Walmart 2015 Annual Report Download - page 32

30 2015 Annual Report
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 2016 2017-2018 2019-2020 Thereafter
Recorded contractual obligations:
Long-term debt
(1)
$ 45,896 $ 4,810 $ 3,835 $ 4,032 $33,219
Short-term borrowings 1,592 1,592 — — —
Capital lease obligations
(2)
5,454 504 920 778 3,252
Unrecorded contractual obligations:
Non-cancelable operating leases 17,910 1,759 3,097 2,590 10,464
Estimated interest on long-term debt 32,910 1,950 3,690 3,399 23,871
Trade letters of credit 2,723 2,723 — — —
Stand-by letters of credit 1,898 1,898 — — —
Purchase obligations 10,712 6,548 3,428 652 84
Total commercial commitments $119,095 $21,784 $14,970 $11,451 $70,890
(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 in the “Notes to the
Consolidated Financial Statements” for more information.
Additionally, the Company has $15.0 billion in undrawn committed lines
of credit which, if drawn upon, would be included in the current 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, 2015,
and management’s forecasted market rates for our variable rate debt.
Purchase obligations include legally binding contracts, such as firm
commitments for inventory and utility purchases, as well as commitments
to make capital expenditures, software acquisition and license
commitments 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 defined as agreements that are
enforceable and legally binding and that specify all significant terms,
including: fixed or minimum quantities to be purchased; fixed, minimum
or variable price provisions; and the approximate timing of the transac-
tion. Our purchase orders are based on our current inventory needs and
are fulfilled by our suppliers within short time periods. We also enter into
contracts for outsourced services; however, the obligations under these
contracts are not significant and the contracts generally contain clauses
allowing for cancellation without significant 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 different 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, $838 million of
unrecognized tax benefits 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 benefits.
O 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 282 future locations. These lease commitments have lease
terms ranging from 1 to 30 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $58 million for fiscal 2016, 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, 2015, the aggregate termination payment would have been
$64 million. The arrangement pursuant to which this payment could be
made will expire in fiscal 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 fluctuations
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 effect 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.