Walmart - 10-Q quarterly report FY

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<p align="center">UNITED STATES<br>

SECURITIES AND EXCHANGE COMMISSION<br>

Washington, D.C. 20549</p>



<p>(Mark One)</p>

</b>



<p ALIGN="JUSTIFY">[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934 for the quarterly period ended <u>October 31, 1999</u>.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

or<br>

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934 for the transition period from ______to______.</p>



<p ALIGN="JUSTIFY">Commission file number <u>1-6991</p>

</u>



<p align="center"><u>WAL-MART STORES, INC.<br>

</u>(Exact name of registrant as specified in its charter)<u></p>



<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Delaware

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 71-0415188

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br>

&nbsp; (State or other jurisdiction of

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (I.R.S.

Employer<br>

&nbsp;&nbsp; incorporation or organization)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Identification No.)</p>



<p>&nbsp;&nbsp;&nbsp; 702 S.W. Eighth Street<br>

<u>&nbsp;&nbsp;&nbsp;&nbsp; Bentonville, Arkansas

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

72716 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br>

(Address of principal executive offices)&nbsp;&nbsp; (Zip Code)</p>



<p align="center"><u>(501) 273-4000</u><br>

(Registrant&#146;s telephone number, including area code)</p>



<p align="center"><u>Not applicable</u><br>

(Former name, former address and former fiscal year,<br>

if changed since last report)</p>



<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant (1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during

the preceding 12 months (or such shorter periods that the registrant was required to file

such reports), and (2) has been subject to such filing requirements for the past 90 days.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Yes __<u>X</u>__ No _____</p>



<p align="center">Applicable Only to Issuers Involved in Bankruptcy<br>

Proceedings During the Preceding Five Years</p>



<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant has filed all documents

and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange

Act of 1934 subsequent to the distribution of securities under a plan confirmed by the

court.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Yes _____ No _____</p>



<p align="center">Applicable Only to Corporate Issuers</p>



<p ALIGN="JUSTIFY">Indicate the number of shares outstanding of each of the issuer&#146;s

classes of common stock, as of the latest practical date.</p>



<p ALIGN="JUSTIFY">Common Stock, $.10 Par Value &#150; 4,453,743,366 shares as of October

31, 1999.</p>



<p align="center"><strong>Page 1 of 20 (Form 10-Q)</strong></p>

<b>



<p><br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PART

I. FINANCIAL INFORMATION</p>



<p ALIGN="JUSTIFY">Item 1. Financial Statements</p>

</b></font><div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="631" height="1143">

<tr>

<td WIDTH="623" VALIGN="TOP" HEIGHT="67" colspan="3"><font FACE="Arial" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

WAL-MART STORES, INC. AND SUBSIDIARIES<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

CONDENSED CONSOLIDATED BALANCE SHEETS<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(Amounts in millions)</b></font></td>

</tr>

<tr>

<td WIDTH="401" VALIGN="TOP" HEIGHT="52"><font FACE="Arial" SIZE="2"><u><b>&nbsp;<p>ASSETS</b></u></font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="52"><font FACE="Arial" SIZE="2"><b>&nbsp;&nbsp;&nbsp;

October 31,<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1999<br>

&nbsp;&nbsp;&nbsp; (Unaudited)</b></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="52" align="center"><font FACE="Arial" SIZE="2"><b>January

31,<br>

1999<br>

(*Note)</b></font></td>

</tr>

<tr align="center">

<td WIDTH="623" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash and cash

equivalents</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,435 </font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,879 </font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Receivables</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,630

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,118

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Inventories</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">22,373

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">17,076

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Prepaid expenses and

other</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,517

</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,059

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Total current assets</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">26,955

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">21,132

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Property, plant and

equipment, at cost</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">40,322

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">31,129

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Less accumulated

depreciation</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>8,781

</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>7,455

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Net property, plant and equipment</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">31,541

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">23,674

</font></td>

</tr>

<tr align="center">

<td WIDTH="623" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Property under

capital leases</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,340

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">3,335

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Less accumulated

amortization</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,124

</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,036

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Net property under capital leases</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">3,216

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,299

</font></td>

</tr>

<tr align="center">

<td WIDTH="623" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net goodwill and

other acquired intangible assets</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">9,837

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,538

</font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Other assets and

deferred charges</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>820

</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>353

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="623" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Total assets</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong><u>$

72,369 </u></strong></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong><u>$

49,996 </u></strong></font></td>

</tr>

<tr align="center">

<td WIDTH="516" VALIGN="TOP" HEIGHT="19" colspan="2"></td>

</tr>

<tr align="center">

<td WIDTH="623" VALIGN="TOP" COLSPAN="3" HEIGHT="19"><font FACE="Arial" SIZE="2"><u><b>LIABILITIES

AND SHAREHOLDERS' EQUITY</b></u></font></td>

</tr>

<tr align="center">

<td WIDTH="559" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Commercial paper</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

6,459 </font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$ - </font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Accounts payable</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">14,081

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">10,257

</font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Accrued liabilities</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">6,953

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,998

</font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Other current

liabilities</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,499

</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,507

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Total current liabilities</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">28,992

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">16,762

</font></td>

</tr>

<tr align="center">

<td WIDTH="559" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Long-term debt</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">13,532

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">6,908

</font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Long-term obligations

under capital leases </font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">3,027

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,699

</font></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Deferred income taxes

and other</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">793 </font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">716 </font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Minority interest</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,746

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,799

</font></td>

</tr>

<tr align="center">

<td WIDTH="559" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Common stock and

capital in excess of par value</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,052

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">880 </font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Retained earnings</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">23,630

</font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">20,741

</font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Other accumulated

comprehensive income</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(403)</u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(509)</u></font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Total shareholders' equity</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>24,279

</strong></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>21,112

</strong></font></td>

</tr>

<tr align="center">

<td WIDTH="559" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Total liabilities and shareholders' equity</font></td>

<td WIDTH="107" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

72,369 </strong></u></font></td>

<td WIDTH="99" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

49,996 </strong></u></font></td>

</tr>

<tr align="center">

<td WIDTH="559" VALIGN="TOP" HEIGHT="19" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="615" VALIGN="TOP" COLSPAN="3" HEIGHT="1"><font FACE="Arial" SIZE="2">See

accompanying notes to condensed consolidated financial statements.<br>

* Note: The balance sheet at January 31,1999, has been derived from the<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; audited financial statements

at that date, and condensed.</font><p align="center"><font FACE="Arial" SIZE="2"><strong>Page

2 of 20 (Form 10-Q)</strong></font></td>

</tr>

</TABLE>

</center></div><div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="621" height="1258">

<tr>

<td WIDTH="643" VALIGN="TOP" HEIGHT="64" colspan="8"><font FACE="Arial" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

WAL-MART STORES, INC. AND SUBSIDIARIES<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

CONDENSED CONSOLIDATED STATEMENTS OF INCOME</b><br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(Unaudited)<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(Amounts in millions except per share data)</font></td>

</tr>

<tr>

<td WIDTH="245" VALIGN="TOP" HEIGHT="73" rowspan="2"></td>

<td WIDTH="181" VALIGN="TOP" COLSPAN="3" HEIGHT="46"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Three Months Ended<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>October 31,</u></font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="175" VALIGN="TOP" COLSPAN="3" HEIGHT="46"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Nine Months Ended<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>October 31,</u></font></td>

</tr>

<tr>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>1999</u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19" align="center"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="19" align="center"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19" align="center"><font FACE="Arial" SIZE="2"><u>1999</u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19" align="center"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

</tr>

<tr align="center">

<td WIDTH="643" VALIGN="TOP" COLSPAN="8" HEIGHT="16"><font FACE="Arial" SIZE="2">Revenues:</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Net sales</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

40,432 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="57" rowspan="3"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

33,509 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="57" rowspan="3"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$113,619

</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="57" rowspan="3"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

96,849 </font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Other income - net</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>475

</u></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>415

</u></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,321

</u></font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,112</u>

</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">40,907

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">33,924

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">114,940

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">97,961

</font></td>

</tr>

<tr align="center">

<td WIDTH="643" VALIGN="TOP" COLSPAN="8" HEIGHT="16"><font FACE="Arial" SIZE="2">Costs and

expenses:</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Cost of sales</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">31,606

</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">26,380

</font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="19" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">88,970

</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19" rowspan="2"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">76,328

</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="23"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Operating, selling and general<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and administrative expenses </font></td>

<td width="80"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

6,907 </font></td>

<td width="78"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

5,691 </font></td>

<td width="78"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

19,368 </font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="20"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

16,341 </font></td>

</tr>

<tr align="center">

<td WIDTH="643" VALIGN="TOP" HEIGHT="19" colspan="8"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Interest costs:</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Debt</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">251 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="133" rowspan="5"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">135 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="133" rowspan="5"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">502 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="133" rowspan="5"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">380 </font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Capital leases</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>66</u>

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>67</u>

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>197</u>

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>201</u>

</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>38,830

</strong></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>32,273</strong>

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>109,037</strong>

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong>93,250</strong>

</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="57"><font FACE="Arial" SIZE="2">Income before income

taxes, minority<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; interest and equity in <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; unconsolidated subsidiaries</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="57"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT">2,077

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="57"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT">1,651

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="57"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT">5,903

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="57"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT">4,711

</font></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Provision for income

taxes</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>760</u>

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>611</u>

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>2,160</u>

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,743</u>

</font></td>

</tr>

<tr align="center">

<td WIDTH="643" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="245" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2">Income before

minority interest and<br>

&nbsp;&nbsp;&nbsp; equity in unconsolidated subsidiaries</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

1,317 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

1,040 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

3,743 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

2,968 </font></td>

</tr>

<tr align="center">

<td WIDTH="643" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="237" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2">Minority interest and

equity in<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; unconsolidated subsidiaries</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><br>

(18)</u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><br>

(31)</u></font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><br>

(85)</u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><br>

(97)</u></font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="221" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net income</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

1,299 </strong></u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

1,009 </strong></u></font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

3,658 </strong></u></font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

2,871 </strong></u></font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="571" VALIGN="TOP" COLSPAN="8" HEIGHT="19"><font FACE="Arial" SIZE="2">Net

income per share -</font></td>

</tr>

<tr align="center">

<td WIDTH="213" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Basic</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.29 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.23 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.82 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.64 </font></td>

</tr>

<tr align="center">

<td WIDTH="213" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Dilutive</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.29 </font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.22 </font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.82 </font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.64 </font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="229" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Dividends per share</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.0500 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.0388 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.1500 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

0.1163 </font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="229" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Average shareholders'

equity</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

23,613 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

19,629 </font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

22,695 </font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

19,109 </font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="237" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2">Return for the period

on average<br>

&nbsp;&nbsp;&nbsp;&nbsp; shareholders' equity</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

5.50%</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

5.14%</font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

16.12%</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

15.02%</font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="579" VALIGN="TOP" COLSPAN="8" HEIGHT="19"><font FACE="Arial" SIZE="2">Average

number of common shares:</font></td>

</tr>

<tr align="center">

<td WIDTH="213" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Basic</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,454

</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,463

</font></td>

<td WIDTH="18" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,451

</font></td>

<td WIDTH="7" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,470

</font></td>

</tr>

<tr align="center">

<td WIDTH="213" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Dilutive</font></td>

<td WIDTH="80" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,475

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,493

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,473

</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">4,502

</font></td>

</tr>

<tr align="center">

<td WIDTH="547" VALIGN="TOP" HEIGHT="19" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="611" VALIGN="TOP" COLSPAN="8" HEIGHT="19"><font FACE="Arial" SIZE="2">See

accompanying notes to condensed consolidated financial statements.</font></td>

</tr>

</TABLE>

</center></div><font FACE="Courier New">



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 3 of 20 (Form 10-Q)</strong></font>

<font FACE="Courier New"></p>

</font>



<p align="center">&nbsp;</p>

<div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="615" height="1371">

<tr>

<td WIDTH="607" VALIGN="TOP" HEIGHT="74" colspan="4" align="center"><font FACE="Arial"

SIZE="2"><b>WAL-MART STORES, INC. AND SUBSIDIARIES<br>

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</b><br>

(Unaudited)<br>

(Amounts in millions)</font></td>

</tr>

<tr>

<td WIDTH="401" VALIGN="TOP" HEIGHT="38" rowspan="2"></td>

<td WIDTH="198" VALIGN="TOP" COLSPAN="3" HEIGHT="19"><font FACE="Arial" SIZE="2"><b>Nine

Months Ended October 31,</b></font></td>

</tr>

<tr align="center">

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>1999</u></b></font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19" align="center"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19" align="center"><font FACE="Arial" SIZE="2"><b><u>1998</u></b></font></td>

</tr>

<tr align="center">

<td WIDTH="567" VALIGN="TOP" COLSPAN="4" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash

flows from operating activities:</font></td>

</tr>

<tr align="center">

<td WIDTH="361" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Net income</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

3,658 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

2,871 </font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="575" VALIGN="TOP" COLSPAN="4" HEIGHT="38"><font FACE="Arial" SIZE="2">Adjustments

to reconcile net income to net<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; cash provided by operating activities:</font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Depreciation and amortization</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,612

</font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="95" rowspan="5"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,400

</font></td>

</tr>

<tr align="center">

<td WIDTH="361" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Increase in inventories</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(4,621)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(4,136)</font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Increase in accounts payable</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,699

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,304

</font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Non-cash items and other</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>413

</u></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>237

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net cash provided by

operating activities</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">3,761

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,676

</font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="567" VALIGN="TOP" COLSPAN="4" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash

flows from investing activities:</font></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Payments for property, plant &amp; equipment</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(4,013)</font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="95" rowspan="4"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(2,652)</font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Investment in International operations(net of cash acquired, <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $195 million in 1999)</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

(10,653)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="38"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><br>

(47)</font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Other investing activities</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(179)</u></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>69

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net cash used in

investing activities</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(14,845)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(2,630)</font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="567" VALIGN="TOP" COLSPAN="4" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash

flows from financing activities:</font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Increase in commercial paper</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">6,709

</font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="129" rowspan="7"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,890

</font></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Proceeds from issuance of long-term debt</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">5,755

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">521 </font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="15"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Dividends paid</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="15"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(668)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="15"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(520)</font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Payment of long-term debt</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(838)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(1,046)</font></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Purchase of Company stock</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(101)</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(1,117)</font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Other financing activities</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(217)</u></font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(212)</u></font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net cash provided by

(used in) financing activities</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">10,640

</font></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(484)</font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Net decrease in cash

and cash equivalents</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(444)</font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">(438)</font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash and cash

equivalents at beginning of year</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,879

</u></font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,447

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Cash and cash

equivalents at end of period</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong><u>$

1,435 </u></strong></font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><strong><u>$

1,009 </u></strong></font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="575" VALIGN="TOP" COLSPAN="4" HEIGHT="19"><font FACE="Arial" SIZE="2">Supplemental

disclosure of cash flow information:</font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="377" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Income taxes paid</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,895 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

2,227 </font></td>

</tr>

<tr align="center">

<td WIDTH="369" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Interest paid</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">614 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">581 </font></td>

</tr>

<tr align="center">

<td WIDTH="385" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Capital lease

obligations incurred</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">266 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">203 </font></td>

</tr>

<tr align="center">

<td WIDTH="393" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Property, plant and

equipment acquired with debt</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">65 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">19 </font></td>

</tr>

<tr align="center">

<td WIDTH="401" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">ASDA acquisition cost

satisfied with Wal-Mart stock</font></td>

<td WIDTH="74" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">175 </font></td>

<td WIDTH="30" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="78" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">- </font></td>

</tr>

<tr align="center">

<td WIDTH="535" VALIGN="TOP" HEIGHT="19" colspan="4"></td>

</tr>

<tr align="center">

<td WIDTH="591" VALIGN="TOP" COLSPAN="4" HEIGHT="19"><font FACE="Arial" SIZE="2">See

accompanying notes to condensed consolidated financial statements.</font></td>

</tr>

</TABLE>

</center></div><b><font FACE="Courier New">



<p align="center"></font></b><font FACE="Arial" SIZE="2"><strong>Page 4 of 20 (Form 10-Q)<br>

<br>

</strong></font><font FACE="Courier New"><b></p>



<p align="center">WAL-MART STORES, INC. AND SUBSIDIARIES<br>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</p>

</b><u>



<p ALIGN="center">NOTE 1. Basis of Presentation</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The condensed consolidated balance sheet as of

October 31, 1999, and the related condensed consolidated statements of income for the

three and nine month periods ended October 31, 1999, and 1998, and the condensed

consolidated statements of cash flows for the nine month periods ended October 31, 1999,

and 1998, are unaudited. In the opinion of management, all adjustments necessary for a

fair presentation of the financial statements have been included. The adjustments

consisted only of normal recurring items. Interim results are not necessarily indicative

of results for a full year. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The financial statements and notes are presented in

accordance with the rules and regulations of the Securities and Exchange Commission and do

not contain certain information included in the Company&#146;s annual report. Therefore,

the interim statements should be read in conjunction with the Company's annual report for

the fiscal year ended January 31, 1999.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Certain reclassifications have been made to prior

periods to conform to current presentations.</p>

<u>



<p ALIGN="center">NOTE 2. Inventories</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company uses the retail last-in, first-out (LIFO)

method for the Wal-Mart Stores segment, cost LIFO for the Sam&#146;s Club segment, and

other cost methods for the International segment. Inventories are not in excess of market

value. Quarterly inventory determinations under LIFO are partially based on assumptions as

to inventory levels at the end of the fiscal year, sales for the year and the rate of

inflation for the year. If the first-in, first-out (FIFO) method of accounting had been

used by the Company, inventories at October 31, 1999, would have been $413 million higher

than reported, which is a decrease in the LIFO reserve of $60 million from January 31,

1999, and a decrease of $20 million from July 31, 1999. If the FIFO method had been used

at October 31, 1998, inventories would have been $428 million higher than reported, an

increase in the LIFO reserve of $80 million from January 31, 1998, and an increase of $25

million from July 31, 1998. </p>

<u>



<p ALIGN="center">NOTE 3. Costs of computer software</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In March 1998, the Accounting Standards Executive

Committee issued Statement of Position (SOP) 98-1, &quot;Accounting For the Costs of

Computer Software Developed For or Obtained For Internal Use.&quot; The SOP was effective

for the Company as of February 1, 1999. The SOP requires the capitalization of certain

costs incurred in connection with developing or obtaining software for internal use. The

adoption of SOP 98-1 did not have a material impact on the results of operations for the

three and nine month periods ended October 31, 1999, and the Company does not anticipate

that there will be a material impact for the year.</p>

<u>



<p align="center"></u></font><font FACE="Arial" SIZE="2"><strong>Page 5 of 20 (Form 10-Q)<br>

<br>

</strong></font><font FACE="Courier New"><u></p>



<p ALIGN="center">NOTE 4. Segments</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company is principally engaged in the operation

of mass merchandising stores that serve customers primarily through the operation of three

segments. The Company identifies its segments based on management responsibility within

the United States and geographically for all international units. The Wal-Mart Stores

segment includes the Company&#146;s discount stores and Supercenters in the United States.

The Sam&#146;s Club segment includes the warehouse membership clubs in the United States.

The International segment includes all operations in Argentina, Brazil, Canada, China,

Germany, Korea, Mexico, Puerto Rico and the United Kingdom. The revenues in the

&quot;Other&quot; category result from sales to third parties by McLane Company, Inc., a

wholesale distributor.</p>

</font><div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="608" height="753">

<tr>

<td WIDTH="515" VALIGN="TOP" COLSPAN="8" HEIGHT="19"><font FACE="Arial" SIZE="2">Net sales

by operating segment were as follows (in millions):</font></td>

</tr>

<tr>

<td WIDTH="215" VALIGN="TOP" HEIGHT="49" rowspan="2"></td>

<td WIDTH="131" VALIGN="TOP" COLSPAN="3" HEIGHT="19" align="center"><font FACE="Arial"

SIZE="2">Three Months Ended<br>

<u>October 31,</u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="19"></td>

<td WIDTH="173" VALIGN="TOP" COLSPAN="3" HEIGHT="19" align="center"><font FACE="Arial"

SIZE="2">Nine Months Ended<br>

<u>October 31,</u></font></td>

</tr>

<tr>

<td WIDTH="67" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

<u>1999</u></font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="22" align="center"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="22" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="22" align="center"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="22" align="center"><font FACE="Arial" SIZE="2"><u>1999</u></font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="22" align="center"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="22" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Wal-Mart Stores</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

26,460 </font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="100" rowspan="4"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

23,244 </font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="100" rowspan="4"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

77,000 </font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="100" rowspan="4"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

67,214 </font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Sam's Club</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">6,011

</font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">5,589

</font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">17,747

</font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">16,316

</font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">International</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">5,910

</font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,961

</font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">12,883

</font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">8,514

</font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Other</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>2,051

</u></font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,715

</u></font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>5,989

</u></font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>4,805

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" HEIGHT="22" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2">Total Net Sales</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

40,432 </strong></u></font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="22"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

33,509 </strong></u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="22"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

113,619 </strong></u></font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="22"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="22"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

96,849 </strong></u></font></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" HEIGHT="43" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" COLSPAN="8" HEIGHT="37"><font FACE="Arial" SIZE="2">Operating

profit and reconciliation to income before income taxes, minority interest<br>

and equity in unconsolidated subsidiaries are as follows (in millions):</font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="49" rowspan="2"></td>

<td WIDTH="131" VALIGN="TOP" COLSPAN="3" HEIGHT="1" align="center"><font FACE="Arial"

SIZE="2">Three Months Ended<br>

<u>October 31,</u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="1" align="center"></td>

<td WIDTH="173" VALIGN="TOP" COLSPAN="3" HEIGHT="1" align="center"><font FACE="Arial"

SIZE="2">Nine Months Ended<br>

<u>October 31,</u></font></td>

</tr>

<tr align="center">

<td WIDTH="67" VALIGN="TOP" HEIGHT="1"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp; <u>1999</u></font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="1" align="center"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="1" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="1" align="center"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="1" align="center"><font FACE="Arial" SIZE="2"><u>1999</u></font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="1" align="center"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="1" align="center"><font FACE="Arial" SIZE="2"><u>1998</u></font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">Wal-Mart Stores </font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,934 </font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="97" rowspan="4"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,640 </font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="97" rowspan="4"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

5,850 </font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="97" rowspan="4"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

4,827 </font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">Sam's Club</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">187 </font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">172 </font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">521 </font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">471 </font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">International</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">193 </font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">109 </font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">369 </font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">315 </font></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">Other</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>80

</u></font></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(68)</u></font></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(138)</u></font></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(321)</u></font></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" HEIGHT="21" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2">Operating profit</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">2,394

</font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1,853

</font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">6,602

</font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">5,292

</font></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" HEIGHT="21" colspan="8"></td>

</tr>

<tr align="center">

<td WIDTH="215" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2">Interest expense</font></td>

<td WIDTH="67" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>317

</u></font></td>

<td WIDTH="6" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="70" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>202

</u></font></td>

<td WIDTH="16" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="73" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>699

</u></font></td>

<td WIDTH="12" VALIGN="TOP" HEIGHT="21"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="21"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>581

</u></font></td>

</tr>

<tr align="center">

<td WIDTH="515" VALIGN="TOP" HEIGHT="21" colspan="8"></td>

</tr>

<tr align="center">

<td width="215" height="60"><font FACE="Arial" SIZE="2">Income before income taxes,<br>

&nbsp; minority interest and equity<br>

&nbsp; in unconsolidated subsidiaries</font></td>

<td width="67" height="60"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT"><strong><u>$ 2,077</u>

</strong></font></td>

<td width="6" height="60"></td>

<td width="70" height="60"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT"><strong><u>$ 1,651</u>

</strong></font></td>

<td width="16" height="60"></td>

<td width="73" height="60"><font FACE="Arial" SIZE="2">&nbsp;<p ALIGN="RIGHT"><strong><u>$ 5,903</u>

</strong></font></td>

<td width="12" height="60"></td>

<td WIDTH="85" VALIGN="TOP" HEIGHT="60"><p ALIGN="RIGHT"><font FACE="Arial" SIZE="2"><strong><u><br>

<br>

$ 4,711</u> </strong></font></td>

</tr>

</TABLE>

</center></div><font FACE="Courier New">



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 6 of 20 (Form 10-Q)<br>

</strong></font><font FACE="Courier New"><br>

</p>

<u>



<p align="center">NOTE 5. Comprehensive Income</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Statement of Financial Accounting Standards No. 130,

&quot;Reporting Comprehensive Income&quot;, establishes standards for reporting and

display of comprehensive income and its components. Comprehensive income is net income,

plus certain other items that are recorded directly to shareholders&#146; equity,

bypassing net income. The only such items currently applicable to the Company are foreign

currency translation adjustments. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Comprehensive income was $1,381 million and $986

million for the quarters ended October 31, 1999 and 1998, respectively, and was $3,764

million and $2,816 million for the nine months ended October 31, 1999 and 1998,

respectively.</p>

<u>



<p ALIGN="center">NOTE 6. Settlement of Lawsuit</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In the second quarter of fiscal 2000, a $624 million

jury verdict was rendered against the Company in a lawsuit. The Company agreed to settle

the lawsuit for an amount less than the jury verdict. The Company had previously

established reserves related to this lawsuit, which were not material to its results of

operations or financial position. The settlement exceeded the Company&#146;s estimated

reserves for this lawsuit and resulted in a charge in the second quarter of fiscal 2000 of

$.03 per share, net of taxes. </p>

<u>



<p ALIGN="center">NOTE 7. Stock Split</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; On March 4, 1999, the Company announced a two-for-one

stock split issued in the form of a 100% stock dividend. The date of record was March 19,

1999, and it was distributed on April 19, 1999. Consequently, the per share data for all

prior periods presented has been restated to reflect the stock split.</p>

<u>



<p ALIGN="center">NOTE 8. Acquisition</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In the second quarter of fiscal 2000, the Company

acquired ASDA Group PLC (ASDA), the third largest retailer in the United Kingdom with 229

stores. The Company acquired approximately 29% of the outstanding ASDA shares on the open

market in June and July and issued a tender offer for all remaining ASDA shares other than

for shares held by shareholders of ASDA, residing in certain countries. On July 27, 1999,

the tender offer for ASDA became unconditional and the majority of the remaining shares

were tendered. As of October 31, 1999, the Company has acquired 100% of the outstanding

shares of ASDA. Two months of the results of ASDA operations are included in the

Company&#146;s Consolidated Statements of Income in the third quarter of fiscal 2000. ASDA

financial statements are consolidated on a trailing month reporting basis, because ASDA

reports on a December 31 fiscal year end. The acquisition has been recorded as a purchase.

The allocation of the purchase price of approximately $11 billion is preliminary, as the

ASDA net assets and liabilities are still being reviewed to determine their appropriate

fair value. Resulting goodwill and other acquired intangible assets of approximately $7.5

billion will be amortized over 40 years. </p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 7 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; To facilitate the interim financing of the ASDA

acquisition, the Company entered into agreements for committed lines of credit of $10

billion with seven banks to support the issuance of commercial paper. After the majority

of the shares of ASDA were acquired and the permanent financing was obtained, this

commitment was reduced to $4 billion and as of October 31, 1999, the $4 billion commitment

was still active.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Proforma results are presented as if ASDA were

consolidated from the beginning of each period presented. Adjustments to net income are

primarily related to the amortization of goodwill and other acquired intangible assets and

additional interest expense on the debt incurred for the acquisition. The following

proforma results were converted from Great Britain pounds sterling to U. S. dollars at the

average exchange rate for the periods presented and range from 1.57 to 1.65:</p>

</font><div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="649" height="637">

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="55" rowspan="2"></td>

<td WIDTH="28%" VALIGN="TOP" COLSPAN="2" HEIGHT="36" align="center"><font FACE="Arial"

SIZE="2">Quarter Ended<br>

October 31,</font></td>

<td WIDTH="30%" VALIGN="TOP" COLSPAN="2" HEIGHT="36" align="center"><font FACE="Arial"

SIZE="2">Nine Months Ended<br>

October 31,</font></td>

</tr>

<tr>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>1999</u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

<u>1998</u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>1999</u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="19"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>1998</u></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2">(Amounts

in millions except per share data)</font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Average exchange rate</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1.57</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1.65</font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1.60</font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">1.65</font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2"><b>Sales</b></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">As reported</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

40,432 </font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

33,509 </font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

113,619 </font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

96,849 </font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">ASDA</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>1,035

</u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>2,887

</u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>7,282

</u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>8,680

</u></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Proforma results</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

41,467 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

36,396 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

120,901 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

105,529 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2"><b>Net

income</b></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">As reported</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,299 </font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

1,009 </font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

3,658 </font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">$

2,871 </font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">ASDA</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">39 </font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">94 </font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">255 </font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT">300 </font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Adjustments</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(8)</u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(120)</u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(279)</u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u>(359)</u></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Proforma results</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

1,330 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

983 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

3,634 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

2,812 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2"><b>Net

income per share</b></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2">Basic</font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">As reported</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.29 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.23 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.82 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.64 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Proforma results</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.30 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.22 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.82 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.63 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"><font FACE="Arial" SIZE="2">Dilutive</font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">As reported</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.29 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.22 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.82 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.64 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="41%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">Proforma results</font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.30 </strong></u></font></td>

<td WIDTH="14%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.22 </strong></u></font></td>

<td WIDTH="16%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.81 </strong></u></font></td>

<td WIDTH="15%" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2"><p ALIGN="RIGHT"><u><strong>$

0.62 </strong></u></font></td>

</tr>

<tr>

<td WIDTH="100%" VALIGN="TOP" HEIGHT="19" colspan="5"></td>

</tr>

</TABLE>

</center></div><font FACE="Courier New"><u>



<p ALIGN="center">NOTE 9. Long Term Debt</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; On August 5,1999, the Securities and Exchange

Commission declared effective the Company&#146;s shelf registration statement under which

the Company may issue debt securities aggregating $10.5 billion, in part, in contemplation

of obtaining permanent financing for the acquisition of ASDA. On August 10, 1999, the

Company sold notes subject to the shelf registration statement totaling $5.75 billion. The

notes were sold in three tranches: $1.25 billion at 6.150% due in 2001, $1.25 billion at

6.550% due in 2004, and $3.25 billion at 6.875% due in 2009.</p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 8 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>

<u>



<p align="center">NOTE 10. New Accounting Pronouncement</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In December 1999, the Securities and Exchange

Commission issued Staff Accounting Bulletin No. 101 &#150; &quot;Revenue Recognition in

Financial Statements&quot; (SAB 101). This SAB deals with various revenue recognition

issues, several which are common within the retail industry. The impact of SAB 101 on the

Company&#146;s financial statements is not currently known; however, the Company is in the

process of analyzing the effects of the SAB and intends to apply its provisions no later

than the first quarter of its fiscal year ended January 31, 2001.</p>

<u>



<p align="center">NOTE 11. Subsequent Event</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In November 1999, the Company sold notes totaling

$250 million pursuant to its existing shelf registration statement. These notes are a part

of the Company&#146;s series of notes that bear interest at 6.875% and will be due in

2009. The proceeds from the sale of these notes were used to reduce commercial paper.

Therefore, the Company classified $250 million of commercial paper as long-term debt. </p>

<b>



<p align="center">Item 2. Management&#146;s Discussion and Analysis of Financial Condition<br>

and Results of Operations</p>

</b><u>



<p ALIGN="center">Results of Operations</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company had 21% and 17% sales increases for the

quarter and the nine months ended October 31, 1999, respectively, when compared to the

same periods in fiscal 1999. These sales increases were attributable to the Company&#146;s

acquisitions, expansion program and domestic comparative store sales increases of 7.0% and

8.1% for the quarter and the nine months ended October 31, 1999, respectively. The

comparative store sales increases for the Wal-Mart Stores segment were 7.4% and 8.4% for

the quarter and nine months ended October 31, 1999, respectively. For the Sam&#146;s Clubs

segment the comparative sales increases were 5.8% and 7.0% for the quarter and nine months

ended October 31, 1999, respectively. The International segment had 100% and 51% sales

increases for the quarter and nine months ended October 31, 1999, respectively, when

compared to sales in the same periods in fiscal 1999.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Domestic expansion activity during the first nine

months of fiscal 2000 included 20 new Wal-Mart stores, the relocation of one Wal-Mart

store, five new Sam&#146;s Clubs, the expansion or relocation of six Sam&#146;s Clubs, 33

new Supercenters and the conversion of 85 Wal-Mart stores to Supercenters. During the nine

months ended October 31, 1999, one Wal-Mart store was closed. International expansion

during the first nine months of fiscal 2000 included the addition of ten units in Canada,

one unit in China, one unit in Korea, 29 units in Mexico, one unit in Puerto Rico, the

acquisition of 229 units in the United Kingdom and one store relocation in the United

Kingdom. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; At October 31, 1999, the Company had 1,803 Wal-Mart

stores, 682 Supercenters, and 456 Sam&#146;s Clubs in the United States. Internationally,

the Company operated units in Argentina(13), Brazil(14), Canada(163),</p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 9 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>



<p ALIGN="center">Germany(95), Mexico(444), Puerto Rico(15) and the United Kingdom (229)

and under joint venture agreements in China(6) and Korea(5). At October 31, 1998, the

Company had 1,863 Wal-Mart stores, 543 Supercenters, and 450 Sam&#146;s Clubs in the

United States. Internationally, the Company operated units in Argentina(13), Brazil(11),

Canada(150), Germany(21), Mexico(409) and Puerto Rico(14) and under joint venture

agreements in China(3) and Korea(4).</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The sales increases experienced by the International

segment were due principally to expansion activities which included the July 1998

acquisition of four units previously operated by Korea Makro in Korea, the January 1999

acquisition of the Interspar hypermarket chain in Germany, and the July 1999 acquisition

of the ASDA Group PLC in the United Kingdom. As a result of the timing of these

acquisitions, sales for the quarter and nine months ended October 31, 1999, are not

comparable to the same period last year due to the additional sales generated by these

acquisitions. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; International sales accounted for 11.3% of total

Company sales in the first nine months of fiscal 2000, compared with 8.8% during the same

period in fiscal 1999. Sam&#146;s Clubs sales as a percentage of total Company sales fell

from 16.8% in the nine months ended October 31, 1998, to 15.6% for the nine months ended

October 31, 1999, largely as a result of faster growth in other segments.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company&#146;s gross profit as a percentage of

sales increased from 21.27% in the third quarter of fiscal 1999 to 21.83% during the third

quarter of fiscal 2000. For the nine-month period ended October 31, 1999, gross profit as

a percentage of sales was 21.69%, up from 21.19% in last year&#146;s comparable period.

Gross profit as a percentage of sales improved in both domestic operating segments as well

as in the international segment. The Company&#146;s operating results for the third

quarter include the results of ASDA, which has a gross profit percentage approximately 1%

higher than that of the pre-existing businesses. Improvements in gross profit were

attributable to the favorable sales mix of higher margin merchandise categories.

Additionally, markdowns and shrinkage for the quarter and first nine months of fiscal 2000

were down as a percentage of sales when compared to the same periods in fiscal 1999. The

improvements in gross profit occurred despite the $6.7 billion of price rollbacks and with

significant growth in the lower margin food business. The Sam&#146;s Clubs segment

comprises a lower percentage of the consolidated Company sales than last year. As a

result, the gross profit stated as a percentage of sales for the Company as a whole is

positively impacted, since Sam&#146;s Clubs contribution to gross profit is a lower

percentage of sales than that of the Wal-Mart and International operating segments. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Operating, selling, general and administrative

expenses, as a percentage of sales, were 17.08% for the third quarter of fiscal 2000, up

from 16.98% in the corresponding period last year and 17.05% compared with 16.87% for the

nine-month period. Expenses for the nine-month period were impacted by the May 16, 1999,

settlement of a lawsuit, which resulted in a charge for the year of approximately $.03 per

share, net of taxes. Disregarding the charge taken in connection with this settlement,

expenses would have decreased by 3 basis points, as a percentage of</p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 10 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>



<p ALIGN="center">sales, for the nine-month period ended October 31, 1999. The Wal-Mart

Stores segment had expense improvements, while the Sam&#146;s Clubs segment was unchanged.

The International segment&#146;s expense control was favorable against plan, which

includes start-up and transition expenses in new market countries, for the quarter and

nine-month period ended October 31, 1999, when compared to the same periods of the

previous year. Excluding investments in new markets, the International segment reduced

expenses as a percentage of sales for the quarter and the year-to-date period ended

October 31, 1999, when compared to prior periods. Expenses as a percentage of sales were

negatively affected in the consolidated results due to the percentage of the total sales

volume decreasing in the Sam's Clubs segment, which has lower expenses as a percentage of

sales, while the percentage of total sales volume increased in the International segment,

which has higher expenses as a percentage of sales than the Sam's Clubs segment. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The International segment&#146;s operating profit

increased from $109 million in the third quarter of fiscal 1999 to $193 million for the

third quarter of fiscal 2000. Operating profit increased $54 million for the nine-month

period ended October 31, 1999, when compared to the same period of the previous year.

Operating profit has improved compared to the prior year, due to the inclusion of the

operating results of ASDA in the International segment for the first time, but was

somewhat offset by the store remodel expenditures and the general office consolidations

associated with the acquisitions in Germany. As noted above, the results for the first

nine months of fiscal 2000 include the operating results of Korea Makro,

Interspar(Germany) and ASDA(United Kingdom), which were not included in their entirety, in

the comparable period of fiscal 1999.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In fiscal 1999, Mexico was considered to operate in a

highly-inflationary economy and reported its operations using United States Dollars. In

fiscal 2000, Mexico is no longer considered a highly-inflationary economy and is reporting

its operations in its local currency. There was no material impact on the Company&#146;s

consolidated or International segment's results of operations or financial position as a

result of the change. </p>

<u>



<p ALIGN="center">Liquidity and Capital Resources</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; Cash flows provided by operating activities were

$3,761 million for the first nine months of fiscal 2000, compared with $2,676 million for

the comparable period in fiscal 1999. Operating cash flow was up for the nine months ended

October 31, 1999, primarily due to an increase in net income of $787 million over the

Company&#146;s net income for the comparable period in fiscal 1999. The improvement in

operating cash flow was impacted by the higher ratio of supplier funded inventory, which

was 62.94% for the nine-month period compared to 55.40% for the same period in fiscal

1999. Inventories for the Company were up 9% compared to October 31, 1998, on a

year-to-date sales increase of 17%. The Company was a net user of cash as a result of its

investment in ASDA and capital spending. Net cash used in investing activities and net

cash provided by financing activities for the nine months ended October 31, 1999, have

increased compared with the previous year. The increases in investing and financing

activities are due to the investment in ASDA and the debt incurred to fund that

acquisition. Cash and cash equivalents at the end</p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 11 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>



<p ALIGN="center">of the nine-month period were up 42% or $426 million, when compared with

the end of the same period in fiscal 1999. During the first nine months of fiscal 2000,

the Company repurchased $101 million of its common stock, paid dividends of $668 million

and invested $4,013 million in capital assets. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; At October 31, 1999, the Company had total assets of

$72,369 million compared with total assets of $49,996 million at January 31, 1999. Working

capital at October 31, 1999, was $(2,037) million, down $6,407 million when compared to

working capital at January 31, 1999, of $4,370 million. The ratio of current assets to

current liabilities was .9 to 1.0 at October 31, 1999, 1.2 to 1.0 at October 31, 1998, and

1.3 to 1.0 at January 31, 1999. The decrease in working capital and the current ratio was

primarily due to the addition of $4 billion in commercial paper over the comparable period

of the prior year, primarily to fund a portion of the costs of the ASDA stock acquisition.

Historically, with the holiday season, the fourth quarter generates additional cash flow,

which is used to reduce the outstanding commercial paper. It is anticipated that this cash

flow will bring the Company&#146;s working capital and current ratio to approximately a

breakeven point by the end of fiscal year 2000. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; To facilitate the interim financing of the ASDA

acquisition, the Company entered into agreements for committed lines of credit of $10

billion with seven banks to support the issuance of commercial paper. After the majority

of the shares of ASDA were acquired and the permanent financing was obtained, this

commitment was reduced to $4 billion and as of October 31, 1999, the $4 billion commitment

was still active. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; On August 5, 1999, the Securities and Exchange

Commission declared effective the Company&#146;s shelf registration statement, under which

the Company may issue debt securities aggregating $10.5 billion, in part, in contemplation

of obtaining permanent financing for the acquisition of ASDA. On August 10, 1999, the

Company sold notes subject to the shelf registration statement totaling $5.75 billion. The

notes were sold in three tranches: $1.25 billion at 6.150% due in 2001, $1.25 billion at

6.550% due in 2004, and $3.25 billion at 6.875% due in 2009. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In November 1999, the Company sold notes totaling

$250 million pursuant to its existing shelf registration statement. These notes are a part

of the Company&#146;s series of notes that bear interest at 6.875% and will be due in

2009. The proceeds from the sale of these notes were used to reduce commercial paper.

Therefore, the Company classified $250 million of commercial paper as long-term debt.</p>

</font><font FACE="Courier New" SIZE="2">



<p ALIGN="center"></font><font FACE="Courier New">&nbsp;&nbsp;&nbsp; In March 1999, the

Company announced plans to increase the existing common stock repurchase program by $1.2

billion, resulting in a total outstanding authorization of $2 billion. With the ASDA

acquisition, the Company intends to postpone any further share repurchases until its ratio

of debt to total book capitalization is approximately 40%. As of October 31, 1999, the

total debt to capitalization ratio, including commercial paper, was 50% compared to 39% at

the same time last year. Additionally, the Company increased the annual dividend 29% to

$.20 per share (after the two-for-one common stock split, which was also announced in

March of 1999) for fiscal 2000. This marks the twenty-seventh consecutive yearly increase

in dividends. </p>



<p align="center"></font><font FACE="Arial" SIZE="2"><strong>Page 12 of 20 (Form 10-Q)<br>

</strong></font><br>

<font FACE="Courier New"></p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company anticipates generating sufficient

operating cash flow to pay the increased dividend, to fund all capital expenditures, and

to repay the commercial paper and short-term borrowings. The Company plans to refinance

existing long-term debt as it matures and may desire to obtain additional long-term

financing for other purposes or for strategic reasons. The Company anticipates no

difficulty in obtaining long-term financing in view of its excellent credit rating and

favorable experiences in the debt market in the recent past. After consideration of the

November 1999, $250 million debt offering, the Company has a shelf registration under

which it can sell up to $4,501 million of additional debt securities in the public

markets.</p>

<u>



<p ALIGN="center">Market Risk</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; During the quarter ended October 31, 1999, the

Company entered into currency and interest rate swap agreements to hedge its net

investment in the United Kingdom. These swaps all mature in August 2009. The following

table gives information about the interest rate derivative financial instruments related

to currency swaps which the Company entered into during the third quarter. </p>

</font><div align="center"><center>



<table BORDER="1" CELLSPACING="1" CELLPADDING="2" WIDTH="636" height="2792">

<tr>

<td WIDTH="441" VALIGN="TOP" HEIGHT="62" rowspan="2"></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="32"><font face="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;

Notional<br>

&nbsp;&nbsp;&nbsp; Amount</font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="32" align="center"><font face="Arial" SIZE="2">Fair

Value<br>

10/31/99</font></td>

</tr>

<tr align="center">

<td WIDTH="163" VALIGN="TOP" COLSPAN="2" HEIGHT="22"><font face="Arial" SIZE="2">&nbsp;

(in millions of U.S. dollars)</font></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(8)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 6-month Great Britain Pound LIBOR minus .1650%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .1300%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">-</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.3%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 6-month Great Britain Pound LIBOR minus .1650%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .1300%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(6)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month Great Britain Pound LIBOR minus .3275%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .2975%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(3)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.2%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month Great Britain Pound LIBOR minus .3275%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">13</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .2975%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar Rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="16" colspan="3"><p align="center"><font FACE="Arial"

SIZE="2"><strong>Page 13 of 20 (Form 10-Q)</strong></font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="29" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(7)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month Great Britain Pound LIBOR minus .0450% </font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .0350%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.2%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month Great Britain Pound LIBOR minus .0450%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">500</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">3</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .0350%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">100</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(2)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 6-month Great Britain Pound LIBOR minus .3120%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .2920%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">100</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">-</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.2%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 6-month Great Britain Pound LIBOR minus .3120%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">100</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">2</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .2920%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">400</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(7)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 6-month Great Britain Pound LIBOR minus .0230%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .0080%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">400</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">7</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.2%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 6-month Great Britain Pound LIBOR minus .0230%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">400</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">1</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .0080%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(6)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 6-month Great Britain Pound LIBOR minus .1970%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .1670%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">2</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.1%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 6-month Great Britain Pound LIBOR minus .1970%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="16" colspan="3"><p align="center"><font FACE="Arial"

SIZE="2"><strong>Page 14 of 20 (Form 10-Q)</strong></font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="33" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">4</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .1670%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Currency

swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">(6)</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 6-month Great Britain Pound LIBOR minus .1840%</font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 3-month U.S. Dollar LIBOR minus .1690%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - Great Britain Pounds</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay fixed/receive variable</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">2</font></font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate paid - Great Britain Pound rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.1%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="22" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate received - 6-month Great Britain Pound LIBOR minus .1840%</font></td>

</tr>

<tr align="center">

<td WIDTH="588" VALIGN="TOP" HEIGHT="18" colspan="3"></td>

</tr>

<tr align="center">

<td WIDTH="604" VALIGN="TOP" COLSPAN="3" HEIGHT="16"><font FACE="Arial" SIZE="2">Interest

rate swap - U.S. Dollars</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="16"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Pay variable/receive fixed</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">250</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="16"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">4</font></font></td>

</tr>

<tr align="center">

<td WIDTH="596" VALIGN="TOP" HEIGHT="16" colspan="3"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Average rate paid - 3-month U.S. Dollar LIBOR minus .1690%</font></td>

</tr>

<tr align="center">

<td WIDTH="449" VALIGN="TOP" HEIGHT="18"><font FACE="Arial" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;

Fixed rate received - U.S. Dollar rate</font></td>

<td WIDTH="68" VALIGN="TOP" HEIGHT="18"><font SIZE="2"><p ALIGN="RIGHT"><font face="Arial">6.9%</font></font></td>

<td WIDTH="65" VALIGN="TOP" HEIGHT="18"></td>

</tr>

</TABLE>

</center></div><font FACE="Courier New"><u>



<p ALIGN="center">Accounting Pronouncements</p>

</u>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In June 1998, the Financial Accounting Standards

Board (FASB) issued Statement No. 133, &quot;Accounting for Derivative Instruments and

Hedging Activities.&quot; Statement No. 133 requires all derivatives to be recorded on the

balance sheet at fair value and establishes the accounting treatment for three types of

hedges: hedges of changes in the fair value of assets, liabilities, or firm commitments;

hedges of the variable cash flows of forecasted transactions; and hedges of foreign

currency exposures of net investments in foreign operations. The Company is analyzing the

implementation requirements and currently does not anticipate there will be a material

impact on the results of operations or financial position after the adoption of Statement

No. 133. In June 1999, the FASB issued Statement No. 137 &quot;Accounting for Derivative

Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No.

133&quot;, which postponed the effective date of Statement No. 133 for one year. The

Statement will now be effective for the Company beginning February 1, 2001.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In December 1999, the Securities and Exchange

Commission issued Staff Accounting Bulletin No. 101 &#150; &quot;Revenue Recognition in

Financial Statements&quot; (SAB 101). This SAB deals with various revenue recognition

issues, several which are common within the retail industry. The impact of SAB 101 on the

Company&#146;s financial statements is not currently known; however, the Company is in the

process of analyzing the effects of the SAB and intends to apply its provisions no later

than the first quarter of its fiscal year ended January 31, 2001.</p>



<p align="center"></font><font face="Arial" size="2"><strong>Page 15 of 20 (Form 10-Q)<br>

<br>

</strong></font><font FACE="Courier New"></p>

<u>



<p ALIGN="center">Year 2000 Issue State of Readiness</p>

</u></font><font SIZE="2">



<p ALIGN="center"></font><font FACE="Courier New">&nbsp;&nbsp;&nbsp; Historically,

computer software has been programmed to make assumptions about the century when given a

date that only uses two digits to represent the year. Although these assumptions have been

perfectly acceptable the past few decades, they are potential cause for concern for

software used in the year 2000 and beyond. Specifically, this abbreviated date format

makes it difficult for an application or computer user to distinguish between dates

starting with 19xx and 20xx. The Company has been evaluating and adjusting all of its

known date-sensitive systems and equipment for Year 2000 compliance, including those

systems and equipment which supports the Company's International segment. The assessment

phase of the Year 2000 project is complete and included assessments of both information

technology, such as point-of-sale computer systems, as well as non-information technology

equipment, such as warehouse conveyor systems. All internal coding conversions are

complete. All business critical third party applications have been converted. Virtually

all of the compliance was performed or is expected to be performed by Company associates. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; All programs in the Company&#146;s current

application inventory have been successfully tested for operation in the year 2000. A

final test cycle is in progress to ensure all version levels, upgrades, new releases and

enhancements implemented throughout the year are Year 2000 compliant. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The total incremental estimated cost directly related

to the Year 2000 remedy is $28.7 million with $2.2 million in assumed cost related to the

second quarter acquisition of ASDA Group PLC. Approximately $17.5 million of the cost is

related to reprogramming, replacement, extensive testing and validation of software, which

is being expensed as incurred, while approximately $9.5 million is related to acquisition

of hardware, which is being capitalized. Approximately $27.5 million of the $28.7 million

cost of conversion had been incurred by the end of the third quarter of fiscal 2000. All

of these costs are being funded through operating cash flows. These costs are not a

significant component of the Company's overall information technology budget. The

Company's Information Systems Division did not defer any information technology projects

last year to address the Year 2000 issue. During fiscal 2000 the Company still plans to

complete and implement over half of the normal project load in priority sequence.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; In addition to internal Year 2000 implementation

activities, the Company is communicating with other companies with which our systems

interface or on which it relies to determine the extent to which those companies are

addressing their Year 2000 compliance. Testing began during the third quarter of fiscal

1999 and was substantially complete by October 31, 1999. No significant issues have been

detected in the testing process. There can be no assurance that there will not be an

adverse effect on the Company if third parties, such as utility companies or merchandise

suppliers, do not convert their systems in a timely manner and in a way that is compatible

with the Company's systems. However, management believes that ongoing communication with

and assessment of these third parties should minimize these risks. </p>



<p align="center"></font><font face="Arial" size="2"><strong>Page 16 of 20 (Form 10-Q)</strong></font>

<font FACE="Courier New"></p>



<p align="center">&nbsp;</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company anticipates minimal business disruption

will occur as a result of Year 2000 issues; however, possible consequences include, but

are not limited to, loss of communications links with certain store locations, loss of

electric power, inability to process transactions, send purchase orders, or engage in

similar normal business activities. In addition, since there is no uniform definition of

Year 2000 compliance and not all customer situations can be anticipated, the Company may

experience an increase in sales returns of merchandise that may contain hardware or

software components that are not Year 2000 compliant. If returns of merchandise increase,

such returns are not expected to be material to the Company's financial condition. </p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Company has essentially completed its contingency

plans for possible Year 2000 issues. Distribution of contingency materials will continue

into December.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; During the second quarter, the Company acquired ASDA

Group PLC. All business critical conversions and contingency planning are essentially

complete for ASDA at this time.</font><font SIZE="2"> </font><font FACE="Courier New">ASDA

budgeted $27.5 million for Year 2000 compliance. Of this amount $25.3 million was incurred

prior to the Company&#146;s acquisition of ASDA and $1.5 million has been incurred after

the acquisition was completed. Budgeted numbers for Year 2000 compliance were converted

from Great Britain pounds sterling at an exchange rate of 1.60.</p>

</font><font SIZE="2">



<p ALIGN="center"></font><font FACE="Courier New">&nbsp;&nbsp;&nbsp; The cost of the

conversions and the completion dates are based on management&#146;s best estimates and may

be updated as additional information becomes available. Readers are referred to Item 5 of

this report, which addresses forward-looking statements made by the Company.</p>



<p align="center"></font><font face="Arial" size="2"><strong>Page 17 of 20 (Form 10-Q)</strong></font>

<font FACE="Courier New"></p>



<p align="center">&nbsp;</p>

<b>



<p align="center">PART II. OTHER INFORMATION</p>



<p align="center">Item 1. Legal Proceedings</p>



<p ALIGN="center"></b>&nbsp;&nbsp;&nbsp; The United States Environmental Protection Agency

(EPA) is threatening to bring suit against the Company and five of its contractors over

alleged violations of the 1992 storm water permit at various Wal-Mart development sites in

Texas, New Mexico and Oklahoma. The EPA has presented the Company with penalty

calculations of $5.6 million.</p>

<b>



<p align="center">Item 5. Other Information</p>

</b>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; The Private Securities Litigation Reform Act of 1995

provides a safe harbor for forward-looking statements made by or on behalf of the Company.

Certain statements contained in Management&#146;s Discussion and Analysis and in other

Company filings are forward-looking statements. 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 are active; our business 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.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; 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 but are not limited to: the costs of

goods; competitive pressures; inflation; consumer debt levels; currency exchange

fluctuations; trade restrictions; changes in tariff and freight rates; Year 2000 issues;

unemployment levels; interest rate fluctuations; and other capital market and economic

conditions.</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp; 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 our business or operations. Undue reliance should not be placed on these

forward-looking statements, which speak only as of their dates. We assume no obligation to

update any of these forward-looking statements.</p>

<b>



<p align="center">Item 6. Exhibits and Reports on Form 8-K</p>



<p ALIGN="center"></b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) The following

document is filed as an exhibit to this<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 10-Q:</p>



<p align="center"></font><strong><font face="Arial" size="2">Page 18 of 20 (Form 10-Q)<br>

<br>

</font></strong><font FACE="Courier New"></p>



<p align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Exhibit 27 - Financial Data Schedule</p>



<p ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) A Form 8-K was filed on

August 11, 1999, to report the

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;significant

acquisition of the issued shares of Asda<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Group PLC, an English

public company and the required<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; reporting of the

financial statements and pro forma<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; financial information,

filed as an amendment report<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to Form 8-K, filed on

October 5, 1999.</p>



<p align="center"></font><font face="Arial" size="2"><strong>Page 19 of 20 (Form 10-Q)</strong></font>

<font FACE="Courier New"></p>



<blockquote>

<blockquote>

<blockquote>

<p ALIGN="JUSTIFY">&nbsp;</p>

</blockquote>

</blockquote>

</blockquote>

<b>



<p align="center">SIGNATURES</p>



<p align="center">&nbsp;</p>

</b>



<p align="center">Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf by the undersigned

thereunto duly authorized.</p>



<p align="center">&nbsp;</p>



<p align="center">&nbsp;</p>



<p align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

WAL-MART STORES, INC.</p>



<p align="center">&nbsp;</p>



<p align="center">Date: December 15, 1999

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>/s/David D. Glass&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>

</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

President and<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Chief Executive Officer<u></p>

</u>



<p align="center">&nbsp;</p>



<p align="center">Date: December 15, 1999

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<u>/s/James A. Walker Jr.&nbsp;&nbsp;&nbsp; <br>

</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Senior Vice President<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

and Controller<u></p>

</u></font><font FACE="Courier">



<p align="center">&nbsp;</p>



<p align="center"></font><font face="Arial" size="2"><strong>Page 20 of 20 (Form 10-Q)</strong></font>

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<p align="center">&nbsp;</p>

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Walmart - 10-Q quarterly report FY

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