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					                                          Appendix A
                                         SWOT Analysis


 The following SWOT analysis is based on Wal-Mart Stores, Inc. (WMT), which operates in the
 discount retail industry. Strengths and weaknesses focus on internal factors within the company,
 whereas opportunities and threats are based on external industry aspects.

                  Strengths                                        Weaknesses
       Low-cost Leader                                  Declining Sales Growth
       Power over Suppliers                             International Markets
       International Acquisitions                       Comparative Stores Sales
       Diversity of Employees                           Employee Turnover Rate
                                                         Employee Compensation/Benefits

                Opportunities                                        Threats
       Internet Sales                                   Increased Oil/Energy Prices
       Digital Movie Downloads                          Decline in Housing Market
       Banking Industry
       Pharmacy Industry

Strengths

   Low-cost Leader
 Wal-Mart‟s low cost leadership stems from a combination of leveraging power over suppliers,
 and efficient operations that combine to put the lowest cost items on store shelves.1 Wal-Mart‟s
 enjoys retail profits unmatched by competitors allowing them to mass purchase goods from
 suppliers at lower costs. The exploitation of well located distribution centers permits Wal-Mart
 to maximize its product supply its stores. Continually adapting stores reveal advancements made
 in store efficiencies. These procedures allow Wal-Mart to exploit its low cost implementation
 effectively.

   Power over Suppliers

 Wal-Mart has gained gradual strength in dictating more power over its suppliers.2 Wal-Mart‟s
 massive size has decreased its reliance on fewer suppliers and expanded stores push the number
 of suppliers even higher. Wal-Mart gains their power over suppliers as they impose strict
 demands on product sizes and prices. The price dictation by Wal-Mart empowers them because
 suppliers can no longer manipulate the price and are forced into cheaper compliance.
   International Acquisitions
 Wal-Mart‟s success within the United States is prevalent, but now with the acquisition of Trust-
 Mart they have become the largest foreign chain.3 International acquisitions allow for a
 smoother transition into the foreign markets. Foreign markets present different customers and
 regulations and purchasing already existing stores allow instant success opposed to pushing new
 stores in.

   Diversity of Employees
 Wal-Mart‟s belief of “Respect for the Individual” is backed through its diversity of staff
 appealing to the American culture. Wal-Mart‟s mixture of employees has been extended in
 numbers of women and minorities. A thrust has been made toward universities recruitment and
 expansion developing intelligent employees.4 The push toward employee diversification backs
 Wal-Mart‟s commitment toward becoming a total corporation.

Weaknesses

       Declining sales growth

 Over the past six years, Wal-Mart‟s net sales increase has been declining. In 2006, net sales
 increase reached an all-time low of 9.5%.5 Wal-Mart managers see this as an extremely serious
 problem and are focusing all of their efforts to regain double-digit sales growth. If their sales
 growth continues to decrease Wal-Mart could face major issues in the future and need to increase
 the growth of their sales.

       Weak performance in some international markets

 Wal-Mart has experienced some issues when expanding overseas. In Germany the stores
 performed poorly and eventually needed to be shutdown. Wal-Mart may be trying to expand
 overseas too fast and not paying enough attention to the cultural differences between the United
 States and the foreign country. If Wal-Mart wants to succeed overseas they need to spend more
 time researching foreign markets and gathering information.

       Declining comparative store sales

 Comparative store sales is a measure that indicates the performance of existing stores by
 measuring the growth in sales for such stores for a particular period over the corresponding
 period in the prior year. Wal-Mart has seen a 1% annual decrease in comparative stores sales that
 they are attributing to the opening of large amounts of stores.

       Employee Turnover Rate

 Wal-Mart has an annual employee turnover rate of 45-50% compared to competitors like
 COSTCO who have a turnover rate of 25%.6 This difference wastes huge amounts of money for
 hiring screening and training employees. Also, most of the new employees are not staying at
 Wal-Mart long enough to learn how to do their jobs properly.

     Employee Compensation/Benefits
 Wal-Mart pays its employees on average five dollars less than their competitors.7 This creates
 employee morale problems and contributes to the high turnover rate. Wal-Mart also provides
 medical benefits to fewer employees than their competitors. If Wal-Mart wants to have happy
 employees who enjoy their job, they need to consider raising their pay and benefits packages.

Opportunities

       Internet Sales

 The average Internet purchaser has an average household income of $63,000, compared to the
 average $33,000 household income of a non-Internet purchaser8. Wal-Mart has implemented
 www.walmart.com, along with their store site www.walmartstores.com, for customer shopping
 on the internet. This site allows customers to obtain Wal-Mart‟s low prices from the comforts of
 their home.

       Digital Movie Downloads

 Wal-Mart is looking to seize on the opportunity of online movie services. The company currently
 makes up 40% of the United States “hard copy” DVD sales9. By venturing into the online
 downloading service, Wal-Mart looks to compete with Apple, the leader in downloadable movies.
 Wal-Mart is looking to enter the digital download market by offering a free download of a movie
 when it is purchased at the retail location. The Company is also considering installing in-store
 kiosks where films can be downloaded onto portable discs.

       Banking Industry

 The financial services industry offers a new opportunity for Wal-Mart. The Company is trying to
 break into the market in order to capitalize on the low-income families that already shop at the
 store10. Wal-Mart management feels this segment is unable to afford many financial services.
 Law makers are trying to keep the giant out of the banking industry, but Wal-Mart states that it
 will not pose a threat to the high-end banking firms. The Company currently offers limited
 financial services such as money orders and wire transfers. This is made possible through
 partnerships with MoneyGram International and SunTrust banks.

       Pharmacy Industry

 This fall Wal-Mart announced its plan to begin offer $4 prescription drugs to consumers11. The
 plan covers 291 prescription drugs, and no insurance is needed to take advantage of the prices.
 This program is part of a plan to offer incredibly low priced drugs to Wal-Mart shoppers. The
 program is starting in 65 Florida locations and is slated to expand to the whole state by the end of
 2007.

Threats

       Increased Oil/Energy Prices

 Wal-Mart‟s customer base focuses on discount value-seekers, and these customers are much
 more likely to be affected by increased gas and energy prices. The increase on this type of
 customer‟s gas budget will decrease their budget on Wal-Mart. Also, the increased energy bills
 will shrink Wal-Mart‟s margins on household appliances.

       Declining Housing Market

 The economy has recently experienced record-lows in housing sales and soaring mortgage rates
 over the last five years12. This is a threat to Wal-Mart‟s home improvement products, and will
 shrink their margins in this segment.
                                              Appendix B
                                          Porter’s Five Forces
                                           Industry Analysis


 I. Power of Buyers

   The power of buyers in the retail industry is low. There are so many customers that shop at retail
   stores, and specifically Wal-Mart, that an individual does not have ability to leverage price,
   product or service offerings. Wal-Mart controls over 2% of the United States economy, and over
   100 million customers shop at Wal-Mart a week13. The average Wal-Mart store has over $100
   million in sales a year, and offers products in over 40 different departments. The Company also
   owns and operates 3,400 stores domestically. The sheer size of the retailer allows them to control
   what products and prices they offer to customers.

   Wal-Mart must monitor customer buying trends in order to maintain its strong position. In 2006
   Wal-Mart tested an upscale clothing line in its stores14. The Metro 7 initially did well in 600 test
   stores, but not when expanded to new stores, the sales dropped off. Wal-Mart simply pulled the
   line and took note. The Company recognizes it is a low price leader and that is what they
   continue to offer customers.

II. Power of Suppliers

   The economic power of suppliers in the retail industry is low. On a daily basis, Wal-Mart has
   tens of thousands of items on their store shelves15. Competition for this shelf space is extremely
   intense, which gives power to the retailer. The majority of products supplied by retailers can be
   easily imitated because they are not unique. This takes power away from the suppliers. When a
   supplier receives shelf space from Wal-Mart, they must make certain that Wal-Mart becomes a
   top priority for their company. If they do not provide Wal-Mart with high quality merchandise
   for a reasonable price then Wal-Mart will begin its search for a supplier that will follow their
   terms in their strict business relationship.

III. Threat of New Entrants

   The threat of new entrants into the discount retail market is low. In order to make an impact in
   this industry you must have billions of dollars just to compete with the top competitors. Even if
   you were able to get past the enormous amount of money necessary to open up stores, the prices
   of your supplies would more than likely be much more expensive than that of Wal-Mart‟s. This
   is because of their massive orders from their suppliers. Wal-Mart has also built unbreakable ties
   with many companies because of their long-standing business over the years. These
   relationships have made companies dependent on Wal-Mart rather than Wal-Mart depending on
   their suppliers. An example of this is Wal-Mart insisting that their suppliers begin using RFID
   tags16. Wal-Mart has single-handedly changed the way discount retailers operate and they are
   much too strong for new entrants to steal their thunder. If companies do gain on Wal-Mart, it
   will be companies who are already in the industry like Target, Kroger, or Best Buy.
IV. Threat of Rivalry

  Threat of rivalry in the retail industry is high. The competition taking place in the retail industry
  is healthy. Rivalry is requiring stores to continue to change and better suit the customer. This
  industry is consolidated because each store does not serve a specific niche. They serve several
  different types of customers and do not concentrate on one particular area. Demand for products
  sold in retail stores is very high because most of the goods are necessary for survival. Demand
  for items could fluctuate by shortages in supply or having too much of one item. Exit barriers
  are increased in rival firms because competitiveness pushes firms deeper into the industry,
  increasing losses toward leaving the industry. Pushes to gain product differentiation and brand
  identity increase the fight over an expanded industry.

  However, regardless of the industry as a whole, the threat of rivalry for Wal-Mart specifically is
  extremely low. The threat is low due to unequally sized competitors with one clear market
  leader, Wal-Mart. The threat of rivalry is also very low because the industry is growing slower
  due to Wal-Mart‟s domestic density. With the differentiation and completeness of the industry
  leader competitors are further from being immediate qualified rivals. Extensive pursuit by Wal-
  Mart toward advantages in a low competitive industry leads to a reduction in rivalry. The overall
  breakdown of the dispersion of the target market will be bigger per section than more
  competitive industries. A few stores are provided to wide consumer bases, but densely located
  domestic stores leave minimal room for capturing or stealing target markets. Each retailer has
  similar techniques toward developing final products leading toward fewer advantages. Lower
  selling costs decrease the abilities for profit of competitors to the cost leader because the higher
  costs prevent companies from making as much per product. The differentiation of the cost leader
  Wal-Mart in expanding and maintaining efficient operations establishes a competitive advantage
  that‟s hard to match in size and structure17. Wal-Mart‟s power in their ability to dictate the
  buying price from suppliers prevents smaller firms from making the same impact.

V. Threat of Substitutes

  In the discount retail industry, there is a relatively high risk for substitutes. As long as a company
  can successfully thrive in any given segment at a similar low-cost, they can be considered to be
  selling a substitute for the retailer‟s products. However, the truth is, there is not a discount
  retailer quite like Wal-Mart, reducing their threat for substitutes. Other competitors would rather
  have higher price elasticity, but when you have a power over suppliers as high as Wal-Mart, the
  price elasticity and ability to have substitutes at a similar price is low.

  Wal-Mart is an adaptable retail giant, making it dangerous to companies that sell similar
  products. When companies adopt a new, innovative technology, Wal-Mart is quick to add it to
  their repertoire. For example, Amazon and Apple recently teamed up to offer movie
  downloads—posing a threat to Wal-Mart‟s movie sales. The Company already leads the U.S. in
  DVD sales18, but it assumes the role as a protector of its market share. Wal-Mart immediately
  began talks about how customers can cheaply receive free digital movie downloads with a
  purchase of the hard copy in DVD form.
Although, Wal-Mart causes other company‟s to conform to their standards. Kroger knows that
Wal-Mart poses a threat to their grocery market, so they prepared to compete with their own
Naturally Preferred brand of produce19—a reinvigorated segment for the Cincinnati-based
grocer. These types of moves by Wal-Mart‟s competitors can create similar substitutes and
actually increase substitutes.

There are many segments in the discount retail industry—a list that includes groceries, hardware,
candy, appliances, jewelry, apparel, furniture, toys, and office supplies. A customer that is in the
process of purchasing from these segments has an endless amount of possibilities when it comes
to substitutes. Wal-Mart, which offers 100,000 household products with an average of 60
different brands for each product20, is no exception. However, with the specific type of customer
that Wal-Mart targets (discount, value seekers), there isn‟t a better company to find everything
under one warehouse.
                                             Appendix C
                                          Wal-Mart vs. Costco


                                     Figure 1: Average Hourly Wage

                           $18.00

Dollar Amount (per Hour)
                           $16.00
                           $14.00
                           $12.00
                           $10.00
                            $8.00
                            $6.00
                            $4.00
                            $2.00
                            $0.00
                                           Wal-Mart             Costco
                                                      Company



                                    Figure 2: Employee Turnover Rate

                           60%

                           50%

                           40%
Percentage




                           30%

                           20%

                           10%

                            0%
                                          Wal-Mart              Costco
                                                      Company
                  Figure 3: Employee Sales per Square Foot

                $900
                $800
                $700



Dollar Amount
                $600
                $500
                $400
                $300
                $200
                $100
                  $0
                           Sam's Club             Costco
                               Membership Warehouse



         Figure 4: Health Care Coverage (% of employees)

                90%
                80%
                70%
                60%
Percentage




                50%
                40%
                30%
                20%
                10%
                 0%
                           Wal-Mart               Costco
                                        Company
                                          Appendix D
                                      Supply Chain Analysis



Executives of Wal-Mart continue to focus mainly in one area—supply chain management. For
almost half a century, Wal-Mart, or “the Company”, has followed founder Sam Walton‟s vision
and dream in becoming the low-cost leader in retail. Their structural components, such as
distribution centers and shipping, utilize innovative technology such as Radio Frequency
Identification (RFID) to reduce excess traveling and inventory costs. Also, their focus on
infrastructural aspects, such as purchasing, inventory policies, and logistics planning, further
saves Wal-Mart millions in social and environmental operational effectiveness and efficiency.
All these elements work together to help maintain Wal-Mart‟s competitive advantage—being a
low-cost leader for customers and suppliers.

Purpose of Distribution Centers

Wal-Mart has approximately 120 distribution center locations within the United States and 146
worldwide. Having the largest grouping of distribution centers in the world presents many
challenges for the Company. Wal-Mart has maintained its low-cost business edge through
extremely efficient supply chain operations21. To preserve this advantage Wal-Mart must
continue to drive down costs and sustain control over suppliers through dictating their prices.
The retailer must continually integrate new ideas and advancements into their operations to
sustain their status.

Distribution Efficiency

The evolution of Wal-Mart distribution centers creates many opportunities to increase efficiency.
Wal-Mart realizes that the amount, size, and location of distribution centers are vital to running
their corporation effectively within a specific geographic area. As distribution centers are added,
changes are implemented through prior mistakes and differences are integrated to better cater
each region. These additions in size to new distribution centers include adjustments accounted
for in consumer tendencies, new products, and seasonality factors. Strategically locating
distribution centers allows Wal-Mart to maximize the amount of stores supplied with as much
efficiency as possible. Well located distribution centers minimize trucking costs and total time
taken to supply local stores. New distribution centers may cause overlaps in store trucking
supply resulting in different distributions in total stores supplied but more efficient delivery
times. There is a „domino-effect‟ on adding new distribution centers. The Company can realign
the distribution to shorten the distance that certain trucks have to travel for delivery. This in-turn
allows the company to shorten crucial lead times, which means less safety stock. This leads to
Wal-Mart stores moving the products through their stores quicker and more efficiently. Centers
added may open up closer routes to store suppliers generating lower costs to supply distribution
centers. Wal-Mart continues to search for the most efficient utilization of its distribution centers
and will continue to modify the centers until they prove to be total maximized.
Shipping

Wal-Mart‟s shipping methods are leading the industry with their efficiency. Wal-Mart is
currently experimenting with plans to expand their RFID tag usage to 1000 stores by January
200722. When a pallet is received by Wal-Mart from one of their suppliers, it contains an RFID
tag which is then scanned as it enters the building. The pallet is then organized in the distribution
center based on the item.

Every item purchased from a Wal-Mart store is recorded and the information in immediately sent
to the nearest distribution center. Wal-Mart tracks its items to know exactly how much inventory
per item is at each store. When one of these items begins to fall below quantity standards, the
distribution center retrieves a pallet full of inventory for that item.

When the pallet leaves the distribution center it is scanned and recorded. The RFID tag which
was scanned sends a message to the supplier that Wal-Mart is in need of another pallet. It is then
the supplier‟s responsibility to dispatch another pallet to Wal-Mart.

Online Shipping Methods

Wal-Mart offers three main shipping methods: standard (3 to 7 business days), 2- to 3-Day
(business days), and 1-Day (business day). For heavy or oversized items, freight shipping is used.
This takes between 7 and 14 business days23.

There are two parts of the online shipping method which determine the length of the chosen
shipping time. The first part is the processing time. This is the time from when the order is
submitted to when the item leaves the warehouse. The second part of the online shipping method
is the shipping time. The shipping time is generally the same for most products. An item can
only travel so fast through the mailing system or through Wal-Mart‟s trucking system.

The chosen shipping method will determine the speed of the processing time for the item. The
more a customer is willing to pay for shipping, the faster they will receive their item. The
shipping time will generally be consistent throughout the process except for heavy or oversized
items.

Purchasing Policy

Throughout Wal-Mart‟s history, the discount retailer has needed to employ very strict policies
for the purchasing of inventory. This is because of the huge amounts of inventory that go through
the company every day. The beginning of the process requires a supplier to fill out a submission
form and return it to Wal-Mart. After the product is reviewed a decision will be made to begin
using that product or to reject it. If the product will indeed be used, the next step in the process is
requiring the supplier to gain a better understanding of Wal-Mart and their core values. This is a
vital part of the process because it allows the supplier to really get to know the company and the
people they serve. Next, the supplier is required to fill out several sheets and return them to the
company. Besides looking at just the product, Wal-Mart also requires the possible supplier to
submit their most recent financial statements. This is so they can determine if the company is
financially stable. Wal-Mart uses Universal Product Codes on all inventories so suppliers need to
be able to fulfill that need. After all of these tasks a supplier is allowed to begin a business
relationship with Wal-Mart.

Wal-Mart has become one of the largest firms in the world. Over the last few years they have
begun purchasing more of their inventory from overseas and that has affected their inventory
growth rate. Wal-Mart uses purchase orders to authorize any purchases that the company will
make. The purchase orders are based on the current needs of the company and are expected to be
filled by their suppliers within short time periods24. All of their purchasing contracts are different,
but most require Wal-Mart to pay the supplier once the merchandise has already been delivered.
The Company uses the retail-method to value their inventory which means that it is stated at cost.
Using the retail-method requires Wal-Mart management to make certain judgments and
estimates that could significantly impact the ending balance of inventory. One judgment
management must make would be to determine mark-down items. The items are recorded at the
time of the decision not at the point-of-sale.

Wal-Mart has become is one of the most efficient retail companies in the world. Holding large
amounts of inventory for an extended period of time can cost a retail giant like Wal-Mart
hundreds of millions of dollars per year. That is why the need for such strict purchasing policies
is needed. Wal-Mart makes sure they are only receiving inventory that they absolutely need.
They were not always this efficient with inventory management but over time they have
developed the skills necessary to run an enormous company with relative ease.

Inventory Policy

When analyzing companies supply chain efficiency, it is critical to evaluate the management of
inventory levels. Wal-Mart employs a low-cost strategy that maintains a focus on efficiency. The
company is one of the best in the world at managing its inventory. Wal-Mart utilizes its
extensive network of distribution centers and nearly 7,000 trucks to maintain just-in-time
inventory. The placement of the distribution centers and their efficient management allow for
many Wal-Mart stores to receive inventory within a few hours of levels running low.

Wal-Mart has traditionally allowed inventory to grow at rates extremely close to its sales growth.
The company‟s inventory levels were growing at a rate of 70% in 200125. This number rose to an
all-time high in 2004 when inventory grew at rate of over 90% of sales. This has resulted in
slowing Wal-Mart‟s inventory turnover in those years. The company‟s inventory turnover was at
9.63 in 2004. This means that Wal-Mart was able to completely sell through its inventory 9.63
times a year, or roughly every 38 days. Wal-Mart plans to implement strategies to bring this
number down and slow the growth rate of inventory in comparison to sales.

In 2005, Wal-Mart announced that it plans to begin reducing its inventory growth. The Company
would ideally like to see its inventory growth equal half of its sales growth. In order to achieve
this goal, Wal-Mart introduced “The Remix Program” in 2005. This program intends to speed
the movement of high-volume products through the distribution centers and allow for more
effective ordering and delivery. The Remix Program specifically involves:
       Increasing speed that the fastest selling goods move through Distribution Centers
       Newly designed pallets for faster loading/unloading
       More mechanization in the freezer section of the Distribution Centers

The Remix Program is currently in the testing stage in a Florida Distribution Center, but plans to
be fully integrated into Wal-Mart‟s inventory control activities by the end of 2007. This program
is expected to work hand-in-hand with Wal-Mart‟s use of RFID technology.

In addition to The Remix Program, Wal-Mart also plans to begin lowering its Stock Keeping
Unit (SKU) count and triple its private label branding. This plan would reduce Wal-Mart‟s
reliance on suppliers for products. The Company could control its just-in-time inventory much
more effectively. Wal-Mart intends for this to also greatly reduce the number of items damaged
during delivery, and lower the chances of running out of items. The cutting out of certain items
will also narrow the range of brands of Wal-Mart deals with and make inventory more
manageable.

Logistics

Wal-Mart‟s trucks drive 872,025,520 miles a week, which is why this efficiency is so important
for The Company, financially and environmentally. Within Wal-Mart‟s massive trucking
division, nearly 7,000 trucks to be exact, the retail company has found even more ways to save
millions. Throughout their entire fleet, they look to increase their logistics efficiency by 25% by
2008. They intend to do this by creating lighter, more aerodynamic trucks with fuel efficient
engines and tires. Also, a hybrid drive system would further help with the cost of gasoline. An
increase in supply chain aspects of the fleet can come from avoiding empty trucks at all times—
filled with recyclables or excess inventory if necessary. These innovative ideas alone will save
the company $277 million a year.

On the topic of environmental emissions, Wal-Mart also looks to improve their carbon output.
Auxilliary Power Units (APUs) allows the inside of an idle truck to maintain a comfortable
temperature, without use of the main engine. With the first fleet to have 100% installation of
APUs, Wal-Mart was able to save $25 million a year and reduce 100,000 metric tons of their
carbon output.

Wal-Mart has 120 distribution centers that manage 2,800 discount stores and 525 Sam‟s Clubs,
not to mention their international segment that expands across nine countries26. With six new
facilities in the plans for the near future, Wal-Mart now focuses on “reoptimization” in supply
chain management. Former vice president of logistics Ted Wade says that “every time you roll
out another distribution center you have to realign the network to make the system more
efficient.” And that‟s exactly what the company intends on doing.

The discount retailer has a powerful commitment to logistic efficiency, which is why they
already have more plans for the future. By 2020, Wal-Mart hopes to reduce packaging size in
half—allowing them to ship twice as much on the same amount of fuel.
                Appendix E                           Wal-Mart 2006
                                                     Actual Balance Sheet
      Financial Statements 2006-2011
          Wal-Mart Stores, Inc.                      Assets:
                                                     Current Assets
Wal-Mart 2006                                        Cash and Cash Equivalents                       $6,414
Actual Income Statement                              Receivables                                      2,662
                                                     Inventories                                     32,191
                                                     Prepaid expenses and other                       2,557
Revenues:                                            Total Current Assets                            43,824
Net Sales                                $312,427
                                                     Property and Equipment, at cost
Other Income, net                           3,227    Land                                            16,643
                                          315,654    Buildings and Improvements                      56,163
Costs and Expenses:                                  Fixtures and Equipment                          22,750
Cost of Sales                             240,391    Transportation Equipment                         1,746
Operating, Selling, General and Admin.               Property and Equipment, at cost                 97,302
Expenses                                   56,733    Less accumulated depreciation                   21,427
Operating Income                           18,530    Property and Equipment, net                     75,875

                                                     Property under Capital Lease
Interest:
                                                     Property under Capital Lease                     5,578
Debt                                        1,171    Less accumulated amortization                    2,163
Capital Leases                                249    Property under capital lease, net                3,415
Interest Income                              (248)
Interest, net                               1,172    Goodwill                                        12,188
                                                     Other assets and deferred charges                2,885
Income from continuing operations
before taxes and minority interest         17,358    Total Assets                                  $138,187

                                                     Liabilities and shareholders' equity:
Provision for Income Taxes:
                                                     Current Liabilities
Current                                     5,932
                                                     Commercial paper                                $3,754
Deferred                                     (129)   Accounts payable                                25,373
                                                     Accrued liabilities                             13,465
Income from continuing operations                    Accrued income taxes                             1,340
before minority interest                   11,555    Long-term debt due within one year               4,595
Minority interest                            (324)   Obligations under capital leases due within
Income from continuing operations          11,231    one year                                           299
                                                     Total Current Liabilities                       48,826
Net Income                                $11,231
                                                     Long-term debt                                  26,429
                                                     Long-term obligations under capital leases       3,742
                                                     Deferred income taxes and other                  4,552
                                                     Minority interest                                1,467

                                                     Shareholders' equity
                                                     Preferred stock                                      0
                                                     Common stock                                       417
                                                     Capital in excess of par value                   2,596
                                                     Accumulated other comprehensive income           1,053
                                                     Retained earnings                               49,105
                                                     Total shareholders' equity                      53,171

                                                     Total liabilities and shareholders' equity    $138,187
Wal-Mart 2007                                   Wal-Mart 2007
Forecasted Income Statement                     Forecasted Balance Sheet

                                                Assets:
                                                Current Assets
Revenues:
                                                Cash and Cash Equivalents                       $6,936
Net Sales                            $346,794   Receivables                                      2,601
Other Income, net                       3,537   Inventories                                     37,801
                                      350,331   Prepaid expenses and other                       2,428
Costs and Expenses:                             Total Current Assets                            49,765
Cost of Sales                         269,112
                                                Property and Equipment, at cost
Operating, Selling, General and
                                                Land                                            18,033
Admin. Expenses                        60,342   Buildings and Improvements                      59,510
Operating Income                       20,877   Fixtures and Equipment                          25,663
                                                Transportation Equipment                         1,907
Interest:                                       Property and Equipment, at cost                105,113
Debt                                    1,283   Less accumulated depreciation                   23,125
Capital Leases                            276   Property and Equipment, net                     81,988
Interest Income                         (274)
                                                Property under Capital Lease
Interest, net                           1,286   Property under Capital Lease                     5,878
                                                Less accumulated amortization                    2,292
Income from continuing operations               Property under capital lease, net                3,586
before taxes and minority interest     19,591
                                                Goodwill                                        13,178
                                                Other assets and deferred charges                2,948
Provision for Income Taxes:
Current                                 6,694   Total Assets                                  $151,465
Deferred                                (145)
                                                Liabilities and shareholders' equity:
Income from continuing operations               Current Liabilities
                                                Commercial paper                                $4,404
before minority interest               13,042
                                                Accounts payable                                27,431
Minority interest                       (365)
                                                Accrued liabilities                             14,565
Income from continuing operations      12,677   Accrued income taxes                             1,491
                                                Long-term debt due within one year               4,595
Net Income                            $12,677   Obligations under capital leases due within
                                                one year                                           277
                                                Total Current Liabilities                       52,765

                                                Long-term debt                                  27,609
                                                Long-term obligations under capital leases       3,988
                                                Deferred income taxes and other                  4,162
                                                Minority interest                                1,630

                                                Shareholders' equity
                                                Preferred stock                                      0
                                                Common stock                                       417
                                                Capital in excess of par value                   2,596
                                                Accumulated other comprehensive income           2,081
                                                Retained earnings                               56,218
                                                Total shareholders' equity                      61,312

                                                Total liabilities and shareholders' equity    $151,465
Wal-Mart 2008                                       Wal-Mart 2008
Forecasted Income Statement                         Forecasted Balance Sheet

                                                    Assets:
                                                    Current Assets
Revenues:
                                                    Cash and Cash Equivalents                       $7,776
Net Sales                                $388,790
                                                    Receivables                                      2,916
Other Income, net                           3,966   Inventories                                     42,378
                                          392,756   Prepaid expenses and other                       2,722
Costs and Expenses:                                 Total Current Assets                            55,791
Cost of Sales                             304,041
Operating, Selling, General and Admin.              Property and Equipment, at cost
Expenses                                   67,448   Land                                            20,217
Operating Income                           21,267   Buildings and Improvements                      66,716
                                                    Fixtures and Equipment                          28,770
Interest:                                           Transportation Equipment                         2,138
                                                    Property and Equipment, at cost                117,842
Debt                                        1,439
                                                    Less accumulated depreciation                   25,925
Capital Leases                                310
                                                    Property and Equipment, net                     91,917
Interest Income                             (305)
Interest, net                               1,443   Property under Capital Lease
                                                    Property under Capital Lease                     6,590
Income from continuing operations                   Less accumulated amortization                    2,570
before taxes and minority interest         19,823   Property under capital lease, net                4,020

                                                    Goodwill                                        14,774
Provision for Income Taxes:
                                                    Other assets and deferred charges                3,305
Current                                     6,740
Deferred                                    (147)   Total Assets                                  $169,807

Income from continuing operations                   Liabilities and shareholders' equity:
before minority interest                   13,230   Current Liabilities
Minority interest                           (370)   Commercial paper                                $4,938
Income from continuing operations          12,860   Accounts payable                                30,753
                                                    Accrued liabilities                             16,329
Net Income                                $12,860   Accrued income taxes                             1,672
                                                    Long-term debt due within one year               3,320
                                                    Obligations under capital leases due within
                                                    one year                                           311
                                                    Total Current Liabilities                       57,323

                                                    Long-term debt                                  33,047
                                                    Long-term obligations under capital leases       4,471
                                                    Deferred income taxes and other                  4,665
                                                    Minority interest                                1,827

                                                    Shareholders' equity
                                                    Preferred stock
                                                    Common stock                                       417
                                                    Capital in excess of par value                   2,596
                                                    Accumulated other comprehensive income           2,333
                                                    Retained earnings                               63,127
                                                    Total shareholders' equity                      68,473

                                                    Total liabilities and shareholders' equity    $169,807
Wal-Mart 2009                                   Wal-Mart 2009
Forecasted Income Statement                     Forecasted Balance Sheet

                                                Assets:
Revenues:                                       Current Assets
Net Sales                            $435,873   Cash and Cash Equivalents                       $8,717
Other Income, net                       4,446   Receivables                                      3,269
                                                Inventories                                     47,510
                                      440,319
                                                Prepaid expenses and other                       3,051
Costs and Expenses:
                                                Total Current Assets                            62,548
Cost of Sales                         340,577
Operating, Selling, General and
                                                Property and Equipment, at cost
Admin. Expenses                        75,441   Land                                            22,665
Operating Income                       24,301   Buildings and Improvements                      74,796
                                                Fixtures and Equipment                          32,255
Interest:                                       Transportation Equipment                         2,397
Debt                                    1,613   Property and Equipment, at cost                132,113
Capital Leases                            347   Less accumulated depreciation                   29,065
Interest Income                         (340)   Property and Equipment, net                    103,048
Interest, net                           1,620
                                                Property under Capital Lease
Income from continuing operations               Property under Capital Lease                     7,388
                                                Less accumulated amortization                    2,881
before taxes and minority interest     22,680
                                                Property under capital lease, net                4,507
Provision for Income Taxes:
                                                Goodwill                                        16,563
Current                                 7,711   Other assets and deferred charges                3,705
Deferred                                (168)
                                                Total Assets                                  $190,371
Income from continuing operations
before minority interest               15,137   Liabilities and shareholders' equity:
Minority interest                       (424)   Current Liabilities
Income from continuing operations      14,713   Commercial paper                                $5,536
                                                Accounts payable                                34,478
Net Income                            $14,713   Accrued liabilities                             18,307
                                                Accrued income taxes                             1,874
                                                Long-term debt due within one year               2,858
                                                Obligations under capital leases due within
                                                one year                                           349
                                                Total Current Liabilities                       63,401

                                                Long-term debt                                  37,049
                                                Long-term obligations under capital leases       5,013
                                                Deferred income taxes and other                  5,230
                                                Minority interest                                2,049

                                                Shareholders' equity
                                                Preferred stock
                                                Common stock                                       417
                                                Capital in excess of par value                   2,596
                                                Accumulated other comprehensive income           2,615
                                                Retained earnings                               72,001
                                                Total shareholders' equity                      77,629

                                                Total liabilities and shareholders' equity    $190,371
Wal-Mart 2010                                   Wal-Mart 2010
Forecasted Income Statement                     Forecasted Balance Sheet

                                                Assets:
Revenues:                                       Current Assets
Net Sales                            $488,657   Cash and Cash Equivalents                       $9,773
Other Income, net                       4,984   Receivables                                      3,665
                                                Inventories                                     53,264
                                      493,641
                                                Prepaid expenses and other                       3,421
Costs and Expenses:
                                                Total Current Assets                            70,122
Cost of Sales                         381,538
Operating, Selling, General and
                                                Property and Equipment, at cost
Admin. Expenses                        84,424
                                                Land                                            25,410
Operating Income                       27,679   Buildings and Improvements                      83,854
                                                Fixtures and Equipment                          36,161
Interest:                                       Transportation Equipment                         2,688
Debt                                    1,808   Property and Equipment, at cost                148,112
Capital Leases                            389   Less accumulated depreciation                   32,585
Interest Income                         (381)   Property and Equipment, net                    115,527
Interest, net                           1,816
                                                Property under Capital Lease
                                                Property under Capital Lease                     8,283
Income from continuing operations
                                                Less accumulated amortization                    3,230
before taxes and minority interest     25,863
                                                Property under capital lease, net                5,052
Provision for Income Taxes:                     Goodwill                                        18,569
Current                                 8,793   Other assets and deferred charges                4,154
Deferred                                (191)
                                                Total Assets                                  $213,425
Income from continuing operations
before minority interest               17,261   Liabilities and shareholders' equity:
Minority interest                       (483)   Current Liabilities
Income from continuing operations      16,777   Commercial paper                                $6,206
                                                Accounts payable                                38,653
Net Income                            $16,777   Accrued liabilities                             20,524
                                                Accrued income taxes                             2,101
                                                Long-term debt due within one year               4,639
                                                Obligations under capital leases due within
                                                one year                                           391
                                                Total Current Liabilities                       72,513

                                                Long-term debt                                  41,536
                                                Long-term obligations under capital leases       5,620
                                                Deferred income taxes and other                  5,864
                                                Minority interest                                2,297

                                                Shareholders' equity
                                                Preferred stock
                                                Common stock                                       417
                                                Capital in excess of par value                   2,596
                                                Accumulated other comprehensive income           2,932
                                                Retained earnings                               79,650
                                                Total shareholders' equity                      85,595

                                                Total liabilities and shareholders' equity    $213,424
Wal-Mart 2011                                   Wal-Mart 2011
Forecasted Income Statement                     Forecasted Balance Sheet

                                                Assets:
Revenues:                                       Current Assets
Net Sales                            $547,833   Cash and Cash Equivalents                      $10,957
Other Income, net                       5,588   Receivables                                      4,109
                                                Inventories                                     59,714
                                      553,421
                                                Prepaid expenses and other                       3,835
Costs and Expenses:
                                                Total Current Assets                            78,614
Cost of Sales                         427,458
Operating, Selling, General and
                                                Property and Equipment, at cost
Admin. Expenses                        94,520   Land                                            28,487
Operating Income                       31,443   Buildings and Improvements                      94,008
                                                Fixtures and Equipment                          40,540
Interest:                                       Transportation Equipment                         3,013
Debt                                    2,027   Property and Equipment, at cost                166,048
Capital Leases                            437   Less accumulated depreciation                   36,531
Interest Income                         (430)   Property and Equipment, net                    129,518
Interest, net                           2,034
                                                Property under Capital Lease
Income from continuing operations               Property under Capital Lease                     9,286
before taxes and minority interest     29,409   Less accumulated amortization                    3,621
                                                Property under capital lease, net                5,664
Provision for Income Taxes:
                                                Goodwill                                        20,818
Current                                 9,999
                                                Other assets and deferred charges                4,657
Deferred                                (218)
                                                Total Assets                                  $239,270
Income from continuing operations
before minority interest               19,628   Liabilities and shareholders' equity:
Minority interest                       (550)   Current Liabilities
Income from continuing operations      19,078   Commercial paper                                $6,957
                                                Accounts payable                                43,334
Net Income                            $19,078   Accrued liabilities                             23,009
                                                Accrued income taxes                             2,356
                                                Long-term debt due within one year               2,877
                                                Obligations under capital leases due within
                                                one year                                           438
                                                Total Current Liabilities                       78,971

                                                Long-term debt                                  46,566
                                                Long-term obligations under capital leases       6,300
                                                Deferred income taxes and other                  6,574
                                                Minority interest                                2,575

                                                Shareholders' equity
                                                Preferred stock
                                                Common stock                                       417
                                                Capital in excess of par value                   2,596
                                                Accumulated other comprehensive income           3,287
                                                Retained earnings                               91,984
                                                Total shareholders' equity                      98,284

                                                Total liabilities and shareholders' equity    $239,270
                                 Appendix F
                            Key Financial Statistics
                            Wal-Mart Stores, Inc.

Key Financial Statistics

                             2006      2007      2008      2009      2010      2011
Sales                       312,427   346,794   388,790   435,873   488,657   547,833
Gross Income                 72,036    77,682    84,749    95,296   107,119   120,375
Operating Income             18,530    20,877    21,267    24,301    27,679    31,443
Net Income                   11,231    12,677    12,860    14,713    16,777    19,078
Total Current Assets         43,824    49,765    55,791    62,548    70,122    78,614
Total Current Liabilities    48,826    52,765    57,323    63,401    72,513    78,971
Total Assets                138,187   151,465   169,807   190,371   213,425   239,270
Total Liabilities            85,016    90,154   101,333   112,742   127,830   140,986
Total Shareholders
Equity                       53,171    61,312    68,473    77,629    85,595    98,284




Net Sales Growth             9.54%    11.00%    12.11%    12.11%    12.11%    12.11%

Gross Margin                23.06%    22.40%    21.80%    21.86%    21.92%    21.97%
Operating Margin             5.93%     6.02%     5.47%     5.58%     5.66%     5.74%
Net Margin                   3.59%     3.66%     3.31%     3.38%     3.43%     3.48%

Current Ratio               89.76%    94.31%    97.33%    98.65%    96.70%    99.55%

Basic Earning Power         13.41%    13.78%    12.52%    12.77%    12.97%    13.14%

Return on Assets             8.13%     8.37%     7.57%     7.73%     7.86%     7.97%
Total Asset Turnover           2.26      2.29      2.29      2.29      2.29      2.29

Leverage                       2.60      2.47      2.48      2.45      2.49      2.43
Debt Ratio                  61.52%    59.52%    59.68%    59.22%    59.89%    58.92%
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