Walmart 2004 Annual Report Download - page 51

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The Company is a defendant in Mauldin v. Wal-Mart Stores, Inc., a class-action lawsuit that was filed on October 16, 2001, in the
United States District Court for the Northern District of Georgia, Atlanta Division. The class was certified on August 23, 2002.
On September 30, 2003, the court denied the Company’s motion to reconsider that ruling. The class is composed of female Wal-Mart
Associates who were participants in the Associates Health and Welfare Plan at any time from March 8, 2001, to the present and who
were using prescription contraceptives. The class seeks amendment of the Plan to include coverage for prescription contraceptives,
back pay for all members in the form of reimbursement of the cost of prescription contraceptives, pre-judgment interest, and
attorneys’ fees. The complaint alleges that the Company’s Health Plan violates Title VII’s prohibition against gender discrimination in
that the Health Plan’s Reproductive Systems provision does not provide coverage for prescription contraceptives.
The Company is a defendant in a lawsuit that was filed on August 31, 2001, in the United States District Court for the Eastern District
of Kentucky. EEOC (Janice Smith) v. Wal-Mart Stores, Inc. is an action brought by the EEOC on behalf of Janice Smith and all other
females who made application or transfer requests at the London, Kentucky, Distribution Center from 1995 to the present, and who
were not hired or transferred into the warehouse positions for which they applied. The class seeks back pay for those females not
selected for hire or transfer during the relevant time period. The class also seeks injunctive and prospective affirmative relief. The
complaint alleges that the Company based hiring decisions on gender in violation of Title VII of the 1964 Civil Rights Act as amended.
The EEOC can maintain this action as a class without certification.
The Company was previously a defendant in seven putative class actions that were pending in a Massachusetts state court, in which
the plaintiffs alleged that the Company violated a state regulation requiring individual price stickers to be affixed to certain items
offered for retail sale. The parties entered into a settlement agreement in the fall of 2003, which was approved by the court on
December 15, 2003. The settlement will not have a material impact on the Company’s financial condition or results of operations.
9 Commitments
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 $1.1 billion, $1.1 billion, and $1.0 billion in 2004, 2003, and 2002, respectively. Aggregate minimum annual rentals at
January 31, 2004, under non-cancelable leases are as follows (in millions):
Fiscal Year Operating Leases Capital Leases
2005 $ 665 $ 430
2006 651 427
2007 599 419
2008 553 411
2009 519 397
Thereafter 5,678 3,002
Total minimum rentals $ 8,665 5,086
Less estimated executory costs 44
Net minimum lease payments 5,042
Less imputed interest at rates ranging from 4.2% to 14.0% 1,849
Present value of minimum lease payments $ 3,193
Certain of the leases provide for contingent additional rentals based on percentage of sales. The additional rentals amounted to
$46 million, $51 million and $63 million in 2004, 2003 and 2002, respectively. Substantially all of the store leases have renewal options
for additional terms from 5 to 30 years at comparable rentals.
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.