Filed pursuant to Rule 424(B)(2)
SEC File No. 333-64740
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 25, 2001)
Wal-Mart Stores, Inc.
$1,000,000,000
4.375% Notes Due 2007
--------------------------------------------------------------------------------
We are offering $1,000,000,000 of our 4.375% notes due 2007.
We will pay interest on January 12 and July 12 of each year, beginning on
January 12, 2003. Interest will accrue from July 12, 2002. The notes will
mature on July 12, 2007.
The notes will be our senior unsecured debt obligations, will not be redeemable
prior to maturity except in the case of a specified tax event, and will not be
convertible or exchangeable.
We expect to deliver the notes on or about July 12, 2002 through the book-entry
facilities of The Depository Trust Company, Clearstream Banking or Euroclear.
Public Underwriting Net Proceeds
Offering Price Discount to Wal-Mart
-------------- ------------ ------------
Per 4.375% note due 2007 99.658% 0.350% 99.308%
Total................... $996,580,000 $3,500,000 $993,080,000
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------
Joint Book-running Lead Managers
LEHMAN BROTHERS GOLDMAN, SACHS & CO. JPMORGAN
Senior Co-Managers
BANC ONE CAPITAL MARKETS, INC. WACHOVIA SECURITIES DEUTSCHE BANK SECURITIES
Co-Managers
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY
SALOMON SMITH BARNEY
GUZMAN & COMPANY
THE WILLIAMS CAPITAL GROUP, L.P.
July 9, 2002
TABLE OF CONTENTS
Prospectus Supplement Page
--------------------- ----
Wal-Mart Stores, Inc................... S-3
Recent Development..................... S-3
Use of Proceeds of the Notes........... S-3
Capitalization......................... S-4
Selected Financial Data................ S-5
Description of the Notes............... S-6
Book-Entry Issuance.................... S-8
U.S. Federal Income Tax Consequences to
Holders.............................. S-10
Underwriting........................... S-14
Validity of the Notes.................. S-15
General Information.................... S-15
Prospectus Page
---------- ----
Where You Can Find More Information... 2
Special Note Regarding Forward-Looking
Statements.......................... 3
Wal-Mart Stores, Inc.................. 4
Ratio of Earnings to Fixed Charges.... 5
Use of Proceeds....................... 5
Description of the Debt Securities.... 5
Tax Consequences to Holders........... 12
Plan of Distribution.................. 12
Legal Matters......................... 13
Experts............................... 13
-----------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the attached prospectus. No one has
been authorized to provide you with different information. If this prospectus
supplement is inconsistent with the attached prospectus, you should rely on
this prospectus supplement.
The notes are not being offered in any jurisdiction in which the offering is
not permitted.
This prospectus supplement and the attached prospectus may only be used in
connection with the offering of the notes.
In connection with the offering, Lehman Brothers Inc. and its affiliates may
over-allot or otherwise effect transactions which stabilize or maintain the
market price of the notes at levels above those which might otherwise prevail
in the open market. Such transactions may be effected in the over-the-counter
markets or otherwise. Such stabilizing, if commenced, may be discontinued at
any time without notice.
S-2
WAL-MART STORES, INC.
We are the world's largest retailer as measured by total net sales for
fiscal 2002. Our total net sales exceeded $217 billion in fiscal 2002, over 83%
of which was generated in the United States. We operate mass merchandising
stores that serve our customers primarily through the operation of three
segments:
. Wal-Mart stores, which include our discount stores, Supercenters and
Neighborhood Markets in the United States;
. SAM'S Clubs, which include our warehouse membership clubs in the United
States; and
. the international segment of our business.
We currently operate in all 50 states of the United States, Argentina,
Brazil, Canada, Germany, South Korea, Mexico, Puerto Rico, and the United
Kingdom, and in China under joint venture agreements. In addition, through our
subsidiary, McLane Company, Inc., we provide products and distribution services
to retail industry and institutional food service customers. As of June 30,
2002, we operated in the United States:
. 1,617 Wal-Mart stores;
. 1,140 Supercenters;
. 33 Neighborhood Markets; and
. 512 SAM'S Clubs.
As of June 30, 2002, we also operated 196 Canadian Wal-Mart stores, 11 units
in Argentina, 22 units in Brazil, 19 units in China, 96 units in Germany, 12
units in South Korea, 572 units in Mexico, 17 units in Puerto Rico and 255
units in the United Kingdom. The units operated by our International Division
represent a variety of retail formats. As of June 30, 2002, we employed more
than 1,000,000 associates in the United States and 300,000 associates
internationally.
Wal-Mart Stores, Inc. is the parent company of a group of subsidiary
companies, including McLane Company, Inc., Wal-Mart.com, Inc., Wal-Mart de
Mexico, S.A. de C.V., Asda Group Limited, Sam's West, Inc., Sam's East, Inc.,
Wal-Mart Stores East, Inc., Sam's Property Co., Wal-Mart Property Co., Wal-Mart
Real Estate Business Trust, Sam's Real Estate Business Trust and Wares Delaware
Corporation and our finance subsidiaries, Wal-Mart Cayman (Canadian) Finance
Co., Wal-Mart Cayman (Euro) Finance Co. and Wal-Mart Cayman (Sterling) Finance
Co. The information presented above relates to our operations and our
subsidiaries on a consolidated basis.
Wal-Mart Stores, Inc. was incorporated in the State of Delaware on October
31, 1969.
RECENT DEVELOPMENT
On May 28, 2002, we completed our acquisition of 6.1% of the stock of The
Seiyu, Ltd., a Japanese retail chain, for 6 billion yen, or approximately $46
million based on an exchange rate of 130 yen per U.S. dollar. Under the terms
of the acquisition, we will also have the right to contribute up to 260 billion
yen, or approximately $2 billion based on the same exchange rate, for
additional shares of stock in Seiyu. If we contribute the full 260 billion yen
to Seiyu, we will own approximately 66.7% of the stock of Seiyu. Our investment
in Seiyu represents our entry into the Japanese retail market.
USE OF PROCEEDS OF THE NOTES
We estimate that the net proceeds from the sale of the notes will be
approximately $993 million after underwriting discounts and payment of
transaction expenses.
We will use these net proceeds to reduce our outstanding commercial paper
debt, which totaled approximately $1.5 billion as of July 9, 2002.
S-3
CAPITALIZATION
The following table presents the consolidated capitalization of Wal-Mart and
its subsidiaries at April 30, 2002, and as adjusted to give effect to the
offering of the notes and the application of the estimated net proceeds from
the sale of the notes to reduce our commercial paper debt.
April 30, 2002
----------------
As
Actual Adjusted
------- --------
(in millions)
Short-term debt
Commercial paper................................................................ $ 854 $ --
Long-term debt due within one year.............................................. 3,169 3,169
Obligations under capital leases due within one year............................ 153 153
------- -------
Total short-term debt and capital lease obligations......................... 4,176 3,322
------- -------
Long-term debt
4.375% Notes Due 2007........................................................... -- 1,000
Other long-term debt............................................................ 15,246 15,246
Long-term capital lease obligations............................................. 3,004 3,004
------- -------
Total long-term debt and capital lease obligations.......................... 18,250 19,250
------- -------
Shareholders' equity
Common stock ($0.10 par value; 11,000,000,000 shares authorized;
4,448,040,209 shares issued and outstanding).................................. 445 445
Capital in excess of par value.................................................. 1,476 1,476
Retained earnings............................................................... 35,404 35,404
Other accumulated comprehensive income.......................................... (1,477) (1,477)
------- -------
Total shareholders' equity.................................................. 35,848 35,848
------- -------
Total debt and capital lease obligations and shareholders' equity........ $58,274 $58,420
======= =======
A portion of the net proceeds from the sale of the notes will be used to
reduce additional outstanding commercial paper debt issued subsequent to April
30, 2002 and in excess of the amount of commercial paper debt in the above
table.
We are permitted to issue an additional $1,000,000,000 of debt securities
under a registration statement of which the attached prospectus and this
prospectus supplement are a part. No limit exists on our ability to register
additional debt securities for sale in the future.
S-4
SELECTED FINANCIAL DATA
The following table presents selected financial data of Wal-Mart and its
subsidiaries for the periods specified.
Three Months
Fiscal Years Ended January 31, Ended April 30,
-------------------------------------------- ---------------
1998 1999 2000 2001 2002 2001 2002
-------- -------- -------- -------- -------- ------- -------
(in millions)
Income Statement Data:
Net sales............................................ $117,958 $137,634 $165,013 $191,329 $217,799 $48,052 $54,960
Non-interest expense................................. 112,796 131,088 156,704 181,805 207,735 45,993 52,512
Interest expense..................................... 784 797 1,022 1,374 1,326 352 281
Total expense........................................ 113,580 131,885 157,726 183,179 209,061 46,345 52,793
Income before income taxes, minority interest, equity
in unconsolidated subsidiaries and cumulative
effect of accounting change......................... 5,719 7,323 9,083 10,116 10,751 2,220 2,625
Net Income........................................... 3,526 4,430 5,377 6,295 6,671 1,380 1,652
As of January 31, As of April 30,
-------------------------------------------- ---------------
1998 1999 2000 2001 2002 2001 2002
-------- -------- -------- -------- -------- ------- -------
(in millions)
Balance Sheet Data:
Cash and cash equivalents............................ $ 1,447 $ 1,879 $ 1,856 $ 2,054 $ 2,161 $ 1,477 $ 2,418
Inventories.......................................... 16,497 17,076 19,793 21,442 22,614 22,748 23,532
Total current assets................................. 19,352 21,132 24,356 26,555 28,246 27,281 28,895
Net property, plant and equipment.................... 21,469 23,674 32,839 37,617 42,556 38,472 43,682
Net property under capital leases, net goodwill and
other acquired intangible assets, and other assets
and deferred charges................................ 4,563 5,190 13,154 13,958 12,649 13,675 12,564
Total assets......................................... 45,384 49,996 70,349 78,130 83,451 79,428 85,141
Accounts payable..................................... 9,126 10,257 13,105 15,092 15,617 14,765 16,214
Commercial paper..................................... -- -- 3,323 2,286 743 3,554 854
Long-term debt due within one year................... 1,039 900 1,964 4,234 2,257 3,442 3,169
Obligations under capital leases due within one
year................................................ 102 106 121 141 148 100 153
Total current liabilities............................ 14,460 16,762 25,803 28,949 27,282 28,640 28,626
Long-term debt....................................... 7,191 6,908 13,672 12,501 15,687 13,534 15,246
Long-term obligations under capital leases........... 2,483 2,699 3,002 3,154 3,045 3,095 3,004
Total liabilities.................................... 26,881 28,884 44,515 46,787 48,349 47,464 49,293
Total shareholders' equity........................... 18,503 21,112 25,834 31,343 35,102 31,964 35,848
Total liabilities and shareholders' equity........... 45,384 49,996 70,349 78,130 83,451 79,428 85,141
The ratio of our earnings to fixed charges was 5.56x for the year ended
January 31, 2002 and was 5.68x and 4.87x for the three months ended April 30,
2002 and 2001, respectively. See "Ratio of Earnings to Fixed Charges" in the
attached prospectus.
S-5
DESCRIPTION OF THE NOTES
The following description of the terms and conditions of the notes
supplements the more general terms and conditions of Wal-Mart's debt securities
contained in the attached prospectus.
The notes will be issued under the indenture and will be issued in
registered form without interest coupons in denominations of $1,000 and
integral multiples of $1,000. The notes will constitute our senior unsecured
debt obligations and will rank equally among themselves and with all of our
existing and future senior unsecured debt.
The notes will mature on July 12, 2007 at 100% of their principal amount and
will be initially issued in a total principal amount of $1,000,000,000.
We may, without the consent of the holders of the notes, create and issue
additional notes ranking equally with the notes that we are offering and
otherwise similar in all respects to the notes so that those additional notes
will be consolidated and form a single series with the notes that we are
offering. No additional notes may be issued if an event of default under the
indenture has occurred.
The notes will not be subject to a sinking fund and will not be prepayable
or redeemable prior to maturity, except in the case of a tax event as explained
below. The notes will be subject to defeasance as described in the attached
prospectus. The notes will not be convertible or exchangeable. We will pay
principal of and interest on the notes in U.S. dollars.
The notes will bear interest from July 12, 2002 at the annual interest rate
specified on the cover page of this prospectus supplement. Interest will be
payable semi-annually in arrears on January 12 and July 12 of each year,
beginning on January 12, 2003, to the person in whose name the note is
registered at the close of business on the preceding January 1 or July 1, as
the case may be. Interest on the notes will be computed on the basis of a
360-day year of twelve 30-day months.
Notices to holders of the notes will be mailed to such holders and will also
be published in a leading daily newspaper in The City of New York and in
London. We expect that publication will be made in The City of New York in The
Wall Street Journal and in London in the Financial Times. Any notice shall be
deemed to have been given on the date of mailing and publication or, if
published more than once, on the date of first publication.
The terms and conditions of the notes, including, among other provisions,
the covenants and events of defaults, differ from the terms and conditions of
some other debt securities that we previously have offered and sold and that
remain outstanding. For example, the notes do not have the covenant restricting
the grant of liens and cross-default event of default provision that are
contained in some of our outstanding debt securities.
The notes will not be listed for trading on any exchange. Currently, no
public market exists for the notes.
Bank One Trust Company, NA is the trustee under the indenture governing the
notes and will also be the registrar and paying agent.
The indenture and the notes will be governed by New York law.
Same-Day Settlement and Payment
We will make all payments of principal and interest on the notes to The
Depository Trust Company ("DTC") in immediately available funds.
The notes will trade in same-day funds settlement system until maturity.
Purchases of notes in secondary market trading must be in immediately available
funds.
S-6
Payment of Additional Amounts
We will pay to the holder of any note who is a United States Alien, as
defined below, additional amounts as may be necessary so that every net payment
of principal of and interest on that note, after deduction or withholding for
or on account of any present or future tax, assessment or other governmental
charge imposed upon that holder by the United States or any taxing authority
thereof or therein, will not be less than the amount provided in that note to
be then due and payable. We will not be required, however, to make any payment
of additional amounts for or on account of:
(a) any tax, assessment or other governmental charge that would not have
been imposed but for (1) the existence of any present or former
connection between that holder, or between a fiduciary, settlor,
beneficiary of, member or shareholder of, or possessor of a power over,
that holder, if that holder is an estate, trust, partnership or
corporation, and the United States including, without limitation, that
holder, or that fiduciary, settlor, beneficiary, member, shareholder or
possessor, being or having been a citizen or resident or treated as a
resident of the United States or being or having been engaged in trade
or business or present in the United States or (2) the presentation of a
note for payment on a date more than 30 days after the later of the date
on which that payment becomes due and payable and the date on which
payment is duly provided for;
(b) any estate, inheritance, gift, sales, transfer, excise, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge imposed by reason of
that holder's past or present status as a passive foreign investment
company, a controlled foreign corporation, a personal holding company or
foreign personal holding company with respect to the United States, or
as a corporation which accumulates earnings to avoid United States
federal income tax;
(d) any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payment of principal of or interest
on that note;
(e) any tax, assessment or other governmental charge required to be withheld
by any paying agent from any payment of principal of or interest on any
note if that payment can be made without withholding by any other paying
agent;
(f) any tax, assessment or other governmental charge which would not have
been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements concerning
the nationality, residence, identity or connections with the United
States of the holder or beneficial owner of that note, if such
compliance is required by statute or by regulation of the U.S. Treasury
Department as a precondition to relief or exemption from such tax,
assessment or other governmental charge;
(g) any tax, assessment or other governmental charge imposed on interest
received by (1) a 10% shareholder (as defined in Section 871(h)(3)(B) of
the U.S. Internal Revenue Code of 1986, as amended, and the regulations
that may be promulgated thereunder) of our company or (2) a controlled
foreign corporation with respect to our company within the meaning of
the Internal Revenue Code; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor will we pay any additional amounts to any holder who is a fiduciary or
partnership other than the sole beneficial owner of that note to the extent
that a beneficiary or settlor with respect to that fiduciary, or a member of
that partnership or a beneficial owner thereof would not have been entitled to
the payment of those additional amounts had that beneficiary, settlor, member
or beneficial owner been the holder of that note.
"United States Alien" means any corporation, partnership, individual or
fiduciary that is, as to the United States, a foreign corporation, a
non-resident alien individual who has not made a valid election to be treated
as a United States resident, a non-resident fiduciary of a foreign estate or
trust, or a foreign partnership one or more of
S-7
the members of which is, as to the United States, a foreign corporation, a
non-resident alien individual or a non-resident fiduciary of a foreign estate
or trust.
Redemption upon a Tax Event
The notes may be redeemed at our option in whole, but not in part, on not
more than 60 days' and not less than 30 days' notice, at a redemption price
equal to 100% of their principal amount, if we determine that as a result of
any change or amendment to the laws, treaties, regulations or rulings of the
United States or any political subdivision or taxing authority thereof, or any
proposed change in such laws, treaties, regulations or rulings, or any change
in the official application, enforcement or interpretation of those laws,
treaties, regulations or rulings, including a holding by a court of competent
jurisdiction in the United States, or any other action, other than an action
predicated on law generally known on or before July 9, 2002 except for
proposals before the Congress before that date, taken by any taxing authority
or a court of competent jurisdiction in the United States, or the official
proposal of any action, whether or not such action or proposal was taken or
made with respect to us, (A) we have or will become obligated to pay additional
amounts as described under "--Payment of Additional Amounts" on any note of
that series or (B) there is a substantial possibility that we will be required
to pay those additional amounts. Prior to the publication of any notice of
redemption, we will deliver to the trustee (1) an officers' certificate stating
that we are entitled to effect a redemption and setting forth a statement of
facts showing that the conditions precedent to the right of our company to so
redeem have occurred and (2) an opinion of counsel to that effect based on that
statement of facts.
BOOK-ENTRY ISSUANCE
The notes will be represented by one or more global securities that will be
deposited with and registered in the name of DTC or its nominee. Thus, we will
not issue certificated securities to you for the notes, except in the limited
circumstances described below. Each global security will be issued to DTC,
which will keep a computerized record of its participants whose clients have
purchased the notes. Each participant will then keep a record of its clients.
Unless it is exchanged in whole or in part for a certificated security, a
global security may not be transferred. DTC, its nominees and their successors
may, however, transfer a global security as a whole to one another, and these
transfers are required to be recorded on our records or a register to be
maintained by the trustee.
Beneficial interests in a global security will be shown on, and transfers of
beneficial interests in the global security will be made only through, records
maintained by DTC and its participants. DTC has provided us with the following
information: DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its direct
participants deposit with DTC. DTC also records the settlements among direct
participants of securities transactions, such as transfers and pledges, in
deposited securities through computerized records for direct participants'
accounts. This eliminates the need to exchange certificated securities. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on
file with the SEC.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
S-8
When you purchase notes through the DTC system, the purchases must be made
by or through a direct participant, which will receive credit for the notes on
DTC's records. When you actually purchase the notes, you will become their
beneficial owner. Your ownership interest will be recorded only on the direct
or indirect participants' records. DTC will have no knowledge of your
individual ownership of the notes. DTC's records will show only the identity of
the direct participants and the amount of the notes held by or through them.
You will not receive a written confirmation of your purchase or sale or any
periodic account statement directly from DTC. You should instead receive these
from your direct or indirect participant. As a result, the direct or indirect
participants are responsible for keeping accurate account of the holdings of
their customers. The trustee will wire payments on the notes to DTC's nominee.
The trustee and we will treat DTC's nominee as the owner of each global
security for all purposes. Accordingly, the trustee, any paying agent and we
will have no direct responsibility or liability to pay amounts due on a global
security to you or any other beneficial owners in that global security. Any
redemption notices will be sent by us directly to DTC, which will, in turn,
inform the direct participants (or the indirect participants), which will then
contact you as a beneficial holder.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amounts, to proportionately credit direct participants' accounts
on the payment date based on their holdings. In addition, it is DTC's current
practice to pass through any consenting or voting rights to such participants
by using an omnibus proxy. Those participants will, in turn, make payments to
and solicit votes from you, the ultimate owner of notes, based on their
customary practices. Payments to you will be the responsibility of the
participants and not of DTC, the trustee or our company.
Notes represented by one or more global securities will be exchangeable for
certificated securities with the same terms in authorized denominations only if:
. DTC is unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under applicable law, and a successor is not
appointed by us within 90 days; or
. we decide to discontinue the book-entry system; or
. an event of default has occurred and is continuing with respect to the
notes.
If the global security is exchanged for certificated securities, the trustee
will keep the registration books for the notes at its corporate office and
follow customary practices and procedures regarding those certificated
securities.
Clearstream Banking and Euroclear
Links have been established among DTC, Clearstream Banking and Euroclear,
which are two European book-entry depositaries similar to DTC, to facilitate
the initial issuance of the notes sold outside of the United States and
cross-market transfers of the notes associated with secondary market trading.
Although DTC, Clearstream Banking and Euroclear have agreed to the
procedures provided below in order to facilitate transfers, they are under no
obligation to perform these procedures, and these procedures may be modified or
discontinued at any time.
Clearstream Banking and Euroclear will record the ownership interests of
their participants in much the same way as DTC, and DTC will record the total
ownership of each of the U.S. agents of Clearstream Banking and Euroclear, as
participants in DTC.
When notes are to be transferred from the account of a DTC participant to
the account of a Clearstream Banking participant or a Euroclear participant,
the purchaser must send instructions to Clearstream Banking or Euroclear
through a participant at least one day prior to settlement. Clearstream Banking
or Euroclear, as the case may be, will instruct its U.S. agent to receive notes
against payment. After settlement, Clearstream Banking or Euroclear will credit
its participant's account. Credit for the notes will appear on the next day
(European time).
S-9
Because settlement is taking place during New York business hours, DTC
participants will be able to employ their usual procedures for sending notes to
the relevant U.S. agent acting for the benefit of Clearstream Banking or
Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. As a result, to the DTC participant, a cross-market
transaction will settle no differently than a trade between two DTC
participants.
When a Clearstream Banking or Euroclear participant wishes to transfer notes
to a DTC participant, the seller will be required to send instructions to
Clearstream Banking or Euroclear through a participant at least one business
day prior to settlement. In these cases, Clearstream Banking or Euroclear will
instruct its U.S. agent to transfer these notes against payment for them. The
payment will then be reflected in the account of the Clearstream Banking or
Euroclear participant the following day, with the proceeds back-valued to the
value date, which would be the preceding day, when settlement occurs in New
York. If settlement is not completed on the intended value date, that is, the
trade fails, proceeds credited to the Clearstream Banking or Euroclear
participant's account will instead be valued as of the actual settlement date.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS
The following is a discussion of material U.S. federal income tax
consequences of the ownership of notes as of the date of this prospectus
supplement for beneficial owners of notes that purchase the notes at their
"issue price" on the issue date in connection with this offering. Except where
noted, this discussion deals only with notes held as capital assets and does
not deal with special situations. For example, this discussion does not address:
. tax consequences to holders who may be subject to special tax treatment,
such as dealers in securities or currencies, financial institutions, real
estate investment trusts, regulated investment companies, tax-exempt
entities, traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings, corporations that accumulate
earnings to avoid federal income tax, insurance companies, or, in some
cases, an expatriate of the United States or a nonresident alien
individual who has made a valid election to be treated as a United States
resident;
. tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction or a straddle;
. tax consequences to holders of notes whose "functional currency" is not
the U.S. dollar;
. tax consequences to holders of notes that are "controlled foreign
corporations," "passive foreign investment companies" or "foreign personal
holding companies;"
. alternative minimum tax consequences, if any; or
. any state, local or foreign tax consequences.
If a partnership or an entity treated as a partnership for U.S. federal
income tax purposes holds any of the notes, the tax treatment of a partner or
an equity interest owner of such other entity will generally depend upon the
status of the person and the activities of the partnership or other entity
treated as a partnership. If you are a partner of a partnership or an equity
interest owner of another entity treated as a partnership holding any of the
notes, you should consult your tax advisors.
The discussion below is based upon the provisions of the U.S. Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions as of the date of this prospectus supplement. Those authorities may
be changed, perhaps retroactively, so as to result in U.S. federal income tax
consequences different from those discussed below.
You should consult your own tax advisors concerning the U.S. federal income
tax consequences to you and any consequences arising under the laws of any
other taxing jurisdiction.
S-10
Consequences to United States Holders
The following is a discussion of material U.S. federal tax consequences that
will apply to you if you are a United States holder of notes.
"United States holder" means a beneficial owner of a note that is:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision of the United States;
. an estate, the income of which is subject to U.S. federal income taxation
regardless of its source; or
. a trust that (1) is subject to the primary supervision of a court within
the United States and the control of one or more U.S. persons or (2) has a
valid election in effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
Payments of Interest
Interest on a note will generally be taxable to you as ordinary income at
the time it is paid or accrued in accordance with your method of accounting for
tax purposes.
Sale, Exchange and Retirement of Notes
Your tax basis in a note will, in general, be your cost for that note
reduced by any cash payments on that note other than qualified stated interest.
Upon the sale, exchange, retirement or other disposition of a note, you will
recognize gain or loss equal to the difference between the amount you realize
upon the sale, exchange, retirement or other disposition (less an amount equal
to any accrued stated interest that you did not previously include in income,
which will be treated as a payment of interest for federal income tax purposes)
and your adjusted tax basis in the note. That gain or loss will be capital gain
or loss. Capital gains of individuals derived in respect of capital assets held
for more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to certain
payments of principal and interest paid on the notes and to the proceeds of
sale of the notes made to you unless you are an exempt recipient (such as a
corporation). A backup withholding tax of 30% for payments during 2002 and 2003
(declining to 29% in 2004 and 2005, and 28% in 2006 and thereafter) will apply
to such payments if you fail to provide a correct taxpayer identification
number or certification of foreign or other exempt status or fail to report in
full dividend and interest income.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax liability provided the
required information is timely furnished to the IRS.
Consequences to Non-United States Holders
The following is a discussion of the material U.S. federal income and estate
tax consequences that generally will apply to you if you are a non-United
States holder of Notes. A non-United States holder is a holder other than a
United States holder.
U.S. Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any payment of
principal of or interest on the notes, provided that:
S-11
. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of Section 871(h)(3) of the Internal Revenue Code and related U.S.
Treasury regulations;
. you are not a controlled foreign corporation that is related to us through
stock ownership;
. you are not a bank whose receipt of interest on the notes is described in
Section 881(c)(3)(A) of the Internal Revenue Code; and
. (1) you provide your name and address on an IRS Form W-8BEN ( or successor
form), and certify, under penalty of perjury, that you are not a U.S.
person or (2) you hold your notes through certain foreign intermediaries,
and you satisfy the certification requirements of applicable U.S. Treasury
regulations. Special certification rules apply to certain non-United
States holders that are entities rather than individuals.
If you cannot satisfy the requirements described above, payments of interest
made to you will be subject to the 30% U.S. federal withholding tax, unless you
provide us with a properly executed (1) IRS Form W-8BEN (or successor form)
claiming an exemption from or reduction in the rate of withholding under the
benefit of an applicable tax treaty or (2) IRS Form W-8ECI (or successor form)
stating that interest paid on the notes is not subject to withholding tax
because it is effectively connected with your conduct of a trade or business in
the United States.
The 30% U.S. federal withholding tax generally will not apply to any gain
that you realize on the sale, exchange, retirement or other disposition of the
note.
U.S. Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on the notes
beneficially owned by you at the time of your death, provided that (1) you do
not own, within the meaning of the Internal Revenue Code and the U.S. Treasury
regulations, 10% or more of the total combined voting power of those classes of
our voting stock referred to above and (2) interest on the notes would not have
been, if received at the time of your death, effectively connected with the
conduct by you of a trade or business in the United States.
U.S. Federal Income Tax
If you are engaged in a trade or business in the United States and interest
on the notes is effectively connected with the conduct of that trade or
business, you will be subject to U.S. federal income tax on that interest on a
net income basis (although exempt from the 30% withholding tax) in the same
manner as if you were a U.S. person as defined under the Internal Revenue Code.
In addition, if you are a foreign corporation, you may be subject to a branch
profits tax equal to 30% (or lower applicable treaty rate) of your earnings and
profits for the taxable year, subject to adjustments, that are effectively
connected with the conduct by you of a trade or business in the United States.
For this purpose, interest on notes will be included in your earnings and
profits.
Any gain realized on the disposition of a note generally will not be subject
to U.S. federal income tax unless (1) that gain or income is effectively
connected with the conduct of a trade or business in the United States by you,
or (2) you are an individual who is present in the United States for 183 days
or more in the taxable year of that disposition and certain other conditions
are met.
Information Reporting and Backup Withholding
In general, information reporting and backup withholding will not apply to
payments that we make or any of our paying agents (in its capacity as such)
makes to you if you have provided the required certification that you are a
non-United States holder as described above and provided that neither we nor
any of our paying agents has actual knowledge that you are a United States
holder (as described above).
S-12
In addition, you will not be subject to backup withholding and information
reporting with respect to the proceeds of the sale of a note within the United
States or conducted through certain U.S.-related financial intermediaries, if
the payor receives the statement described above and does not have actual
knowledge that you are a U.S. person, as defined under the Internal Revenue
Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
S-13
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
we have agreed to sell to the underwriters named below, severally and not
jointly, the principal amount of the notes set forth opposite their respective
names:
Principal Amount
Underwriter of Notes
----------- ----------------
Lehman Brothers Inc................... $ 200,000,000
Goldman, Sachs & Co................... 200,000,000
J.P. Morgan Securities Inc............ 200,000,000
Banc One Capital Markets, Inc......... 90,000,000
Wachovia Securities, Inc.............. 90,000,000
Deutsche Bank Securities Inc.......... 80,000,000
Credit Suisse First Boston Corporation 40,000,000
Morgan Stanley & Co. Incorporated..... 40,000,000
Salomon Smith Barney Inc.............. 40,000,000
Guzman & Company...................... 10,000,000
The Williams Capital Group, L.P....... 10,000,000
--------------
Total.............................. $1,000,000,000
==============
The underwriters have advised us that they propose to offer the notes to the
public initially at the public offering prices set forth on the cover page of
this prospectus supplement. The underwriters may also offer notes to dealers at
that price less concessions not in excess of 0.200% of the principal amount of
the notes. The underwriters may allow, and these dealers may reallow, a
concession to other dealers not in excess of 0.125% of the principal amount of
the notes. After the initial public offering of the notes is completed, the
public offering prices and these concessions may be changed.
In connection with the offering, SEC rules permit the underwriters to engage
in certain transactions that stabilize the price of the notes. These
transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the notes. If the underwriters create a
short position in the notes in connection with the offering by selling a larger
principal amount of notes than as set forth on the cover page of this
prospectus supplement, the underwriters may reduce that short position by
purchasing notes in the open market. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might otherwise be in the absence of
such purchases. Neither the underwriters nor we can make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither the
underwriters nor we make any representation that the underwriters will engage
in such transactions, or that such transactions, once begun, will not be
discontinued without notice. Lehman Brothers Inc. will act as stabilization
manager for the offering of the notes.
Some of the underwriters and their affiliates may from time to time in the
ordinary course of business provide, and have provided in the past, investment
or commercial banking services to us and our affiliates. Banc One Capital
Markets, Inc. and Bank One Trust Company, NA, the indenture trustee, are each
wholly-owned subsidiaries of Bank One Corporation.
We will pay transaction expenses, estimated to be approximately $80,000,
relating to the offering of the notes in addition to the underwriting discounts
appearing on the cover page of this prospectus supplement.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
S-14
Each of the underwriters has represented and agreed that (1) it has not
offered or sold and, prior to the expiry of the period of six months after the
date of issue of the notes, will not offer or sell any notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(2) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000 (the "FSMA")) received by it in connection with
the issue or sale of any notes in circumstances in which section 21(1) of the
FSMA does not apply to us; and (3) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the notes in, from or otherwise involving the United Kingdom.
Each of the underwriters has represented and agreed that it has not offered
or sold and will not offer or sell the notes, nor will it circulate or
distribute this prospectus supplement or any other offering document or
material in connection with the offer of the notes, whether directly or
indirectly, to the public or any member of the public in Singapore other than
(1) to an institutional investor or other person specified in Section 106C of
the Singapore Companies Act, (2) to a sophisticated investor, and in accordance
with the conditions, specified in Section 106D of the Singapore Companies Act
or (3) otherwise pursuant to, and in accordance with the conditions of, any
other applicable provision of the Singapore Companies Act.
Each of the underwriters has also acknowledged and agreed that the notes
have not been registered under the Securities and Exchange Law of Japan and are
not being offered or sold and may not be offered or sold, directly or
indirectly, in Japan or to or for the account of any resident of Japan, except
(1) pursuant to an exemption from the registration requirements of the
Securities and Exchange Law of Japan and (2) in compliance with any other
applicable requirements of Japanese law.
The offering of the notes is being conducted pursuant to Conduct Rule
2710(C)(8) of the NASD.
Lehman Brothers Inc. and J.P. Morgan Securities Inc. will make the notes
available for distribution on the Internet through a proprietary Web site
and/or a third-party system operated by Market Axess Inc., an Internet-based
communications technology provider. Market Axess Inc. is providing the system
as a conduit for communications between Lehman Brothers Inc. and its customers
and J.P. Morgan Securities Inc. and its customers and is not a party to any
transactions. Market Axess Inc., a registered broker-dealer, will receive
compensation from Lehman Brothers Inc. or J.P. Morgan Securities Inc. based on
transactions Lehman Brothers Inc. or J.P. Morgan Securities Inc. conducts
through the system. Lehman Brothers Inc. and J.P. Morgan Securities Inc. will
make the notes available to their customers through the Internet distributions,
whether made through a proprietary or third-party system, on the same terms as
distributions made through other channels.
VALIDITY OF THE NOTES
The validity of the notes will be passed on for us by Hughes & Luce, L.L.P.,
Dallas, Texas, and for the underwriters by Simpson Thacher & Bartlett, New
York, New York.
GENERAL INFORMATION
Except as disclosed in this prospectus supplement or the attached
prospectus, including the documents incorporated by reference, there has been
no material adverse change in our financial position since April 30, 2002.
Our independent auditors are Ernst & Young LLP, Tulsa, Oklahoma.
The notes have been accepted for clearance through DTC, Clearstream Banking
and Euroclear and have been assigned the following identification numbers:
CUSIP Number ISIN Number Common Code
------------ ------------------------ ------------------------
931142BR3 US931142BR37 015150769
S-15
PROSPECTUS
WAL-MART STORES, INC.
$6,000,000,000
DEBT SECURITIES
This prospectus forms part of a shelf registration statement that we and
several of our subsidiaries filed with the Securities and Exchange Commission.
We may use that registration statement to offer and sell, in one or more
offerings at various times, up to a total of $6,000,000,000 of our debt
securities. As described in a separate prospectus contained in that
registration statement, that registration statement also registers the offer
and sale of debt securities by three of our finance subsidiaries, Wal-Mart
Cayman (Euro) Finance Co., Wal-Mart Cayman (Canadian) Finance Co. and Wal-Mart
Cayman (Sterling) Finance Co. The offer and sale of debt securities by one or
more of those subsidiaries under that separate prospectus and any related
prospectus supplements will reduce the amount of debt securities that we can
offer and sell under this prospectus.
We may offer and sell debt securities in different series that have
different terms and conditions. This prospectus provides you with a general
description of certain material terms of those debt securities. When we sell a
particular series of the debt securities, we will provide a prospectus
supplement describing the specific terms and conditions of that series of debt
securities, including:
. the public offering price;
. the maturity date;
. the interest rate or rates, which may be fixed or variable;
. the times for payment of principal, interest and any premium; and
. any redemption provisions of the debt securities in the series.
The prospectus supplement may also contain important information about U.S.
federal income tax consequences and, in certain circumstances, consequences
under other countries' tax laws to which you may become subject if you acquire
the debt securities being offered by that prospectus supplement. The prospectus
supplement may also update or change information contained in this prospectus.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
You should read carefully both this prospectus and any prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information" before making your investment decision.
We maintain our principal executive offices at:
702 S.W. 8th Street
Bentonville, Arkansas 72716
Telephone: (501) 273-4000.
Neither the Securities and Exchange Commission nor any state securities
commission or other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is July 25, 2001.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information.............. 2
Special Note Regarding Forward-Looking Statements 3
Wal-Mart Stores, Inc............................. 4
Ratio of Earnings to Fixed Charges............... 5
Use of Proceeds.................................. 5
Description of the Debt Securities............... 5
Tax Consequences to Holders...................... 12
Plan of Distribution............................. 12
Legal Matters.................................... 13
Experts.......................................... 13
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. We
have not authorized anyone to provide you with different information.
We are not offering the debt securities in any jurisdiction in which the
offer is not permitted.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Instead of repeating the information that we have
already filed with the SEC, the SEC allows us to "incorporate by reference" in
this prospectus information contained in documents we have filed with the SEC.
Those documents form an important part of this prospectus. Any documents that
we file with the SEC in the future will also be considered to be part of this
prospectus and will automatically update and supersede the information
contained in this prospectus.
We incorporate by reference in this prospectus the documents listed below
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until we complete or terminate the
offering of debt securities by this prospectus.
. Wal-Mart's Annual Report on Form 10-K for its fiscal year ended January
31, 2001, as amended.
. Wal-Mart's Quarterly Report on Form 10-Q for its fiscal quarter ended
April 30, 2001.
. Wal-Mart's Current Report on Form 8-K dated May 9, 2001.
As allowed by the SEC's rules, we have not included in this prospectus all
of the information that is included in the registration statement. At your
request we will provide you, free of charge, with a copy of the registration
statement, any of the exhibits to the registration statement or a copy of any
other information we have incorporated by reference into the registration
statement. If you want more information, write in care of or call:
Allison D. Garrett, Esq.
Vice President and Assistant General Counsel
Wal-Mart Stores, Inc.
Corporate Offices
702 S.W. 8th Street, Mail Stop 0290
Bentonville, Arkansas 72716
Telephone: (501) 273-4505
2
You may also obtain a copy of any filing we have made with the SEC directly
from the SEC. You may either:
. read and copy any materials we file with the SEC at the SEC's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
its offices in New York, New York at 7 World Trade Center, Suite 1300, New
York, New York 10048, and Chicago, Illinois at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; or
. visit the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
issuers that file electronically.
You can obtain more information about the SEC's public reference room by
calling the SEC at 1-800-SEC-0330.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference certain statements
that may be deemed to be "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
may be included, for example, under "Wal-Mart Stores, Inc." and "Use of
Proceeds," and in certain portions of our reports and other information
incorporated in this prospectus by reference. These forward-looking statements
may include statements that address activities, events or developments that we
expect or anticipate will or may occur in the future, including:
. future capital expenditures, including the amount and nature of those
expenditures;
. expansion and other development trends of industry segments in which we
and our subsidiaries are active;
. our business strategy;
. our financing strategy;
. expansion and growth of our business; and
. operations and other similar matters.
Although we believe the expectations expressed in the forward-looking
statements are based on reasonable assumptions within the bounds of our
knowledge of our business, a number of factors could cause actual results to
differ materially from those expressed in any forward-looking statements,
whether oral or written, made by us or on our behalf. Many of these factors
have previously been identified in filings or statements made by us or on our
behalf.
Our business operations are subject to factors outside our control. Any one,
or a combination, of these factors could materially affect our financial
performance. These factors include:
. the costs of goods;
. the cost of electricity and other energy requirements;
. competitive pressures;
. inflation;
. consumer debt levels;
. currency exchange fluctuations;
. trade restrictions;
. changes in tariff and freight rates;
3
. unemployment levels;
. interest rate fluctuations; and
. other capital market and economic conditions.
Forward-looking statements that we make or that are made by others on our
behalf are based on a knowledge of our business and the environment in which we
operate, but because of the factors listed above, actual results may differ
from those in the forward-looking statements. Consequently, all of the
forward-looking statements made are qualified by these cautionary statements.
We cannot assure you that the actual results or developments anticipated by us
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on us or on our business or operations.
Prospective investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. We assume no
obligation to update any of the forward-looking statements.
WAL-MART STORES, INC.
We are the world's largest retailer as measured by total net sales for
fiscal 2001. Our total net sales exceeded $191 billion in fiscal 2001, over 83%
of which was generated in the United States. We operate mass merchandising
stores that serve our customers primarily through the operation of three
segments:
. Wal-Mart stores, which include our discount stores, Supercenters and
Neighborhood Markets in the United States;
. SAM'S Clubs, which include our warehouse membership clubs in the United
States; and
. the international segment of our business.
We currently operate in all 50 states of the United States, Argentina,
Brazil, Canada, Germany, Korea, Mexico, Puerto Rico, and the United Kingdom,
and in China under joint venture agreements. In addition, through our
subsidiary, McLane Company, Inc., we provide products and distribution services
to retail industry and institutional food service customers. As of June 30,
2001, we operated in the United States:
. 1,682 Wal-Mart stores;
. 977 Supercenters;
. 22 Neighborhood Markets; and
. 486 SAM'S Clubs.
As of June 30, 2001, we also operated 176 Canadian Wal-Mart stores, 11 units
in Argentina, 21 units in Brazil, 12 units in China, 93 units in Germany, six
units in Korea, 515 units in Mexico, 17 units in Puerto Rico and 245 units in
the United Kingdom. The units operated by our International Division represent
a variety of retail formats. As of June 30, 2001, we employed more than 962,000
associates in the United States and 282,000 associates internationally.
Wal-Mart Stores, Inc. is the parent company of a group of subsidiary
companies, including McLane Company, Inc., Wal-Mart.com, Inc., Wal-Mart de
Mexico, S.A. de C.V., Asda Group Limited, Sam's West, Inc., Sam's East, Inc.,
Wal-Mart Stores East, Inc., Sam's Property Co., Wal-Mart Property Co., Wal-Mart
Real Estate Business Trust, Sam's Real Estate Business Trust, Wares Delaware
Corporation and the finance subsidiaries. The information presented above
relates to our operations and our subsidiaries on a consolidated basis.
Wal-Mart Stores, Inc. was incorporated in the State of Delaware on October
31, 1969.
4
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed charges,
for the periods indicated:
Three Months Ended
Year Ended January 31, April 30,
----------------------------- ------------------
1997 1998 1999 2000 2001 2000 2001
----- ----- ----- ----- ----- ----- -----
4.59x 5.33x 6.24x 6.76x 5.54x 5.47x 4.87x
For the purpose of computing our ratios of earnings to fixed charges, we
have defined "earnings" to mean our earnings before income taxes and fixed
charges, excluding capitalized interest and earnings attributable to minority
interests owned by others in our subsidiaries.
We have also defined "fixed charges" to mean:
. the interest that we pay; plus
. the capitalized interest that we show on our accounting records; plus
. the portion of the rental expense for real and personal property that we
believe represents the interest factor in those rentals.
We have not disclosed ratios of earnings to fixed charges and preferred
stock dividends because we do not have any shares of preferred stock
outstanding.
USE OF PROCEEDS
Except as we otherwise specifically describe in an applicable prospectus
supplement, we will use the net proceeds from the sale of the debt securities:
. to repay the short-term borrowings that we have incurred for corporate
purposes, including to finance capital expenditures such as the purchase
of land and construction of stores and other facilities;
. to repay short-term borrowings that we have incurred to acquire other
companies and assets; and
. to meet our other general working capital requirements.
Before we apply the net proceeds to one or more of these uses, we may invest
those net proceeds in short-term marketable securities.
We may also incur from time to time additional debt other than through the
offering of debt securities under this prospectus.
DESCRIPTION OF THE DEBT SECURITIES
We will issue the debt securities in one or more series under an indenture,
dated as of July 5, 2001, among us, three of our finance subsidiaries, Wal-Mart
Cayman (Euro) Finance Co., Wal-Mart Cayman (Canadian) Finance Co., and Wal-Mart
Cayman (Sterling) Finance Co. (collectively, the "finance subsidiaries") and
Bank One Trust Company, NA, as the indenture trustee.
The indenture is a contract among us, the finance subsidiaries and the
trustee. The trustee has two main roles. First, the trustee can enforce your
rights against us if an "event of default," as that term is described below,
occurs under the indenture in relation to debt securities we have issued.
Second, the trustee performs certain administrative duties for us.
5
We have summarized below material provisions of the debt securities that we
will offer and sell pursuant to this prospectus and material provisions of the
indenture. However, you should understand that this is only a summary. We have
not described all of the provisions of the indenture. We have filed the
indenture with the SEC, and we suggest that you read the indenture. We are
incorporating by reference the provisions of the indenture referred to in the
following summary, whether by reference to articles, sections or defined terms.
The following summary is qualified in its entirety by those provisions of the
indenture.
We will describe the particular terms and conditions of any series of debt
securities offered in the applicable prospectus supplement. The prospectus
supplement, which we will file with the SEC, may or may not modify the general
terms found in this prospectus. For a complete description of any series of
debt securities, you should read both this prospectus and the prospectus
supplement relating to that series of debt securities.
General
As a holder of debt securities issued under the indenture, you will be one
of our unsecured creditors and will have a right to payment equal to that of
our other unsecured creditors.
The debt securities offered by this prospectus, when aggregated with the
debt securities offered by the finance subsidiaries through the separate
prospectus filed under the registration statement of which this prospectus is a
part, will be limited to a total of $6,000,000,000, or the equivalent amount in
any non-U.S. currency. The indenture, however, does not limit the amount of
debt securities that may be issued under it and provides that debt securities
may be issued under it from time to time in one or more series.
With respect to each particular series of debt securities that we offer by
this prospectus, the prospectus supplement will describe the following terms of
each series of debt securities:
. the title of the series;
. the maximum aggregate principal amount, if any, established for debt
securities of the series;
. the maximum aggregate initial public offering price, if any, established
for the debt securities of the series;
. the date or dates on which the principal will be paid;
. the conditions pursuant to which and the times at which any premium on the
debt securities of the series will be paid;
. the annual rate or rates, if any, which may be fixed or variable, at which
the debt securities of the series shall bear interest, or the method or
methods by which the rate or rates, if any, at which the debt securities
of the series shall bear interest may be determined;
. the date or dates from which interest, if any, shall accrue;
. the dates on which any accrued interest shall be payable and the record
dates for the interest payment dates;
. the percentage of the principal amount at which the debt securities of the
series will be issued, and if less than face amount, the portion of the
principal amount that will be payable upon acceleration of those debt
securities' maturity or at the time of any prepayment of those debt
securities or the method for determining that amount;
. whether we may prepay the debt securities of the series in whole or part
and, if so, the time or times at which any such prepayment may be made,
whether the prepayment may be made in whole or may be made in part from
time to time and the terms and conditions on which such prepayment may be
made, including the obligation to pay any premium or any other make-whole
amount in connection with any prepayment;
6
. the offices or agencies where the debt securities of the series may be
presented for registration of transfer or exchange;
. the place or places where the principal of, premium, if any, and interest,
if any, on debt securities of the series will be paid;
. whether we will have the right to redeem or repurchase the debt securities
of the series, in whole or in part, at our option, when those redemptions
or repurchases may be made, the redemption or repurchase price or the
method or methods for determining the redemption or repurchase price, and
any other terms and conditions relating to any such redemption or
repurchase by us;
. whether, when, on what terms and at whose option we will be obligated to
redeem or repurchase the debt securities of the series in whole or part at
any time pursuant to any sinking fund or analogous provisions or without
the benefit of any sinking fund or analogous provisions, and any
redemption or repurchase price or the method for determining any
redemption or repurchase price;
. whether the debt securities of the series will be convertible into any
other of our securities and, if so, when the conversion of exchange right
may be exercised, the conversion or exchange price or the ratio or ratios
or the method of determining the conversion or exchange price or ratio and
any other terms and conditions, including anti-dilution terms, upon which
any conversion or exchange may occur;
. if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which we will issue debt securities of the series;
. the currency in which we will pay principal, any premium, interest or
other amounts owing with respect to the debt securities of the series,
which may be United States dollars, a foreign currency or a composite
currency;
. any index, formula or other method that we must use to determine the
amount of any payment of principal, any premium or interest on the debt
securities of the series;
. if the debt securities of the series are subordinated in right of payment
to other securities, the terms and conditions of subordination;
. whether, and under what conditions, we will be required to pay any
additional amounts;
. whether the debt securities of the series will be issued in certificated
or book-entry form;
. any addition to, or change in, the events of default with respect to, or
covenants relating to, the debt securities in the series;
. whether the debt securities of the series will be subject to defeasance as
provided in the indenture; and
. any other specific terms and conditions of the series of debt securities.
If we sell any series of debt securities for, that we may pay in, or that
are denominated in, one or more foreign currencies, currency units or composite
currencies, we will disclose any material applicable restrictions, elections,
tax consequences, specific terms and other information with respect to that
series of debt securities and the relevant currencies, currency units or
composite currencies in the prospectus supplement relating to that series.
We may also offer and sell a series of the debt securities as original issue
discount securities, bearing no interest or interest at a rate that at the time
of issuance is below market rates, or at a substantial discount below their
stated principal amount. We will describe the income tax consequences and other
special considerations applicable to any original issue discount securities of
that kind described in the prospectus supplement relating to that series.
Events of Default and Waiver
An event of default with respect to debt securities of a series issued will
occur if:
. we fail to pay interest on any outstanding debt securities when it is due
and payable and that failure continues for 30 days;
7
. we fail to pay principal on any outstanding debt securities when it is due
and payable;
. we fail to perform or we breach any covenant or warranty in the indenture
with respect to any debt securities outstanding or we fail to perform or
breach any covenant or warranty particular to that series of debt
securities and that failure continues for 90 days after we receive written
notice of that default;
. certain events of bankruptcy, insolvency or reorganization occur with
respect to us; and
. in the event the debt securities are guaranteed, the guarantor repudiates
its obligation under the guarantee or the guarantees are determined to be
unenforceable or invalid.
If an event of default with respect to any series of outstanding debt
securities occurs and is continuing, the trustee or the holders of not less
than 25% in aggregate principal amount of that series of outstanding debt
securities may declare the principal amount of the outstanding debt securities
of that series to be immediately due and payable. The holders of a majority in
aggregate principal amount of the outstanding debt securities of a series may
waive an event of default resulting in acceleration of the debt securities of
that series, but only if all other events of default with respect to the debt
securities of that series have been remedied or waived and all payments due
with respect to the debt securities of that series, other than those due as a
result of acceleration, have been made. If an event of default occurs and is
continuing with respect to the debt securities of a series, the trustee may, in
its discretion, and at the written request of holders of not less than a
majority in aggregate principal amount of the outstanding debt securities of
that series and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and subject to
certain other conditions set forth in the indenture will, proceed to protect
the rights of the holders of the debt securities of that series. Prior to any
acceleration of the maturity of the debt securities of a series, the holders of
a majority in aggregate principal amount of the debt securities of that series
may waive any past default under the indenture except a default in the payment
of principal of, or interest on, those debt securities.
The indenture provides that upon the occurrence of an event of default
described in the first two bullet points in the first paragraph under "Events
of Default and Waiver" with respect to a series of debt securities, we will,
upon the trustee's demand, pay to the trustee for the benefit of the holders of
the outstanding debt securities of that series, the whole amount then due and
payable on the debt securities of that series for principal and interest. The
indenture also provides that if we fail to pay such amount forthwith upon such
demand, the trustee may, among other things, institute a judicial proceeding
for the collection of those amounts.
The indenture provides that, notwithstanding any other provision of the
indenture, the holder of any debt securities of a series will have the right to
institute suit for the enforcement of any payment of principal of, and interest
on, the debt securities of that series when due and that that right will not be
impaired without the consent of that holder.
The trustee is required, within 90 days after the occurrence of a default
with respect to the debt securities of a series, to give to the holders of the
debt securities of that series notice of all uncured defaults known to it.
However, except in the case of default in the payment of principal or interest
on any of the debt securities of that series, the trustee will be protected in
withholding that notice if the trustee in good faith determines that the
withholding of that notice is in the interest of the holders of the debt
securities of that series. The term "default," for the purpose of this
provision only, means the occurrence of any of the events of default specified
above excluding any grace periods.
We are required to file annually with the applicable trustee a written
statement as to the existence or non-existence of defaults under the indenture
or any series of debt securities.
Legal Defeasance and Covenant Defeasance
We may, at our option and at any time, elect to have all of the obligations
discharged with respect to the outstanding debt securities and any guarantee of
those debt securities, except for:
. the rights of holders of debt securities to receive payments of principal
and interest from the trust referred to below when those payments are due;
8
. our obligations respecting the debt securities concerning issuing
temporary notes, registration of transfers of debt securities, mutilated,
destroyed, lost or stolen debt securities, the maintenance of an office or
agency for payment and money for debt security payments being held in
trust;
. the rights, powers, trusts, duties and immunities of the trustee and our
obligations in connection therewith; and
. the provisions of the indenture relating to such a discharge of
obligations.
We refer to a discharge of this type as "defeasance."
In addition, other than our covenant to pay the amounts due and owing with
respect to a series of debt securities, we may elect to have our obligations as
the issuer of a series of debt securities released with respect to covenants
relating to that series of debt securities. Thereafter, any failure to comply
with those obligations will not constitute a default or event of default with
respect to the debt securities of that series. If such a release of our
covenants occurs, our failure to perform or our breach of the covenants or
warranties defeased will no longer constitute an event of default with respect
to those debt securities.
To exercise the right to either of the rights we describe above, certain
conditions must be met, including:
. we must irrevocably deposit with the trustee, in trust for the debt
security holders' benefit, cash in U.S. dollars, certain United States
government securities, or a combination thereof, in amounts sufficient to
pay the principal of and interest on all of the then outstanding debt
securities to be affected by the defeasance at their stated maturity;
. the trustee must receive an opinion of counsel confirming that the holders
of the outstanding debt securities will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of that defeasance and
will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if that
defeasance had not occurred, which opinion, only in the case of the type
of defeasance described first above, will be based on a ruling of the
Internal Revenue Service or a change in federal income tax law to that
effect occurring after the date of the indenture;
. no default or event of default exists on the date of such deposit, subject
to certain exceptions; and
. the trustee must receive an opinion of counsel to the effect that, after
the 91st day following the deposit, the trust funds will not be part of
any "estate" formed by the bankruptcy or reorganization of the party
depositing those funds with the trustee or subject to the "automatic stay"
under the United States Bankruptcy Code or, in the case of covenant
defeasance, will be subject to a first priority lien in favor of the
trustee for the benefit of the holders.
Satisfaction and Discharge
If we and the finance subsidiaries so request, the indenture will cease to
be of further effect, other than as to certain rights of registration of
transfer or exchange of the notes, as provided for in the indenture, and the
trustee, at our expense, will execute proper instruments acknowledging
satisfaction and discharge of the indenture, the debt securities and any
guarantees then outstanding when:
. either all the debt securities previously authenticated and delivered
under the indenture, other than destroyed, lost or stolen securities that
have been replaced or paid and notes that have been subject to defeasance,
have been delivered to the trustee for cancellation; or
. all of the securities issued under the indenture not previously delivered
to the trustee for cancellation have become due and payable, will become
due and payable at their stated maturity within 60 days or will become due
and payable at redemption within 60 days under arrangements satisfactory
to the trustee for the giving of notice of redemption by the trustee in
our name and expense; and
9
. in each of the foregoing cases, each issuer of the affected debt
securities has irrevocably deposited or caused to be deposited with the
trustee cash in U.S. dollars, certain United States government securities,
or a combination thereof, in trust for the purpose and in an amount
sufficient to pay and discharge the entire indebtedness arising under the
debt securities issued pursuant to the indenture not previously delivered
to the trustee for cancellation, for principal, and premium, if any, on
and interest on these securities to the date of such deposit (in the case
of notes that have become due and payable) or to the stated maturity of
these securities or redemption date, as the case may be;
. we and the finance subsidiaries have paid or caused to be paid all sums
payable under the indenture by us and them; and
. we and the finance subsidiaries have delivered to the trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided in the indenture relating to the satisfaction and
discharge of the indenture, the securities issued under the indenture have
been complied with.
Modification of the Indenture
The indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding debt
securities of each affected series, modifications and alterations of such
indenture may be made which affect the rights of the holders of such debt
securities. However, no such modification or alteration may be made without the
consent of the holder of each debt security if the modification or alteration
would, among other things:
. change the maturity of the principal of, or of any installment of interest
on, any debt security, or reduce the principal amount of any debt
security, or change the method of calculation of interest or the currency
of payment of principal or interest on, or reduce the minimum rate of
interest thereon, or impair the right to institute suit for the
enforcement of any such payment on or with respect to any such debt
security; or
. reduce the above-stated percentage in principal amount of outstanding debt
securities required to modify or alter such indenture.
The trustee and we, without the consent of the holders of the debt
securities, may execute a supplemental indenture to, among other things:
. evidence the succession of another corporation to us and the successor's
assumption to our respective agreements and obligations with respect to
the debt securities and the indenture;
. add to our covenants further restrictions or conditions that our board of
directors and the trustee consider to be for the protection of holders of
all or any series of the debt securities and to make the occurrence of a
default in any of those additional covenants, restrictions or conditions a
default or an event of default under the indenture subject to certain
limitations;
. cure ambiguities or correct or supplement any provision contained in the
indenture or any supplemental indenture that may be defective or
inconsistent with another provision;
. provide for the issuance of debt securities whether or not then
outstanding under the indenture in coupon form and to provide for
exchangeability of the coupon form securities with other debt securities
issued under the indenture in fully registered form;
. establish new series of debt securities and the form or terms of such
series of debt securities and to provide for the issuance of securities of
any series so established; and
. evidence and provide for the acceptance of appointment of a successor
trustee and to change the indenture as necessary to have more than one
trustee under the indenture.
10
Amalgamation, Consolidation, Merger or Sale of Assets
The indenture provides that we may, without the consent of the holders of
any of the outstanding debt securities of any series, amalgamate, consolidate
with, merge into or transfer our assets substantially as an entirety to any
person, provided that:
. any successor to us assumes our obligations on the debt securities and
under the indenture;
. any successor to us must be an entity incorporated or organized under the
laws of the United States;
. after giving effect thereto, no event of default, as defined in the
indenture, shall have occurred and be continuing; and
. certain other conditions under the indenture are met.
Any such amalgamation, consolidation, merger or transfer of assets
substantially as an entirety that meets the conditions described above would
not constitute a default or event of default that would entitle holders of the
debt securities or the trustee, on their behalf, to take any of the actions
described above under "Events of Default and Waiver."
No Limitations on Additional Debt and Liens
The indenture and the debt securities do not contain any covenants or other
provisions that would limit our right to incur additional indebtedness, enter
into any sale and leaseback transaction or grant liens on our assets.
The Indenture Trustee
Bank One Trust Company, NA is the trustee under the indenture governing the
debt securities and will also be the registrar and paying agent. The trustee is
a national banking association with its principal offices in Chicago, Illinois.
The trustee has two main roles under the indenture. First, the trustee can
enforce your rights against us if any of the actions described above under
"Events of Default and Waiver" occurs. Second, the trustee performs certain
administrative duties for us. The trustee is entitled, subject to the duty of
the trustee during a default to act with the required standard of care, to be
indemnified by the holders of the debt securities before proceeding to exercise
any right or power under the indenture at the request of those holders. The
indenture provides that the holders of a majority in principal amount of the
debt securities may direct, with regard to that series, the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to the
debt securities, although the trustee may decline to act if that direction is
contrary to law or if the trustee determines in good faith that the proceeding
so directed would be illegal or would result in personal liability to it.
Bank One Trust Company, NA also serves as trustee under an indenture, dated
as of April 1, 1991, between it and us. As of May 31, 2001, we had issued a
total of $17.46 billion of our senior unsecured securities under that indenture
as supplemented through the date of this prospectus. Bank One Trust Company, NA
also serves as trustee under an indenture, dated as of December 1, 1986,
covering secured bonds issued in the aggregate principal amount of $137,082,000
by the owner trustees of approximately 24 SAM'S Clubs store properties that are
leased to one of our subsidiaries. Bank One Leasing Corporation, an affiliate
of Bank One Trust Company, NA, established a business trust that purchased 15
Wal-Mart discount stores for $53,661,785 and leased the stores back to us for
an initial term of 20 years in a transaction consummated on December 22, 1992.
On November 10, 1994, a second business trust of which Bank One Leasing
Corporation is a beneficiary purchased an additional 23 Wal-Mart discount
stores for $128,842,500 and leased the stores back to us for an initial term of
20 years. Bank One Trust Company, NA also serves as trustee under an indenture,
dated as of April 27, 2001 among Wal-Mart Canada Venture Corp., one of our
subsidiaries, us, as guarantor, and it. On April 27, 2001, Wal-Mart Canada
Venture Corp. issued a total of $325,000,000 of its senior unsecured debt
securities under that indenture, which are guaranteed by us.
11
We expect to maintain banking relationships in the ordinary course of
business with Bank One, NA, an affiliate of Bank One Trust Company, NA.
TAX CONSEQUENCES TO HOLDERS
A prospectus supplement may describe the principal U.S. federal income tax
consequences of acquiring, owning and disposing of debt securities of some
series in the following circumstances:
. payment of the principal, interest and any premium in a currency other
than the U.S. dollar;
. the issuance of any debt securities with "original issue discount," as
defined for U.S. federal income tax purposes;
. the issuance of any debt securities with an associated "bond premium," as
defined for U.S. federal income tax purposes; and
. the inclusion of any special terms in debt securities that may have a
material effect for U.S. federal income tax purposes.
In addition, if the tax laws of foreign countries are material to a particular
series of debt securities, a prospectus supplement may describe the principal
income tax consequences of acquiring, owning and disposing of debt securities
of some series under similar circumstances.
PLAN OF DISTRIBUTION
General
We may sell the debt securities being offered hereby:
. directly to purchasers;
. through agents;
. through dealers;
. through underwriters; or
. through a combination of any of those methods of sale.
We may effect the distribution of the debt securities from time to time in
one or more transactions either:
. at a fixed price or prices which may be changed;
. at market prices prevailing at the time of sale;
. at prices related to the prevailing market prices; or
. at negotiated prices.
We may directly solicit offers to purchase the debt securities. Offers to
purchase debt securities may also be solicited by agents designated by us from
time to time. Any of those agents, who may be deemed to be an "underwriter," as
that term is defined in the Securities Act of 1933, involved in the offer or
sale of the debt securities in respect of which this prospectus is delivered
will be named, and any commissions payable by us to that agent will be set
forth in the prospectus supplement.
If a dealer is utilized in the sale of the debt securities in respect of
which this prospectus is delivered, we will sell those debt securities to the
dealer, as principal. The dealer, who may be deemed to be an "underwriter," as
that term is defined in the Securities Act of 1933, may then resell those debt
securities to the public at varying prices to be determined by that dealer at
the time of resale.
12
If we use an underwriter or underwriters in the sales, we will execute an
underwriting agreement with those underwriters at the time of sale of the debt
securities and the name of the underwriters will be set forth in the prospectus
supplement, which will be used by the underwriters to make resales of the debt
securities in respect of which this prospectus is delivered to the public. The
compensation of any underwriters will also be set forth in the prospectus
supplement.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with us, to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, or to our contributing to payments those underwriters, dealers, agents
and other persons are required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or any of our subsidiaries in the ordinary course of business.
LEGAL MATTERS
The validity of the debt securities offered by this prospectus and any
prospectus supplement will be passed upon for us by Hughes & Luce, L.L.P., our
counsel.
EXPERTS
The consolidated financial statements of Wal-Mart Stores, Inc. and its
subsidiaries incorporated by reference in Wal-Mart Stores, Inc.'s Annual Report
on Form 10-K, as amended, for the fiscal year ended January 31, 2001, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon incorporated by reference therein and incorporated herein by
reference. Such financial statements are, and audited financial statements to
be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements, to the extent covered by consents filed with the Securities and
Exchange Commission, given on the authority of such firm as experts in
accounting and auditing.
13
[GRAPHIC]
$1,000,000,000
WAL-MART STORES, INC.
4.375% Notes Due 2007
-----------------
PROSPECTUS SUPPLEMENT
July 9, 2002
-----------------
Joint Book-running Lead Managers
LEHMAN BROTHERS GOLDMAN, SACHS & CO. JPMORGAN
Senior Co-Managers
BANC ONE CAPITAL MARKETS, INC. WACHOVIA SECURITIES DEUTSCHE BANK SECURITIES
Co-Managers
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY
SALOMON SMITH BARNEY
GUZMAN & COMPANY
THE WILLIAMS CAPITAL GROUP, L.P.