Walmart 2004 Annual Report Download - page 27

Contractual Obligations and Other Commercial Commitments
The following table sets forth certain information concerning our obligations and commitments to make contractual future payments,
such as debt and lease agreements, and contingent commitments.
Payments Due During Fiscal Years Ending January 31,
(in millions) Total 2005 2006-2007 2008-2009 Thereafter
Recorded Contractual Obligations:
Long-term debt $ 20,006 $ 2,904 $ 5,106 $ 2,609 $ 9,387
Commercial paper 3,267 3,267 – – –
Capital lease obligations 5,086 430 846 808 3,002
Unrecorded Contractual Obligations:
Non-cancelable operating leases 8,665 665 1,250 1,072 5,678
Undrawn lines of credit 5,279 3,029 2,250 – –
Trade letters of credit 2,006 2,006 – – –
Standby letters of credit 1,396 1,396 – – –
Purchase obligations 32,928 10,502 13,550 8,855 21
Total commercial commitments $ 78,633 $ 24,199 $ 23,002 $ 13,344 $ 18,088
Purchase obligations include all legally binding contracts such as firm commitments for inventory purchases, utility purchases, as well
as capital expenditures, software acquisition/license commitments and legally binding service contracts. Purchase orders for the
purchase of inventory and other services are not included in the table above. Purchase orders represent authorizations to purchase
rather than binding agreements. For the purposes of this table, contractual obligations for purchase of goods or services are defined as
agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based
on our current inventory needs and are fulfilled by our suppliers within short time periods. We also enter into contracts for outsourced
services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for
cancellation without significant penalty.
The expected timing for payment of the obligations discussed above is estimated based on current information. Timing of payments and
actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for
some obligations.
In addition to the amounts discussed and presented above, the Company has made certain guarantees as discussed below for which the
timing of payment, if any, is unknown.
In connection with the expansion of our distribution network within Canada, we have guaranteed specific obligations of a third-party
logistics provider. In the unlikely event this provider fails to perform its financial obligations regarding certain Wal-Mart-related
projects, we would be obligated to pay an amount of up to $110 million. These agreements cover periods of up to 10 years.
In connection with debt financing of $500 million, we could be liable for an early-termination payment under a related interest rate
swap arrangement if certain unlikely events were to occur. At January 31, 2004, the termination payment was $88 million. This
arrangement expires in fiscal 2011.
In connection with the development of our grocery distribution network in the United States, we have agreements with third parties
which would require us to purchase or assume the leases on certain unique equipment in the event the agreements are terminated.
These agreements, which can be terminated by either party at will, cover up to a five-year period and obligate the Company to pay up
to approximately $148 million in the unlikely termination of some or all of these agreements.
The Company has entered into lease commitments for land and buildings for 11 future locations. These lease commitments with real
estate developers provide for minimum rentals for 20 years, excluding renewal options, which, if consummated based on current cost
estimates, will approximate $17 million annually over the lease terms.
There are no recourse provisions which would enable us to recover any amounts paid under the above guarantees from third parties. No
liability has been recorded in our financial statements for these guarantees.
Capital Resources
Management believes that cash flows from operations and proceeds from the sale of commercial paper will be sufficient to finance any
seasonal buildups in merchandise inventories and meet other cash requirements. If our operating cash flows are not sufficient to pay
the increased dividend and to fund our capital expenditures, we anticipate funding any shortfall in these expenditures with a
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