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Walmart Reports Q3 EPS Of $1.08, Reaffirms Top End Of Full-year EPS Guidance; Company Is Well Positioned For Q4 Holidays

ROI was 18.0 percent and 18.2 percent for the trailing 12 months ended Oct. 31, 2012 and 2011, respectively.

We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the fiscal year or trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets of continuing operations, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of eight.

ROI is considered a non-GAAP financial measure. We consider return on assets (“ROA”) to be the financial measure computed in accordance with GAAP that is the most directly comparable financial measure to ROI as we calculate that financial measure. ROI differs from ROA (which is income from continuing operations for the fiscal year or trailing 12 months divided by average total assets of continuing operations for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets from continuing operations for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at total invested capital.

Although ROI is a standard financial metric, numerous methods exist for calculating a company’s ROI. As a result, the method used by management to calculate ROI may differ from the methods other companies use to calculate their ROI. We urge you to understand the methods used by other companies to calculate their ROI before comparing our ROI to that of such other companies.
Wal-Mart Stores, Inc.
Return on Investment Calculation
For the Trailing Twelve Months Ended,
      October 31,
(Dollar amounts in millions)     2012   2011
Operating income $ 27,602 $ 26,161
+ Interest income 163 171
+ Depreciation and amortization 8,385 8,073
+ Rent 2,575 2,253
= Adjusted operating income     $ 38,725     $ 36,658  
Average total assets of continuing operations (1) $ 200,447 $ 190,954
+ Average accumulated depreciation and amortization (1) 50,382 46,040
- Average accounts payable (1) 38,914 36,882
- Average accrued liabilities (1) 17,713 17,204
+ Rent * 8       20,600       18,024  
= Average invested capital     $ 214,802     $ 200,932  
Return on investment (ROI)       18.0 %     18.2 %
Income from continuing operations     $ 17,318     $ 16,195  
Average total assets of continuing operations (1)     $ 200,447     $ 190,954  
Return on asset (ROA)       8.6 %     8.5 %
      As of October 31,
Certain Balance Sheet Data     2012   2011   2010
Total assets of continuing operations (2) $ 205,738 $ 195,155 $ 186,753
Accumulated depreciation and amortization 53,658 47,106 44,974
Accounts payable 40,272 37,555 36,208
Accrued liabilities 18,536 16,890 17,518

(1)  The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2.

(2)  Based on continuing operations only and therefore excludes the impact of discontinued operations.  Total assets as of Oct. 31, 2012, 2011 and 2010 in the table above exclude assets of discontinued operations that are reflected in the Condensed Consolidated Balance Sheets of $80 million, $89 million and $137 million, respectively.

Constant Currency

In discussing our operating results, we sometimes refer to the impact of changes in currency exchange rates that we use to convert the operating results for all countries where the functional currency is not the U.S. dollar. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, we are referring to our operating results without the impact of the currency exchange rate fluctuations and without the impact of acquisitions until the acquisitions are included in both comparable periods. The disclosure of constant currency amounts or results permits investors to understand better our underlying performance without the effects of currency exchange rate fluctuations or acquisitions.

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