Walmart 1998 Annual Report Download - page 23

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23
Market Risk
Market risks relating to the Company’s operations result
primarily from changes in interest rates and changes in
foreign exchange rates. We enter into interest rate swaps to
minimize the risk and costs associated with our financial
activities. The swap agreements are contracts to exchange
fixed or variable rates for floating interest rate payments
periodically over the life of the instruments.
The following table provides information about our
derivative financial instruments and other financial
instruments that are sensitive to changes in interest rates. For
debt obligations, the table presents principal cash flows and
related weighted-average interest rates by expected maturity
dates. For interest rate swaps, the table presents notional
amounts and average interest rates by contractual maturity
dates. For variable rate instruments, we have indicated the
applicable floating rate index.
Interest Rate Sensitivity
Principal (Notional) Amount by Expected Maturity
Average Interest (Swap) Rate
Fair value
(Amounts in millions) 1999 2000 2001 2002 2003 Thereafter Total 1/31/98
Liabilities
Long-term debt Including current portion
Fixed rate debt $1,039 $815 $2,018 $52 $559 $3,747 $8,230 $8,639
Average interest rate 7.1% 7.2% 7.2% 7.1% 6.9% 7.2% 7.2%
Long-term obligation related to
real estate investment trust
Fixed rate obligation 36 39 43 46 50 382 596 560
Average interest rate 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4%
Interest Rate Derivative Financial Instruments
Related to Debt
Interest rate swaps
Pay variable/receive fixed – 500 – – – – 500 –
Average pay rate – 30-day commercial paper
non-financial plus .134%
Average receive rate – 5.7% – – – – 5.7%
Interest Rate Derivative Financial Instruments
Related to Real Estate Investment Trust Obligation
Interest rate swaps
Pay variable/receive fixed 35 37 41 45 49 378 585 17
Average pay rate – 30-day commercial
paper non-financial
Average receive rate 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Interest Rate Derivative Financial Instrument
on Currency Swap
German Deutschmarks
Pay variable/receive variable – – – – 1,101 – 1,101 (1)
Average pay rate – 3-month Deutschmark
LIBOR minus .0676%
Average receive rate – 30-day commercial
paper non-financial