Walmart 1998 Annual Report Download - page 36

8 Long-term Lease Obligations
The Company and certain of its subsidiaries have long-term
leases for stores and equipment. Rentals (including, for certain
leases, amounts applicable to taxes, insurance, maintenance,
other operating expenses and contingent rentals) under all
operating leases were $596 million, $561 million and $531
million in 1998, 1997 and 1996, respectively. Aggregate
minimum annual rentals at January 31, 1998, under
non-cancelable leases are as follows (in millions):
Fiscal year ended January 31,1998
Wal-Mart Stores SAM’S Club International Other Consolidated
Revenues from external customers $ 83,820 $ 20,668 $ 7,517 $ 5,953 $ 117,958
Intercompany real estate charge (income) 1,375 349 (1,724)
Depreciation and amortization 674 104 118 738 1,634
Operating income 5,833 616 262 (208) 6,503
Interest expense 784
Income before income taxes
and minority interest 5,719
Total assets $ 22,002 $ 3,864 $ 7,390 $ 12,128 $ 45,384
Certain of the leases provide for contingent additional
rentals based on percentage of sales. Such additional rentals
amounted to $46 million, $51 million and $41 million in 1998,
1997 and 1996, respectively. Substantially all of the store
leases have renewal options for additional terms from five
to 25 years at comparable rentals.
The Company has entered into lease commitments for land
and buildings for 38 future locations. These lease commitments
with real estate developers provide for minimum rentals for
20 to 25 years, excluding renewal options, which if consummated
based on current cost estimates, will approximate $38 million
annually over the lease terms.
9 Segments
The Company and its subsidiaries are principally engaged
in the operation of mass merchandising stores located in all
50 states, Argentina, Brazil, Canada, Germany, Mexico and
Puerto Rico, and through joint ventures in China.
In June 1997, the Financial Accounting Standards Board
(FASB) issued Statement No. 131, “Disclosures about
Segments of an Enterprise and Related Information,” which
the Company has adopted in the current year.
The Company identifies such segments based on
management responsibility within the United States and
geographically for all international units. The Wal-Mart
Stores segment includes the Company’s discount stores and
Supercenters in the United States. The SAM’S Club segment
includes the warehouse membership clubs in the United
States. The Company’s operations in Argentina, Brazil,
Germany, Mexico and China are consolidated using
a December fiscal year end, generally due to statutory
reporting requirements. There were no significant intervening
events which materially affected the financial statements.
The Company measures segment profit as operating profit,
which is defined as income before interest expense, income
taxes and minority interest. Information on segments and a
reconciliation to income, before income taxes and minority
interest, are as follows (in millions):
Fiscal Operating Capital
year leases leases
1999 $ 404 $ 347
2000 384 345
2001 347 344
2002 332 343
2002 315 340
Thereafter 2,642 3,404
Total minimum rentals $ 4,424 5,123
Less estimated executory costs 73
Net minimum lease payments 5,050
Less imputed interest at rates ranging from 6.1% to 14.0% 2,465
Present value of minimum lease payments $ 2,585
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