Walmart 2005 Annual Report Download - page 49

WAL-MART 2005 ANNUAL REPORT 47
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.
10 Retirement-Related Benefits
In the United States, the company maintains a Profit Sharing and
401(k) Retirement Savings Plan under which most full-time and
many part-time associates become participants following one year
of employment. The Profit Sharing component of the plan is
entirely funded by the company, with an additional contribution
made by the company to the associates’ 401(k) component of the
plan. In addition to the company contributions to the 401(k)
Retirement Savings component of the plan, associates may elect to
contribute a percentage of their earnings. During fiscal 2005, par-
ticipants could contribute up to 25% of their pretax earnings, but
not more than statutory limits.
Associates may choose from among 13 different investment options
for the 401(k) Retirement Savings component of the plan. For
associates who did not make an election, their 401(k) balance in
the plan is placed in a balanced fund. Associates are immediately
vested in their 401(k) funds and may change their investment
options at any time. Additionally, fully vested associates have the
same 13 investment options for the Profit Sharing component of
the plan. Associates are fully vested in the Profit Sharing compo-
nent of the plan after seven years of service.
Annual contributions made by the company to the United States
and Puerto Rico Profit Sharing and 401(k) Retirement Savings
Plans are made at the sole discretion of the company, and were
$756 million, $662 million and $574 million in fiscal 2005,
2004, and 2003, respectively.
Employees in foreign countries who are not U.S. citizens are covered
by various postemployment benefit arrangements. These plans are
administered based upon the legislative and tax requirements in the
country in which they are established. Annual contributions to for-
eign retirement savings and profit sharing plans are made at the dis-
cretion of the company, and were $199 million, $123 million and
$132 million in fiscal 2005, 2004 and 2003, respectively.
The company’s United Kingdom subsidiary, ASDA, has a defined
benefit pension plan. The plan was underfunded by $419 million
and $328 million at January 31, 2005 and 2004, respectively.
11 Segments
The company and its subsidiaries are principally engaged in the
operation of retail stores located in all 50 states, Argentina, Canada,
Germany, South Korea, Puerto Rico and the United Kingdom,
through joint ventures in China, and through majority-owned
subsidiaries in Brazil and Mexico. The company identifies segments
based on management responsibility within the United States and
in total for international units.
The Wal-Mart Stores segment includes the company’s Supercenters,
Discount Stores and Neighborhood Markets in the United States
as well as Walmart.com. The SAM’S CLUB segment includes the
warehouse membership clubs in the United States as well as sams-
club.com. The International segment consists of the company’s
operations in Argentina, Brazil, China, Germany, Mexico, South
Korea and the United Kingdom, which are consolidated using a
December 31 fiscal year-end, generally due to statutory reporting
requirements. There were no significant intervening events which
materially affected the financial statements. The company’s opera-
tions in Canada and Puerto Rico are consolidated using a January
31 fiscal year-end. The amounts under the caption “Other” in the
following table are unallocated corporate overhead, including our
real estate operations in the United States. The company’s portion
of the results of our unconsolidated minority interest in Seiyu, is also
included under the caption “Other.”