Friday, September 16, 2005

The “Other” operating segment

I finally found out what is in the “Other” segment for Wal-Mart ( know, the one with $44 billion in assets and no explanation). I simply read all the annual reports going back until the first appearance of the “Other” segment. It first appears in the 1998 Annual Report.

In June 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information,” which Wal-Mart adopted in Fiscal Year 1998. Wal-Mart identifies such segments based on “management responsibility within the United States and geographically for all international units.”

All of Wal-Mart’s real estate assets in the United States are included in this “Other” operating category. Those are the primary assets of the category. The real estate is then leased to the Wal-Mart Stores segment and the SAM’S Club segment.

All of the international real estate, by the way, is placed in the “International” segment.

[Back in 1998, by the way, Wal-Mart still owned McLane Company Inc., the grocery distribution business. McLane existed in the "Other" operating segment all the way up until it was sold to Berkshire Hathaway in Fiscal Year 2004. (Sale was completed on May 23, 2003 for $1.5 billion in cash from Berkshire.) Most of the revenue in the "Other" operating segment came from McLane. When McLane left Wal-Mart in FY 2004, operating income for the "Other" segment went negative, i.e. more expenses than income.]


Post a Comment

<< Home