Walmart 2014 Annual Report Download - page 32

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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 2015 2016-2017 2018-2019 Thereafter
Recorded contractual obligations:
Long-term debt
(1)
$ 45,874 $ 4,103 $ 6,876 $ 4,638 $30,257
Short-term borrowings 7,670 7,670 — — —
Capital lease obligations
(2)
6,291 586 1,077 917 3,711
Unrecorded contractual obligations:
Non-cancelable operating leases 17,170 1,734 3,094 2,506 9,836
Estimated interest on long-term debt 34,034 1,921 3,692 3,459 24,962
Trade letters of credit 2,843 2,843 — — —
Purchase obligations 5,032 4,383 621 20 8
Total commercial commitments $118,914 $23,240 $15,360 $11,540 $68,774
(1) “Long-term debt” includes the fair value of our derivatives classified as fair value hedges.
(2) “Capital lease obligations” includes executory costs and imputed interest related to capital lease obligations that are not yet recorded. Refer to Note 11 for more information.
Additionally, the Company has approximately $15.4 billion in undrawn
lines of credit and standby letter of credit facilities which, if drawn upon,
would be included in the liabilities section of the Company’s Consolidated
Balance Sheets.
Estimated interest payments are based on our principal amounts
and expected maturities of all debt outstanding at January 31, 2014,
and management’s forecasted market rates for our variable rate debt.
Purchase obligations include legally binding contracts such as rm
commitments for inventory and utility purchases, as well as commitments
to make capital expenditures, software acquisition and license commit-
ments and legally binding service contracts. Purchase orders for inventory
and other services are not included in the table above. Purchase orders
represent authorizations to purchase rather than binding agreements.
For the purposes of this table, contractual obligations for the purchase of
goods or services are dened as agreements that are enforceable and
legally binding and that specify all signicant terms, including: xed or
minimum quantities to be purchased; xed, minimum or variable price
provisions; and the approximate timing of the transaction. Our purchase
orders are based on our current inventory needs and are fullled by our
suppliers within short time periods. We also enter into contracts for
outsourced services; however, the obligations under these contracts are
not signicant and the contracts generally contain clauses allowing for
cancellation without signicant penalty.
The expected timing for payment of the obligations discussed above is
estimated based on current information. Timing of payments and actual
amounts paid with respect to some unrecorded contractual commit-
ments may be dierent depending on the timing of receipt of goods or
services or changes to agreed-upon amounts for some obligations.
In addition to the amounts shown in the table above, $763 million
of unrecognized tax benets are considered uncertain tax positions and
have been recorded as liabilities. The timing of the payment, if any,
associated with these liabilities is uncertain. Refer to Note 9 in the
“Notes to Consolidated Financial Statements” for additional discussion
of unrecognized tax benets.
Off Balance Sheet Arrangements
In addition to the unrecorded contractual obligations presented
above, we have entered into certain arrangements, as discussed below,
for which the timing of payment, if any, is unknown.
The Company has future lease commitments for land and buildings
for approximately 317 future locations. These lease commitments have
lease terms ranging from 4 to 40 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $49 million for scal 2015, based on current estimates.
In connection with certain long-term debt issuances, we could be liable
for early termination payments if certain unlikely events were to occur.
At January 31, 2014, the aggregate termination payment would have
been $74 million. The arrangement pursuant to which this payment
could be made will expire in scal 2019.
Market Risk
In addition to the risks inherent in our operations, we are exposed to
certain market risks, including changes in interest rates and uctuations
in currency exchange rates.
The analysis presented below for each of our market risk sensitive
instruments is based on a hypothetical scenario used to calibrate potential
risk and does not represent our view of future market changes. The eect
of a change in a particular assumption is calculated without adjusting any
other assumption. In reality, however, a change in one factor could cause
a change in another, which may magnify or negate other sensitivities.
30 Walmart 2014 Annual Report