沃爾瑪Walmart Inc (WMT) 1999年年度報告「NYSE」.pdf

《沃爾瑪Walmart Inc (WMT) 1999年年度報告「NYSE」.pdf》由會員分享，可在線閱讀，更多相關《沃爾瑪Walmart Inc (WMT) 1999年年度報告「NYSE」.pdf（40頁珍藏版）》請在三個皮匠報告上搜索。

1、1 9 9 9 A N N U A L R E P O R TA NEW KIND OF WAL-MART HELPS MAKE HISTORYHow do you best serve the customer?By knowing what the customer wants!Thats where Wal-Marts leading-edge informationsystems come in.An inside look at Wal-MartThe People Greeters smileis just the beginning of ourcustomer focus.WH

2、OS NO.1?THE CUSTOMER!WHOS NO.1?THE CUSTOMER!Fine-tunedMerchandisingPaul Harvey interview:Steady as she grows In a world of dramatic ups and downs,Wal-Marts growthstrategy keeps producing returns for shareholders.Board of DirectorsMeet some of the business leaders from across the UnitedStates and aro

3、und the world who guide Wal-Marts growth.Fine-tuned merchandisingInformation is the key to serving the customer,and Wal-Martkeeps looking for new ways to leverage our understanding ofcustomers,markets and merchandise into shareholder value.Everybodyshometown store“The Wal-Mart Way”has truly gone glo

4、bal,as customersworldwide come to know our service,selection and Every DayLow Prices.The ultimate learning organizationThe new store in Panorama City may not look like an ordi-nary Wal-Mart,but then Wal-Mart has never been tied downto old ways of serving our customers.Its not a market,its our home“O

5、ur commitment has always been to our customers and ourcommunities,”says Cynthia Lin,and she should know.As aWal-Mart Community Affairs Director,she works to makethat commitment a reality.Good neighbors to a nationWal-Mart associates,working one-by-one on projects plannedat their own stores,add up to

6、 the largest charitable fund-rais-ing force in the United States.Now showing at Wal-Mart!Borrowing from the entertainment industry,Wal-Mart findsnew ways to make shopping fun.Fiscal 1999 end-of-year store countsThe information our customers seek most often is simply,“Wheres the nearest Wal-Mart?”So

7、along with our store-count chart,our annual report also includes a map showingwhich states have the most and fewest people per Wal-Mart.11year financial summaryManagements discussion and analysisFinancial statementsCorporate information2You never can tell whatyoull see at a Wal-Mart maybe even the n

8、ations topteam of 10-to 14-year-oldcheerleaders,the ChampionOutlaws from San Diego(left).The name of the gameis“retailtainment”;theidea is to make shopping atWal-Mart fun.Page 15Table of contentsINTERVIEW47811121314153920261816WHOS NO.1?THE CUSTOMER!FINANCIALSTheres a method in ourmerchandising:Indu

9、stry-leading technology notonly helps us stock theitems customers want(left),but also helps themfind items they may need.Page 8A multi-story Wal-Mart?Thatsjust the first surprise in our newcommunity store in PanoramaCity(below).Page 12Welcome to Wal-Marts 1999 Annual Report!Just as they do in our st

10、ores,our PeopleGreeters welcome you to each story.Our featuredgreeters:Cover and Page 14 Chester Grandstaff;Page 2(above)Frances M.Judd;Page 8 Carrol M.Martin;Page9 Pat S.Hines;Page 10 Shelly L.Bagby;Page 12 JavierRincon(Assistant Manager);and Page 16 EricTinderhott.Three for the price of one:Our 19

11、99Annual Report features an interview withChairman Rob Walton,President andCEO David Glass and Senior ViceChairman Don Soderquist(right).PaulHarvey,prominent broadcaster andshareholder,conducts this interview.Page 4D I R E C T O R SJeronimo ArangoJohn A.Cooper,Jr.Stephen FriedmanStanley C.GaultDavid

12、 D.GlassRoland A.HernandezDr.Frederick S.HumphriesE.Stanley KroenkeElizabeth A.SandersJack C.ShewmakerDonald G.SoderquistDr.Paula SternJose H.VillarrealJohn T.WaltonS.Robson WaltonC H A I R M A NS.Robson WaltonO F T H E B O A R DP R E S I D E N T AND C E ODavid D.GlassS E N I O R V I C EDonald G.Sod

13、erquistC H A I R M A NV I C E C H A I R M A N,C O OH.Lee Scott,Jr.E X E C U T I V E V P,Paul R.CarterP R E S I D E N T-WA L-M A RT R E A LT YE X E C U T I V E V P-Bob ConnollyM E R C H A N D I S I N GE X E C U T I V E V P,Thomas M.CoughlinP R E S I D E N T A N D C E OWA L-M A RT S T O R E SD I V I S

14、 I O NE X E C U T I V E V P-David DibleS P E C I A LT Y D I V I S I O NE X E C U T I V E V P,Thomas GrimmP R E S I D E N T A N D C E OS A MS C L U B D I V I S I O NE X E C U T I V E V P,Bob L.MartinP R E S I D E N T A N D C E OINTERNATIONAL DIVISIONE X E C U T I V E V P,C F OJohn B.MenzerE X E C U T

15、 I V E V P-Nick WhiteF O O D D I V I S I O NS E N I O R V P,S E C R E TA RYRobert K.RhoadsA N D G E N E R A L C O U N S E LS E N I O R V P-F I N A N C EJ.J.FitzsimmonsA N D T R E A S U R E R1 9 9 9 A N N U A L R E P O R T3From our most far-flung facilities to the Saturday morning meetings at the Hom

16、eOffice in Bentonville,seemingly everything that happens at Wal-Mart is accompanied by a rousing rendition of the Wal-Mart cheer.But where a school oranother company may cheer that theyre“Number One,”at Wal-Mart we drive ourkey principle home by ending our cheer with:“Whos Number One?The Customer!”A

17、nd that brings us to the theme for our 1999 Annual Report:Whats the best way to serve the customer?Know what the customer wants!Did you know that Wal-Mart has one of the largest databases in the world?Our storehouse of information is used to look for new ways to give customers what theywant better,f

18、aster and,of course,at Every Day Low Prices.So as you read this annual report,watch first for the People Greeters from throughout the company whose photos welcome you to each story.Then keep youreyes open for examples of Wal-Marts 900,000 merchants and the ways we use todaystechnologies to ensure th

19、at at Wal-Mart,the customer is Number One Always.ABOUT THE 1999 ANNUAL REPORTFINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTSNET SALES95$82.596$93.697$104.998$118.099$137.66090120150EARNINGS PER SHARE95$.5996$.6097$.6798$.7899$.990.40.60.81.0RETURN ON ASSETS959.0%967.8%977.9%988.5%999.6%RETURN ON SHAREHOLDE

20、RS EQUITY9522.8%9619.9%9719.2%9819.8%9922.4%67891018202224al-Mart has just completedits best year ever,with salesof over$137 billion in fiscal1999,up 17%,which is almost$20 billionmore than last year.More importantly,Earnings Per Share increased by 27 per-cent,Return on Assets improved to 9.6percent

21、 and the company paid dividendsof almost$700 million to shareholders.Now we all know and appreciate theassociates in our local Wal-Mart,butlets take this opportunity to talk to theleaders of Wal-Mart and ask them whythis group of people is so successfuland what challenges lie ahead thisnext year.As

22、shareholders you knowthe results!Now,the rest of the story.Wal-Mart had a record year in fis-cal 1999.How do you explain thetremendous performance and howwill you continue to deliver similarshareholder results in the future?DAVID GLASS:This year things cametogether about as well as you couldexpect.T

23、he economic environment wasgood,our associates did a great job ofgetting the right merchandise in thestores,our stores executed their plansvery well and our customers continuedto exhibit their confidence in us byspending their hard-earned dollars inour stores and clubs.Although we did have the best

24、year inour history,we look at many things wecould have done better and just howmuch in the way of sales and profits weleft on the table.Every time we are outof stock on an item that a customerwants,every time we spend more thanwe need to build a store,every time wefail to meet a customers expectatio

25、nsand they leave unhappy each of theseare examples of where we can improve.How do we continue to deliver futureresults?One store at a time,one cus-tomer at a time.You have commented that this yearsresults exceeded your own expecta-tions.What were the positive factorsthat provided the upside surprise

26、s foryour company?ROB WALTON:Clearly we were a bene-ficiary of a strong U.S.economy,lowinflationary environment,continuingimprovements on the food side of ourbusiness and a superb performance bysome of our international markets likeCanada and Puerto Rico.The singlebiggest positive had to be the dili

27、genceand level of execution on the part of ourassociates and partners around theglobe.Every division exceeded itsbusiness plan and I believe we workedtogether as a team better than ever inthe past.If the economy slows down,what willbe the impact on Wal-Mart?DON SODERQUIST:If the economy doestighten,

28、we must make sure that we takecare of the customer and pick up marketshare.We recognize that todays level ofconsumer optimism is not sustainableforever,but we dont see any currentsigns that things are slowing.Traditionally we have fared better thanour competition during downturns asthe consumer focu

29、s shifts toward value,and that is exactly what our Every DayLow Price program is all about.What was the biggest challenge in theyear?Why?WALTON:The biggest challenge was ourcompetition!They continue to get betterand better and it forces us to constantlystrive to improve every aspect of ourbusiness.I

30、n the past we competed with I N T E R V I E W4STEADYWPAUL HARVEY,ONE OF THE MOST RECOGNIZED NAMES AND VOICES INAMERICA AND A WAL-MART SHARE-HOLDER,INTERVIEWS ROB WALTON,CHAIRMAN;DAVID GLASS,PRESIDENTAND CEO;AND DON SODERQUIST,SENIORVICE CHAIRMAN;TO UNDERSTAND WHERETHE COMPANY GOES FROM HERE.STEADYAS

31、 SHE GROWS5the regional chains,then the nationaldiscount chains,and now some of ourbest competition comes from otherretail sectors and for that matter othercontinents.The most exciting part isthat if we learn from competing with thebest in each of these categories,in eachand every market,we have the

32、 opportu-nity to continue to build a world classorganization.SAMS experienced some challengestwo or three years ago.What changedin that business that caused such anoutstanding performance in the lasttwo years and particularly the mostrecent year?SODERQUIST:SAMS Club is a conceptthat was started back

33、 in 1983.Weentered the club business because itwas the retail concept with the lowest-cost method of distributing merchan-dise.Unfortunately,I believe that overthe years the industry and SAMS aswell,has lost some of its merchandisefocus.The SAMS team used the last twoyears or so to reinvigorate the

34、clubs andput some fun back into the operations,and with their new president,TomGrimm,continue to improve the mer-chandise offering.I believe this is obvi-ous by the acceleration in the salesincreases as well as the number of newmembers and the renewal rates of exist-ing members.GLASS:The clubs did a

35、n excellent jobthis year of showing value to the mem-bers.Throughout the year they took thesavings in their expenses and gave themback to the members in the form oflower prices.These efforts also acceler-ated the sales growth and,consequently,the earnings growth for the division.SAMS should be able

36、to continue deliv-ering sales growth as well as opening 10 to 15 new clubs this year.You have just completed your secondacquisition in Germany.What are yourplans for future international growth?WALTON:International has become asignificant piece of the Wal-Mart busi-ness.This year alone the division

37、in itsfifth year of operations generated$12.2billion in revenue and$551 million inoperating profit.In addition to the 74units in Germany we also acquired fourunits in Korea and added another 36units to the countries where we hadexisting operations.We still havetremendous room for growth domesti-call

38、y but also want to offer the Wal-Martshopping experience to customersaround the world.Over the next fiveyears the international division shouldrepresent up to one-third of total salesand earnings growth of the company.Inaddition to being the largest retailer inCanada and Mexico,we now have storesin

39、Asia,Europe and South America andwill continue to grow those markets aswell as look for other areas where wecan build on the Wal-Mart name.How is Wal-Mart dealing with thefinancial turmoil in markets likeBrazil or Asia?WALTON:Fortunately,global companieshave the opportunity to make positivesout of n

40、egatives.In our“portfolio”ofcountries,the difficulties you mentionare balanced by the extremely strongperformance of other operations Canada,Mexico and Puerto Rico,forexample.Slowdowns in these econ-omies offer real estate and acquisitionopportunities.We take a longterm view,and recognize these econ

41、omies willstrengthen again and we look to positionourselves for the future.Wal-Mart has always had a unique cor-porate culture a culture that manysaid could not transcend geographicboundaries.How have you managed totranslate that culture and make itspeak to the amazingly diverse popu-lation youre no

42、w serving?SODERQUIST:Over the years many saidthat we would not be able to serve cus-tomers west of the Mississippi,outsideof the South,in metropolitan areas oroutside of the United States.Frankly,wefind that customers want the samethings.Regardless of where we are,cus-tomers want to be treated well,

43、want tohave a good assortment of products tochoose from and they want that mer-chandise at a great price.The mostamazing fact is that our associatesaround the world embrace and protectthis culture that they have built over thelast 35 years.In January you announced severalchanges in your management t

44、eam.Ibelieve Lee Scott is now the COO andTom Coughlin is the President of theWal-Mart stores division.Why wouldyou make those changes after such agood year?GLASS:Change is inevitable,and one ofthe things that we must do as an organi-zation is to prepare the company for the 6future.We have always mov

45、ed our bestand brightest talent around the organi-zation to build the broad skills and expe-rience that will carry Wal-Mart into thefuture.A few years ago we took our CIO,Bobby Martin,and asked him to run ourInternational business.Three years agowe asked Tom Coughlin,who had runour SAMS business and

46、 was then run-ning our Specialty Division,to head upour Wal-Mart store operations.At thesame time Lee Scott moved fromLogistics to lead our Merchandisingteam.These are three examples of thiscross-pollination that occurs throughoutour company.The senior managementchanges announced in January build on

47、the extensive experiences that theseindividuals have accumulated over theyears and will make our leaders betterprepared to serve our customers andshareholders in the future.There has been a great deal of pressregarding your entry into the foodbusiness with your new NeighborhoodMarket Stores.Is this

48、the growth planof the future?GLASS:First let me talk a little aboutthe food business.Over 10 years ago webegan experimenting with a retail con-cept called a“Hypermarket”or,as ourversion was named,a Supercenter.Thisconcept took the idea of retailing bothgeneral merchandise and food in thesame buildin

49、g and created the conve-nience of“one-stop shopping.”It hasbecome our key domestic growth vehicleand will remain so for at least the next 10years.This year alone we are going toopen approximately 150 Supercenters inthe United States as well as using it as akey vehicle in our international growth.Sup

50、ercenters effectively serve a largetrade area,but we think there may besome business that we are not gettingpurely because they may not be as closeto the customer or convenient for smallshopping trips.Thats where we thinkthere may be an opportunity for thesmall grocery/drug store format wherewe are

51、testing the Neighborhood Market.Wal-Mart associates are renowned forgetting involved with and taking careof their communities.Why is this sucha way of life for the Wal-Mart family?SODERQUIST:You know,Wal-Martstarted in a small town and remainsheadquartered in Bentonville,Arkansas.We understand commu

52、nityvalues.In the last year Wal-Mart associ-ates delivered more than$127 milliondollars to communities and charities intheir home markets.“Home”is reallythe key word here!As associates we notonly represent Wal-Mart,we also repre-sent our local communities and causes,and by helping those around us we

53、 arehelping our friends,neighbors and ourown families.The most amazing thing isthat this mentality permeates the entireorganization from Bentonville to Brazil.Weve mentioned that you paid almost$700 million in shareholder dividendsthis year.What else is the companydoing with the tremendous cash flow

54、that is being generated?Where is thecompany investing the shareholdersmoney?GLASS:In addition to the dividends thatwere returned directly to the sharehold-ers,the company spent$3.7 billionbuilding and remodeling our unitsaround the world,over$800 million onacquisitions in Germany and Korea,andused a

55、pproximately$1.2 billion forshare repurchase.The company bought over$1.2 billiondollars worth of its own stock thisyear.Why are you buying your stockand will this continue in the future?GLASS:In March,the Board of Directorsincreased the share repurchase autho-rization to$2 billion dollars.Over thela

56、st three or four years the company hasrepurchased almost 82,600,000 shares ofthe stock on the open market.Sharerepurchase programs are a tax-efficientmethod of giving back to the sharehold-ers and one that is frequently used whencompanies have very strong cash flowpositions.Share repurchase programs

57、lower the number of outstanding sharesand therefore increase shareholdervalue.However,our first priority for useof our cash is to build new stores andclubs throughout our markets.The sec-ond is acquisitions that make sense forour company and shareholders and thethird is the share repurchase program.

58、Internet companies made the news a lot this year.What is Wal-Marts viewtoward online retailing and how willyou deal with this new breed of competitors?WALTON:Wal-Mart is in the retail busi-ness and for that reason we look at anyform of retailing as a competitor.TheInternet has some very interestinga

59、spects and will definitely serve a grow-ing market as we move into the 21st cen-tury.However,very few,if any,Internetretailers have made a profit,and issueslike the cost of delivery,merchandisereturns and data security all have to beresolved before this business model isvalidated.We have been sellin

60、g from ourWeb site for about two years and we willcontinue to invest in development andlearning as we move forward.When andif the business proves viable,we will bethere with the technology,distribution,assortment and the lowest price.Justlike we are in all of our concepts.Wereally look at this busin

61、ess like anotherWal-Mart store,but without walls.Although Wal-Mart,the company,per-formed superbly,Wal-Mart stock,dideven better and was up 106%for thecalendar year.In fact,I believe it wasthe No.1 stock on the Dow.Will thistype of appreciation continue?GLASS:Last year in this annual report Imade th

62、e comment that,although itwould be nice,I would not expect thestock price to appreciate at that 73 per-cent rate again.Well,I was wrong!Ourassociates and customers saw to that.However,I would again repeat that thestock appreciation that we have enjoyedover the last two years is unusual,evenconsideri

63、ng the tremendous results andeffort on the part of all of our associatesand partners.Unfortunately,we dontdirectly control the stock market!Ourcommitment is to delivering sales andprofits for our shareholders,and allow-ing the market to take care of itself.Over time,our earnings growth will con-trol

64、 our share price.7food distribution center mayseem like an odd place tofind the board of directorsof a$138 billion corpora-tion,but thats the waythings work at Wal-Mart.Our board wanted to make sure theassociates at Distribution Center6059 in Olney,Ill.,knew how much weappreciate their ranking as Fo

65、odDistribution Center of the Year.So agroup from the board,pictured here,toured the center.The Wal-Mart Board of Directors:(Main photo,left to right)Elizabeth A.Sanders,President,The SandersPartnership;E.Stanley Kroenke,Chairman,The Kroenke Group;DavidD.Glass,President and CEO,Wal-MartStores Inc.;Ja

66、ck C.Shewmaker,retiredVice Chairman,Wal-Mart Stores Inc.;and Jeronimo Arango,Founder,Cifra.(Inset photo,left to right)JoseVillarreal,Partner,Akin Gump Strauss Hauer&Feld LLP;John T.Walton,Chairman,True North Partners LLC;Donald G.Soderquist,Senior Vice Chairman,Wal-Mart Stores Inc.;Roland Hernandez,

67、Chairman and CEO,Telemundo GroupInc.;and Dr.Paula Stern,President,TheStern Group Inc.(Not pictured)John A.Cooper Jr.,Chairman,Cooper Communities Inc.;Stephen Friedman,Senior Advisor,Marsh&McLennan Risk Capital Corp.,and Limited Partner,Goldman,Sachs&Co.;Stanley C.Gault,retired Chairman,Goodyear Tire

68、&Rubber Co.;Dr.Frederick S.Humphries,President,Florida A&M University;and S.RobsonWalton,Chairman,Wal-Mart Stores Inc.AB O A R D O F D I R E C T O R S8ook up when you walk into a Wal-Mart;the first face you see will quite likelybe smiling at you,welcoming you to the store.This is our People Greeter

69、a real,live person who wants you to know not only that were glad to seeyou,but were glad to serve you.What you may not see is the vast web of information technology that supports all of ourassociates at Wal-Mart.Our people make the difference,and our retail knowledge andexperience help them ensure t

70、hat you get what you want,as conveniently as possible at,of course,Every Day Low Prices.Few people think of retailing as an industry on the cutting edge of the InformationRevolution,but in the world of information technology,that secret has been out fora long time.In fact,the Wal-Mart emphasis on in

71、formation stems from Sam Walton,who used to say,“People think we got big by putting big stores in small towns.Reallywe got big by replacing inventory with information.”INFORMATION IS THE KEY TO SERVING THE CUSTOMER,AND WAL-MART KEEPS LOOKING FOR NEW WAYS TO LEVERAGE OUR UNDERSTANDING OF CUSTOMERS,MA

72、RKETS AND MERCHANDISE INTO SHAREHOLDER VALUE.FINETUNEDMERCHANDISINGLW H O S N O.1?T H E C U S T O M E R!Here is a look at some of the myriad ofways Wal-Mart uses knowledge to makethe customer number one always.WHOS NUMBER ONE?The first and most important thingabout Wal-Marts information systemsis pr

73、ecisely that the customers needscome first.By using technology toreduce inventory,expenses and shrink-age,we can create lower prices for ourcustomers and better returns for ourshareholders.But how do you quantify what cus-tomers want?At Wal-Mart,informationtechnology gives us that knowledge inthe mo

74、st direct way:by collecting andanalyzing our own internal informationon exactly what any given shoppingcart contains.The popular term is“data-mining,”and Wal-Mart has beendoing it since about 1990.The result,by now,is an enormousdatabase of purchasing informationthat enables us to place the right it

75、emin the right store at the right price.Ourcomputer system receives 8.4 millionupdates every minute on the items thatcustomers take home and the rela-tionship between the items in eachbasket.Our merchants use this data-base to understand what customerswant and to find ways to help themget it into th

76、eir carts with as muchconvenience,and at as low a cost,aspossible.In any given week,for example,a typi-cal Wal-Marts highest-selling itemswill include videotapes of SleepingBeauty,Folgerscoffee,bananas andtoilet paper although the chances arethat no single shopping cart containsall of those items.Th

77、at kind of information has signifi-cant value in and of itself.Consider Wal-Marts ability to keep the shelvesstocked with exactly what customerswant most,but still be able to keepinventories under tight control.Thecomputerized transmission of transac-tions to our systems,which keep trackof what merc

78、handise is needed where,is a key tool as Wal-Mart merchantswork to serve our customers.And thats only the beginning.Forexample,imagine a receipt thatrecords a customers purchase ofClearasil,a Backstreet Boys CD andlip gloss.Its a safe guess that this cus-tomers household has a teenage girl init,and

79、where there are teenagers,there is merchandising to be done.THE CUSTOMER!Not every customer wants to get in andget out of Wal-Mart in a hurry.As onecustomer told a recent gathering of Wal-Mart managers,“Sometimes my wifeand I go to Wal-Mart and just wanderaround we figure it usually costs$15 to$20 a

80、 lap just to get around the store!”But for many customers in these har-ried times,every minute is precious.Wal-Mart finds ways to simplify theirlives,while speeding them to thecheckout perhaps with items theyonly realized they needed when theysaw the stores product placement.Forexample:Consider the

81、common banana socommon,in fact,that the grocery cartsof America contain bananas moreoften than any other single item.Sowhy not make it easy for a shopper toremember the bananas?In Wal-Martgrocery departments,bananas canoften be found not just in the producesection,but in the cereal and dairyaisles t

82、oo.There are some obvious purchasingpatterns among the register receipts offamilies with infants and small chil-dren.Well thought-out product place-ment not only simplifies the shoppingtrip for these customers with babyaisles that include infant clothes andchildrens medicine alongside diapers,baby f

83、ood and formula but at thesame time places higher-margin prod-ucts among the staples.Seasonal merchandising a key Wal-Mart focus offers many opportu-nities for product placement based oncustomer buying patterns.For example,as pre-Halloween displays of costumesgo up,they can be accompanied by aselect

84、ion of flashlights a valuablereminder for busy parents who mightnot have thought to stop by the hard-ware department for that importantpiece of trick-or-treating equip-ment.Customers whobuy suitcases arelikely to be lookingfor other itemsthey might needfor traveling too such as travelalarms and iron

85、s,which now,logically enough,canbe found displayed alongside lug-gage at many Wal-Mart stores.The common thread is simple:Weare here to serve the customer;andcustomers tend to buy from uswhen we make it easy for them.Thatsounds like a simple idea.But first youmust understand the customersneeds.And t

86、hats where informationcomes in.ADDING VALUE TO THE CARDAt our SAMS Club division,as we con-tinue to look for new ways to add valueto our membership card,Wal-Martsfocus on information provides the infra-structure to both manage and refine ournew merchandising concepts.Under the leadership of new Pres

87、identTom Grimm,a 25-year retail veteranwho was previously president and CEOof another membership warehouse storecompany,SAMS Club is trying manyideas to build excitement and sales in the stores.For example:At a handful of testlocations,SAMS Club has placed agas station in the stores parkinglot.With

88、prices that typically runlower than nearby stations,the SAMSClub stations have achieved enormoussales volumes without any outsideadvertising.In the process of implementing the gas station test,SAMS Club and ven-dors developed a laser scanner for thegas pumps that can read the bar codeon the customer

89、s SAMS Club card.This certainly makes customers liveseasier because they dont have to carryan extra card to buy gas.It also regis-ters the gas purchases into our infor-mation database,so we can better910determine our membersneeds,and how best to meetthem.Other new additions toSAMS Clubs departments

90、that arebeing tested include pharmacy,opti-cal,one-hour photo and copy centers.In each case,the new departments areproviding us with invaluable,real-world information on how to improvetheir operations and better serve ourmembers.To add variety and spice to the lives ofour members while taking advant

91、ageof merchandising opportunities,wehave been increasing our emphasis on“road shows,”in which we bringunique,high-end merchandise suchas gourmet desserts,scuba equipment,custom golf sets and many other kindsof items to a club for a limited periodof 10 to 12 days.Each SAMS Club facility hosts from tw

92、oto six road shows a month,and after awhile they begin to add up.Our roadshow team planned and executed 20,000road shows last year,partnering withabout 100 vendors an impressive featof logistical execution in itself andexceeded its sales goal by several million dollars.And speaking of carefully targ

93、etedmerchandising,SAMS Club has alsofocused on regional buying such asstocking Motor City Cinnamon Breadin Detroit-area clubs or finding acrawfish plate for our members inLouisiana.A CULTURE OF CHANGEWal-Mart is not afraid of change.Ourcomputerized merchandising aidswere but a gleam in some program-

94、mers eye only a few years ago,but Wal-Mart committed itself to taking asmuch advantage of new technology aspossible.In the process,we learnedthat information can be leveraged intonew ideas for serving our customers.And at the same time,each new idea isa source of fresh information.For example:At abo

95、ut 40,000 square feet,one of Wal-Marts new NeighborhoodMarkets is less than one-fourth the size ofa Supercenter,and stocks only 20,000 to23,000 different items in a store,com-pared to more than 100,000 items at aSupercenter.The Neighborhood Marketcombines grocery and dry-goods depart-ments with such

96、 convenience-orientedfeatures as a drive-through pharmacy.The Supercenter is a key engine of ourcurrent growth.In the past year,wecelebrated both the 10th anniversaryof the Supercenter and the 500thSupercenter to open.At first,it mayseem strange to open much smallerstores with stock similar to bothD

97、iscount Store and grocery merchan-dise,but the Neighborhood Market doesnot compete with Supercenters itcomplements them.The NeighborhoodMarket aims to fill a niche we may notbe serving today.At the same time,because the firstNeighborhood Markets are test stores,we can use them as merchandising lab-o

98、ratories.Our newest ideas in productplacement,store design and retailtain-ment(please see accompanying story)can be tested while,at the same time,offering a shopping experience aimeddirectly at our customers needs.“Again and again our customers tell usthey expect more convenience thesedays,”said Hen

99、ry Jordan,Director ofOperations for the NeighborhoodMarkets.“A lot of times,customers goto Supercenters and it is convenient,because if you need a wide variety of11items,you have a true one-stop shop-ping experience.“But if you only need a handful of itemsand,say,its Saturday afternoon,ourcustomers

100、can come down to theNeighborhood Market.”CONNECTIVITY COUNTSThe Wal-Mart web of information sys-tems extends far beyond the walls ofany one store.Starting from the basicinformation compiled at the checkoutstand,at the shelves,and gathered byassociates equipped with hand-heldcomputer monitors,Wal-Mar

101、t works tomanage its supplies and inventoriesnot only in the stores,but all the wayback to the original source.Wal-Mart has given suppliers access tosome of our systems,which enablesthem to know exactly what is selling,and to plan their production according-ly.This not only helps us keep invento-rie

102、s under control,but also helps thesupplier deliver the lowest-cost prod-uct to the customer.With sales and in-stock informationtransmitted between Wal-Mart and oursupplier-partners in seconds over theInternet,buyers and suppliers areprivy to the same facts and negotiatebased on a shared understandin

103、g sav-ing a significant amount of time andenergy over more traditional,low-techsystems.Our buyer benefits from thesuppliers product knowledge,whilethe supplier benefits from Wal-Martsexperience in the market.Combine these information systemswith our logistics our hub-and-spokesystem in which distrib

104、ution centersare placed within a days truck run ofthe stores and all the pieces fall intoplace for the ability to respond to theneeds of our customers,before they areeven in the store.In todays retailing world,speed is acrucial competitive advantage.Andwhen it comes to turning informationinto improv

105、ed merchandising and ser-vice to the customer,Wal-Mart is out infront and gaining speed.In the words ofRandy Mott,Senior Vice President andChief Information Officer,“The surestway to predict the future is to invent it.”ost Wal-Mart customers hear a“welcome”when they enter a store well,actu-ally,we w

106、elcome every customer.But more and more often these days,thatwelcome sounds more like Bienvenido!or perhaps Willkommen.Dontworry,it still means“welcome”in Chinese,French,German,Korean,Portuguese or Spanish.Thats because were doing business notonly in the United States,but also in Argentina,Brazil,Ca

107、nada,China,Germany,Mexico,Puerto Ricoand,in our latest international expansion,SouthKorea.And in the process,weve learned that theWal-Mart Way of doing business quality,service andEvery Day Low Prices translates into any language.“Wal-Mart is still very early in the curve,but we alreadyare a proven

108、global brand,”said Bob L.Martin,President and CEO of Wal-Mart International.“The United States has only 4.5 percent ofthe worlds population,so the way we see it,that leaves most of the world as potential Wal-Mart customers.”The International divisions sales rose to more than$12 billion in fiscal 199

109、9 an increaseof 63 percent over the previous years sales of$7.5 billion.And Internationals operatingprofit for the year was$551 million,for an increase of 110 percent from the year before.In fiscal 1999,along with growing our business in such familiar venues as Mexico,Canada and Puerto Rico,Wal-Mart

110、 also took its first steps into South Korea,acquiring amajority interest in four units previously run by the Korea Makro company;acquired the74-unit Interspar hypermarket chain in Germany,approximately quadrupling the size ofour operations there;and announced plans to triple the size of our operatio

111、ns in China.“In the markets we currently serve there are significant expansion opportunities,and in thenew regions we are exploring,there are millions of underserved customers,”Martin said.“But still,despite the size of all these numbers,our future hinges on doing exactly whatweve always done buildi

112、ng our success one store at a time,one customer at a time.”“THE WAL-MART WAY”HAS TRULY GONE GLOBAL,AS CUSTOMERS WORLDWIDE COME TO KNOW OURSERVICE,SELECTION AND EVERY DAY LOW PRICES.MEVERYBODYSHOMETOWN STOREEVERYBODYSHOMETOWN STOREI N T E R N AT I O N A Lbit of good news was longoverdue in Panorama C

113、ity.The General Motors plantclosed in 1992.More busi-nesses closed after theNorthridge earthquake in1994.In 1996 the only anchor tenant inthe Panorama Mall,The Broadwaydepartment store,also closed.And then good news came toPanorama City,a central-city neigh-borhood in Los Angeles SanFernando Valley.

114、It can besummed up in one name:Wal-Mart.Today,instead of deteriorationand declining traffic,bustling crowdsand retail excitement are driven by thenew Wal-Mart store that replaced TheBroadway in the Panorama Mall.“You can see it in the community peo-ple are happy again,”said LouiseMarquez,mall manage

115、r and marketingdirector for Panorama Mall,one of 52malls nationwide owned by TheMacerich Co.“You can see a lot of peoplewith strollers,walking over to the mall.“I have a lot of respect for Wal-Mart,”Marquez said.“They do a lot more forthe community than most anchors.”Store No.2568,which opened May 2

116、0,1998 in Panorama Mall,is a Wal-MartTHE ULTIMATE LEARNING ORGANIZATIONTHE“NEW”STORE IN PANORAMA CITY MAY NOTLOOK LIKE AN ORDINARY WAL-MART,BUT THEN,WAL-MART HAS NEVER BEEN TIED DOWN TOOLD WAYS OF SERVING OUR CUSTOMERS.12AC O M M U N I T Y C O M M I T M E N TA true community store:Assistant Manager

117、Javier Rincon(left)and associates Bennie Rubin and EvitaBimbeia(above)help bring the Wal-Mart Way to Panorama City in central-city Los Angeles.like no other.For starters,it is the firstWal-Mart within the city limits of Los Angeles and the only multi-storyWal-Mart in the United States.To enable cust

118、omers to get from floor tofloor with their shopping carts,the storefeatures“vermaports”German-madedevices that keep carts level in theirown special escalators,running side-by-side with the customer escalators.And in keeping with the demographicsof the community,signs in the storebear such familiar m

119、essages as“Alwayslow prices.Always”except that inPanorama 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 thecommunity.They teamed up with theLos Angeles Police Department for apre-grand opening celeb

120、ration thatraised money for LAPD Jeopardy,a gang prevention program.Betweenthe fund-raiser and a matching grant,Wal-Mart ended up contributing about$34,000 to the LAPD program,alongwith more than$15,000 to other com-munity organizations and causes.And how did Panorama City respond tothe new Wal-Mart

121、?By making it one ofthe most successful Wal-Marts ever!For example:Grand-opening day sales exceeded thestores sales plan by 20 percent;More than 43,000 customers passedthrough the registers in the first week;An average of 9,500 customers havemade purchases every day since thestore opened;and,From al

122、l accounts,other merchants inthe mall and surrounding neighborhoodhave seen increased business,thanks tothe shoppers attracted by Wal-Mart.“It was definitely something new andunique for Wal-Mart,”said AssistantManager Javier Rincon.“In recyclingthe building and coming into the citylimits,we had to g

123、et really involved inthe community.”Also,Rincon added with a grin,“OtherWal-Marts have McDonalds.We haveMis Amigos.”And therein lies another story of howWal-Mart became part of the PanoramaCity community.Mis Amigos(“myfriends”),a Mexican restaurant andsnack bar within the Wal-Mart,hadbeen located in

124、 the mall before Wal-Mart arrived.“Without the anchor,we were strug-gling,”recalled Norma Armstrong,whooperates Mis Amigos.“So many timeswe were selling maybe$70 a day.Idput all my savings into this businessand I couldnt close it.I could only waitand hope for something good to hap-pen.It was awful.“

125、Then one morning,Tom Coughlincame in and ordered chorizo and eggs,”said Armstrong.She didnt know thatCoughlin,now president and CEO ofthe Wal-Mart stores division,was thenthe divisions executive vice presidentand chief operating officer,visiting tolook over the opportunities inPanorama City.Coughlin

126、 and Armstrong fell into con-versation,Armstrong said,“and I toldhim I would like to expand my busi-ness,but business was just so lousy.“He said,How would you like to moveinto Wal-Mart?“I said,Are you for real?He gave mehis card,and the rest is history.“Ive been in this community for 35years,”Armstr

127、ong said.“Ive seen it up,Ive seen it in the hole,and Im here totell you,Wal-Mart saved this community.“Ive gotten involved so much with Wal-Mart since they came here.Its notjust making money for them,theyshare the wealth.They make dreamscome true.”Marquez,the Panorama Mall manager,seconded that moti

128、on.“This community,Los Angeles,theyrenot used to people trying to helpthem,”Marquez said.“This is an eye-opener for the city of Los Angeles,get-ting a big business that cares so muchabout the quality of life.Wal-Martbrings quality,low prices and selection and they open up a lot of areas for people t

129、o succeed.”When Cynthia Lin first arrives in a communitywhere Wal-Mart is planning to place a store,she arrives as a stranger.But when Lins work is done,she and Wal-Mart are no longer strangers in town.After all,Wal-Mart is not a faceless outsider;were your neighbors.When Cynthia Lin comesto town,th

130、ats the message she brings to ournew neighbors,customers and associates.“As large a company as Wal-Mart is,we aretruly a very local presence in every communitywe serve,”said Lin,who is Director ofCommunity Affairs for the West Region of Wal-Mart.“Thats reflected in our associates,vir-tually all of w

131、hom are hired locally,and we workclosely with community groups,governmentagencies and the local business community.“Its wonderful to be able to develop a workingrelationship with the other merchants in town,”Lin said.“Theres a very definite niche that wefill,and very definite niches for other busine

132、ssesin the community.Its a very complementaryrelationship,although we compete at times.“Our commitment has always been to our cus-tomers and our communities,”she said.“ThePanorama City store is a perfect example ofthat commitment in action,with the creationof hundreds of jobs,new sales-tax revenues

133、forthe city and extensive community involvementprograms.And,as always,Wal-Mart is fulfillingan important need in the community for goodproducts at great prices.”13ITS NOT A MARKET,ITS OUR HOME“OUR COMMITMENT HAS ALWAYS BEEN TOOUR CUSTOMERS AND OUR COMMUNITIES,”SAYS CYNTHIA LIN,AND SHE SHOULDKNOW.AS

134、A WAL-MART COMMUNITYAFFAIRS DIRECTOR,SHE WORKS TO MAKETHAT COMMITMENT A REALITY.ead this story with one eye onthe big picture more than$131 million in donations tothe Childrens MiracleNetwork(CMN)over 11 years,more than$127 million intotal community contributions in fiscal1999 alone,and on and on.Bu

135、t from another viewpoint,this is asmall story the story of individualWal-Mart associates who,over andover,across America and around theworld,go the extra mile to help theircommunities,and their customers,intheir hours of need.Most of all,perhaps,this is the story of3-year-old Luke Harbur(picturedabo

136、ve right),an active,happy childwho is alive today thanks in large partto a miracle the Childrens MiracleNetwork,that is.Luke was only six weeks old when hewas diagnosed with Alagille Syndrome,a rare disease that can lead to liverfailure.At 11 months he underwentliver transplant surgery,performed atC

137、hildrens Mercy Hospital in KansasCity,in partnership with the trans-plant program at the University ofKansas Medical Center.Today,at 3 going on 4,Luke will needregular treatment for the rest of hislife,but his prognosis is good and tothe outside eye,he seems like what heis an active,happy toddler.Th

138、at would have been quite enough forLukes parents,Kim and Nate Harburof Overland Park,Kan.,except that theprocess of getting and waiting for Lukes liver transplant sensitized themto the importance of organ donations.And theyre doing something about it,through the non-profit Gift of LifeFoundation,who

139、se mission is to edu-cate the public about organ donation.“This experience has changed our livesforever,and were only trying to do thesame for families like ours,”said KimHarbur.Nate Harbur added,“We feelindebted to Wal-Mart.Its the thingstheir people do that make this possible.”Wal-Mart became the

140、exclusive retailsponsor of CMN Champions,the net-works fund-raising campaign,in 1988.Since then,thanks to the ideas,effortsand contributions of our associates andcustomers,Wal-Mart has raised morethan$131 million for the CMN$27 mil-lion in 1998 alone.The CMN contribution,though,repre-sented only abo

141、ut one-fifth of Wal-Marts charitable contributions ofmore than$127 million last year.OurCommunity Matching Grants totaledmore than$42 million,and other con-tributions went to the United Way,scholarships,grants for economicdevelopment and the environment,awards to top teachers and public offi-cials,a

142、nd more.14RTeacher of the YearEnvironmentMake A Difference DayEconomic DevelopmentOther DonationsHoliday Charitable ContributionScholarshipsUnited WayStore Contribution AccountsChildrens Miracle NetworkCommunity Matching GrantsTotal$1,135,5001,574,9612,400,0002,429,8403,442,8004,527,1068,000,00014,5

143、00,00019,979,01627,000,00042,150,894$127,140,117U.S.CONTRIBUTIONSU.S.CONTRIBUTIONSGOOD NEIGHBORSTO A NATIONC O M M U N I T Y I N V O LV E M E N TWAL-MART ASSOCIATES,WORKING ONE-BY-ONE ON PROJECTSPLANNED AT THEIR OWN STORES,ADD UP TO THE LARGESTCHARITABLE FUND-RAISING FORCE IN THE UNITED STATES.heres

144、 a lesson here:Make shop-ping more fun and less of achore,and shoppers will want tocome back for more.Yes,but what does that have todo with Garth Brooks or 10-year-old cheerleaders flying a dozenfeet in the air?Well,heres a new wordfor your merchandising vocabulary:Retailtainment.Retailtainment,as P

145、resident and CEODavid Glass puts it,is simply“doingthings to make sure our customersenjoy themselves in our stores.”Andwhen Wal-Mart associates turn theirminds to making customers happy,theresults can have people dancing in theaisles literally.For example,what do Garth Brooks,Trisha Yearwood,Reba Mc

146、Entire,Brooks and Dunn,the BeeGees andHanson have in common?Yes,theyreall superstars.And theyve all playedconcerts for Wal-Mart and our cus-tomers,shown on our Wall of Eyes,thebanks of televisions in our Electronicsdepartments.And then there are those flying cheer-leaders.They come from San Diego,th

147、eyre national champions,they flythrough the air with the greatest ofease,and theyre only 10 to 14 yearsold.Theyre the Champion Outlaws,acheerleading team that loves to per-form at Wal-Mart when theyre notcompeting for national titles or per-forming at San Diego Chargers games.We could fill this enti

148、re report withmore examples cookie-stacking con-tests,clowns painting childrens faces,spectacular holiday-themed displays but you get the idea.Whats next?Well,dont look now,butsome Wal-Marts are beginning to seecouples stopping by the store on dates,to check out the entertainment.Whoneeds the multip

149、lex?Wal-Mart sellspopcorn and soft drinks too!T15NOW SHOWINGNOW SHOWINGWAL-MART FINDS NEW WAYS TO MAKE SHOPPING FUN.CanadaUnited StatesGermanyChinaKorea MexicoPuerto RicoBrazilArgentina16S T AT E P O P U L AT I O N P E R W A L-M A R T S T O R EU.S.TOTALSupercentersSupercentersSAMS ClubSAMS ClubFISCA

150、L 1999 END OF YEAR STORE COUNTS*Includes 36 Superamas,63 Bodegas,33 Aurreras,183 Vips and 43 SuburbiasArgentinaBrazilKoreaMexicoPuerto RicoChinaGermanyAlbertaBritish ColumbiaManitobaNew BrunswickNewfoundlandNova ScotiaNW TerritoriesOntarioQuebecSaskatchewan1,869 564 451INTL.TOTALCANADA TOTAL153 0 00

151、00358*90035 0316101094270495191394771572880000000000Discount StoresDiscount StoresU.S.U.S.INTL.INTL.INTL.U.S.AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMisso

152、uriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming483344910628142936259895842384452202331523538729131318181052758745423

153、50635852163144272210559837424113135161124147559310321941213246318162236018192125250102311230002701001442800171731027230100018380502011712092401902003582003001130UNDER 50,00050,000 TO 100,000100,000 TO 150,000150,000 TO 200,000200,000 AND OVERGRAND TOTAL2,3897134975201494617181 1-Y E A R F I N A N C

154、I A L S U M M A R Y(Dollar amounts in millions except per share data)199919981997Net sales$137,634$117,958$104,859Net sales increase17%12%12%Comparative store sales increase9%6%5%Other income-net1,5741,3411,319Cost of sales108,72593,43883,510Operating,selling and general and administrative expenses2

155、2,36319,35816,946Interest costs:Debt529555629Capital leases268229216Provision for income taxes2,7402,1151,794Minority interest and equity in unconsolidated subsidiaries(153)(78)(27)Net income4,4303,5263,056Per share of common stock*:Net income Basic and Dilutive0.990.780.67Dividends0.160.140.11Finan

156、cial PositionCurrent assets$21,132$19,352$17,993Inventories at replacement cost17,54916,84516,193Less LIFO reserve473348296Inventories at LIFO cost17,07616,49715,897Net property,plant and equipment and capital leases25,97323,60620,324Total assets49,99645,38439,604Current liabilities16,76214,46010,95

157、7Long-term debt6,9087,1917,709Long-term obligations under capital leases2,6992,4832,307Shareholdersequity21,11218,50317,143Financial RatiosCurrent ratio1.31.31.6Inventories/working capital3.93.42.3Return on assets*9.6%8.5%7.9%Return on shareholdersequity*22.4%19.8%19.2%Other Year-End DataNumber of d

158、omestic Wal-Mart stores1,8691,9211,960Number of domestic Supercenters564441344Number of domestic SAMS Club units451443436International units715601314Number of Associates910,000825,000728,000Number of Shareholders261,170245,884257,215*Restated to reflect the two-for-one stock split announced March 4,

159、1999,with date of record of March 19,1999.The stock split is payable on April 19,1999.*Net income before minority interest and equity in unconsolidated subsidiaries/average assets*Net income/average shareholdersequity1919961995199419931992199119901989$93,627$82,494$67,344$55,484$43,887$32,602$25,811

160、$20,64913%22%21%26%35%26%25%29%4%7%6%11%10%10%11%12%1,14691464549740426217513774,50565,58653,44444,17534,78625,50020,07016,05715,02112,85810,3338,3216,6845,1524,0703,268692520331143113432036196186186180153126118991,6061,5811,3581,171945752632488(13)4(4)4(1)2,7402,6812,3331,9951,6091,2911,0768380.600

161、.590.510.440.350.280.240.190.100.090.070.050.040.040.030.02$17,331$15,338$12,114$10,198$8,575$6,415$4,713$3,63116,30014,41511,4839,7807,8576,2074,7513,64231135146951247339932329115,98914,06411,0149,2687,3845,8084,4283,35118,89415,87413,1769,7936,4344,7123,4302,66237,54132,81926,44120,56515,44311,389

162、8,1986,36011,4549,9737,4066,7545,0043,9902,8452,0668,5087,8716,1563,0731,7227401851842,0921,8381,8041,7721,5561,1591,0871,00914,75612,72610,7538,7596,9905,3663,9663,0081.51.51.61.51.71.61.71.82.72.62.32.72.12.42.42.17.8%9.0%9.9%11.1%12.0%13.2%14.8%14.6%19.9%22.8%23.9%25.3%26.0%27.7%30.9%31.8%1,9951,

163、9851,9501,8481,7141,5681,3991,2592391477234109634334264172562081481231052762262410675,000622,000528,000434,000371,000328,000271,000223,000244,483259,286257,946180,584150,242122,41479,92980,27020MANAGEMENTS DISCUSSION AND ANALYSISThe Companys sales growth of 17%in fiscal 1999,when comparedto fiscal 1

164、998,was attributable to our expansion program and adomestic comparative store sales increase of 9%.Expansion for fis-cal 1999 included the opening of 37 Wal-Mart stores,123Supercenters(including the conversion of 88 existing Wal-Martstores),eight SAMS Club units,and the opening or acquisition of114

165、international units.International sales accounted for approxi-mately 8.9%of total Company sales in fiscal 1999 compared with6.4%in fiscal 1998.The growth in International is partially due toacquisitions during 1999 and 1998.In the third quarter of fiscal1998,the Company acquired a controlling intere

166、st of Cifra,S.A deC.V.(Cifra)which at acquisition date included 250 units in varyingformats including Aurreras,Bodegas,Suburbias,Superamas,andVips.In the fourth quarter of fiscal 1998,the Company acquiredthe 21 units of the Wertkauf hypermarket chain in Germany.In fis-cal 1999,the Company acquired f

167、our units in South Korea whichwere previously operated by Korea Makro.See Note 6 of Notes toConsolidated Financial Statements for additional information onacquisitions.SAMS Club sales,as a percentage of total Companysales,decreased from 17.5%in fiscal 1998 to 16.6%in fiscal 1999.The sales increase o

168、f 12%in fiscal 1998 when compared to fiscal1997 was attributable to our expansion program and comparativestore sales increases of 6%.Expansion for fiscal 1998 included theopening of 37 Wal-Mart stores,97 Supercenters(including the con-version of 75 existing Wal-Mart stores),eight SAMS Clubs,and theo

169、pening or acquisition of 289 international units,including thevarious Cifra formats.International sales accounted for approxi-mately 6.4%of total Company sales in fiscal 1998 compared with4.8%in fiscal 1997.The growth in International is partially due tothe acquisition of controlling interest of Cif

170、ra during the thirdquarter.SAMS Club sales,as a percentage of total Company sales,decreased from 18.9%in fiscal 1997 to 17.5%in fiscal 1998.Costs and ExpensesCost of sales,as a percentage of sales,decreased,resulting inincreases in gross margin of.2%and.4%in fiscal 1999 and fiscal1998,respectively.T

171、hese improvements in gross margin occurredeven with continued price rollbacks and our continuing commit-ment to always providing low prices.Lower inventory levels result-ed in reduced markdowns and decreased shrink and generated asustainable improvement in profitability without raising prices.The im

172、provement in gross margin also occurred despite higherfood department and International sales,which generally havelower gross margins than domestic general merchandise.Thiseffect is partially offset by the slower growth of SAMS Club,whichis our lowest gross margin retail operation.Operating,selling,

173、general and administrative expenses decreased.2%as a percentage of sales in fiscal 1999 when compared with fis-cal 1998.The strong sales increase along with lower inventory lev-els combined to reduce expenses as a percentage of sales.Theexpense leverage was mitigated in the consolidated results due

174、tothe percentage of the total volume decreasing in the SAMS Clubsegment,which has lower expenses as a percentage of sales,whilethe percentage of total volume increased in the International seg-ment,which has higher expenses as a percentage of sales than theother operating segments.Every operating se

175、gment was flat ordown in expenses as a percent of sales in fiscal 1999 when com-pared with fiscal 1998.Operating,selling,general and administrative expenses increased.3%as a percentage of sales in fiscal 1998 when compared withfiscal 1997.Approximately.2%of the increase in fiscal 1998 wasdue to incr

176、eases in payroll and related benefit costs.Additionally,a contributing factor in the increase for the year was the one-timepre-tax charge of$50 million for closing the majority of the BudsDiscount City stores during the second quarter of fiscal 1998.Interest CostsInterest costs decreased.1%as a perc

177、entage of sales in fiscal 1999when compared with fiscal 1998.This marks the third consecutiveyear that interest costs relating to debt have declined.TheCompany was able to meet cash requirements without short-termborrowings throughout most of fiscal 1999 due to enhanced oper-ating cash flows.The int

178、erest on the Companys capital leasesincreased over fiscal 1998 due to continuing expansion.Interestcosts decreased in fiscal 1998 compared to fiscal 1997 due primar-ily to lower short-term borrowings.Enhanced operating cash flowsand lower capital spending enabled the Company to meet cashrequirements

179、 without short-term borrowings throughout most offiscal 1998.See Note 3 of Notes to Consolidated FinancialStatements for additional information on interest and debt.Market RiskMarket risks relating to the Companys operations result primarilyfrom changes in interest rates and changes in foreign excha

180、ngerates.The Company enters into interest rate swaps to minimize the riskand costs associated with financing activities.The swap agree-ments are contracts to exchange fixed or variable rates for variableor fixed interest rate payments periodically over the life of theinstruments.The following tables

181、 provide information about theCompanys derivative financial instruments and other financialinstruments that are sensitive to changes in interest rates.Fordebt obligations,the table presents principal cash flows and relat-ed weighted-average interest rates by expected maturity dates.Forinterest rate

182、swaps,the table presents notional amounts and inter-est rates by contractual maturity dates.The applicable floatingrate index is included for variable rate instruments.All amountsare stated in United States dollar equivalents.Sales(in millions)by operating segment for the three fiscal years ended Ja

183、nuary 31,are as follows:Fiscal YearWal-Mart StoresSAMS ClubInternationalOther(McLane)Total CompanyTotal Company Increase1999$95,395$22,881$12,247$7,111$137,63417%1998 83,820 20,668 7,517 5,953 117,95812%1997 74,840 19,785 5,002 5,232 104,85912%Net SalesInterest Rate SensitivityAs of January 31,1999P

184、rincipal(Notional)Amount by Expected MaturityAverage Interest(Swap)RateFair value(Amounts in millions)20002001200220032004ThereafterTotal1/31/99LiabilitiesLong-term debt including current portionFixed rate debt$900$1,284$801$558$285$3,980$7,808$8,323Average interest rate U.S.$rate7.1%7.2%7.1%6.9%7.0

185、%7.2%7.2%Long-term obligation related to real estate investment trustFixed rate obligation3943465055327560641Fixed interest rate U.S.$rate8.4%8.4%8.4%8.4%8.4%8.4%8.4%Interest Rate Derivative Financial Instruments Related to DebtInterest rate swapPay variable/receive fixed50050010Average rate paid 30

186、-day U.S.commercial paper non-financial plus.134%Fixed rate received U.S.$rate5.7%5.7%Interest rate swapPay variable/receive fixed5005005Average rate paid 30-day U.S.commercial paper non-financial plus.245%Fixed rate received U.S.$rate5.9%5.9%Interest Rate Derivative Financial Instruments Related to

187、 Real Estate Investment Trust ObligationInterest rate swapPay variable/receive fixed384145495432455144Average rate paid 30-day U.S.commercial paper non-financialFixed rate received U.S.$rate7.0%7.0%7.0%7.0%7.0%7.0%7.0%Interest rate swapPay variable/receive fixed23023030Average rate paid 6-month U.S.

188、LIBOR Fixed rate received U.S.$rate7.0%7.0%Interest Rate Derivative Financial Instrument Related to Currency SwapsCurrency swap German DeutschemarksPay variable/receive variable1,1011,101(43)Average rate paid 3-month German Deutschemark LIBOR minus.0676%Average rate received 30-day U.S.commercialpap

189、er non-financialInterest rate swap German DeutschemarksPay fixed/receive variable 1,1011,101(58)Fixed rate paid German Deutschemark rate4.5%4.5%Average rate received 3-month GermanDeutschemark LIBOR minus.0676%Interest rate swap U.S.DollarsPay variable/receive fixed1,1011,10128Average rate paid 30-d

190、ay U.S.commercial paper non-financialFixed rate received U.S.$rate5.8%5.8%Currency swap German DeutschemarksPay variable/receive variable80980918Average rate paid 3-month German Deutschemark LIBOR minus.055%Average rate received 30-day U.S.commercialpaper non-financialInterest rate swap German Deuts

191、chemarksPay fixed/receive variable 8098093Fixed rate paid German Deutschemark rate3.4%3.4%Average rate received 3-month GermanDeutschemark LIBOR minus.055%Interest rate swap U.S.DollarsPay variable/receive fixed8098091Average rate paid 30-day U.S.commercial paper non-financialFixed rate received U.S

192、.$rate5.2%5.2%21The Company routinely enters into forward currency exchange con-tracts in the regular course of business to manage its exposureagainst foreign currency fluctuations on cross-border purchases ofinventory.These contracts are generally for durations of six monthsor less.In addition,the

193、Company entered into two foreign curren-cy swaps to hedge the net investment in Germany.The following tables provide information about the Companysderivative financial instruments,including foreign currency for-ward exchange agreements and currency swap agreements by func-tional currency and present

194、s the information in United States dol-lar equivalents.For foreign currency forward exchange agree-ments,the table presents the notional amounts and averageexchange rates by contractual maturity dates.Interest Rate SensitivityAs of January 31,1998Principal(Notional)Amount by Expected MaturityAverage

195、 Interest(Swap)RateFair value(Amounts in millions)19992000200120022003ThereafterTotal1/31/98LiabilitiesLong-term debt including current portionFixed rate debt$1,039$815$1,268$802$559$3,747$8,230$8,639Average interest rate U.S.$rate7.1%7.2%7.2%7.1%6.9%7.2%7.2%Long-term obligation related to real esta

196、te investment trustFixed rate obligation3639434650382596660Fixed interest rate U.S.$rate8.4%8.4%8.4%8.4%8.4%8.4%8.4%Interest Rate Derivative Financial Instruments Related to DebtInterest rate swapPay variable/receive fixed500500Average rate paid 30-day U.S.commercial paper non-financial plus.134%Fix

197、ed rate received-U.S.$rate5.7%5.7%Interest Rate Derivative Financial Instruments Related to Real Estate Investment Trust ObligationInterest rate swapPay variable/receive fixed343841454937858517Average pay rate 30-day U.S.commercial paper non-financialFixed rate received-U.S.$rate7.0%7.0%7.0%7.0%7.0%

198、7.0%7.0%Interest rate swapPay variable/receive fixed23023020Average rate paid 6-month U.S.LIBORFixed rate received-U.S.$rate7.0%7.0%Interest Rate Derivative Financial Instrument Related to Currency SwapGerman DeutschemarksPay variable/receive variable1,1011,101(1)Average rate paid 3-month German Deu

199、tschemark LIBOR minus.0676%Average rate received 30-day U.S.commercial paper non-financial22Foreign Currency Exchange Rate SensitivityAs of January 31,1999Principal(Notional)Amount by Expected MaturityFair value(Amounts in millions)20002001200220032004ThereafterTotal1/31/99Forward Contracts to Sell

200、Foreign Currencies for U.S.$Canadian DollarsNotional amount4545(1)Average contract rate1.51.5German DeutschemarksNotional amount11Average contract rate1.81.8Forward Contracts to Sell Foreign Currencies for Hong Kong$German DeutschemarksNotional amount11Average contract rate0.20.2Average currency exc

201、hange rate1.81.8Currency Swap AgreementsPayment of German DeutschemarksNotional amount1,1011,101(43)Average contract rate1.81.8Payment of German DeutschemarksNotional amount80980918Average contract rate1.71.7Foreign Currency Exchange Rate SensitivityAs of January 31,1998Principal(Notional)Amount by

202、Expected MaturityFair value(Amounts in millions)19992000200120022003ThereafterTotal1/31/98Forward Contracts to Sell Foreign Currencies for U.S.$Canadian DollarsNotional amount2424Average contract rate1.41.4German DeutschemarksNotional amount22Average contract rate1.81.8Forward Contracts to Sell Fore

203、ign Currencies for Hong Kong$German DeutschemarksNotional amount11Average contract rate0.20.2Average currency exchange rate 1.81.8Currency Swap AgreementsPayment of German DeutschemarksNotional amount1,1011,101(1)Average contract rate1.81.823International OperationsThe Companys foreign operations ar

204、e comprised of wholly-ownedoperations in Argentina,Canada,Germany and Puerto Rico;jointventures in China and Korea;and majority-owned subsidiaries inBrazil and Mexico.As a result,the Companys financial resultscould be affected by factors such as changes in foreign currencyexchange rates or weak econ

205、omic conditions in the foreign mar-kets in which the Company does business.The Company minimizesexposure to the risk of devaluation of foreign currencies by oper-ating in local currencies and through buying forward contracts,where feasible,for known transactions.All foreign operations are measured i

206、n their local currencies withthe exception of Mexico,which operates in a highly-inflationaryeconomy and reports operations using United States dollars.Beginning in fiscal 2000,Mexico will no longer be considered ahighly-inflationary economy and will begin reporting its operationsin its local currenc

207、y.The Company does not anticipate there willbe a material impact on the consolidated or International seg-ments results of operations or financial position as a result of thechange.In fiscal 1999,the foreign currency translation adjustmentincreased by$36 million to$509 million primarily due to theex

208、change rates in Brazil and Canada,and in fiscal 1998,the foreign currency translation adjustment increased by$73 millionto$473 million primarily due to the exchange rate in Canada.The International segments operating profit increased from$262million in fiscal 1998 to$551 million in fiscal 1999.As no

209、ted above,the results for fiscal 1999 include the operating profit of Cifra andWertkauf.Because the acquisitions occurred during the last half offiscal 1998,the additional operating profit resulting from theseacquisitions accounts for a part of the increase in theInternational segments operating pro

210、fit.Liquidity and Capital ResourcesCash Flows InformationCash flows from operating activities were$7,580 million in fiscal1999,up from$7,123 million in fiscal 1998.In fiscal 1999,theCompany invested$3,734 million in capital assets,paid dividendsof$693 million,and had a net cash outlay of$855 million

211、 for acqui-sitions.Acquisitions include the purchase of six undeveloped sitesand four units in Korea which had been operated by Korea Makro,and 74 Interspar hypermarkets in Germany from Spar Handels AG.See Note 6 of Notes to Consolidated Financial Statements for addi-tional information on acquisitio

212、ns.Company Stock Purchase and Common StockDividendsIn fiscal 1999,the Company repurchased over 21 million shares ofits common stock for$1,202 million.In March of 1999 theCompany announced plans to increase the existing common stockrepurchase program by$1.2 billion,resulting in a total outstandingaut

213、horization of$2 billion.Additionally,the Company increasedthe dividend 29%to$.20 per share(after the two-for-one commonstock split,which was also announced in March of 1999)for fiscal2000.This marks the 27th consecutive yearly increase in dividends.Borrowing InformationThe Company had committed line

214、s of credit with 78 banks,aggre-gating$1,872 million and informal lines of credit with variousother banks,totaling an additional$1,950 million,which wereused to support short-term borrowing and commercial paper.These lines of credit and their anticipated cyclical increases weresufficient to finance

215、the seasonal buildups in merchandise inven-tories and other cash requirements.The Company anticipates generating sufficient operating cash flowto pay the increased dividend and to fund all capital expenditures.Accordingly,management does not plan to finance future capitalexpenditures with debt.Howev

216、er,the Company plans to refinanceexisting long-term debt as it matures and may desire to obtainadditional long-term financing for other uses of cash or for strate-gic reasons.The Company anticipates no difficulty in obtaininglong-term financing in view of an excellent credit rating and favor-able ex

217、periences in the debt market in the recent past.In additionto the available credit lines mentioned above,the Company maysell up to$501 million of public debt under shelf registration state-ments previously filed with the United States Securities andExchange Commission.ExpansionDomestically,the Compa

218、ny plans to open approximately 40 newWal-Mart stores and approximately 150 new Supercenters.Relocations or expansions of existing discount stores will accountfor 90 of the Supercenters,while approximately 60 will be newlocations.Due to the positive customer feedback on theNeighborhood Market concept

219、,which is being tested in four loca-tions,the Company plans to expand the test to additional areas.Also planned for fiscal 2000 are ten to fifteen new SAMS Clubs,including six relocations.In addition,the Company will remodelapproximately 140 of the existing SAMS Clubs and expand oneunit.In order to

220、serve these and future developments,theCompany will begin shipping from three new distribution centersin the next fiscal year.Internationally,plans are to develop 75 to80 new retail units.These stores are planned in Argentina,Brazil,Canada,China,Korea,Mexico,and Puerto Rico.Total plannedgrowth repre

221、sents approximately 34 million square feet of netadditional retail space.Total planned capital expenditures for fiscal 2000 approximate$4.9 billion.We plan to finance our expansion primarily with oper-ating cash flows.Year 2000 Issue State of ReadinessHistorically,computer software has been programm

222、ed to makeassumptions about the century when given a date that only usestwo digits to represent the year.Although these assumptions havebeen perfectly acceptable the past few decades,they are a potentialcause for concern for software used in the year 2000 and beyond.Specifically,this abbreviated dat

223、e format makes it difficult for anapplication or computer user to distinguish between dates startingwith 19xx and 20 xx.The Company has been evaluating and adjust-ing all of its known date-sensitive systems and equipment for Year2000 compliance,including those systems and equipment whichsupport the

224、Companys International segment.The assessmentphase of the Year 2000 project is substantially complete and24included both information technology,such as point-of-sale com-puter systems,as well as non-information technology equipment,such as warehouse conveyor systems.All internal coding conver-sions

225、are complete.Some third-party applications representingless than 1%of the total application inventory remain to be con-verted,these applications are dependent on vendor upgrade avail-ability and will be completed by October 1999.Virtually all theconversions were performed or are expected to be perfo

226、rmed byCompany associates.The next phase of the Companys Year 2000 project,complete sys-tem testing,began during the second quarter of fiscal 1999.Thefirst phase of testing has been completed on critical systems.Thusfar,no significant issues have been detected in the testing.A sec-ond,more comprehen

227、sive phase of testing,is scheduled for theMarch 1999 to July 1999 timeframe.A final test cycle is plannedfor October 1999 to ensure all version levels,upgrades,new releas-es and enhancements are Year 2000 compliant.The total incremental estimated cost directly related to the Year2000 remedy is$27 mi

228、llion.Approximately$17.5 million of thecost is related to reprogramming,replacement,extensive testingand validation of software,which is being expensed as incurred,while approximately$9.5 million is related to acquisition of hard-ware.Approximately$8 million of the$27 million cost of conver-sion has

229、 been incurred as of the end of the fourth quarter of fiscal1999.The majority of the remaining costs include future testing ofthe systems and the purchase of additional equipment.All of thesecosts are being funded through operating cash flows.These costsare not a significant component of the Company

230、s overall informa-tion technology budget.The Companys Information SystemsDivision did not defer any information technology projects lastyear to address the Year 2000 issue.During fiscal 2000 theCompany still plans to complete and implement over half of thenormal project load in priority sequence.In

231、addition to internal Year 2000 implementation activities,theCompany is communicating with other companies with which oursystems interface or on which it relies to determine the extent towhich those companies are addressing their Year 2000 compli-ance.Testing began during the third quarter of fiscal

232、year 1999and will be substantially complete by October 31,1999.Thus far,no significant issues have been detected in the testing process.There can be no assurance that there will not be an adverse effecton the Company if third parties,such as utility companies or mer-chandise suppliers,do not convert

233、 their systems in a timely man-ner and in a way that is compatible with the Companys systems.However,management believes that ongoing communication withand assessment of these third parties should minimize these risks.The Company anticipates minimal business disruption will occuras a result of Year

234、2000 issues;however,possible consequencesinclude,but are not limited to,loss of communications links withcertain store locations,loss of electric power,inability to processtransactions,send purchase orders,or engage in similar normalbusiness activities.In addition,since there is no uniform defini-ti

235、on of Year 2000 compliance and not all customer situations canbe anticipated,the Company may experience an increase in salesreturns of merchandise that may contain hardware or softwarecomponents.If returns of merchandise increase,such returns arenot expected to be material to the Companys financial

236、condition.Although the Company has not finalized its contingency plans forpossible Year 2000 issues,initial analysis and planning is under-way.Where needed,the Company will establish contingency plansbased on its actual testing experience with its supplier base andassessment of outside risks.The Com

237、pany anticipates the majorityof its contingency plans to be in place by October 31,1999.The cost of the conversions and the completion dates are based onmanagements best estimates and may be updated as additionalinformation becomes available.Readers are referred to the nextsection of this report,whi

238、ch addresses forward-looking state-ments made by the Company.Forward-Looking StatementsThe Private Securities Litigation Reform Act of 1995 provides asafe harbor for forward-looking statements made by or on behalfof the Company.Certain statements contained in ManagementsDiscussion and Analysis and i

239、n other Company filings are forward-looking statements.These statements discuss,among otherthings,expected growth,future revenues,future cash flows andfuture performance.The forward-looking statements are subjectto risks and uncertainties including but not limited to the cost ofgoods,competitive pre

240、ssures,inflation,consumer debt levels,cur-rency exchange fluctuations,trade restrictions,changes in tariffand freight rates,Year 2000 issues,interest rate fluctuations andother capital market conditions,and other risks indicated in theCompanys filings with the United States Securities and ExchangeCo

241、mmission.Actual results may materially differ from anticipatedresults described in these statements.2526CONSOLIDATED STATEMENTS OF INCOME(Amounts in millions except per share data)Fiscal years ended January 31,199919981997Revenues:Net sales$137,634$117,958$104,859Other income-net1,5741,3411,319139,2

242、08119,299106,178Costs and Expenses:Cost of sales108,72593,43883,510Operating,selling and generaland administrative expenses22,36319,35816,946Interest Costs:Debt529555629Capital leases268229216131,885113,580101,301Income Before Income Taxes,Minority Interest and Equity in Unconsolidated Subsidiaries7

243、,3235,7194,877Provision for Income TaxesCurrent3,3802,0951,974Deferred(640)20(180)2,7402,1151,794Income Before Minority Interest and Equity in Unconsolidated Subsidiaries4,5833,6043,083Minority Interest and Equity in Unconsolidated Subsidiaries(153)(78)(27)Net Income$4,430$3,526$3,056Net Income Per

244、Share Basic and Dilutive$0.99$0.78$0.67Average Number of Common Shares:Basic4,4644,5164,585Dilutive4,4854,5334,592See accompanying notes.27(Amounts in millions)January 31,19991998AssetsCurrent Assets:Cash and cash equivalents$1,879$1,447Receivables1,118976InventoriesAt replacement cost17,54916,845Le

245、ss LIFO reserve473348Inventories at LIFO cost17,07616,497Prepaid expenses and other1,059432Total Current Assets21,13219,352Property,Plant and Equipment,at Cost:Land5,2194,691Building and improvements16,06114,646Fixtures and equipment9,2967,636Transportation equipment55340331,12927,376Less accumulate

246、d depreciation7,4555,907Net property,plant and equipment23,67421,469Property Under Capital Lease:Property under capital lease3,3353.040Less accumulated amortization1,036903Net property under capital leases2,2992,137Other Assets and Deferred Charges2,8912,426Total Assets$49,996$45,384Liabilities and

247、ShareholdersEquityCurrent Liabilities:Accounts payable$10,257$9,126Accrued liabilities4,9983,628Accrued income taxes501565Long-term debt due within one year9001,039Obligations under capital leases due within one year106102Total Current Liabilities16,76214,460Long-Term Debt6,9087,191Long-Term Obligat

248、ions Under Capital Leases2,6992,483Deferred Income Taxes and Other716809Minority Interest1,7991,938ShareholdersEquityPreferred stock($.10 par value;100 shares authorized,none issued)Common stock($.10 par value;5,500 shares authorized,4,448and 2,241 issued and outstanding in 1999 and 1998,respectivel

249、y)445224Capital in excess of par value435585Retained earnings20,74118,167Other accumulated comprehensive income(509)(473)Total ShareholdersEquity21,11218,503Total Liabilities and ShareholdersEquity$49,996$45,384See accompanying notes.CONSOLIDATED BALANCE SHEETS28CONSOLIDATED STATEMENTS OF SHAREHOLDE

250、RS EQUITYOtherCapital inaccumulatedNumberCommonexcess ofRetainedcomprehensive(Amounts in millions except per share data)of sharesstockpar valueearningsincomeTotalBalance January 31,19962,293$229$545$14,394($412)$14,756Comprehensive IncomeNet income3,0563,056Other accumulated comprehensive incomeFore

251、ign currency translation adjustment1212Total Comprehensive income$3,068Cash dividends($.11 per share)(481)(481)Purchase of Company stock(8)(7)(201)(208)Stock options exercised and other(1)98Balance January 31,19972,28522854716,768(400)17,143Comprehensive IncomeNet income3,5263,526Other accumulated c

252、omprehensive incomeForeign currency translation adjustment(73)(73)Total Comprehensive income$3,453Cash dividends($.14 per share)(611)(611)Purchase of Company stock(47)(5)(48)(1,516)(1,569)Stock options exercised and other318687Balance January 31,19982,24122458518,167(473)18,503Comprehensive IncomeNe

253、t income4,4304,430Other accumulated comprehensive incomeForeign currency translation adjustment(36)(36)Total Comprehensive income$4,394Cash dividends($.16 per share)(693)(693)Purchase of Company stock(21)(2)(37)(1,163)(1,202)Two-for-one stock split(announced March 4,1999)2,224223(223)Stock options e

254、xercised and other4110110Balance January 31,19994,448$445$435$20,741($509)$21,112See accompanying notes.29(Amounts in millions)Fiscal years ended January 31,199919981997Cash flows from operating activitiesNet Income$4,430$3,526$3,056Adjustments to reconcile net income to net cashprovided by operatin

255、g activities:Depreciation and amortization1,8721,6341,463Increase in accounts receivable(148)(78)(58)(Increase)/decrease in inventories(379)(365)99Increase in accounts payable1,1081,0481,208Increase in accrued liabilities1,2591,329430Deferred income taxes(640)20(180)Other789(88)Net cash provided by

256、operating activities7,5807,1235,930Cash flows from investing activitiesPayments for property,plant and equipment(3,734)(2,636)(2,643)Proceeds from sale of photo finishing plants464Acquisitions(855)(1,865)Other investing activities17180111Net cash used in investing activities(4,418)(4,421)(2,068)Cash

257、 flows from financing activitiesDecrease in commercial paper(2,458)Proceeds from issuance of long-term debt536547Net proceeds from formation of Real EstateInvestment Trust632Purchase of Company stock(1,202)(1,569)(208)Dividends paid(693)(611)(481)Payment of long-term debt(1,075)(554)(541)Payment of

258、capital lease obligations(101)(94)(74)Other financing activities(195)14368Net cash used in financing activities(2,730)(2,138)(3,062)Net increase in cash and cash equivalents432564800Cash and cash equivalents at beginning of year1,44788383Cash and cash equivalents at end of year$1,879$1,447$883Supple

259、mental disclosure of cash flow informationIncome tax paid$3,458$1,971$1,791Interest paid805796851Capital lease obligations incurred347309326Investment in unconsolidated subsidiary exchangedin acquisition226See accompanying notes.CONSOLIDATED STATEMENTS OF CASH FLOWS30NOTES TO CONSOLIDATED FINANCIAL

260、STATEMENTS1 Summary of Significant Accounting PoliciesConsolidationThe consolidated financial statements include the accounts of sub-sidiaries.Significant intercompany transactions have been eliminat-ed in consolidation.Cash and cash equivalentsThe Company considers investments with a maturity of th

261、ree monthsor less when purchased to be cash equivalents.InventoriesThe Company uses the retail last in first out(LIFO)method fordomestic Wal-Mart discount stores and Supercenters and cost LIFOfor SAMS Clubs.International inventories are on other cost meth-ods.Inventories are not in excess of market

262、value.Pre-opening costsDuring fiscal 1999,the Company adopted Statement of Position(SOP)98-5,“Reporting on the Costs of Start-Up Activities.”The SOPrequires that the costs of start-up activities,including organizationcosts,be expensed as incurred.The impact of the adoption of SOP 98-5 was$8 million

263、net of taxes.Due to the immateriality to theCompanys results of operations,the initial application was notreported as a cumulative effect of a change in an accounting princi-ple.The impact of the change did not have a material effect on anyof the years presented.Interest during constructionIn order

264、that interest costs properly reflect only that portion relatingto current operations,interest on borrowed funds during the con-struction of property,plant and equipment is capitalized.Interestcosts capitalized were$41 million,$33 million and$44 million in1999,1998 and 1997,respectively.Financial ins

265、trumentsThe Company uses derivative financial instruments for purposesother than trading to reduce its exposure to fluctuations in foreigncurrencies and to minimize the risk and cost associated with financ-ing and global operating activities.Contracts that effectively meetrisk reduction and correlat

266、ion criteria are recorded using hedgeaccounting.Unrealized gains and losses resulting from market move-ments are not recognized.Hedges of firm commitments are deferredand recognized when the hedged transaction occurs.Goodwill and other acquired intangible assetsGoodwill and other acquired intangible

267、 assets are amortized on astraight-line basis over the periods that expected economic benefitswill be provided.Management estimates such periods of economicbenefits using factors such as entry barriers in certain countries,operating rights and estimated lives of other operating assetsacquired.The re

268、alizability of goodwill and other intangibles is evalu-ated periodically when events or circumstances indicate a possibleinability to recover the carrying amount.Such evaluation is based oncash flow and profitability projections that incorporate the impact ofexisting Company businesses.The analyses

269、necessarily involve sig-nificant management judgment to evaluate the capacity of anacquired business to perform within projections.Historically,theCompany has generated sufficient returns from acquired businessesto recover the cost of the goodwill and other intangible assets.Goodwill and other acqui

270、red intangible assets,net of accumulatedamortization,included in the consolidated balance sheets is$2,538million and$1,887 million in 1999 and 1998,respectively.Long-lived assetsThe Company periodically reviews long-lived assets and certainintangible assets when indicators of impairments exist and i

271、f thevalue of the assets is impaired,an impairment loss would be recognized.Comprehensive incomeIn fiscal 1999,the Company adopted Statement of FinancialAccounting Standards No.130,“Reporting Comprehensive Income.”This statement establishes standards for reporting and display ofcomprehensive income

272、and its components.The Company hasreclassified all years presented to reflect comprehensive income and its components in the consolidated statements of shareholdersequity.Stock splitOn March 4,1999,the Company announced a two-for-one stock splitissued in the form of a 100%stock dividend.The date of

273、record isMarch 19,1999,and it will be distributed April 19,1999.Consequently,the stock option data and per share data have beenrestated to reflect the stock split.Advertising costsAdvertising costs are expensed as incurred and were$405 million,$292 million and$249 million in 1999,1998 and 1997,respe

274、ctively.Operating,selling and general and administrative expensesBuying,warehousing and occupancy costs are included in operating,selling and general and administrative expenses.Depreciation and amortizationDepreciation and amortization for financial statement purposes isprovided on the straight-lin

275、e method over the estimated useful livesof the various assets.For income tax purposes,accelerated methodsare used with recognition of deferred income taxes for the resultingtemporary differences.Estimated useful lives are as follows:Costs of computer softwareIn March 1998,the Accounting Standards Ex

276、ecutive Committeeissued Statement of Position(SOP)98-1,“Accounting For the Costsof Computer Software Developed For or Obtained For Internal Use.”The SOP will be effective for the Company beginning February 1,1999.The SOP will require the capitalization of certain costsincurred in connection with dev

277、eloping or obtaining software forinternal use.Currently,costs related to developing internal-use soft-ware are expensed as incurred.The Company does not anticipatethere will be a material impact on the results of operations or finan-cial position after SOP 98-1 is adopted.Building and improvements5-

278、33 yearsFixtures and equipment5-12 yearsTransportation equipment2-5 yearsGoodwill and other acquired intangible assets20-40 years31Accounting for derivative instruments and hedging activitiesIn June 1998,the Financial Accounting Standards Board issuedStatement No.133,“Accounting for Derivative Instr

279、uments andHedging Activities.”The Statement will be effective for the Companybeginning February 1,2000.The new Statement requires all deriva-tives to be recorded on the balance sheet at fair value and establish-es accounting treatment for three types of hedges:hedges of changesin the fair value of a

280、ssets,liabilities,or firm commitments;hedges ofthe variable cash flows of forecasted transactions;and hedges of for-eign currency exposures of net investments in foreign operations.The Company is analyzing the implementation requirements andcurrently does not anticipate there will be a material impa

281、ct on theresults of operations or financial position after the adoption ofStatement No.133.Net income per shareBasic net income per share is based on the weighted average out-standing common shares.Dilutive net income per share is based onthe weighted average outstanding shares reduced by the diluti

282、veeffect of stock options.Foreign currency translationThe assets and liabilities of most foreign subsidiaries are translatedat current exchange rates and any related translation adjustmentsare recorded as a component of accumulated comprehensiveincome.Operations in Mexico operate in highly inflation

283、aryeconomies and certain assets are translated at historical exchangerates and all translation adjustments are reflected in theConsolidated Statements of Income.Beginning in fiscal 2000,Mexicowill no longer be considered highly inflationary and will begin report-ing operations in local currency.Esti

284、mates and assumptionsThe preparation of consolidated financial statements in conformitywith generally accepted accounting principles requires managementto make estimates and assumptions.These estimates and assump-tions affect the reported amounts of assets and liabilities and disclo-sure of continge

285、nt assets and liabilities at the date of the consolidat-ed financial statements and the reported amounts of revenues andexpenses during the reporting period.Actual results could differfrom those estimates.ReclassificationsCertain reclassifications have been made to prior periods to conformto current

286、 presentations.2 Defined Contribution PlansThe Company maintains profit sharing plans under which most full-time and many part-time associates become participants followingone year of employment and a 401(k)plan in which the same asso-ciates may elect to contribute up to 10%of their earnings.The Com

287、pany will make annual contributions to these plans onbehalf of all eligible associates,including those who have notelected to contribute to the 401(k)plan.Annual Company contributions are made at the sole discretion ofthe Company,and were$388 million,$321 million and$247 million in 1999,1998 and 199

288、7,respectively.3 Commercial Paper and Long-term DebtInformation on short-term borrowings and interest rates is as follows(dollar amounts in millions):Fiscal years ended January 31,199919981997Maximum amount outstanding at month-end$1,976$1,530$2,209Average daily short-term borrowings2562121,091 Weig

289、hted average interest rate5.1%5.6%5.3%At January 31,1999 and 1998,there were no short-term borrowingsoutstanding.At January 31,1999,the Company had committedlines of credit of$1,872 million with 78 banks and informal lines ofcredit with various banks totaling an additional$1,950 million,which were u

290、sed to support short-term borrowings andcommercial paper.Short-term borrowings under these lines ofcredit bear interest at or below the prime rate.Long-term debt at January 31,consists of(amounts in millions):The Company has$1 billion of outstanding debt with imbedded putoptions.Beginning in fiscal

291、2001,and every second year thereafterthe holders of the debt may require the Company to repurchasethe debt at face value.Long-term debt is unsecured except for$182 million which is col-lateralized by property with an aggregate carrying value of approx-imately$347 million.Annual maturities of long-te

292、rm debt duringthe next five years are(in millions):The Company has agreed to observe certain covenants under theterms of its note agreements,the most restrictive of which relateto amounts of additional secured debt and long-term leases.The Company has entered into sale/leaseback transactions involv-

293、ing buildings while retaining title to the underlying land.These transactions were accounted for as financings and areincluded in long-term debt and the annual maturities schedulesabove.The resulting obligations are amortized over the leaseterms.Future minimum lease payments for each of the five suc

294、ceeding years as of January 31,1999,are(in millions):At January 31,1999 and 1998,the Company had letters of creditoutstanding totaling$767 million and$673 million,respectively.These letters of credit were issued primarily for the purchase of inventory.Under shelf registration statements previously f

295、iled with theSecurities and Exchange Commission,the Company may issuedebt securities aggregating$501 million.Fiscal years endedAnnualJanuary 31,maturity2000$90020011,2842002801 2003558 2004285 Thereafter3,980 Fiscal years endedMinimumJanuary 31,rentals2000$104 2001100 200294 200398 200493Thereafter7

296、24 Fiscal years ended January 31,199919988.625%Notes due April 2001$750$750 5.875%Notes due October 2005597597 5.850%Notes due June 2018 with biannual put options5005.650%Notes due February 2010 with biannual put options5005007.500%Notes due May 2004500500 9.100%Notes due July 2000500500 6.500%Notes

297、 due June 2003454454 7.250%Notes due June 20134454457.800%-8.250%Obligations from sale/leaseback transactions due 2014427458 6.750%Notes due May 20023003007.000%-8.000%Obligations from sale/leaseback transactions due 2013292306 8.500%Notes due September 2024250250 6.750%Notes due October 2023250250

298、8.000%Notes due September 2006250250 6.125%Eurobond due November 2000250250 6.375%Notes due March 20032282286.750%Eurobond due May 20022002006.875%Eurobond due June 1999250 6.125%Notes due October 1999500Other215203$6,908$7,191 324 Financial InstrumentsInterest rate instrumentsThe Company enters int

299、o interest rate swaps to minimize the risksand costs associated with its financing activities.The swap agree-ments are contracts to exchange fixed or variable rate interest forfixed or variable interest rate payments periodically over the life ofthe instruments.The notional amounts are used to measu

300、re interest to be paid or received and do not represent the exposuredue to credit loss.Settlements of interest rate swaps are accountedfor by recording the net interest received or paid as an adjustmentto interest expense on a current basis.These instruments are notrecorded on the balance sheet,and

301、as of January 31,1999 and 1998,are as follows:Foreign exchange instrumentsThe Company has entered into two foreign currency swap agree-ments to hedge its net investment in Germany.In fiscal 1998,theCompany entered into a foreign currency swap where it will pay1,960 million in German Deutschemarks in

302、 2003 and will receive$1,101 million in United States Dollars.In fiscal 1999,the Companyentered into a foreign currency swap where it will pay 1,360 millionin German Deutschemarks in 2004 and will receive$809 million inUnited States Dollars.The Company routinely enters into forward currency exchange

303、 con-tracts in the regular course of business to manage its exposureagainst foreign currency fluctuations on cross-border purchases ofinventory.These contracts are generally for short durations of sixmonths or less and are insignificant to the Companys operations orfinancial position.There were appr

304、oximately$46 million notionaloutstanding at January 31,1999.Fair value of financial instrumentsCash and cash equivalents:The carry amount approximates fairvalue due to the short maturity of these instruments.Long-term debt:The fair value of the Companys long-term debt,including current maturities,ap

305、proximates$8,323 million atJanuary 31,1999 and is based on the Companys current incremen-tal borrowing rate for similar types of borrowing arrangements.Interest rate instruments:The fair values are estimated amountsthe Company would receive or pay to terminate the agreements asof the reporting dates

306、.Foreign currency contracts:The fair value of foreign currencycontracts are estimated by obtaining quotes from external sources.335 Income TaxesFiscal years ended January 31199919981997CurrentFederal$3,043$1,891$1,769 State and local254186201International83184Total current tax provision3,3802,0951,9

307、74 DeferredFederal(655)(5)(97)State and local(28)(2)(9)International4327(74)Total deferred tax provision(640)20(180)Total provision for income taxes$2,740$2,115$1,794The income tax provision consists of the following(in millions):Notional amountMaturityRateRateFair(in millions)datereceivedpaidvalueJ

308、anuary 31,1999$55120077.0%30-day U.S.commercial$44paper non-financial50020015.9%30-day U.S.commercial 5paper non-financial plus.245%50020015.7%30-day U.S.commercial 10paper non-financial plus.134%1,10120035.8%30-day U.S.commercial28paper non-financial1,101200330-day U.S.commercial 3-month German DEM

309、(43)paper non-financialLIBOR minus.0676%1,10120033-month German DEM4.5%DEM rate(58)LIBOR minus.0676%80920045.2%30-day U.S.commercial1paper non-financial809200430-day U.S.commercial3-month German DEM18paper non-financialLIBOR minus.055%80920043-month German DEM3.4%DEM rate3LIBOR minus.055%23020277.0%

310、6-month U.S.LIBOR30January 31,1998$58520077.0%30-day U.S.commercial$17paper non-financial50020015.7%30-day U.S.commercial paper non-financial plus.134%1,101200330-day U.S.commercial3-month German DEM(1)paper non-financialLIBOR minus.0676%23020277.0%6-month U.S.LIBOR20Fiscal years ended January 31,19

311、9919981997Deferred tax liabilities:Property,plant and equipment$695$797$721 Inventory286275145 International,principally asset basis differences27238783 Other363345 Total deferred tax liabilities1,2891,492994Deferred tax assets:Amounts accrued for financial reporting purposesnot yet deductible for t

312、ax purposes985441295 Capital leases188190169 International,asset basis and loss carryforwards143258314Deferred revenue6689113Other18410868 Total deferred tax assets1,5661,086959 Net deferred tax(assets)liabilities$(277)$406$35 Fiscal years ended January 31,199919981997Statutory tax rate35.0%35.0%35.

313、0%State income taxes,net of federal income tax benefit2.0%2.1%2.2%International(0.5%)(0.3%)(1.5%)Other0.9%0.2%1.1%37.4%37.0%36.8%Items that give rise to significant portions of the deferred tax accounts at January 31,are as follows(in millions):A reconciliation of the significant differences between

314、 the effective income tax rate and the federal statutory rate on pretax income follows:346 AcquisitionsOn January 1,1999,the Company took possession of 74 units fromthe Interspar hypermarket chain in Germany.The units wereacquired from Spar Handels AG,a German company that ownsmultiple retail format

315、s and wholesale operations throughoutGermany.The transaction closed on December 29,1998;therefore,the assets are included in the Companys consolidated balancesheet and the results of operations will be included beginning infiscal 2000.The transaction has been recorded as a purchase.Thenet assets and

316、 liabilities acquired are recorded at fair value.Resulting goodwill is being amortized over 40 years.In July 1998,the Company extended its presence in Asia with aninvestment in Korea.The Company acquired a majority interest infour units as well as six undeveloped sites.The four units were pre-viousl

317、y operated by Korea Makro.The transaction has beenaccounted for as a purchase.The new assets and liabilitiesacquired are recorded at fair value.The goodwill is being amor-tized over 40 years.The results of operations since the effectivedate of the acquisition have been included in the Companysresult

318、s.A merger of the Mexican joint venture companies owned by Wal-Mart Stores,Inc.and Cifra,S.A.de C.V.(Cifra)with,and intoCifra,was consummated with an effective merger date ofSeptember 1,1997.The Company received voting shares of Cifraequaling approximately 33.5%of the outstanding voting shares ofCif

319、ra in exchange for the Companys joint venture interests havinga net book value of approximately$644 million.The Company then acquired 593,100,000 shares of the Series“A”Common Shares and Series“B”Common Shares of Cifra,forapproximately$1.2 billion.The transaction has been accountedfor as a purchase.

320、The net assets and liabilities acquired arerecorded at fair value.Resulting goodwill is being amortized over40 years.As a result of the merger and tender offer,Wal-Mart holdsa majority interest of the outstanding voting shares of Cifra.Theresults of operations for Cifra,since the effective merger da

321、te,have been included in the Companys results.In December 1997,the Company acquired the Wertkauf hyper-market chain in Germany,as well as certain real estate.The 21hypermarkets are one-stop shopping centers that offer a broadassortment of high quality general merchandise and food and aresimilar to t

322、he Wal-Mart Supercenter format in the United States.The transaction has been accounted for as a purchase.Net assetsand liabilities of Wertkauf and the real estate are recorded at fairvalue.The goodwill is being amortized over 40 years.The transac-tion closed on December 30,1997;therefore,the assets

323、are includ-ed in the January 31,1998 consolidated balance sheet and theresults of operations are included in fiscal 1999.35In December 1997,the Company acquired the minority interest inits Brazilian joint venture from Lojas Americanas,and then sold alesser share to an individual.The purchase price o

324、f the minorityinterest approximated book value.Because the transaction closedon December 30,1997,the results of operations for fiscal 1998include the Companys original ownership percentage of the jointventure.Pro forma results of operations are not presented due to theinsignificant differences from

325、historical results,both individuallyand in the aggregate.The fair value of the assets and liabilitiesrecorded as a result of these transactions is as follows(in millions):7 Stock Option PlansAt January 31,1999,131 million shares of common stock werereserved for issuance under stock option plans.The

326、options grant-ed under the stock option plans expire ten years from the date ofgrant.Options granted prior to November 17,1995,may be exer-cised in nine annual installments.Generally,options granted on orafter November 17,1995,may be exercised in seven annual install-ments.The Company has elected to

327、 follow Accounting PrinciplesBoard Opinion No.25,“Accounting for Stock Issued to Employees”(APB 25)and related interpretations in accounting for its employ-ee stock options because the alternative fair value accounting pro-vided under FASB Statement 123,“Accounting for Stock-BasedCompensation,”(FAS

328、No.123)requires the use of option valuationmodels that were not developed for use in valuing employee stockoptions.Under APB 25,because the exercise price of theCompanys employee stock options equals the market price of theunderlying stock on the date of the grant,no compensationexpense is recognize

329、d.Pro forma information,regarding net income and income pershare,is required by FAS No.123 and has been determined as if theCompany had accounted for its associate stock option plans underthe fair value method of that statement.The fair value of theseoptions was estimated at the date of the grant us

330、ing the Black-Scholes option pricing model with the following assumptionranges:risk-free interest rates between 7.2%and 4.4%,dividendyields between 0.4%and 1.2%,volatility factors between.23 and.29,and an expected life of the option of 7.4 years for the optionsissued prior to November 17,1995,and 5.

331、8 years for options issuedthereafter.The Black-Scholes option valuation model was developed for use inestimating the fair value of traded options,which have no vestingrestrictions and are fully transferrable.In addition,option valua-tion methods require the input of highly subjective assumptionsincl

332、uding the expected stock price volatility.Because theCompanys associate stock options have characteristics signifi-cantly different from those of traded options,and because changesin the subjective input assumptions can materially affect the fairvalue estimates,in managements opinion,the existing mo

333、dels donot necessarily provide a reliable single measure of the fair valueof its associate stock options.Using the Black-Scholes option eval-uation model,the weighted average value of options granted dur-ing the years ending January 31,1999,1998 and 1997,were$14,$7and$4 per option,respectively.The effect of applying the fair value method of FAS No.123 to thestock option grants subsequent to Februa