A Progressive Digital Media businessCOMPANY PROFILEKoh.docx

A Progressive Digital Media business
COMPANY PROFILE
Kohl's Corporation
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PUBLICATION DATE: 14 Jan 2016
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TABLE OF CONTENTS
Company
Overview................................................................................
..............3
Key
Facts.................................................................................... ...
........................3
SWOT
Analysis..................................................................................
...................4
Kohl's Corporation Page 2
© MarketLine

Kohl's Corporation
TABLE OF CONTENTS
COMPANY OVERVIEW
Kohl's Corporation (Kohl's or 'the company') operates specialty
department stores in the US. The
department stores offer national and private label brands in
various product categories, including
apparel, footwear, accessories, beauty and home products. The
company is headquartered in
Menomonee Falls, Wisconsin and employed about 137,000
people as of January 31, 2015, of whom
105,000 were part-time employees.
The company recorded revenues of $19,023 million in the
financial year ended January 2015
(FY2015), registering a marginal decrease compared to FY2014.
The operating profit of the company
was $1,689 million in FY2015, a decrease of 3% compared to
FY2014. The net profit was $867
million in FY2015, a decrease of 2.5% compared to FY2014.
KEY FACTS
Kohl's CorporationHead Office
N56 W17000 Ridgewood Drive
Menomonee Falls
Wisconsin 53051
USA
1 262 703 7000Phone

Fax
http://www.kohlscorporation.comWeb Address
19,023.0Revenue / turnover
(USD Mn)
JanuaryFinancial Year End
137,000Employees
KSSNew York Ticker
© MarketLine
Kohl's Corporation
Company Overview
SWOT ANALYSIS
Kohl's operates specialty department stores in the US. It is the
exclusive US retailer for a number
of brands, including Food Network, Jennifer Lopez, Marc
Anthony, Rock & Republic and Simply
Vera Vera Wang. The strategy of focusing on expanding its
exclusive brands offering drives the
increase in customer base and consequently the top line growth
as each of its exclusive brands
enjoy strong customer loyalty. A strong portfolio of exclusive
brands provides a competitive advantage
to the company thereby strengthening its market position.
However, intense competition could have
an adverse impact on the company's sales and profitability.

WeaknessesStrengths
Concentrated geographic presence and
limited product selection
Differentiating itself through exclusive brand
offerings
Strong omni-channel presence
ThreatsOpportunities
Intense competitionIncreasing preference to shop online
Increasing labor costs in the USGrowing apparel market in the
US
Growing demand for private label brands
Strengths
Differentiating itself through exclusive brand offerings
Kohl's is the exclusive US retailer for a number of brands such
as Food Network, Jennifer Lopez,
Marc Anthony, Rock & Republic and Simply Vera Vera Wang.
Other than licensing agreements, the
company also partners with popular designers and celebrities in
order to feature their designed
garments at its stores. For instance, in 2013, the company
partnered with various designers including
Catherine Malandrino, Derek Lam and Peter Som for its
DesigNation limited-edition collection. Kohl's
launched the Derek Lam for DesigNation limited-edition
collection featuring misses' apparel and
swimwear at Kohl's stores and Kohls.com in 2013. Catherine
Malandrino for DesigNation collection

featuring dresses, skirts, pants, shirts, sweaters and outerwear
was made available at Kohl's stores
nationwide and at Kohls.com in 2013. In FY2014, the company
launched an assortment of over 20
new national beauty and fragrance brands in over 250 stores and
on-line. In April 2014, Kohl's and
Disney announced a Disney-branded apparel collection for kids
under the Jumping Beans brand,
exclusively at Kohl's stores and at Kohls.com. In September
2014, Kohl's announced a partnership
with MILLY by Michelle Smith to launch its DesigNation
limited-edition collection. The capsule
collection features women apparel. In the same month, the
company announced the availability of
Elie Tahari for DesigNation collection at Kohl's stores
nationwide and on Kohls.com.
© MarketLine
Kohl's Corporation
SWOT Analysis
Kohl’s announced the availability of Gaiam women’s apparel
collection at Kohl’s stores nationwide
and on Kohls.com, in April 2015. In August 2015, the company,
in partnership with actress and
fitness enthusiast, Shay Mitchell, introduced ‘Fit to Wander’
athleisure apparel collection at Kohl’s
stores and on Kohls.com. Kohl’s announced the availability of
Thakoon for DesigNation collection
at Kohl's stores nationwide and on Kohls.com, in September
2015. In October 2015, the company
announced the availability of Madden Girl collection at Kohl’s

stores and on Kohls.com. The collection
includes cold weather boots, accessories and outerwear.
The strategy of focusing on expanding its exclusive brands
offering drives the increase in customer
base and consequently the top line growth as each of its
exclusive brands enjoy strong customer
loyalty. In addition, the private and exclusive brands, which
have higher gross margin rate than
national brands, will increase the profitability for Kohl's. A
strong portfolio of exclusive brands therefore
provides a competitive advantage to the company and helps in
strengthening its market position.
Strong omni-channel presence
Kohl’s follows an omni-channel strategy, which involves
integration of stores, internet and mobile
devices in order to meet the needs of customers as well as to
deploy all of the company's inventory.
Through this strategy, the company’s stores can increase online
sales by providing customers
opportunities to view, touch and/or try on physical merchandise
before they order online; customers
can return online purchases at the company’s stores, as well as
earn and redeem Kohl's Cash
coupons and Yes2You rewards online or in store irrespective of
where they were earned; and in-store
customers can order from online kiosks in its stores. This
strategy also helps the customers who
utilize the company’s mobile application while in the store to
receive mobile coupons that can be
used when they check out. They can also order online and pick-
up in store in approximately 100
stores. Further in September 2015, Kohl’s introduced a new
omnichannel and digital initiative to

deliver an easy shopping experience to its customers. These
initiatives include a store mode for
Kohl’s mobile application, enhanced mobile payment options
like Apple Pay, a continuous omnichannel
shopping bag across platforms, and visa checkout on Kohls.com
and on mobile. Kohl’s will also pilot
same-day delivery in selected markets.
Therefore, increasing focus on omni-channel approach will help
in presenting and selling its brands
and collections to its customers in an efficient manner, in both
the online and offline channels. This
approach further helps in increasing Kohl’s market penetration
across various segments of customers.
Weaknesses
Concentrated geographic presence and limited product selection
Kohl's is completely dependent on the US economy for its
revenue generation. In comparison, its
competitors such as The Gap and Wal-Mart Stores have
operations in countries outside the US as
well. The Gap derived 23% of its revenues from non-US regions
(7% from Canada and 16% from
other foreign countries) in FY2015. Wal-Mart Stores, which
operates in the US and other international
© MarketLine
Kohl's Corporation
SWOT Analysis

markets, derived 28.2% of its revenue from international
markets during the same period. Diversified
business operations allow these companies to reduce their
business risk by limiting exposure to
fluctuations in economic factors in a particular region.
In addition, the company offers a limited product selection as
compared to its peers. Sears Holdings’
product assortment includes apparel, toys, home fashion
products, outdoor living products, consumer
electronics, home appliances, footwear, grocery, sporting goods,
health and beauty products, tires
and batteries, and jewelry and accessories among others. Kohl's,
in comparison, offers an assortment
of apparel, footwear, accessories, soft home products such as
sheets and pillows, and housewares.
Thus, concentrated geographic presence makes Kohl's
vulnerable to fluctuations in the US economy
which, in turn, could adversely impact its top-line growth. In
addition, the company's limited product
selection restricts its potential to compete against companies
with diversified product offerings.
Opportunities
Increasing preference to shop online
Online shopping in the US has witnessed strong growth over the
last few years. According to the
US Department of Commerce, online retail sales (adjusted for
seasonal variation) in the US increased
from $169.3 billion in 2010 to $297.2 billion in 2014,
representing a compound annual growth rate
(CAGR) of 15.1%. e-commerce sales increased 14.4% in 2014
over the previous year. Total retail

sales, on the other hand, grew by only 3.6% during 2014. e-
commerce sales accounted for 6.4% of
total retail sales in 2014, compared to 4.4% in 2010.
Furthermore, e-commerce sales for the third
quarter of 2015 totaled $87.5 billion, an increase of 15.1%
compared to the third quarter of 2014.
Kohl's has a strong presence in the online retail format. The
company markets a range of product
categories through its e-commerce site www.kohls.com.The
website offers a selection of items and
categories beyond what is available in stores. The website
primarily focuses on offering extended
sizes, product line extensions and web-exclusive product lines.
The company also operates four
e-commerce fulfillment centers to distribute purchases made
through its e-commerce site. By
leveraging its existing platform, the company can capitalize on
the growing trend to shop online and
also expand customer base.
Growing apparel market in the US
The apparel industry has witnessed a decline in the last few
years as the demand declined due to
several factors, including the economic slowdown and the
fluctuations in the raw material prices
which led to an increase in the prices. However, with the
economic condition in developed markets
improving leading to an increase in consumer spending, the
apparel market is expected to perform
well in the next few years. According to MarketLine, the US
accounts for 28.5% of the global apparel
retail industry value. The apparel retail industry in the US grew
by 1.9% in 2014 to reach a value of
$375.1 billion. Womenswear was the largest segment of the

apparel retail industry in the US for the
© MarketLine
Kohl's Corporation
SWOT Analysis
same period, accounting for 51% of the industry's total value.
By 2019, the US apparel retail industry
is forecast to have a value of $457.6 billion, an increase of 22%
since 2014.
Kohl's sells apparel for women, men and children under
national, exclusive and private label brands
at all its stores. During FY2015, the women's and men's
business lines accounted for 30% and 20%
of the company's revenues, respectively, a significant portion of
which is apparel sales. With apparel
market in the US growing, Kohl's is well positioned to generate
revenues from its product offering.
Growing demand for private label brands
Demand for private label products has been growing in the US
since last few years. These products
provide customers with an attractive alternative to higher-priced
national brands. Instead of buying
expensive brands, consumers across the industry are turning to
generic and private label products.
Even upper-income shoppers are more willing to buy store
brands, which has traditionally appealed
more to shoppers with limited budgets. According to industry
estimates, among all major US retail

channels, private label sales increased by approximately 3% in
2014, whereas national brands sales
grew by nearly 1% during the same period. In supermarkets,
unit and dollar shares increased to
nearly 23% and 20%, respectively.
The company offers a wide range of products under its private
labels such as Apt. 9, Croft & Barrow,
Jumping Beans, SO and Sonoma Life + Style. The change in
customer preference and strong
inclination towards private label products will enable Kohl’s to
increase the sales of its own branded
products. As these products have higher margins they will
contribute to a strong bottom line.
Threats
Intense competition
The retail industry in the US is highly competitive. Kohl's
competes with traditional department stores,
upscale mass merchandisers, off-price retailers, internet and
catalog businesses, specialty stores
and other forms of retail commerce. The key competitive factors
include style, quality, price,
merchandise mix, brands, service, customer experience and
convenience. The company competes
directly with larger retail players such as Target, Wal-Mart
Stores and Sears Holdings in many of
the markets it operates. These retailers have large market
presence and larger economies of scale,
which provide greater power to negotiate for better margins
with vendors. Therefore, the company
will have to constantly differentiate itself from its competitors
through efficient and in trend
merchandising, and attractive promotional programs in order to

retain its market share; otherwise,
intense competition could drive away its potential and existing
customers which could result in drop
in its revenues and profit margins.
Increasing labor costs in the US
© MarketLine
Kohl's Corporation
SWOT Analysis
Tight labor markets, increased overtime, government mandated
increases in minimum wages and
a higher proportion of full-time employees have resulted in an
increase in labor costs for many of
the employers. The federal minimum wage rate in the US, which
remained at $5.15 per hour since
1998, increased to $5.85 per hour in 2008. It further increased
to $6.55 per hour in 2009 and to
$7.25 per hour in 2010. Many states and municipalities in the
country have minimum wage rates
even higher than the federal minimum wage rate due to the
higher cost of living. For instance, in
California, the minimum wage rate increased from $9 in 2015 to
$10 in 2016; in Connecticut, the
minimum wage rate grew from $9.15 in 2015 to $9.6 in 2016.
The minimum wage rate increased
from $8.23 in 2015 to $8.31 in 2016 in Colorado. Similarly, in
Alaska, the minimum wage rate
increased from $8.75 in 2015 to $9.75 in 2016; in Arkansas, it
increased from $7.5 in 2015 to $8 in
2016; and in Massachusetts, the minimum wage rate increased

from $9 in 2015 to $10 in 2016.
Kohl's employed about 137,000 people as of January 31, 2015.
Rising labor costs can increase the
company's operating cost and adversely impact its margins.
© MarketLine
Kohl's Corporation
SWOT Analysis
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RUNNING HEAD: DCF VALUATION and EVA & MVA
ASSIGNMENT
3
DCF VALUATION AND EVA & MVA ASSIGNMENT
DCF Valuation and EVA & MVA Assignment –

The Coca Cola Company
I. Introduction
Some of the valuation measures used by investors to analyze
whether or not it is beneficial to invest in a company are the
Discounted Cash Flow (DCF) Valuation, the Economic Value
Added (EVA) and Market Value Added (MVA) Analysis. The
Coca Cola Company (KO) has been one of the leading bottled
beverage producers for decades but has been facing declining
sales due to a more health-conscious consumer market in the
most recent years. These declining sales and increased interest
expenses due to increased liabilities after a majority acquisition
of shares in Green Mountain Beverage Co. resulted only in
acceptable, but not too promising future financial performance
forecasts for KO in the eVal Model. This paper will analyze
whether KO is still a good investment choice through a DCF
Valuation and whether the company is able to create
shareholder wealth or destroys it through an EVA and MVA
analysis.
II. Explanation of the Variables Used in the DCF Valuation
The Discounted Cash Flow (DCF) Valuation analyzes future
cash flow estimates and discounts these with a discount rate to
create a present value for the predicted future cash flows. The
DCF valuation evaluates the potential for investment. If the

value of the DCF valuation is greater than the cost of the
investment it is considered a good stock pick (Damodaran, n.d.).
The variables used in the DCF valuation include: Cost of Equity
(calculated with the CAPM) and Cost of Net Debt (based on
KO’s SEC 10K), which result in the Weighted Average Cost of
Capital (WACC) that will be used as the discount rate in the
DCF valuation. KO does not have any preferred stock
outstanding; thus the value is 0% in this model. Furthermore,
the terminal growth rate is important in the DCF valuation to
determine the future cash flow estimates.
The Coca Cola Company has a Cost of Common Equity of 6%.
The input for the CAPM formula are the risk-free rate of 1.76%
based on the rate of the 10-year treasury bond as of 2/19/15
(Yahoo! Finance, 2016), the market risk premium, which is
according to average historic rates 5.5% and the beta coefficient
of KO of 0.77 (Yahoo! Finance, 2016). The Cost of Equity was
calculated with the CAPM Formula:
Cost of Equity = Risk-free Rate + Market Risk Premium * Beta
of KO
= 1.76% + 5.5% * 0.77
= 5.995% or approximately 6%.
The Cost of Debt is based on interest rates on short- and long-
term debt stated in the company’s SEC 10K. According to KO’s
SEC 10K, the company’s average cost of debt for short-term
debt is 1.2% and the average cost for long-term debt is 2.2%
(Coca Cola, 2015). Weighted by the amount of short- and long-
term debt outstanding this results in an average cost of debt of
1.65%. However, entering a value lower than 4% into the eVal
Model led to invalid results, thus the cost of debt for the
purpose of this analysis was entered as 4% in the eVal Model,
the lowest valid cost of debt. KO has a corporate tax rate of
23.60% according to the company’s SEC 10K (Coca Cola,
2015).
Based on these inputs, the adjusted WACC is 9.73%. WACC is
calculated with the following formula:
WACC = (weight of equity * cost of equity) + (weight of debt *

cost of debt) * (1-tax rate) (Clayman et al., 2012).
The last input factor needed for the DCF Valuation is the
terminal growth rate, which is 3% for KO. The Coca Cola
Company is a stable company and therefore does not expect
large growth as a technology firm would, but marginal growth.
A positive growth rate signals the company is expected to be
able to improve its performance from the previous years by
further diversifying its product portfolio through strategic
acquisitions like the partnership with Green Mountain Beverage
Company.
Entering the above presented variables in the DCF Valuation in
the eVal Model led to the results discussed in the following
section.
III. Explanation and Interpretation of DCF Valuation Results
The DCF Valuation in the eVal Model can be used to calculate
the intrinsic value of a company and therefore determine
whether shares are currently selling over- or undervalued. If the
intrinsic value is larger than the current market price the shares
are selling undervalued and it is a good investment. When the
intrinsic value is less than the current market price, shares are
overvalued and are not a recommended investment
(Investopedia, 2003).
The DCF Valuation for KO results in a Forecasted Value of
$196,556,842,000. Since the Value of Contingent Equity Claims
is 0, the Value Attributable to Common Equity is
$196,556,842,000. This aligns with the currently stated Market
Cap of $190.36bn (Yahoo! Finance, 2016) considering a
terminal growth rate of 3%. Dividing this value by the common
shares outstanding, 4,366 million, the DCF Valuation forecasts
a Price per Share of $45.03. On February 19, 2016 the current
market price per share at the NYSE for KO was $43.77. This
means the intrinsic value of KO calculated with the DCF
Valuation is larger than the market price, which indicates that
shares are currently selling undervalued. Considering a positive
terminal growth rate and the shares selling at a lower price than
the intrinsic value KO is a good investment choice.

IV. Explanation of the Data Used for the EVA Analysis and
Interpretation of Results
The Economic Value Added (EVA) is used to measure the
economic value added by management during a given year
(EVA & MVA Model, n.d.).
The formula for EVA is:
EVA = Net Operating Profit After Tax – (WACC * Invested
Capital).
The EVA considers Invested Capital as the sum of short- &
long-term debt and shareholder equity. The Net Operating Profit
is calculated by decreasing the operating income by the
estimated income taxes of the company. The WACC calculation
has been explained in the DCF Valuation section.
Entering KO’s 2014 values from the company’s financial
statements into the EVA Model for short-term debt
($22,682,000), long-term debt ($19,063,000), common stock
($1,760,000) and Retained Earnings (63,408,000), Total
Invested Capital of $109,519,000 is calculated. Data for the
current price of stock ($43.77), Number of Shares Outstanding
(4,366,000), EBIT ($9,808,000) and the corporate tax rate
(23.6%) less taxes ($2,314,688) results in the NOPAT of
$7,493,312. In the last step of the model values for the cost of
short-term debt (1.2%), long-term debt (2.2%), the market risk
premium (5.5%), the risk-free rate on a ten-year treasury bond
(1.76%), debt to equity ratio (0.64), beta (0.77) leads to the
Cost of Equity of 5.995% and thus to a WACC of 4.3%. The
EVA Analysis based on these input factors is:
EVA = $7,493,312 – (4.3% * $109,519,000) = $2,644,023.60.
This means in 2014 the management of KO was able to create
Economic Added Value of $2,644,023.60. Thus, the firm is
creating shareholder wealth and is an attractive investment.
The EVA is an important measure to determine whether a
company creates or destroys shareholder wealth. A closely
related measure is the MVA (Peterson Drake, P. & Fabozzi, F.,
2012). Usually if the company is managed in a way that
increases the EVA, the MVA will also be higher. The MVA,

also a measure of shareholder wealth creation will be analyzed
in the next section.
V. Explanation of the Data Used for the MVA Analysis and
Interpretation of Results
The Market Value Added (MVA) is the “difference between the
market value of equity and the amount of Equity Capital
[investors provided]” (EVA & MVA Model, n.d.). Therefore,
MVA measures the amount of wealth a company has created
over time and is considered the principal indicator of
shareholder wealth creation. In the MVA Model the value of the
firm equals the Market value of its debt and equity. The formula
for the MVA calculation is:
MVA = (MV of Equity + MV of Debt) – Total Capital
Invested
= Market Value of Firm – Total Capital Invested.
Using the same input as for the above discussed EVA Analysis,
the MVA of KO is:
MVA = ($190,354,854.60 + $41,745,000) - $106,913,000 =
$125,186,854.60.
KO’s MVA of $125,186,854.60 indicates the amount of wealth
the firm has created over time (Peterson Drake, P. & Fabozzi, F.
2012). This result aligns with the connection mentioned above
that usually an increase in EVA will also lead to a higher MVA.
Considering the MVA as the principal indicator of shareholder
wealth maximization, KO is an attractive opportunity for
investors.
VI. Conclusion and Recommendation
Considering all three valuation measures discussed in this
analysis The Coca Cola Company is a well performing firm and
a recommended investment as it has an intrinsic value larger
than the current market price, has an increased EVA and high
MVA that both indicate that the firm is creating shareholder
wealth. This proves even though Coca Cola faced declining
sales in the most recent years, the company, if able to further
diversify its product portfolio and provide consumers with
healthier choices, will continue to be a valuable asset in an

investor’s portfolio.
References
Clayman, M. & Fridson, M. & Troughton, H. (2012). Corporate
finance: a Practical Approach, Second Edition. Hoboken, NJ:
Wiley.
Coca Cola. (2015). SEC 10K. Retrieved from http://www.coca-
colacompany.com/content/dam/journey/us/en/private/fileas
sets/pdf/2015/02/2014- annual-report-on-form-10-k.pdf
Damodaran, A. (n.d.) Discounted Cash Flow Valuation: Basics.
Retrieved from
http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/basic
s.pdf
EVA & MVA Model. (n.d.). Retrieved from
https://learn.umuc.edu/d2l/le/125356/discussions/posts/186
85425/ViewAttachment?fileId =5271294
Investopedia. (2003). Intrinsic Value Definition. Retrieved from
http://www.investopedia.com/terms/i/intrinsicvalue.asp
Peterson Drake, P., & Fabozzi, F. (2012). Analysis of financial
statements, Third Edition. Hoboken, NJ: Wiley.
Yahoo! Finance. (2016). KO Key Statistics. Retrieved from
http://finance.yahoo.com/q/ks?s=KO
EVA and MVAECONOMIC VALUE ADDED (EVA)MARKET
VALUE ADDED (MVA)ECONOMIC VALUE ADDEDEVA is a
measure that is used to estimate the amount of economic value
added by management during a given year.MARKET VALUE
ADDEDMVA is the difference between the market value of

equity and the amount of Equity Capital that investors have
supplied.EVA &MVA ARE CLOSELY RELATEDEVA and
MVA are related in a significant way. Managing the firm in
ways that increase EVA will generally lead to higher MVA,
an important measure of shareholder wealth creation.
EVA ExampleECONOMIC VALUE ADDEDEVA = Net
Operating Profit After-tax - (WACC * Invested Capital)Where
Invested Capital = (Debt + Equity); It is determined by
summing short-term debt, long-term debt and shareholder
equity (capital stock, paid-in capital and retained
earnings).Net Operating Profit is determined by reducing
operating income by the amount of estimated income
taxes.The firm's weighted average cost of capital is used to
calculate the annual capital charge. It is determined by
multiplying the after-tax weighted average cost of capital by
the amount of invested capital.EVA ExampleYearShort-term
DebtLong-term DebtCommon StockPaid-in CapitalRetained
EarningsTotal Capital
Invested1$500.0$26,100.0$5,000.0$16,000.0$16,392.0$63,992.0
2$0.0$22,800.0$5,000.0$16,000.0$25,275.0$69,075.03$0.0$69,
500.0$5,000.0$16,000.0$69,141.0$159,641.04$0.0$61,200.0$5,
000.0$16,000.0$123,544.0$205,744.05$0.0$102,900.0$5,000.0$
16,000.0$206,599.0$330,499.06$0.0$89,600.0$5,000.0$16,000.
0$276,644.0$387,244.07$0.0$76,300.0$5,000.0$16,000.0$378,7
09.0$476,009.08$0.0$63,000.0$4,500.0$0.0$286,020.0$353,520
.09$0.0$51,500.0$4,300.0$0.0$278,952.0$334,752.0YearSalesO
perating Income (EBIT)Less: TaxesEquals: Net Operating Profit
After Taxes (NOPAT)Invested CapitalWACCCapital
ChargeEVA (NOPAT - Capital
Charge)1$82,800.0$13,400.0$3,200.0$10,200.0$63,992.012.60
%$8,063.0$2,137.02$97,200.0$18,100.0$4,700.0$13,400.0$69,0
75.015.93%$11,003.6$2,396.43$181,400.0$67,500.0$19,600.0$
47,900.0$159,641.031.07%$49,600.5($1,700.5)4$196,900.0$85,
600.0$24,300.0$61,300.0$205,744.028.72%$59,089.7$2,210.35
$283,300.0$130,600.0$36,700.0$93,900.0$330,499.027.18%$89
,829.6$4,070.46$237,000.0$107,300.0$31,200.0$76,100.0$387,

244.019.63%$76,016.0$84.07$372,800.0$153,800.0$45,800.0$1
08,000.0$476,009.022.51%$107,149.6$850.48$204,100.0$72,20
0.0$22,400.0$49,800.0$353,520.014.87%$52,568.4($2,768.4)9$
239,500.0$70,300.0$21,000.0$49,300.0$334,752.014.04%$46,9
99.2$2,300.8
MVA ExampleMARKET VALUE ADDED (MVA)MVA is the
difference between the market value of equity and the amount of
equity capital that investors have supplied.MVA measures
the amount of wealth a firm has created over time.As such, it is
the principal indicator of shareholder wealth maximization.For
the purpose of estimating MVA, the value of a firm equals the
market value of its debt and equity.YearMarket Value of
EquityPlus: Market Value of DebtEquals: Market Value of
FirmMinus: Total Capital InvestedEquals:
MVA1$75,000.0$26,100.0$101,100.0$63,992.0$37,108.02$121,
100.0$22,800.0$143,900.0$69,075.0$74,825.03$354,200.0$69,5
00.0$423,700.0$159,641.0$264,059.04$624,600.0$61,200.0$68
5,800.0$205,744.0$480,056.05$1,034,800.0$102,900.0$1,137,7
00.0$330,499.0$807,201.06$1,110,900.0$89,600.0$1,200,500.0
$387,244.0$813,256.07$1,414,200.0$76,300.0$1,490,500.0$476
,009.0$1,014,491.08$1,069,700.0$63,000.0$1,132,700.0$353,52
0.0$779,180.09$985,500.0$51,500.0$1,037,000.0$334,752.0$70
2,248.0
EVA MVA ModelCALCULATION OF EVA AND MVAName of
CompanyMcCormick & Co. (MKC)Year2014Short-Term
Debt$270,800.00From Balance Sheet - End of Previous
YearLong-Term Debt$1,014,100.00Preferred Dividend $ per
sharePreferred Stock Price per shareFrom Balance Sheet - End
of Previous YearPreferred Stock$0.00$0.00$0.00From Balance
Sheet - End of Previous YearCommon Stock$995,600.00From
Balance Sheet - End of Previous YearPaid-In Capital$0.00From
Balance Sheet - End of Previous YearRetained
Earnings$982,600.00From Balance Sheet - End of Previous
YearTotal Invested Capital$3,263,100.00Computer
CalculatesPrice of Stock$88.49Current Market DataNumber of
Shares Outstanding115,370.00Yahoo Finance EBIT

$604,100.00Calculate from Income Statement - Current
YearTax Rate24.15%Calculate from Income Statement (Taxes /
Income Before Taxes)Less: Taxes$145,890.15Computer
CalculatesEquals NOPAT$458,209.85Computer CalculatesRate
on Short-Term Debt3.50%From Form 10K Report or Current S-
T Bond DataRate on Long-Term Debt5.70%From Form 10K
Report or Current L-T Bond DataMarket Risk
Premium5.50%Normally 5% - 6%; Use 5.5%Risk-Free Rate
(L/T Treasury bond)3.00%Current Rate on 10yr. Treasury
BondDebt to Equity Ratio0.65Computer CalculatesBeta of
Stock0.65Yahoo Finance Cost of Preferred
Stock0.00%Computer CalculatesCost of Equity Capital6.575%%
S-T Debt% L-T Debt% Equity% Preferred
StockWACC6.05%8.30%31.08%60.62%0.00%Analysis is
Computer GeneratedCALCULATION OF EVA - ECONOMIC
VALUE ADDEDEBITLess: TaxesEquals: NOPAT (Net
Operating Profit After Tax)Equals: Invested Capital - Beginning
of PeriodWACCCapital ChargeEVA (NOPAT - Capital
Charge)$604,100.00$145,890.15$458,209.85$3,263,100.006.05
%$197,348.35$260,861.50Return on Invested Capital
14.04%NOPAT/Inv. CapitalFirm is Creating Shareholder
WealthCALCULATION OF MVA - MARKET VALUE
ADDEDMarket Value of EquityPlus: Market Value of
DebtEquals: Market Value of FirmMinus: Total Invested
CapitalEquals:
MVA$10,209,091.30$1,284,900.00$11,493,991.30$3,263,100.0
0$8,230,891.30Firm is Creating Shareholder Wealth
Sheet5
Sheet6
COMPANY: KOHL’S
PART 1: Financial Forecast (COMPLETED ALREADY)
PART 2: CAPITAL BUDGETING (COMPLETED ALREADY)
PART 3:

1 DCF Company Valuation –
Prepare a DCF Valuation of the selected company using the
eVal model and the projections developed in Week 2 (this is the
financial forecast you’ve previously submitted, I attached your
previous work).
Compare the intrinsic value of the company's stock (valuation)
to the current stock price.
Interpret and explain the results.
2 EVA & MVA Analysis -
Prepare an analysis of EVA and MVA for the selected
company. Excel models are provided by the instructor. Explain
the results.
(see attachment for example!) –
Excel Worksheet Attached named “MODEL_EXAMPLE”
Attached is an Excel Workbook that contains several
worksheets. The first worksheet reviews the definitions of EVA
and MVA.
The second worksheet provides an example of how to calculate
EVA.
The third worksheet provides an example of how to calculate
MVA.
The last worksheet includes an Excel model that can be used to
calculate EVA and MVA for a firm.
**USEFUL:
Supplement: Video EVA and MVA
https://www.youtube.com/watch?v=ZCaeMTSTWYs

IntroSTEPS:1) enter financial data on the Financial Statements
Sheet,2) examine the Ratio Analysis and Cash Flow Analysis,3)
enter forecasts on the Forecasting Assumptions Sheet to create
future Financial Statement predictions,4) enter cost of capital
assumptions on the Valuation Parameters Sheet to determine the
company's value,5) evaluate the details of the resulting
valuation for either the Residual Income of Discounted Cash
Flow models.Other Useful Links:Where to buy the latest 'Equity
Valuation and Analysis' textbookCheck here for updated
versions of eValSupplements to the textbook cases
© 2012, Russell Lundholm and Richard Sloan.
version 4.00
Russell Lundholm
Richard Sloan
Where to buy the latest 'Equity Valuation and Analysis'
textbook
Supplements to the textbook cases
Check here for updated versions of eVal
Check here for updated versions of eVal
Supplements to the textbook cases
Where to buy the latest 'Equity Valuation and Analysis'
textbook
Financial StatementsFinancial Statements($000s)Data can be
entered manually in financial statements or as a block cut-and-
paste from the Case Data Sheet to the Raw Data Input section
below.Jump to Raw Data InputCompany Name and
TickerKOHL'SKSSLink to Form 10-KsCommon Shares
Outstanding7,154(in 000s at most recent fiscal year
end)Estimated
Price/Share=$83,726.48ActualActualActualActualActualForecas
tForecastForecastForecastForecastForecastForecastForecastFore
castForecastForecastForecastFiscal Year End (YYYY-MM-
DD)2007/12/312008/12/312009/12/312010/12/312011/12/31201
2/12/312013/12/312014/12/312015/12/312016/12/312017/12/31
2018/12/312019/12/312020/12/312021/12/312022/12/312023/12

/31Income StatementSales
(Net)18,800,00019,280,00019,030,00019,020,00019,200,00019,
417,54919,673,81319,970,19020,308,31520,690,07821,117,646
21,593,47422,120,33722,701,35323,340,01224,040,21224,761,4
18Cost of Goods
Sold1,240,00013,120,00012,980,00012,980,00013,200,00013,34
9,56513,525,74713,729,50613,961,96614,224,42914,518,38114,
845,51315,207,73215,607,18016,046,25816,527,64617,023,475
Gross
Profit20,040,00032,400,00032,010,00032,000,00032,400,00032,
767,11333,199,56033,699,69634,270,28134,914,50735,636,027
36,438,98737,328,06938,308,53339,386,27040,567,85841,784,8
94R&D Expense00000000000000000SG&A
Expense4,240,0004,270,0004,310,0004,350,0004,450,0004,500,
4214,559,8164,628,5084,706,8754,795,3574,894,4545,004,7375
,126,8495,261,5125,409,5345,571,8205,738,975EBITDA24,280,
00036,670,00036,320,00036,350,00036,850,00037,267,53537,7
59,37638,328,20338,977,15639,709,86440,530,48141,443,7254
2,454,91843,570,04544,795,80446,139,67847,523,868Depreciat
ion &
Amortization778,000833,000889,000886,000934,000927,57193
8,952952,226967,466984,7581,004,1971,025,8961,049,9801,07
6,5911,105,8871,138,0461,172,187EBIT25,058,00037,503,0003
7,209,00037,236,00037,784,00038,195,10638,698,32839,280,43
039,944,62240,694,62241,534,67942,469,62143,504,89944,646,
63645,901,69147,277,72348,696,055Net Interest
Expense303,000329,000338,000345,000332,000332,012336,085
340,837346,292352,481359,439367,206375,826385,351395,837
407,348419,569Non-Operating Income
(Loss)1,860,0001,560,000140,0001,350,0001,060,0001,072,010
1,086,1581,102,5211,121,1881,142,2651,165,8701,192,1401,22
1,2271,253,3041,288,5631,327,2201,367,037EBT27,221,00039,
392,00037,687,00038,931,00039,176,00039,599,12840,120,572
40,723,78741,412,10242,189,36743,059,98844,028,96745,101,9
5246,285,29147,586,09149,012,29250,482,660Income
Taxes692,000575,000515,000482,000384,000388,147393,25939

9,171405,918413,537422,071431,568442,086453,685466,43548
0,415494,827Other Income (Loss)00000000000000000Net
Income Before Ext.
Items27,913,00039,967,00038,202,00039,413,00039,560,00039,
987,27640,513,83141,122,95841,818,02042,602,90443,482,058
44,460,53545,544,03846,738,97648,052,52649,492,70650,977,4
87Ext. Items & Disc. Ops.00000000000000000Minority Interest
in Earnings00000000000000000Preferred
Dividends00000000000000000Net Income (available to
common)27,913,00039,967,00038,202,00039,413,00039,560,00
039,987,27640,513,83141,122,95841,818,02042,602,90443,482,
05844,460,53545,544,03846,738,97648,052,52649,492,70650,9
77,487Balance SheetOperating Cash and Market.
Sec.1,210,000537,000971,0001,410,000707,000715,011724,447
735,361747,811761,869777,613795,135814,535835,930859,447
885,231911,788Receivables00025,00026,00026,29526,64227,04
327,50128,01828,59729,24129,95530,74131,60632,55433,531In
ventories320,0003,750,0003,870,0003,810,0004,040,0004,085,7
764,139,6984,202,0614,273,2084,353,5374,443,5054,543,6274,
654,4884,776,7434,911,1275,058,4615,210,215Other Current
Assets371,000434,000447,000452,000305,000308,456312,5273
17,235322,606328,671335,463343,021351,391360,620370,7663
81,889393,345Total Current
Assets1,901,0004,721,0005,288,0005,697,0005,078,0005,135,53
75,203,3145,281,6995,371,1265,472,0955,585,1775,711,0245,8
50,3686,004,0356,172,9476,358,1356,548,879PP&E
(Net)8,910,0008,870,0008,750,0008,520,0008,310,0008,404,158
8,515,0728,643,3488,789,6928,954,9259,139,9819,345,9259,57
3,9599,825,42910,101,84910,404,90410,717,051Investments153
,00053,00064,00000000000000000Intangibles000000000000000
00Other
Assets261,000261,000277,000218,000222,000224,515227,4782
30,905234,815239,229244,173249,675255,766262,484269,8692
77,965286,304Total
Assets11,225,00013,905,00014,379,00014,435,00013,610,00013
,764,21013,945,86514,155,95214,395,63314,666,24814,969,331

15,306,62415,680,09316,091,94916,544,66517,041,00417,552,2
35Current
Debt94,000105,000139,000110,000127,000128,439130,134132,
094134,331136,856139,684142,832146,317150,160154,384159,
016163,786Accounts
Payable1,230,0001,310,0001,370,0001,510,0001,250,0001,264,
1631,280,8471,300,1431,322,1561,347,0101,374,8471,405,8251
,440,1261,477,9531,519,5321,565,1181,612,072Income Taxes
Payable133,000290,00094,00078,000130,000131,473133,20813
5,215137,504140,089142,984146,206149,773153,707158,03116
2,772167,655Other Current
Liabilities1,130,000833,0001,140,00011,600,0001,210,0001,223
,7101,239,8601,258,5381,279,8471,303,9061,330,8521,360,839
1,394,0421,430,6581,470,9071,515,0341,560,485Total Current
Liabilities2,587,0002,538,0002,743,00013,298,0002,717,0002,7
47,7852,784,0502,825,9902,873,8382,927,8622,988,3673,055,7
013,130,2583,212,4783,302,8553,401,9403,503,999Long-Term
Debt4,150,0004,450,0004,720,0004,650,0004,580,0004,631,894
4,693,0244,763,7224,844,3794,935,4465,037,4385,150,9435,27
6,6225,415,2195,567,5655,734,5925,906,630Other
Liabilities460,000512,000560,000562,000563,000569,379576,8
94585,584595,499606,693619,231633,184648,633665,670684,3
97704,929726,077Deferred
Taxes386,000362,000382,000368,000257,000259,912263,34226
7,309271,835276,945282,668289,038296,090303,867312,41632
1,788331,442Total
Liabilities7,583,0007,862,0008,405,00018,878,0008,117,0008,2
08,9718,317,3108,442,6068,585,5528,746,9468,927,7059,128,8
669,351,6039,597,2339,867,23310,163,25010,468,148Minority
Interest00000000000000000Preferred
Stock00000000000000000Paid in Common Capital
(Net)6,510,0006,050,0005,980,00059,900,0005,490,000(46,762,
036)(87,202,551)(128,240,718)(169,962,003)(212,455,687)(255,
815,420)(300,139,824)(345,533,129)(392,105,880)(439,975,690
)(489,268,073)(540,039,228)Retained
Earnings10,200,00010,880,00011,460,00012,010,00012,330,000

52,317,27692,831,106133,954,065175,772,085218,374,989261,
857,047306,317,582351,861,620398,600,595446,653,122496,14
5,828547,123,315Total Common
Equity16,710,00016,930,00017,440,00071,910,00017,820,0005,
555,2395,628,5555,713,3475,810,0825,919,3026,041,6266,177,
7586,328,4906,494,7156,677,4316,877,7547,084,087Total
Liabilities and
Equity24,293,00024,792,00025,845,00090,788,00025,937,00013
,764,21013,945,86514,155,95214,395,63314,666,24814,969,331
15,306,62415,680,09316,091,94916,544,66517,041,00417,552,2
35Error! A =L+E?Statement of Retained EarningsBeg. Retained
Earnings10,200,00010,880,00011,460,00012,010,00012,330,000
52,317,27692,831,106133,954,065175,772,085218,374,989261,
857,047306,317,582351,861,620398,600,595446,653,122496,14
5,828+Net
Income39,967,00038,202,00039,413,00039,560,00039,987,2764
0,513,83141,122,95841,818,02042,602,90443,482,05844,460,53
545,544,03846,738,97648,052,52649,492,70650,977,487-
Common Dividends00000000000000000+/-Clean Surplus Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
00000000=End. Retained
Earnings10,880,00011,460,00012,010,00012,330,00052,317,276
92,831,106133,954,065175,772,085218,374,989261,857,047306
,317,582351,861,620398,600,595446,653,122496,145,828547,1
23,315Values for Dupont Analysis and ValuationNet Operating
Income27,602,29739,633,19837,859,38139,063,72939,224,7463
9,652,01040,174,45140,778,78141,468,33442,246,96843,119,09
644,089,73045,164,52846,349,84747,652,80949,081,36550,553,
806Net Financial
Expense310,703333,802342,619349,271335,254335,266339,380
344,177349,686355,936362,962370,805379,510389,129399,717
411,341423,681Net
Income27,913,00039,967,00038,202,00039,413,00039,560,0003
9,987,27640,513,83141,122,95841,818,02042,602,90443,482,05
844,460,53545,544,03846,738,97648,052,52649,492,70650,977,
487Effective Tax

Rate(0.0254)(0.0146)(0.0137)(0.0124)(0.0098)(0.0098)(0.0098)
(0.0098)(0.0098)(0.0098)(0.0098)(0.0098)(0.0098)(0.0098)(0.00
98)(0.0098)(0.0098)Net Operating
Assets20,954,00021,485,00022,299,00076,670,00022,527,00010
,315,57310,451,71310,609,16410,788,79210,991,60411,218,749
11,471,53311,751,42912,060,09412,399,38112,771,36313,154,5
04Net Financial
Obligations4,244,0004,555,0004,859,0004,760,0004,707,0004,7
60,3334,823,1584,895,8174,978,7105,072,3025,177,1235,293,7
755,422,9395,565,3795,721,9505,893,6086,070,416Total
Common
Equity16,710,00016,930,00017,440,00071,910,00017,820,0005,
555,2395,628,5555,713,3475,810,0825,919,3026,041,6266,177,
7586,328,4906,494,7156,677,4316,877,7547,084,087Raw Data
Inputscut-and-paste raw data block from DataMaker file
hereCompany Name and TickerKOHL'SKSSA Windows vs
Macintosh issue can cause the fiscal year end dates to be off by
roughly 4 years. If this occurs, select and copy the 1462 cell
below, select the cells with the dates, choose Paste Special
Values and select Subtract or Add.Common Shares
Outstanding7,154Fiscal Year End (YYYY-MM-
DD)2007/12/312008/12/312009/12/312010/12/312011/12/31Sale
s (Net)18,800,00019280000190300001902000019200000Cost of
Goods Sold124000013120000129800001298000013200000R&D
Expense00000SG&A
Expense42400004270000431000043500004450000Depreciation
& Amortization778000833000889000886000934000Interest
Expense303000329000338000345000332000Non-Operating
Income (Loss)1860000156000014000013500001060000Income
Taxes692000575000515000482000384000Minority Interest in
Earnings00000Other Income (Loss)00000Ext. Items & Disc.
Ops.00000Preferred Dividends00000Operating Cash and
Market.
Sec.12100005370009710001410000707000Receivables00025,00
026,000Inventories3200003750000387000038100004040000Oth
er Current Assets371000434000447000452000305000PP&E

(Net)89100008870000875000085200008310000Investments153
000530006400000Intangibles00000Other
Assets261000261000277000218000222000Current
Debt94000105000139000110000127000Accounts
Payable12300001310000137000015100001250000Income Taxes
Payable1330002900009400078000130000Other Current
Liabilities11300008330001140000116000001210000Long-Term
Debt41500004450000472000046500004580000Other
Liabilities460000512000560000562000563000Deferred
Taxes386000362000382000368000257000Minority
Interest00000Preferred Stock00000Paid in Common Capital
(Net)651000060500005980000599000005490000Retained
Earnings1020000010880000114600001201000012330000Comm
on Dividends00000
Jump to Raw Data Input
Ratio AnalysisRatio AnalysisCompany
NameKOHL'SActualActualActualActualActualForecastForecast
ForecastForecastForecastForecastForecastForecastForecastForec
astForecastForecastFiscal Year End
Date2007/12/312008/12/312009/12/312010/12/312011/12/31201
2/12/312013/12/312014/12/312015/12/312016/12/312017/12/31
2018/12/312019/12/312020/12/312021/12/312022/12/312023/12
/31Annual Growth RatesSales2.6%-1.3%-
0.1%0.9%1.1%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8%3.0
%3.0%Assets23.9%3.4%0.4%-
5.7%1.1%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8%3.0%3.0
%Common Equity1.3%3.0%312.3%-75.2%-
68.8%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8%3.0%3.0%Ea
rnings43.2%-
4.4%3.2%0.4%1.1%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8
%3.0%3.0%Free Cash Flow to Investors0.0%449962.2%-
192.4%0.0%1.3%1.5%1.6%1.8%2.0%2.2%2.4%2.6%2.8%3.0%3
.0%Sustainable Growth
Rate222.3%88.2%88.2%342.1%724.5%725.2%725.8%726.4%72
7.1%727.7%728.3%729.0%729.6%730.2%730.2%ProfitabilityR
eturn on

Equity2.3762.2230.8820.8823.4217.2457.2527.2587.2647.2717.
2777.2837.2907.2967.3027.302Return on Equity (b4 non-
recurring)2.2822.2150.8520.8583.3297.0497.0557.0617.0687.07
47.0807.0867.0927.0997.1057.105Return on Net Operating
Assets1.8681.7290.7890.7912.4153.8693.8723.8763.8793.8833.
8863.8903.8933.8963.9003.900Basic Dupont ModelNet Profit
Margin1.4852.0732.0072.0722.0602.0592.0592.0592.0592.0592.
0592.0592.0592.0592.0592.0592.059x Total Asset
Turnover1.5341.3461.3201.3691.4191.4201.4211.4231.4241.42
51.4261.4281.4291.4301.4321.432x Total
Leverage1.4591.4731.3051.3011.6982.4782.4782.4782.4782.478
2.4782.4782.4782.4782.4782.478= Return on
Equity4.6413.9803.5713.6704.9627.2457.2527.2587.2647.2717.
2777.2837.2907.2967.3027.302Advanced Dupont ModelNet
Operating
Margin1.4682.0561.9892.0542.0432.0422.0422.0422.0422.0422.
0422.0422.0422.0422.0422.0422.042x Net Operating Asset
Turnover0.9090.8690.3840.3871.1821.8951.8961.8981.9001.90
21.9031.9051.9071.9081.9101.910= Return on Net Operating
Assets1.8681.7290.7890.7912.4153.8693.8723.8763.8793.8833.
8863.8903.8933.8963.9003.900Net Borrowing Cost
(NBC)(0.076)(0.073)(0.073)(0.071)(0.071)(0.071)(0.071)(0.071
)(0.071)(0.071)(0.071)(0.071)(0.071)(0.071)(0.071)(0.071)Sprea
d (RNOA -
NBC)1.9441.8020.8620.8622.4853.9403.9433.9473.9503.9543.9
573.9603.9643.9673.9713.971Financial Leverage
(LEV)0.2620.2740.1080.1060.4050.8570.8570.8570.8570.8570.
8570.8570.8570.8570.8570.857ROE = RNOA +
LEV*Spread2.3762.2230.8820.8823.4217.2457.2527.2587.2647.
2717.2777.2837.2907.2967.3027.302Margin AnalysisGross
Margin1.0661.6801.6821.6821.6881.6881.6881.6881.6881.6881.
6881.6881.6881.6881.6881.6881.688EBITDA
Margin1.2911.9021.9091.9111.9191.9191.9191.9191.9191.9191.
9191.9191.9191.9191.9191.9191.919EBIT
Margin1.3331.9451.9551.9581.9681.9671.9671.9671.9671.9671.
9671.9671.9671.9671.9671.9671.967Net Operating Margin (b4

non-
rec.)1.3671.9741.9821.9821.9871.9861.9861.9861.9861.9861.98
61.9861.9861.9861.9861.9861.986Net Operating
Margin1.4682.0561.9892.0542.0432.0422.0422.0422.0422.0422.
0422.0422.0422.0422.0422.0422.042Turnover AnalysisNet
Operating Asset
Turnover0.9090.8690.3840.3871.1821.8951.8961.8981.9001.90
21.9031.9051.9071.9081.9101.910Net Working Capital
Turnover22.7367.655(7.913)(7.675)7.7617.7687.7757.7827.789
7.7967.8037.8107.8177.8247.8317.831Avge Days to Collect
Receivables0.0000.0000.2400.4850.4920.4910.4910.4900.4900.
4890.4890.4880.4880.4880.4870.487Avge Inventory Holding
Period(56.614)(107.138)(107.982)(108.532)(111.086)(110.985)(
110.883)(110.782)(110.681)(110.581)(110.481)(110.382)(110.2
83)(110.184)(110.085)(110.085)Avge Days to Pay
Payables(47.838)(38.033)(40.307)(38.836)(34.489)(34.477)(34.
464)(34.452)(34.440)(34.428)(34.416)(34.404)(34.391)(34.379)
(34.367)(34.367)PP&E
Turnover2.1692.1602.2032.2822.3232.3262.3282.3302.3322.33
42.3362.3382.3402.3432.3452.345Analysis of Leverage- Long-
Term Capital StructureDebt to Equity
Ratio0.2540.2690.2790.0660.2640.8570.8570.8570.8570.8570.8
570.8570.8570.8570.8570.8570.857FFO to Total
Debt8.9017.9428.0088.1378.2538.2618.2698.2778.2858.2928.30
08.3088.3168.3238.3318.331CFO to Total
Debt8.0947.95010.2155.8808.2498.2568.2638.2708.2788.2858.2
928.2998.3068.3138.3208.320Analysis of Leverage- Short-Term
LiquidityCurrent
Ratio0.7351.8601.9280.4281.8691.8691.8691.8691.8691.8691.8
691.8691.8691.8691.8691.8691.869Quick
Ratio0.4680.2120.3540.1080.2700.2700.2700.2700.2700.2700.2
700.2700.2700.2700.2700.2700.270EBIT Interest
Coverage(82.700)(113.991)(110.086)(107.930)(113.807)(115.04
1)(115.144)(115.247)(115.350)(115.452)(115.554)(115.656)(11
5.758)(115.860)(115.961)(116.062)(116.062)EBITDA Interest
Coverage(80.132)(111.459)(107.456)(105.362)(110.994)(112.24

8)(112.351)(112.453)(112.556)(112.658)(112.760)(112.862)(11
2.964)(113.066)(113.167)(113.268)(113.268)Fiscal
Year2011201220132014201520162017201820192020202120222
0232024202520262027
Cash Flow AnalysisCash Flow Analysis($000)Company
NameKOHL'SActualActualActualActualForecastForecastForeca
stForecastForecastForecastForecastForecastForecastForecastFor
ecastForecastFiscal Year End
Date2008/12/312009/12/312010/12/312011/12/312012/12/31201
3/12/312014/12/312015/12/312016/12/312017/12/312018/12/31
2019/12/312020/12/312021/12/312022/12/312023/12/31Pro
Forma Statement of Cash FlowsOperating:Net
Income39,967,00038,202,00039,413,00039,560,00039,987,2764
0,513,83141,122,95841,818,02042,602,90443,482,05844,460,53
545,544,03846,738,97648,052,52649,492,70650,977,487+Depre
ciation &
Amortization(833,000)(889,000)(886,000)(934,000)(927,571)(9
38,952)(952,226)(967,466)(984,758)(1,004,197)(1,025,896)(1,0
49,980)(1,076,591)(1,105,887)(1,138,046)(1,172,187)+Increase
in Deferred
Taxes(24,000)20,000(14,000)(111,000)2,9123,4303,9674,5265,1
105,7236,3697,0527,7778,5499,3729,654+Increase in Other
Liabilities52,00048,0002,0001,0006,3797,5148,6919,91511,194
12,53813,95315,44917,03718,72720,53221,148+Minority
Interest in Earnings0000000000000000+Preferred
Dividends0000000000000000=Funds From
Operations39,162,00037,381,00038,515,00038,516,00039,068,9
9539,585,82340,183,39040,864,99541,634,45142,496,12143,45
4,96044,516,55945,687,19946,973,91548,384,56549,836,102-
Increase in
Receivables00(25,000)(1,000)(295)(347)(401)(458)(517)(579)(6
44)(713)(787)(865)(948)(977)-Increase in
Inventory(3,430,000)(120,000)60,000(230,000)(45,776)(53,922)
(62,363)(71,147)(80,329)(89,967)(100,122)(110,861)(122,255)(
134,384)(147,334)(151,754)-Increase in Other Current
Assets(63,000)(13,000)(5,000)147,000(3,456)(4,071)(4,708)(5,3

71)(6,064)(6,792)(7,559)(8,369)(9,230)(10,145)(11,123)(11,457
)+Increase in Accounts
Payable80,00060,000140,000(260,000)14,16316,68419,29522,0
1324,85427,83630,97834,30137,82741,57945,58646,954+Increa
se in Taxes
Payable157,000(196,000)(16,000)52,0001,4731,7352,0072,2892
,5852,8953,2223,5673,9344,3244,7414,883+Increase in Other
Curr.
Liabilities(297,000)307,00010,460,000(10,390,000)13,71016,15
018,67821,30924,05926,94629,98733,20336,61640,24944,12745
,451=Cash From
Operations35,609,00037,419,00049,129,00027,834,00039,048,8
1639,562,05240,155,89840,833,63041,599,03842,456,46043,41
0,82244,467,68745,633,30446,914,67348,319,61449,769,202Inv
esting:-Capital
Expenditures873,0001,009,0001,116,0001,144,000833,413828,0
37823,951821,122819,526819,141819,952821,947825,120829,4
68834,990860,040-Increase in
Investments100,000(11,000)64,0000000000000000-Purchases of
Intangibles0000000000000000-Increase in Other
Assets0(16,000)59,000(4,000)(2,515)(2,963)(3,427)(3,910)(4,41
4)(4,944)(5,502)(6,092)(6,718)(7,384)(8,096)(8,339)=Cash
From
Investing973,000982,0001,239,0001,140,000830,898825,07482
0,524817,212815,111814,197814,450815,856818,402822,08382
6,894851,701Financing:+Increase in
Debt311,000304,000(99,000)(53,000)53,33362,82572,65982,89
393,592104,821116,652129,164142,440156,571171,658176,808
-Dividends Paid to Minority Interest0000000000000000-
Dividends Paid on Preferred0000000000000000+Increase in
Pref. Stock0000000000000000-Dividends Paid on
Common0000000000000000+/-Net Issuance of Common
Stock(460,000)(70,000)53,920,000(54,410,000)(52,252,036)(40,
440,515)(41,038,167)(41,721,285)(42,493,684)(43,359,734)(44,
324,404)(45,393,306)(46,572,751)(47,869,810)(49,292,383)(50,
771,155)+/-Clean Surplus Plug

(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
00000000=Cash From
Financing(39,436,000)(37,388,000)14,958,000(93,703,000)(52,1
98,703)(40,377,690)(40,965,508)(41,638,392)(42,400,092)(43,2
54,913)(44,207,751)(45,264,142)(46,430,311)(47,713,239)(49,1
20,725)(50,594,346)Net Change in
Cash(2,854,000)1,013,00065,326,000(64,729,000)(12,318,989)9
,43610,91312,45114,05815,74417,52119,40121,39523,51725,78
326,557+ Beginning Cash
Balance1,210,000537,000971,0001,410,000707,000715,011724,
447735,361747,811761,869777,613795,135814,535835,930859,
447885,231= Ending Cash
Balance(1,644,000)1,550,00066,297,000(63,319,000)(11,611,98
9)724,447735,361747,811761,869777,613795,135814,535835,9
30859,447885,231911,788Free Cash Flow to Common
EquityNet
Income39,967,00038,202,00039,413,00039,560,00039,987,2764
0,513,83141,122,95841,818,02042,602,90443,482,05844,460,53
545,544,03846,738,97648,052,52649,492,70650,977,487-
Increase in Common
Equity(220,000)(510,000)(54,470,000)54,090,00012,264,761(73
,316)(84,792)(96,735)(109,220)(122,324)(136,132)(150,732)(16
6,225)(182,716)(200,323)(206,333)+/-Clean Surplus Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
00000000=Free Cash Flow to Common
Equity460,00070,000(53,920,000)54,410,00052,252,03640,440,
51541,038,16741,721,28542,493,68443,359,73444,324,40445,3
93,30646,572,75147,869,81049,292,38350,771,155Computation
based on SCF:+Cash From
Operations35,609,00037,419,00049,129,00027,834,00039,048,8
1639,562,05240,155,89840,833,63041,599,03842,456,46043,41
0,82244,467,68745,633,30446,914,67348,319,61449,769,202-
Increase in
Cash2,854,000(1,013,000)(65,326,000)64,729,00012,318,989(9,
436)(10,913)(12,451)(14,058)(15,744)(17,521)(19,401)(21,395)
(23,517)(25,783)(26,557)+Cash From

Investing973,000982,0001,239,0001,140,000830,898825,07482
0,524817,212815,111814,197814,450815,856818,402822,08382
6,894851,701+Increase in
Debt311,000304,000(99,000)(53,000)53,33362,82572,65982,89
393,592104,821116,652129,164142,440156,571171,658176,808
-Dividends Paid to Minority Interest0000000000000000-
Dividends Paid on Preferred0000000000000000+Increase in
Preferred Stock0000000000000000+/-Clean Surplus Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
00000000=Free Cash Flow to Common
Equity460,00070,000(53,920,000)54,410,00052,252,03640,440,
51541,038,16741,721,28542,493,68443,359,73444,324,40445,3
93,30646,572,75147,869,81049,292,38350,771,155Financing
Flows:+Dividends Paid0000000000000000-Net Issuance of
Common
Stock460,00070,000(53,920,000)54,410,00052,252,03640,440,5
1541,038,16741,721,28542,493,68443,359,73444,324,40445,39
3,30646,572,75147,869,81049,292,38350,771,155= Free Cash
Flow to Common
Equity460,00070,000(53,920,000)54,410,00052,252,03640,440,
51541,038,16741,721,28542,493,68443,359,73444,324,40445,3
93,30646,572,75147,869,81049,292,38350,771,155Free Cash
Flow to all InvestorsNet Operating
Income39,633,19837,859,38139,063,72939,224,74639,652,0104
0,174,45140,778,78141,468,33442,246,96843,119,09644,089,73
045,164,52846,349,84747,652,80949,081,36550,553,806-
Increase in Net Operating
Assets(531,000)(814,000)(54,371,000)54,143,00012,211,427(13
6,141)(157,450)(179,629)(202,812)(227,145)(252,784)(279,896)
(308,665)(339,287)(371,981)(383,141)+/-Clean Surplus Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
00000000=Free Cash Flow to
Investors(184,802)(576,619)(54,170,271)54,127,74651,863,437
40,038,31040,621,33141,288,70642,044,15642,891,95143,836,9
4644,884,63146,041,18347,313,52148,709,38450,170,665Comp
utation based on SCF:Cash From

Operations35,609,00037,419,00049,129,00027,834,00039,048,8
1639,562,05240,155,89840,833,63041,599,03842,456,46043,41
0,82244,467,68745,633,30446,914,67348,319,61449,769,202-
Increase in Operating
Cash673,000(434,000)(439,000)703,000(8,011)(9,436)(10,913)(
12,451)(14,058)(15,744)(17,521)(19,401)(21,395)(23,517)(25,7
83)(26,557)+Cash from
Investing973,000982,0001,239,0001,140,000830,898825,07482
0,524817,212815,111814,197814,450815,856818,402822,08382
6,894851,701+Interest
Expense(329,000)(338,000)(345,000)(332,000)(332,012)(336,08
5)(340,837)(346,292)(352,481)(359,439)(367,206)(375,826)(38
5,351)(395,837)(407,348)(419,569)-Tax Shield on
Interest(4,802)(4,619)(4,271)(3,254)(3,254)(3,294)(3,341)(3,39
4)(3,455)(3,523)(3,599)(3,684)(3,777)(3,880)(3,993)(4,113)+/-
Clean Surplus Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
Investors(2,365,802)2,38110,716,729(9,898,254)39,536,43740,0
38,31040,621,33141,288,70642,044,15642,891,95143,836,9464
4,884,63146,041,18347,313,52148,709,38450,170,665Financing
Flows:+Dividends on Common
Stock0000000000000000+Interest
Expense(329,000)(338,000)(345,000)(332,000)(332,012)(336,08
5)(340,837)(346,292)(352,481)(359,439)(367,206)(375,826)(38
5,351)(395,837)(407,348)(419,569)-Tax Shield on
Interest(4,802)(4,619)(4,271)(3,254)(3,254)(3,294)(3,341)(3,39
4)(3,455)(3,523)(3,599)(3,684)(3,777)(3,880)(3,993)(4,113)+Di
vidends on Preferred Stock0000000000000000+Dividends Paid
to Minority Interest0000000000000000-Net Issuance of
Common
Stock460,00070,000(53,920,000)54,410,00052,252,03640,440,5
1541,038,16741,721,28542,493,68443,359,73444,324,40445,39
3,30646,572,75147,869,81049,292,38350,771,155-Net Issuance
of
Debt(311,000)(304,000)99,00053,000(53,333)(62,825)(72,659)(

82,893)(93,592)(104,821)(116,652)(129,164)(142,440)(156,571)
(171,658)(176,808)-Net Issuance of Preferred
Stock0000000000000000=Free Cash Flow to
Investors(184,802)(576,619)(54,170,271)54,127,74651,863,437
40,038,31040,621,33141,288,70642,044,15642,891,95143,836,9
4644,884,63146,041,18347,313,52148,709,38450,170,665Tradit
ional Computation of
FCF:EBIT37,503,00037,209,00037,236,00037,784,00038,195,10
638,698,32839,280,43039,944,62240,694,62241,534,67942,469,
62143,504,89944,646,63645,901,69147,277,72348,696,055-
Taxes on
EBIT570,198510,381477,729380,746384,893389,964395,83040
2,524410,082418,547427,969438,402449,908462,555476,42249
0,714+Increase in Deferred
Taxes(24,000)20,000(14,000)(111,000)2,9123,4303,9674,5265,1
105,7236,3697,0527,7778,5499,3729,654=
NOPLAT38,049,19837,739,38137,699,72938,053,74638,582,91
139,091,72339,680,22740,351,67241,109,81341,958,94942,903,
95943,950,35345,104,32046,372,79447,763,51849,196,423+Dep
reciation &
Amortization(833,000)(889,000)(886,000)(934,000)(927,571)(9
38,952)(952,226)(967,466)(984,758)(1,004,197)(1,025,896)(1,0
49,980)(1,076,591)(1,105,887)(1,138,046)(1,172,187)+Non-
Operating Income
(Loss)1,560,000140,0001,350,0001,060,0001,072,0101,086,158
1,102,5211,121,1881,142,2651,165,8701,192,1401,221,2271,25
3,3041,288,5631,327,2201,367,037+Other Income
(Loss)0000000000000000+Ext. Items & Disc.
Ops.0000000000000000=Gross Cash
Flow38,776,19836,990,38138,163,72938,179,74638,727,35039,
238,92939,830,52240,505,39441,267,32042,120,62243,070,203
44,121,59945,281,03346,555,47147,952,69249,391,273-
Increase in Working
Capital(2,880,000)(396,000)10,175,000(9,979,000)(28,191)(33,
208)(38,405)(43,815)(49,470)(55,406)(61,659)(68,273)(75,290)
(82,760)(90,734)(93,456)-Capital

Expenditures873,0001,009,0001,116,0001,144,000833,413828,0
37823,951821,122819,526819,141819,952821,947825,120829,4
68834,990860,040-Increase in
Investments100,000(11,000)64,0000000000000000-Purchases of
Intangibles0000000000000000-Increase in Other
Assets0(16,000)59,000(4,000)(2,515)(2,963)(3,427)(3,910)(4,41
4)(4,944)(5,502)(6,092)(6,718)(7,384)(8,096)(8,339)+Increase
in Other
Liabilities52,00048,0002,0001,0006,3797,5148,6919,91511,194
12,53813,95315,44917,03718,72720,53221,148+/-Clean Surplus
Plug
(Ignore)(39,287,000)(37,622,000)(38,863,000)(39,240,000)0000
Investors(2,365,802)2,38110,716,729(9,898,254)39,536,43740,0
38,31040,621,33141,288,70642,044,15642,891,95143,836,9464
4,884,63146,041,18347,313,52148,709,38450,170,665Analysis
of Earnings Quality(Red Shading = Quality Flag)Current Op.
Accruals/NOA0.180(0.002)(0.498)0.1420.0010.0020.0030.0030.
0040.0040.0040.0050.0050.0050.0060.006+ Non-Current Op.
Accruals/NOA(0.009)(0.008)(0.016)(0.001)0.0040.0110.0120.0
140.0150.0170.0180.0200.0210.0230.0240.024= Operating
Accruals/NOA0.0610.0182.529(0.710)(0.560)0.0130.0150.0170.
0190.0210.0230.0240.0260.0280.0300.030Sales
Growth0.026(0.013)(0.001)0.0090.0110.0130.0150.0170.0190.0
210.0230.0240.0260.0280.0300.030- NOA Turnover
Growth0.0350.0322.531(0.713)(0.565)0.0000.0000.0000.0000.0
000.000(0.000)0.0000.000(0.000)(0.000)-
Interaction0.001(0.000)(0.001)(0.007)(0.006)0.0000.0000.0000.
0000.0000.000(0.000)0.0000.000(0.000)(0.000)= Operating
Accruals/NOA0.0610.0182.529(0.710)(0.560)0.0130.0150.0170.
0190.0210.0230.0240.0260.0280.0300.030Fiscal
Year2012201320142015201620172018201920202021202220232
024202520262027
Credit AnalysisCredit AnalysisCompany
NameKOHL'SActualActualActualActualActualForecastForecast
ForecastForecastForecastForecastForecastForecastForecastForec

astForecastForecastFiscal Year End
Date2007/12/312008/12/312009/12/312010/12/312011/12/31201
2/12/312013/12/312014/12/312015/12/312016/12/312017/12/31
2018/12/312019/12/312020/12/312021/12/312022/12/312023/12
/31Analysis of Leverage- Long-Term Capital StructureDebt to
Equity
Ratio0.2540.2690.2790.0660.2640.8570.8570.8570.8570.8570.8
570.8570.8570.8570.8570.8570.857FFO to Total
Debt8.9017.9428.0088.1378.2538.2618.2698.2778.2858.2928.30
08.3088.3168.3238.3318.331CFO to Total
Debt8.0947.95010.2155.8808.2498.2568.2638.2708.2788.2858.2
928.2998.3068.3138.3208.320Analysis of Leverage- Short-Term
LiquidityCurrent
Ratio0.7351.8601.9280.4281.8691.8691.8691.8691.8691.8691.8
691.8691.8691.8691.8691.8691.869Quick
Ratio0.4680.2120.3540.1080.2700.2700.2700.2700.2700.2700.2
700.2700.2700.2700.2700.2700.270EBIT Interest
Coverage(82.700)(113.991)(110.086)(107.930)(113.807)(115.04
1)(115.144)(115.247)(115.350)(115.452)(115.554)(115.656)(11
5.758)(115.860)(115.961)(116.062)(116.062)EBITDA Interest
Coverage(80.132)(111.459)(107.456)(105.362)(110.994)(112.24
8)(112.351)(112.453)(112.556)(112.658)(112.760)(112.862)(11
2.964)(113.066)(113.167)(113.268)(113.268)Analysis of Credit
RiskNet Income to Total
Assets2.4872.8742.6572.7302.9072.9052.9052.9052.9052.9052.
9052.9052.9052.9042.9042.9042.904implied default
probability2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0%2.0
%2.0%2.0%2.0%2.0%2.0%2.0%Total Liabilities to Total
Assets0.6760.5650.5851.3080.5960.5960.5960.5960.5960.5960.
5960.5960.5960.5960.5960.5960.596implied default
probability5.5%4.5%4.5%10.0%4.5%4.5%4.5%4.5%4.5%4.5%4.
5%4.5%4.5%4.5%4.5%4.5%4.5%Quick
Ratio0.4680.2120.3540.1080.2700.2700.2700.2700.2700.2700.2
700.2700.2700.2700.2700.2700.270implied default
probability6.5%9.0%9.0%9.0%9.0%9.0%9.0%9.0%9.0%9.0%9.0
%9.0%9.0%9.0%9.0%9.0%9.0%EBIT to Interest

Expense(82.70)(113.99)(110.09)(107.93)(113.81)(115.04)(115.1
4)(115.25)(115.35)(115.45)(115.55)(115.66)(115.76)(115.86)(1
15.96)(116.06)(116.06)implied default
probability7.5%7.5%7.5%7.5%7.5%7.5%7.5%7.5%7.5%7.5%7.5
%7.5%7.5%7.5%7.5%7.5%7.5%Inventory Holding Period-
94.19-104.33-108.83-107.14-111.71-111.71-111.71-111.71-
111.71-111.71-111.71-111.71-111.71-111.71-111.71-111.71-
111.71implied default
probability3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0
%3.0%3.0%3.0%3.0%3.0%3.0%Annual Sales Growth0.0%2.6%-
1.3%-
0.1%0.9%1.1%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8%3.0
%3.0%implied default
probability4.2%3.2%4.2%4.2%3.2%3.2%3.2%3.2%3.2%3.2%3.2
%3.2%3.2%3.2%3.2%3.2%3.2%Average Implied Default
Probability4.8%4.9%5.0%6.0%4.9%4.9%4.9%4.9%4.9%4.9%4.
9%4.9%4.9%4.9%4.9%4.9%4.9%Fiscal
Year2011201220132014201520162017201820192020202120222
0232024202520262027Lookup Table of default
probabilitydecile 1min decile 2min decile 3min decile 4min
decile 5min decile 6min decile 7min decile 8min decile 9min
decile 10NI to TA thresholds-0.448-0.161-
0.0490.0010.0220.0380.0560.0790.118NI to TA default
rates0.0830.080.0720.0550.0450.0300.0250.0200.0200.020TL to
TA
thresholds0.1750.2830.3850.4760.5580.6330.7090.8161.030TL
to TA default
rates0.020.0220.0250.0300.0350.0450.0550.0700.0900.100Quic
k Ratio
thresholds0.3820.5220.8090.9941.2001.4701.8902.5304.550Qui
ck Ratio default
rates0.090.0650.050.0420.0400.0350.0250.0200.0150.010EBIT
to Int thresholds-17.4-3.6-
0.1391.252.2103.3805.2109.16023.800EBIT to Int default
rates0.0750.090.0850.0700.0500.0300.0210.0180.0150.010Inv
Holding

thresholds0.3652.5614.2431.395070.08091.980121.540174.470I
nv Holding default
rates0.030.0350.0390.0400.0420.0450.0490.0550.0600.070Sales
Growth thresholds-0.203-
0.0630.0030.050.0980.1580.2440.3980.797Sales Growth default
rates0.0690.0550.0420.0320.0300.0300.0320.0420.0500.065
Forecasting AssumptionsForecasting AssumptionsCompany
NameKOHL'STERMINALEstimated
Price/Share=$83,726.48YEARActualActualActualActualActualF
orecastForecastForecastForecastForecastForecastForecastForeca
stForecastForecastForecastForecastFiscal Year End
Date2007/12/312008/12/312009/12/312010/12/312011/12/31201
2/12/312013/12/312014/12/312015/12/312016/12/312017/12/31
2018/12/312019/12/312020/12/312021/12/312022/12/312023/12
/31Implied Return on
Equity2.3762.2230.8820.8823.4217.2457.2527.2587.2647.2717.
2777.2837.2907.2967.3027.302Income Statement
AssumptionsSales Growth2.6%-1.3%-
0.1%0.9%1.1%1.3%1.5%1.7%1.9%2.1%2.3%2.4%2.6%2.8%3.0
%3.0%Cost of Goods Sold/Sales-6.6%-68.0%-68.2%-68.2%-
68.8%-68.8%-68.8%-68.8%-68.8%-68.8%-68.8%-68.8%-68.8%-
68.8%-68.8%-68.8%-
68.8%R&D/Sales0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0
.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%SG&A/Sales-22.6%-
22.1%-22.6%-22.9%-23.2%-23.2%-23.2%-23.2%-23.2%-23.2%-
23.2%-23.2%-23.2%-23.2%-23.2%-23.2%-
23.2%Dep&Amort/Avge PP&E and Intang.-9.4%-10.1%-10.3%-
11.1%-11.1%-11.1%-11.1%-11.1%-11.1%-11.1%-11.1%-11.1%-
11.1%-11.1%-11.1%-11.1%Net Interest Expense/Avge Net
Debt-7.5%-7.2%-7.2%-7.0%-7.0%-7.0%-7.0%-7.0%-7.0%-
7.0%-7.0%-7.0%-7.0%-7.0%-7.0%-7.0%Non-Operating
Income/Sales9.9%8.1%0.7%7.1%5.5%5.5%5.5%5.5%5.5%5.5%
5.5%5.5%5.5%5.5%5.5%5.5%5.5%Effective Tax Rate-2.5%-
1.5%-1.4%-1.2%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-1.0%-
1.0%-1.0%-1.0%-1.0%-1.0%-1.0%Minority Interest/After Tax
Income0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0

.0%0.0%0.0%0.0%0.0%0.0%Other
Income/Sales0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
0.0%0.0%0.0%0.0%0.0%0.0%0.0%Ext. Items & Disc.
Ops./Sales0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0
%0.0%0.0%0.0%0.0%0.0%0.0%Pref. Dividends/Avge Pref.
Stock0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0
%0.0%0.0%0.0%0.0%Balance Sheet AssumptionsWorking
Capital AssumptionsEnding Operating
Cash/Sales6.4%2.8%5.1%7.4%3.7%3.7%3.7%3.7%3.7%3.7%3.7
%3.7%3.7%3.7%3.7%3.7%3.7%Ending
Receivables/Sales0.0%0.0%0.0%0.1%0.1%0.1%0.1%0.1%0.1%0
.1%0.1%0.1%0.1%0.1%0.1%0.1%0.1%Ending
Inventories/COGS-25.8%-28.6%-29.8%-29.4%-30.6%-30.6%-
30.6%-30.6%-30.6%-30.6%-30.6%-30.6%-30.6%-30.6%-30.6%-
30.6%-30.6%Ending Other Current
Assets/Sales2.0%2.3%2.3%2.4%1.6%1.6%1.6%1.6%1.6%1.6%1
.6%1.6%1.6%1.6%1.6%1.6%1.6%Ending Accounts
Payable/COGS-99.2%-10.0%-10.6%-11.6%-9.5%-9.5%-9.5%-
9.5%-9.5%-9.5%-9.5%-9.5%-9.5%-9.5%-9.5%-9.5%-
9.5%Ending Taxes
Payable/Sales0.7%1.5%0.5%0.4%0.7%0.7%0.7%0.7%0.7%0.7%
0.7%0.7%0.7%0.7%0.7%0.7%0.7%Ending Other Current
Liabs/Sales6.0%4.3%6.0%61.0%6.3%6.3%6.3%6.3%6.3%6.3%6
.3%6.3%6.3%6.3%6.3%6.3%6.3%Other Operating Asset
AssumptionsEnding Net
PP&E/Sales47.4%46.0%46.0%44.8%43.3%43.3%43.3%43.3%43
.3%43.3%43.3%43.3%43.3%43.3%43.3%43.3%43.3%Ending
Investments/Sales0.8%0.3%0.3%0.0%0.0%0.0%0.0%0.0%0.0%0
.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Ending
Intangibles/Sales0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.
0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Ending Other
Assets/Sales1.4%1.4%1.5%1.1%1.2%1.2%1.2%1.2%1.2%1.2%1
.2%1.2%1.2%1.2%1.2%1.2%1.2%Other Operating Liability
AssumptionsOther
Liabilities/Sales2.4%2.7%2.9%3.0%2.9%2.9%2.9%2.9%2.9%2.
9%2.9%2.9%2.9%2.9%2.9%2.9%2.9%Deferred

Taxes/Sales2.1%1.9%2.0%1.9%1.3%1.3%1.3%1.3%1.3%1.3%1.
3%1.3%1.3%1.3%1.3%1.3%1.3%Financing AssumptionsCurrent
Debt/Total
Assets0.8%0.8%1.0%0.8%0.9%0.9%0.9%0.9%0.9%0.9%0.9%0.
9%0.9%0.9%0.9%0.9%0.9%Long-Term Debt/Total
Assets37.0%32.0%32.8%32.2%33.7%33.7%33.7%33.7%33.7%3
3.7%33.7%33.7%33.7%33.7%33.7%33.7%33.7%Minority
Interest/Total
Assets0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.
0%0.0%0.0%0.0%0.0%0.0%Preferred Stock/Total
Assets0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.
0%0.0%0.0%0.0%0.0%0.0%Dividend Payout
Ratio0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0
%0.0%0.0%0.0%0.0%0.0%
Valuation ParametersValuation ParametersEstimated
Price/Share=$83,726.48Company Name:KOHL'SRequired
Valuation Parameters (to compute value of common
equity):Enter Cost of Equity Capital:10.00%Enter Value of
Contingent Claims on Common Equity ($000):0Enter Date of
Valuation:2012/06/20Enter Dilution Factor for Splits Occurring
Since Latest Fiscal Year End:1.00Optional Valuation
Parameters (to compute value to all investors):Enter Cost of Net
Debt:8.00%Enter Cost of Preferred Stock:9.00%Enter Cost of
Minority Interest:10.00%Adjust the Weighted Average Cost of
Capital Input9.3720%upsuch that the two equity values below
are approximately equal:Equity Value computed directlyEquity
Value computed indirectlyapproximate weighted averagefrom
flows to equityholders:as the Entity Value less non-equity
claims:cost of capital to use as starting
point:83726.4891973.4510.03%
Residual Income ValuationsResidual Income
Valuation($000)Company NameKOHL'SMost Recent Fiscal
Year End12/31/11Date of Valuation6/20/12Cost of Common
Equity10.00%Teriminal Growth Rate3.00%Fiscal Year of
Forecast2012/12/312013/12/312014/12/312015/12/312016/12/31
2017/12/312018/12/312019/12/312020/12/312021/12/312022/12

/312023/12/31(53,655,643)Valuation to Common EquityNet
Income39,987,27640,513,83141,122,95841,818,02042,602,9044
3,482,05844,460,53545,544,03846,738,97648,052,52649,492,70
650,977,487Common Equity at Beginning of
Year17,820,0005,555,2395,628,5555,713,3475,810,0825,919,30
26,041,6266,177,7586,328,4906,494,7156,677,4316,877,754Res
idual
Income38,205,27639,958,30740,560,10341,246,68642,021,8964
2,890,12843,856,37244,926,26246,106,12747,403,05548,824,96
350,289,712Present Value of Residual
Income34,732,06933,023,39430,473,40628,172,04126,092,2912
4,210,35922,505,25420,958,43319,553,49918,275,93017,112,85
216,023,852Present Value Beyond 10 Years268,916,240Present
Value of First 10 Years257,996,674Common Equity as
of12/31/1117,820,000Forecast Equity Value Before Time
Adj.544,732,915Forecasted Value as of Valuation
Date598,979,234Less Value of Contingent Equity Claims0Value
Attributable to Common Equity598,979,234Common Shares
Outstanding at BS Date7,154Equivalent Shares at Valuation
Date7,154Forecast Price/Share$83,726.48Valuation to All
InvestorsCost of Debt8.00%Cost of Preferred Stock9.00%Cost
of Minority Interest10.00%After Tax Weighted Average Cost of
Capital9.37%Net Interest Expense to Net
Debtholders(332,012)(336,085)(340,837)(346,292)(352,481)(35
9,439)(367,206)(375,826)(385,351)(395,837)(407,348)(419,569)
Beginning Book Value of
Debt4,707,0004,760,3334,823,1584,895,8174,978,7105,072,302
5,177,1235,293,7755,422,9395,565,3795,721,9505,893,608Resi
dual Interest
Expense(708,572)(716,912)(726,689)(737,957)(750,778)(765,22
3)(781,376)(799,328)(819,186)(841,068)(865,104)(891,057)Pres
ent Value of Residual Interest
Income(656,085)(614,636)(576,869)(542,420)(510,967)(482,22
0)(455,925)(431,852)(409,797)(389,577)(371,028)(353,851)Val
ue of Debt(8,377,562)Dividends to Preferred
Stockholders000000000000Beginning Book Value of Preferred

Stock000000000000Residual Income to Preferred
Stock000000000000Present Value of Preferred Residual
Income000000000000Value of Preferred Stock0Minority
Interest in Earnings000000000000Beginning Book Value of
Minority Interest000000000000Residual Income to Minority
Interest000000000000Present Value of MI Residual
Income000000000000Value of Minority Interest0Net Operating
Income39,652,01040,174,45140,778,78141,468,33442,246,9684
3,119,09644,089,73045,164,52846,349,84747,652,80949,081,36
550,553,806Beginning Net Operating
Assets22,527,00010,315,57310,451,71310,609,16410,788,79210
,991,60411,218,74911,471,53311,751,42912,060,09412,399,381
12,771,363Residual Income to all
Investors37,540,77939,207,67639,799,24640,474,04341,235,84
242,088,96343,038,30944,089,41645,248,50346,522,53747,919,
29549,356,874Present Value of Residual Investor
Income34,323,93932,776,21430,419,80228,284,72626,347,7852
4,588,45822,988,57921,532,03720,204,53418,993,36217,887,21
516,845,108Entity Value590,010,995Less Value of
Debt8,377,562Less Value of Preferred Stock0Less Value of
Minority Interest0Forecast Equity Value Before Time
Date7,154Forecast Price/Share$91,973.45
DCF ValuationsDCF Valuations($000)Company
NameKOHL'SMost Recent Fiscal Year End12/31/11Date of
Valuation6/20/12Cost of Common Equity10.00%Terminal
Growth Rate3.00%Fiscal Year of
Forecast2012/12/312013/12/312014/12/312015/12/312016/12/31
2017/12/312018/12/312019/12/312020/12/312021/12/312022/12
/312023/12/31-53655642.8830Valuation to Common EquityFree
Cash Flow to Common
Equity52,252,03640,440,51541,038,16741,721,28542,493,68443
,359,73444,324,40445,393,30646,572,75147,869,81049,292,383

50,771,155Present Value of
FCF47,501,85133,421,91330,832,58228,496,19926,385,23424,4
75,43922,745,42821,176,31219,751,39318,455,88417,276,6801
6,177,255Present Value Beyond 10 Years271,490,679Present
Value of First 10 Years273,242,235Forecast Equity Value
Before Time Adj.544,732,915Forecasted Value as of Valuation
Date7,154Forecast Price/Share$83,726.48Valuation to All
InvestorsCost of Net Debt8.00%Cost of Preferred
Stock9.00%Cost of Minority Interest10.00%After Tax Weighted
Average Cost of Capital9.37%Free Cash Flow to
Debt(385,345)(398,910)(413,495)(429,185)(446,073)(464,260)(
483,858)(504,990)(527,791)(552,409)(579,007)(596,377)Presen
t Value of FCF to
Debt(356,801)(342,001)(328,246)(315,464)(303,590)(292,562)(
282,327)(272,831)(264,027)(255,872)(248,326)(236,829)Value
of Debt(8,377,562)Free Cash Flow to Preferred
Stock000000000000Present Value of FCF to Preferred
Stock000000000000Value of Preferred Stock0Free Cash Flow to
Minority Interest000000000000Present Value of FCF to
Minority Interest000000000000Value of Minority Interest0Free
Cash Flows to
Investors51,863,43740,038,31040,621,33141,288,70642,044,15
642,891,95143,836,94644,884,63146,041,18347,313,52148,709,
38450,170,665Present Value of FCF to
Investors47,419,30033,470,59531,048,14728,854,04226,864,25
925,057,56623,415,16521,920,39820,558,48419,316,29118,182,
13817,122,848Entity Value590,010,995Less Value of Net
Debt8,377,562Less Value of Preferred Stock0Less Value of
Minority Interest0Forecast Equity Value Before Time

Date7,154Forecast Price/Share$91,973.45
EPS ForecasterEPS Forecaster($000, except per share
amounts)Company NameKOHL'SCommon Shares Outstanding
at BS Date7,154Equivalent Shares at Valuation
Date7,154Forecasted Price at Valuation
Date$83,726.48ForecastForecastForecastForecastForecastForeca
stForecastForecastForecastForecastForecastForecastFiscal Year
of
Forecast2012/12/312013/12/312014/12/312015/12/312016/12/31
2017/12/312018/12/312019/12/312020/12/312021/12/312022/12
/312023/12/31Net
Income39,987,27640,513,83141,122,95841,818,02042,602,9044
3,482,05844,460,53545,544,03846,738,97648,052,52649,492,70
650,977,487Common Equity Issued
(Repurchased)(52,252,036)(40,440,515)(41,038,167)(41,721,28
5)(42,493,684)(43,359,734)(44,324,404)(45,393,306)(46,572,75
1)(47,869,810)(49,292,383)(50,771,155)Forecasted Price at
Year
End$88,145.38$96,959.91$106,655.91$117,321.50$129,053.65$
141,959.01$156,154.91$171,770.40$188,947.44$207,842.19$22
8,626.41$251,489.05New Shares Issued
(Repurchased)(593)(417)(385)(356)(329)(305)(284)(264)(246)(
230)(216)(202)Shares Outstanding at End of
Year6,5616,1445,7595,4045,0744,7694,4854,2213,9743,7443,52
93,327Forecast
EPS$5,831.09$6,377.46$6,909.41$7,492.20$8,131.72$8,834.69
$9,608.73$10,462.58$11,406.24$12,451.21$13,610.72$14,872.8
1Consensus Analyst Forecast of EPSForecast Five Year Growth
Rate in EPS9%Consensus Analyst Forecast of Growth RateTo
obtain analyst forecasts, click here
Although not a necessary input for eVal, we recommend that
you find the analyst forecasts for your company and store them
in the yellow-shaded cells for comparison purposes.
Model SummaryModel SummaryHistorical Data
For:KOHL'SMost Recent Fiscal Year End:2011/12/31Average
ROE (last five years)159.08%Sales Growth (last five

years)0.53%Forecast Data:Forecast Horizon10 yearsThis Year's
ROE342.13%Terminal Year's ROE730.24%This Year's Sales
Growth1.13%Terminal Year's Sales Growth3.00%This Year's
Forecast EPS$5,831.09Forecast 5 Year EPS
Growth8.66%Valuation Data:Cost of Equity
Capital10.00%Valuation Date2012/06/20Estimated
Price/Share$83,726.48Estimated Price/Earnings
Ratio14.36Estimated Market/Book Ratio33.61

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