Walmart 2005 Annual Report Download - page 31

WAL-MART 2005 ANNUAL REPORT 29
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 2006 2007-2008 2009-2010 Thereafter
Recorded Contractual Obligations
Long-term debt $23,846 $3,759 $ 4,972 $ 5,811 $ 9,304
Commercial paper 3,812 3,812 – – –
Capital lease obligations 5,720 521 1,019 958 3,222
Unrecorded Contractual Obligations:
Non-cancelable operating leases 9,072 730 1,326 1,108 5,908
Interest on long-term debt 10,701 1,107 1,912 1,653 6,029
Undrawn lines of credit 4,696 1,946 – 2,750 –
Trade letters of credit 2,613 2,613 – – –
Standby letters of credit 2,026 2,002 24 – –
Purchase obligations 28,472 12,461 13,717 2,280 14
Total commercial commitments $90,958 $28,951 $22,970 $14,560 $24,477
Purchase obligations include all legally binding contracts such as
firm commitments for inventory purchases, utility purchases, as
well as capital expenditures, software acquisition/license commit-
ments 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 provi-
sions; 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 con-
tracts 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 pay-
ments 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 in
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 $118 million.
These agreements cover periods of up to 10 years.
In connection with certain debt financing, we could be liable
for early termination payments if certain unlikely events were to
occur. At January 31, 2005, the aggregate termination payment
was $113 million. These arrangements expire in fiscal 2011 and
fiscal 2019.
In connection with the development of our grocery distribution
network in the United States, we have agreements with third par-
ties which would require us to purchase or assume the leases on
certain unique equipment in the event the agreements are termi-
nated. 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 $163 million upon termination of some
or all of these agreements.
There are no recourse provisions which would enable us to
recover from third parties any amounts paid under the above
guarantees. No liability for these guarantees has been recorded
in our financial statements.
The company has entered into lease commitments for land and
buildings for 46 future locations. These lease commitments with real
estate developers provide for minimum rentals ranging from 5-30
years, which, if consummated based on current cost estimates, will
approximate $30 million annually over the lease terms.
Capital Resources
During fiscal 2005, we sold $5.8 billion of notes. The proceeds
from the sale of these notes were used to repay commercial paper
and for other general corporate purposes.