ITEM 1. BUSINESS
Wal-Mart Stores, Inc. (together with its subsidiaries hereinafter referred to as the "Company") is the world's largest retailer measured by total revenues. During the fiscal year ended January 31, 1999, the Company had net sales of $137,634,000,000.
(a) Development of Business
Domestically, at January 31, 1999, the Company operated 1,869 discount stores and 564 Supercenters, and 451 SAM'S Clubs. Tables summarizing information concerning additions of units and square footage for domestic discount stores, Supercenters and SAM'S Clubs since January 31, 1994, are included as Schedules A and B to Item 1 found on pages 10 and 11 of this annual report.
In fiscal 1999, the Company took possession of 74 units from the Interspar hypermarket chain in Germany. The units were acquired from Spar Handels AG, a German company that owns multiple retail formats and wholesale operations throughout Germany. The transaction closed on December 29, 1998, Interspar's fiscal year end. Therefore, the acquired assets are included in the Company's consolidated balance sheet as of January 31, 1999, and the results of operations will be included beginning in fiscal 2000.
In fiscal 1999, the Company extended its presence in Asia with an investment in Korea. The Company acquired a majority interest in four existing units as well as six undeveloped sites. The four acquired units were previously operated by Korea Makro. The results of operations since the effective date of the acquisition have been included in the Company's results of operations.
See Note 6 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report for additional information regarding our acquisitions.
Internationally, at January 31, 1999, the Company operated units in Argentina(13), Brazil(14), Canada(154), Germany(95), Mexico(416), and Puerto Rico(15), and, under joint venture agreements, in China(5) and Korea(4). A table summarizing information concerning additions of units and square footage for international units operated since fiscal 1994, is included as Schedule C to Item 1 found on page 12 of this annual report.
(b) Financial information about the Company's industry segments
The Company is principally engaged in the operation of mass merchandising stores, which serve our customers primarily through the operation of three segments.
The Company identifies segments based on management responsibility within the United States and geographically for all international units. The Wal-Mart Stores segment includes the Company's discount stores and Supercenters in the United States. The SAM'S Club segment includes the warehouse membership clubs in the United States. The International segment includes all operations in Argentina, Brazil, Canada, China, Germany, Korea, Mexico and Puerto Rico. For the financial results of the Company's operating segments, see Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report.
(c) Narrative Description of Business
The Company, a Delaware corporation, has its principal offices in Bentonville, Arkansas. Although the Company was incorporated in October 1969, the businesses conducted by its predecessors began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, the Company's business was devoted entirely to the operation of variety stores. In that year, the first Wal- Mart Discount City (discount store) was opened. In fiscal 1984, the Company opened its first three SAM'S Clubs, and in fiscal 1988, its first Wal-Mart Supercenter (combination full-line supermarket and discount store). In fiscal 1992, the Company began its first international initiative when the Company entered into a joint venture in which it had a 50% interest with Cifra S.A. de C.V. (Cifra). The Company's international presence has continued to expand and at January 31, 1999, the Company had operations in seven countries and Puerto Rico.
WAL-MART STORES OPERATING SEGMENT
The Wal-Mart Stores segment, which includes the Company's discount stores and Supercenters in the United States, had sales of $95,395,000,000, $83,820,000,000 and $74,840,000,000 for the three fiscal years ended January 31, 1999, 1998, and 1997, respectively. During the most recent fiscal year, no single discount store or Supercenter location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report for additional information regarding our segments.
General. The Company operates Wal-Mart discount stores in all 50 states. The average size of a discount store is approximately 94,300 square feet. Wal-Mart Supercenters are located in 29 states and the average size of a Supercenter is 181,200 square feet. The Supercenter prototypes range in size from 110,000 square feet to 234,000 square feet.
Merchandise. Wal-Mart discount stores and the general merchandise area of the Supercenters are generally organized with 40 departments and offer a wide variety of merchandise, including apparel for women, girls, men, boys and infants. Each store also carries domestics, fabrics and notions, stationery and books, shoes, housewares, hardware, electronics, home furnishings, small appliances, automotive accessories, horticulture and accessories, sporting goods, toys, pet food and accessories, cameras and supplies, health and beauty aids, pharmaceuticals and jewelry. In addition, the stores offer an assortment of grocery merchandise, with the assortment in Supercenters being broader and including meat, produce, deli, bakery, dairy, frozen foods and dry grocery.
Nationally advertised merchandise accounts for a majority of sales in the stores. The Company markets lines of merchandise under store brands including but not limited to "Sam's American Choice", "One Source", "Great Value", "Ol' Roy" and "Equate". The Company also markets lines of merchandise under licensed brands; some of which include "Faded Glory", "Kathie Lee", "White Stag", "Puritan", "Better Homes & Gardens", "Popular Mechanics", "Catalina", "McKids", "Basic Equipment" and "House Beautiful".
During the fiscal year ended January 31, 1999, sales in discount stores and Supercenters (which are subject to seasonal variance) by product category were as follows: PERCENTAGE CATEGORY OF SALES
Hardgoods........................ 22 Softgoods/domestics.............. 21 Grocery, candy and tobacco....... 16 Pharmaceuticals.................. 9 Electronics...................... 9 Sporting goods and toys.......... 7 Health and beauty aids........... 7 Stationery ...................... 4 Shoes............................ 2 Jewelry.......................... 2 One-hour photo................... 1 100%
Operations. Hours of operations vary by location, but generally range from 7:00 a.m. to 11:00 p.m. six days a week, and from 10:00 a.m. to 8:00 p.m. on Sunday for discount stores and Supercenters. In addition, an increasing number of discount stores and almost all of the Supercenters are open 24 hours each day. Wal-Mart discount stores and Supercenters maintain uniform prices, except where lower prices are necessary to meet local competition. Sales are primarily on a self-service, cash-and-carry basis with the objective of maximizing sales volume and inventory turnover while minimizing expenses. Bank credit card programs, operated without recourse to the Company, are available in all stores.
Seasonal Aspects of Operations. The Wal-Mart Stores operating segment's business is seasonal to a certain extent. Generally, the highest
volume of sales occurs in the fourth fiscal quarter and the lowest volume occurs during the first fiscal quarter.
Competition. Wal-Mart discount stores compete with other discount, department, drug, variety and specialty stores, many of which are national chains. Wal-Mart Supercenters compete with other supercenter-type stores, discount stores, supermarkets and specialty stores, many of which are national or regional chains. The Company also competes with others for new club sites. As of January 31, 1999, based on net sales, the Wal-Mart Stores segment ranked first among all retail department store chains and among all discount department store chains.
The Company's competitive position within the industry is largely determined by its ability to offer value and service to its customers. The Company has many programs designed to meet the competitive needs of its industry. These include "Everyday Low Price", "Item Merchandising", "Store- Within-a-Store" and "Price Rollbacks" programs. Although the Company believes it has had a major influence in most of the retail markets in which its stores are located, there is no assurance that this will continue.
Distribution. During the 1999 fiscal year, approximately 84% of the Wal-Mart discount stores' and Supercenters' purchases were shipped from Wal-Mart's 43 distribution centers, nine of which are grocery distribution centers, and two of which are import distribution centers. The balance of merchandise purchased was shipped directly to the stores from suppliers. The 43 centers are located throughout the continental United States. Five distribution centers are located in each of Arkansas and Texas; three in South Carolina; two in each of California, Florida, Georgia, Indiana, Mississippi, New York and Pennsylvania; and one in each of Alabama, Arizona, Colorado, Iowa, Illinois, Kansas, Kentucky, New Hampshire, New Mexico, North Carolina, Ohio, Oregon, Tennessee, Utah, Virginia and Wisconsin.
SAM'S CLUB OPERATING SEGMENT
The SAM'S Club segment, which includes the warehouse membership clubs in the United States, had sales of $22,881,000,000, $20,668,000,000 and $19,785,000,000 for the three fiscal years ended January 31, 1999, 1998, and 1997, respectively. During the most recent fiscal year, no single club location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report for additional information regarding our segments.
General. The Company operates SAM'S Clubs in 48 states. The average size of a SAM'S Club is approximately 121,200 square feet, and club sizes generally range between 90,000 and 150,000 square feet of building area.
Merchandise. SAM'S Clubs offer bulk displays of name brand hardgood merchandise, some softgoods and institutional size grocery items, and selected items under the "Member's Mark" store brand. Generally each
SAM'S Club also carries software and electronic goods, jewelry, sporting goods, toys, tires, stationery and books. Most clubs have fresh food departments, which include bakery, meat and produce. In addition, some clubs offer one-hour photo, embroidery departments, pharmaceuticals and gas stations.
During the fiscal year ended January 31, 1999, sales in the clubs (which are subject to seasonal variance) by product category were as follows:
PERCENTAGE CATEGORY OF SALES
Sundries.......................... 31.6 Food ............................. 32.8 Hardlines ........................ 22.1 Softlines ........................ 5.7 Service Businesses................ 7.8 100.0%
Operations. Operating hours vary among SAM'S Clubs, but they are generally open Monday through Friday from 10:00 a.m. to 8:30 p.m. Most SAM'S Clubs are open Saturday from 9:30 a.m. to 8:30 p.m. and on Sunday from 11:00 a.m. to 6:00 p.m.
SAM'S Clubs are membership only, cash-and-carry operations. However, a financial service credit card program (Discover Card) is available in all clubs and the "SAM'S Direct" commercial finance program and "Business Revolving Credit" are available to qualifying business members. Also, a "Personal Credit" program is available to qualifying club members. Any credit issued under these programs is without recourse to the Company. Club members include businesses and those individuals who are members of certain qualifying organizations, such as government and state employees and credit union members. In fiscal 1999, business members paid an annual membership fee of $30 for the primary membership card with a spouse card available at no additional cost. The annual membership fee for an individual member is $35 for the primary membership card with a spouse card available at no additional cost.
Seasonal Aspects of Operations. The SAM'S Club operating segment's business is seasonal to a certain extent. Generally, the highest volume of sales occurs in the fourth fiscal quarter and the lowest volume occurs during the first fiscal quarter.
Competition. SAM'S Clubs compete with warehouse clubs, as well as with discount retailers, wholesale grocers and general merchandise wholesalers and distributors. The Company also competes with others for new club sites. As of January 31, 1999, based on domestic U.S. net sales, the SAM'S Club segment ranked first among all warehouse clubs.
Distribution. During fiscal 1999, approximately 61% of the SAM'S Club purchases were shipped from distribution facilities. The balance was shipped directly to the clubs from suppliers. Operationally, the principle
focus is on crossdocking product, while maintaining stored inventory is minimized. A combination of Company owned and operated facilities and third-party facilities comprise the overall distribution structure.
INTERNATIONAL OPERATING SEGMENT
The Company's International Segment is comprised of wholly owned operations in Argentina, Canada, Germany and Puerto Rico; through joint ventures in China and Korea; and through majority-owned subsidiaries in Brazil and Mexico. Sales for the three fiscal years ended January 31, 1999, 1998, and 1997 were $12,247,000,000, $7,517,000,000 and $5,002,000,000, respectively. During the most recent fiscal year, no single location accounted for as much as 1% of total Company sales or net income. See Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report for additional information regarding our segments.
General. Operating formats vary by country, but include Wal-Mart discount stores in Canada and Puerto Rico; Supercenters in Argentina, Brazil, China, Korea and Mexico; SAM'S Clubs in Argentina, Brazil, China, Mexico, and Puerto Rico; Hypermarkets in Germany and Superamas (traditional supermarket,) Bodegas (discount store,) Aurreras (combination store,) Suburbias (specialty department store) and Vips (restaurant) in Mexico.
Merchandise. The merchandising strategy in the International operating segment is similar to that of domestic segments in the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of sales, several store brands not found in the United States have been developed to serve customers in the different markets in which the International segment operates. In addition, steps have been taken to develop relationships with local vendors in each country to ensure reliable sources of quality merchandise.
Operations. The hours of operation for operating units in the international division vary by country and by individual markets within countries, depending upon local and national ordinances governing hours of operation. While sales are primarily on a cash-and-carry basis, credit cards or other consumer finance programs exist in certain markets to facilitate the purchase of goods by the customer.
Seasonal Aspects of Operations. The International operating segment's business is seasonal to a certain extent. Generally, the highest volume of sales occurs in the fourth fiscal quarter. The seasonality of the business varies by country due to different national and religious holidays, festivals and customs, as well as different climatic conditions.
Competition. The International operating segment competes with a variety of local, national and international chains in the discount, department, drug, variety, specialty and wholesale sectors of the retail market. The segment's competitive position is determined, to a large extent, by its ability to offer its customers low prices on quality merchandise that offers exceptional value. In Supercenters, our ability to
effectively operate the food departments has a major impact on the segment's competitive position in the markets where we operate.
Distribution. The International segment operates export consolidation facilities in Jacksonville, Florida; Seattle, Washington; and Laredo, Texas in support of product flow to its Mexican, Asian, and Latin American markets. In addition, distribution facilities are located in Argentina, Brazil, Canada, China and Mexico which process and flow both imported and domestic product to the operating units. Operationally, the principle focus is on crossdocking product, while maintaining stored inventory is minimized. During fiscal 1999, approximately 50% of the International merchandise purchases flowed through these distribution facilities. The balance was shipped directly to the stores from suppliers. A combination of Company owned and operated facilities and third-party facilities comprises the overall distribution structure for International logistics.
OTHER
The sales reported in the "Other" category included in Note 9 of Notes to Consolidated Financial Statements incorporated by reference in Item 8 of Part II found on page 17 of this annual report result from sales to third parties by McLane Company, Inc. (McLane). McLane is a wholly owned wholesale distributor that sells its merchandise to a variety of retailers, primarily to the convenience store industry. McLane also services Wal-Mart discount stores, Supercenters and SAM'S Clubs. Sales to third parties for the three fiscal years ended January 31, 1999, 1998, and 1997 were $7,111,000,000, $5,953,000,000 and $5,232,000,000 respectively. McLane offers a wide variety of grocery and non-grocery products, including perishable and non-perishable items. The non-grocery products consist primarily of tobacco products, hardgood merchandise, health and beauty aids, toys and stationery.
McLane has 19 distribution centers from which its customers, including the Company, are served. The distribution centers are located in the continental United States with two located in each of Arizona, California, Texas and Virginia, and one each in Colorado, Florida, Georgia, Illinois, Kentucky, Mississippi, Missouri, New York, North Carolina, Utah and Washington.
Employees (Associates).
As of January 31, 1999, the Company employed approximately 910,000 associates worldwide, with approximately 780,000 in the United States and 130,000 internationally. Most associates participate in incentive programs, which provide the opportunity to receive additional compensation based upon the Company's productivity or profitability.
[FN]
(1) Wal-Mart discount store locations relocated or expanded as Wal-Mart Supercenters.
(2) Total opened net of conversions of Wal-Mart discount stores to Wal-Mart Supercenters.
[FN]
(1) Includes 147 clubs acquired in PACE acquisition.
[FN]
* In fiscal 1998, includes 33 Aurreras (combination stores), 62 Bodegas (discount stores), 38 Suburbias (specialty department stores), 36 Superamas (traditional supermarkets), and 178 Vips (restaurants), the majority of which were acquired in 1998 in the Cifra acquisition.
* In fiscal 1999, includes 33 Aurreras (combination stores), 63 Bodegas (discount stores), 43 Suburbias (specialty department stores), 36 Superamas (traditional supermarkets), and 183 Vips (restaurants).
ITEM 2.
ITEM 2. PROPERTIES
The number and location of domestic and international Wal-Mart discount stores, Supercenters and SAM'S Clubs is incorporated by reference to the table under the caption "Fiscal 1999 End of Year Store Counts" on Page 17 of the Annual Report to Shareholders for the year ended January 31, 1999.
The Company owns 1,488 properties on which domestic discount stores and Supercenters are located and 214 of the properties on which domestic SAM'S are located. In some cases, the Company owns the land associated with leased buildings. New buildings, both leased and owned, are constructed by independent contractors.
The remaining buildings in which its present domestic locations are located are either leased from a commercial property developer, leased pursuant to a sale/leaseback arrangement or leased from a local governmental entity through an industrial revenue bond transaction. All of the Company's leases for its stores provide for fixed annual rentals and, in many cases, the leases provide for additional rent based on sales volume.
Domestically, the Company operated 43 Wal-Mart distribution facilities and 19 McLane distribution facilities at January 31, 1999. These distribution facilities are primarily owned by the Company, and several are subject to mortgage secured loans. Some of the distribution facilities are leased under industrial development bond financing arrangements and provide the option of purchasing these facilities at the end of the lease term for nominal amounts.
The Company owns office facilities in Bentonville, Arkansas that serve as the home office for the Company and owns an office facility in Temple, Texas which serves as the home office for McLane.
Internationally, the Company has a combination of owned and leased properties in each country in which the operating units are located. The Company owns ten properties in Argentina, eight properties in Brazil, seven properties in Canada, one property in China under joint venture, 21 properties in Germany, four properties in Korea under joint venture, 242 properties in Mexico, and four properties in Puerto Rico in which the operating units are located, with the remaining units in each country being leased.
The Company utilizes both owned and leased properties for office facilities in each country in which we conduct business.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and no properties of the Company are subject to any material pending legal proceeding, other than routine litigation incidental to its business.
The Company recently opened a Supercenter in Honesdale, Pennsylvania. In February of 1999, the Company settled claims made by the Pennsylvania Department of Environmental Protection that the construction activities led to excess erosion and sedimentation of a nearby creek. In the settlement, Wal-Mart agreed to pay a fine of $25,000 and to perform a $75,000 community environmental project in the Honesdale area. The Company is negotiating settlement of a claim by the United States Army Corps of Engineers that the construction resulted in the filling of approximately 0.76 acres in excess of the permitted fill area of waters and wetlands at the site. The proposed settlement with the Corps will require Wal-Mart to pay $200,000 to a non-profit corporation for the purchase of local wetlands conservation areas and easements. Under contracts with third parties, Wal-Mart has received reimbursement for the $75,000 community environmental project and the $25,000 fine. Wal-Mart also expects to be reimbursed under third party contracts for the $200,000 proposed settlement amount.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during the last quarter of the year ended January 31, 1999.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to each of the executive officers of the Company, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience shown for each officer has been his principal occupation for at least the past five years.
Current Position Name Business Experience Held Since Age
David D. Glass President and Chief Executive 1988 63 Officer.
S. Robson Walton Chairman of the Board. 1992 54
Donald G. Soderquist Senior Vice Chairman of the Board. 1999 65 Prior to January 1999, he served as Vice Chairman and Chief Operating Officer.
H. Lee Scott, Jr. Vice Chairman and Chief Operating 1999 50 Officer. Prior to January 1999, he served as President and Chief Executive Officer of Wal-Mart Stores Division. Prior to January 1998, he served as Executive Vice President - Merchandising. Prior to October 1995, he served as Executive Vice President - Logistics. Prior to that, he served as Senior Vice President - Logistics.
Paul R. Carter Executive Vice President 1995 58 and President - Wal-Mart Realty Company. Prior to 1995, he served as Executive Vice President and Chief Financial Officer.
Robert F. Connolly Executive Vice President - 1998 55 Merchandising. Prior to January 1998, he served as Senior Vice President - General Merchandise Manager. Prior to October 1996, he served as Vice President - Jewelry and Shoes. Prior to February 1996,he served as Executive Vice President of Montgomery Ward. Prior to January 1994, he served as Senior Vice President - General Merchandise Manager of Wal-Mart Stores, Inc.
Thomas M. Coughlin Executive Vice President and 1999 50 President and Chief Executive Officer of Wal-Mart Stores Division. Prior to January 1999, he served as Executive Vice President and Chief Operating Officer of Wal-Mart Stores Division. Prior to January 1998, he served as Executive Vice President - Store Operations. Prior to 1995, he served as Senior Vice President - Specialty Divisions.
David Dible Executive Vice President - 1995 51 Specialty Divisions. Prior to 1995, he served as Senior Vice President - Merchandising.
Thomas R. Grimm Executive Vice President and 1998 54 President and Chief Executive Officer of SAM'S Club Division. Prior to October 1998, he was retired and served as a consultant to various organizations. Prior to June 1994, he served as President and Chief Executive Officer of Pace Membership Warehouse, a Division of K-Mart Corporation.
Bob L. Martin Executive Vice President 1993 50 and President and Chief Executive Officer of Wal-Mart International Division.
John B. Menzer Executive Vice President and 1995 48 Chief Financial Officer. Prior to September 1995, he served as President and Chief Operating Officer of Ben Franklin Retail Stores, Inc.
Nicholas J. White Executive Vice President - 1989 54 Food Division.
William G. Rosier President and Chief Executive 1995 50 Officer of McLane Company, Inc. Prior to 1995, he served as Senior Vice President - Marketing and Customer Services for McLane.
James A. Walker, Jr. Senior Vice President and 1995 52 Controller. Prior to 1995, he served as Vice President and Controller.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information required by this item is incorporated by reference to the information "Number of Shareholders" under the caption "11- Year Financial Summary" on Pages 18 and 19, and all the information under the captions "Market Price of Common Stock", "Listings - Stock Symbol: WMT" and "Dividends Paid Per Share" on page 39 of the Annual Report to Shareholders for the year ended January 31, 1999.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to all information under the caption "11-Year Financial Summary" on Pages 18 and 19 of the Annual Report to Shareholders for the year ended January 31, 1999.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is furnished by incorporation by reference to all information under the caption
"Management's Discussion and Analysis" on Pages 20 through 25 of the Annual Report to Shareholders for the year ended January 31, 1999.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is furnished by incorporation by reference to all information under the captions "Consolidated Statements of Income", "Consolidated Balance Sheets", "Consolidated Statements of Shareholders' Equity", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements" and "Report of Independent Auditors" on Pages 26 through 38 of the Annual Report to Shareholders for the year ended January 31, 1999.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item with respect to the Company's directors and compliance by the Company's directors, executive officers and certain beneficial owners of the Company's Common Stock with Section 16(a) of the Securities Exchange Act of 1934 is furnished by incorporation by reference to all information under the captions entitled "Nominees for Directors" on Pages 2 and 3 and "Section 16(a) Beneficial Ownership Reporting Compliance" on Page 12 of the Company's definitive Proxy Statement for its Annual Meeting of Shareholders to be held on Friday, June 4, 1999 (the "Proxy Statement"). The information required by this item with respect to the Company's executive officers is included as Item 4A of Part I found on pages 14 through 16 of this annual report.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is furnished by incorporation by reference to all information under the caption entitled "Compensation of Directors" on Page 4, "Compensation and Nominating Committee Report on Executive Compensation" on page 5 through 7, and "Summary Compensation", "Option Grants In Last Fiscal Year", and "Option Exercises and Fiscal Year End Option Values" on Pages 8 through 10 of the Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is furnished by incorporation by reference to all information under the caption entitled "Stock Ownership", subcaptions "Ownership of Major Shareholders (1)" and "Holdings of Officers and Directors" on Pages 10 through 12 of the Proxy Statement.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is furnished by incorporation by reference to all information under the caption "Related- Party Transactions with Wal-Mart" on Page 5 of the Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. & 2. Consolidated Financial Statements
The financial statements listed in the Index to Consolidated Financial Statements, which appears on Page 21 of this annual report, are incorporated by reference herein or filed as part of this Form 10-K.
3. Exhibits
The following documents are filed as exhibits to this Form 10-K:
3(a) Restated Certificate of Incorporation of the Company is incorporated herein by reference to Exhibit 3(a) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1989, and the Certificate of Amendment to the Restated Certificate of Incorporation is incorporated herein by reference to Registration Statement on Form S-8 (File Number 33-43315).
3(b) By-Laws of the Company, as amended June 3, 1993, are incorporated herein by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended January 31, 1994.
4(a) Form of Indenture dated as of June 1, 1985, between the Company and Bank of New York, Trustee, (formerly Boatmen's Trust Company and Centerre Trust Company) is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-3 (File Number 2-97917).
4(b) Form of Indenture dated as of August 1, 1985, between the Company and Bank of New York, Trustee, (formerly Boatmen's Trust Company and Centerre Trust Company) is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-3 (File Number 2-99162).
4(c) Form of Amended and Restated Indenture, Mortgage and Deed of Trust, Assignment of Rents and Security Agreement dated as of December 1, 1986, among the First National Bank of Boston and James E. Mogavero, Owner Trustees, Rewal Corporation I, Estate for Years Holder, Rewal Corporation II, Remainderman, the Company and the First National Bank of Chicago and R.D. Manella, Indenture Trustees, is incorporated herein by
reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-11394).
4(d) Form of Indenture dated as of July 15, 1990, between the Company and Harris Trust and Savings Bank, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-35710).
4(e) Indenture dated as of April 1, 1991, between the Company and The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on Form S-3 (File Number 33-51344).
4(f) First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991, between the Company and The First National Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344).
+10(a) Form of individual deferred compensation agreements is incorporated herein by reference to Exhibit 10(b)from the Annual Report on Form 10-K of the Company, as amended, for the year ended January 31, 1986.
+10(b) Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Registration Statement on Form S-8 (File Number 2-94358).
+10(c) 1986 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(h) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1987.
+10(d) 1991 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(h) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1992.
+10(e) 1993 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1984 is incorporated herein by reference to Exhibit 10(i) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1993.
+10(f) Wal-Mart Stores, Inc. Stock Option Plan of 1994 is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-8 (File Number 33-55325).
+10(g) Wal-Mart Stores, Inc. Director Compensation Plan is incorporated herein by reference to Exhibit 4(d) to Registration Statement on Form S-8 (File Number 333-24259).
+10(h) Wal-Mart Stores, Inc. Officer Deferred Compensation Plan is incorporated herein by reference to Exhibit 10(i) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1996.
+10(i) Wal-Mart Stores, Inc. Restricted Stock Plan is incorporated herein by reference to Exhibit 10(j) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1997.
+10(j) 1996 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 is incorporated herein by reference to Exhibit 10(j) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1998.
+10(k) 1997 Amendment to the Wal-Mart Stores, Inc. Stock Option Plan of 1994 is incorporated herein by reference to Exhibit 10(k) from the Annual Report on Form 10-K of the Company for the year ended January 31, 1998.
*+10(l) Wal-Mart Stores, Inc. Stock Incentive Plan of 1998 is filed herewith as an Exhibit to this Form 10-K.
*+10(m) Wal-Mart Stores, Inc. Management Incentive Plan of 1998 is filed herewith as an Exhibit to this Form 10-K.
*13 All information incorporated by reference in Items 1, 2, 5, 6, 7 and 8 of this Annual Report on Form 10-K from the Annual Report to Shareholders for the year ended January 31, 1999.
*21 List of the Company's Subsidiaries
*23 Consent of Independent Auditors
*27 Financial Data Schedule
*Filed herewith as an Exhibit.
+Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the last quarter of the fiscal year ended January 31, 1999.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Annual Report to Shareholders (page)
Covered by Report of Independent Auditors:
Consolidated Statements of Income for each of the three years in the period ended January 31, 1999 26
Consolidated Balance Sheets at January 31, 1999 and 1998 27
Consolidated Statements of Shareholders' Equity for each of the three years in the period ended January 31, 1999 28
Consolidated Statements of Cash Flows for each of the three years in the period ended January 31, 1999 29
Notes to Consolidated Financial Statements, except Note 10 30-37
Not Covered by Report of Independent Auditors:
Note 10 - Quarterly Financial Data (Unaudited) 38
All schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements, including the notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: April 15, 1999 /s/David D. Glass David D. Glass President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
DATE: April 15, 1999 ____________________ S. Robson Walton Chairman of the Board
DATE: April 15, 1999 /s/David D. Glass David D. Glass President, Chief Executive Officer and Director
DATE: April 15, 1999 /s/Donald G. Soderquist Donald G. Soderquist Senior Vice Chairman of the Board and Director
DATE: April 15, 1999 /s/John B. Menzer John B. Menzer Executive Vice President and Chief Financial Officer (Principal Financial Officer)
DATE: April 15, 1999 /s/James A. Walker, Jr. James A. Walker, Jr. Senior Vice President and Controller (Principal Accounting Officer)
Date: April 15, 1999 /s/Jeronimo Arango Jeronimo Arango Founder of Cifra S.A. de C.V. and Director of Wal-Mart Stores, Inc.
DATE: April 15, 1999 /s/John A. Cooper, Jr. John A. Cooper, Jr. Director
DATE: April 15, 1999 ____________________ Stephen Friedman Director
DATE: April 15, 1999 ____________________ Stanley C. Gault Director
DATE: April 15, 1999 /s/Roland A. Hernandez Roland A. Hernandez Director
DATE: April 15, 1999 ______________________ Frederick S. Humphries Director
DATE: April 15, 1999 /s/E. Stanley Kroenke E. Stanley Kroenke Director
DATE: April 15, 1999 /s/Elizabeth A. Sanders Elizabeth A. Sanders Director
DATE: April 15, 1999 /s/Jack C. Shewmaker Jack C. Shewmaker Director
DATE: April 15, 1999 ____________________ Paula Stern Director
DATE: April 15, 1999 /s/Jose H. Villarreal Jose H. Villarreal Director
DATE: April 15, 1999 /s/John T. Walton John T. Walton Director