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.
(Reporting by Jessica Wohl)
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