Walmart 1999 Annual Report Download - page 31

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Accounting for derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, “Accounting for Derivative Instruments and
Hedging Activities.” The Statement will be effective for the Company
beginning February 1, 2000. The new Statement requires all deriva-
tives to be recorded on the balance sheet at fair value and establish-
es accounting treatment for three types of hedges: hedges of changes
in the fair value of assets, liabilities, or firm commitments; hedges of
the variable cash flows of forecasted transactions; and hedges of for-
eign currency exposures of net investments in foreign operations.
The Company is analyzing the implementation requirements 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.
Net income per share
Basic net income per share is based on the weighted average out-
standing common shares. Dilutive net income per share is based on
the weighted average outstanding shares reduced by the dilutive
effect of stock options.
Foreign currency translation
The assets and liabilities of most foreign subsidiaries are translated
at current exchange rates and any related translation adjustments
are recorded as a component of accumulated comprehensive
income. Operations in Mexico operate in highly inflationary
economies and certain assets are translated at historical exchange
rates and all translation adjustments are reflected in the
Consolidated Statements of Income. Beginning in fiscal 2000, Mexico
will no longer be considered highly inflationary and will begin report-
ing operations in local currency.
Estimates and assumptions
The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and assump-
tions affect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the consolidat-
ed financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications
Certain reclassifications have been made to prior periods to conform
to current presentations.
2 Defined Contribution Plans
The Company maintains profit sharing plans under which most full-
time and many part-time associates become participants following
one year of employment and a 401(k) plan in which the same asso-
ciates may elect to contribute up to 10% of their earnings.
The Company will make annual contributions to these plans on
behalf of all eligible associates, including those who have not
elected to contribute to the 401(k) plan.
Annual Company contributions are made at the sole discretion of
the Company, and were $388 million, $321 million and
$247 million in 1999, 1998 and 1997, respectively.
3 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, 1999 1998 1997
Maximum amount outstanding at month-end $ 1,976 $ 1,530 $ 2,209
Average daily short-term borrowings 256 212 1,091
Weighted average interest rate 5.1% 5.6% 5.3%
At January 31, 1999 and 1998, there were no short-term borrowings
outstanding. At January 31, 1999, the Company had committed
lines of credit of $1,872 million with 78 banks and informal lines of
credit with various banks totaling an additional $1,950
million, which were used to support short-term borrowings and
commercial paper. Short-term borrowings under these lines of
credit bear interest at or below the prime rate.
Long-term debt at January 31, consists of (amounts
in millions):