Walmart 2008 Annual Report Download - page 46

44 WAL-MART 2008 ANNUAL REPORT
Notes to Consolidated Financial Statements
Additionally, the U.S. Attorney’s Oce in the Northern District of
California has initiated its own investigation regarding the Company’s
handling of hazardous materials and hazardous waste and the
Company has received administrative document requests from the
California Department of Toxic Substances Control requesting docu-
ments and information with respect to two of the Company’s distri-
bution facilities. Further, the Company also received a subpoena
from the Los Angeles County District Attorney’s Oce for documents
and administrative interrogatories requesting information, among
other things, regarding the Company’s handling of materials and
hazardous waste. California state and local government authorities
and the State of Nevada have also initiated investigations into these
matters. The Company is cooperating fully with the respective
authorities. While management cannot predict the ultimate outcome
of this matter, management does not believe the outcome will have
a material eect on the Company’s nancial condition or results
of operations.
9 Commitments
The Company and certain of its subsidiaries have long-term leases
for stores and equipment. Rentals (including amounts applicable to
taxes, insurance, maintenance, other operating expenses and contin-
gent rentals) under operating leases and other short-term rental
arrangements were $1.6 billion, $1.4 billion and $1.0 billion in 2008,
2007 and 2006, respectively. Aggregate minimum annual rentals at
January 31, 2008, under non-cancelable leases are as follows:
(Amounts in millions) Operating Capital
Fiscal Year Leases Leases
2009 $ 1,094 $ 595
2010 1,051 576
2011 994 561
2012 866 528
2013 788 494
Thereafter 8,966 3,243
Total minimum rentals $13,759 $5,997
Less estimated executory costs 27
Net minimum lease payments 5,970
Less imputed interest at rates
ranging from 3.0% to 13.6% 2,051
Present value of minimum
lease payments $3,919
Certain of the Company’s leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals
amounted to $33 million, $41 million and $27 million in 2008, 2007 and
2006, 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, 2008, the aggregate termination payment would have
been $129 million. The two arrangements pursuant to which these
payments could be made 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 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 ve-year period and obligate the Company to pay up
to approximately $97 million upon termination of some or all of
these agreements.
The Company has potential future lease commitments for land and
buildings for 165 future locations. These lease commitments have
lease terms ranging from 2 to 39 years and provide for certain mini-
mum rentals. If executed, payments under operating leases would
increase by $67 million for scal 2009, based on current cost estimates.
10 Retirement-Related Benets
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,
associates may elect to contribute a percentage of their earnings to
the 401(k) component of the plan. During scal 2008, participants
could contribute up to 50% 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 and 14 investment options for
the Prot Sharing component of the plan. For associates who did not
make an election, their 401(k) balance in the plan was placed in a
balanced fund. Associates’ 401(k) funds immediately vest, and associates
may change their investment options at any time. Associates with three
years of service have full diversication rights with the 14 investment
options for the Prot Sharing component of the plan. Prior to January 31,
2008, associates were fully vested in the Prot Sharing component of
the plan after seven years of service, with vesting starting at 20% at
three years of service and increasing 20% each year until year seven.
Eective January 31, 2008, associates are fully vested in the Prot
Sharing component of the plan after six years of service, with vesting
starting at 20% at two years of service and increasing 20% each year
until year six.
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
$945 million, $890 million and $827 million in scal 2008, 2007 and
2006, respectively.