Walmart 2007 Annual Report Download - page 58

Wal-Mart 2007 Annual Report 56
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 operating leases and other short-term
rental arrangements were $1.4 billion, $1.0 billion and $1.1 billion in 2007,
2006 and 2005, respectively. Aggregate minimum annual rentals at
January 31, 2007, under non-cancelable leases are as follows (in millions):
Operating Capital
Fiscal Year Leases Leases
2008 $ 842 $ 538
2009 826 540
2010 768 520
2011 698 505
2012 634 480
Thereafter 6,678 3,132
Total minimum rentals $10,446 5,715
Less estimated executory costs 29
Net minimum lease payments 5,686
Less imputed interest at rates ranging
from 3.0% to 15.6% 1,888
Present value of minimum lease payments $3,798
The Company has entered into sale/leaseback transactions involving
buildings and the underlying land that were accounted for as capital
and operating leases. Included in the annual maturities schedule above
are $601 million of capital leases and $22 million of operating leases.
Certain of the Company’s leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals
amounted to $41 million, $27 million and $32 million in 2007, 2006
and 2005, respectively. Substantially all of the Company’s store leases
have renewal options, some of which may trigger an escalation in rentals.
In connection with certain debt  nancing, we could be liable for early
termination payments if certain unlikely events were to occur. At
January 31, 2007, the aggregate termination payment was $69 million.
These two arrangements expire in  scal 2011 and  scal 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  ve-year period and obligate the Company to
pay up to approximately $150 million upon termination of some or
all of these agreements.
The Company has entered into lease commitments for land and
buildings for 141 future locations. These underlying leases with real
estate developers will provide for minimum rentals ranging from
4 to 30 years and will approximate $72 million annually over the
lease terms based on current cost estimates.
10 Retirement-Related Benefits
In the United States, the Company maintains a Pro t Sharing and 401(k)
Plan under which most full-time and many part-time associates become
participants following one year of employment. The Pro t Sharing
component of the plan is entirely funded by the Company, and the
Company makes an additional contribution to the associates’ 401(k)
component of the plan. In addition to the Company contributions to
the 401(k) component of the plan, associates may elect to contribute
a percentage of their earnings. During  scal 2007, participants could
contribute up to 25% of their pretax earnings, but not more than
statutory limits.
Associates may choose from among 13 di erent investment options
for the 401(k) 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’ 401(k) funds immediately vest, and associates may
change their investment options at any time. Additionally, after
January 31, 2007, associates with three years of service have full diversi-
 cation rights with the same 13 investment options for the Pro t
Sharing component of the plan. Associates are fully vested in the
Pro t Sharing component of the plan after seven years of service.
Annual contributions made by the Company to the United States
and Puerto Rico Pro t Sharing and 401(k) Plans are made at the sole
discretion of the Company. Expense associated with these plans was
$890 million, $827 million and $756 million in  scal 2007, 2006 and
2005, respectively.
Employees in foreign countries who are not U.S. citizens are covered
by various post-employment bene t arrangements. These plans are
administered based upon the legislative and tax requirements in
the country in which they are established. Annual contributions to
foreign retirement savings and pro t sharing plans are made at the
discretion of the Company, and were $274 million, $244 million and
$199 million in  scal 2007, 2006 and 2005, respectively.
The Company’s subsidiaries in the United Kingdom and Japan have
de ned bene t pension plans. The plan in the United Kingdom was
underfunded by $251 million and $332 million at January 31, 2007 and
2006, respectively. The plan in Japan was underfunded by $208 million
and $228 million at January 31, 2007 and 2006, respectively. These
underfunded amounts have been recorded in our Consolidated Balance
Sheets upon the adoption of SFAS 158. Certain other foreign opera-
tions have de ned bene t arrangements that are not signi cant.
Notes to Consolidated Financial Statements