Walmart 2003 Annual Report Download - page 31

December 31, 2002. The Company believes the adoption of FAS No. 146, which will occur in fiscal 2004, will not have a
material impact on its financial position or results of operations.
In November, 2002, the FASB’s Emerging Issues Task Force (EITF) reached a consensus on EITF 02-16 “Accounting by
a Reseller for Cash Consideration Received from a Vendor”, which addresses the accounting for ‘Cash Consideration’
(which includes slotting fees, cooperative advertising payments etc.) and ‘Rebates or Refunds’ from a vendor that are
payable only if the merchant completes a specified cumulative level of purchases or remains a customer of the vendor
for a specified period of time. With regards to the ‘cash considerations,’ the EITF agreed that the consideration should
be treated as a reduction of the prices of the vendor products or services and should therefore be included as a reduction
of cost of sales unless the vendor receives, or will receive, an identifiable benefit in exchange for the consideration. With
respect to the accounting for a rebate or refund, the EITF agreed that such refunds or rebates should be recognized as
a reduction of the cost of sales based on a systematic and rational allocation of the consideration to be received. This
guidance should be applied prospectively to arrangements entered into after December 15, 2002. The Company is
currently evaluating the impact of this new guidance which will be applied in the first quarter of fiscal 2004.
The Company has various stock option compensation plans for Associates. The Company currently accounts for those
plans under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to
Employees,” and related interpretations. Historically, no significant stock-based employee compensation has been
recognized under APB Opinion No. 25. In August 2002, the Company announced that on February 1, 2003, it will adopt
the expense recognition provisions of the Financial Accounting Standards Board Statement No. 123, “Accounting and
Disclosure of Stock-Based Compensation” (“FAS 123”). Under FAS 123, compensation expense is recognized based on
the fair value of stock options granted. The Company has chosen to retroactively restate its results of operations for this
accounting change. The adoption of the fair value method will result in a reduction of retained earnings at that date of
$348 million, representing the cumulative stock option compensation recorded for prior years net of the tax effect. The
Company’s estimates that the impact of changing the accounting method for the adoption of FAS 123 will have an
impact of $0.02 to $0.03 per share in the year of adoption.
Forward-Looking Statements
This Annual Report contains statements that Wal-Mart believes are “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995, and intended to enjoy the protection of the safe harbor for
forward-looking statements provided by that Act. These forward-looking statements generally can be identified by use of
phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee” or other similar words or phrases. Similarly,
descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. These statements
discuss, among other things, expected growth, future revenues, future cash flows, future performance and the anticipation
and expectations of Wal-Mart and its management as to future occurrences and trends. These forward-looking statements
are subject to risks, uncertainties and other factors, in the United States and internationally, including, the cost of goods,
competitive pressures, inflation, consumer spending patterns and debt levels, currency exchange fluctuations, trade
restrictions, changes in tariff and freight rates, interest rate fluctuations and other capital market conditions, and other
risks. We discuss certain of these matters more fully in other of our filings with the SEC, including our Annual Report on
Form 10-K. We filed our Annual Report on Form 10-K for our fiscal year 2003 with the SEC on or about April 11, 2003.
Actual results may materially differ from anticipated results described in these statements as a result of changes in facts,
assumptions not being realized or other circumstances. You are urged to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements. As a result of these matters, including changes in facts,
assumptions not being realized or other circumstances, our actual results may differ materially from historical results
or from anticipated results expressed or implied in these forward-looking statements. The forward-looking statements
included in this Annual Report are made only as of the date of this report and we undertake no obligation to update these
forward-looking statements to reflect subsequent events or circumstances.
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