Walmart 2016 Annual Report Download - page 58

2016 Annual Report56
These matters may require the involvement of certain members of the
Company’s senior management that could impinge on the time they
have available to devote to other matters relating to the business. The
Company expects that there will be on-going media and governmental
interest, including additional news articles from media publications on
these matters, which could impact the perception among certain
audiences of the Company’s role as a corporate citizen.
The Company’s process of assessing and responding to the governmen-
tal investigations and the shareholder lawsuits continues. While the
Company believes that it is probable that it will incur a loss from these
matters, given the on-going nature and complexity of the review, inqui-
ries and investigations, the Company cannot reasonably estimate any
loss or range of loss that may arise from these matters. Although the
Company does not presently believe that these matters will have a mate-
rial adverse effect on its business, given the inherent uncertainties in
such situations, the Company can provide no assurance that these mat-
ters will not be material to its business in the future.
11. Commitments
The Company has 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 $2.5 billion in fiscal 2016 and
$2.8 billion in both fiscal 2015 and 2014.
Aggregate minimum annual rentals at January 31, 2016, under
non-cancelable leases are as follows:
(Amounts in millions) Operating Capital Lease
Fiscal Year Leases and Financial Obligations
2017 $ 2,057 $ 815
2018 1,989 758
2019 1,794 710
2020 1,697 655
2021 1,530 624
Thereafter 12,438 5,093
Total minimum rentals $21,505 $ 8,655
Less estimated executory costs 39
Net minimum lease payments 8,616
Noncash gain on future termination
of financing obligation 1,070
Less imputed interest (3,319)
Present value of minimum lease payments $ 6,367
Certain of the Company’s leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals were not
material for fiscal 2016, 2015 and 2014. Substantially all of the Company’s
store leases have renewal options, some of which may trigger an escalation
in rentals.
The Company has future lease commitments for land and buildings for
approximately 215 future locations. These lease commitments have
lease terms ranging from 10 to 30 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $34 million for fiscal 2017, based on current cost estimates.
In connection with certain long-term debt issuances, the Company
could be liable for early termination payments if certain unlikely events
were to occur. At January 31, 2016, the aggregate termination payment
would have been $44 million. The arrangement pursuant to which this
payment could be made will expire in fiscal 2019.
12. Retirement-Related Benefits
The Company offers a 401(k) plan for associates in the U.S. under which
eligible associates can begin contributing to the plan immediately upon
hire. The Company also offers a 401(k) type plan for associates in Puerto
Rico under which associates can begin to contribute generally after one
year of employment. Under these plans, after one year of employment,
the Company matches 100% of participant contributions up to 6% of
annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their
pretax earnings, but not more than the statutory limits. Participants age
50 or older may defer additional earnings in catch-up contributions up
to the maximum statutory limits.
Associates in international countries who are not U.S. citizens are covered
by various defined contribution post-employment benefit arrangements.
These plans are administered based upon the legislative and tax require-
ments in the countries in which they are established.
Additionally, the Company’s subsidiaries in the United Kingdom and
Japan have sponsored defined benefit pension plans. The plan in the
United Kingdom was overfunded by $106 million and underfunded by
$85 million at January 31, 2016 and 2015, respectively. The plan in Japan
was underfunded by $205 million and $223 million at January 31, 2016
and 2015, respectively. Overfunded amounts are recorded as assets in
the Company’s Consolidated Balance Sheets in other assets and deferred
charges. Underfunded amounts are recorded as liabilities in the Company’s
Consolidated Balance Sheets in deferred income taxes and other. Certain
other international operations also have defined benefit arrangements
that are not significant.
The following table summarizes the contribution expense related to the
Company’s retirement-related benefits for fiscal 2016, 2015 and 2014:
Fiscal Years Ended January 31,
(Amounts in millions) 2016 2015 2014
Defined contribution plans:
U.S. $ 967 $ 898 $ 877
International 179 167 165
Defined benefit plans:
International 6 5 20
Total contribution expense for
retirement-related benefits $1,152 $1,070 $1,062
Notes to Consolidated Financial Statements