Wal-Mart to add more detail in financial reports after SEC query
Aug 6 (Reuters) - Wal-Mart Stores Inc will tweak its future financial reports to add more detail on legal proceedings and cyber security after U.S. regulators asked the retailer to better explain certain matters in its latest quarterly and annual filings.
Wal-Mart's correspondence with the U.S. Securities and Exchange Commission took place in June and July and was made public on Monday.
The letters include a reference to the "legal proceedings" section of Wal-Mart's quarterly filing, an area under close scrutiny by investors since the New York Times reported an alleged past bribery scheme in Mexico on April 21.
The SEC wrote to Wal-Mart Chief Financial Officer Charles Holley on June 8 with comments on the annual report for the fiscal first quarter that ended on April 30 and the fiscal year that ended on Jan. 31.
Regarding the quarterly report, the SEC asked the world's largest retailer to provide greater detail about the outcome of legal proceedings, such as the range of a possible loss from litigation. If no range could be provided, the SEC asked that Wal-Mart provide a reason why such an estimate could not be given.
"Furthermore, if you cannot estimate the possible loss or range of possible losses, please consider providing additional disclosure that could allow a reader to evaluate the potential magnitude of the claim," Andrew Mew, accounting branch chief of the SEC's division of corporation finance, said in the letter.
Wal-Mart said in its June 22 reply that it would change the disclosure. Instead of reading: "While management cannot predict the ultimate outcome of these matters, management does not believe it will have a material effect on the Company's financial condition or results of operations," it will now read: "Management does not believe any possible loss or the range of any possible loss that may be incurred in connection with this matter will be material to the Company's financial condition or results of operations."
Wal-Mart also said it would update disclosures related to the Foreign Corrupt Practices Act matter if any material development occurred.
For the annual report, the SEC asked if any security breaches through cyber attacks have occurred in the past, and asked the retailer to expand its risk factor statement in the future to disclose such information.
Wal-Mart said computer hackers make numerous attempts to breach the company's information systems each year and that none of the attempts have resulted in anyone gaining access to the personal information of customers, employees or vendors stored on Wal-Mart's information systems.
It agreed to state more clearly that it "may be vulnerable" by modifying its risk factor disclosure to include details about the security of its information.
A letter from Mew to Holley dated July 9 said the SEC has completed its review.
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