Walmart 2002 Annual Report Download

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Annual Report
2002

Table of contents

  • Page 1
    Annual Report 2002

  • Page 2
    ... A Letter from Lee Scott The Company We Keep End-of-Year Store Count We're Merchants First What's in Store for Our Global Community United by Compassion New SAM'S CLUB Format Wal-Mart in the News 2 4 5 6 8 10 12 13 14 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Financials Return On Assets...

  • Page 3
    ...H. Lee Scott President & CEO David D. Glass Chairman of the Executive Committee of the Board Thomas M. Coughlin Executive Vice President; President & CEO, Wal-Mart Stores Division Michael Duke Executive Vice President, Administration Thomas Grimm Executive Vice President; President & CEO, SAM'S CLUB...

  • Page 4
    ... to be the best as measured by our stakeholders, who are our customers, our Associates, our suppliers, our communities and importantly, our shareholders. Our stated goal is for earnings to grow at a rate equal to or better than sales. We did not achieve that goal in the last fiscal year, but we did...

  • Page 5
    ... low prices" by Wal-Mart. The study says, "Today's economic reality is that high-tech decisions made in Arkansas play a larger role in boosting America's productivity than decisions made in Silicon Valley or Seattle." The New York Times said in an article citing our shareholders and Associates...

  • Page 6
    ... at Wal-Mart and SAM'S CLUBS managed to achieve two very impressive feats: increasing revenue by 13.8 percent over the previous year in the face of economic adversity, and constructing almost 200 new stores. How did Wal-Mart Associates do it? They simply provided amazing customer service, kept costs...

  • Page 7
    ...0 0 0 0 0 0 0 0 0 Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming U.S.Totals 11 12 18 27 9 51 53 8 72...

  • Page 8
    ... microwave supplier. Though the new microwave oven costs half as much, it has the same quality as the old one, and all the same features. Global sourcing also helped the Company negotiate prices for fans and air conditioners, allowing its ASDA stores in the United Kingdom to cut prices on the items...

  • Page 9
    ...Super Item" sign bearing the Associate's photograph. Five years ago, Tom Coughlin, President of the Wal-Mart Stores Division, launched one of the most successful VPI programs ever when he chose Duck Tapeâ„¢ as his item and created a comprehensive system of promotions to help sell it. Store managers...

  • Page 10
    ...over the previous year. We added 107 new stores in multiple retail formats throughout Brazil, Canada, China, Germany, Mexico, Puerto Rico, South Korea and the United Kingdom. We also expanded our specialty operations, including jewelry, one-hour photo and optical labs. "Every day low prices, quality...

  • Page 11
    .... Our Associates represent the faces and perspectives of their local communities, of our customers, and of long-term Wal-Mart leadership. They provide unique insight into the history and culture of Wal-Mart, as well as what it takes to be the best in each community where we operate our stores. The...

  • Page 12
    ... like Children's Miracle Network, United Wal-Mart's Good.Works. community involvement program is based on the philosophy of operating globally and giving back locally. We rely on our Associates to know which organizations are most important to their hometowns, and we Way, community matching grants...

  • Page 13
    ...Community Involvement 2002 Company's 300,000 Associates outside the United States enrich their communities. Last year, our Company, our Associates and customers in eight countries and Puerto Rico raised and contributed nearly $15 million to their communities. In Canada, for example, Wal-Mart stores...

  • Page 14
    ...now allows members to see 37 different windows of merchandise. Other features of the new format include new fresh goods like rotisserie chicken, steamed shrimp and bagels, fresh floral, an optical department, a one-hour photo lab and a gas station. As the new SAM'S CLUB slogan says, "It's a Big Deal...

  • Page 15
    ... large stores and discount pricing, increased efficiency in sales and forced other companies to follow best practices. Fortune Lists Wal-Mart as Great Place to Work Wal-Mart Associates have once again ranked their Company as one of the "100 best to work for" in Fortune magazine's prestigious annual...

  • Page 16
    ... equity Financial Ratios Current ratio Inventories/working capital Return on assets* Return on shareholders' equity** Other Year-End Data Number of U.S. Wal-Mart stores Number of U.S. Supercenters Number of U.S. SAM'S CLUBS Number of U.S. Neighborhood Markets International units Number of Associates...

  • Page 17
    ... accounting method for SAM'S CLUB membership revenue recognition as the effects of this change would not have a material impact on this summary. Therefore, pro forma information as if the accounting change had been in effect for all years presented has not been provided. The acquisition of the ASDA...

  • Page 18
    ... expansion programs, and a domestic comparative store sales increase of 5%. The Wal-Mart Stores and SAM'S CLUB segments include domestic units only. Wal-Mart stores and SAM'S CLUBS located outside the United States are included in the International segment. Costs and Expenses For fiscal 2002...

  • Page 19
    ... operations in Argentina, Canada, Germany, South Korea, Puerto Rico and the United Kingdom; operations through joint ventures in China; and operations through majority-owned subsidiaries in Brazil and Mexico. International sales accounted for approximately 16.3% of total Company sales in fiscal 2002...

  • Page 20
    ... more significant accounting policies and how they are applied in preparation of the financial statements. Inventories We use the retail last-in, first-out (LIFO) inventory accounting method for the Wal-Mart Stores segment, cost LIFO for the SAM'S CLUB segment and other cost methods, including the...

  • Page 21
    ... CLUB membership fee revenue over the 12-month term of the membership. Customer purchases of Wal-Mart/SAM'S CLUB shopping cards are not recognized until the card is redeemed and the customer purchases merchandise using the shopping card. Defective merchandise returned by customers is either returned...

  • Page 22
    ... statement previously filed with the United States Securities and Exchange Commission. Expansion In the United States, we plan to open approximately 50 new Wal-Mart stores and approximately 180 to 185 new Supercenters in fiscal 2003. Relocations or expansions of existing discount stores will account...

  • Page 23
    ...6.8% Great Britain pound denominated Long-term debt including current portion Fixed rate debt 11 236 Average interest rate 8.4% 8.4% Interest Rate Derivative Financial Instruments Related to Debt Interest rate swap - Pay variable/receive fixed 500 Average rate paid - Rate A Fixed rate received - USD...

  • Page 24
    ... income statement. We routinely enter into forward currency exchange contracts in the regular course of business to manage our exposure against foreign currency fluctuations on cross-border purchases of inventory. These contracts are generally for durations of six months or less. At January 31, 2002...

  • Page 25
    ... Day Low Price Strategy and because rebates and coupons accepted by the Company's stores are offered by the product supplier and not by the Company. As a result, the adoption of this guidance is not expected to have a significant impact on the Company's financial position or results of operations...

  • Page 26
    Consolidated Statements of Income (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 2002 2001 2000 $ 217,799 2,...

  • Page 27
    Consolidated Balance Sheets (Amounts in millions) January 31, Assets Current Assets Cash and cash equivalents Receivables Inventories At replacement cost Less LIFO reserve Inventories at LIFO cost Prepaid expenses and other Total Current Assets Property, Plant and Equipment, at Cost Land Building ...

  • Page 28
    Consolidated Statements of Shareholders' Equity Number of shares 4,448 Common stock $ ...Foreign currency translation adjustment Hedge accounting adjustment Total Comprehensive Income Cash dividends ($.28 per share) Purchase of Company stock Stock options exercised and other Balance - January 31, 2002...

  • Page 29
    ...of year Supplemental disclosure of cash flow information Income tax paid Interest paid Capital lease obligations incurred Property, plant and equipment acquired with debt ASDA acquisition cost satisfied with debt ASDA acquisition cost satisfied with Company stock See accompanying notes. 2002 $ 6,671...

  • Page 30
    ...in foreign currencies and to minimize the risk and cost associated with financial and global operating activities. Generally, contract terms of a hedge instrument closely mirror those of the item it hedges providing a high degree of risk reduction and correlation. Contracts that are highly effective...

  • Page 31
    ... contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. Accounting principle change In December 1999, the Securities and Exchange Commission...

  • Page 32
    ... Day Low Price strategy and because rebates and coupons accepted by the Company's stores are offered by the product's supplier and not by the Company. As a result, the adoption of this guidance is not expected to have a significant impact on the Company's financial position or results of operations...

  • Page 33
    ... as a current liability in the January 31, 2002 consolidated balance sheet. Long-term debt is unsecured except for $161 million, which is collateralized by property with an aggregate carrying value of approximately $413 million. Annual maturities of long-term debt during the next five years are (in...

  • Page 34
    .... These letters of credit were issued primarily for the purchase of inventory. In July 2001, the Company filed a shelf registration statement with the United States Securities and Exchange Commission under which it could issue up to a total of $6 billion in debt securities. During fiscal 2002 the...

  • Page 35
    ... - 57 Receive fixed rate, pay fixed rate cross-currency interest rate swaps designated as cash flow hedge (Foreign exchange notional amount: CAD 503 at 1/31/2002). 325 - 8 - $ 5,367 $ 8,410 $ 372 $ 1,110 Derivative financial instruments not designated for hedging: Foreign currency exchange forward...

  • Page 36
    ... Income Comprehensive income is net income plus certain other items that are recorded directly to shareholders' equity. The only items currently applicable to the Company are foreign currency translation adjustments and hedge accounting adjustments. The following table gives further detail regarding...

  • Page 37
    ... be subject to annual impairment tests under FASB Standard 142. See Note 1 of Notes to Consolidated Financial Statements for additional information on New Accounting Pronouncements. In December 1999, the Company acquired most of the minority interest of its operation in South Korea from its joint...

  • Page 38
    ...Company had accounted for its employee 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 Black-Scholes option pricing model with the following assumption ranges: risk-free interest rates between 4.4% and...

  • Page 39
    ..., either alone or in the aggregate, will have a material adverse effect on the Company's financial position or results of its operations. The Company and certain of its subsidiaries have long-term leases for stores and equipment. Rentals (including, for certain leases, amounts applicable to taxes...

  • Page 40
    ... 31, 2002 and 2001, ASDA long-lived assets, including primarily net plant, property and equipment and net goodwill, totaled $12.4 billion in each year. All of the real estate in the United States is included in the "Other" category and is leased to Wal-Mart Stores and SAM'S CLUB. The revenues in the...

  • Page 41
    11 Quarterly Financial Data (Unaudited) Amounts in millions (except per share information) 2002 Net sales Cost of sales Net income Net income per common share, basic and diluted 2001 Net sales Cost of sales Net income Net income per common share, basic and diluted April 30, $ 48,052 37,850 1,380 $ ...

  • Page 42
    ...three years in the period ended January 31, 2002, in conformity with accounting principles generally accepted in the United States. Tulsa, Oklahoma March 22, 2002 Report of Management Management of Wal-Mart Stores Inc. is responsible for the integrity and objectivity of the financial statements and...

  • Page 43
    ...10-Q* Current Press Releases* Current Sales and Earnings Releases* Copy of Proxy Statement* Diversity Programs Report Supplier Standards Report * These reports are also available via fax or on the corporate website. Listings - Stock Symbol: WMT New York Stock Exchange Pacific Stock Exchange Annual...

  • Page 44
    The "Teacher of the Year" program has recognized nearly 11,000 teachers and contributed millions of dollars in educational grants to schools since it began six years ago. Last year, grants went to 3,260 schools all across the country, and one teacher - Mark Boen, a third-grade teacher in Fergus ...