2007 Annual Report Can Live Better

2007 Annual Report can live better. – Wal-Mart’s mission around the world

Financial highlights

Fiscal Years Ended January 31, (Dollar amounts in millions, except per share data) 2007 2006 2005 2004 2003 Net sales $ 344,992 $ 308,945 $ 281,488 $ 252,792 $ 226,479 Cost of sales $ 264,152 $ 237,649 $ 216,832 $ 195,922 $ 175,769 Income from continuing operations $ 12,178 $ 11,408 $ 10,482 $ 9,096 $ 7,940 Diluted earnings per share from continuing operations $ 2.92 $ 2.72 $ 2.46 $ 2.08 $ 1.79 Long-term debt $ 27,222 $ 26,429 $ 20,087 $ 17,088 $ 16,545 Return on assets(1) 8.8% 9.3% 9.8% 9.7% 9.6% Return on shareholders’ equity(2) 22.0% 22.9% 23.1% 22.4% 21.8%

(1) Income from continuing operations before minority interest, divided by average total assets from continuing operations. (2) Income from continuing operations before minority interest, divided by average shareholders’ equity. “ The best part is if we work together, we’ll lower the cost of living for everyone, not just in America, but we’ll give the world an opportunity to see what it’s like to save and have a better life.” –Sam Walton

Shop and Enjoy Every Day Low Prices Sam Walton founded the Company in 1962 on a simple proposition – save people money so they can live better. That proposition is still synonymous with Wal-Mart because we continue to deliver on our promise of every day low prices for quality products and services. As a result, our customers around the world shop smarter.

1 Save on life’s essential items and more

We want our customers to know that Wal-Mart is the low price leader on everydayy items, as well as those products that enhance our lives. Customers shop us more often because off the values theyy fi nd in our stores. That means when a senior citizen saves onhis pharmacyy needs, he can cross the aisle and pickk up something special for dinner. Or when a mom comes in for her child’s school supplies, she fi nds there’s moneyy left over to treat him to a new toy. At Sam’s Club, our members count on us to pass the savings along to them–whetherfor their small business or for their personal needs. The long-term business memberwho runs a convenience store, and visits the club weekly for his merchandise and offiffice supplies, fi nds the perfect diamond when he’s ready to propose. From cleaning supplies to big screen plasma televisions, customers and members count on us for great values.

2 Live a healthier life

In many locations around the globe, we offffer every day low prices on prescription medicines, over-the-counter healthcare products, fresh produce and meat, exercise equipment and more. Many off our stores have independent doctors off optometry to serve our customers’’vision needs. Wealso educate consumers about various health issues, the benefifits off early detection and the importance off good nutrition. In the United Kingdom, Asda works with our suppliers to reduce the salt content in private- label foods. An exciting announcement this past year in the United States was the roll- out off the $4 generic prescription program. The Associated Press (November 2, 2006) summarized our initiative this way: “Wal-Mart has accomplished what the federal government and a litany off think-tanks have, as yet, been unable to do: make medication affordable for the masses.”

3 4 Make affordability and sustainability one word

Wal-Mart can change and enhance its value to the world and to our shareholders. The need for sustainable business practices is increasingly urgent. What’s good for the environment can be good for business. Wal-Mart merchandise should be both aff ordable and sustainable so working families don’t have to make a choice. That’s why we have announced initiatives such as our goal to sell 100 million compact fl uorescent light bulbs in the United States by 2008. We know that this saves energy and reduces greenhouse gas emissions. That’s why we unveiled the packaging scorecard for our U.S. Wal-Mart and Sam’s Club suppliers this past year. The goal: reduce packaging by fi ve percent by 2013 – an eff ort that will be equal to remov- ing 213,000 trucks from the road. That’s also why we announced plans to purchase all wild-caught fresh and frozen fi sh for the U.S. market from Marine Stewardship Council (MSC)-certifi ed fi sheries within the next three to fi ve years. These are just some of the many initiatives that refl ect the Com- pany’s commitment to leadership in business and sustainability. To keep up to date on our eff orts, visit www.walmartstores.com/environment. Also, look for Wal-Mart’s upcoming Sustainability Report.

5 Build a career

Wal-Mart is committed to fi nding and retaining the most talented associates. Having a diverse, multicultural workforce at all levels is critical for our success. Wal-Mart creates jobs, often in areas that need them the most. When Wal-Mart was close to opening its fi rst discount store in the city off Chicago, more than 15,000 applications were received for 450 available jobs. In 2006, Wal-Mart de Mexico interviewed 100,000 applicants for 17,409 new positions. Situations like this give us the opportunity to hire the best people. Today, our worldwide workforce consists off more than 1.9 million associates. In several countries, a majority off our management team is comprised off associates who have advanced through the ranks. It is this opportunity to move ahead that makes working for Wal-Mart attractive to associates, as well as to external talent. A majority off our markets have “Stores off Learning”” where associates participate in classroom lectures along with in-store training. The Company’s efffforts have been recognized in several countries, where we have been honored as the “best place”” to work.

6 Le Dabney (pictured right) Debra Layton (pictured right) 20-year associate 21-year associate

Starting position Starting position Part-time stocker and sales associate Part-time cashier Wal-Mart discount store Wal-Mart discount store Tyler, Texas, United States Monett, Missouri, United States

Current position Current position Regional Operations Support Director Vice President Wal-Mart Stores International Professional and Oregon, Washington, Alaska, Technical Services, Home Offiffice Hawaii, United States Bentonville, Arkansas, United States

Kevin Johnson (pictured left) Luckie Xie (pictured left) 15-year associate 11-year associate

Starting position Starting position Part-time sales associate Part-time sales associate Wal-Mart discount store Wal-Mart supercenter El Paso, Texas, United States Shenzhen, China

Current position Current position Store Manager Store Manager Wal-Mart supercenter Wal-Mart supercenter Hemet, California, United States Foshan City, China

Leticia Ramos (pictured right) Bobby Higgins (pictured right) 12-year associate 20-year associate

Starting position Starting position Full-time cashier Part-time cart pusher Wal-Mart supercenter Sam’s Club Avellaneda, Buenos Aires, Argentina Springdale, Arkansas, United States

Current position Current position District Manager Loss Prevention Market Manager Wal-Mart Home Offi ce and Sam’s Club Distribution Center Colorado, Wyoming, Idaho, Montana, Buenos Aires, Argentina South Dakota, United States

7 Neighbors help neighbors

Building homes. Teaching children. Funding college scholarships. Donating merchandise. Raising money. These are just a few examples off the support that Wal-Mart and our associates provide in thousands off neighborhoods around theglobe to make a difffference in their own communities. Nothing makes us prouder than to be recognized as a good neighbor. After all, we believe good…works. In 2006, through the Wal-Mart Foundation, charitable partners and donations from customers and associates, Wal-Mart contributed more than $415 million in cash and in-kind merchandise to100,000 organizations worldwide. Wal-Mart’s U.S. associate volunteer networkk has become one off the largest employee volunteer programs in the country. This effffort – Volunteerism Always Pays (VAP) –spurs associates to workk with local communityy nonprofifit organizations and their projects. Thousands off associates, as well as stores and clubs, have beenrecognized in their communities and byy the organizations theyy serve, for their outstanding efffforts. Some off their workk is identifified in the boxes on these pages.

Associates in Action The Brandon, FL Sam’s Club has helped 100,000 preserve an endangered marsh and wetland on the property of a local organizations elementary school. The clean-up has extended the students’ classroom supported lessons to their own environment.

Associates in Action More than Since l989, Seiyu associates have been supporting the Japan Guide Dog $300 million in Association by placing donation boxes at approximately 250 store service cash and in-kind counters. Last year, donations to this merchandise foundation, dedicated to helping those with visual impairment, reached donated 7,346,100 yen, an amount equal to more than $60,700.

Associates in Action 6,000 U.S. The Bangor, ME Sam’s Club is one of Maine’s cherished possessions. scholarships In 2006, the Club’s extensive good works were honored by the Maine awarded Commission for Community Service and the Maine Volunteer Connection.

8 Associates in Action Wal-Mart Costa Rica store cashiers are the main force in helping raise 170,000 grants money for Dulce Ayuda,™ a program dedicated to supporting initiatives for awarded in the underprivileged children. The cashiers off er a heart-shaped lollipop to each United States shopper who donates 20 cents to the organization.

Associates in Action Needy children in Sioux City, Iowa More than have received new bikes and helmets, thanks to the associates at Wal-Mart $115 million raised #1361. These associates also are busy taking part in the American Cancer from customers and Society’s Relay for Life events, Muscular Dystrophy Association walks, the state’s associates Variety Club activities and more. (in the Unitedd States and Canada)

More than $5.8 million 1 million hours donated volunteered in per week the United States

9 Our “Wal-Mart Out in Front” plan is delivering tangible results. Letter from Lee Scott, Wal-Mart President and CEO

To our shareholders, associates and customers: investment. Considering our goal was onlyy to have fl attened the downward trend byy the end off the fiscal year, an increase in Last year, Wal-Mart Stores, Inc. delivered both record sales and ROI is a great accomplishment for Wal-Mart U.S. earnings from continuing operations. We also stepped out and tookk on some off the toughest challenges facing the com- Unlocking the Value munities we serve. But we did not achieve these things while At Wal-Mart, our growth has been guided by a strategy of doing business as usual. We did them during a period off per- focusing our financial and humanresources in areas where haps the most rapid and profound changein our Company’s we can unlockk the most value. In our International division, history. With our transformation plan, we are committed to we call this approach “major in the majors.””Our results clearly staying “Out in Front””off the changes around us. demonstrate that this is the right strategy. This success is a tribute toWal-Mart associates around the Last year,we opened the doors to seven newWal-Mart world, and the culture theyy live and carryy forward everyy day. At Supercentres in Canada. The response from our customers Wal-Mart, we save people moneyy so theyy can live better. We are has been excellent, and we plan to open 21 new supercentres proud off that purpose, and I am proud off our associates, our this year. We increased our ownership stake off Seiyu in Japan Company, and the results we achieved together this past year. to 53.3 percent. Seiyu’s totalcomparable store sales for fi scal 2007 were positive for the fi rst time in 15 years. We increased Record Sales our stake in CARHCO to 51 percent, and we renamed CARHCO When it comes to the fi scal year’s fi nancial results, Wal-Mart Wal-Mart Central America. We also added 120 new stores in again delivered solid performance. We had record net sales of Mexico and are veryy encouraged byy the performance and con- $345 billion, an increase off 11.7 percent over fi scal year 2006. tinued growth opportunities for all six store formats there. Our net income from continuing operations rose 6.7 percent Asda’s turn-around strategy continues to deliver results. over last year to a record $12.2 billion. Earnings per share from The teamimproved the basics, introduced a new store format, continuing operations were $2.92. and upgraded several departments. I am also verypleased with our results inWal-Mart’s At the beginning off fi scal 2008, we announced an investment International division, headed by Mike Duke. Led byMexico in Trust-Mart, a leading hypermarket operator with101 retail and increasing momentum at Asda in the United Kingdom, stores in 34 cities in China. This broughtadditional scale to our international sales increased more than 30 percent to $77 bil- China retail business as we develop a foundation for greater lion for the year. Doug McMillon and his Sam’s Club team also long-range business opportunities in China. turned in a solid performance, with sales growing 4.5 percent Exiting Germany and SouthKorea last year was the right for the year. For the sixth quarter in a row, Sam’s Club grew decision, and we have redeployed resources from those operating income faster than sales. countries toother critical areas off our International division. Off course, there were a couple off disappointments. In particular, total U.S. comparable store sales were 2.0 percent Customer Relevancy last year, which was below our plan. However, theWal-Mart In our stores and clubs last year, we spent a lot off time, energy Stores division, led byy Eduardo Castro-Wright, continued its and resources to better understand the peoplewe serve. We trend off improving labor productivityy and inventoryy manage- wanted to know who shops our stores and clubs and who ment.The U.S. team also delivered an increase in return on does not; what type off merchandise they want and what

10 they do not; what they value most in the store and club Taking Care of Associates experience and what is less important. As a Company, there Off course, the most important part off taking care off customers is no question in my mind that we understand our customers istaking care off associates. They are thepoint off contact for better today than we have inyears,and we understand them our customers in the stores. all around the world. Every year,Wal-Mart creates tens off thousands off jobs In working to broaden our appeal to our customers, we throughout the United States, manyy off them in neighborhoods moved too quickly intherollout off some off our fashion- that desperatelyy need economic opportunities. These jobs pay forward apparel in the United States. We are making adjust- competitive wages and offffer good benefifits. We are also proud ments this year to improve our core basics. We continue to off the fact that 90 percent off U.S. associates have health cov- strive to make sure every Wal-Mart store is a “Store off the erage,and Wal-Mart insures more than 1 million lives. We are Community” –one that reflflects the individual needs off each committed to affffordable and accessible healthcare. neighborhood we serve. In order tocontinue to attract and retain excellent associates, The three-year plan launched byy Eduardo last year is provid- we are listening to them – especially our valued long-term ing momentum to drive returns and growth for Wal-Mart U.S. associates – about how to make their jobs and careers more I am confifident that these changes will contribute to continued fulfifilling. Last year,we again increased our average full-time improvements in our U.S. stores. hourly wage in the United States. Giving our associates thetools and opportunities they It is our commitment to ensure that our workforce is diverse. need to be as productive as possible also is critical to improv- Our associates reflflect the ethnic and cultural diversityy off their ing our operations and effifficiencies. I am very pleased that communities. Given ourr size, we must represent the faces off the our Company has delivered workforce productivity gains in world.Wal-Mart holds its senior leaders accountable for meet- every quarter off the last two years. And there are a lot of ing diversity goals each year. Every offifficer’s compensation and other changes we can make – and have been making – to performance evaluation is dependent on achieving very spe- improve the productivity off our core business. cific objectives in the area off diversity. In fact, all officers but one met their goals this year.

“Wal-Mart holds its senior leaders accountable for meeting diversity goals each year. Every officer’s compensation and performance evaluation is dependent on achieving very specific objectives in the area of diversity.“

11 Valuable to Communities Another example off our positive impact on communities As we continue to grow around the world, it is always our goal is our $4 generic prescription drug program. Last year, we to be a valuable member off each off those communities. We rolled this program out fi rst in Florida and then rapidly want our neighbors to see, understand and be a part off the expanded it to all U.S. pharmacies. The response from our cus- positive impact Wal-Mart has everywhere we operate. tomers has been outstanding because we have saved them One way we do this is through charitable giving. According money where they need it most – in reduced healthcare costs. to the Chronicle off Philanthropyy, the Wal-Mart Foundation is the largest corporate cash contributor in America. In 2006, Improving Lives through its foundation, charitable partners and donations Since I came to Wal-Mart in 1979, I have learned a lot off les- from customers and associates, Wal-Mart provided more than sons about leadership. One off the most valuable lessons is $415 million in cash and in-kind merchandise to more than this: there is a price to being special. Over the last 45 years, those off us who have served Wal-Mart have paid a price to build a special Company – whether it means working on weekends, keeping a modest offiffice space, or always putting others before ourselves. But there is a “ To Wal-Mart customers, saving a dollar, reward, and it is not just working for a special Company; it is a a pound, or a peso means something. special opportunity to touch and improve the lives off millions off people around the world. It means being able to buy the school At Wal-Mart, we touch and improve lives through the charitable giving off our foundation. We do it by creating clothes or fresh food they need. Without jobs that pay competitive wages, offffer good benefifits and Wal-Mart, they might not be able to create career opportunities. We do it by making diversity a priority throughout our workforce and our operations. We do afford such items. It also means empow- it by being a more sustainable and environmentally-friendly business. But above all, we do it through our everyday work: ering people to aspire to a better life for we save people money so they can live better. To Wal-Mart customers, saving a dollar, a pound, or a peso themselves and their families.” means something. It means being able to buy the school clothes or fresh food they need. Without Wal-Mart, they might not be able to afffford such items. It also means empowering people to aspire to a better life for themselves and their families. 100,000 organizations around the world. More important, we This is what Wal-Mart does and, for the most part, whom gave most off the money at the local level where we can have we serve. And though our Company may undergo profound the greatest impact. Our international stores and associates changes, we will never change who we are. We will always be raised and contributed $45 million off this total. Wal-Mart, and we will always strive to be a better Wal-Mart. Beyond our charitable programs, Wal-Mart is committed to sustainability. Our stores are selling more organic and environmentally-friendly products. We are working with suppliers to reduce packaging and take nonrenewable energy out of the products we sell. We are making our facilities and truck fleet more efficient by adopting energy-efficient practices. Lee Scott These sustainable programs are making our business more President and Chieff Executive Offifficer efficient; they are also making sure that our customers do Wal-Mart Stores, Inc. not have to choose between a product they can afford and a sustainable product.

12 Staying “Out in Front” requires leadership at every level. Rob Walton, Chairman of the Board of Directors, shares his thoughts We lead when we embrace my dad’s vision – to improve the lives of everyday people by making everyday things more affordable. To do so, we must meet today’s challenges, and those in the future, in a way that’s consistent with the values and customer focus that have taken us where we are.

There is the potential for leadership in every position within is the furthest thing from a rubber stamp, and I consider it a Wal-Mart and so many opportunities for people to move up privilege to be overseeing Wal-Mart in association with such and assume more leadership responsibility. That responsibil- talented, dedicated people. ity, I believe, demands integrity, courage and a willingness to embrace change. Successful leaders are willing to fail as they Tomorrow’s Leaders try new things and to accept an occasional disappointment I know that the future leaders off our Company are already when things don’t workk out as planned. Only when we keep in place throughout our organization, working closely with improving and striving to make things better through innova- Wal-Mart associates and our current management team. Each tion, creativityy and new ideas can we be assured off staying day, these leaders are gaining the knowledge and experience out in front. they will need to keep Wal-Mart out in front. We rely every day on the leaders throughout our stores and clubs to help Leadership and Teamwork carry out the Wal-Mart mission – taking care off our custom- Our management today around the world is the best, most ers and making their lives better – just as my father set out to strategic leadership team we have ever had. They are making do. Thanks to our Board, our management team and our as- the changes necessary for us to continue to stay out in front. sociates throughout our worldwide organization for making They are also teaming up with Wal-Mart’s Board members, Wal-Mart a world-class retail leader. who bring experience from many difffferent backgrounds. The caliber off our Board members is tremendous and allows us to tap into a vast knowledge resource. The Board has been instrumental in encouraging the Company to more quickly Rob Walton address critical issues, and I am extremely pleased that they Chairman off the Board off Directors, are not reticent about sharing their opinions. Today’s Board Wal-Mart Stores, Inc.

“Leadership at Wal-Mart happens throughout the organization, from accounting to merchandising. Nowhere, however, is it more important than in the aisles and at the registers of our stores. That is where our associates determine whether we succeed or fail.”

13 Leaders set Senior offi cers Eduardo Castro-Wright the pace Executive Vice President, President and Chieff Executive Offiffi cer, Our offifficers know that retail is a local business. Success starts with Wal-Mart Stores Division researching what the customer wants – whether it’s faster checkouts, M. Susan Chambers ethnic foods or urban-styled clothing.It’s critical to build and lead a Executive Vice President, People Division team focused on identifying the right opportunities and the right ap- Patricia A. Curran proaches to deliver a store off the community. Today, Wal-Mart lead- Executive Vice President, ers around the world relyy on countless years off business experience People, Wal-Mart Stores Division to improve our stores and service to our customers. Some offifficers Leslie A. Dach started their careers as hourlyy associates in a store or club. Others are Executive Vice President, Corporate Affffairs and newcomers to Wal-Mart and adopt our unique culture. Regardless Government Relations off whether they workk in logistics, information systems, operations, Douglas J. Degn merchandising or one off Wal-Mart’s many support areas, every Executive Vice President, officer around the world is focused on our mission to save cus- Food, Wal-Mart Stores Division tomers money so they can live better. Linda M. Dillman Executive Vice President, Riskk Management, Benefifits Weekly offi cer meetings provide the opportunity to review the Company’s ongoing and Sustainability performance, focus on initiatives to drive sales and customer service, and address broader issues. Video conferencing links offi cers around the world for these discussions and presentations. Informal discussions before and after each meeting help build the relationships and teams critical for success.

14 Johnnie C. Dobbs, Jr. Gregory L. Johnston William S. Simon Executive Vice President, Executive Vice President, Executive Vice President, Logistics and Supply Chain Operations, Sam’s Club Chieff Operating Offifficer, Wal-Mart Stores Division Michael T. Duke Thomas A. Mars Vice Chairman, Responsible Executive Vice President and Gregory E. Spragg forInternational General Counsel Executive Vice President, Merchandising and Replenishment, John E. Fleming C. Douglas McMillon Sam’sClub Executive Vice President, Executive Vice President, Chieff Merchandising Offiffi cer, President and Chieff Executive Offiffi cer, S. Robson Walton Wal-Mart Stores Division Sam’s Club Chairman off the Board off Directors Rollin L. Ford John B. Menzer Claire A. Watts Executive Vice President, Vice Chairman, Executive Vice President, Chieff Information Offifficer Chieff Administrative Offifficer Apparel and Product Development, Wal-Mart Stores Division Craig R. Herkert Stephen F. Quinn Executive Vice President, Executive Vice President, Steven P. Whaley President and Chieff Executive Offiffi cer, Chieff Marketing Offifficer Senior Vice President The Americas, International and Controller Thomas M. Schoewe Charles M. Holley, Jr. Executive Vice President and Eric S. Zorn Executive Vice President, Chieff Financial Offifficer Executive Vice President, Finance and Treasurer President, Wal-Mart Realty H. Lee Scott, Jr. Thomas D. Hyde President and Executive Vice President and Chieff Executive Offifficer Corporate Secretary

15 Innovation leads the organization

We are proud totake the lead in innovations that benefifit Wal-Mart, the retail industry and in some cases, our planet as well. From new environmentally-friendly initiatives to ouropportunities with information systems and technology, we are always trying to improve what we do and encourage innovation on a broader scale with our suppliers, peers and businesses throughout the world.

Real Estate: Pioneering Substainable Technologies One off the truly innovative energy conservation ideas that has long been applied by Wal-Mart’s Real Estate group is a sophisticated daylight harvesting system. Each store’s system relies onhundreds off rooftop skylights connected to sensors and state-of-the-art control technology. Sales fl oor lighting changes, based on the available natural light streaming through the skylights during the day. Today, 90 percent off all newlyy constructed U.S. Wal-Mart facilities include this energy-saving technology. Mexico and Central America employy similar versions off this smart system. Additionally, Wal-Mart freezer cases now are applying industry-unique technology in several countries. Motion-activated Light-Emitting Diode (LED) lighting turns itselff offff and on as customers approach. And, in Mexico, waterrecycling technologyy catches waste- water and reuses it in sanitation and irrigation systems. Today, the Company is using and testing some off the most ground-breaking heat reclamation technologies and sharing results and proven returns with all that are interested.

Information Systems: Driving Value for Customers, Associates, and Shareholders In 2006, Wal-Mart’s InformationSystems Divisionwon the Information Integrity Coalition’s Award for Innovation, an accomplishment that underscores its industry- leading stature. Innovation is taking place in a number off areas. Nowhere is this more evident than inthe application off Radio Frequency Identifification (RFID) technology. Wal-Mart has been a critical catalyst that has brought this technology to business use and now is helping to foster worldwide RFID standards. To ensure greater supply chain visibility, satellite-based tracking technology is being installed in the Company’s entire fl eet off over-the-road trailers. The data generated by the system increases productivity, reduces costsand enhances security. Construction off an exciting Innovation Lab is under way. This center will showcase leading-edge technology and demonstrate howit canlead to future products, as well as better ways to serve our shoppers.

16 Merchandising: Developing Brands and Products For many years, innovation in merchandising has led to unique brands and new products for our customers. That commitment continues even more so in the 21st century. We strengthened the offfferings in apparel and home products made from organiccotton, bamboo, soyand recycled fi bers. Consumers can fi nd more afffford- ableand sustainablechoices intheWal-Mart aisles. In our grocery area since 1993, Great Value® serves as our customers’’ brand for quality at every day low prices. The Wal-Mart Deli Take ‘N’ Bake Pizza is an excellent value and easy to bake at home. Line extensions also include Deli take-and-bake chicken pot pies, meat lasagna and chicken enchiladas. Wal-Mart increasinglyy is the destination for exclusive offfferings off branded products from theworld’s leading food companies, including organic items, dairy, and frozen. We workk with suppliers to develop unique products in categories from housewares to lawn and garden and from toys toelectronics.

Logistics: Mixing It Up What happens when two distribution networks swap inventory? Plenty – when they are Wal-Mart’s Grocery Distribution Center Networkk and Wal-Mart’s Regional General Merchandise Distribution CenterNetwork. Eachwas once a specialist – the Grocery Network handling dry grocery goods, such as cereals and snacks, and the Regional Networkk moving primarily general merchandise, such as household cleaners, paper towels, toys and electronics. In 2006, that changed when approximately 4,000 items switched networks. Now, high-velocity items – grocery and general merchandise – are combined and sent to the stores from the“High Velocity Distribution Centers.” This innovative“Remix””means items needed most by customers arrive at the store on one truck, so they can beunloaded and moved faster totheshelves. Wealso can reduce the number off additional regional distribution centers we’ll need in our network going forward. Stores get improved merchandise fl ow and in-stock,while Wal-Mart reduces its capital spending needs.

Global Procurement: Establishing Category Specialists Knowledge is power,and in-depth knowledge is critical when itcomes tochoosing merchandise suppliers from around the world to deliver the right mix off quality and value to Wal-Mart customers. That’s why Global Procurement is establishing groups off technical experts – specialists that focus on the many important dynamics off a particular categoryy purchase. For example, in apparel, GlobalProcurement has brought together individualswho have a specialized understanding off various apparel man- ufacturing techniques, screen printing, fi nishing, etc. – as well as individuals who have an extended understanding off difffferent fabrics such as cotton, synthetics, knits and wovens. These specialty groups work closely together with our team members responsible for ethical sourcing and logistics. It’s all to make certain that every day we bring our customers quality products at unbeatableprices.

17 Businesses balance returns with growth Total number off locations: 3,443 as off January 31, 2007 Total FY ‘07 sales: $226 billion

the last year, Wal-Mart U.S. laid out a three-year roadmap for driving returns and growth. This roadmap is centered around three broad pillars: customer relevancy, return on investment and people development. Customer Relevancy We are utilizing both detailed market research and customer segmentation to better deliver against customer needs and expectations. Delivering low prices is essential. We also are tailoring our merchandise assortment and store experience to meet the specifific needs off a broader customer base. Two examples off how we have increased relevancyy include our “Store off the Community””efffforts and our remodel program. We also have realigned our merchandising organization around fi ve keyy power categories – entertainment, grocery, health and wellness, apparel and home.

Wal-Mart U.S. operating income

18.0

12.0 Dollars (in billions) 6.0

0 05 06 07 Fiscal year Return on Investment We have renewed our focus on driving return on investment. By better matching staffiffi ng levels with shopping patterns, we continued our trend off improving labor productivity which, in part, helped us achieve record operating income for fi scal year 2007. Additionally, through our merchandising flow initiative, we are achieving stronger inventory controls. Both off these efffforts enable us to drive stronger returns. People Development Many programs were executed during the year to strengthen management’s relationship with associates. Specififi cally, we im- plemented a new fi eld support structure, improved and aligned compensation, increased leadership development and created a store manager council to ensure greater visibility for grassroots feedbackk from our associates. These initiatives, in concert with strong business planning and greater accountability, have contributed to strong improvements within the business.

As we enter our second year off the three-year plan, Wal-Mart U.S. is focused on these three broad areas to strengthen the business. 18 INTERNATIONAL

Total number off locations: 2,757 as off January 31, 2007 Total number off clubs: 579 as off January 31, 2007 Total FY ‘07 sales: $77 billion Total FY ’07 sales: $42 billion

Unlocking Value Reinvigorating the Brand International is focused on putting resources, both Sam’s Club is building on its foundation byy deepening relationships financial and people, to work on what is most important. Going with small business owners through relevant product offff erings forward, that means placing priority on driving the Company’s such as our new, commercial-grade BAKERS & CHEFS™ cookware presence where the greatest growth and greatest returns exist, for food service entrepreneurs and byy offff ering valuable services, in- i.e., “majoring in the majors.”” Such is the case in Mexico where cluding affffordable healthcare alternatives and savings on branded we continue to see consistent growth in all formats. Likewise in and generic prescription drug prices, to help businesses run more Canada, we will continue expanding our supercentres as theyy con- profifi tably. We also are broadening our appeal to Advantage mem- tinue to generate positive results. In South and Central America, bers byy improving the qualityy and uniqueness off personal needs we also are experiencing strong performance. and affffordable luxuryy offff erings like our new bistro cake found in our fresh bakery, which is covered with authentic, rich ganache, Total International portfolio of locations typicallyy found onlyy in the finest bakeries. (The Americas, Europe and Asia) Operating income and sales growth by quarter

335 Operating Income The Americas – 71% Sales 465 Asia – 17% 20% 1,957 Europe – 12% 15%

10%

Units 5%

0 A Two-Part Strategy Q1 Q2 Q3 Q4 To accomplish our objectives, we concentrate on two areas: Fiscal year ‘07 focused portfolio execution and global leverage. Currently, our portfolio includes 46 store banners in nine formats off varying size in 13 markets outside the United States. Byy focused portfolio Improving Member Experience In addition to making certain we have the right items available execution, we mean that expansion will occur in those countries to our members, every Sam’s Club must deliver a great in-club where we have the greatest abilityy to capture value and where the experience. We have improved check-out efficiency. Jewelry, greatest value creation potential resides. Focused portfolio execu- electronics and office supplies have been moved to the front tion also means growing comparable store sales and operating off the club and are displayed prominently to improve the entry income from existing stores byy paying attention to the basics impression. In our new clubs, we have redesigned our logo and off serving our customers. It means developing a foundation for signing to refresh our brand and improve in-club navigation. We greater long-range business plans that address emerging markets also have increased the amount off natural lighting in our new such as India and China. Moreover, to strengthen our portfolio clubs, along with expanding our Fax ‘N’ Pull/Click ‘N’ Pull area to execution, we are investing in customer and market research to process orders from our members more quickly. enhance our store off the communityy format. As for global leverage, we are intent on taking full advantage Improving Club Performance off our worldwide assets, including formats, information systems, We work hard to make Sam’s Club more appealing for our purchasing organizations, category expertise and shared best members. Speed-to-flfloor inventoryy management is accelerating, practices. Most important, we are leveraging the talents off excep- productivity is increasing, and we are instituting money-saving tional Wal-Mart associates around the world. sustainability practices, such as our use off skylights and LED lighting and increasing our recycling efffforts. Our international strategy continues to balance the ability to leverage Wal-Mart’s global brand power with the need for All off these initiatives have helped us grow operating income local autonomy. faster than sales for six consecutive quarters. 19 Strengthen our investment discipline

(Pictured left to right) Michael Fung, Senior Vice President, Finance, Wal-Mart Stores Division; Sam Dunn, Senior Vice President, Finance, Sam’s Club; Wan Ling Martello, Senior Vice President and Chief Financial Offi cer, Wal-Mart International.

20 Around the world, Wal-Mart continues to put major emphasis on balancing returns and growth. We are focused on prioritizing capital spending to the projects that produce the highest returns. We want to improve our Company’s return on investment, or ROI, improve our comparable store sales and improve our working capital productivity. The outcome is a focus on the most capital- effifficient opportunities and a continued focus on the customer. Wal-Mart U.S. improved its process for approving new store capital expenditures with priorityy given to those projects with the best potential returns. In addition, there is a renewed focus on working capital management with inventories increasing at a much slower pace than sales. All off this has produced a stable return for our Wal-Mart U.S. segment and serves as a foundation for strong returns in the future.

Acquisitions and rapid growth continue to impact the ROI for our International segment. Our international focus is to expand in markets where we canhave long-term growth opportunities and generate returns above our weighted-average cost off capital. As ourInternational segment continues to integrate the acquisitions made in fiscal 2006 and earlyy fi scal 2007, we expect to see an improvement in that segment’s ROI. Wal-Mart is a Company still growing and one that also is dedicated to improving ROI. Square footage will grow inthe United States and around the world in fi scal 2008, and beyond.

21 Grow with a well-mapped strategy

Every store and club we operaate around the world undergoes a very thorough analysis by our executive-level Real Estate Committee. Every month, thee Committee assesses the viability off neww store and club projects, expansions and store relocations.relocations Taken into consideration are the overall economic environment and, most important, the specififics off the individual trade area that can impact a project’s return on investment. As the Committee reviews each project, it considers the competitive landscape, community demographics, real estate and construction costs, the labor market, potential impacts on neighboring Wal-Mart stores, as well as other factors. In every case, the prospective project is benchmarked against various metrics to verify that it meets our investment requirements. After each store and club opens, the Committee reviews post audit information to assess whether projections are being met and keyy indicators off success are being achieved. In addition to the reviews conducted by the Real Estate Committee, our Operations leadership reviews store projects after grand opening to trackk results against established performance parameters and to take appropriate corrective action when desired results are not achieved.

22 Markets That Fit Our Growth Model Our strategy is to put resources to work on what’s most important. Does this market improve our global leverage? What are the potential opportunities in that market? Can we unlock that potential and create value? Where can we get the greatest return and growth? All these things and more are taken into consideration as we look at our businesses around the world. Internationally, we are leveraging the strength of Wal-Mart to provide innovation and benefits to all markets, including emerging areas, such as China and India. We honor the brand, such as Asda, where the brand is important locally to our customers. And, where it makes sense, we will use the strength of the Wal-Mart name.

23 Wal-Mart Stores, Inc. These are our banners worldwide. We are united in saving our customers money so they can live better. Wal-Mart 2007 Annual Report 25 Financial Condition and Results of Operations Condition Financial Firm Accounting Reporting Over on Internal Financial Control Firm Management’s Discussion and Analysis of Discussion and Analysis of Management’s of Income Statements Consolidated Consolidated Balance Sheets Consolidated Equity of Shareholders’ Statements Consolidated of Cash Flows Statements Consolidated Statements Financial Consolidated to Notes Report Public of Independent Registered Accounting Report Public Independent of Registered Report Our Shareholders Management’s to Unit Count 2007 End-of-Year Fiscal Information and Stock Corporate 28 39 40 41 42 43 60 61 62 63 64 Table of Contents Table Wal-Mart 2007 Annual Report 26 “Accounting andDisclosure ofStock-Based Compensation.” fi In scal provisions ofStatement ofFinancial Accounting Standards No. 123, been restated for thefi scal2004adoptionofthe expense recognition operations are presented asdiscontinued operations. Allyears have occurred infiKorean McLane andtheSouth andGerman scal 2007. operationsthatthe dispositionofourSouthKorean andGerman Company,of McLane (“McLane”) Inc. thatoccurred in fi scal2004and Financial information for all years hasbeenrestated to refl thesale ect (3) Income from continuing operations interest, before dividedby minority average shareholders’ equity. (2) Income from continuing operations interest, before dividedby minority average totalassetsfrom continuing operations. (1) Beginning infi scal 2007, comparable store salesincludesallstores andclubsthathave beenopen foratleasttheprevio Comparable store salesincrease intheUnited States Net salesincrease Net sales Operating results Fiscal Year 31, EndedJanuary amountsinmillions, except(Dollar pershare data) Eleven-Year Financial Summary Return onassets Return Current ratio Financial ratios Shareholders’ equity Long-term obligationsundercapitalleases Long-term debt Current liabilitiesofcontinuingoperations Total assetsofcontinuingoperations Property, equipmentandcapitalleaseassets, net Inventories Current assetsofcontinuingoperations Financial position Dividends Netincome, diluted from continuingoperations, Income diluted Per share ofcommonstock: Net income from continuingoperations Income Eff Interest expense, net Operating, selling, generalandadministrative expenses Cost ofsales Units outsidetheUnited States intheUnited States Markets Neighborhood Sam’s ClubsintheUnited States Supercenters intheUnited States Discount stores intheUnited States data year-end Other Return onshareholders’Return equity ective taxrateective year andwhichhadnotbeenconverted, expandedorrelocated since thatdate. or expansion.For fi scal 2006andprior years, we considered comparable store salestobeatstores that were openasof and clubsthatare relocated, orexpanded are excluded converted from comparable store salesforthefi rst12monthsfollowing (2)

(3)

(1) related to goodwill. years to adoption,theCompany prior expense recorded amortization Board Statement No. 142, Assets.” Intangible “Goodwill andOther In fiIn scal 2003,the Company adopted Financial Accounting Standards to our fiimpact nancialstatements. No. 123R, Payment,”“Share-Based whichdidnotresult inamaterial 2005, we adopted Statement ofFinancial Accounting Standards $344,992 $ 46,588 $ 2.92 $ 12,178 $264,152 151,193 61,573 27,222 51,754 88,440 33,685 11,284 64,001 3,513 1,529 2,757 2,256 1,075 2007 11.7% 33.6% 0.67 2.71 22.0% 112 579 0.9 8.8% 2% $308,945$281,488 20062005 0.9 53,17149,396 3,6673,073 26,42920,087 48,34842,609 77,86566,549 31,91029,419 11,23110,267 135,624117,139 $2.46 $ $2.72 0.600.52 43,146 $ 2.682.41 37,913 $ 11,408 $ 10,482 118 980 1,178 55,73950,178 $237,649$216,832 2,1811,480 10 85 100 567551 1,9801,713 1,2091,353 9.8% 11.4% 33.1% 34.2% 33.1% 3% 3% 3% 22.9% 23.1% 22.9% 9.3% 9.8% 9.3% us 12months. Additionally, stores February 1stofthepriorfi scal the relocation, conversion Wal-Mart 2007 Annual Report 27 this accounting change ect for on this summary. The cumulative eff The cumulative on this summary. to $198 million net of tax. scal 2000 amounted in fi recorded to prior been made periodsto conform cations have Certain reclassifi presentations. current to ects of the change a material impactects not have of this change would 4% 5% 6% 5% 8% 9% 6% 5% 6% 8% 9% 5% 6% 5% 4% 64 49 31 19 7 4 – – 0.9 0.9 1.0 0.9 0.9 1.2 1.3 1.7 0.9 1.2 1.3 0.9 1.0 0.9 8.0% 0.9 10.1% 9.6% 8.5% 9.6% 9.0% 9.3% 9.7% 538 525 500 475 463 451 443 436 463 451 443 525 500 475 538 825 930 1,183 1,194 837 595 716 807 716 837 595 1,194 1,183 930 825 22.4% 21.8% 20.7% 23.0% 24.5% 22.0% 19.6% 18.8% 24.5% 22.0% 19.6% 21.8% 20.7% 23.0% 22.4% 2.07 1.79 1.47 1.39 1.19 0.98 0.77 0.66 1.19 0.98 0.77 1.79 1.47 1.39 2.07 0.11 0.20 0.16 0.14 0.30 0.28 0.24 0.36 34.4% 34.9% 36.4% 36.6% 37.4% 37.7% 37.0% 36.8% 37.0% 37.4% 37.7% 34.9% 36.4% 36.6% 34.4% 11.6% 12.6% 13.0% 16.1% 18.7% 15.3% 12.4% 11.9% 12.4% 18.7% 15.3% 12.6% 13.0% 16.1% 11.6% 2004 2003 2002 2001 2000 1999 1998 1997 1998 2000 1999 2003 2002 2001 2004 1,471 1,258 1,066 888 721 564 441 344 1,960 721 564 441 1,801 1,869 1,921 1,066 888 1,568 1,647 1,736 1,478 1,258 1,471 314 605 568 892 1,050 955 1,163 1,248 2,888 2,903 2,956 3,054 2,852 2,697 2,480 2,304 2,852 2,697 2,480 2,903 2,956 3,054 2,888 9,054 7,955 6,592 6,235 5,324 4,397 3,504 3,042 5,324 4,397 3,504 7,955 6,592 6,235 9,054 43,623 39,461 35,192 31,407 25,878 21,141 18,519 17,151 25,878 21,141 18,519 39,461 35,192 31,407 43,623 17,088 16,545 15,632 12,453 13,650 6,875 7,169 7,685 7,169 13,650 6,875 10,432 12,453 25,058 15,848 13,930 31,752 26,309 28,096 37,308 15,632 16,545 17,088 26,263 24,098 21,793 20,710 18,961 16,058 16,005 15,556 18,961 16,058 16,005 24,098 21,793 20,710 26,263 19,935 34,570 24,824 23,237 50,053 44,172 39,439 57,591 43,877 39,178 34,275 29,942 25,182 21,469 18,831 16,437 18,831 25,182 21,469 39,178 34,275 29,942 43,877 102,455 90,229 79,301 74,317 67,290 47,066 44,221 38,571 67,290 47,066 44,221 90,229 79,301 74,317 102,455 Years prior to 1998 have not been restated for the eff for not been restated prior 1998 have to Years The consolidation of The Seiyu, Ltd., had a signifi cant impact on the had a signifi Ltd., The Seiyu, The consolidation of The acquisi- fi position amounts in this summary. nancial scal 2006 fi debt issuance related and the Company’s PLC Group tion of the Asda fi scal 2000 amounts in this summary. cant impact on the had a signifi recogni- Club membership revenue Sam’s in accounting method for tion as the eff $ 33,548 $ 28,867 $ 25,915 $ 24,796 $ 22,982 $ 19,503 $ 18,589 $17,385 $ 2.08 $ 1.79 $ 1.50 $ 1.44 1.25 $ $ 0.94 $ 0.76 $ 0.65 $ 9,096 $ 7,940 $ 6,718 $ 6,446 $ 5,582 $ 4,209 $ 3,424 $ 2,978 $195,922 $175,769 $156,807 $138,438 $119,526 $101,456 $ 88,163 $78,897 88,163 $ $119,526 $101,456 $175,769 $156,807 $138,438 $195,922 $252,792 $226,479 $201,166 $178,028 $153,345 $129,161 $112,005 $99,627 $112,005 $153,345 $129,161 $226,479 $201,166 $178,028 $252,792 Wal-Mart 2007 Annual Report 28 2007 Sales by2007 Sales Segment that have beenopenfor atleasttheprevious 12months. Additionally, include inourmeasure ofcomparablestore salesallstores andclubs changed ourmethodofcalculatingcomparablestore sales. We now year. intheprior sponding period Beginning infiscal2007,we growth insalesfor over suchstores thecorre- period for aparticular ofourexistingstores the byindicates measuring theperformance continued operations. Comparable store salesisameasure which income doesnotincludeunallocated anddis- overhead corporate expense, interest. incometaxes Segment andminority operating refers to incomefrom continuingoperationsbefore netinterest income andcomparablestore sales. Segment operatingincome Condition andResultsofOperations, we discusssegment operating Throughout thisManagement’s DiscussionandAnalysisofFinancial 31,2007,andtheyear thenended. accompanying notes asofJanuary should beread withourfi inconjunction nancialstatements and and results ofoperationstheCompany asawhole. This discussion of how thosesegments andtheirresults aff segmentsvarious ofourbusinessto provide abetter understanding discussion alsoprovides information aboutthefi nancial results ofthe aff accountingprinciples how certain thataccounted factors for thosechanges, aswell as and theprimary items inthosefi key in certain nancialstatements from year to year, that willassistinunderstandingourfi nancialstatements, thechanges We intend for thisdiscussionto provide thereader withinformation 31. year endsonJanuary use. Internationally, we operate withsimilarphilosophies. Ourfi scal merchandise at “members only” for prices bothbusinessandpersonal focus for Sam’s Clubisto provide exceptional valueonbrand-name underfrequentwill notchangeerratically promotional activity. Our day sothatourcustomers trustthatourprices every at alowprice diversity. philosophy EDLPisourpricing underwhichwe items price a culture thatrewards and andembracesmutualrespect, integrity whilefostering day (“EDLP”), low prices atevery chandise andservices mer- day by ofquality providingcustomers abroad every assortment saving people moneysotheycanlive better. We thetrustofour earn retail stores formats invarious around andiscommitted theworld to Stores,Wal-Mart (“Wal-Mart,” Inc. the “Company” or “we”) operates Overview and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition from fi scal2006. record $345.0billion,up11.7% Net sales 12.1% –Sam’s Club 22.3% –International 65.6% – Wal-Mart ect ourfiect nancialstatements. The ect thefiect nancialcondition in fi scal2007 were a or international chains,or international aswell asinternet-based retailers andcatalog stores manycialty ofwhichare andsupermarkets, national, regional andspe- drug, variety competition from otherdiscount,department, internationally. weStates andthecountries serve We facestrong sales We inboththeUnited operate inthehighlycompetitive retail industry The Retail Industry segments, seeNote 11to ourConsolidated Financial Statements. United States. For fi certain nancialinformation relating to ouroperating count stores, supercenters andSam’s Clubs thatoperate outsidethe several diff 22.3% ofourfi scal2007netsales. segmentInternational includes The Rico. andPuerto operations in12countries This segment generated segment consisted ofretail 31,2007,ourInternational At January 132,000 square feet insize. business andpersonaluse. OurSam’s Clubsaverage approximately value onbrand-namemerchandise at “members only” for prices both 2007 netsales. Ourfocus for Sam’s Clubisto provide exceptional format, samsclub.com. Sam’s Clubaccounted for 12.1%ofourfi scal which operate intheUnited States, andthesegment’s onlineretail Our Sam’s Clubsegment consistsofmembershipwarehouse clubs, • whichaverage approximately Markets, Neighborhood 42,000square • Discount stores, whichaverage approximately 107,000square feet • Supercenters, whichaverage approximately 187,000square feet in Our traditional StoresWal-Mart retail formats include: the United States, and Wal-Mart’s onlineretail format, walmart.com. sists ofthree diff accounting for 65.6%ofourfi scal2007netsales. Thissegment con- Our StoresWal-Mart segment isthelargest segment ofourbusiness, Stores, Sam’s ClubandInternational. Our operationsare ofthree comprised businesssegments: Wal-Mart Operations titledmeasures byothercompanies.to similarly reported calculation ofcomparablestore comparable sales isnotnecessarily comparable store across salesvaries theretail industry. As aresult, our sales byotherswithintheretail industry. The method ofcalculating calculation. Comparable store salesisalsoreferred to as “same-store” orrelocatedconverted are thatperiod notincludedinthe during orrelocatedconverted sincethatdate. Stores thatwere expanded, fias ofFebruary 1stoftheprior scal year andhadnotbeenexpanded, considered comparablestore salesto besalesatstores thatwere open relocation, conversion orexpansion.For fi scal2006andprior years, we from comparablestore salesfor thefi rst12months following the stores andclubsthatare relocated, orexpandedare converted excluded of generalmerchandise. feet insize andoff offoodlimited products; and variety in size andoff line supermarket; size andoff erent formats ofretail stores andrestaurants, includingdis- er a wide assortment ofgeneralmerchandise andafull- er awideassortment er a wide assortment ofgeneralmerchandise anda er awideassortment erent traditionalretail formats, allofwhichoperate in er a full-line supermarket and a limited assortment andalimited assortment er afull-linesupermarket Wal-Mart 2007 Annual Report 29 ciency. Total inventories at January up 5.6% inventories 31, 2007, were Total ciency. Net cash provided by operating operating by Net cash provided activities operations of continuing fiscal 2007. for $20.2 billion was

Company Performance Measures Measures Performance Company Management uses a number of metrics assess the Company’s to performance including: sales, store comparable • net sales growth, than greater • operating income growth and growth less than net sales • inventory growth assets. on average • return the performance which indicates sales is a measure store Comparable such stores in sales for by measuring growth the of our existing stores a particularfor period the corresponding in the prior period year. over 1.9% for sales were comparable store segment’s Wal-Mart Stores Our Club segment’s fi scal 2006. Our Sam’s for versus 3.0% scal 2007 fi fi scal versus 5.0% in scal 2007 2.5% in fi comparable club sales were 2006, including the impact of fuel sales. has long been than net sales growth greater Operating income growth our operating income scal 2007, fi For us. of success for a measure scal 2006, while net sales fi to when compared 9.5% by increased and Wal-Mart Stores Our period. the same by 11.7% over increased the International however, met this target; Club segments Sam’s and the impact did not due to of the newly acquired segment entities. consolidated less than that of net sales is a keyInventory at a rate measure growth of our effi at January levels up 11.7% when over 31, 2006, and net sales were fi scal 2006. scal 2007 with comparing fi on continuing to focused are we as ours, an asset base as large With make It certain productive. is important sus- our assets are us to for ned as income from Return on assets is defi on assets. tain our return minority divided by average interest continuing operations before scal fi Return on assets for continuing operations. assets from total Return 2007, 2006 and 2005 was 8.8%, 9.3% and 9.8%, respectively. scal 2007 and 2006 was impacted by acquisition and on assets in fi asset returns. consolidation of entities with lower from continuing operations increased 6.7% to $12.2 billion. Foreign $12.2 billion. Foreign 6.7% to continuing operations increased from impacted sales and operating favorably currency rates exchange scal 2007. in fi income by $1.5 billion and $90 million, respectively, fi we paid $1.7 bil- scal 2007, scal 2007. During fi was $20.2 billion for and paid dividends of our common stock repurchase lion in cash to we issued $7.2 billion in scal 2007, during fi $2.8 billion. Additionally $5.8 billion of long-term a debt and funded long-term debt, repaid paper of $1.2 billion (net of issuances). in commercial decrease in operating income on a 4.5% increase a 9.2% increase helped drive fi scal 2006. scal 2007 with in net sales when comparing fi scal 2006. fi to in net sales compared of 21.5% and a 30.2% increase the 2007 sales in the International include sales from segment Fiscal American and Central Retail (“Seiyu”) Ltd. The Seiyu, consolidation of Wal-Mart Central now known (“CARHCO”), Holding Company as America, and the acquisition of Sonae Distribuição Brasil S.A. (“Sonae”). in the increase points to These entities contributed 17.1 percentage scal 2007. the International net sales in fi segment as discontinued been presented Both dispositions have operations. all periods. for Statements Financial operations in our Consolidated further our Consolidated 6 to see Note details of these transactions, For Statements. Financial experienced an 11.1% increase in operating income and a 7.8% and a 7.8% in operating income experienced increase an 11.1% in net sales in fiscal 2007. increase when compared to January 31, 2006. During fi scal 2007, we made we scal 2007, January to when compared 31, 2006. During fi of 7.8% which was an increase $15.7 billion of capital expenditures scal 2006. of $14.5 billion in fi capital expenditures over • Net cash provided by operating activities of continuing operations provided Net cash • $151.2 billion at January 9.4%, to assets increased 31, 2007, Total • segment Wal-Mart Stores fiscal 2006, our to When compared • on the needs of each individual member focus continued Club’s Sam’s • Our International an operating income increase generated segment • and GermanSouth disposed of our we scal 2007, Korean During fi • • Net sales increased 11.7% to $345.0 billion in fi scal 2007, and income $345.0 billion in fi to 11.7% Net sales increased • Key Items in Fiscal 2007 Items in Fiscal Key fi scal 2007 include: fiitems during nancial cant Signifi and Results of Operations and Results with a number of companies for compete we Additionally, businesses. quality as in attracting as well and retaining locations, site prime retail are companies, along with other retail We, (“associates”). employees cost ofto: but not limited uenced by a number of factors including, infl economic conditions, and buying patterns, debt levels consumer goods, labor costs, unemployment, preferences, customer rates, interest fl weather patterns, fuel prices, uctuations, ation, currency exchange infl Our and insurance costs. pressures competitive events, catastrophic other whole- sales competition from strong faces Club segment Sam’s and other internet-based catalogs businesses, sale club operators, can be located on risks our Company to information Further retailers. the 10-K for in our Annual Report on Form “Item 1A, Risk Factors,” in ended Januaryyear 31, 2007. Management’s Discussion and Analysis of Financial Condition of Financial and Analysis Discussion Management’s Wal-Mart 2007 Annual Report 30 the consolidated operationsofSeiyuand Sonae, whichare entitieswith ating expensesasapercentage due to oftotal netsaleswasprimarily for fi scal2007,2006and2005, respectively. Halftheincrease inoper- expenses”) asapercentage ofnetsaleswere 18.6%,18.0%and17.8% Operating, selling, generalandadministrative expenses(“operating total gross margin. ments infi scal2007and2006hadafavorable onthe Company’s impact increases innetsalesfor the Stores seg- Wal-Mart andInternational gross margins thanourSam’s Clubsegment. Accordingly, thegreater Our Stores segmentWal-Mart salesyieldhigher and International was 23.4%,23.1%and23.0%infi scal2007,2006and2005, respectively. Our total gross profi t as apercentage ofnetsales(our “gross margin”) to continue for theforeseeable future. Stores segments thantheSam’s Club segment. We thistrend expect rapid development ofnewstores and intheInternational Wal-Mart when compared to theprevious fi scal years resulted from themore segment’s netsalesasapercent oftotal Company salesinfi scal2007, net salesfor fi scal2007. Additionally, thedecrease intheSam’s Club and consolidationofSeiyuCARHCO resulted ina3.2%increase in StoresWal-Mart andSam’s Clubsegments. The acquisition ofSonae segment’s netsalesasapercentage oftotal netsalesrelative to the segment’sInternational netsales, causinganincrease intheInternational $1.5 billionand$1.4favorable respectively, impact, onthe fiDuring scal2007and2006, foreign exchange rates currency hada a similarrate. stores oncomparablestore fi saleswillcontinueduring scal2008at years 2007,2006and2005. We thatthiseff expect bytheopeningofnewstoresimpacted byapproximately 1%infi scal comparable store salesinfi scal2007,2006and2005 were negatively tional stores salesaway may take from existingunits. We estimate that stores intheUnited States, we dosowithanunderstandingthataddi- within thetradearea ofestablishedstores. As we continueto addnew home andapparel andpressure categories from newstore expansions salesactivity, inthe year recovery softness asaresultprior ofhurricane in comparablestore salesisdueto adiffi fi scal2007and3.4%in scal2006intheUnited States.fi Thedecrease rable store salesincreases. Comparable store salesincreased 2.0%in from ouracquisitions, globalstore expansionprograms andcompa- when compared to theprevious fi scal year. Thoseincreases resulted Our total netsalesincreased by 11.7%and9.8%infi scal2007and2006 Fiscal Year 31, EndedJanuary The Company andeachofitsoperatingsegments hadnetsales(inmillions),asfollows: Results ofOperations and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition Sam’s Club StoresWal-Mart Total netsales International 26246.% 7.8% $226,294 65.6% 3492100 11.7% $344,992 100.0% e ae o oa increase oftotal Net sales 1521.% 4.5% 41,582 12.1% 7162.% 30.2% 77,116 22.3% cult benchmark setinthe cult benchmark

ecn Percent Percent 2007 ect of opening new ofopeningnew ect 2005 2006 e ae o oa ices Ntsls oftotal Netsales increase oftotal Netsales Percent Percent Percent $0,1 79 94 $191,826 68.1% 9.4% $209,910 67.9% 39,798 37,119 12.9% 7.2% 13.2% $0,4 0.% .% $281,488 9.8% $308,945 100.0% 100.0% 59,237 19.2% 52,543 12.7% 18.7% certain federal andstate taxcontingencies.certain to adjustmentsindeferredmarily incometaxes andresolutions of 2007. The fi scal2006rate waslessthan the scal2005rate,pri- due fi and state taxcontingenciesinfi scal 2006inexcess ofthosein scal fi than thefi to federal scal2006rate dueprimarily resolutions ofcertain 33.6%, 33.1%and34.2%,respectively. The fi scal2007rate washigher Our eff fi scal2006incometaxaccruals. income taxaccrualsfor years, prior andreduced levels ofinterest on by abenefi tfrom refund ofIRSinterest paid, reversal ofinterest on increased borrowing levels andhigherinterest off rates, partially The increase ininterest, net,of$198millioninfi scal2006wasdue to higher interest rates onourfl oating-rate debt. in fi resulted scal2007primarily from increased borrowing levels and 2005 through fi scal2007. Theincrease ininterest, net,of$351million Interest, net,asapercentage ofnetsaleswasessentiallyfl atfrom scal fi off intheseexpensesfi Increases advertising. scal2006 were partially sales becauseofincreases inutilities, maintenance andrepairs and Operating expensesinfi scal 2006 were higherasa percentage ofnet administrative expenses. generalandClub segments andslightlyhighercorporate-level segment relativeInternational to our StoresWal-Mart andSam’s percentage oftotal netsaleswasdueto faster growth rates inour operations. The remainder oftheincrease inoperatingexpensesasa less favorable operatingexpenseleverage thanourotherInternational

set byreduced payroll costsasapercentage ofnetsales. sales increases. programs andcomparable store acquisitions, global store expansion Total netsalesincreased from our ective incometaxratesective for fi scal2007,2006and2005 were set Wal-Mart 2007 Annual Report 31 set by higher set by a slight scal 2006 comparable club sales. contributing 1.3 percentage points to fi points to contributing 1.3 percentage of the opening of 15 new expansion consisted Club segment Sam’s closed were clubs Three fi scal 2006. and 17 clubs in scal 2007 clubs in fi fi total expan- scal 2006. Our scal 2007 and one club was closed in in fi or footage, of additional club square added 2.9 million sion program scal 2007 and 2.7 million, or 3.8%, of additional club square 3.9%, in fi scal 2006. in fi footage Fiscal 2007 segment operating income as a percentage of segment net of segment as a percentage operating income 2007 segment Fiscal was This increase scal 2006. fi points over sales was up 0.2 percentage The gross margin. in gross increase point driven by a 0.2 percentage initial to improved scal 2006 can be attributed fi from increase margin of our business areas and food in the general merchandise rates margin warranty product to our scal 2006 adjustment liabilities which and a fi margin Our gross margin. gross impact on last year’s had an unfavorable pricing increase expansion and our our competitive despite increased which net sales, in the cost of markdowns of segment as a percentage assortments. merchandise primarily in our home and apparel occurred net sales segment of operating expenses as a percentage Segment 2006,fi scal primarily to due flfrom at essentially were scal 2007 in fi which was off labor productivity in the stores, improved programs. and remodel maintenance with our store costs associated points 0.1 percentage operating income was down 2006 segment Fiscal was driven by a This decrease sales. net of segment as a percentage in point increase and a 0.1 percentage margin slight decline in gross partially scal 2006 levels, off fi operating expenses from The net sales. of segment in other income as a percentage increase to the con- scal 2005 can be attributed fi from decrease margin gross as a percentage items food in sales of our lower-margin tinued increase rising transportation net sales, segment and the unfa- of total costs, impact warranty our product vorable of an adjustment to liabilities of operating expenses as a percentage The segment’s scal 2006. in fi fi scal 2005 primarily higher than were scal 2006 fi net sales in segment utilities and advertising from costs. expense pressures due to cult

2007 2006 2005 fi scal scal 2007 and in fi Club segment the Sam’s in net sales for Growth scal of 2.5% in fi comparable club sales increases from 2006 resulted scal 2006, along with our club expansion program. 2007 and 5.0% in fi 4.5% than in rate at a slower scal 2007 increased club sales in fi Comparable 7.2% in fuel and certain rates food- growth scal 2006 primarily to lower due fi 7.5% impact sales had a negative Fuel categories and media categories. related scal 2007, while $1,512 points on comparable club sales in fi of 0.4 percentage 1,385 1,280 9.2% 8.2% 13.7% 3.6% 3.5% 3.4% Sam’s Club Segment Sam’s Year Fiscal Year Fiscal Prior from Net Sales Increase Segment Income (in millions) Operating Segment Year Fiscal Prior Increase from Operating Income Segment Net Sales of Segment Percentage Operating Income as a Our expansion programs consist of opening new units, converting converting of opening new units, consist Our expansion programs in more units that result relocating supercenters, to discount stores expansion Segment as expanding existing stores. well as footage, square 12 scal 2007 included the opening of 15 discount stores, during fi Neighborhood Markets (including the conversion and 276 supercenters supercenters). into of 147 existing discount stores and/or relocation fi total our scal 2007, scal 2007. During closed in fi stores discount Two square 42 million of store added approximately expansion program scal 2006 expansion during fi Segment an 8.4% increase. footage, 15 Neighborhood Marketsincluded the opening of 24 discount stores, of and/or relocation conversion (including the and 267 supercenters discount stores Two supercenters). into 166 existing discount stores fiprogram total expansion scal 2006, our scal 2006. During closed in fi increase. an 8.6% footage, square 39 million of store added approximately benchmark set in the prior year as a result of hurricanebenchmark as a result set in the prior recovery year sales categories and pressure softness in the home and apparel activity, of established stores. expansion within the trade area new store from new store help mitigate to initiatives several developed have We These initia- sales. comparable store grow and to expansion pressure a by creating the customer to relevant include becoming more tives our shopping experience improve continuing to and store better assortment.merchandise The segment net sales increases in fi scal 2007 and fifrom the scal 2006 scal 2007 and in fi increases net sales The segment of 1.9% sales increases comparable store from resulted years scal prior fi fi to our expansion scal 2006, in addition in scal 2007 and 3.0% in fi a diffi due to sales is in comparable store The decrease program. Year Fiscal 2007 2006 2005 Year Fiscal Prior from Sales Increase Net Segment 7.8% Income (in millions) Operating Segment 9.4% 10.1% Year Fiscal Prior Increase from Operating Income Segment $17,029 Net Sales of Segment Percentage 15,324 14,163 Operating Income as a 11.1% 8.2% 9.7% 7.5% 7.3% 7.4% and Results of Operations and Results Management’s Discussion and Analysis of Financial Condition of Financial and Analysis Discussion Management’s Wal-Mart Stores Segment Wal-Mart Wal-Mart 2007 Annual Report 32 sales into U.S. dollarsby anaggregate of$1.4billion infi scal2006. rates favorably aff Additionally, ofchangesinforeign theimpact exchange currency added 398stores and29millionsquare feet 2005. inDecember 2005,andthe consolidationofSeiyuinJapan,which in December Brazil,Southern whichadded 139stores and11millionsquare feet tional unitsquare footage. This includestheacquisitionofSonaein of relocations andclosings, whichadded53million,or45.1%,ofaddi- rates. fi In segmentInternational added701units, scal2006,the net sion program ofchangesinforeign andtheimpact exchange currency resulted from improved operatingexecution, expan- ourinternational The fi 6.1% • the $1.5billionfavorable ofchangesinforeign impact currency 5.9% 5.5% • expansionprogramour international whichadded576units, netof 22.8% • 9.7% net salesgrowth from existingunits, 21.5% • the consolidationofSeiyuandCARHCO andtheacquisitionof 3,197 asa OperatingIncome 3,506 resultedprimarily from: Percentage ofSegment NetSales The fi segment’sInternational scal2007increase inthe netsales $4,259 Segment OperatingIncome from Increase Prior Fiscal Year JapanandMexico.America, 19.3% inCentral subsidiaries and theoperationsofmajority-owned 12.7% Segment Operating (inmillions) Income theoperationofjointventuresand theUnited Kingdom, inChina 30.2% operationsinArgentina, Brazil, Rico Canada,Puerto wholly-owned Segment NetSalesIncrease segment of wascomprised 31,2007,ourInternational At January from Prior Fiscal Year 2005 2006 2007 Fiscal Year International Segment related to theclosingofthree theyear. clubsduring pared to fi scal2006. Fiscal 2007alsoincludedan$11millioncharge slight increase inemployee-related costsinfi scal2007whencom- as apercentage ofsegment dueto netsalesincreased a primarily andjewelry, fi during including pharmacy scal2007.Operatingexpenses sales increased higher-margin dueto strong categories, salesincertain of segment netsales. Gross margin asapercentage ofsegment net off partially gin andmembershiprevenue asapercentage ofsegment netsales, to fi scal2006. Theincrease wasdue animprovementto in gross mar- of segment netsalesincreased slightlyinfi scal2007whencompared Consistent withpastperiods, segment operatingincomeasapercentage and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition

exchange fi rates during scal2007. February 2006)and CARHCO, whichadded372 stores and6.5millionsquare feet in additional unitsquare footage (thisincludestheconsolidationof relocations andclosings, consistingof20.4million,or12.0%, fi scal2007netsales, Sonae, allofwhichadded17.1percentage pointsto theincrease in scal 2006 increase in the International segment’sscal 2006increase intheInternational netsalesprimarily set byanincrease inoperatingexpensesasapercentage ected the translation of International segment net thetranslationofInternational ected operating incomeasapercent ofsegment netsalesby approximately percentage ofsegment netsalesby1.2percentage points, andreduced margin by0.4percentage points, increased operatingexpensesasa and CARHCO. These acquisitions andconsolidationsincreased gross oftheacquisitionSonaeandconsolidationSeiyu impact of segment netsaleswasdown from fi due to the scal2006,primarily Fiscal segment operatingincomeasapercentage 2007International 2005 were $28.9billion,$26.8billionand$26.0respectively. fiour Consolidated during Statements ofIncome scal2007,2006and segment netsales.of theInternational Netsalesfor Asda includedin Fiscal subsidiary, Asda, 2007netsalesatourUnited were Kingdom 37.4% tobacco, fi during scal2006. lower-marginment netsalesincertain categories, includingfueland as apercentage ofsegment netsalesdecreased dueto strong seg- recognized from highermembershipsalesinfi scal2006.Gross margin percentage theresult ofsegment ofincome netsaleswasprimarily off ment netsalesinfi scal2006whencompared to scal2005,partially fi dueto lower wageandaccidentcostsasapercentageprimarily ofseg- Operating expensesasapercentage ofsegment netsalesimproved slight decrease ingross margin asapercentage ofsegment netsales. income asapercentage off ofsegment netsales, partially increase wasdueto animprovement inoperatingexpensesandother increased slightlyinfi scal2006whencompared to scal2005.fi The Segment operatingincomeasapercentage ofsegment netsales Wal-Mart International Total UnitCount set byincreased costs. utility The increase inotherincomeasa 1,400 2,100 2,800 Units 700 0 05 Fiscal Year 06 07 (1) Unit counts are 31,ofthe years asofDecember shown acquisitions andnewstore openings. its total unitcountboththrough International thepastthree years,In are as of January 31. 31. are asofJanuary for allcountries, except Rico, Canada andPuerto which has almostdoubled Wal-Mart Wal-Mart set bya (1) Wal-Mart 2007 Annual Report 33 Wal-Mart paid dividends totaling paid dividends totaling Wal-Mart $2.8 billion, or approximately 2007. in fiscal $0.67 per share, 2007 dividends paid in fiscal The over an 11.7% increase represent fiscal 2006.

cash in funding operations and in providing returns to shareholders shareholders to returns cash in funding operations and in providing of dividends. and payment repurchases of share in the form Program Repurchase Share Company under of our common stock shares repurchase we time, time to From of by our Board authorized program repurchase a $10.0 billion share fiwe scal 2006, rst half of 2004. During in September the fi Directors program. under this repurchase $3.6 billion of shares repurchased $1.8 billion of repurchased we scal 2007, During the fourth quarter of fi At January program. 31, 2007, approxi- under this repurchase shares under be repurchased may shares $4.3 billion of additional mately this program. other restriction or limiting the period for is no expiration date There under the program, can make repurchases which we our share over $10.0 billion repurchased have only when and if we which will expire shares repurchased the program, Under under the program. of our shares con- We unissued status. to and returned constructively retired are repurchases, make factors in determining when to sider several share our capacity for cash needs, our current including among other things, and the market price our cost of borrowings, of the stock.leverage, Stock Dividends Common $2.8 billion, or $0.67 per approximately paid dividends totaling We fi an represent scal 2007 The dividends paid in scal 2007. in fi share, fi scal 2006 dividend of $0.60 per The scal 2006. fi over 11.7% increase have We fiscal 2005. over a 15.4% increase represented share our dividend everyincreased since the first dividend was year 1974. in March declared an approved of Directors Board 8, 2007, the Company’s On March of 31.3% an increase $0.88 per share, annual dividends to in increase The annual dividend will be scal 2007. the dividends paid in fi over quarterlypaid in four installments on April 2, 2007, June 4, 2007, 4, 2007, and January on September holders of record 2, 2008 to December 17 and 14, 2007, respectively. 16, May 18, August March cient use of in operating set by an increase operating activitiesows from of continuing of segment in operating income as a percentage set by an increase

Working Capital Capital Working assets at January current liabilities exceeded Current 31, 2007, by January of $166 million from $5.2 billion, an increase 31, 2006. Our 1 at January 0.9 to liabilities was current assets to ratio of current 31, 2007 and 2006. At January assets of $151.2 bil- had total 31, 2007, we assets of $138.2 billion at January with total lion, compared 31, 2006. to our effi cit due a working generally have capital defi We In fi scal 2007, we paid dividends of $2.8 billion, made $15.7 billion in scal 2007, In fi of shares repurchase paid $1.7 billion in cash to capital expenditures, the issuance of long-term $7.2 billion from our common stock, received $1.2 million of $5.8 billion of long-term debt and repaid debt, repaid paper (net of issuances). commercial operations were $20.2 billion, $17.7 billion and $15.2 billion in fi scal billion and $15.2 billion in fi $20.2 billion, $17.7 operations were ows provided in cash fl The increases 2007, 2006 and 2005, respectively. primarilywere attributableyear scal each fi by operating activities for man- improved continuing operations and from income improved to in accounts payable resulting agement of inventoryprocurement than inventory. rate at a faster growing Overview cant activities by operating ows provided supply us with a signifi Cash fl Our cash fl of liquidity. source expenses and a decrease in other income, both as a percentage of seg- both as a percentage in other income, expenses and a decrease scal 2006 improvement fi The International segment’s ment net sales. shift was primarily in the mix of prod- a favorable due to margin in gross categories which carry general merchandise ucts sold toward a higher in operating expenses as a point increase The 0.5 percentage margin. primarily scal 2006 was driven by net sales in fi of segment percentage Other advertising, utilityincreased income and insurance expenditures. points net sales declined 0.2 percentage of segment as a percentage income in Canada reductionrental primarily scal 2006 to a in due in fi Fiscal 2006 operat- scal 2005. tax recovery in Mexico fi in and a payroll changes impact of $68 million from ing income includes a favorable currency rates. exchange in foreign Resources Liquidity and Capital While fiscal 2006 International segment operating income as a While fiscal 2006 International operating income as a segment scal 2005, fi from net sales was down slightly of segment percentage This improve- points. was up 0.5 percentage margin gross segment was off margin gross ment in segment and Results of Operations and Results The impactwas partially of the acquisitions points. 0.6 percentage off the Overall, businesses in this segment. net sales in our other was up of our other businesses margin gross International segment’s 2007, primarily scal driven by improvements points in fi 0.2 percentage shift in the mix of a favorable from in Mexico and Canada resulting categories which carry general merchandise sold toward products a of percentage 2007 operating expenses as a Fiscal higher margin. at when essentially fl were net sales of our other businesses segment a 2007 operating income includes Fiscal scal 2006. fi to compared currency in foreign changes impact of $90 million from favorable rates. exchange Management’s Discussion and Analysis of Financial Condition of Financial and Analysis Discussion Management’s Wal-Mart 2007 Annual Report 34 which would require us to purchase orassumetheleases on certain inthe United States,network we have agreements withthird parties distribution withthedevelopment ofourgrocery connection In lion. expire arrangements infiThese two scal2011and scal2019. fi 31,2007,theaggregate payment termination January was$69mil- events were unlikely to payments occur.termination ifcertain At debtfi withcertain connection In nancing, we couldbeliable for early cussed belowfor whichthetimingofpayment, ifany, isunknown. presented above, guarantees asdis- theCompany hasmadecertain additionto theunrecordedIn obligations discussedand contractual Off vices orchangesto agreed-upon amountsfor someobligations. may bediff amountspaidofsomeunrecordedactual commitments contractual is estimated basedoncurrent information. Timing ofpayments and timingforThe expected payment oftheobligations discussedabove without signifi cantpenalty. generallycontainclausesallowing forand thecontracts cancellation however, are theobligationsunderthese contracts notsignifi cant timeperiods. short We alsoenter for into contracts outsourced services; needsandareon ourcurrent inventory fulfi lledbyour supplierswithin approximate Ourpurchase timingofthetransaction. orders are based purchased; fixed, provisions; price andthe minimumorvariable all signifi Payments Fiscal DueDuring Years 31, cant terms, including: EndingJanuary xedorminimumquantities to fi be agreements thatare enforceable andlegallybindingthat specify are obligationsfor defitractual purchase ofgoodsorservices nedas rather thanbindingagreements. For ofthistable, thepurposes con- the tableabove. Purchase orders represent to purchase authorizations arefor notincludedin thepurchase andotherservices ofinventory contracts.Purchase orderscommitments andlegallybindingservice capitalexpenditures,ments to make acquisition/license software purchases,commitments for andutility inventory aswell ascommit- Purchase suchasfi obligationsincludealllegallybindingcontracts rm (In millions) as debtandleaseagreements, andcontingentcommitments: future contractual paymen information ourobligationsandcommitmentsto make concerning The following certain tablesetsforth Contractual Commercial Commitments ObligationsandOther and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition tnb etr fcei 227 ,4 – – – – – – – – 3,500 – – 11,960 3,132 – – 6,678 1,705 985 2,247 2,986 1,332 – 2,482 3,390 2,247 2,986 1,060 1,594 1,479 6,890 2,570 538 842 17,626 2,570 5,715 10,446 Total commercial commitments Standbyletters ofcredit Trade letters ofcredit Undrawn linesofcredit Purchase 15,168 $32,650$ Interest debt onlong-term 11,252 3,567 126223 operatingleases Non-cancelable 5,428 $ obligations Unrecorded contractual obligations: 9,120 $ Capitalleaseobligations Commercial paper 5,398 $12,704 Recorded contractual obligations: Long-term debt

Balance SheetArrangements erent dependingonthetimingofreceipt ofgoodsorser- Total 2008 2009–2010 2011–2012 Thereafter $96,298$30,732$17,823$13,046$34,697 corporate purposes.corporate outstanding commercial paperindebtedness andfor othergeneral proceeds from debtwere theissuanceofsuchlong-term usedto repay fiDuring scal2007, debt. issued$7.2billionoflong-term we Thenet Capital Resources approximate $72millionannuallyover the leaseterms. years, which,ifconsummated basedoncurrent costestimates, will estate developers provide for minimumrentals ranging from 4to 30 buildings for 141future locations. These leasecommitmentswithreal The Company hasentered into leasecommitmentsfor landand ofsomeoralltheseagreements.$150 millionupontermination a fi agreements, atwill, cover upto whichcanbeterminated by eitherparty unique equipmentintheevent theagreements are terminated. These ve-year period andobligate theCompany period ve-year to pay upto approximately cash requirements. inventories andmeetother seasonal buildupsinmerchandise will besufficient to finance any from thesaleofcommercial paper flows from operations andproceeds Management believes that cash ts, such Wal-Mart 2007 Annual Report 35 Fiscal Year Ended Year Fiscal January 31, 2006 26,429 4,595 284 $ 3,754 $ 3,667 $38,729 52% 961 182 960 182 285

9,604 5,428 3,513 27,222 $20,988 $48,478 $20,209 $38,874 $ 1,441 $ 2,570 $39,018 January 31, 2007 January 31, 2007 Fiscal Year Ended Year Fiscal

In the past, we have utilized total debt to total capitalization as the total debt to total utilized In have the past, we ratio of now use the We primary our leverage. metric monitor to debt as our average to adjusted operations ow from cash fl adjusted primary with methods com- consistent which is also metric, leverage rating. determine our credit to rating agencies monly used by credit ned as is defi operations as the numerator ow from cash fl Adjusted for the current of continuing operations operations ow from cash fl less expense operating rent plus two-thirds year the current of year debt as average Adjusted expense. interest capitalized year current average debt plus eight times average ned as is defi the denominator of begin- debt is the simple average Average expense. operating rent long-term debt due within one paper, ning and ending commercial long-term debt, obligations under capital leases due in one year, year, operating Average and long-term obligations under capital leases. and prior year year of current expense is the simple average rent this metric investors is useful to believe We expense. operating rent as The ratio, our leverage. measure to with a tool them as it provides to requirements the published threshold exceeds below, calculated ratings. credit maintain our current 43% (4) culty in culty cient to pay pay to cient

(1) )

cient to fi nance any nance any fi cient to (3) ow from operations to adjusted average debt average adjusted to operations from ow

(2) nancial information nancial Amounts in millions except for the calculated ratio for the calculated Amounts in millions except

Denominator Denominator cash fl Adjusted – Current year capitalized interest expense expense interest capitalized year – Current Numerator debt Average (1) 2/3 X $1,441 (2) ($39,018 + $38,729)/2 (3) 8 X (($1,441 + $960)/2) ned as defi of the ratio (4) The calculation seasonal buildups in merchandise inventories and meet other cash inventories seasonal buildups in merchandise suffi not ows are If cash fl our operating requirements. funding anticipate we fund our capital expenditures, dividends and to shortfallany with a combination of commercial in these expenditures nance existing long-term refi plan to We paper and long-term debt. obtain additional long-term to desire and may debt as it matures no diffi We anticipate for other corporate purposes. nancing fi rating and favor- view of our credit nancing in obtaining long-term fi The following able experiences in the debt marketpast. recent in the our rated rating agencies that of the credit table details the ratings at Januaryoutstanding indebtedness 31, 2007. Rating Agency & Poor’s Standard Service Investors Moody’s Ratings Fitch Paper Commercial Dominion Bond Rating Service Debt Long-Term R-1(middle) P-1 A-1 + AA F1 + Aa2 AA AA and Results of Operations and Results and proceeds operations from ows Management cash fl that believes suffi paper will be the sale of commercial from Management’s Discussion and Analysis of Financial Condition of Financial and Analysis Discussion Management’s Cash fl ows from operating activities ows from of continuing operations Cash fl expense operating rent year current Two-thirds + Eight times average operating rent expense operating rent Eight times average ( Obligations under capital leases due within one year Obligations under capital leases due within one year Commercial paper Commercial debt due in one year Long-term Cash fl ow from operations to average debt average to operations ow from Cash fl Selected fi expense 2007 operating rent year Fiscal expense 2006 operating rent year Fiscal interest capitalized 2007 year Fiscal Long-term obligations under capital leases Long-term Long-term debt Long-term

Total debt Total Wal-Mart 2007 Annual Report 36 appropriate mixoffi xed- and oating-rate debt.Our preferencefl associated withfinancingactivities, aswell asto maintainan We enter into interest rate swapsto minimize andcosts therisks balances onthosedates by$14million. would have increased annualinterest expenseontheoutstanding in commercial paperrates ineff and 2006,was5.3%3.9%,respectively. Ahypothetical 10%increase interest rate, 31,2007 including fees, ontheseobligationsatJanuary outstanding commercial paper obligations. The weighted-average 31,2007and2006,we had$2.6billionand$3.8of At January and $48million,respectively. expense onborrowings outstandingatthosedates by $47million 31,2007and2006,would have increasedJanuary annualinterest respectively. Ahypothetical 10%increase ininterest rates ineff of interest 31,2007and2006, rate swaps, was4.9%and4.8%atJanuary eff respectively, debtoutstanding. oflong-term Ourweighted-average 31,2007and2006,we had$32.7billionand$31.0billion, At January which may magnify thesensitivities. orcounteract reality,tion. In may changesinonefactor result inchangesanother, assumptioniscalculated withoutchanging any otherassump- particular change infairvaluemay notbelinear. The eff lated becausetherelationship ofthechangeinassumptionto the based ontheassumedchangeinrates generallycannotbeextrapo- hypothetical fi gures discussed below indicate, changesinfairvalue anddonotrepresentrisk changes. ourviewoffuture As market the These changesare hypothetical usedto calibrate scenarios potential is basedona10%changeininterest orforeign exchange rates. currency The analysispresented sensitive risk instruments for eachofourmarket in foreign exchange rates. currency risks, includingchangesininterest market rates andchanges certain inherent additionto therisks inouroperations,In we are exposedto Market Risk from operations. fithat we during may make outofcash scal2008,primarily ows fl to fi nancethisexpansion,andany acquisitionsofotheroperations expansions accountingfor approximately 30ofthoseunits). We plan segment (withrelocations 320 to 330newunitsinourInternational or relocations orexpansionsaccounting for 15ofthoseSam’s Clubs)and 20to 30newSam’s Markets, 15 to 20newNeighborhood Clubs(with expansions accountingfor approximately 145ofthosesupercenters), stores, 265to 270newsupercenters (withrelocations, conversions or expenditures of5to 10newdiscount willincludetheconstruction $17 billion,includingadditionsofcapitalleases. These fi scal2008 Capital expenditures for fi scal2008are expected beapproximatelyto Future Expansion 2007 was52%. aff for thecurrent fi scal year to average total debt(whichexcludes any of netcashprovided ofcontinuingoperations byoperatingactivities The mostrecognized comparableGAAPmeasure directly istheratio and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition

ect ofoperatingleasesorcapitalized interest)ect andfor whichfi scal ective interestective theeff rate considering debt,after onlong-term ect at January 31, 2007and2006, atJanuary ect ect of a variation ina ofavariation ect ect ect at ect ect oa ntGot 65 660 30 - 625 - 20 330 FY’08Expansion 10 - 305 - 5 20 - 15 Total UnitGrowth International 320 Total U.S. Expansion Sam’s Club Neighborhood Markets Discount Stores Supercenters 265 - Wal-Mart’s ExpansionProgram - 330 270 2007 and2006,respectively, asahedgeofournetinvestment in 31, debt ofapproximately ¥142.1billionand¥87.1asofJanuary addition,we havethe valueofdebt$359million.In designated dollar relative poundwould to theBritish result inagain(orloss) a hypothetical 10%increase (ordecrease) invalueoftheUnited States 31,2006, (or loss)inthevalueofdebt$594million.AtJanuary of theU.S. dollarrelative poundwould to theBritish result inagain 31,2007,ahypothetical 10%increase (ordecrease)January invalue tively, asahedgeofournetinvestment At intheUnited Kingdom. 31,2007and2006,respec- £3.0 billionand£2.0asofJanuary swaps, we additionto currency haveIn designated debtofapproximately and 2006,would have aninsignifi onthevalueofswaps. cantimpact rates ineff lying theseswapsfrom themarket 31,2006.Ahypothetical 10%changeininterest ratesJanuary under- 31,2007,and($96million)$78millionat $196 millionatJanuary result ina(loss)orgainthevalueofswaps($178million)and exchange rate would theseswapsfrom rates underlying themarket tively. Ahypothetical 10%increase (ordecrease) intheforeign currency and 2006,represented alossof$181millionand$124million,respec- currency. 31,2007 The aggregate fairvalueoftheseswapsatJanuary ofdebtdenominated incurrencies risk otherthanthelocal currency swapwhichhedgestheforeign addition,we holdacross-currency In component ofournetinvestments andJapan. intheUnited Kingdom We swapsto hedgetheforeign holdcurrency exchange currency gain invalueoftheswaps($103million)or$104million,respectively. level ineff hypothetical increase (ordecrease) of10%ininterest rates from the in valueoftheswaps($95million)or$103million,respectively. A the level ineff A hypothetical increase (ordecrease) of10%ininterest rates from 31,2006. 31,2007andagainof$133millionatJanuary at January The aggregate fairvalueoftheseswapsrepresented alossof$1million interest rate over payments periodically thelife oftheinstruments. to exchangecontracts fi or for variable- xed- orvariable-rates xed- fi interest rate swaps, infl oating-rate debt. Theswapagreements are is to maintainapproximately 50%ofourdebtportfolio, including ect at January 31,2006,would have resulted atJanuary ina(loss)orect ect at January 31,2007,would result ina(loss)orgain atJanuary ect ect at January 31,2007 atJanuary ect Wal-Mart 2007 Annual Report 37 recover to cient returns nite lives for indicators of impairment whenever events or changes events of impairment indicators whenever for lives nite generated retail price indices except for grocery items, for which we which we for grocery items, for price indices except retail generated use a consumer price index. At January 2006, our inven- 31, 2007 and as if they were those inventories tories valued at LIFO approximated valued at FIFO. inventory estimated losses (“shrinkage”) for provides The Company of inventorybetweenof a percentage counts on the basis physical ect the historical trend refl annually to is adjusted The provision sales. shrinkage Historically, of the actual inventory count results. physical has not been volatile. Impairment of Assets assets other than goodwill and assets with long-lived evaluate We indefi their carrying indicate in circumstances not be recoverable. may values of impairment the existence regarding judgments Management’s based on market are indicators conditions and our operational per- The evaluation ows. such as operating income and cash fl formance, fl which is ows, cash able is performed of identifi level at the lowest in certain at circumstances, or, level generally at the individual store The variability factors of these depends on a level. the market group including uncertaintynumber of conditions, and events about future may thus our accounting estimates and changes in demographics, These factors could cause manage- period period. to change from that conclude that impairment and require exist ment to indicators impairment be performed, in management tests which could result resulting assets is impaired, determining of long-lived that the value assets. in a writedown of the long-lived not assets are nite-lived intangible other acquired Goodwill and indefi impairment annually or whenever for evaluated amortized, but are that the value of a certain indicate or changes in circumstances events make management to This evaluation requires be impaired. asset may and economic rates, growth ows, cash fl future to relating judgments based on determining These evaluations are and market conditions. the fair value of a reportingvaluation method unit or asset using a market-based approach. relative, ow or a cash fl such as discounted suffi has generated the Company Historically, nite-lived intangible other acquired the cost of goodwill and indefi if dif- of the factors tests, used in these Because of the nature assets. results operating future periods, conditions occur in future ferent could be materially impacted. Taxes Income cant signifi requires income taxes for The determination of our provision and application and the interpretation the use of estimates, judgment, in assessing the required is cant judgment Signifi of complex tax laws. establish We timing and amounts of deductible and taxable items. fullyreserves are positions return our belief that our tax when, despite supportable, that certain believe we be successfully positions may adjust these we When facts change, and circumstances challenged. Accounting The Financial taxes. income for reserves our provision through Uncertainty for “Accounting 48, issued Interpretation No. Board Standards adjust our past methods of us to which will require Taxes,” in Income in assessing the timing and amounts of deductiblejudgment and year 2008. scal fi commencing taxable items esult in a esult in a At January31, cant accounting policies debt of $103 million. ect of infl ation, and these estimates are are ation, and these estimates ect of infl our estimates. er from ect our fi nancial position and results of operations as nancial position and ect our fi

adjusted to actual results determined at year-end. Our LIFO provision Our LIFO provision determined actual at year-end. to results adjusted markup and internally based on inventory rates is calculated levels, Under the retail method, inventory cost, which is determined at is stated method, Under the retail retail grouping’s each merchandise ratio to by applying a cost-to-retail of the ratio is based on the initial margin The FIFO cost-to-retail value. measuringfor any ratio The cost-to-retail activity. year purchase scal fi year purchase scal of the fi LIFO reserves is based on the initial margin method requires The retail activity less the impact markdowns. of any makemanagement to certain that may and estimates judgments cantly impact as well the ending inventory valuation at cost as signifi made include Judgments recognized. margin the amount of gross inventory markdowns shrinkage. and sell through used to recording When management determines the salability of inventory dimin- has markdowns clearance activity cost impactished, for and the related Factors price at the time the is made. change decision recorded are in the determination markdowns of and considered include current and age of merchandise, preferences customer demand, anticipated patterns Changes in weather fashion trends. as seasonal and as well could cause material fashion trends to related preferences and customer year. changes in the amount and timing of markdowns to year from a quarter for a LIFO provision records the Company When necessary, annual eff the estimated for Inventories Inventories of cost or market at the lower as determined our inventories value We rst-out fi using the last-in, method of accounting, primarily the retail by segment’s Wal-MartStores substantially all our (“LIFO”) method for in our distri- and merchandise Club merchandise Sam’s merchandise. cost using valued based on weighted-average are bution warehouses primarily international operations are for Inventories the LIFO method. using the stated method of accounting and are valued by the retail fi rst-out (“FIFO”) method. rst-in, fi Management continually reviews its accounting policies, how they are how they are Management its accounting policies, continually reviews nancial state- reported and disclosed in our fi applied and how they are is a summary signifi of our more Following ments. nancial statements. of the fi applied in preparation and how they are refl ected in our fi nancial statements. These judgments and estimates and estimates These judgments fi nancial statements. ected in our refl Actual outcomes. and expectations based on past events of future are diff may results Summary of Critical Accounting Policies Policies Summary of Critical Accounting in Company of the results nancial Management report to strives the fi although in some cases account- manner, a clear and understandable use technical us to complex and require rules are ing and disclosure we Statements, Financial In our Consolidated preparing terminology. States. accounting principles in the United generally accepted follow make us to certainThese principles require and apply judg- estimates ments that aff 2006, a hypothetical 10% increase (or decrease) in value of the U.S. in value of the U.S. (or decrease) 10% increase 2006, a hypothetical in a gain (or loss) in result would the Japanese yen to dollar relative $75 million. the value of the debt of gain (or loss) in the value of the gain (or loss) in the value and Results of Operations and Results Japan. At January (or decrease) 10% increase 31, 2007, a hypothetical r would yen the Japanese to dollar relative in value of the U.S. Management’s Discussion and Analysis of Financial Condition of Financial and Analysis Discussion Management’s Wal-Mart 2007 Annual Report 38 other things, growth, expected future revenues, future cash fl ows, statements. also forward-looking These statements discuss, among ofourobjectives,descriptions strategies, plans, goals or targets are “may result,” “plan,” be”“will and other, similarwords orphrases. Similarly, “anticipate,” “believe,”increase,” “could result,” “could “expect,”result,” “will year 2007. These statements are identifi edbytheuseof words operationsinfi withthedispositionofour German in connection scal regarding thepossibletaxtreatment andeff common stock andinNote 5to ourConsolidated Financial Statements andouranticipated reasonssecurities for repurchasing shares ofour to sellourlong-term debtsecurities,paper andlong-term ourability cashfl to fundcertain ability bythesaleofcommercial owshortfalls Results ofOperationswithrespect to ourcapitalexpenditures, our in Management’s DiscussionandAnalysisofFinancial Condition and total netsales, andunderthecaption andCapitalResources”“Liquidity ofourbusinesssegments representthe netsalesofcertain ofour stores onexistingstores salesandthetrend inthepercentages that Results ofOperationsregarding theeff Management’s DiscussionandAnalysis ofFinancial Condition and include statements underthecaption “Results ofOperations” in ments provided bythatAct. statements These forward-looking to enjoytheprotection state- ofthesafe for harbor forward-looking LitigationReformSecurities of1995. Act Those statements are intended statements”“forward-looking withinthemeaningofPrivate containsstatements that This AnnualReport believesWal-Mart are Forward-Looking Statements this discussion. Note 1to ourConsolidated Financial Statements thatappearafter For ofoursignificant accountingpolicies, pleasesee asummary our self-insuranceaccrualby$25millionor$72million,respectively. claims costsorlossdevelopment would factors increase ordecrease and generalliability, a1%increase ordecrease to theassumptionsfor from theseassumptions. For example, for ourworkers’ compensation signifi cantly aff insured program. The estimated accrualsfor theseliabilitiescouldbe the incurred costsassociated withtheclaimsmadeagainstourself- development, andapplyappropriate lossdevelopment to factors lating ourliability, we analyze trends, ourhistorical includingloss calcu- assumptions.demographic In factors, andotheractuarial claimsexperience, historical includingfrequency,ering severity, thatweassociated withtherisks retain are estimated byconsid- obligation for employee-related healthcare benefits. Liabilities compensation, generalliability, andtheCompany’s vehicle liability insurance for anumberofrisks, including, withoutlimitation,workers’ We useacombinationofinsurance, self-insured retention andself- Self-Insurance and ResultsofOperations Management’s DiscussionandAnalysisofFinancial Condition ected iffutureected occurrences orlossdevelopment diff ect oftheopeningnew ect ect ofthelossrecordedect er er except asmay berequired by applicablelaw. statements to refllooking subsequentevents orcircumstances, ect noobligation to update theseforward- andwe undertake report, speakonlyasofthedate ofthisincluded inthisAnnualReport statements. such forward-looking statements The forward-looking statements andnotto placeunduereliance onthe forward-looking carefully andotherfactors inevaluatingthese risks, uncertainties operations intheway we expect. You are urged to considerallof consequencesforexpected usoraffect us, ourbusinessor tially realized, thatthoseresults ordevelopments willresult inthe oranticipatedexpected byuswillberealized or, even ifsubstan- We cannotassure thereader thattheresults ordevelopments statements.results orimpliedintheseforward-looking described circumstance, results actual may differ materially from anticipated a result ofchangesinfacts, assumptionsnotbeingrealized orother andlisted above, described the factors aswell asotherfactors, oras and theenvironment inwhichwe operate. However, becauseof above ofourbusinessdescribed are madebasedonaknowledge SEC onoraboutMarch 27,2007. statements The forward-looking onForm 31,2007,withtheReport 10-Kfor theyear endedJanuary onForm including ourAnnualReport 10-K. We filedourAnnual andExchangeour filingswiththeSecurities Commission (“SEC”), financial condition,resultsinotherof ofoperationsandliquidity that may factors affect ourbusinessoperations, risk well ascertain performance. We ofthesematters more fully, discusscertain as events couldadversely aff isnotexclusive. andunanticipated factors performance Other with certainty. The foregoing thatmay listoffactors affect our buying patterns. areThose buyingpatterns difficultto forecast asaresult ofthe seasonal quarter operating incomeinthefourth Moreover, ofourannual part adisproportionate earn we typically conditionsandevents. economicandgeo-political capital market, est rate fl changesinemploymentlegislation uctuations, andother proceedings to whichwe are unemploymentlevels, aparty, inter- and regulations thataffect ourbusiness, theoutcome oflegal andfreightchanges intariff rates, changesintaxandotherlaws foreign exchange suppliers, fl currency uctuations, trade restrictions, anddebtlevels,terns ofgoodsfrom weather patterns, transport pressures, inflation,accident-related costs, consumerbuyingpat- materials, catastrophiccost ofconstruction events, competitive and electricity, thecostofhealthcare benefits, insurancecosts, of goods, costs, information laborcosts, security thecostoffuel objectives. include,Those factors butare notlimited to, thecost aff factors, intheUnited States andinternationally,certain thatcould rences andtrends. statements are to subject These forward-looking of and expectations anditsmanagementastoWal-Mart future occur- future capitalexpenditures, andtheanticipation future performance ect ourfiect businessstrategy, nancialperformance, plans, goalsand ect ourbusinessoperations andfiect nancial Wal-Mart 2007 Annual Report 39 (242) (204) (242) (249) (324) (215) (177) (0.05) (0.05) (0.05) (0.04) $ 2.68 4,259 4,183 4,266 4,188 $ 2.41 2006 2005 2006 $281,488 $308,945 2,822 3,156 284,310 312,101 216,832 237,649 50,178 55,739 17,300 18,713 1,171 931 253 249 1,178 980 16,320 17,535 5,326 5,932 263 (129) 5,589 5,803 10,731 11,732 10,482 11,408 $ 11,231 $ 10,267 $ 2.73 $ 2.68 $ 2.46 $ 2.41 $ 2.72 $ 2.46 $ 0.60 $ 0.52 89 260 (280) (425) (894) 2007 (0.21) (0.21) 4,164 4,168 3,658 1,549 1,529 6,276 6,365 64,001 20,497 12,603 12,178 348,650 264,152 $ 2.71 $344,992 $ 11,284 $ 2.92 $ 2.71 $ 2.92 $ 0.67 rest 18,968 rest

minority inte

e income taxes and taxes e income

See accompanying notes. See accompanying Weighted-average number of common shares: shares: of common number Weighted-average Basic Diluted share Dividends per common Revenues: sales Net Membership income and other and expenses: Costs of sales Cost expenses general and administrative selling, Operating, income Operating Interest: Debt leases Capital income Interest net Interest, befor operations continuing from Income taxes: income for Provision Current Deferred minority interest before operations continuing from Income Minority interest operations continuing from Income tax net of operations, discontinued from Loss Net income share: per common Basic net income continuing operations from Basic income per share discontinued operations from Basic loss per share per share net income Basic share: per common net income Diluted continuing operations from income per share Diluted discontinued operations from loss per share Diluted per share net income Diluted (Amounts in millions except per share data) per share (Amounts in millions except Ended January 31, Year Fiscal Consolidated Statements of Income Statements Consolidated Wal-Mart 2007 Annual Report 40 o-urn iblte fdsotne prtos liabilitiesofdiscontinuedoperations Non-current eerdicm ae n te Deferred incometaxes andother Ln-emdb Long-term obligationsundercapitalleases Long-term debt urn iblte fdsotne prtos Current liabilitiesofdiscontinuedoperations ogtr etdewti n er Obligationsundercapitalleasesduewithinoneyear Long-term debtduewithinoneyear oa urn iblte Total current liabilities cre noetxs Accrued incometaxes Acudl aiiis Accrued liabilities Acut aal Accounts payable assetsofdiscontinuedoperations Non-current Cmeca ae Commercial paper Current liabilities: Liabilities andshareholders’ equity assetsanddeferred charges Other Gowl Goodwill Less accumulated amortization rpryudrcptllae e undercapitallease, Property net undercapitallease Property undercapital lease: Property rpryadeupet e andequipment,net Property Less accumulated depreciation rpryadeupet tcs andequipment,atcost Property Tasotto qimn Transportation equipment itrsadeupet Fixtures andequipment ulig n mrvmns Buildingsandimprovements Land and equipment,atcost: Property Current assetsofdiscontinuedoperations oa iblte n hrhles qiy $151,193 Total liabilitiesandshareholders’ equity oa urn ses Total current assets Prepaid expensesandother oa hrhles qiy Total Accumulated othercomprehensive income shareholders’ equity Ivnois Inventories Rtie anns Retained earnings Rcials Receivables aia necs fprvle Capitalinexcess ofparvalue 31,2006,respectively) 31,2007andJanuary andoutstandingatJanuary Common stock ($0.10parvalue;11,000shares authorized, 4,131and 4,165issued Preferred stock ($0.10parvalue;100shares authorized, noneissued) Shareholders’ equity: Commitments andcontingencies ahadcs qiaet Cashandcashequivalents Current assets: Assets Mnrt neet Minority interest See accompanyingSee notes. 31, January inmillionsexcept(Amounts pershare data) Consolidated BalanceSheets oa ses $151,193 Total assets 285

$ 2,570 $ 7,373 109,798 (24,408) 27,222 51,754 14,675 28,090 13,759 85,390 25,168 64,052 46,588 18,612 61,573 33,685 55,818 (2,342) 3,513 5,428 2,406 3,050 5,392 1,966 2,690 2,508 2,840 2,834 2,160 4,971 2007 706 413 – – – – – 3,667 26,429 4,595 48,825 1,340 13,274 25,101 2,516 $ 3,754 12,097

3,265 5,392 74,600 1,744 95,537 22,413 55,206 43,825 2,468 16,174 53,171 $138,187 31,910 49,105 1,053 2,575 2,596 $ 6,193 1,465 – 2006 4,501 129 477 1,884 679 (2,127) (20,937) $138,187 284 417 Wal-Mart 2007 Annual Report 41 (2) (2) of Shares Stock Par Value Income Earnings Total Earnings Income Value Par Stock Shares of 4,311 431 $ $ 2,135 851 $ 40,206 $ 43,623 $ 4,234 423 2,425 2,694 43,854 49,396 See accompanying notes. See accompanying (Amounts in millions except per share data) per share (Amounts in millions except – JanuaryBalance 31, 2004 Number Common Excess of Comprehensive Retained Other Comprehensive in of Accumulated Excess Capital Common Number Consolidated Statements of Shareholders’ Equity Shareholders’ of Statements Consolidated income: Comprehensive Net income Other income: comprehensive currency translation Foreign derivatives changes in fair values of Net 1,938 1,938 10,267 10,267 income comprehensive Total Minimum liability pension dividends ($0.52 per share) Cash stock of Company Purchase and other options exercised Stock – JanuaryBalance 31, 2005 4 (81) (8) (136) 426 (93) (4,405) (2,214) (4,549) (2,214) (93) 12,110 426 Comprehensive income: Comprehensive Net income Other income: comprehensive income currency translation Foreign Net changes in fair values of derivatives income comprehensive Total Minimum pension liability Cash dividends ($0.60 per share) Net stock of Company Purchase and other options exercised Stock 11,284 – JanuaryBalance 31, 2006 income: Comprehensive 11,284 income: Other comprehensive currency translation Foreign of derivatives values Net changes in fair income comprehensive Total Minimum pension liability 5 (74) of initial application for Adjustment 4,165 158, net of tax SFAS dividends ($0.67 per share) Cash 1 (7) stock of Company Purchase 417 and other options exercised Stock (1) – JanuaryBalance 31, 2007 (1,691) (104) 275 2,596 1,053 51 5 49,105 (1,691) (1) (39) 53,171 (3,469) 11,231 (2,511) 4,131 (3,580) 11,231 6 (2,511) (4) 1,584 $413 51 276 9,590 290 (52) $2,834 (15) $2,508 $55,818 6 1,584 $61,573 (120) (1,769) (2,802) (1,825) (15) (2,802) 12,859 290 (120) Wal-Mart 2007 Annual Report 42 Dividends paid (Decrease) increase incommercial paper Cash fl Net cashusedininvesting activities Payment debt oflong-term Proceeds from debt issuanceoflong-term Net cashprovided by(usedin)investing ofdiscontinuedoperations activities Net cashusedininvesting ofcontinuingoperations activities Purchase ofCompany stock investing activities Other Investment operations, ininternational netofcashacquired Net cashusedinfi nancingactivities fi Other nancingactivities Payment ofcapitalleaseobligations Proceeds operations, international net from disposalofcertain Eff Proceeds andequipment from disposalofproperty Payments andequipment for property Cash fl Net cashprovided byoperatingactivities ofdiscontinuedoperations Net cashusedinoperatingactivities Net cashprovided ofcontinuingoperations byoperatingactivities Increase inaccruedliabilities Increase inaccountsreceivable Increase Increase in assetsandliabilities, netofeff Changesincertain inventories Increase inaccountspayable Increase Other operating activities Deferred income taxes netcashprovided byoperatingactivities: Depreciation and amortization Adjustments to reconcile incomefrom continuingoperationsto Income from continuingoperations Income Capitalleaseobligationsincurred Loss from discontinuedoperations, netoftax Interest paid Cash andcashequivalentsatbeginning ofyear Net income Cash fl Income taxpaid Income Supplemental disclosure ofcashfl Cash andcashequivalentsatendofyear Net increase incash andcashequivalents See accompanyingSee notes. (2) Includescash andcash equivalents ofdiscontinued operations 31,2006and2005 of$221million and$383millionatJanuary (1) Includescash and cash equivalents ofdiscontinued operations 31, of$221million,$383millionand$336 millionatJanuary Fiscal Year 31, EndedJanuary inmillions) (Amounts Consolidated Statements ofCashFlows ect ofexchangeect rate changesoncash ows from fi ows from investing activities ows from operating activities nancing activities ow information (2)

(1)

ects ofacquisitions: ects $ 11,284 6,665 $ 7,373 $ (14,463) (14,507) (15,666) 20,164 20,209 12,178 (2,802) (1,193) (5,758) (1,718) (4,839) (1,274) 7,199 2,344 1,039 5,459 1,553 6,414 2007 (227) (340) (214) 223 610 394 588 159 894 959 (68) (45) 44 89 97 7,6915,832 (30) (59) (67) (99) – – 102 925 1,042 17,63515,044 17,73715,179 997 1,002 2,4251,681 613388 (129)263 4,6454,185 11,40810,482 286377 177215 1,3901,163 $ 11,231 $ 10,267 $ 5,962 $ 5,593 926289 20062005 $ 5,4885,199 6,414 $ 5,488 (101)205 (14,186) (12,351) (14,186) (2,511) (2,214) (2,511) 544 (704) (12,292) (14,156) (601) (315) (601) (2,724) (2,131) (2,724) (4) 113 (349) (204) (245) (3,580) (4,549) (3,580) (2,422) (2,609) (2,422) (12,803) (14,530) (102) (135) (102) (466) (302) (466) (1,761) (2,515) (1,761) 2007,2006and2005,respectively. , respectively. Wal-Mart 2007 Annual Report 43 ective at meeting

scal 2007, 2006 and 2005, respectively.

change in fair ective portion of an instrument’s assets, set against the change in fair value of the hedged

Long-Lived Assets Long-Lived at cost. Management long-lived stated reviews assets are Long-lived or changes in events of impairment indicators whenever assets for that the carrying indicate circumstances not be recoverable. value may able cash The evaluation is performed of identifi level lowest at the certain or in level is at the individual store which circumstances ows, fl by to be generated expected ows Cash fl a market of stores. group based on useful life the asset’s over estimated assets are the related If that the carrying projections. the evaluation indicates updated impair- potential any not be recoverable, amount of the asset may asset or based upon the fair value of the related ment is measured market as determined by an appropriate appraisal or asset group other valuation technique. Intangible Assets Goodwill and Other Acquired fair value of price over of purchase the excess Goodwill represents reporting the appropriate to and is allocated net assets acquired, at stated Other assets are intangible acquired unit when acquired. com- as determined by a valuation technique the fair value acquired asset. Goodwill and use of the related with the intended mensurate not amortized; assets are nite-lived intangible other acquired indefi events impairment annually or whenever for evaluated rather they are that the value of the asset may indicate or changes in circumstances con- assets are nite-lived intangible other acquired Defi be impaired. amortized basis assets and are on a straight-line long-lived sidered ts will be provided. the periodsover that expected economic benefi for evaluated assets are nite-lived intangible other acquired Indefi impairment based on their fair values using valuation techniques variables annually based on the most recent updated which are and assumptions. Financial Instruments Financial for purposes nancial instruments derivative fi uses The Company and foreign interest to its exposure manage other than trading to xed- mix of fi maintain an appropriate as to as well rates, exchange Contractterms debt. of a hedge instrument closely oating-rate and fl of risk a high degree providing of the hedged item, those mirror eff Contractsreduction and correlation. that are using hedge recorded the risk criteria and correlation reduction are If depending on the instrument is a hedge, a derivative accounting. in the fair value of the instrument will changes of the hedge, nature either be off in recognized earnings or be rm commitments through liabilities or fi in is recognized the hedged item income until other comprehensive The earnings. ineff Instruments in earnings. that recognized value will be immediately which or contracts for hedge accounting, do not meet the criteria for valued at fair are has not elected hedge accounting, the Company gains or losses reported in earnings duringvalue with unrealized the period of change. Interest Capitalized $182 million, on construction costs capitalized Interest were projects $157 million, and $120 million in fi ected the the ected

Summary of Significant Summary of Significant Policies Accounting

Inventories Inventories of cost or market at the lower as values inventories The Company using the of accounting, method determined primarily the retail by Wal-Mart rst-outfor substantially all of the (“LIFO”) method fi last-in, Club merchandise Sam’s inventories. merchandise segment’s Stores valued based are in our distribution warehouses and merchandise of Inventories cost using the LIFO method. on the weighted-average method of account- primarily the retail operations are valued by foreign fi rst-out At January (“FIFO”) method. 31, 2007 and rst-in, using the fi ing, those inventories valued at LIFO approximate 2006, our inventories valued at FIFO. as if they were Receivables Receivables insurance consist primarily from receivable of receivables Accounts sup- our pharmacy from from receivables companies resulting sales, real from receivables marketing programs, pliers for or incentive property from transactions estate and receivables insurance claims. debit card, credit customer banks for amounts due from Additionally, process to transactions and EBT days of seven card that take in excess receivable. ed as accounts classifi are Cash and Cash Equivalents Equivalents and Cash Cash with a maturity months considers investments of three The Company The majority of pay- be cash equivalents. to or less when purchased and debit card third-party card, banks for credit ments due from t transactions (“EBT”) within 24-48 hours, process electronic benefi generally which are transactions occurring for on a Friday, except and EBT debit card card, All credit Monday. the following processed ed as classifi are days in less than seven transactions that process these trans- banks for Amounts due from cash and cash equivalents. totaled $882 million and $561 million at ed as cash actions classifi January 31, 2007 and 2006, respectively. The Company’s operations in Argentina, Brazil, China, Costa Rica, China, Costa Brazil, operations in Argentina, The Company’s Nicaragua Japan, Mexico, the and Honduras, Guatemala, El Salvador, year- scal using a December Kingdom 31 fi consolidated United are were There statutory generally due to end, reporting requirements. cant intervening which materially aff events no signifi the accounts of certain consolidates The Company variable interest Wal-Mart is the primary it has been determined that entities where liabilities and The assets, operations. ciary of those entities’ benefi the Company. not material to of operations of these entities are results 1 Consolidation include the accounts of Statements Financial The Consolidated “Company”). the or Inc. and its subsidiaries (“Wal-Mart” Wal-Mart Stores, in con- been eliminated transactions have cant intercompany Signifi 50% has a 20% to in which the Company solidation. Investments uence cant infl signifi exercises the Company and where interest voting using the equity method. for accounted are the investee over operations in Canada and Company’s The nancial statements. fi year-end. scal using a JanuaryPuerto consolidated Rico are 31 fi Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 44 Notes to Consolidated Financial Statements a’ lb Total goodwill Sam’s Club International 31, January as follows (inmillions): Goodwill isrecorded onthebalancesheetinoperatingsegments the costofgoodwill. Historically, theCompany hasgenerated suffi withinprojections. ofanacquiredcapacity businessto perform analyses require signifi cantmanagementjudgment to evaluate the utilizes orrevenue multiplesofearnings ofcomparableentities. The counted cashfl owmethodor approach, relative which market-based of therelated unit.Fair reporting valueismeasured basedonadis- Goodwill isevaluated for thefairvalue bydetermining impairment ponent ofaccumulated othercomprehensive income. the period. Related translationadjustmentsare recorded asacom- foreign are subsidiaries translated usingaverage exchange rates for exchange rates atthebalancesheetdate. The incomestatements of The assetsandliabilitiesofallforeign are subsidiaries translated using Foreign Currency Translation straight-lineand indetermining rent expensefor operatingleases. of minimumleasepayments intheCompany’s capitalleasetests Rent abatements andescalationsare considered inthecalculation life oftheasset. improvement islimited to theendofrenewal oreconomic period and renewal isreasonably assumed, theusefullife oftheleasehold made for leaseholdimprovements ofalease late term intheexpected ortheeconomiclifeterm signifi oftheasset.If cantexpenditures are useful life ofleaseholdimprovements islimited lease bytheexpected and inthecalculationofstraight-line rent expense. Additionally, the ofwhetherastoredetermination leaseisacapitaloroperating the solediscretion oftheCompany. isusedinthe term This expected andtheexercise term the initialnon-cancelable ofsuchrenewal isat that would preclude theabandonmentofleaseatend the exercise ofrenewal optionswhere exists an economicpenalty The Company ofaleasebyassuming estimates term theexpected Leases 2006. upon itsdisposalinOctober ations andtheallocationofgoodwillto ourSouthKorean operation Holding Company (“CARHCO”), foreign exchange rate currency fl uctu- resulted from Retail theconsolidationofCentral primarily American segment’sThe changeintheInternational goodwillsincefi scal2006

$13,759 cient returns to recover $13,454 2007 305 $11,792 2006 305 $12,097 beginning ofyear Deferred membershipfee revenue, Fiscal Year 31, EndedJanuary 2006 and2005(inmillions): of revenues recognized for inearnings eachofthefi scal years 2007, revenues, membershipfees received from membersandtheamount bership, whichis12months. The following tabledetailsunearned in theUnited States over andinternationally ofthemem- theterm The Company recognizes Sam’s Clubmembershipfee revenues both Sam’s ClubMembershipFee Revenue Recognition merchandise by usingtheshoppingcard. revenue untilthecard isredeemed andthecustomer purchases andSam’sWal-Mart Clubshoppingcards are notrecognized as possessionofthemerchandise.and takes Customer purchases of away whenthecustomer satisfi transactions esallpayment obligations for layaway transactions. The Company recognizes revenue from lay- sales returns atthetimeitsellsmerchandise to thecustomer, except The Company recognizes salesrevenue netofsalestaxes andestimated Revenue Recognition Membership feeMembership revenue recognized feesMembership received end ofyear Deferred membershipfee revenue, of Income whentherelated issold.of Income inventory reduction ofpurchases andrecognized inourConsolidated Statements tising. Substantiallyallpayments from suppliersare accounted for asa specifi cprograms margin suchasmarkdowns, protection andadver- volume incentives, warehouse allowances andreimbursements for receivesWal-Mart moneyfrom suppliersfor programs, various primarily Payments from Suppliers and clubsthecostofwarehousing for ourSam’s Clubsegment. from theCompany’scost oftransportation warehouses to thestores to theCompany’s warehouses, stores andclubsfrom suppliers, the product cost,thecostoftransportation Cost ofsalesincludesactual Cost ofSales 31,2007and2006.membership fee refunds atJanuary refunds have beennominal. Accordingly, existed for noreserve membershipfeeanalysis ofhistorical refunds indicates thatsuch accrued liabilitiesintheConsolidated BalanceSheets. The Company’s The Company’s deferred membershipfee revenue isincludedin Statements ofIncome. and otherincomeintherevenues oftheConsolidated section Sam’s Clubmembershipfee revenue isincludedinmembership $ 490 $ 535 1,030 2007 (985) 2006 2005 5 $449 $458 940 890 9 $458 $490 (908) (881) Wal-Mart 2007 Annual Report 45 erences. erences. between the erences in which the year ect for ective tax rate also refl ects the Company’s ectsCompany’s the also refl ective tax rate erences are expected to be recovered or settled. or settled. be recovered expected to are erences based on expectedective annual income tax rate liabilities of a change in tax rate tax assets and ect on deferred

fi nancial statement carrying nancial statement assets and liabilities amounts of existing fi tax assets and liabilities are Deferred tax bases. and their respective in eff using enacted tax rates measured those temporary diff The eff the period in income in that includes the enactment is recognized established when necessary are allowances reduce to Valuation date. likelybe realized. than not to more the amounts tax assets to deferred the Company In income taxes, determining the quarterly for provision uses an annual eff The eff and statutory tax rates. cant discrete Signifi of tax audits. outcome assessment of the ultimate in the in the income tax provision recognized separately are items quarter in which they occur. requires income taxes for provision The determination of the Company’s and and the interpretation the use of estimates, cant judgment, signifi in required is cant judgment Signifi application of complex tax laws. assessing the timing and amounts of deductible and taxable items. belief that the Reserves management’s established when, despite are fully supportable, positions are tax return management Company’s When that certainbelieves challenged. be successfully positions may through these reserves adjusted facts change, are and circumstances income taxes. for the provision Depreciation and AmortizationDepreciation purposes nancial statement are and amortizationDepreciation fi for useful lives the estimated method over the straight-line on provided amortization including expense, Depreciation of the various of assets. 2007, 2006 and 2005 was years scal property fi under capital leases for income tax For and $4.2 billion, respectively. $5.5 billion, $4.6 billion used with recog- are methods of depreciation accelerated purposes, temporary the resulting diff for income taxes nition of deferred the shorter over of the depreciated are improvements Leasehold expected lease term. of the asset or the remaining useful life estimated follows: as purposes statement nancial are fi for useful lives Estimated Buildings and improvements and equipment Fixtures equipment Transportation Taxes Income under the asset and liability method. for accounted Income are taxes the estimated for recognized tax assets and liabilities are Deferred tax consequences attributable diff to future 5–50 years 3–12 years 3–15 years

Insurance/Self-lnsurance Insurance/Self-lnsurance retention self-insured a combination of insurance, uses The Company without limitation, including, a number of risks, and self-insurance for liability vehicle and the compensation, general liability, workers’ benefits. healthcare employee-related obligation for Company’s by considering estimated these risks with Liabilities associated are frequency factors, and demographic historical claims experience, severity factors and other actuarial assumptions. Share-based compensation awards that may be settled in cash are are be settled in cash that may Share-based awards compensation as liabilities and marked market for to accounted Measured each period. performance-based only compensation cost for is recognized awards that the performance if it is probable condition will be achieved. Share-Based Compensation Share-Based Compensation its share-based expense for compensation recognizes The Company The fair value granted. that are based on the fair value of the awards using the Black- of grant at the date options is estimated of stock Scholes-Merton for was developed option valuation model which that have traded options use in estimating the fair value of exchange Option valuation transferable. fully restrictions and are no vesting includ- the input of highly subjective assumptions, methods require compensation cost, Measured priceing the expected stock volatility. the vesting ratably over is recognized forfeitures, net of estimated share-basedperiod compensation award. of the related Pre-Opening Costs The costs of start-up costs and new organization including activities, expensed as incurred. are openings, store Operating, Selling, General and Administrative Expenses and Administrative General Selling, Operating, expenses include all and administrative general selling, Operating, the to related those costs except operating costs of the Company stores transportation the warehouses, the supplier to from products of the transportation to the the costs related from of products or clubs, for or clubs and the cost of warehousing the stores to warehouses and the cost of warehousing a result, As Club segment. our Sam’s and International distri-Wal-Mart segments Stores occupancy our for general and selling, included in operating, bution facilities are do not include the cost of our we Because expenses. administrative and International distributionWal-Mart facilities in segments Stores not be compara- may margin gross t and profi our gross cost of sales, their to include all costs related that may those of other retailers ble to distributioncosts of sales and in the calculation of gross facilities in margin. gross t and profi Costs Advertising $1.6 bil- $1.9 billion, and were expensed as incurred Advertising costs are 2005, respectively. lion and $1.4 billion in fiscal 2007, 2006 and Advertising costs consist primarily of print advertisements. and television Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 46 Weighted-average interest rate Average borrowings dailyshort-term atany monthend amount outstanding Maximum Fiscal Year (dollars inmillions): borrowings andinterest onshort-term Information rates isasfollows 2 to current presentations. reclassifiCertain cationshave to conform periods beenmade to prior Reclassifi may diff period. results Actual revenues thereporting andexpensesduring the Consolidated Financial amountsof Statements andthereported aff tions aff estimatesto andassumptions. make These estimates andassump- requireswith generallyaccepted accountingprinciples management The preparation ofourConsolidated Financial Statements inconformity Estimates andAssumptions their eff included inthediluted netincomepershare calculationbecause 31,2007,2006and2005,respectively,January whichwere not 62 million,57millionand59optionshares outstandingat 2007, 2006and2005,respectively. The Company hadapproximately stockrestricted was4million,5millionand7shares infi scal stockand restricted grants. The dilutive eff outstanding shares adjusted for thedilutive eff per commonshare isbasedontheweighted-average numberof average numberofoutstandingcommonshares. Diluted netincome Basic netincomepercommonshare isbasedontheweighted- Net Income Per Common Share Total accruedliabilities Other Self-insurance Accrued wagesandbenefi ts 31, January Accrued liabilitiesconsistofthefollowing (dollarsinmillions): Accrued Liabilities Notes to Consolidated Financial Statements ect thedisclosureect ofcontingentassetsandliabilitiesatthedate of

Long-Term Debt Commercial Paper and ect would beantidilutive.ect ect the reported amountsofassetsandliabilities. thereported ect They also er from thoseestimates. cations $7,968 4,741 2007 ect ofstock optionsand ect 4.7% ect ofstock options ect 5,719 4,823 2006 2005 2,954 $9,054 $7,782 $14,675 $ 5,347 3.4% 1.6% 6,374 2007 $13,274 2,583 $ 4,414 6,277 2006 .7% Notes due2021 Notes due2007 Other Notes due2013 5.170% LIBORless0.140% Notes due2018 Notes due2024 Notes due2017 1.100 –13.250%, Notes due2015 1.600 –2.300% 3.750 –5.000% 2.000 –2.500% 2.100 –2.875% 6.750% .5% Notes due2036 Notes due2011 Notes due2009 0.1838 –10.880% LIBORless0.10% Notes due2010 DuebyFiscal Year 0.310 –9.200%, 5.250% 1.200 –6.875% Interest Rate 31,consistsof(inmillions): Long-term debtatJanuary on undrawn amounts. 50 basispoints, andincurcommitment fees of2to 7.5basispoints rates pluszero ofLIBORplus11to 13basispointsandatprime to interest June2008and2011,carry between times starting commercial paper. The committed linesofcredit mature atvarying $6.5 billionwith54firms andbanks, which were used to support 31,2007,theCompany hadcommitted linesofcreditJanuary of 31,2007and2006,respectively.commercial paperatJanuary At borrowings consisted of$2.6billionand$3.8 Short-term within oneyear intheConsolidated BalanceSheets. All oftheseissuanceshave beenclassifi debtdue edaslong-term notes mustsell, andtheCompany mustrepurchase, thenotes atpar. not occuratthetimeofany interest rate reset, theholdersof of theinterest rate. If, for any reason, ofthe notes does theremarketing are withtheannualreset structuredto inconnection beremarketed amount of$500millionandthesecondin$1.0billion, time. Two puttablereset securities, oneinthe issuesofmoneymarket Company to repurchase thedebtatparplusaccruedinterest atany The holdersofone$500milliondebtissuancemay require the The Company has$2.0billionindebtwithembedded putoptions. (2) Includes adjustmentstodebthedgedby derivatives. (1) Notes duein2011and2019bothinclude$500millionputoptions. oa Total .0% Notes due2027 Notes due2039 Notes due2031 Notes due2012 5.502% Notes due2014 4.875% 5.750 –7.550% 1.200 –4.125% Notes due2008 0.750 –7.250% LIBORless0.1025% 2.875 –13.750%, .5 .0% Notes due2019 Notes due2016 2.950 –5.006% 3.150 –6.630%

Notes duein2027include$1.0billionputoptions. (2)

(1) (1) (1)

$ 4,614 $32,650 4,372 4,465 1,966 1,983 2,426 2,970 3,141 3,292 1,000 2007 250 515 759 769 18 28 37 45 – – 25 3,415 23 31 41 53 266 516 2,800 4,279 $ 4,527 2006 872 $31,024 – 1,890 2,015 2,885 3,311 3,308 – 767 Wal-Mart 2007 Annual Report 47 extent a great set to ective in fair value of the hedges hedges and all changes Financial Instruments Financial

3 and for hedging nancial instruments derivative fi uses The Company changes in interest to non-trading purposes its exposure manage to in nancial instruments fi Use of derivative rates. exchange and foreign certain to subjects such as the Company risks, programs hedging market Market risks. the possibility and credit that the risk represents In relation- instrument will change. value of the derivative a hedging is off in the value of the derivative the change ship, risk by the change in the value of the underlying Credit item. hedged the possibility that the counterparty represents derivatives to related or contractual, The notional, terms ll the of the contract. will not fulfi to nancial instruments is used fi derivative amount of the Company’s the and does not represent be paid or received to interest measure risk. through credit risk due to is monitored Credit exposure Company’s setting concentration limits including procedures, established approval collateral ratings and requiring credit by counterparty, reviewing The majority of the Company’s (generally cash) when appropriate. by nationally or better “AA-” transactions with counterparties are rated rating agencies. credit recognized Instruments Value Fair risks the minimize swaps to rate interest into enters The Company Under the swap nancing activities. its fi with and costs associated variable-rate pays and receives the Company interest agreements, of the instruments. the life periodicallyover payments interest xed-rate fi be paid or to interest measure used to The notional amounts are All loss. credit due to the exposure and do not represent received rate xed interest fi swaps that receive rate interest of the Company’s designated are payments rate variable and pay interest payments terms c amounts of and notional the specifi As as fair value hedges. instruments exactlythe derivative those of the instruments match be per- assumed to instruments were the derivative being hedged, eff fectly on the balance sheet with no net impact on the recorded were income statement. The Company had trade letters of credit outstanding totaling $3.0 billion outstanding totaling of credit trade letters had The Company At Januaryand $2.6 billion at January 31, 31, 2007 and 2006, respectively. outstand- of credit had standby letters 2007 and 2006, the Company of These letters $2.2 billion and $2.3 billion, respectively. ing totaling of inventory and self- the purchase issued primarily for were credit insurance purposes. Thereafter 300 Ended January 31, Year Fiscal 2008 2009 2010 2011 2012 Annual Maturities Thereafter Total $ 10 10 10 10 $350 10 The Company has entered into sale/leaseback transactions involving sale/leaseback transactions into involving has entered The Company These transactions the underlying title to land. buildings while retaining in long-term included debt nancings and are as fi for accounted were obligations The resulting and the annual maturities schedule above. (in millions): years and thereafter ve during the next as follows fi mature Thereafter 12,704 Ended January 31, Year Fiscal 2008 2009 2010 2011 2012 Thereafter Maturity Annual Total $ 5,428 4,499 4,621 2,875 $32,650 2,523 Long-term debt is unsecured except for $333 million, which is which is $333 million, for except debt is unsecured Long-term by property carryingcollateralized with an aggregate of value maturities $1.3 billion. Annual of long-term debt approximately (in millions): are during and thereafter the next years five In connection with the Company’s borrowing arrangements, the the arrangements, borrowing In connection with the Company’s However, nancial covenants. observe to fi is not required Company undrawn under certain were $6.0 billion, which totaling of credit lines observe to as of January certain has agreed 31, 2007, the Company minimum amounts to the most restrictive of which relates covenants, In debt and long-term leases. addition, one of of additional secured on $2.0 billion of covenants nancial our subsidiaries has restrictive fi and maintain certain sales, it to equity, long-term debt that requires with these covenants was in compliance Company The t levels. profi at January 31, 2007. Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 48 Long-term debt fiNon-derivative nancialinstruments: Total Receive fi xed-rate, pay oatingrate interest ratefl swapsdesignated asfairvaluehedges fiDerivative nancialinstrumentsdesignated for hedging: at1/31/2007and1/31/2006,respectively) notionalamount:¥0and¥52,056 asanetinvestment hedge(Cross-currency Receive fi xed-rate, pay interest xed-rate rate swapdesignatedfi cross-currency 1/31/2007and1/31/2006) notionalamount:GBP795at asnetinvestment hedges(Cross-currency Receive fi xed-rate, pay interest xed-rate rate swapsdesignatedfi cross-currency at1/31/2007and1/31/2006,respectively) asacashfl notionalamount:CAD0and CAD503 owhedge(Cross-currency Receive fi xed-rate, pay interest xed-rate rate swapdesignatedfi cross-currency Fiscal Year 31, EndedJanuary Notional Instrument Fair Value ofFinancial Instruments Amount Fair Value due to the short maturity ofthese instruments. maturity due to the short Cash andcash equivalents: income taxes andother, date. basedonmaturity with anunrealized lossare recorded inaccruedliabilitiesordeferred and deferred charges, date. based onmaturity Those instruments Consolidated Balance Sheetsinothercurrent assetsorother Hedging instrumentswithanunrealized gainare recorded onthe 2006, respectively. Allchangesinthefairvalueoftheseinstruments of theCompany’s 31,2007and netinvestment inJapanatJanuary ¥142.1 billionand¥87.1ofdebtthatisdesignated asahedge 2006, respectively. The Company alsohasoutstandingapproximately 31,2007and net investment asofJanuary intheUnited Kingdom £2.0 billionofdebtthatisdesignated asahedgeoftheCompany’s The Company hasoutstandingapproximately £3.0billionand forin onecurrency fi xed-rate payments inanothercurrency. Japan. The agreements areto exchange contracts fi xed-rate payments rate swapsthathedgeitsnetinvestments and intheUnited Kingdom interest to cross-currency 31,2006,theCompany wasparty January rate swapsthathedgeitsnetinvestment At intheUnited Kingdom. interest to cross-currency 31,2007,theCompany isparty At January Net Investment Instruments Notes to Consolidated Financial Statements amountapproximates fairvalue The carrying (in millions)

the agreements dates. asofthereporting estimated amountstheCompany would receive orpay to terminate Fair value instrumentsandnetinvestment instruments: borrowing rate for ofborrowing arrangements. similartypes Long-term debt: matured infiscal2007. gains orlossesonforeign-denominated debt. The instruments other comprehensive to incometo offset earnings transaction rate resulted inreclassification ofamountsfrom accumulated another currency. Changesintheforeign spotexchange currency fixed-rate for payments inonecurrency fixed-rate payments in exchange risk. currency The agreement to exchange wasacontract debt. The swapwasdesignated asacashflow hedgeofforeign foreign-denominatedhedge theforeign ofcertain risk currency interest rate to swapto across-currency The Company wasparty Cash Flow Instruments in accumulated othercomprehensive income. ting theforeign translationadjustmentthatisalsorecorded currency are recorded inaccumulated othercomprehensive income, off $32,650 $ 6,445 $ 5,195 Fair valueisbasedontheCompany’s current incremental 1,250 2007 – – $31,024 $ 8,952 $ 6,945 2006 432 1,250 325 $32,521 $ (182) (1) $ 2007 (181) – – The fairvaluesare $31,580 2006 (17) (120) $ (111) $ 133 (107) set- Wal-Mart 2007 Annual Report 49 t d in d in other other 1,053

tements oftements reign currencyreign 1, 2007, 2006 and (15) (15) (120) (120) 123 123 123 (117) (117) (117) 1,291 $ (6) $(232) $ $(232) (6) 1,291 $ 1,584 1,584 1,584

Accumulated Other Comprehensive Income Income OtherAccumulated Comprehensive

In conjunction with the disposition of our operations in South Korea and Germany, the Company reclassifi ed $603 million from fo ed $603 million from reclassifi the Company In conjunction and Germany, operations in South Korea with the disposition of our The foreign currency gains of $143 million, $521 million, and $292 million at January translation amount includes translation The foreign 3 Kingdom United hedges of our operations in the and Japan. net investment to related 2005, respectively, Sta discontinued operations within our Consolidated income into other comprehensive translation amounts included in accumulated year 2007. scal Income fi for

Balance at January 31, 2004 currency translation adjustment Foreign Change in fair value of hedge instruments earningsto cation Reclassifi Subsidiary minimum pension liability Balance at January 31, 2005 currency translation adjustment Foreign Change in fair value of hedge instruments 1,938 earningsto cation Reclassifi Subsidiary minimum pension liability $ 1,044 Currency Balance at January 31, 2006 Foreign (1,691) Derivative Translation $ 2,982 (3) $ Minimum (43) Instruments Liability Pension $ (190) Total (5) $ (31) 41 $ 851 $ (283) (93) 1,938 30 (43) $ 2,694 (1,691) (93) 51 (31) 41 51 30 4 Amounts include equity. shareholders’ to directly plus certain income is net income recorded that are Comprehensive other items ne recorded and minimum pension liabilities are instruments derivative the Company’s income for other comprehensive accumulated further of accumulated changes in the composition table gives detail regarding The following income tax effects. of the related income during fiscal 2007, 2006 and 2005 (in millions): comprehensive Notes to Consolidated Financial Statements Financial Consolidated to Notes Foreign currency translation adjustment Foreign Change in fair value of hedge instruments earningsto cation Reclassifi Subsidiary minimum pension liability of tax 158, net initial application of SFAS for Adjustment January at Balance 31, 2007 $2,875 $ – $(367) 2,508 $ Wal-Mart 2007 Annual Report 50 Ohr Valuation allowance Total deferred taxassets Other for deductible taxpurposes Share-based notyet purposes reporting compensation Amountsaccruedfor fi nancial Netoperatinglosscarryforwards Deferred taxassets Total deferred taxliabilities Other Inventory andequipment Property Deferred taxliabilities 31, January are asfollows (inmillions): thatgive to signifi rise Items ofthe deferred taxaccounts cantportions interest taxes andminority operations Total incomefrom continuing before income OutsidetheUnited States United States Fiscal Year 31, EndedJanuary isasfollowsinterest (inmillions): byjurisdiction from continuingoperationsbeforeIncome incometaxes andminority Total provision for incometaxes Total deferred taxprovision International State and local Federal Deferred: Total current taxprovision International State andlocal Federal Current: Fiscal Year 31, EndedJanuary The incometaxprovision consistsofthefollowing (inmillions): 5 Notes to Consolidated Financial Statements e eerdtxlaiiis Net deferred taxliabilities netofvaluationallowance Total deferred tax assets,

Income TaxesIncome $18,968 $15,158 $6,365 $4,871 3,810 6,276 2007 2007 100 883 522 (15) 89 4 $17,535$16,320 $14,447$13,599 20062005 $5,803$5,589 56 (71) $4,646$4,116 20062005 3,0882,721 (129)263 23 (123) 5,9325,326 837570 449640 (62) 311 $ 865 $4,035 $3,153 $1,098 $2,937 3,858 1,847 2007 (921) 846 300 282 600 3,545 737 248 1,668 $ $3,759 892 392 551 $2,816 2006 $1,126 $2,633 (912) Company’s assetsofdiscontinuedoperations. non-current ofthelossascapitalmay beincluded withthecharacterization tax asset,netofitsrelated valuationallowance, resulting from the against future capitalgainsandwould expire in2012.Any deferred a capitalloss, any suchcapitallosscouldonlyberealized byoff thelossisrecharacterized as ofsuchdeductions. If characterization in future periods. challengesthe often Revenue Service The Internal up to $1.6 billionwhichmay beincludedindiscontinuedoperations may resultdeduction intherecognition ofadditionaltaxbenefi tsof Finalstock deduction. resolution ofthe oftheamountandcharacter worthless operationsasanordinary on thedispositionofitsGerman this transaction. The Company thetaxlossrealized plansto deduct See Note 6,Acquisitions andDisposals, for additionalinformation about recognized ataxbenefi tof$126million related to thistransaction. addition,theCompany operations. on thedispositionofitsGerman In fiDuring scal2007,the Company recorded apretax loss of$918million now included. losses pre-acquisition of thediscontinuedoperationsandfor certain years through 2014.Prior year amountshave beenrestated for losses of$1.3billionexpire invarious will. Netoperatinglosscarryforwards willadjustgood- netoperatinglosscarryforwards these pre-acquisition 31,2007and2006.Any taxbenefiJanuary tultimately realized from theseamounts, $2.0billionrelates lossesatOf to pre-acquisition 31,2007and2006,respectively.$2.3 billionand$2.4atJanuary The Company of hadforeign netoperatinglosscarryforwards isnotpracticable. earnings undistributed amount oftheunrecognized deferred related taxliability to the manently reinvested inthebusiness. oftheThe determination have 31,2006,assuchearnings beenper- $6.8 billionatJanuary aggregating 31,2007and approximately $8.7billionatJanuary offoreignaccumulated earnings butundistributed subsidiaries Federal andstate incometaxes have notbeenprovided on Eff Other United States taxes outsidethe Income federal incometaxbenefi t State incometaxes, netof Statutory taxrate Statutory Fiscal Year 31, EndedJanuary as follows: rateincome taxrate onpretax andthefederal incomeis statutory A reconciliation ofthesignifi cantdiff foreign translation. currency The changeintheCompany’s netdeferred by isimpacted taxliability ective incometaxrateective 33.56% 35.00% (1.40%) (1.84%) 2007 1.80% erences theeff between 2006 2005 33.09% 34.25% 1.85% 2.27% 35.00% 35.00% (1.67%) (0.81%) (1.67%) (2.21%) (2.09%) ective set Wal-Mart 2007 Annual Report 51 In September 2005, the Company acquired a 33.3% interest in CARHCO, in CARHCO, a 33.3% interest acquired In 2005, the Company September 413 supermarkets operates in that currently a retailer and other stores The pur- Honduras and Nicaragua. Guatemala, Rica,Costa El Salvador, $318 million, including transaction chase price was approximately in investment for its accounted Company scal 2006, the Incosts. fi of the purchase with Concurrent under the equity method. CARHCO an agreement into entered the Company in CARHCO, the investment fi s- rst quarter of fi in the additional 17.7% of CARHCO an purchase to to that will allow the Company agreement cal 2007 and an option 2010 from in September an additional 24% beginning up to purchase does the extent Company that the To of CARHCO. the shareholders the additional 24% of CARHCO, purchase to its option not exercise certainthe minority will have shareholders put rights that could the additional 24% of CARHCO purchase to the Company require 2012. after September the additional 17.7% of purchased In 2006, the Company February $212 million. Following price of approximately a purchase for CARHCO as a began consolidating CARHCO the Company this purchase, majority-owned subsidiary using a December 31 fiscal year-end. of consolidation through the date of operations from results CARHCO’s of a result As January the Company. not material to 31, 2007, were $1.3 billion assets and liabilities of total the consolidation of CARHCO, in our Consolidated recorded were and $576 million, respectively, assets able intangible Goodwill and identifi Statements. Financial $412 mil- approximately to in the consolidation amounted recorded was scal 2007, CARHCO During fi lion and $97 million, respectively. America.Wal-Mart Central renamed Disposals agreements nitive defi into entered Company scal 2007, the During fi which and Germany, in South Korea dispose of our operations to the net included in our International Consequently, segment. were the disposition of our our gain on these operations, to losses related and the loss on the disposition of our German operations, South Korea in our Consolidated as discontinued operations presented operations are of Cash Flows of Income Statements Statements and our Consolidated disposed of the asset groups Additionally, all periods presented. for reported and liabilities of discontinued operations in our as assets are Balance Sheets as of JanuaryConsolidated 31, 2006. business in In announced the sale of its retail May 2006, the Company Won for Ltd., Shinsegae Co., to 16 stores, South Korea, which operated This transaction 825 billion, subject certain to closing adjustments. 2006 in September Commission Trade Fair the Korea by was approved The Company quarterand closed during the third of fiscal 2007. sale of $103 million, and tax expense gain on the a pretax recorded of $63 million during fiscal 2007. In determining the gain on the allocated the Company operations, disposition of our South Korean The transaction con- the reporting$206 million of goodwill from unit. cation obligations. the eventIn be subject certaintinues to to indemnifi will we divestiture, with this associated additional charges any are there and report discontinued operations in such amounts through record periods. future

Acquisitions and Disposals Acquisitions

In December 2005, the Company completed the purchase of Sonae the purchase In completed December Company 2005, the operation in Southern Brazil, a retail Distribuição Brasil S.A. (“Sonae”), 139 hypermarkets, supermarkets operates that currently and ware- $720 million price was approximately The purchase house units. in the acquisition of recorded Assets including transaction costs. $566 million. As $1.3 billion and liabilities assumed were Sonae were goodwill of $305 million recorded we of the Sonae acquisition, a result results assets of $89 million. Sonae’s able intangible and other identifi included are the Company, not material to which were of operations, of acqui- the date following Statements Financial in our Consolidated year-end. scal Januarysition through 31, 2007, using a December 31 fi Through a warrant exercisable through December Company 2007, the through a warrant exercisable Through 539 mil- approximately ¥154.6 billion for can contribute approximately Seiyu stock. of lion additional common shares If the warrant is exercised, 71% of the common approximately own would the Company of Seiyu’s assume no conversion These percentages of Seiyu. shares and no other issuances of common shares into stock preferred Seiyu common shares. The minority interest in Seiyu is represented, in part, of by shares The minority in Seiyu is represented, interest of Seiyu com- convertible shares into that are stock preferred Seiyu’s proposes stock preferred mon stock. If the minority holder of Seiyu’s has the stock, the Company of preferred sell or convertto its shares In price. at a predetermined June those shares right purchase to certain purchased Seiyu the minority of 2006, the Company holder’s of the Seiyu $45 million. None approximately for shares preferred including the preferred by the Company, owned shares preferred Seiyu common been converted into have June, in purchased shares 55.3% approximately own would If the Company converted, shares. common shares. of Seiyu’s 6 Acquisitions an additional interest purchased During December 2005, the Company the bringing $570 million, approximately for (“Seiyu”), Ltd. The Seiyu, in including adjustments arising in Seiyu, investment total Company’s billion. Seiyu is a retailer $1.2 to the equity method of accounting, from general apparel, selling stores 392 operates in Japan, that currently certain and pur- this additional food services.merchandise, Following 53.3% of Seiyu common owned approximately the Company chase, the purchase, interest of the controlling on the date Beginning shares. began consolidating Seiyu as a majority-ownedCompany subsidiary from results of operations year-end. Seiyu’s scal using a December 31 fi January of consolidation through not materialthe date 31, 2007, were total of the initial consolidation of Seiyu, a result As the Company. to were respectively, assets and liabilities of $6.7 billion and $5.6 billion, Goodwill recorded Statements. Financial in our Consolidated recorded $1.5 billion. approximately to in the consolidation amounted Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 52 its associates withthoseofitsshareholders. The Company believes thatsuchawards better align theinterests of under thePlan have been registered of1933. Act undertheSecurities its associates, and210millionshares ofcommonstock to beissued (non-vested) share compensationawards stock andperformance to shareholder-approved, wasestablishedto grant stock options, restricted The Company’s Plan Stock Incentive of2005(the “Plan”), whichis the fair-value basedmethodofSFAS 123(R). compensationisaccounted forAll share-based inaccordance with onourresultsimpact ofoperations, fi nancialpositionor cash ows. fl upon itsrelease. The adoptionofSFAS 123(R)didnothave amaterial (“SFAS 123(R)”). The Company adopted theprovisions ofSFAS 123(R) Financial Accounting Standards Board issuedarevision ofSFAS 123 (“SFAS 123”),restating results 2004,the December for periods. In prior provisions ofStatement ofFinancial Accounting Standards No. 123 On February 1,2003,theCompany adopted theexpenserecognition 2006 and2005,respectively. plans was$101million,$82millionand$71for fi scal2007, income taxbenefi t recognized compensation for allshare-based $204 millionfor fi scal2007,2006and2005, respectively. The total tion costrecognized for allplanswas$271million,$244and compensationplans.through share-based various The compensa- compensation to executives andotherassociates oftheCompany 31,2007,theCompany hasawardedAs ofJanuary share-based 7 Net losses Net sales Fiscal Year 31, EndedJanuary from operationsasfollows: ourSouthKorean andGerman alsoincludenetsalesandoperatinglosses Statements ofIncome discontinued operationsaspresented intheCompany’s Consolidated additionto thegainandlossondispositionsnoted above,In such amountsthrough discontinued operationsinfuture periods. charges associated withthisdivestiture, we willrecord andreport indemnifiIn theevent cationobligations. there are any additional adjustmentandother to continues to apost-closing besubject $126 millionrelated infi to thistransaction scal2007. Thetransaction of fiIn addition,the Company scal2007. recognized ataxbenefi tof thethirdEuropean andclosedduring quarter competitionauthorities fi$918 millionduring scal2007. wasapproved Thetransaction bythe which operated 85stores, to Metro AG, andrecorded apretax lossof July2006,theCompanyIn agreed operations, to disposeofitsGerman Notes to Consolidated Financial Statements

Compensation Plans Share-Based $2,489 2007 (142) $3,482$3,734 20062005 (177) (215) (177) Expected lifeExpected inyears Risk-free interest rate Volatility Dividend yield Fiscal Year 31, EndedJanuary options atthegrant dates: the Company to estimate thefairvaluesofCompany’s stock tables represent aweighted average oftheassumptionsusedby on theannualdividendrate atthetimeofgrant. The following atthetimeofgrant. curve dividendyield isbased The expected risk-free interest rate isbasedontheUnited States Treasury yield ofourstock volatility isbasedonhistorical andtheexpected volatility ofgrants withsimilarvesting periods. Expectedexpiration activity option, theCompany basesitsestimates exercise onhistorical and estimating anoption’s fairvalue. To life theexpected determine ofthe interest rates thatcorrelate oftheoptionwhen term withtheexpected table. Generally, theCompany volatilities usesexpected andrisk-free assumptionsforuses various inputs, whichare noted inthefollowing optionvaluationmodel that grant usingtheBlack-Scholes-Merton The fairvalueofeachstock optionaward isestimated onthedate of to 34millionshares ofcommonstock. 2000 were registered to grant stock optionsto itscolleaguesfor up Colleague Plan Share 1999and Ownership The Asda ShareSave Plan becomingexercisable.and generallylapsesixmonthsafter The Asda options becomeexercisable eitherathree-year orfi after period ve-year valueonthedate ofgrant.associates Sharesave at80%ofmarket The Asda Sharesave Plan 2000(“Sharesave”), grants optionsto certain shares outofthemoneyatvesting date expire. The secondplan, grant. Shares in themoneyatvesting date are exercised while ofthedate of anniversary the grant andtheotherhalfonsixth from thedate ofgrant, of withhalfvesting onthethird anniversary ciates. Optionsgranted undertheCSOPPlan generallyexpire sixyears asso- grants optionsto Plan certain Share 1999(“CSOP”), Ownership stock optionplansto itsassociates. The fi rstplan, The Asda Colleague The Company’s subsidiary, Asda, United alsooff Kingdom erally have of10years. term acontractual upon theexercise ofoptionsare newlyissued. Optionsgranted gen- granted fi after scal2001generally vest over ve years.fi Shares issued options granted before fi scal2001 vest over seven years. Options of theCompany’s stock atthedate ofgrant. Generally, outstanding have beengranted withanexercise price equalto themarket price Under thePlan plans, andprior substantiallyallstock optionawards

2007 19.4% 5.3 4.8% 2.3% 4.1 4.9 2006 2005 4.0% 3.3% 20.8% 25.7% 1.6% 1.1% ers two other other ers two Wal-Mart 2007 Annual Report 53 and and n on n on time and formance formance nce share nce share alue of shares alue of shares include awards include awards s $9.20, $11.82 y. years ended years ed, vested shares shares vested ed, he Plan, which ishe Plan, rights awards are are rights awards , was $103 million, Intrinsic Value ards may be settled may ards lities in the accom- k and performance share

Date Fair Value Fair Date Life in Years in Life Remaining Exercise Price Exercise

As of January 31, 2007, there was $360 million of total unrecognized compensation cost related to restricted stock and performa restricted stock to compensation cost related of JanuaryAs unrecognized was $360 million of total 31, 2007, there Granted 8,022,000 45.95 48.95 Restricted at January and performance stock awards share 31, 2006 8,022,000 Granted Vested (1,042,000) Forfeited January at 2007 31, Restricted awards and performance stock share 7,899,000 14,046,000 $ 48.28 $46.85 (833,000) 49.05 awards granted under the Plan, which is expected to be recognized over a weighted-average period of 3.9 years. The total fair v The total period of 3.9 years. a weighted-average over be recognized which is expected to under the Plan, granted awards years ended January scal respectivel 31, 2007, 2006 and 2005, was $38 million, $20 million and $34 million, during the fi vested As of January 31, 2007, there was $310 million of total unrecognized compensation cost related to stock options granted under t under options granted stock to compensation cost related of JanuaryAs unrecognized was $310 million of total 31, 2007, there The weighted-average grant-date fair value of options granted during the fi scal years ended January scal 31, 2007, 2006 and 2005, wa during the fi fair value of options granted grant-date The weighted-average These grants certain to stock associates. various of restricted (non-vested) types grants of awards Company the Under the Plan, vesting is based on the passage of Plan which under the performance began issuing awards Company 2005, the scal share During fi restricted stoc liabilityThe total for each reporting period. liabilities is remeasured The fair value of the restricted stock Granted 12,451,000 43.74 26.31 12,451,000 Outstanding at January 31, 2006 (5,015,000) Granted Exercised or expired Forfeited JanuaryOutstanding at 2007 31, January at 31, 2007 Exercisable 71,911,000 scal during the fi of options vested fair value The total period of 3.0 years. a weighted-average over be recognized expected to 71,376,000 January million and $161 million, respectively. 31, 2007, 2006, and 2005, was $160 million, $197 $ 49.69 36,917,000 ended January during the years intrinsicThe total value of options exercised 31, 2007, 2006 and 2005 and $11.39, respectively. (7,971,000) $48.65 $125 million and $235 million, respectively. $48.82 aw The restricted stock periods vary. Vesting performance the passage of time, based on that vest criteria, shares or both. for ed as liabi classifi are these awards election. Consequently, cash, based upon the associate’s or as stock in stock, or deferred 47.36 The restricted stock in stock. be settled or deferred to the award has elected for sheets unless the associate balance panying settled in stock. 6.6 5.1 and retur growth on the extent based which revenue the associate to accrue to These awards of performanceachievement criteria. achiev a one- are over extent Based on the which the targets period. three-year to attained or exceeded to goals are investment performance amount. Because the or cash, the per be settled in stock may award 150% of the original shares 0% to range from may $130,266,000 balance sheets. as liabilities in the accompanying for accounted are shares $ 82,447,000 at Januaryawards 31, 2007, was $153 million. below activity and performance fiscal 2007 is presented restricted stock award for share non-vested A summary of the Company’s under the Plan: could be earned that or vested the maximum number of shares represents Awards Restricted Share and Performance Stock Non-Vested Shares Grant- Weighted-Average A summary of the stock option award activity for fi scal 2007 is presented below: scal 2007 is presented A summary activity fi option award for of the stock Shares Options Weighted-Average Weighted-Average Aggregate Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 54 rest breaks. found infavor oftheCompanyThe jury ontheplaintiff imately $78millionontheirclaimsfor off awarded back-pay2006, thejury damages to the plaintiff theirfullmealandrestmembers from breaks. taking 13, OnOctober failed to pay class membersfor andprevented allhoursworked class in Philadelphia, Pennsylvania. The plaintiff Wal-Mart Stores, Inc. above, lawsuits described anotheroftheclass-action In 31,2007,theCompany fiand onJanuary leditsNoticeofAppeal. Company believes ithassubstantialdefenses to theclaimsatissue, amount ofapproximately $26millionincostsandattorneys’ fees. The 2006, thejudgeentered anorder awarding theplaintiff all, relief oftheinjunctive sought by theplaintiff inJune2006,thejudgeenteredtrial anorder allowingsome, butnot penaltiesand$115millioninpunitive damages. Followingutory abench 2005. returned averdict ofapproximatelyThe jury $57millioninstat- the plaintiff law, relief. damagesand injunctive on trial andseekmonetary Ajury were notprovided mealandrest breaks inaccordance withCalifornia Stores, Inc. above lawsuits described is One oftheclass-action fromloss whichmay arise theselawsuits. Company cannotreasonably estimate thepossiblelossorrangeof case, certifi cationwas granted andthecasewasthendismissed. The denied andthecasewasthendismissed, andinoneadditionalsuch anotherfi ofthesecases.only intwo In ve suchcases, certifi cationwas of thesecases;andhasbeenconditionallygranted for noticepurposes ineight ofthesecases;hasbeengrantedfourteen in wholeorinpart cases. Where ithasbeenaddressed, certifi cationhasbeendeniedin certifi ofthese cationhas inamajority yet to beaddressed by thecourt damages, relief, injunctive etary orboth.Classcollective-action for performed. work The complaintsgenerallyseekunspecifi edmon- or failedto provide thattheywere breaks, work notpaid orotherwise ciates whoallegethattheCompany forced themto work “off allegations inwhichtheplaintiff The Company isadefendant innumerous casescontainingclass-action tomaterial theCompany’s fi nancialconditionor results ofoperations. the Company, individuallyorintheaggregate, may result inliability related matters, discussedbelow, ifdecidedadversely to orsettledby interests oftheCompany’s shareholders. The matters, orgroups of into settlement agreements, ifitbelieves settlementisinthebest into discussionsregarding settlementofthesematters, andmay enter Company’s Consolidated Financial Statements. The Company may enter respect to thesematters, where appropriate, whichare refl inthe ected “Accounting for Contingencies,” theCompany hasmadeaccrualswith accordance withStatement ofFinancial Accounting Standards No. 5, The Company isinvolved inanumberoflegalproceedings. In 8 Notes to Consolidated Financial Statements

Litigation , a class-action lawsuit inwhichtheplaintiff , aclass-action s’ 22, damagesconcludedonDecember claimsfor monetary , a jury trial was commenced on September 5, 2006, wascommenced onSeptember 5,2006, trial , ajury s are current andformer asso- hourly -the-clock work andmissed work -the-clock s allegethattheCompany s. 27, OnDecember Savaglio v. Wal-Mart s allege that they s allegethatthey Braun/Hummel v. s an additional s anadditional s ofapprox- the clock” s’ been denied cases undertheFLSAhasbeengrantednotice purposes inoneofthese and NewMexico Michigan, Tennessee. Conditional certifi cation for status understate andfederal laws, whichare pendinginCalifornia, brought managerswhochallengetheirexempt onbehalfofsalaried The Company iscurrently adefendant infi putativeve classactions or rangeoflosswhichmay result from thislawsuit. this case. The Company cannotreasonably estimate thepossibleloss bonus plans. hasmadenodecisiononclasscertifiThe court cationin associatemethodology ofpayments incentive madeundervarious ispendingin CaliforniaA putative challenging classaction the for animmediate appeal. the classentirely. hisruling isanticipated thatthejudgewillcertify It and onNovember 7,2006,thejudgeentered anorder decertifying inorderdocket to consider Wal-Mart’s theclass, motionto decertify date,scheduled trial however, thejudgetook thecaseoff treble damages, interest andattorneys’ fees. before Shortly the approximatelywere seeking $90millioninbackpay, plusstatutory vented theirfullmealandrest classmembersfrom breaks, taking and Company failedto pay classmembersfor andpre- allhoursworked inCambridge, Massachusetts. a jury The plaintiff Stores, Inc. above, lawsuits described Another oftheclass-action in post-trial motionsand, ifnecessary, onappeal. defenses to theclaimsatissue, andintends to challengetheverdict interest andattorneys’ fees. The Company believes ithassubstantial of approximately penalties, plusprejudgment $62millioninstatutory claims.meal-period The plaintiff The Company isadefendant in fromarise theselawsuits. reasonably estimate thepossibleloss orrangeoflosswhichmay 1.6 millionpresent andformer female associates. by theplaintiff and managementtrackpromotions challenged policiesandpractices 26,1998,whohaveDecember beenormay to besubjected thepay employed atany domesticretailWal-Mart store atany timesince ages, andlostpay, exceptions, to includesallwomen certain subject relief, ofliability,purposes anddeclaratory injunctive punitive dam- certifi cation. Theclass, whichwascertifi for court edbythedistrict theplaintiff anddenying inpart granting inpart attorneys’ issuedanorder fees. court OnJune21,2004,thedistrict things, relief, injunctive front pay, backpay, punitive damages, and pay, trainingandjob assignments. The complaintseeks, among other againstwomen ofdiscriminating inpromotions, andpractice pattern States. The complaintallegesthatthe Company hasengagedina all oftheCompany’s retail stores andwarehouse clubsintheUnited was brought onbehalfofallpastandpresent female employees in ofCalifornia. District forThe case theNorthern Court States District lawsuit commencedinJune2001andpendingtheUnitedaction

(Comer v. Wal-Mart Stores, Inc.) , had been scheduled to go to trial on October 2,2006,before, hadbeenscheduledto onOctober goto trial (Sepulveda v.(Sepulveda Wal-Mart Stores, Inc.) s. The classascertifi edcurrently includesapproximately s are now seeking anadditionalawards are now seeking Dukes v.Dukes Wal-Mart Stores, Inc. . In another,. In classcertifi cationhas . The Company cannot s allegedthatthe s’ motionfor class Salvas v. Wal-Mart the trial thetrial , aclass- Wal-Mart 2007 Annual Report 55 documents and administrative ce for District the Central of California, ce for District the Central that it is of California ce for that the use of other things, among ce contends, On November 8, 2005, the Company received a grand jury a grand received subpoena 8, 2005, the Company On November Offi Attorney’s U.S. the from receipt, the Company’s seeking to relating documents and information storage treatment, recycling, cation, transportation, identifi handling, and disposal of certain hazardous that constitutes merchandise by has been informed Company The waste. materials or hazardous Offi Attorney’s the U.S. violations of the potential into of a criminal investigation a target Water ConservationResource the Clean and Recovery Act (“RCRA”), This U.S. Statute. Transportation Materials Act, and the Hazardous OffiAttorney’s transport to trucks Company the certain from merchandise returned RCRA by because is prohibited centers its return to stores Company’s The government waste. hazardous be considered those materials may the must ship from comply with RCRA,alleges that, to the Company ed dis- a certifi to directly waste” “hazardous certainstore materials as Company The carrier. waste ed hazardous posal facility a certifi using that the practicecontends of transporting to merchandise returned subsequent disposition, including disposal by for centers its return regulations. and is compliant with applicable laws ed facilities, certifi the possible loss or range estimate cannot reasonably The Company this matter. ariseof loss which may from Office in the Northern Attorney’s the U.S. District of Additionally, the Company’s regarding own investigation its has initiated California and the Company waste materials hazardous and handling of hazardous the California from document requests administrative has received documents and requesting Substances Control Toxic Department of distribution facilities. two of the Company’s to with respect information Angeles the Los a subpoena from also received the Company Further, County Offi District Attorney’s regarding among other things, information, requesting interrogatories California waste. handling of materials and hazardous the Company’s authorities of Nevada have and local government and the State state is The Company these matters. into investigations also initiated The Company authorities. cooperating fully with the respective the possible loss or range of loss estimate cannot reasonably this matter. arisewhich may from rming the rming successful in s are Mauldin v. Wal-Mart Wal-Mart Mauldin v. s fi led an unopposed led s fi and or scope, size erent is an action by the brought could awarded, damages which, if s also seek punitive , a class-action lawsuit that was fi led on led October 16, 2001, in , a class-action that was fi lawsuit rmative relief. The complaint alleges that the Company based hir- The complaint alleges that the Company rmative relief. Until recently, the Company was a defendant in was a defendant the Company Until recently, August 24, led on that was fi in a lawsuit a defendant is The Company District Court the Eastern District 2001, in the U.S. for of Kentucky. Inc. Stores, Wal-Mart Smith) v. EEOC (Janice district court’s certifi cation order. On February Company 20, 2007, the On cation order. district certifi court’s by a larger led a petition askingreconsidered that the decision be fi panel of the court. appeal of is not successful in its If the Company court cation, or an appellate for ruling that allows issues a class certifi with a diff cation of a class or classes the certifi which there on the merits from verdict is a subsequent adverse if there settlement of of a negotiated or in the event is no successful appeal, liability the Company. could be material to the litigation, the resulting The plaintiff the settlement, could vary negotiated the litigation or any widely, the possible loss or range of estimate cannot reasonably Company the litigation. ariseloss which may from Inc. Stores, District States the United Court the Northern for District of Georgia, August 23, 2002, consisting ed on Atlanta Division. A class was certifi participants who were Wal-Mart associates in the Associates of female the pres- 8, 2001, to March time from at any Plan Welfare Health and The class sought contraceptives. using prescription ent and who were contra- prescription for include coverage to amendment of the Plan of of reimbursement all members in the form for back pay ceptives, and interest prejudgment contraceptives, the cost of prescription On December 8, 2006, the plaintiff fees. attorneys’ in light of the Company’s dismiss the case voluntarily motion to beginning coverage such provide to amendment of the Plan recent January grant- 1, 2007. On December 20, the Court an order entered ing the motion and dismissing the case. who made EEOC on behalf of Janice Smith and all other females distribution Kentucky, at the London, requests application or transfer or transferred not hired and who were the present, 1995 to from center The class seeks which they applied. positions for the warehouse into during the or transfer hire not selected for those females for back pay The class also seeks injunctive and prospective period. time relevant affi VII of the 1964 Civil Rights Title ing decisions on gender in violation of The EEOC can maintain this action as a class without Act amended. as the possible reasonably estimate cannot Company The cation. certifi this litigation. ariseloss or range of loss which may from The Company believes that the district believes ruling is incorrect. court’s On The Company Court the Ninth States 31, 2004, the United Circuit of Appeals for August discretionary of the ruling. for petition review the Company’s granted 6, 2007, a divided three-judge On February States panel of the United Court the Ninth issued a decision affi Circuit of Appeals for the Company. material of additional amounts to in the payment result because of the uncertainty of the appeal from of the outcome However, cation decision, because of the uncertainty of the district certifi court’s the district by court, contemplated the balance of the proceedings the litigation, arising from if any, liability, and because the Company’s if plaintiff damages award any of including the size Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 56 lease terms basedoncurrentlease terms costestimates. 4 to 30years andwillapproximate $72millionannually over the estate developers willprovide for minimumrentals ranging from buildings for 141future locations. leaseswithrealThese underlying The Company hasentered into leasecommitmentsfor landand all oftheseagreements. pay upto approximately ofsomeor $150millionupontermination at will, cover upto afi andobligate the period Companyve-year to nated. These agreements, whichcanbeterminated byeitherparty uniqueequipmentintheevent theagreementscertain are termi- ties whichwould require usto purchase orassumetheleaseson intheUnited States,network we have agreements withthird par- distribution withthedevelopment ofourgrocery connection In expire arrangements infiThese two scal2011and scal 2019. fi 31,2007,theaggregate payment termination January was$69million. events were unlikely to payments occur.termination ifcertain At debtfi withcertain connection In nancing, we couldbeliable for early 1,888 have renewal options, anescalationinrentals. someofwhichmay trigger and 2005,respectively. SubstantiallyalloftheCompany’s store leases amounted to $41million, $27millionand$32in2007,2006 480 rentals basedonapercentage ofsales. Suchcontingentrentals 505 oftheCompany’sCertain leasesprovide for thepayment ofcontingent 520 5,686 540 634 29 are $601millionofcapitalleasesand$22operatingleases. $3,798 698 scheduleabove intheannualmaturities and operatingleases. Included 768 5,715 landthatwerebuildings andtheunderlying accounted for ascapital 826 The Company hasentered involving into sale/leasebacktransactions $10,446 $ 538 Leases Present valueofminimumleasepayments $ from 3.0%to 15.6% 842 Leases Less imputed interest atrates ranging Net minimumleasepayments Capital Operating Less costs estimated executory Total minimumrentals Thereafter 2012 2011 2010 2009 2008 6,678 Fiscal Year leasesare asfollows 31,2007,undernon-cancelable (inmillions): January 2006 and2005,respectively. Aggregate minimumannual rentals at rental were arrangements $1.4billion,$1.0billionand$1.1in2007, and contingentrentals) under operatingleasesandothershort-term 3,132 applicable to taxes, insurance, maintenance, otheroperatingexpenses stores andequipment.Rentals(including, leases, for amounts certain have ofits subsidiaries leasesfor long-term The Company andcertain 9 Notes to Consolidated Financial Statements

Commitments tions have defi nedbenefiarrangements that t are notsignifi cant. Sheets upontheadoptionofSFAS otherforeign 158.Certain opera- amountshave beenrecorded underfunded inourConsolidated Balance 31,2007and2006,respectively.and $228millionatJanuary These 2006, respectively. by$208million The planinJapanwasunderfunded 31,2007and by $251millionand$332atJanuary underfunded defi nedbenefi tpensionplans. Kingdomwas TheplanintheUnited The Company’s andJapanhave intheUnited Kingdom subsidiaries $199 millioninfi scal2007,2006and2005, respectively. discretion oftheCompany, andwere $274million,$244millionand foreign retirement savings andprofi plansare tsharing madeatthe inwhichtheyare established. to Annualcontributions the country administered baseduponthelegislative andtaxrequirements in benefi post-employment by various tarrangements. Theseplansare Employees inforeign whoare countries notU.S. citizens are covered 2005, respectively. $890 million,$827millionand$756infi scal2007,2006and discretion oftheCompany. Expenseassociated withtheseplanswas Profi Rico and Puerto and401(k) tSharing Plans are madeatthesole madeby theCompanyAnnual contributions to theUnited States Profi seven componentoftheplanafter tSharing years ofservice. componentoftheplan.AssociatesSharing are fullyvested inthe firights withthesame13investment cation options for the Profi t have 31,2007,associates withthree fulldiversi- years ofservice January change theirinvestment optionsatany time. Additionally, after fund. Associates’ 401(k)fundsimmediately vest, andassociates may their401(k)balanceintheplanisplacedabalanced an election, for the401(k)componentofplan.For associates whodidnotmake Associates may choosefrom among 13diff limits. statutory uptocontribute 25%oftheirpretax earnings, butnotmore than a percentage fi oftheirearnings. During could scal2007,participants the 401(k)componentofplan,associates to may contribute elect additionto theCompanycomponent oftheplan.In to contributions toCompany theassociates’ anadditionalcontribution makes 401(k) component oftheplanisentirely fundedby theCompany, andthe following oneyear ofemployment.participants The Profi tSharing Plan associates become underwhichmostfull-timeandmany part-time theUnited States,In theCompany maintainsaProfi and401(k) tSharing 10

Retirement-Related Benefits erent investment options Wal-Mart 2007 Annual Report 57 (1,529) ompany’s ompany’s as well as as well nternational ng decision tions before tions before elow are elow are discontinued ned subsid- $ 18,968 d operations. d operations. of the United of the United – 281,488 $ – 308,945 $

5,685 37,966 $ 43,999 $ 117,139 $ 5,686 49,018 $ 48,111 $ 135,624 $

2,212 312 1,286 1,649 5,459 – 1,649 (4,483) 1,286 3,896 587 – 2,212 312 29,489 $ 29,489 $ 32,809 $ 32,809 $ 17,029 1,512 4,259 (2,303) 20,497 (2,303) 4,259 17,029 1,512

$226,294 $41,582 $77,116 $ 34,649 $ – $344,992 $ 6,345 $55,989 $54,210 $151,193

Segments

Certain information for fi scal years 2006 and 2005 has been reclassifi ed and conforms to the current year presentation. year to the current ed and conforms reclassifi years 2006 and 2005 has been scal fi Certain for information Intercompany real estate charge (income) charge estate real Intercompany and amortizationDepreciation Operating income (loss) net expense, Interest Income continuing operations before from 2,754 and minority income taxes interest assets of continuing operations Total 1,561 513 $ 14,163 274 – 1,280 (3,267) 840 3,197 1,510 – (1,340) 4,185 17,300 $ 16,320 (980) Intercompany real estate charge (income) charge estate real Intercompany and amortizationDepreciation Operating income (loss) net expense, Interest Income continuing operations before from 3,454 and minority income taxes interest assets of continuing operations Total Ended January 31, 2005 Year Fiscal 1,922 Revenues from external customers 547 $ 15,324 Stores Wal-Mart Club Sam’s 296 191,826 $ – International 1,385 Other Consolidated (4,001) 37,119 $ 971 3,506 52,543 $ 1,456 – (1,502) $ 4,645 18,713 $ 17,535 (1,178)

The Wal-Mart Stores segment includes the Company’s supercenters, discount stores and Neighborhood Markets discount stores States, United in the supercenters, includes the Company’s segment Wal-Mart Stores The from continuing opera ned as income which is defi income,” operating “segment as t of its segments profi the measures The Company Ended January 31, 2007 Year Fiscal external from customers Revenues Stores Wal-Mart Club Sam’s International Other Consolidated 11 states in all 50 located stores principally and its subsidiaries engaged in the continuing operations of retail are The Company majority-ow in China, and through Canada, Puerto Rico Kingdom, Brazil, joint ventures and the United Argentina, through States, by our chief operati used based on the information es segments identifi The Company iaries America, in Central Japan and Mexico. business unit of the Company. among each performancemaker analyze resources to allocate and to I The as samsclub.com. as well States membership clubs in the United the warehouse includes Club segment The Sam’s walmart.com. table b in the “Other” The amounts under the caption States. operations outside of the United the Company’s consists of segment the C majority of Seiyu and CARHCO, ownership the periods prior the Company’s to For corporate assets and overhead. unallocated “Other.” portion minority the caption in those entities was also included under of our unconsolidated of the results interest of discontinue and results corporate overhead unallocated and minority and excludes income taxes interest expense, net interest minority and interest income taxes, continuing operations before income from to and the reconciliation Information on segments (in millions): as follows operations are (income) charge estate real Intercompany and amortizationDepreciation Operating income (loss) net expense, Interest Income continuing operations before from and minority income taxes interest of continuing operations assets Total Ended January 31, 2006 Year Fiscal Revenues from external customers Stores Wal-Mart Club Sam’s 209,910 $ International Other Consolidated 39,798 $ 59,237 $ $ Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 58 Net income $ 2,461 $ 2,805 $ 2,374 $ 3,589 $ 68,382 2,374 $ 0.86 $20,036 $ 2,805 $88,418 $ 57,325 (32) $17,271 0.57 $ 2,461 $74,596 $ 58,089 $17,843 (0.01) 0.67 3,621 $ (48) $75,932 $ $16,147 53,852 0.58 $69,999 $ 2,422 $ (0.01) 0.87 (48) $ $3,940 2,853 $ (0.01) 75,565 0.58 0.95 $2,647 $ 2,511 $ $ (50) $98,090 $2,083 63,765 0.68 (0.01) 0.63 $ $ $83,543 $2,615 0.59 64,585 $ 0.50 $84,524 – fiThe sumofquarterly nancialdata may not agree annualamountsdue to to rounding. $ Basicanddiluted netincomepershare 60,237 $78,834 0.63 Basicanddiluted losspershare from discontinuedoperations $3,940 $ – Basicanddiluted incomepershare from continuingoperations 0.95 53 $ $2,594 Basic anddiluted netincomepercommonshare: Net income $2,984 0.62 Loss from discontinuedoperations, netoftax $ 0.01 from continuingoperations Income (901) $2,660 Gross profi t 0.72 Cost ofsales $ Net sales (0.22) (45) Fiscal year 2006 0.64 $ Basicanddiluted netincome pershare (0.01) $ Basicanddiluted (loss) income pershare from discontinued operations Basicanddiluted income pershare from continuing operations Basic anddiluted netincome percommon share: Net income (Loss) income from discontinued operations, netof tax Income from continuing operations Gross profi Cost ofsales Net sales Fiscal year 2007 (Amounts inmillions,(Amounts except pershare information) 12 of theUnited States, additionsto long-lived assetswere $3.5billion, and $18.1billioninfi scal2007,2006and2005, respectively. Outside and otherassetsdeferred charges were $26.1billion,$22.4billion Outside oftheUnited States, long-lived assets, net,excluding goodwill $11.8 billionand$9.8infi scal2007,2006and2005, respectively. theUnited States,In additionsto long-lived assetswere $12.2billion, 31,2007,2006and2005,respectively.and $48.4billionasofJanuary other assetsanddeferred charges were $62.3billion,$55.5billion theUnited States,In long-lived assets, net,excluding goodwilland Notes to Consolidated Financial Statements

t 1,9 $999 1,7 $22,525 $19,778 $19,939 $18,597 t

Quarterly FinancialQuarterly Data(Unaudited) April 30, July 31, October 31, January 31, January 31, October July31, 30, April and $11.3 billion at January 31,2007,2006and2005,respectively.and $11.3billionatJanuary pr ily of and $26.0billion,respectively. Asda long-lived assets, consistingprimar- fisales during scal2007,2006and2005 were $28.9billion,$26.8billion segment. to Asda thetotalin comparison operationsoftheInternational States. The operationsoftheCompany’s are signifi Asda subsidiary cant segment includesallrealThe International estate outsidetheUnited $2.7 billionand$3.0infi scal2007,2006and2005, respectively. operty andequipment, net,totaled $13.3billion,$11.0 operty Quarter ended Quarter Wal-Mart 2007 Annual Report 59 ects of ects guid- provides ects in misstatements of prior year Subsequent Events

Accounting Bulletin No. 108, “Considering the Eff 108, Bulletin No. Accounting In September 2006, the Securities and Exchange Commission (“SEC”)In Commission 2006, the Securities September and Exchange issued Staff 14 approved of Directors Board 8, 2007, the Company’s On March $0.88 per share. annual dividend to in the Company’s an increase quarterly The annual dividend will be paid in four installments on April and January 4, 2007, 2, 2007, June 4, 2007, September 2, 17 and 16, May 18, August on March holders of record 2008 to December 14, 2007, respectively. of a 35% announced the purchase In 2007, the Company February 101 hyper- BCL operates (“BCL”). Ltd. Company in Bounteous interest The purchase banner. Trust-Mart markets in China under the in 34 cities 2007, the was $264 million. Also in February the 35% interest price for the selling to a loan issued purchase paid $376 million to Company equity of BCL. by the remaining which is securitized BCL shareholders entered in BCL, the Company with the initial investment Concurrent with the Company which provides a stockholdersinto agreement rights with a portionvoting associated of BCL common stock of the an additional 30% of the aggregate the loan, amounting to by secured the Company agreement, the purchase to Pursuant outstanding shares. in BCL on or before interest the remaining purchase to is committed price nal purchase The fi 2010 subjectFebruary certain to conditions. $320 million, net of will be approximately interest the remaining for and subject under certain reduction to loan repayments circumstances. Prior Year Misstatements Quantifying Misstatements when in Current Year Prior (“SAB 108”), in which the Staff Statements” Financial Year of the eff ance on the consideration the purpose of assessing for misstatements year quantifying current SAB 108 as of January adopted The Company as 31, 2007, materiality. a material impact on 108 did not have The adoption of SAB required. or liquidity. results of operations nancial condition, fi the Company’s Standards Accounting Financial issued In 2007, the FASB February and Financial Assets Financial Option for Value “TheFair 159, No. 115” No. Statement Liabilities – Including an amendment of FASB nancial fi many 159 permits measure to companies 159”). SFAS (“SFAS ed election instruments and certain at fair value at specifi other items The 1, 2008. February beginning 159 will be effective SFAS dates. on its 159 the impact assessing is currently of SFAS Company financial statements.

in ect be recorded will

Recent Accounting Recent Accounting Pronouncements

In September 2006, the FASB also issued Statement of Financial of Financial also issued Statement In 2006, the FASB September ned Defi for Accounting “Employers’ 158, No. Standards Accounting of Plans – an amendment Postretirement Pension and Other t Benefi This standard 158”). (“SFAS 87, 88, 106 and 132(R)” No. Statements FASB t plan in the state- of the funded status of a benefi recognition requires in recognition requires also The standard nancial position. ment of fi income of certainother comprehensive gains and losses that arise as under pension accounting rules, during deferred the period but are reporting es the timing of and adds certain disclosures. as modifi well and disclosure the funded status recognition adopted The Company elements as of January elements 31, 2007, and will adopt measurement The adoption of 158. as of January SFAS by 31, 2009, as required finan- a material impact on the Company’s 158 did not have SFAS of operations or liquidity. cial condition, results In July 2006, the Financial Accounting Standards Board (“FASB”) issued (“FASB”) Board Standards Accounting In July 2006, the Financial UncertaintyTaxes” for in Income “Accounting 48, Interpretation No. by prescrib- for income taxes, es the accounting (“FIN 48”). FIN 48 clarifi to a tax position is required threshold ing a minimum recognition FIN 48 also nancial statements. in the fi being recognized meet before cation, classifi measurement, guidance on derecognition, provides and disclosure accounting in interim periods, and penalties, interest 1, 2007, as 48 on February will adopt FIN The Company transition. eff which the cumulative and for required Accounting of Financial issued Statement In 2006, the FASB September This stan- 157”). (“SFAS Measurements” Value “Fair 157, No. Standards for measuring fair value establishes a framework nes fair value, defi dard accounting principles in generally accepted disclosures and expands 157 on will adopt SFAS The Company about fair value measurements. 157 is not expected The adoption of SFAS 1, 2008, as required. February nancial condition, fi a material impact on the Company’s have to operations or liquidity. of results 13 a consensus on reached Force Task Issues In June 2006, the Emerging Assessed Taxes for Requirements “Disclosure 06-3 (“EITF 06-3”), Issue No. Transactions.” Authorityby a Governmental on Revenue-Producing an entity choose betweenThe consensus allows two to acceptable transactions in whichaccounting policies for based on their alternatives such the entity authority, a governmental on behalf of collects taxes accounted collected are taxes method, the gross Under as sales taxes. expense. with an offsetting as a component of sales revenue for sales revenue. to a reduction the net method allows Conversely, 22, APB No. Entities should disclose the method selected pursuant to reported If gross are such taxes Policies.” of Accounting “Disclosure taxes. cant, entities should disclose the amount of those signifi and are reportsretrospec- nancial through fi The guidance should be applied to for cant, signifi if amounts are all periods presented, application for tive interim and annual reporting 1, 2007. Historically, February beginning sales net of tax collected. has presented the Company evaluating the is currently The Company earnings. retained determine the impactInterpretation to the Interpretation will have or liquidity. results of operations nancial condition, on its fi Notes to Consolidated Financial Statements Financial Consolidated to Notes Wal-Mart 2007 Annual Report 60 that ourauditsprovide areasonable basisfor ouropinion. evaluating theoverall fi nancial statement presentation. We believe used andsignifi cantestimates madebymanagement,as well as statements. Anauditalsoincludesassessingtheaccountingprinciples theamountsanddisclosures inthefievidence supporting nancial misstatement.material Anauditincludesexamining, onatest basis, sonable assuranceaboutwhetherthefi nancialstatements are free of standards require theauditto obtainrea- thatwe planandperform Public Company Accounting Board Oversight (United States). Those We ourauditsinaccordance conducted withthestandards ofthe fi nancialstatements basedonouraudits. management. Ourresponsibility isto express anopiniononthese These fi nancialstatements are the ofthe Company’sresponsibility fl 31,2007. ows for eachofthethree endedJanuary years intheperiod consolidated statements ofincome, shareholders’ equity, andcash 31,2007and2006,therelated Stores,Wal-Mart asofJanuary Inc. We have audited theaccompanying consolidated balancesheetsof Wal-Mart Stores, Inc. The Board ofDirectors andShareholders, Registered ofIndependent PublicReport Accounting Firm March 26,2007 Rogers, Arkansas March 26,2007expressed anunqualifi edopinionthereon. Organizations ofthe Treadway dated Commission andourreport Integrated Framework establishedin 31,2007,basedoncriteria as ofJanuary ness of Stores,Wal-Mart Inc.’s control internal over fi nancial reporting Company Accounting Board Oversight (United States), theeff We alsohave audited, inaccordance withthestandards ofthePublic Defi nedBenefi Other t Postretirement Pensionand Plans Financial Accounting Standards No. 158, eff As discussedinNote 13to theconsolidated fi nancialstatements, generally accepted accountingprinciples. withU.S. 31,2007,inconformity years endedJanuary intheperiod dated results ofitsoperationsandcashfl ows for each ofthethree 31,2007and2006,theconsoli- Stores,Wal-Mart atJanuary Inc. fairly, respects, inallmaterial theconsolidated fi nancialpositionof ouropinion, thefiIn nancialstatements referred to above present ective January 31,2007,theCompany adopted Statement of January ective issuedbytheCommittee ofSponsoring Employers’ Accounting for Internal Control – . ective- Wal-Mart 2007 Annual Report 61 ective internal control over fi nancial report- nancial fi over ective internal control subject periods the to are future ectiveness to ective internal control over fi nancial reporting nancial as of fi over ective internal control ectiveness of internal control over fi nancial reporting nancial did not include fi over ectiveness of internal control

Rogers, ArkansasRogers, 26, 2007 March Because of its inherent limitations, internal control over financial financial over internal control limitations, Because of its inherent projections Also, or detect misstatements. reporting not prevent may evaluation of eff of any in because of changes become inadequate may risk that controls or of compliance with the policies or that the degree conditions, deteriorate. may procedures Report Our “Management’s to in the accompanying indicated As on the assessment of and conclusion management’s Shareholders,” eff of American of Central Retail Holding Company, the internal controls scal 2007 and majority acquired in fi ownership which the Company of Financial Statements Consolidated scal 2007 is included in the fi Wal-Mart Central now knownThis entity, as Inc. Wal-Mart Stores, 0.9% and 0.6% of consolidated in the aggregate, America, represented, of the Company respectively, net sales, assets and consolidated total This acquisition is more January ended, the year 31, 2007. and for as of, for Statements Financial the Consolidated 6 to fully discussed in Note fi reporting nancial of over scal 2007. Our audit of internal control fi Inc. include an evaluation of the internal also did not Wal-Mart Stores, fi scal 2007 acquisition. reportingfor this nancial fi over control Inc. Wal-Mart Stores, that assessment In our opinion, management’s maintained eff January based on the in all material respects, 31, 2007, is fairly stated, Inc. maintained, Wal-Mart Stores, in our opinion, criteria. Also, COSO eff in all material respects, ing as of January criteria. 31, 2007, based on the COSO of the Public with the standards in accordance audited, also have We the consolidated States), (United Oversight Board Accounting Company Inc. as of JanuaryWal-Mart Stores, 31, 2007 and 2006, balance sheets of shareholders’ of income, statements consolidated and the related years in the period ended for each of the three ows and cash fl equity, January an 31, 2007 and our report 26, 2007 expressed March dated ed opinion thereon. unqualifi nancial reporting includes issued by the Committee of issued by the Committee over ective internal control over ective internal control ectiveness of the Company’s and ectiveness of internal control, ect on the fi nancial statements. nancial statements. ect on the fi ective internal control over fi nancial reportingfor its nancial and fi over ective internal control Internal Control – Integrated Framework – Integrated Internal Control those policies and procedures that (1) pertain of the maintenance those policies and procedures to ect the trans- and fairly accurately refl detail, that, in reasonable records actions and dispositions of the assets of the company; (2) provide as necessary recorded assurance that transactions to are reasonable with gener- in accordance nancial statements of fi permit preparation and expenditures and that receipts accounting principles, ally accepted authoriza- with being made only in accordance are of the company of the company;tions of management and directors and (3) provide or timely detection of prevention assurance regarding reasonable assets or disposition of the company’s acquisition, use, unauthorized a material eff that could have A company’s internal control over financial reporting is a process financial reporting over is a process internal control A company’s the reliability assurance regarding reasonable provide to designed fi for nancial statements reporting nancial of and the preparation of fi external accounting with generally accepted purposes in accordance fi over internal control A company’s principles. performing such other procedures as we considered necessary considered performing as we in the such other procedures basis a reasonable that our audit provides believe We circumstances. our opinion. for Sponsoring Organizations of the Treadway Commission (the COSO COSO (the Commission Treadway of the Sponsoring Organizations main- for is responsible management Inc.’s Wal-Mart Stores, criteria). taining eff financial over of internal control assessment of the effectiveness an opinion on management’s express reporting. is to Our responsibility assessment and an opinion on the eff reporting nancial Our audit respects. was maintained in all material fi nancial fi over included obtaining an understanding of internal control and evalu- assessment, testing reporting, evaluating management’s and operating eff ating the design We conducted our audit in accordance with the standards of the of the with the standards conducted our audit in accordance We Those States). (United Oversight Board Accounting Company Public plan and perform that we obtain rea- the audit to require standards sonable assurance about whether eff internal control over fi nancial reporting nancial audit. based on our fi over internal control We have audited management’s assessment, included in the assessment, included in the management’s audited have We under Report our Shareholders” “Management’s to accompanying “Report Reporting,” OverInternal on Financial Control the caption Inc. eff maintained Wal-Mart Stores, that reporting nancial January as of 31, 2007, based on criteria established fi in Internal Control Over Financial Reporting OverInternal Financial Control Shareholders, and of Directors Board The Inc. Stores, Wal-Mart Report of Independent Registered Public Accounting Firm on Firm Accounting Report Public of Independent Registered Wal-Mart 2007 Annual Report 62 Company, ofwhichtheCompany ownership in fi acquired majority control over fi Management’s assessmentoftheeff to Shareholders. whichappearsinthisAnnualReport their report LLP, anindependentregistered publicaccountingfi asstatedrm, in & 31,2007,hasbeenaudited byErnst asofJanuary reporting Young of theeff ing waseff based onitsassessment, Wal-Mart’s control internal over fi Internal Control —Integrated Framework OrganizationsSponsoring (“COSO”) ofthe Treadway Commission in bytheCommitteemanagement hasutilized setforth of thecriteria fi itsassessment, In making 31,2007. asofJanuary nancial reporting assessed theeffectiveness oftheCompany’s control internal over ing may notprevent misstatements. ordetect has Management Because ofitsinherent limitations, control internal over fi nancial report- generallyaccepted intheUnitedwith accountingprinciples States. of fi inaccordance purposes nancialstatements reporting for external ance regarding thereliability offi and thepreparation nancial reporting fi isaprocess designed nancial provideto reporting reasonable assur- adequate control internal over fi controlInternal over nancial reporting. hasresponsibility forManagement establishingandmaintaining onInternal ControlReport Over Financial Reporting Stock Exchange’s governance corporate listingstandards. Chief Executive Offi New York Stock Exchange therequired annualcertifi cationofour 31,2007. Additionally,ended January we have alsoprovided to the onFormattached asexhibitsto ourAnnualReport 10-K for theyear 31,2007. as ofandfor theyear endedJanuary These certifi cationsare required certifi cations related to our Consolidated Financial Statements We have fi the andExchange ledwiththeSecurities Commission (“SEC”) Financial Statements. and related withtheirauditofourConsolidated datainconnection have madeavailable & to Ernst Young LLPallofourfi nancial records Consolidated Financial Statements found inthisAnnualReport. We LLP, anindependentregistered publicaccountingfi rm, to auditour throughActing ourAudit Committee, we have retained & Ernst Young ically, bothwithandwithoutmanagementpresent. to theAudit Committee andmeetwiththeAudit Committee period- the independentauditors auditors andtheinternal have free access ofourfi controlinternal andtheobjectivity Both nancial reporting. procedures, theindependenceofourindependentauditors, our andregularly reviewsWal-Mart management’s fi nancialpoliciesand The Audit Committee stays informed ofthefi nancialconditionof information andtheauditofourConsolidated Financial Statements. of independentdirectors, oversees fi ourprocess ofreporting nancial The Audit Committee oftheBoard ofDirectors, whichconsistssolely and circumstances. available information andmanagement’s viewofcurrent conditions estimates andjudgments, whicharecertain baseduponcurrently Consolidated Financial Statements, managementwasrequired to make generallyaccepted intheUnitedprinciples States. preparing those In Financial Statements were prepared withaccounting inconformity to Shareholders.contained inthisAnnualReport Those Consolidated Consolidated Financial Statements andotherfi nancialinformation is responsible for of thepreparation, andobjectivity integrity Wal-Mart’s of Management Stores,Wal-Mart (“Wal-Mart” Inc. orthe “Company”) toManagement’s OurShareholders Report ectiveness oftheCompany’sectiveness control internal over fi nancial ective as of January 31,2007.Management’s assessment asofJanuary ective nancial reporting excluded Central American Retail Holding excluded RetailHolding Centralnancial reporting American cer regarding ourcompliancewiththeNew York ectiveness oftheCompany’sectiveness internal . Management concluded that concludedthat . Management nancial report- scal scal Executive Vice President andChiefFinancial Offi Thomas M.Schoewe President andChiefExecutive Offi H. Lee Scott,Jr. violations related to fi nancialoraccountingmatters. regarding potential violationsofourstatements ofethics, including channel for associates confi to make oversees andadministers anethicshotline. The ethicshotlineprovides a to transactions Wal-Mart. party We maintainanethicsoffi senior offi to bereviewed transactions bytheAudit Committee.related-party The applies to Wal-Mart’s senior offi alsohasinplaceaRelated-Party Wal-Mart Transaction Policy. This policy also maintainsaseparate Code ofEthicsfor ourseniorfi nancialoffi required ofmanagement. ofallassociates whoare part The Company business. Familiarity andcompliancewiththeStatement ofEthicsis of andcompliancewiththelawintegrity intheconduct Wal-Mart’s ofhighethicalstandards suchashonesty,the continuedobservance hasadoptedWal-Mart aStatement ofEthicsto guideourassociates in to matter pertaining Wal-Mart. ment attheappropriate level whentheyare aboutany concerned allassociates are encouragedtothe opendoorpolicy inform manage- be aware ofandaddress issuesinatimelyandeff long-standing “Open Door” helpsmanagement communicationpolicy to besuccessful.and thehigheststandards Our of ethicsare necessary Our Company wasfounded onthebeliefthatopencommunications onEthical Standards Report specifi withinthetimeperiods reported assurance thatsuchinformation isrecorded, processed, summarized and regarding required disclosure andwere eff communicated to management, asappropriate, to allow timelydecisions ExchangeSecurities of1934,asamended, Act wasaccumulated and required we fi to bedisclosedbyusinthereports tive asofthatdate to provide reasonable assurancethatinformation theywere 31,2007,anddetermined and procedures eff asofJanuary hasassessedtheeff Management is accumulated andcommunicated to managementinatimelyfashion. reasonable assurancethatinformation required to betimelydisclosed We maintaindisclosure controls andprocedures designed to provide Evaluation ofDisclosure Controls andProcedures following thedatereporting oftheacquisition. acquisitions from theirfi control rstassessmentofinternal over nancial fi guidelines establishedby theSEC,companiesare allowed to exclude Note 6to ourConsolidated Financial Statements for fi scal2007.Under 31,2007. ended January This acquisitionismore fullydiscussedin solidated netsales, respectively, oftheCompany asofandfor theyear in theaggregate, 0.9%and0.6%ofconsolidated total assetsandcon- 2007. This entity, as nowknown represented, Central America, Wal-Mart

cers anddirectors are required related- material to report cers anddirectors andrequires material cer ectiveness ofthesedisclosure ectiveness controls dential and anonymous complaints dential andanonymous complaints ed bytheSEC’s rulesandforms. ective toective provide reasonable cer ective ective manner. Through le or submit under the le orsubmitunderthe ce which cers. ec- Wal-Mart 2007 Annual Report 63 (1) Big), 157 supermarkets (Bompreço, Mercadorama, Nacional), 11 cash-n- Mercadorama, (Bompreço, Big), 157 supermarkets and grocery stores discount 15 combination (Maxxi Alacado), carry stores (Magazine) and 2 discount stores (Todo merchandise Dia), 3 general (Ministores Bompreço) (Pali) stores and 102 discount (Maxi Bodega) stores Menos), 8 warehouse (Despensade Don stores Familiar) Juan) and 29 discount Bodega), 2 membership clubs (Club Co) (Maxi stores 8 warehouse (Despensa stores Familiar) and 88 discount (Despensa stores Familiar) (Maxi Bodega) and 29 discount stores (Seiyu) stores merchandise and 2 general (Bodega), and grocery stores Mi discount Bodega), 219 combination stores and 2 discount 61 department (Suburbia), 312 restaurants stores (Mi Bodega Express) (Amigo)31 supermarkets (George) stores (Asda Living), 12 apparel stores merchandise 7 general (Asda Essentials) stores and 2 discount except Canada and Puerto Rico, which are as of Januarywhich are and Puerto 31. Our Canada Rico, interna- except and included: market by formats varied tional operating International Country Units 299 Argentina Brazil Canada 289 13 AmericaCentral 73 China 392 Japan Mexico 889 Puerto Rico KingdomUnited totals International totals Grand for all countries, shown as of December 31, of the years are counts Unit (1) 413 – 13 supercenters • Argentina (Hiper Bompreço, 66 hypermarkets Clubs, 19 Sam’s – 26 supercenters, Brazil • 2,757 335 54 Clubs and 6 Sam’s stores 276 discount – 7 supercentres, • Canada Clubs and 3 Sam’s 2 Neighborhood Markets • China – 68 supercenters, 6,779 (Más por (Hiper Mas), 23 supermarkets – 4 hypermarkets Rica Costa • (La Despensa 32 supermarkets (Hiper Paiz), – 2 hypermarkets El Salvador • (Paiz), 28 supermarkets (Hiper Paiz), Guatemala – 6 hypermarkets • 5 warehouse (Paiz), 6 supermarkets (Hiper Paiz), – 1 hypermarket Honduras • Seiyu), (Livin, (Seiyu, Sunny) Japan – 97 hypermarkets 293 supermarkets • (Superama, 100 supermarkets Clubs, 77 Sam’s – 118 supercenters, Mexico • (Pali) stores (La Unión) and 35 discount – 5 supermarkets Nicaragua • Clubs and 9 Sam’s stores, 8 discount Puerto Rico – 6 supercenters, • (Asda), (Asda),United Kingdom 291 supermarkets – 23 supercenters • Alaska 7 – 3 – 2 11 3 11 13 – 6 79 – 6 – 2 49 11 Alabama – 12 36 Alaska7 62 15 13 Arizona – 22 – 39 – Arkansas18 48 145 California 1 22 – – 13 Colorado 3 2 – 146 4 4 Connecticut 28 4 28 114 4 Delaware – 45 Florida 8 3 16 16 12 Georgia 59 8 Hawaii 6 – 76 Idaho 3 42 2 Illinois 78 2 42 7 3 Indiana 19 12 Iowa 14 65 – Kansas 13 71 12 Kentucky 17 12 – – 10 Louisiana 25 9 3 Maine 10 – – Maryland 32 1 13 45 27 Massachusetts 41 15 3 – 3 6 10 – 26 Michigan 34 1 55 Minnesota 28 84 5 Mississippi 9 9 Missouri 33 – 20 Montana 3 – Nebraska – Nevada 6 30 New Hampshire New Jersey New Mexico 19 New York 98 16 – North Carolina 8 44 30 North Dakota 7 3 61 14 Ohio 38 5 31 Oklahoma 23 45 – 71 23 1 15 Oregon 4 2 73 28 6 7 46 Pennsylvania 87 Rhode Island 16 43 – 9 South Carolina 279 7 – 7 96 South Dakota 27 21 13 17 8 Tennessee 7 12 50 – Texas 3 2 68 Utah2 – – – – Vermont – 3 – 51 2 19 Virginia 12 24 – 2 21 Washington 12 49 Virginia West 9 10 1 28 Wisconsin 4 2 – Wyoming totals States United 1,075 4 – – – – 2,256 30 579 – 5 112 – – State Stores Supercenters Clubs Markets Clubs Supercenters Stores State Discount Sam’s Neighborhood Fiscal 2007 End-of-Year Unit Count End-of-Year 2007 Fiscal Wal-Mart 2007 Annual Report 64 s ure* 5.2 $ $50.42 *Through March 16,2007. 1st Quarter* Fiscal 31, year ended January 1st Quarter Fiscal 31, year endedJanuary Market Price ofCommon Stock are alsoavailable website. viathecorporate the Company c/oInvestor Relationsorbycalling479-273-8446. These reports areThe following available reports withoutcharge uponrequest bywriting 72758 Rogers, Arkansas 5414 Pinnacle Point Dr., Suite 102 & Ernst Young LLP RegisteredIndependent Public Accounting Firm: communications refer to ourwebsite www.walmartstores.com/investors. information regarding onshareholder andinvestorfurther ourpolicy other membersoftheinvestment aboutouroperations. community For Stores,Wal-Mart communicates withitsshareholders periodically Inc. and Communication withShareholders: Fayetteville, Arkansas. 2007, inBud Walton campus, Arena ofArkansas ontheUniversity ofShareholdersOur AnnualMeeting willbeheldonFriday, June1, Annual Meeting: New York Stock Exchange Listing –Stock Symbol: WMT Dividend reinvestment anddirectstock purchase available http//www.computershare.comInternet: TDD for hearing-impaired insidetheUnited States 1-800-952-9245 1-800-438-6278 Providence, Island02940-3069 Rhode P.O. Box 43069 ComputershareCompany, TrustN.A. Registrar and Transfer Agent: Corporate Information Corporate andStock Information 4th Quarter 4th Quarter 3rd Quarter 2nd Quarter Supplier Standards Report Supplier Standards Report Copy ofProxy Statement onFormCurrent Reports 8-K Current Releases SalesandEarnings onForm Reports 10-Q Quarterly onFormAnnual Report 10-K $49.70 $44.80 $52.15 $43.48 $50.00 $42.31 $48.87 $44.52 High LowHigh 2007 2008

$05 $44.95 $50.57 $47.00 $49.80 $50.51 $42.49 $53.51 $46.81 High LowHigh ihLow High 2006 45.06 Chief Executive Offi fi 31,2007and2006. asofJanuary Further, nancial reporting the Company’s 31, 2007andtheeff ended January disclosure for theCompany’s endedduring eachoftheperiods fi scal year Commission (the regarding oftheCompany’s thequality “SEC”) public asrequired andExchange bytheSecurities filed theircertifications aur ,20 $0.150 $0.150 $0.150 $0.150 $0.1675 $0.1675 that allofthedividendswere reinvested. $0.1675 $0.1675 shares ofourcommonstock andineachoftheindicesshownassumes Index. assumes$100wasinvestedThe comparison onFebruary 1,2002in cumulative andtheS&P500 total returns ontheS&P500RetailingIndex theficommon stock during ve scal yearsendingwithfi fi scal2007 tothe $0.22 This graph compares thecumulative total shareholder return on Wal-Mart’s $0.22 Stock Performance Chart $0.22 $0.22 3,2006 January September 6,2005 June 6,2005 4,2005 April Fiscal 31,2006 year endedJanuary 2,2007 January September 5,2006 June 5,2006 3,2006 April Fiscal 31,2007 year endedJanuary Dividends Paid Per Share 2,2008 January September 4,2007 June 4,2007 2,2007 April Fiscal 31,2008 year endedJanuary Dividends Payable Per Share NYSE listingstandards. governance listingstandards, asrequired 303A.12(a)ofthe by Section that heisnotaware ofany violation bytheCompany of theNYSEcorporate The Company’s ChiefExecutive Offi Certifi common stock. As ofMarch 16,2007,there were 312,423 holdersofrecord of Wal-Mart’s Shareholders $175

Dollars 100 125 150 25 50 75 Comparative 5-Year Cumulative Total ReturnAmong Wal-Mart 0 cations Stores, Inc., S&P500Index andS&P500RetailingIndex 20 40 07 05 04 03 02 cer has certifi WMT Assumes $100invested onFeb.Assumes 1,2002 Fiscal year endingJan.31,2007 S&P 500RetailingIndex Assumes dividendreinvestedAssumes ed to theNew York Stock Exchange (“NYSE”) cer andChiefFinancial Offi ectiveness of internal control ofinternal ectiveness over Fiscal Year S&P 500Index 06

cer have Designed by Corporate Reports Inc./Atlanta www.corporatereport.com Inc./Atlanta Reports Corporate by Designed Board of Directors

Aida M. Alvarez Douglas N. Daft Jim C. Walton Ms. Alvarez is the former Administrator Mr. Daft is the retired Chairman of the Mr. Walton is the Chairman of the Board of the United States Small Business Board of Directors and Chief Executive of Directors and Chief Executive Offiffi cer of Administration and was a member of Offiffi cer of The Coca-Cola Company. Arvest Bank Group, Inc., a group of banks President Bill Clinton’s Cabinet from operating in 91 communities in the states of David D. Glass 1997 to 2001. Arkansas, Kansas, Missouri and Oklahoma. Mr. Glass is former Chairman of the James W. Breyer Executive Committee of the Board of S. Robson Walton Mr. Breyer is a Managing Partner of Accel Directors of Wal-Mart Stores, Inc. and the Mr. Walton is Chairman of the Board of Partners, a venture capital firm. former President and Chief Executive Directors of Wal-Mart Stores, Inc. Offiffi cer of Wal-Mart Stores, Inc. M. Michele Burns Christopher J. Williams Ms. Burns is the Executive Vice President Roland A. Hernandez Mr. Williams is the Chairman of the Board and Chief Executive Offiffi cer of Mercer Mr. Hernandez is the retired Chairman of of Directors and Chief Executive Offiffi cer of Human Resource Consulting, a subsidiary the Board of Directors and Chief Executive The Williams Capital Group, L.P., an invest- of Marsh and McLennan Companies, Inc. Offiffi cer of Telemundo Group, Inc., a Spanish- ment bank. language television station company. Dr. James I. Cash, Jr. Linda S. Wolf Dr. Cash is the retired James E. Robinson H. Lee Scott, Jr. Ms. Wolf is the retired Chairman of the Professor of Business Administration at Mr. Scott is the President and Chief Board of Directors and Chief Executive Harvard Business School, where he served Executive Offi cer of Wal-Mart Stores, Inc. Offi cer of Leo Burnett Worldwide, Inc., from July 1976 to October 2003. an advertising agency and division of Jack C. Shewmaker Publicis Groupe S.A. Roger C. Corbett Mr. Shewmaker is the President of J-COM, Mr. Corbett is the retired Chief Executive Inc., a consulting company, a retired Offiffi cer and Group Managing Director of Wal-Mart executive and a rancher. Woolworths Limited, the largest retail company in Australia.

From left to right Jack C. Shewmaker, Dr. James I. Cash, Jr., Aida M. Alvarez, Christopher J. Williams, S. Robson Walton, Roger C. Corbett, Roland A. Hernandez, Linda S. Wolf, H. Lee Scott, Jr., Douglas N. Daft, Jim C. Walton, M. Michele Burns, James W. Breyer and David D. Glass. Each week, more than 176 million shoppers around the world visit a Wal-Mart location and leave with Go shopping! great products and services backed by every day low prices.

Come join them.

Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 www.walmartstores.com Sustainability in action

For investor information: 10% 479-273-6463 1516 www.walmartstores.com/investors

All paper in Wal-Mart’s Annual Report came from well-managed forests or other controlled Retail Internet Sites: sources certifi ed in accordance with the international standards of the Forest Stewardship www.walmart.com Council (FSC). The cover paper contains 10% post-consumer recycled fi ber and the paper used www.samsclub.com in the narrative and fi nancial sections contains 30% post-consumer recycled fi ber.