Walmart 1999 Annual Report Download

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1999 ANNUAL REPORT
A NEW KIND OF WAL-MART HELPS MAKE HISTORY
How do you best serve the
customer? By knowing what
the customer wants! That’s where
Wal-Mart’s leading-edge information
systems come in.
An inside look
at Wal-Mart
The People Greeter’s smile
is just the beginning of our
customer focus.
WHO’S NO.1?
THE CUSTOMER!
WHO’S NO.1?
THE CUSTOMER!
Fine-tuned
Merchandising
Paul Harvey
interview:

Table of contents

  • Page 1
    ... HELPS MAKE HISTORY 1 9 9 9 A N N U A L R E P O R T WHO'S NO.1? THE CUSTOMER! The People Greeter's smile is just the beginning of our customer focus. Fine-tuned Merchandising How do you best serve the customer? By knowing what the customer wants! That's where Wal-Mart's leading-edge information...

  • Page 2
    ... the nearest Wal-Mart?" So along with our storecount chart, our annual report also includes a map showing which states have the most and fewest people per Wal-Mart. FINANCIALS 18 20 26 39 2 11-year financial summary Management's discussion and analysis Financial statements Corporate information...

  • Page 3
    ...the company whose photos welcome you to each story. Then keep your eyes open for examples of Wal-Mart's 900,000 merchants and the ways we use today's technologies to ensure that at Wal-Mart, the customer is Number One - Always. FINANCIAL FINANCIAL HIGHLIGHTS HIGHLIGHTS NET SALES 95 $82.5 RETURN ON...

  • Page 4
    ... last year. More importantly, Earnings Per Share increased by 27 percent, Return on Assets improved to 9.6 percent and the company paid dividends of almost $700 million to shareholders. Now we all know and appreciate the associates in our local Wal-Mart, but let's take this opportunity to talk to...

  • Page 5
    ... world. Over the next five years the international division should represent up to one-third of total sales and earnings growth of the company. In addition to being the largest retailer in Canada and Mexico, we now have stores in Asia, Europe and South America and will continue to grow those markets...

  • Page 6
    ... our International business. Three years ago we asked Tom Coughlin, who had run our SAM'S business and was then running our Specialty Division, to head up our Wal-Mart store operations. At the same time Lee Scott moved from Logistics to lead our Merchandising team. These are three examples of this...

  • Page 7
    ...of the Year. So a group from the board, pictured here, toured the center. A The Wal-Mart Board of Directors: (Main photo, left to right) Elizabeth A. Sanders, President, The Sanders Partnership; E. Stanley Kroenke, Chairman, The Kroenke Group; David D. Glass, President and CEO, Wal-Mart Stores Inc...

  • Page 8
    ... in the world of information technology, that secret has been out for a long time. In fact, the Wal-Mart emphasis on information stems from Sam Walton, who used to say, "People think we got big by putting big stores in small towns. Really we got big by replacing inventory with information." L ook...

  • Page 9
    ... of new President Tom Grimm, a 25-year retail veteran who was previously president and CEO of another membership warehouse store company, SAM'S Club is trying many ideas to build excitement - and sales - in the stores. For example: At a handful of test locations, SAM'S Club has placed a gas station...

  • Page 10
    ... how best to meet them. Other new additions to SAM'S Club's departments that are being tested include pharmacy, optical, one-hour photo and copy centers. In each case, the new departments are providing us with invaluable, realworld information on how to improve their operations and better serve our...

  • Page 11
    ... it, that leaves most of the world as potential Wal-Mart customers." The International division's sales rose to more than $12 billion in fiscal 1999 - an increase of 63 percent over the previous year's sales of $7.5 billion. And International's operating profit for the year was $551 million, for an...

  • Page 12
    ...SERVING OUR CUSTOMERS. A true community store: Assistant Manager Javier Rincon (left) and associates Bennie Rubin and Evita Bimbeia (above) help bring the Wal-Mart Way to Panorama City in central-city Los Angeles. The General Motors plant closed in 1992. More businesses closed after the Northridge...

  • Page 13
    ... in Panorama City, the signs read "Siempre precios bajos. Siempre." Even before the new store opened, associates found a way to plant Wal-Mart firmly in the heart of the community. They teamed up with the Los Angeles Police Department for a pre-grand opening celebration that raised money for LAPD...

  • Page 14
    ... the world, go the extra mile to help their communities, and their customers, in their hours of need. Most of all, perhaps, this is the story of 3-year-old Luke Harbur (pictured above right), an active, happy child who is alive today thanks in large part to a miracle - the Children's Miracle Network...

  • Page 15
    ... happy, the old. They're the Champion Outlaws, a cheerleading team that loves to perform at Wal-Mart when they're not competing for national titles or performing at San Diego Chargers games. We could fill this entire report with more examples - cookie-stacking contests, clowns painting children...

  • Page 16
    S TAT E P O P U L AT I O N P E R WA L - M A R T S T O R E Canada United States Germany China Korea Mexico Puerto Rico Brazil Argentina 16

  • Page 17
    ...58 Iowa 42 Kansas 38 Kentucky 44 Louisiana 52 Maine 20 Maryland 23 Massachusetts 31 Michigan 52 Minnesota 35 Mississippi 38 Missouri 72 Montana 9 Nebraska 13 Nevada 13 New Hampshire 18 New Jersey 18 New Mexico 10 New York 52 North Carolina 75 North Dakota 8 Ohio 74 Oklahoma 54 Oregon 23 Pennsylvania...

  • Page 18
    ... Financial Ratios Current ratio Inventories/working capital Return on assets** Return on shareholders' equity*** Other Year-End Data Number of domestic Wal-Mart stores Number of domestic Supercenters Number of domestic SAM'S Club units International units Number of Associates Number of Shareholders...

  • Page 19
    1996 $ 93,627 13% 4% 1,146 74,505 15,021 692 196 1,606 (13) 2,740 0.60 0.10 1995 $ 82,494 22% 7% 914 65,586 12,858 520 186 1,581 4 2,681 0.59 0.09 1994 $ 67,344 21% 6% 645 53,444 10,333 331 186 1,358 (4) 2,333 0.51 0.07 1993 $ 55,484 26% 11% 497 44,175 8,321 143 180 1,171 4 1,995 0.44 0.05 1992 ...

  • Page 20
    ... to our expansion program and comparative store sales increases of 6%. Expansion for fiscal 1998 included the opening of 37 Wal-Mart stores, 97 Supercenters (including the conversion of 75 existing Wal-Mart stores), eight SAM'S Clubs, and the opening or acquisition of 289 international units...

  • Page 21
    ...500 5.9% 5 10 Interest Rate Derivative Financial Instruments Related to Real Estate Investment Trust Obligation Interest rate swap Pay variable/receive fixed Average rate paid - 30-day U.S. commercial paper non-financial Fixed rate received - U.S.$ rate Interest rate swap Pay variable/receive fixed...

  • Page 22
    ... Germany. The following tables provide information about the Company's derivative financial instruments, including foreign currency forward exchange agreements and currency swap agreements by functional currency and presents the information in United States dollar equivalents. For foreign currency...

  • Page 23
    ... 2002 2003 2004 Thereafter Total Fair value 1/31/99 Forward Contracts to Sell Foreign Currencies for U.S.$ Forward Contracts to Sell Foreign Currencies for Hong Kong $ Foreign Currency Exchange Rate Sensitivity As of January 31, 1998 Principal (Notional) Amount by Expected Maturity (Amounts in...

  • Page 24
    ... of the increase in the International segment's operating profit. Borrowing Information The Company had committed lines of credit with 78 banks, aggregating $1,872 million and informal lines of credit with various other banks, totaling an additional $1,950 million, which were used to support short...

  • Page 25
    ... both information technology, such as point-of-sale computer systems, as well as non-information technology equipment, such as warehouse conveyor systems. All internal coding conversions are complete. Some third-party applications representing less than 1% of the total application inventory remain...

  • Page 26
    ...D AT E D S TAT E M E N T S O F I N C O M E (Amounts in millions except per share data) Fiscal years ended January 31, Revenues: Net sales Other income-net Costs and Expenses: Cost of sales Operating, selling and general and administrative expenses Interest Costs: Debt Capital leases 529 268 131,885...

  • Page 27
    ...within one year Total Current Liabilities Long-Term Debt Long-Term Obligations Under Capital Leases Deferred Income Taxes and Other Minority Interest Shareholders' Equity Preferred stock ($.10 par value; 100 shares authorized, none issued) Common stock ($.10 par value; 5,500 shares authorized, 4,448...

  • Page 28
    ... STATEMENTS OF SHAREHOLDERS' EQUITY (Amounts in millions except per share data) Balance - January 31, 1996 Comprehensive Income Net income Other accumulated comprehensive income Foreign currency translation adjustment Total Comprehensive income Cash dividends ($.11 per share) Purchase of Company...

  • Page 29
    ...from sale of photo finishing plants Acquisitions Other investing activities Net cash used in investing activities Cash flows from financing activities Decrease in commercial paper Proceeds from issuance of long-term debt Net proceeds from formation of Real Estate Investment Trust Purchase of Company...

  • Page 30
    ...consolidated statements of shareholders' equity. Inventories The Company uses the retail last in first out (LIFO) method for domestic Wal-Mart discount stores and Supercenters and cost LIFO for SAM'S Clubs. International inventories are on other cost methods. Inventories are not in excess of market...

  • Page 31
    ...assets and liabilities of most foreign subsidiaries are translated at current exchange rates and any related translation adjustments 2 Defined Contribution Plans The Company maintains profit sharing plans under which most fulltime and many part-time associates become participants following one year...

  • Page 32
    ... long-term leases. The Company has entered into sale/leaseback transactions involving buildings while retaining title to the underlying land. 4 Financial Instruments Interest rate instruments The Company enters into interest rate swaps to minimize the risks and costs associated with its financing...

  • Page 33
    ... U.S. commercial paper non-financial 30-day U.S. commercial paper non-financial plus .134% 3-month German DEM LIBOR minus .0676% 6-month U.S. LIBOR $17 - (1) 20 Foreign exchange instruments The Company has entered into two foreign currency swap agreements to hedge its net investment in Germany. In...

  • Page 34
    ... new assets and liabilities acquired are recorded at fair value. The goodwill is being amortized over 40 years. The results of operations since the effective date of the acquisition have been included in the Company's results. A merger of the Mexican joint venture companies owned by Wal-Mart Stores...

  • Page 35
    ... if the Company had accounted for its associate stock option plans under the fair value method of that statement. The fair value of these options was estimated at the date of the grant using the BlackScholes option pricing model with the following assumption ranges: risk-free interest rates between...

  • Page 36
    ... all of the store leases have renewal options for additional terms from five to 25 years at comparable rentals. The Company has entered into lease commitments for land and buildings for 47 future locations. These lease commitments with real estate developers provide for minimum rentals for 20 to...

  • Page 37
    ...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 Company's operations in Fiscal year ended January 31,1999...

  • Page 38
    ... based upon currently available information and management's view of current conditions and circumstances. Management has developed and maintains a system of accounting and controls, including an extensive internal audit program, designed to provide reasonable assurance that the Company's assets are...

  • Page 39
    ...10-K* Quarterly Financial Information* Current Press Releases* Diversity Programs Report Copy of Proxy Statement * These reports are also available via fax and e-mail. Listings- Stock Symbol: WMT New York Stock Exchange Pacific Stock Exchange Annual Meeting: Our Annual Meeting of Shareholders will...

  • Page 40
    A world of opportunity "Just think of all the people in the world who haven't had the opportunity to shop at Wal-Mart." David Glass President and CEO, Wal-Mart