
We are required to file annually with the trustee a certificate either
stating the absence of any default or specifying any default that exists.
(Section 3.09) The trustee is required, within 90 days after the occurrence of
a default with respect to the debt securities of any series, to give to the
holders of the debt securities notice of all uncured defaults known to it.
However, except in the case of default in the payment of principal and
premium, if any, or interest on any of the debt securities of that series, the
trustee will be protected in withholding that notice if the trustee in good
faith determines that the withholding of that notice is in the interest of the
holders of the debt securities of that series. The term "default," for the
purpose of this provision only, means the occurrence of any of the events of
default specified above excluding any grace periods. (Section 5.07)
The trustee is entitled, subject to the duty of the trustee during a
default to act with the required standard of care, to be indemnified by the
holders of the debt securities of any series before proceeding to exercise any
right or power under the indenture at the request of those holders. The
indenture provides that the holders of a majority in principal amount of each
series of outstanding debt securities may direct, with regard to that series,
the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the
trustee, provided that the trustee may decline to act if that direction is
contrary to law or if the trustee determines in good faith that the proceeding
so directed would be illegal or would involve it in personal liability.
(Section 5.06)
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Modification of the Indenture
The trustee and we, with the consent of the holders of not less than 66
2/3% in aggregate principal amount of each series of the debt securities at
the time outstanding affected thereby, may execute supplemental indentures
amending, changing or eliminating the provisions of the indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
those debt securities. However, no supplemental indenture of that kind may:
. extend the fixed maturity of any debt securities or the time of
payment of interest, reduce the interest rate, the principal amount or
any premium to be paid upon redemption or the amount of principal of
an original issue discount security that would be payable upon
acceleration of maturity, or impair or affect the right of any debt
security holder to institute suit for payment or the right of
repayment, if any, at the option of the holder of debt securities,
without the consent of the holder of each debt securities so affected;
or
. reduce the above percentage of debt securities, the holders of which
are required to consent to any supplemental indenture of that kind,
without the consent of the holders of all the affected debt securities
then outstanding.
(Section 9.02) In some circumstances, the holders of a majority in aggregate
principal amount of each series of debt securities may waive all defaults and
rescind and annul a declaration that the series of debt securities has become
due and payable and the consequences of a declaration of that kind. (Section
5.01)
The trustee and we, without the consent of the holders of the debt
securities, may execute an indenture or supplemental indentures to:
. evidence the succession of another corporation to us and our
successor's assumption to our agreements and obligations with respect
to the debt securities and the indenture;
. add to our covenants further restrictions or conditions that our board
of directors and the trustee consider to be for the protection of
holders of all or any series of the debt securities and to make the
occurrence of a default in any of those additional covenants,
restrictions or conditions a default or an event of default permitting
enforcement of all or any of the several remedies provided in the
indenture with some permissible limitations;
. cure ambiguities or correct or supplement any provision contained in
the indenture or any supplemental indenture that may be defective or
inconsistent with another provision;
. provide for the issuance of debt securities whether or not then
outstanding under the indenture in coupon form and to provide for
exchangeability of the coupon form securities with debt securities
issued under the indenture in fully registered form;
. establish the form or terms and to provide for the issuance of any
series of debt securities under the indenture; and
. evidence and provide for the acceptance of appointment of a successor
trustee and to change the indenture as necessary to have more than one
trustee under the indenture. (Section 9.01)
Defeasance of Offered Debt Securities in Certain Circumstances
The indenture provides that our board of directors may provide by
resolution that we will be discharged from any and all obligations in respect
of the debt securities of any series upon the deposit with the trustee, in
trust, of money and/or obligations of, or obligations the principal of and
interest on which are fully guaranteed by, the United States of America, which
through the payment of interest and principal those debt securities in
accordance with their terms will provide money in an amount sufficient to pay
any installment of principal of and interest on the debt securities of that
series on the stated maturity of that payments in accordance with the terms of
the indenture and those debt securities. A discharge may only occur if we have
received from, or there has been published by, the U.S. Internal Revenue
Service a ruling to the effect that the discharge will not be deemed, or
result in, a taxable event with respect to holders of the debt securities of
that series. (Section 11.05)
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<PAGE>
Global Securities
Unless otherwise stated in a prospectus supplement, the debt securities
of a series will be issued in whole or in part in the form of one or more
global securities that will be deposited with, or on behalf of, a depositary
identified in the applicable prospectus supplement relating to that series.
The global securities may be issued in either registered or bearer form and in
either temporary or permanent form. The specified terms of the depositary
arrangement with respect to a series of debt securities will be described in
the applicable prospectus supplement relating to that series.
Concerning the Trustee
The First National Bank of Chicago, a national banking association with
its principal offices in Chicago, Illinois, is the trustee under the indenture
and will also serve as paying agent and registrar.
The First National Bank of Chicago also serves as trustee under an
indenture dated as of December 1, 1986 covering secured bonds issued in the
aggregate principal amount of $137,082,000 by the owner-trustees of
approximately 24 SAM'S Clubs store properties which are leased to us. We have
issued notes in the aggregate principal amount of $1.00 billion under this
indenture as originally executed and, as of the date of this prospectus, $7.05
billion under the indenture as supplemented. First Chicago Leasing
Corporation, an affiliate of The First National Bank of Chicago, established a
business trust which purchased 15 Wal-Mart discount department stores for
$53,661,785 and leased the stores back to us for an initial term of 20 years
in a transaction which was consummated on December 22, 1992. On November 10,
1994, a second business trust of which First Chicago Leasing Corporation is a
beneficiary purchased an additional 23 Wal-Mart discount department stores for
$128,842,5000 and leased the stores back to us for an initial term of 20
years. We expect that we will also maintain banking relationships in the
ordinary course of business with The First National Bank of Chicago.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS
A prospectus supplement may describe the principal U.S. federal income
tax consequences of acquiring, owning and disposing of debt securities of some
series in the following circumstances:
. payment of the principal, interest and any premium in a currency other
than the U.S. dollar;
. the issuance of any debt securities with "original issue discount," as
defined for U.S. federal income tax purposes; and
. the inclusion of any special terms in debt securities that may have a
material effect for U.S. federal income tax purposes.
PLAN OF DISTRIBUTION
General
We may sell the debt securities being offered hereby:
.directly to purchasers;
.through agents;
.through dealers;
.through underwriters; or
.through a combination of any of those methods of sale.
We may effect the distribution of the debt securities from time to time
in one or more transactions either:
.at a fixed price or prices which may be changed;
.at market prices prevailing at the time of sale; or
.at prices related to the prevailing market prices; or
.at negotiated prices.
11
<PAGE>
We may directly solicit offers to purchase the debt securities. Offers
to purchase debt securities may also be solicited by agents designated by us
from time to time. Any of those agents, who may be deemed to be an
"underwriter," as that term is defined in the Securities Act of 1933, involved
in the offer or sale of the debt securities in respect of which this
prospectus is delivered will be named, and any commissions payable by us to
that agent will be set forth in the prospectus supplement.
If a dealer is utilized in the sale of the debt securities in respect of
which this prospectus is delivered, we will sell those debt securities to the
dealer, as principal. The dealer, who may be deemed to be an "underwriter," as
that term is defined in the Securities Act of 1933, may then resell those debt
securities to the public at varying prices to be determined by that dealer at
the time of resale.
If we use an underwriter or underwriters in the sales, we will execute
an underwriting agreement with those underwriters at the time of sale of the
debt securities and the name of the underwriters will be set forth in the
prospectus supplement, which will be used by the underwriters to make resales
of the debt securities in respect of which this prospectus is delivered to the
public. The compensation of any underwriters will also be set forth in the
prospectus supplement.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with us, to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, or to our contributing to payments those underwriters, dealers, agents
and other persons are required to make.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or any of our subsidiaries in the ordinary course of
business.
LEGAL MATTERS
The validity of the debt securities offered by this prospectus and any
prospectus supplement will be passed upon for us by Hughes & Luce, L.L.P., our
counsel.
EXPERTS
The consolidated financial statements of Wal-Mart Stores, Inc. and
subsidiaries incorporated by reference in our Annual Report on Form 10-K for
the fiscal year ended January 31, 1999, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon incorporated
by reference therein and incorporated herein by reference. Such financial
statements are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of Ernst & Young LLP pertaining to such financial statements (to the
extent covered by consents filed with the Securities and Exchange Commission)
given upon the authority of such firm as experts in accounting and auditing.
12
<PAGE>
PRINCIPAL EXECUTIVE OFFICES OF WAL-MART STORES, INC.
Wal-Mart Stores, Inc.
702 S.W. 8th Street
Bentonville, Arkansas 72716
U.S.A.
TRUSTEE, REGISTRAR, U.S. PAYING AGENT
AND U.S. TRANSFER AGENT
Bank One Trust Company, NA
One North State Street
9th Floor
Chicago, Illinois 60670
U.S.A.
LUXEMBOURG LISTING AGENT,
LONDON PAYING AGENT PAYING AGENT AND
AND TRANSFER AGENT TRANSFER AGENT
Bank One, NA, London Branch Kredietbank S.A. Luxembourgeoise
27 Leadenhall Street 43, Boulevard Royale
London EC2A 1AA L-2955 Luxembourg
England
LEGAL ADVISERS
To Wal-Mart as to U.S. Law To the Underwriters as to U.S. Law
Hughes & Luce, L.L.P. Simpson Thacher & Bartlett
1717 Main Street 425 Lexington Avenue
Dallas, Texas 75201 New York, New York 10017
U.S.A.
U.S.A.
To Wal-Mart as to English Law To the Underwriters as to English
Simmons & Simmons Law
21 Wilson Street Linklaters & Alliance
London EC2M 2TX Linklaters
England One Silk Street
London EC2Y 8HQ
England
INDEPENDENT AUDITORS
Ernst & Young LLP
3900 One Williams Center
Tulsa, Oklahoma 74172
U.S.A.
<PAGE>
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You
must not rely on any unauthorized information or representations. This
prospectus is an offer to sell only the notes offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus is current only as of its dates.
----------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Wal-Mart Stores, Inc....................................................... S-3
Use of Proceeds of the Notes............................................... S-3
Capitalization............................................................. S-4
Selected Financial Data.................................................... S-5
Exchange Rate Information.................................................. S-6
Directors and Executive Officers........................................... S-7
Description of the Notes................................................... S-8
Book-Entry Issuance........................................................ S-12
Tax Consequences to Holders................................................ S-16
Underwriting............................................................... S-23
Validity of the Notes...................................................... S-24
Listing and General Information............................................ S-24
Prospectus
Where You Can Find More Information........................................ 2
Special Note Regarding Forward-Looking Statements.......................... 3
Wal-Mart Stores, Inc....................................................... 4
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 5
Description of the Debt Securities......................................... 5
U.S. Federal Income Tax Consequences to Holders............................ 11
Plan of Distribution....................................................... 11
Legal Matters.............................................................. 12
Experts.................................................................... 12
</TABLE>
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(Pounds) ,000,000
Wal-Mart Stores, Inc.
% Notes Due 2030
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PROSPECTUS SUPPLEMENT
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Goldman Sachs International
Deutsche Bank
Goldman, Sachs & Co.
Deutsche Banc Alex. Brown
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