Walmart Financial Model built during Wall Street Training class

1. WALL ST. TRAINING
A B C D E F G H I J K L M N O P
1 Wal-Mart Stores, Inc.
2 11-Year Financial Summary
3
4 ($ in millions, except per share data)
5 Actual CAGR/
6 Fiscal 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Avg
7 Net Sales $ 89,051 $ 99,627 $ 112,005 $ 130,522 $ 156,249 $ 180,787 $ 204,011 $ 229,616 $ 256,329 $ 285,222 $ 312,427 13.4%
8 COGS 70,485 78,897 88,163 102,490 121,825 140,720 159,097 178,299 198,747 219,793 240,391 13.1%
9 Operating, SG&A Expenses 14,547 16,437 18,831 21,778 26,025 30,822 35,147 39,983 44,909 51,248 56,733 14.6%
10 Net Income 2,689 2,978 3,424 4,240 5,394 6,087 6,448 7,818 8,861 10,267 11,231 15.4%
11 Diluted EPS $ 0.58 $ 0.65 $ 0.76 $ 0.95 $ 1.21 $ 1.36 $ 1.44 $ 1.76 $ 2.03 $ 2.41 $ 2.68 16.5%
12 Dividends 0.10 0.11 0.14 0.16 0.20 0.24 0.28 0.30 0.36 0.52 0.60 19.6%
13
14 Net Sales Growth 13.7% 11.9% 12.4% 16.5% 19.7% 15.7% 12.8% 12.6% 11.6% 11.3% 9.5% 13.4%
15 EPS Growth 12.1% 16.9% 25.0% 27.4% 12.4% 5.9% 22.2% 15.3% 18.7% 11.2% 16.7%
16
17 COGS, % of Net Sales 79.2% 79.2% 78.7% 78.5% 78.0% 77.8% 78.0% 77.7% 77.5% 77.1% 76.9% 78.1%
18 Op, SG&A Expenses, % of Net Sales 16.3% 16.5% 16.8% 16.7% 16.7% 17.0% 17.2% 17.4% 17.5% 18.0% 18.2% 17.1%
19 Net Income, % of Net Sales 3.0% 3.0% 3.1% 3.2% 3.5% 3.4% 3.2% 3.4% 3.5% 3.6% 3.6% 3.3%
20 Dividend Growth 10.0% 27.3% 14.3% 25.0% 20.0% 16.7% 7.1% 20.0% 44.4% 15.4% 20.0%
21 Dividend Payout Rate 17.2% 16.9% 18.4% 16.8% 16.5% 17.6% 19.4% 17.0% 17.7% 21.6% 22.4% 18.3%
22
23 Current assets of continuing operations 16,779 17,385 18,589 20,064 23,478 25,344 26,615 29,543 34,421 38,854 43,824
24 Current liabilities of continuing operations 10,944 10,432 13,930 16,155 25,525 28,366 26,795 32,225 37,840 43,182 48,826
25 Working Capital 5,835 6,953 4,659 3,909 (2,047) (3,022) (180) (2,682) (3,419) (4,328) (5,002)
26 ∆ Working Capital 1,118 (2,294) (750) (5,956) (975) 2,842 (2,502) (737) (909) (674)
27
28 PPE, net 18,554 19,935 23,237 25,600 35,533 40,461 45,248 51,374 59,023 68,118 79,290
29 ∆ Net PPE 1,381 3,302 2,363 9,933 4,928 4,787 6,126 7,649 9,095 11,172
30
31 Discount Stores 1,995 1,960 1,921 1,869 1,801 1,736 1,647 1,568 1,478 1,353 1,209
32 Supercenters 239 344 441 564 721 888 1,066 1,258 1,471 1,713 1,980
33 SAM'S CLUBs 433 436 443 451 463 475 500 525 538 551 567
34 Neighborhoold Markets - - - 4 7 19 31 49 64 85 100
35 International Stores 276 314 589 703 991 1,054 1,154 1,272 1,355 1,587 2,285
36
37
38
39 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xls<Historical> Hamilton Lin, CFA, www.wallst-training.com

2. WALL ST. TRAINING
A B C D E F G H I J K L M N O P
1 Wal-Mart Stores, Inc.
2 Income Statement
3
4 (All figures in millions, except per share data)
5 Actual Estimated Projected
6 Fiscal 2003 2004 2005 2006 2007 2008 2009 2010 Projection Notes
7
8 Revenue
9 Net Sales 229,616 $ 256,329 $ 285,222 $ 312,427 $ 341,602 $ 372,818 $ 406,141 $ 441,631 $ 479,338 % Growth
10 Other Income, net 1,961 2,352 2,910 3,227 3,550 3,905 4,295 4,725 5,197 % Growth
11 Total Revenue $ 258,681 $ 288,132 $ 315,654 $ 345,152 $ 376,723 $ 410,437 $ 446,355 $ 484,535 Sum
12 Cost of Sales (198,747) (219,793) (240,391) (262,156) (285,367) (310,061) (336,271) (364,024) % of Net Sales
13 Gross Profit $ 59,934 $ 68,339 $ 75,263 $ 82,996 $ 91,356 $ 100,376 $ 110,084 $ 120,511 Sum
14 Operating, SG&A Expenses (44,909) (51,248) (56,733) (62,725) (69,216) (76,231) (83,795) (91,932) % of Revenue
15 Operating Income $ 15,025 $ 17,091 $ 18,530 $ 20,271 $ 22,140 $ 24,145 $ 26,289 $ 28,579 Sum
16 Interest Expense (729) (934) (1,171) (1,493) (1,811) (1,943) (2,036) (2,096) Debt Sweep
17 Capital Lease Interest Expense (267) (253) (249) (250) (250) (250) (250) (250) Assumption
18 Interest Income 164 201 248 257 240 240 240 240 Debt Sweep
19 Pre-Tax Income $ 14,193 $ 16,105 $ 17,358 $ 18,785 $ 20,320 $ 22,191 $ 24,243 $ 26,473 Sum
20 Income Taxes (5,118) (5,589) (5,803) (6,575) (7,112) (7,767) (8,485) (9,266) Tax Rate
21 Minority Interest (193) (214) (249) (324) (373) (428) (493) (567) (652) % Growth
22 Net Income $ 8,861 $ 10,267 $ 11,231 $ 11,837 $ 12,779 $ 13,932 $ 15,191 $ 16,556 Sum
23
24 Diluted Shares Outstanding 4,373 4,266 4,188 4,188 4,188 4,188 4,188 4,188 Assumption
25
26 Diluted Earnings per Share $ 2.03 $ 2.41 $ 2.68 $ 2.83 $ 3.05 $ 3.33 $ 3.63 $ 3.95 Net Income / Diluted S/O
27
28 EBITDA $ 18,877 $ 21,355 $ 23,247 $ 25,429 $ 27,770 $ 30,278 $ 32,959 $ 35,820 Op. Inc + Depr + Amort
29 EBITDA Margin 7.3% 7.4% 7.4% EBITDA / Revenue
30
31 Income Statement Assumptions
32
33 Net Sales Growth (0.2)% 11.6% 11.3% 9.5% 9.3% 9.1% 8.9% 8.7% 8.5% Decrease 20 bps
34 Other Income, net Growth 19.9% 23.7% 10.9% 10.0% 10.0% 10.0% 10.0% 10.0% Assumption
35
36 COGS, % of Net Sales (0.2)% 77.5% 77.1% 76.9% 76.7% 76.5% 76.3% 76.1% 75.9% Decrease 20 bps
37 Op, SG&A, % of Revenue 0.2% 17.4% 17.8% 18.0% 18.2% 18.4% 18.6% 18.8% 19.0% Increase 20 bps
38
39 Minority Interest Growth 10.88% 16.36% 30.12% 15.0% 15.0% 15.0% 15.0% 15.0% Assumption
40
41 Effective Tax Rate 36.1% 34.7% 33.4% 35.0% 35.0% 35.0% 35.0% 35.0% Assume normalized tax rate
42
43 Depreciation & Amortization $ 3,852 $ 4,264 $ 4,717 $ 5,158 $ 5,630 $ 6,133 $ 6,670 $ 7,241 % of Revenue
44 D&A, % of Net Revenue 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
45
46 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xls<IS> Hamilton Lin, CFA, www.wallst-training.com

3. WALL ST. TRAINING
A B C D E F G H I J K L M N O P Q
1 Wal-Mart Stores, Inc.
2 Balance Sheet
3
4 ($ in millions)
5 Actual Estimated Projected
6 Fiscal 2004 2005 2006 2007 2008 2009 2010 Notes
7 ASSETS
8 Current Assets
9 Cash & Equivalents $ 5,488 $ 6,414 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 From CF statement
10 Receivables 1,715 2,662 2,911 3,177 3,461 3,764 4,086 365 Days A/R: Revenue * No. Days / 365
11 Inventories 29,762 32,191 34,962 37,901 41,011 44,293 47,750 365 Days Inv: COGS * No. Days / 365
12 Prepaid Expenses and Other 1,889 2,557 2,796 3,052 3,325 3,616 3,925 % of Revenue
13 Total Current Assets $ 38,854 $ 43,824 $ 46,669 $ 50,130 $ 53,797 $ 57,673 $ 61,761 Sum
14
15 Net PPE $ 65,400 $ 75,875 $ 88,217 $ 97,588 $ 107,454 $ 117,784 $ 128,543 Beg Bal - negative CapEx - Depr
16 Net Capital Leases 2,718 3,415 3,415 3,415 3,415 3,415 3,415 Constant; assume no net changes
17 Goodwill 10,803 12,188 12,188 12,188 12,188 12,188 12,188 Constant; assume no acquisitions
18 Other Assets and Deferred Charges 2,379 2,885 3,155 3,443 3,751 4,080 4,429 % of Revenue
19 TOTAL ASSETS $ 120,154 $ 138,187 $ 153,643 $ 166,763 $ 180,606 $ 195,140 $ 210,336 Sum
20
21 LIABILITIES
22 Current Liabilities
23 Commercial Paper $ 3,812 $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754 From Debt Sweep
24 Revolver - - 10,407 15,975 20,351 25,631 28,126 From Debt Sweep
25 Accounts Payable 21,987 25,373 27,921 30,668 33,623 36,792 40,186 365 Days A/P: Expenses * No. Days / 365
26 Accrued Liabilities 12,120 13,465 14,723 16,070 17,508 19,040 20,669 % of Revenue
27 Accrued Income Taxes 1,281 1,340 1,340 1,340 1,340 1,340 1,340 Constant
28 Current Portion of Long-Term Debt 3,759 4,595 3,320 2,858 4,639 2,877 3,000 From Debt Sweep
29 Current Portion of Capital Leases 223 299 299 299 299 299 299 Constant; assume no net changes
30 Total Current Liabilities $ 43,182 $ 48,826 $ 61,765 $ 70,964 $ 81,513 $ 89,734 $ 97,373 Sum
31
32 Long-Term Debt $ 20,087 $ 26,429 $ 23,109 $ 20,251 $ 15,612 $ 12,735 $ 9,735 From Debt Sweep
33 Capital Leases 3,171 3,742 3,742 3,742 3,742 3,742 3,742 Constant; assume no net changes
34 Deferred Income Taxes & Other 2,978 4,552 4,552 4,552 4,552 4,552 4,552 Constant
35 Minority Interest 1,340 1,467 1,467 1,467 1,467 1,467 1,467 Constant
36 TOTAL LIABILITIES $ 70,758 $ 85,016 $ 94,635 $ 100,976 $ 106,886 $ 112,230 $ 116,869 Sum
37
38 SHAREHOLDERS' EQUITY
39 Common Stock $ 423 $ 417 $ 417 $ 417 $ 417 $ 417 $ 417 Held constant
40 APIC(Additional Paid In Capital) 2,425 2,596 2,596 2,596 2,596 2,596 2,596 Beg Bal + Stock Issued
41 Retained Earnings 43,854 49,105 54,942 61,722 69,653 78,844 89,400 Beg Bal + Net Inc - Dividends - Repurchases
42 Accumulated Other Comp. Income 2,694 1,053 1,053 1,053 1,053 1,053 1,053 Constant
43 TOTAL SHAREHOLDERS' EQUITY $ 49,396 $ 53,171 $ 59,008 $ 65,788 $ 73,719 $ 82,910 $ 93,466 Sum
44
45 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 120,154 $ 138,187 $ 153,643 $ 166,763 $ 180,606 $ 195,140 $ 210,336 Sum
46
47 Check $ - $ - $ - $ - $ - $ - $ - Calculation
48
49 Total Revenue $ 288,132 $ 315,654 $ 345,152 $ 376,723 $ 410,437 $ 446,355 $ 484,535 From Income Statement
50 Cost of Sales 219,793 240,391 262,156 285,367 310,061 336,271 364,024 From Income Statement
51 Operating, SG&A Expenses 51,248 56,733 62,725 69,216 76,231 83,795 91,932 From Income Statement
52 Total Expenses 271,041 297,124 324,881 354,583 386,292 420,066 455,956 Sum of COGS and Op, SG&A
53
54 Days Receivable Outstanding 2.2 3.1 3.1 3.1 3.1 3.1 3.1 A/R * 365 / Revenue
55 Days Inventories Outstanding -0.2 49.4 48.9 48.7 48.5 48.3 48.1 47.9 Inventory * 365 / COGS, decrease by .2 days
56 Prepaid, % of Revenue 0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% Prepaid / Revenue
57 Other Assets, % of Revenue 0.8% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% Other Assets / Revenue
58 Days Payable Outstanding 0.2 29.6 31.2 31.4 31.6 31.8 32.0 32.2 A/P * 365 / Total Expenses, increase by .2 days
59 Accrued Liabilities, % of Revenue 4.2% 4.3% 4.3% 4.3% 4.3% 4.3% 4.3% Accrued Liabilities / Revenue
60 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xls <BS> Hamilton Lin, www.wallst-training.com

4. WALL ST. TRAINING
A B C D E F G H I J K L M N
1 Wal-Mart Stores, Inc.
2 Cash Flow Statement
3
4 ($ in millions)
5 Estimated Projected
6 Fiscal 2006 2007 2008 2009 2010 Calculation
7
8 Cash From Operating Activities:
9 Net Income $ 11,837 $ 12,779 $ 13,932 $ 15,191 $ 16,556 From Income Statement
10 Plus: Depreciation & Amortization 5,158 5,630 6,133 6,670 7,241 From Income Statement
11
12 Changes in Working Capital:
13 (Increase)/Decrease in Receivables (249) (266) (284) (303) (322) Prior Year less Current Year
14 (Increase)/Decrease in Inventories (2,771) (2,939) (3,110) (3,283) (3,456) Prior Year less Current Year
15 (Increase)/Decrease in Prepaid Expenses and Other (239) (256) (273) (291) (309) Prior Year less Current Year
16 (Increase)/Decrease in Other Assets and Deferred Charges (270) (289) (308) (328) (349) Prior Year less Current Year
17 Increase/(Decrease) in Accounts Payable 2,548 2,747 2,954 3,170 3,393 Current Year less Prior Year
18 Increase/(Decrease) in Accrued Liabilities 1,258 1,347 1,438 1,532 1,629 Current Year less Prior Year
19 Total Change in Working Capital $ 278 $ 344 $ 417 $ 497 $ 586 Sum
20 Total Cash From Operating Activities $ 17,274 $ 18,753 $ 20,482 $ 22,359 $ 24,382 Sum
21
22 Cash From Investing Activities:
23 (Increase) in Capital Expenditures $ (17,500) $ (15,000) $ (16,000) $ (17,000) $ (18,000) Assumption
24 Total Cash From Investing Activities $ (17,500) $ (15,000) $ (16,000) $ (17,000) $ (18,000) Sum
25
26 Cash From Financing Activities:
27 Issuance of Common Stock $ - $ - $ - $ - $ - Assumption
28 Common Stock Dividends (2,500) (2,500) (2,500) (2,500) (2,500) Assumption
29 Net (Purchase) / Reissuance of Treasury Stock (3,500) (3,500) (3,500) (3,500) (3,500) Assumption
30 Cash Available / (Required) Before Debt $ (6,226) $ (2,247) $ (1,518) $ (641) $ 382 Sum of CFO, CFI and CFF items
31
32 Debt Borrowing / (Repayment) 5,812 2,247 1,518 641 (382) From Debt schedule
33 Total Cash From Financing Activities $ (188) $ (3,753) $ (4,482) $ (5,359) $ (6,382) Sum of all CFF items, exclude row 30 !!
34
35 Beginning Cash Balance $ 6,414 $ 6,000 $ 6,000 $ 6,000 $ 6,000 From Balance Sheet
36 Change in Cash (414) - - - - Sum of CFO, CFI and CFF
37 Ending Cash Balance $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 Sum => This goes to BS
38 Average Cash Balance 6,207 6,000 6,000 6,000 6,000 Average of Beg and End Balance
39
40 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xls <CF> Hamilton Lin, www.wallst-training.com

5. WALL ST. TRAINING
A B C D E F G H I J K L M
1 Wal-Mart Stores, Inc.
2 Debt Schedule
3
4 ($ in millions)
5 Estimated Projected
6 Fiscal 2006 2007 2008 2009 2010
7
8 Cash Available/(Required) Before Debt $ (6,226) $ (2,247) $ (1,518) $ (641) $ 382
9 Plus: Beginning Cash on Balance Sheet 6,414 6,000 6,000 6,000 6,000
10 Less: Minimum Cash Balance avg of 05 and 06 (6,000) (6,000) (6,000) (6,000) (6,000)
11 Mandatory Debt Repayment (4,595) (3,320) (2,858) (4,639) (2,877)
12 Cash Before Discretionary Debt Repayment / (Borrowing) $ (10,407) $ (5,567) $ (4,376) $ (5,280) $ (2,495)
13
14 Tranche 1
15 Beginning Balance $ 31,024 $ 26,429 $ 23,109 $ 20,251 $ 15,612
16 Mandatory Debt Repayment (4,595) (3,320) (2,858) (4,639) (2,877)
17 Ending Balance $ 31,024 $ 26,429 $ 23,109 $ 20,251 $ 15,612 $ 12,735
18 Average Balance $ 28,727 $ 24,769 $ 21,680 $ 17,932 $ 14,174
19
20 Tranche 2
21 Beginning Balance $ - $ - $ - $ - $ -
22 Mandatory Debt Repayment - - - - -
23 Ending Balance $ - $ - $ - $ - $ - $ -
24 Average Balance $ - $ - $ - $ - $ -
25
26 Commercial Paper
27 Beginning Balance $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754
28 Mandatory Debt Repayment - - - - -
29 Ending Balance $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754
30 Average Balance $ 3,754 $ 3,754 $ 3,754 $ 3,754 $ 3,754
31
32 Revolver
33 Beginning Balance $ - $ 10,407 $ 15,975 $ 20,351 $ 25,631
34 Discretionary Sweep 10,407 5,567 4,376 5,280 2,495
35 Ending Balance $ - $ 10,407 $ 15,975 $ 20,351 $ 25,631 $ 28,126
36 Average Balance $ 5,204 $ 13,191 $ 18,163 $ 22,991 $ 26,878
37
38 Total Debt, Beginning Balance 34,778 40,590 42,838 44,356 44,997
39 Less: Mandatory Debt Repayment $ (4,595) $ (3,320) $ (2,858) $ (4,639) $ (2,877)
40 Revolver Debt Borrowing / (Repayment) $ 10,407 $ 5,567 $ 4,376 $ 5,280 $ 2,495
41 Total Debt, Ending Balance 40,590.4 42,837.5 44,355.5 44,996.8 44,614.6
42 Less: Current Portion (3,320) (2,858) (4,639) (2,877) (3,000)
43 Less: Commercial Paper (3,754) (3,754) (3,754) (3,754) (3,754)
44 Less: Revolver (10,407) (15,975) (20,351) (25,631) (28,126)
45 Total Long Term Debt $ 23,109 $ 20,251 $ 15,612 $ 12,735 $ 9,735
46
47 Beginning Cash Balance $ 6,414 $ 6,000 $ 6,000 $ 6,000 $ 6,000
48 Ending Cash Balance 6,000 6,000 6,000 6,000 6,000
49 Average Cash Balance 6,207 6,000 6,000 6,000 6,000
50 Note: Fiscal year ends January 31 of the next year.
51
wmtmodeltemplate-12808433079289-phpapp01.xls<Debt Sweep> Hamilton Lin, www.wallst-training.com

6. WALL ST. TRAINING
A B C D E F G H I J K L M
52 Wal-Mart Stores, Inc.
53 Interest Schedule
54
55 ($ in millions)
56 Estimated Projected
57 Fiscal Year Ending October 31, 2006 2007 2008 2009 2010
58
59 Interest Rates
60 Cash & Cash Equivalents 4.0% 4.0% 4.0% 4.0% 4.0%
61 Tranche 1 4.4% 4.4% 4.4% 4.4% 4.4%
62 Tranche 2 5.0% 5.0% 5.0% 5.0% 5.0%
63 Commercial Paper 3.4% 3.4% 3.4% 3.4% 3.4%
64 Revolver 5.0% 5.0% 5.0% 5.0% 5.0%
65
66
67 Interest Income 1 (1 = Beginning balance
68 Cash & Cash Equivalents 2 = Average Balance) $ 257 $ 240 $ 240 $ 240 $ 240
69
70 Interest Expense
71 Tranche 1 $ 1,365 $ 1,163 $ 1,017 $ 891 $ 687
72 Tranche 2 - - - - -
73 Commercial Paper 128 128 128 128 128
74 Revolver - 520 799 1,018 1,282
75 Total Interest Expense $ 1,493 $ 1,811 $ 1,943 $ 2,036 $ 2,096
76
77 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xls<Debt Sweep> Hamilton Lin, www.wallst-training.com

7. WALL ST. TRAINING
N
1
2
3
4
5
6 Calculation
7
8 From CF statement
9 Balance Sheet
10 Assumption
11 Sum of mandatory pmts below
12 Sum
13
14
15 Equal to prior year's end balance
16 Given, Debt Footnote
17 Sum
18 Average of Beg and End Balance
19
20
21 Equal to prior year's end balance
22 Assumption
23 Sum
24 Average of Beg and End Balance
25
26
27 Equal to prior year's end balance
28 Balancing equation
29 Sum
30 Average of Beg and End Balance
31
32
33 Equal to prior year's end balance
34 Balancing equation
35 Sum
36 Average of Beg and End Balance
37
38 Sum of prior year's end balances
39 Sum of mandatory pmts, to CF
40 Reference revolver sweep, to CF
41 Sum
42
43
44
45
46
47 From CF statement
48 From CF statement
49 Calculation
50
51
wmtmodeltemplate-12808433079289-phpapp01.xls<Debt Sweep> Hamilton Lin, www.wallst-training.com

8. WALL ST. TRAINING
N
52
53
54
55
56
57 Calculation
58
59
60 Assumption
61 Wtg'ed avg estimate, 10K p 39
62 Assumption
63 Given, Debt Footnote
64 Assumption
65
66
67
68 If switch = 1, take interest rate *
69 beginning balance, else rate *
70 average balance
71
72
73
74
75
76
77
wmtmodeltemplate-12808433079289-phpapp01.xls<Debt Sweep> Hamilton Lin, www.wallst-training.com

9. WALL ST. TRAINING
A B C D E F G H I J K L M N O P
1 Wal-Mart Stores, Inc.
2 Discounted Cash Flow Analysis
3
4 ($ in millions, except per share data)
5 Estimated Projected
6 Fiscal 2006 2007 2008 2009 2010
7
8 EBITDA $ 25,429 $ 27,770 $ 30,278 $ 32,959 $ 35,820
9 EBIT 20,271 22,140 24,145 26,289 28,579
10 Less: Cash Taxes @ 35.0% 35.0% (7,095) (7,749) (8,451) (9,201) (10,003)
11 Tax-effected EBIT $ 13,176 $ 14,391 $ 15,694 $ 17,088 $ 18,577
12 Plus: Depreciation & Amortization 5,158 5,630 6,133 6,670 7,241
13 Less: Capital expenditures (17,500) (15,000) (16,000) (17,000) (18,000)
14 Plus / (Less): Change in net working capital 278 344 417 497 586
15 Unlevered free cash flow $ 1,112 $ 5,365 $ 6,244 $ 7,255 $ 8,403
16
17 WACC @ 10.0%
18 NPV of Unlevered free cash flow @ 10.0% $ 20,309
19
20 EBITDA MULTIPLE METHOD
21 Terminal Value Undiscounted Discounted
22 EBITDA Multiple 8.0x $ 286,561 $ 177,932
23 10.0x 358,201 222,414
24
25 DCF Range (Implied Enterprise Value) $ 198,241 – $ 242,724 Total Debt 36245
26 Cash -6414
27 Equity Value (a) $ 168,410 – $ 212,893 Net Debt 29831
28 Implied Price per Share (b) $ 40.21 – $ 50.83 S/Out 4188
29
30 –
31 PERPETUITY GROWTH METHOD
32 Terminal Value Undiscounted Discounted
33 Perpetuity Growth Rate 3.0% $ 273,341 $ 169,724
34 4.0% $ 321,994 $ 199,933
35
36 DCF Range (Implied Enterprise Value) $ 190,033 – $ 220,243
37
38 Equity Value (a) $ 160,202 – $ 190,412
39 Implied Price per Share (b) $ 38.25 – $ 45.47
40
41 Note: Fiscal year ends January 31 of the next year.
42 Note: Present Values as of January 31, 2005.
43 (a) Assumes $0,000M of net debt.
44 (b) Assumes 00,00.0MM shares outstanding.
wmtmodeltemplate-12808433079289-phpapp01.xls<DCF> Hamilton Lin, CFA, www.wallst-training.com

10. WALL ST. TRAINING
A B C D E G K L M N O P Q R S T U V W X Y
1 Analysis of Selected Publicly Traded Discount Retailers – Illustrative Training Template Only!
2 Financial Summary
3
4 (All figures in millions, except for per share data)
5 Stock
6 Price Equity Enterprise Revenue EBITDA EBIT EPS
7 Company Ticker 4/10/06 Value Value (a) 2005A 2006E 2007P 2005A 2006E 2007P 2005A 2006E 2007P 2005A 2006E
8
9 Costco COST $ 54.43 $ 26,087 $ 23,235 $ 55,431 $ 61,218 $ 67,658 $ 2,062 $ 2,319 $ 2,614 $ 1,566 $ 1,769 $ 2,001 $ 2.16 $ 2.37
10 JC Penney JCP 58.47 13,830 14,256 18,781 19,481 20,093 1,954 2,135 2,296 1,582 1,750 1,878 3.63 4.25
11 Kohl's KSS 53.95 18,805 19,515 13,402 15,096 17,120 1,755 2,026 2,373 1,416 1,633 1,909 2.43 2.86
12 Sears SHLD 138.31 21,993 21,023 54,261 53,700 53,748 2,969 3,502 4,106 2,148 2,096 2,363 6.03 7.72
13 Target TGT 51.62 45,347 53,470 52,620 59,050 65,539 5,732 6,466 7,241 4,323 4,916 5,464 2.71 3.12
14 TOTAL $ 126,062 $ 131,499
15
16
17
18
19
20
21 Wal-Mart WMT $ 45.70 $ 190,459 $ 220,290 $ 315,654 $ 352,541 $ 388,813 $ 23,299 $ 25,420 $ 29,002 $ 18,582 $ 20,650 $ 23,126 $ 2.63 $ 2.92
22
23 Source: Publicly available SEC filings, Bloomberg and IBES estimates.
24 Note: Figures have NOT been adjusted for extraordinary and non-recurring items and should be!
25 Note: All years ending approximately January 31 of the next year.
26 (a) Enterprise Value calculated as Equity Value plus Net Debt (Total Debt less Cash & Cash Equivalents).
27
28
29
wmtmodeltemplate-12808433079289-phpapp01.xlsRetail Comps Hamilton Lin, CFA, www.wallst-training.com

11. WALL ST. TRAINING
Z
1
2
3
4
5
EPS6
7 2007P
8
9 $ 2.83
10 4.81
11 3.44
12 9.26
13 3.57
14
15
16
17
18
19
20
21 $ 3.34
22
23
24
25
26
27
28
29
wmtmodeltemplate-12808433079289-phpapp01.xlsRetail Comps Hamilton Lin, CFA, www.wallst-training.com

12. WALL ST. TRAINING
AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR AS AT AU AV AW
1 Analysis of Selected Publicly Traded Discount Retailers – Illustrative Training Template Only!
2 Valuation Multiples
3
4
5 Revenue/ Enterprise Value as a Multiple of Stock Price as a Multiple of
6 2005 Margins Number Store Revenue EBITDA EBIT Earnings per Share
7 Company Ticker EBITDA EBIT Stores ($MM's) 2005A 2006E 2007P 2005A 2006E 2007P 2005A 2006E 2007P 2005A 2006E
8
9 Costco COST 3.7% 2.9% 471 $ 117.7 0.42x 0.38x 0.34x 11.3x 10.0x 8.9x 14.8x 13.1x 11.6x 25.2x 23.0x
10 JC Penney JCP 10.4% 9.0% 1,019 18.4 0.76 0.73 0.71 7.3 6.7 6.2 9.0 8.1 7.6 16.1 13.8
11 Kohl's KSS 13.1% 10.8% 732 18.3 1.46 1.29 1.14 11.1 9.6 8.2 13.8 12.0 10.2 22.2 18.9
12 Sears SHLD 5.5% 3.9% 3,843 14.1 0.39 0.39 0.39 7.1 6.0 5.1 9.8 10.0 8.9 22.9 17.9
13 Target TGT 10.9% 8.3% 1,397 37.7 1.02 0.91 0.82 9.3 8.3 7.4 12.4 10.9 9.8 19.0 16.5
14
15
16 HIGH 13.1% 10.8% $ 117.7 1.46x 1.29x 1.14x 11.3x 10.0x 8.9x 14.8x 13.1x 11.6x 25.2x 23.0x
17 AVERAGE 8.7% 7.0% 41.2 0.81 0.74 0.68 9.2 8.1 7.2 12.0 10.8 9.6 21.1 18.0
18 MEDIAN 10.4% 8.3% 18.4 0.76 0.73 0.71 9.3 8.3 7.4 12.4 10.9 9.8 22.2 17.9
19 LOW 3.7% 2.9% 14.1 0.39 0.38 0.34 7.1 6.0 5.1 9.0 8.1 7.6 16.1 13.8
20
21 Wal-Mart WMT 7.4% 5.9% 6,141 $ 51.4 0.70x 0.62x 0.57x 9.5x 8.7x 7.6x 11.9x 10.7x 9.5x 17.4x 15.7x
22
23 Source: Publicly available SEC filings, Bloomberg and IBES estimates.
24 Note: Figures have NOT been adjusted for extraordinary and non-recurring items and should be!
25 Note: All years ending approximately January 31 of the next year.
26 (a) Enterprise Value calculated as Equity Value plus Net Debt (Total Debt less Cash & Cash Equivalents).
27
28
29
wmtmodeltemplate-12808433079289-phpapp01.xlsRetail Comps Hamilton Lin, CFA, www.wallst-training.com

13. WALL ST. TRAINING
AX
1
2
3
4
Price as a Multiple of
5
rnings per Share
6
7 2007P
8
9 19.2x
10 12.2
11 15.7
12 14.9
13 14.5
14
15
16 19.2x
17 15.3
18 14.9
19 12.2
20
21 13.7x
22
23
24
25
26
27
28
29
wmtmodeltemplate-12808433079289-phpapp01.xlsRetail Comps Hamilton Lin, CFA, www.wallst-training.com

14. WALL ST. TRAINING
F7: Should be latest Basic
Shares Outstanding from front of latest 10K or 10Q or proxy (whichever is later) + effect of diluted shares due to treasury adjusted options
H7: From latest balance sheet, EXCLUDING capital leases and INCLUDING correct minority interest figure
I7: From latest balance sheet, don't forget to include short term investments and exclude restricted cash
L9: Want actuals for 12 months ending 1/31/06, so take:
7/12 of 8/05 actual +
5/12 of 8/06 estimate (should really be straight from 10Q filings, but for illustrative training purposes and simplicity in this exercise, take estimate)
M9: Want estimates for 12 months ending 1/31/07, so take:
7/12 of 8/06 estimate +
5/12 of 8/07 estimate
N9: Want estimates for 12 months ending 1/31/08, so take:
7/12 of 8/07 estimate +
5/12 of 8/08 estimate
P9: Want actuals for 12 months ending 1/31/06, so take:
7/12 of 8/05 actual +
5/12 of 8/06 estimate (should really be straight from 10Q filings, but for illustrative training purposes and simplicity in this exercise, take estimate)
Q9: Want estimates for 12 months ending 1/31/07, so take:
7/12 of 8/06 estimate +
5/12 of 8/07 estimate
R9: Want estimates for 12 months ending 1/31/08, so take:
7/12 of 8/07 estimate +
5/12 of 8/08 estimate
T9: Want actuals for 12 months ending 1/31/06, so take:
7/12 of 8/05 actual +
5/12 of 8/06 estimate (should really be straight from 10Q filings, but for illustrative training purposes and simplicity in this exercise, take estimate)
U9: Want estimates for 12 months ending 1/31/07, so take:
7/12 of 8/06 estimate +
5/12 of 8/07 estimate
V9: Want estimates for 12 months ending 1/31/08, so take:
7/12 of 8/07 estimate +
5/12 of 8/08 estimate
X9: Want actuals for 12 months ending 1/31/06, so take:
7/12 of 8/05 actual +
5/12 of 8/06 estimate (should really be straight from 10Q filings, but for illustrative training purposes and simplicity in this exercise, take estimate)
Y9: Want estimates for 12 months ending 1/31/07, so take:
7/12 of 8/06 estimate +
5/12 of 8/07 estimate
Z9: Want estimates for 12 months ending 1/31/08, so take:
7/12 of 8/07 estimate +
5/12 of 8/08 estimate
L12: Given since Pro Forma figure including full year of Kmart and Sears results
wmtmodeltemplate-12808433079289-phpapp01.xlsNotes Hamilton Lin, CFA, www.wallst-training.com

15. WALL ST. TRAINING
A B C D E F G H I J K L M N O P Q R S T U
1 Wal-Mart Stores, Inc.
2 Illustrative Reference Range
3
4 (All figures in millions, except per share data)
5 Relevant Multiple Implied Enterprise Implied Equity Implied Price per
6 Methodology Statistic Range Value Value Share
7
8 Analysis of Selected Publicly Traded Discount Retailers
9 Net Revenue 2005A $ 315,654 0.75x – 0.80x $ 236,741 – $ 252,523 $ 206,910 – $ 222,692 $ 49.41 – $ 53.17
10 2006E 345,152 0.70x – 0.75x $ 241,606 – $ 258,864 $ 211,775 – $ 229,033 $ 50.57 – $ 54.69
11 2007P 376,723 0.65x – 0.70x $ 244,870 – $ 263,706 $ 215,039 – $ 233,875 $ 51.35 – $ 55.84
12
13 EBITDA 2005A $ 23,247 9.0x – 9.5x $ 209,223 – $ 220,847 $ 179,392 – $ 191,016 $ 42.83 – $ 45.61
14 2006E 25,429 8.0x – 8.5x $ 203,429 – $ 216,143 $ 173,598 – $ 186,312 $ 41.45 – $ 44.49
15 2007P 27,770 7.0x – 7.5x $ 194,390 – $ 208,275 $ 164,559 – $ 178,444 $ 39.29 – $ 42.61
16
17 EBIT 2005A $ 18,530 12.0x – 12.5x $ 222,360 – $ 231,625 $ 192,529 – $ 201,794 $ 45.97 – $ 48.18
18 2006E 20,271 10.5x – 11.0x $ 212,843 – $ 222,979 $ 183,012 – $ 193,148 $ 43.70 – $ 46.12
19 2007P 22,140 9.5x – 10.0x $ 210,334 – $ 221,404 $ 180,503 – $ 191,573 $ 43.10 – $ 45.74
20
21 EPS 2005A $ 2.68 21.5x – 22.5x $ 271,298 – $ 282,529 $ 241,467 – $ 252,698 $ 57.66 – $ 60.34
22 2006E 2.83 17.5x – 18.0x $ 236,986 – $ 242,905 $ 207,155 – $ 213,074 $ 49.46 – $ 50.88
23 2007P 3.05 15.0x – 15.5x $ 221,519 – $ 227,908 $ 191,688 – $ 198,077 $ 45.77 – $ 47.30
24
25 Reference Range $ 45.00 $ 55.00
26
27
28 Analysis of Selected Retail Acquisitions
29 2005A Net Revenue $ 315,654 0.75x – 1.00x $ 236,741 – $ 315,654 $ 206,910 – $ 285,823 $ 49.41 – $ 68.25
30 EBITDA 23,247 9.0x – 9.5x $ 209,223 – $ 220,847 $ 179,392 – $ 191,016 $ 42.83 – $ 45.61
31 EBIT 18,530 14.0x – 15.0x $ 259,420 – $ 277,950 $ 229,589 – $ 248,119 $ 54.82 – $ 59.25
32 EPS 2.68 19.5x – 22.5x $ 248,836 – $ 282,529 $ 219,005 – $ 252,698 $ 52.29 – $ 60.34
33
34 Reference Range $ 50.00 $ 60.00
35
36
37 Analysis of Selected Premiums Paid
38 Stock Price 4 Weeks Prior $ 45.33 10.0% – 20.0% – – –
39 4/7/2006 1 Day Prior 46.02 5.0% – 15.0% – – –
40
41 Reference Range $ 50.00 $ 55.00
42
43
44 Discounted Cash Flow Analysis
45 EBITDA Multiple Method 8.0x – 10.0x $ 198,241 – $ 242,724 $ 168,410 – $ 212,893 $ 40.21 – $ 50.83
46 Perpetuity Growth Method 3.0% – 4.0% 190,033 – 220,243 160,202 – 190,412 38.25 – 45.47
47
48 Reference Range $ 40.00 $ 50.00
49
50
51 Note: Fiscal year ends January 31 of the next year.
wmtmodeltemplate-12808433079289-phpapp01.xlsRef Range Hamilton Lin, CFA, www.wallst-training.com

16. WALL ST. TRAINING
A B C D E F G H I J
1 Wal-Mart Stores, Inc.
2 Illustrative Reference Range
3
4
52-week Trading Range $42.4
5 $
6 Analysis of Selected Acquisitions
7 Discounted Cash Flow Analysis $40.00
$
8
9
10
11
12
13
14
15
16
17
18 METHODOLOGY
19
20
21
22
23
24
25
26
27
28
29
30
31
$30.00 $40.0
32
33 Illustrative WMT
34
35
36
37 min max
38 52-week Trading Range $42.49 8.08 $50.57
39 Analysis of Selected Publicly Traded Discount Retailers $45.00 10.00 $55.00
40 Analysis of Selected Acquisitions $50.00 10.00 $60.00
41 Analysis of Selected Premiums Paid $50.00 5.00 $55.00
42 Discounted Cash Flow Analysis $40.00 10.00 $50.00
43 Reference Range $45.00 $55.00
44
45 Current Stock Price $ 45.70 0
46 $ 45.70 1
wmtmodeltemplate-12808433079289-phpapp01.xlsFootball Hamilton Lin, CFA, www.wallst-training.com

17. Treasury Method Calculation
Number of Options 10.000
Exercise Price $ 45.00
Current Stock Price $ 100.00
Proceeds to Company $ 450.0
Proceeds to Holder $ 1,000.0
Difference $ 550.0
Share Dilution 5.500
Treasury Method 5.500 =max(0, # options * (1 - Exercise Price / Current Price))
The max function sets the equation to zero in the event that the exercise
price is greater than the current stock price, in which event, the option
is out-of-the-money and does not cause extra shares to be issued.
Try the math yourself.
Apply the formula for EACH tranche of options
Treasury Adjusted Diluted Shares Outstanding =
Basic Shares Outstanding + MAX ( 0, # options * (1 - Exercise Price / Current Price))
WALL ST. TRAINING ®
(212) 537-6631 Hamilton Lin, CFA
info@hlcp.net President
hamilton@hlcp.net
Wall St. Training is a registered servicemark of HL Capital Partners, Ltd. www.wallst-training.com