Walmart 2004 Annual Report Download - page 43

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In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), as amended by
FIN 46-R. This interpretation addresses the consolidation of business enterprises (“variable interest entities”) to which the usual
condition (ownership of a majority voting interest) of consolidation does not apply. This interpretation focuses on financial interests
that indicate control. It concludes that in the absence of clear control through voting interests or sufficient equity, a company’s
exposure (“variable interest”) to the economic risks and potential rewards from the variable interest entity’s assets and activities are the
best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the values of
the variable interest entity’s assets and liabilities. Variable interests may arise from financial instruments, service contracts, nonvoting
ownership interests and other arrangements. If an enterprise holds a majority of the variable interests of an entity, it would be
considered the primary beneficiary. The primary beneficiary would be required to consolidate the assets, liabilities and the results of
operations of the variable interest entity in its financial statements. FIN 46-R applies immediately to variable interest entities that were
created or for which control was obtained after January 31, 2003, at the end of the first interim period ended after December 15, 2003,
for variable interest entities that are special purpose entities and at the end of the first interim period ending after March 15, 2004, for
all other entities established on or before January 31, 2003.
The Company has adopted the provisions of FIN 46-R for the year ending January 31, 2004, for any variable interest entities created
after January 31, 2003, and for any variable interest entities that are special purpose entities with no impact on our financial
statements. The Company will adopt the provisions of FIN 46-R for our financial statements for the first quarter ending April 30, 2004,
for any variable interest entities created before February 1, 2003. As the net sales and total assets of entities affected by FIN 46-R
represent less than 1% of the Company’s net sales and total assets, we do not expect the adoption of this provision of FIN 46-R to have
a material impact on our financial statements.
Reclassifications
Certain reclassifications have been made to prior periods to conform to current presentations.
2 Commercial Paper and Long-term Debt
Information on short-term borrowings and interest rates is as follows (dollar amounts in millions):
Fiscal Years Ended January 31, 2004 2003 2002
Maximum amount outstanding at any month-end $ 4,957 $ 4,226 $ 4,072
Average daily short-term borrowings 1,498 1,549 2,606
Weighted average interest rate 1.1% 1.7% 3.7%
At January 31, 2004 and 2003, short-term borrowings consisted of $3.3 billion and $1.1 billion, respectively, of commercial paper.
At January 31, 2004, the Company had committed lines of $5.1 billion with 73 firms and banks and informal lines of credit with various
banks totaling an additional $145 million, which were used to support commercial paper.
Long-term debt at January 31, consists of (in millions):
Interest Rate Due by Fiscal Year 2004 2003
6.875% Notes due 2010 $ 3,500 $ 3,500
4.375% – 7.250% Notes due 2014 2,854 1,265
Various Notes due 2006 2,597 2,597
4.375% – 8.000% Notes due 2007 2,130 2,084
5.750% – 7.550% Notes due 2031 1,912 1,823
6.550% – 7.500% Notes due 2005 1,750 1,750
4.375% Notes due 2008 1,500 1,500
3.375% Notes due 2009 1,000 –
6.562% – 8.246% Obligations from sale/leaseback transactions due 2013-2015 527 580
5.850% Notes due 2019 with put option 500 500
6.200% Notes due 2011 with put option 500 500
8.500% Notes due 2025 250 250
6.750% Notes due 2024 250 250
3.250% – 6.500% Notes due 2004 –3,382
Other, including adjustments to debt hedged by derivatives 736 1,152
$ 20,006 $ 21,133