Walmart 2010 Annual Report Download - page 50

certified disposal facility using a certified hazardous waste carrier. The
company contends that the practice of transporting returned merchandise
to its return centers for subsequent disposition, including disposal by
certified facilities, is compliant with applicable laws and regulations.
While management cannot predict the ultimate outcome of this matter,
management does not believe the outcome will have a material effect
on the company’s financial condition or results of operations.
Additionally, the U.S. Attorney’s Office 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 documents and
information with respect to two of the company’s distribution facilities.
Further, the company also received a subpoena from the Los Angeles
County District Attorney’s Office 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 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
effect on the company’s financial condition or results of operations.
12 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 contingent rentals)
under operating leases and other short-term rental arrangements were
$1.8 billion in each of fiscal 2010 and 2009, and $1.6 billion in 2008.
Aggregate minimum annual rentals at January 31, 2010, under non-
cancelable leases are as follows:
(Amounts in millions) Operating Capital
Fiscal Year Leases Leases
2011 $ 1,275 $ 607
2012 1,212 568
2013 1,106 535
2014 1,043 504
2015 986 455
Thereafter 7,477 2,915
Total minimum rentals $13,099 $5,584
Less estimated executory costs 50
Net minimum lease payments 5,534
Less imputed interest at rates
ranging from 3.0% to 12.6% 2,018
Present value of minimum lease payments $3,516
Certain of the company’s leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals were
immaterial for fiscal years 2010, 2009 and 2008. 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 financing, we could be liable for early
termination payments if certain unlikely events were to occur. At
January 31, 2010, the aggregate termination payment would have
been $109 million. The two arrangements pursuant to which these
payments could be made 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 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 approxi-
mately $41 million upon termination of some or all of these agreements.
The company has potential future lease commitments for land and
buildings for approximately 348 future locations. These lease commit-
ments have lease terms ranging from 1 to 40 years and provide for
certain minimum rentals. If executed, payments under operating
leases would increase by $59 million for fiscal 2011, based on
current cost estimates.
13 Retirement-Related Benefits
The company maintains separate Profit Sharing and 401(k) Plans for
associates in the United States and Puerto Rico, under which associates
generally become participants following one year of employment. The
Profit 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’s contributions,
associates may elect to contribute a percentage of their earnings to the
401(k) component of the plan. During fiscal 2010, participants could
contribute up to 50% of their pretax earnings, but not more than
statutory limits.
Annual contributions made by the company to the United States
and Puerto Rico Profit Sharing and 401(k) Plans are made at the
sole discretion of the company. Contribution expense associated
with these plans was $1.1 billion, $1.0 billion and $945 million in
fiscal 2010, 2009 and 2008, respectively.
Employees in international countries who are not U.S. citizens are covered
by various post-employment benefit arrangements. These plans are
administered based upon the legislative and tax requirements in the coun-
tries in which they are established. Annual contributions to international
retirement savings and profit sharing plans are made at the discretion of
the company, and were $218 million, $210 million and $267 million in
fiscal 2010, 2009 and 2008, respectively.
The company’s subsidiaries in the United Kingdom and Japan have
defined benefit pension plans. The plan in the United Kingdom was
underfunded by $339 million and $34 million at January 31, 2010 and
2009, respectively. The plan in Japan was underfunded by $249 million
and $289 million at January 31, 2010 and 2009, respectively. These
underfunded amounts have been recorded in deferred income taxes
and other in our Consolidated Balance Sheets at January 31, 2010 and
2009. Certain other international operations have defined benefit
arrangements that are not significant.
Notes to Consolidated Financial Statements
48 Walmart 2010 Annual Report