Walmart 2011 Annual Report Download - page 27

Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Walmart 2011 Annual Report 25
Capital Resources
Management believes cash ows from continuing operations and proceeds
from the issuance of short-term borrowings will be sucient to nance sea-
sonal buildups in merchandise inventories and meet other cash requirements.
If our operating cash ows are not sucient to pay dividends and to fund our
capital expenditures, we anticipate funding any shortfall in these expenditures
with a combination of short-term borrowings and long-term debt. We plan
to renance existing long-term debt obligations as they mature and may
desire to obtain additional long-term nancing for other corporate purposes.
Our access to the commercial paper and long-term debt markets have
historically provided us with substantial sources of liquidity. We anticipate
no diculty in obtaining nancing from those markets in the future in
view of our favorable experiences in the debt markets in the recent past.
Our ability to continue to access the commercial paper and long-term
debt markets on favorable interest rate and other terms will depend, to
a signicant degree, on the ratings assigned by the credit rating agencies
to our indebtedness continuing to be at or above the level of our current
ratings. At January 31, 2011, the ratings assigned to our commercial paper
and rated series of our outstanding long-term debt were as follows:
Rating Agency Commercial Paper Long-term Debt
Standard & Poor’s A-1+ AA
Moody’s Investors Service P-1 Aa2
Fitch Ratings F1+ AA
DBRS Limited R-1(middle) AA
In the event that the ratings of our commercial paper or any rated series
of our outstanding long-term debt issues were lowered or withdrawn for
any reason or if the ratings assigned to any new issue of the Company’s
long-term debt securities were lower than those noted above, our ability
to access the debt markets would be adversely aected. In addition, in
such a case, our cost of funds for new issues of commercial paper and
long-term debt (i.e., the rate of interest on any such indebtedness)
would be higher than our cost of funds had the ratings of those new
issues been at or above the level of the ratings noted above. The rating
agency ratings are not recommendations to buy, sell or hold our com-
mercial paper or debt securities. Each rating may be subject to revision
or withdrawal at any time by the assigning rating organization and should
be evaluated independently of any other rating. Moreover, each credit
rating is specic to the security to which it applies.
To monitor our credit ratings and our capacity for long-term nancing, we
consider various qualitative and quantitative factors. We monitor the ratio
of our debt to our total capitalization as support for our long-term nancing
decisions. At January 31, 2011 and 2010, the ratio of our debt-to-total
capitalization was 42.1% and 37.0%, respectively. For the purpose of this
calculation, debt is dened as the sum of short-term borrowings, long-term
debt due within one year, obligations under capital leases due within one
year, long-term debt and long-term obligations under capital leases. Total
capitalization is dened as debt plus total Walmart shareholders’ equity.
Our ratio of debt to our total capitalization increased in scal 2011 resulting
from an increase in long-term debt coupled with a decline in shareholders’
equity primarily due to our increase in share repurchases.
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 certain contingent commitments:
Payments Due During Fiscal Years Ending January 31,
(Amounts in millions) Total 2012 2013-2014 2015-2016 Thereafter
Recorded Contractual Obligations:
Long-term debt $ 45,080 $ 4,655 $ 6,857 $ 7,494 $26,074
Short-term borrowings 1,031 1,031 — — —
Capital lease obligations 5,916 609 1,119 958 3,230
Unrecorded Contractual Obligations:
Non-cancelable operating leases 14,123 1,406 2,607 2,325 7,785
Estimated interest on long-term debt 31,799 1,890 3,503 3,040 23,366
Trade letters of credit 2,620 2,620 — — —
Purchase obligations 4,141 3,200 692 205 44
Total commercial commitments $104,710 $15,411 $14,778 $14,022 $60,499
Additionally, the Company has approximately $11.5 billion in undrawn lines of credit and standby letters of credit which, if drawn upon, would be
included in the liabilities section of the Consolidated Balance Sheets.
Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31, 2011 and management’s
forecasted market rates for our variable rate debt.