Team:FletcherosBy:NathanCohen-Fournier,AdolfoGatti,AngelicaNouhiRepresentingtheFletcherSchoolofLaw&Diplomacy,TuftsUniversity

AMAZONVS.WALMARTREALVISIONCASECOMPETITION

1

TABLE OF CONTENTS Abstract Page 2

Contextual Analysis Page 3

Amazon Analysis Page 4

Walmart Analysis Page 8

Valuations Page 11

Exhibits Page 15

End Notes Page 27

2

ABSTRACT

Choosing to invest between Amazon and Walmart seems, at first glance, a straight-

forward decision. Who wouldn’t invest in the new, exciting player on the block? One is a

promising company built on growth and the vision of a brilliant entrepreneur; the other has

become the largest by revenues and number of employees. One incarnates financial health,

proven track record, and stability; the other, astronomical stock returns accompanied by high

volatility and uncertainty.

We chose the financial strength and consistency of Walmart. We found Walmart’s stock

to be fairly valued. Although financial returns are not expected to be massive, we believe a

steady dividend from a healthy company is the best choice in a turbulent global economy.

Amazon surely has much to offer in promising e-commerce and cloud computing markets.

Nevertheless, many competitors are eyeing these markets, capital requirements are increasing

with sales, and numerous socio-economic risks remain. In fact, we found the stock price of

Amazon to be overvalued by roughly 30%.

3

An investment for the next ten years, Amazon versus Walmart: which to choose? We

picked the stability of Walmart over the uncertainty of Amazon. Throughout this paper, we will

expose the rationale for our investment thesis.

CONTEXTUAL ANALYSIS

During the summer of 2015 Amazon leapfrogged Walmart in terms of market value. This

is the story of two giants facing each other on various battlefields; the biggest being the US retail

industry. The retail industry follows macro-economic trends and has been subject to several

changes due to the advent of technology. A key contributor of transformation in the industry has

been e-commerce. In the US, e-commerce accounted for 20% of the growth in the industry,

which totaled $304.9 billion in 20141 (Exhibit 1). A necessary condition for e-commerce is

internet access: according to the World Bank, 40.7% of world’s population in 2014 had internet

access.2

In the US, e-commerce represented 6.4% of the total retail industry during 2014, and is

projected to increase to 8.9% by year-end 2018 (Exhibit 2).3 Amazon is the leader holding 16%

of the market share,4 whereas Walmart has just recently entered the fray. Additionally, mobile

commerce is gaining a stronger imprint, and is estimated to reach $132.69 billion by 2018 or

27% of total e-commerce sales (Exhibit 3).5

4

AMAZON ANALYSIS

Since its IPO in 1997, Amazon’s market capitalization has increased by 53,040%,

growing from $441 million in Q2-2007 to $235 billion in Q3-2015.6 While the company has

seduced the masses and become a Wall-Street darling, it only recently started to generate much

anticipated profits.

Amazon is considered by many a technology

stock. Indeed, few companies have spent as much in

CAPEX and R&D as Amazon, which has invested

12% of its total sales since 2000.7 Since 2010, the

firm expanded its square footage at a CAGR of 39%

while providing facilities with state-of-the-art

machinery, including recently acquired Kiva robots.8

Amazon’s capacity to branch out from its core

businesses is exemplified by Amazon Web Services (AWS), the company’s new cloud

computing service, which has grown at a CAGR of 52% since 2010.9

Amazon has been able to translate its technological advantages into tangible benefits for

consumers. According to a study conducted by RBC, Amazon is the leader per convenience,

price, and selection in the e-commerce industry,10 giving it a dominating position and placing it

first on US brand rankings.11 The aura that surrounds Amazon’s success results from the

charisma of its founder, Jeff Bezos. Bezos has been nimble at acquiring talent and pushing

employees to constantly create and develop new solutions, while maintaining the focus on

customers. “Above all else, align with customers. Win when they win. Win only when they

win.”12

Source: Amazon

5

In order to meet the lofty valuation metrics attributed to its business, Amazon has to

pursue its growth streak. Growth is the fundamental pillar of Amazon’s strategy. AWS is

expected to be the primary driver of the firm’s progress, as it maintains a leading position within

the cloud market.13 Amazon has been heavily investing in AWS and over a third of the firm’s

PP&E can be attributed to this segment.14 Forrester Research estimates that public cloud

computing will rise from $58 billion in 2013 to $191 billion by 2020.15 High-profile competitors

such as Google, IBM, and Microsoft are also seeking greater market share. Who is better

positioned to capture growth? Amazon the retailer or the Silicon Valley giants? In such a

competitive environment, price cuts will continue to be the norm16, potentially eroding

Amazon’s profit margins and market share which stands, today, at nearly 30%.17

Source: Amazon Quarterly Results (2014-Q1 to 2015-Q3) Growth is also expected to come from international markets. Since 2010, growth in

international sales has been lagging US rates (Exhibit 4).18 Although we believe US operations

will be the primary driver of Amazon’s newly found profitability, we foresee high CAPEX

investments in international markets. Between 2012 and 2014, international operations accounted

for 40% of sales, 33% of assets and, yet, only 22% of CAPEX.19 We see a future alignment in

the long-term, with more investments concentrated internationally.

0%

10%

20%

30%

$0

$1.000

$2.000

$3.000

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3

AWSQuarterlySalesandEBIT%

AWSSales EBIT%

6

Source: CapIQ Amazon Financial Statements (2000-2014 actuals) Amazon’s ability to maintain its dominating position in e-commerce is under threat. Once

competitors catch up with Prime and same-day shipping (Walmart and Ebay already have similar

offerings), consumers will demand even lower prices and differentiation. In this regard, brick-

and-mortars have the lead, due to immediacy, trial-touch-feel, and ease-of-return.

Amazon’s future is filled with infinite, yet uncertain, possibilities, ranging from drone

deliveries to supply chain robotics. The company is also starting to play into the booming B2B e-

commerce market with its Amazon Business segment, competing head-to-head with Alibaba.

However, Amazon’s poor human-resource practices are increasingly likely to spur negative

press. Until now, consumers’ perspective have remained overwhelmingly positive despite the

fact that Amazon is destroying small businesses, mistreating employees, and using tax havens to

enhance its bottom-line. Sooner rather than later, this will damage the company’s reputation. In

addition, its high turnover is creating new competitive threats: ex-employees have founded

FlipKart in India, and Jet.com in the US.

0%

20%

40%

60%

80%

100%

$0

$10.000

$20.000

$30.000

$40.000

$50.000

$60.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

AmazonUSandInternationalSalesandGrowth

USrevenues InternationalRevenues USGrowth InternationalGrowth

7

If the company is able to sustain AWS’ leadership, diversify its portfolio, and resist

potential PR damages, it will remain the undisputed leader. We doubt the future will be so bright

due to our expectations of increased competitive pressures from all angles.

Investors have reacted positively to Amazon’s Q3 2015 results, with the stock surging by

10% upon the announcement.20 Do profits matter? As the saying goes, cash is king. The

company’s operating cash flows (OCF) have been steadily increasing; yet, a large part of it stems

from depreciation, which represented roughly 60% of OCF in 2014 (Exhibit 5).21 Moreover, a

portion of Amazon’s OCF has been driven by a negative cash conversion cycle. Capital is freed-

up by stretching payables and by pushing inventory to third-party sellers, who account for over

40% of units sold.22 The cash conversion cycle has been worsening and has negatively impacted

free cash flow for the first time since 2000 (Exhibit 6).23

Furthermore, since 2010, debt and equivalents have risen from $2.4 billion to $20.2

billion in 2014,24 representing a CAGR of 70% and a debt-to-equity ratio of 150%. The leverage

is even more accentuated when taking into account operating leases. In addition, the return on

invested capital (ROIC) has been highly volatile, lingering in the ‘value destruction’ zone of

below 10% (Exhibit 7).25 It seems as though Amazon’s businesses are becoming more capital

intensive as they grow. This could prove highly problematic as the firm has been filling the gap

with debt and debt equivalents.

Revenue growth and EBITDA are always at the front-page of any Amazon story. Having

looked under the carpet, we find that the situation is not so bright. Under-pressure margins,

ongoing tax investigations in the EU, and potential PR spills all add up to create serious

challenges for Amazon’s sustainable long-term cash flows, let alone profits. Amazon promises

lucrative returns in indisputably growing markets. On the flip-side, its eagerness to expand into

8

uncharted territories exposes it to a number of risks. Preeminently, we believe the firm risks

losing focus on its core business.

WALMART ANALYSIS

Today, Walmart remains the US largest retailer and the world’s largest company by

revenues.26 Its market dominance and competitive strengths have been achieved through the

synergetic combination of eight distinctive factors: low prices, cost consciousness, product

selection, supplier power, technology, expansion, human capital and customer service.

Walmart’s strategy relies on cost leadership. ROIC has been stable around 12% over the past

decade and investors have been rewarded both through stock repurchases and dividends, which

have been raised for 41 consecutive years (Exhibits 8).27

Over the past three years, the firm has invested billions to modernize and adapt to

changes in the industry. CAPEX has averaged 2.6% of total sales between 2012 and

2014. Within this timeframe, Walmart injected a total of $2.7 billion in its e-commerce business

and recently announced an additional $2 billion investment for the next two years.28

Walmart’s future success depends on the company’s ability to leverage the competencies

that have made it into the retailer giant it is today. By re-investing in price, product, accessibility

and experience, we foresee the next decade to reinforce its leadership position.

Currently, Walmart has over 11,000 stores operating in 28 countries, counting 2,290

locations in Mexico, 557 in Brazil and 432 in Japan.29 International sales accounted for 28% of

total revenues in 2014.30 Over the last five years, the international segment has reported an

average revenue growth of 7%, and operating income, as percentage of sales, grew from 3.8% in

9

2013 to 4.5% in 2014.31 In 2014, the US segment reported sales growth of 3.1%, while operating

income was 7.4% of total sales, in contrast with 7.8% for 2013 (Exhibit 9).32

In the coming decade, we foresee the company continuing to strengthen its position in the

Chinese marketplace, expanding into new emerging markets, and opening additional

Neighborhood Markets in the US.

In 2015, Walmart counted 411 stores in China, with plans to open an additional 115 by

2017.33 Many interpreted the company’s decision to slow down its original expansion in China

as an indicator of Walmart’s decline. However, we view this as a strategic pivot from a blanketed

expansion policy towards increasing operational efficiency. This is exemplified by the

company’s recent announcement of a $59 million investment focused on remodeling and

improving 50 locations across the country.34 Walmart's potential success in China relies on its

ability to gain consumers’ trust. For this reason, in 2014, it announced investments in higher

safety management procedures, including various levels of meat and produce audits to ensure the

authenticity of their content and origin; an important distinguishing factor that provides Walmart

with an advantage over its local competitors. This, together with the “Every Day Low Prices”

(EDLP) strategy, is targeted towards the expanding Chinese middle class: an estimated 109

million people today, and 854 million by 2030, the largest middle class of the World.35

While US power brands such as Google and EBay attempted to penetrate the Chinese

market by foreign direct investment, and failed, Walmart successfully entered the market via a

joint venture with local retailer Yihaodian. The JV’s user base increased from 4 million

registered users in 2010 to over 100 million in 2015.36 In the summer of 2015, upon three years

of partnership, Walmart acquired full control of the Chinese e-commerce company, reporting a

traffic increase of over 60%.37 This is especially important as Chinese e-commerce is projected

10

to grow to over $1 trillion by 2018, double the US’s expected market of $491 billion.38 In 2014,

Tmall held over 61% of the Chinese e-commerce market, followed by JD at 18.6%, while

Yihaodia held 1.4% and Amazon 1.3%.39 Additionally, one of Amazon biggest competitors,

Alibaba, has recently partnered with Walmart.40 In fact, 25 stores now offer AliPay, with plans to

further expand.41Similarly, Walmart has entered the Nigerian retail market through a joint

venture with Massmart, a leading African retailer in 2011.42 A recent McKinsey & Co. study

estimates that Nigeria’s consumers market will rise at an average rate of 8% a year, tripling by

2030.43

Both nationally and internationally, Walmart has been faced with a challenge to

transform and shift its core business from physical stores to e-commerce. In its 2015 Annual

Report, Walmart reported online sales growth of 22%, accounting for $12.2 billion in sales. This

places it as the third largest Internet retailer in the US, after Amazon and Apple.44

During Fiscal Year 2015, 56% of the $485 billion of Walmart’s revenues were generated

through the sale of groceries.45 As demand for food is rising with the world’s population, the

global grocery retail industry, which today corresponds to more than $2 trillion a year, will

continue to grow with increasing prices, resulting from climate change: “Changes in temperature

and rainfall patterns could lead to food price rises of between 3% and 84% by 2050.”46 (Exhibit

10) While the battle between the two is usually perceived as head-to-head, in reality, Walmart

competes in a very different segment than the Seattle-based company. As Walmart is expanding

its fresh-produce selection, focusing on organic and locally sourced items, Amazon is testing

Amazon Fresh: a delivery program currently offered in a selected number of cities, where

members can receive a limited number of non-perishable goods at their doors.47

11

The company’s financials statements are exceptionally stable, with gross margins

constantly hovering around 24%, while profit margins averaged 3.5% between 2012 and 2014

(Exhibit 11).48 The company’s return on equity remains strong, reported at 19% in 2014,

compared to the retail industry’s of 15.12%49, and Amazon’s 2.92%.50 Return on capital has been

constant at 12% since 2012 (Exhibit 12).51

As competition becomes increasingly stringent on price and product selection, Walmart

has been shifting its strategy from “daring to be bad” to “daring to be good.”52 Ten years ago,

Walmart was under extreme scrutiny as it was facing numerous legal battles due to claims of

discrimination, use of illegal immigrants, and poor environmental practices.53 Walmart is

undertaking numerous initiatives to enhance the sustainability of its global supply chains, has

increased wages through 2018, and has extended training programs for associates.54

Furthermore, while working on diminishing waste and on achieving 100% renewable energy, the

Arkansas giant has also challenged its suppliers to implement policies that reduce their

environmental impact. In an already mature and saturated market, these policy choices make a

difference to customers who are increasingly rewarding socially conscious corporations.

All-in-all, Walmart will not be revolutionized within the next ten years. The company is

undertaking small but meaningful changes, without endangering its competitive advantages.

VALUATION

As we see in Table A, from a multiples-basis, it is quite clear that Amazon is priced

based on future potential. Although Google and Apple are not regarded as direct competitors, we

believe they represent a good long-term view of where Amazon’s multiples could be headed. On

12

the other hand, Walmart’s multiples are the result of a proven track-record and a no-frills

business model.

Table A: Multiple Analysis Q2 2015 AMZN US

Equity

WMT US

Equity

AAPL US

Equity

TGT US

Equity

GOOGL US

Equity

COST US

Equity

EV/EBITDA 31.3 7.8 7.4 9.2 10.1 14.2

EV/IC 9.3 2.1 2.8 2.3 2.5 3.5

P/E 741.9 14.7 14.5 18.8 27.6 26.5 Source: Bloomberg, Q2 2015

WALMART

Based on our financial analysis and pro-forma statements, we believe Walmart’s stock to

be slightly undervalued. Our calculations indicate an intrinsic value of $62 for 2015, versus the

present market value, as of November 6th, of $58.78 (Exhibit 13). Where Amazon’s stock is

overvalued due to inflated future expectations, Walmart’s price reflects investors’ perceived

stability of the company.

We have forecasted Walmart’s financial statements for the next ten years with an annual

revenue growth of 4% through 2018, increasing to 5% until 2020, based on our analysis of the

company’s international expansion. E-commerce revenues are forecasted at 5% of total revenues,

with annual growth of 25% between 2017 and 2020, decreasing to the upper teens by the end of

our forecasting period and converging towards the industry average (Exhibit 14). Profit margins

through the forecasted years remain stable and comparable to historical trends, at 3.5%.

13

AMAZON

Amazon’s stock price is trading at over $650. Per our model, Amazon’s consolidated

sales must continue to grow by 20% yearly to maintain such value, without accounting for of the

many uncertainties the company is facing. Our discounted cash flow (DCF) model provides a

value of $460, a 30% discount from today’s stock price. We foresee the growth in the various

segments to tame, but growth by 2025 remains at a consolidated 12%, which is, by no means,

tepid.

Graphic 1: Amazon Actual and Forecasted Growth by Segment

. The EBITDA margins are forecasted to double from 5.1% in 2014 to 10.8% in 2025E

due to the change in the sales mix where AWS will represent roughly a third of total. We also

expect CAPEX to remain around 4% to 5% of sales. Other items have been modeled based on

14

historical 5-year performance and a reversion-to-mean. For a detailed view of financial

statements, please refer to Exhibits 15 and 16.

Based on our research and analysis, we are confident that Walmart is the better

investment for the next ten years. Other than a simple long investment structure, we would also

recommend shorting the Amazon stock until the price re-adjusts to its fundamental value (10%

range) and creating a beta-neutral exposure to mitigate market risks.

15

EXHIBITS

EXHIBIT 1

EXHIBIT 2

5,2%5,8%

6,4%7,0%

7,6%8,2%

8,9%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

10,0%

2012 2013 2014 2015 2016 2017 2018

E-COMMERCEas%ofTOTALSALES

$226,9 $264,3 $304,9 $347,3 $392,5 $440,4 $491,5

$4.125,00 $4.269,50 $4.428,20 $4.588,50 $4.740,70 $4.898,20 $5.060,50

$-

$1.000,0

$2.000,0

$3.000,0

$4.000,0

$5.000,0

$6.000,0

2012 2013 2014 2015 2016 2017 2018

NONE-COMMERCERETAILANDE-COMMERCE(BILLION$)

E-Commerce Non-ERetail

16

EXHIBIT 3

EXHIBIT 4: Amazon sales and sales growth by region

Source: CapIQ Financial statements 2000-2014 actuals

$24,78 $42,13 $57,79 $76,41 $98,12 $114,50 $132,69

$202,12 $222,17 $247,11 $270,89 $294,38 $325,90 $358,81

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 2018

M-COMMERCEINE-COMMERCE

M-Commerce E-Com(NonM-Com)

11% 16% 19% 22% 25% 26% 27%

0%

20%

40%

60%

80%

100%

$0

$10.000

$20.000

$30.000

$40.000

$50.000

$60.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

AmazonUSandInternationalSalesandGrowth

USrevenues InternationalRevenues USGrowth InternationalGrowth

17

EXHIBIT 5: Amazon FCF and breakdown

Source: CapIQ Financial statements 2000-2014 actuals EXHIBIT 6: Amazon Cash Conversion Cycle trends

Source: CapIQ Financial statements 2000-2014 actuals

(1.000,0)

0

1.000,0

2.000,0

3.000,0

4.000,0

5.000,0

6.000,0

7.000,0

8.000,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

CFO CAPEX FCF Depreciation

(50,0)

(40,0)

(30,0)

(20,0)

(10,0)

0

(2.000,0)

0

2.000,0

4.000,0

6.000,0

8.000,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

WorkingCapitalandOCF

OCFlessworkingcapital WorkingCapitalImpactonOCF AverageCashConversionCycle

18

EXHIBIT 7: Amazon ROIC

Source: CapIQ Financial statements 2000-2014 actuals EXHIBIT 8

-20%

0%

20%

40%

60%

AMZN

$-

$0,50

$1,00

$1,50

$2,00

$2,50

2006 2008 2010 2012 2014 2015

ANNUALDIVIDEND

19

EXHIBIT 9

EXHIBIT 10

0

50.000,0

100.000,0

150.000,0

200.000,0

250.000,0

300.000,0

2010 2011 2012 2013 204 2015

NETSALESBYSEGMENT

WalmartUnitedStates(U.S.)

Walmart International

Sam'sClub

441,14 457,67 471,7 491,36 511,39 510,33 521,23 549,11 565,6 579,01 594,4

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

USGrocerystoresales($billion)

20

EXHIBIT 11

EXHIBIT 12

EXHIBIT 13

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

2010 2011 2012 2013 2014 2015

PROFITMARGIN

GrossMargin%

NetIncomeMargin%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

2010 2011 2012 2013 2014 2015

RATIOS

ROA

ROC

ROE

EnterpriseValue 20.099.088$Debt 173.123$Cash 9.135$EquityValue 19.935.100$SharesOutstanding 321000

SharePrice 62,10$

21

INCOMESTATEMENT 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026Revenue 468.651,0 476.294,0 485.651,0 505.077 525.280,1 551.544,1 579.121,3 608.077,4 632.400,5 657.696,5 684.004,4 711.364,6 739.819,1 769.411,9 Brick-MortarStores 464.329,1 470.459,8 488.591,2 507.963,1 533.359,6 560.027,1 588.028,4 611.501,8 635.949,9 661.384,9 687.839,6 715.352,9 743.967,0 E-Commerce 11.964,9 15.191,2 16.485,8 17.317,0 18.184,5 19.094,2 20.049,0 20.898,7 21.746,6 22.619,5 23.525,0 24.466,2 25.444,9

TotalRevenue 468.651,0 476.294,0 485.651,0 505.077,0 525.280,1 551.544,1 579.121,3 608.077,4 632.400,5 657.696,5 684.004,4 711.364,6 739.819,1 769.411,9 CostOfGoodsSold 352.297,0 358.069,0 365.086,0 379.692,2 394.879,9 414.623,9 435.355,1 457.122,8 475.407,7 494.424,0 514.201,0 534.769,0 556.159,8 578.406,2

GrossProfit 116.354,0 118.225,0 120.565,0 125.384,9 130.400,3 136.920,3 143.766,3 150.954,6 156.992,8 163.272,5 169.803,4 176.595,5 183.659,3 191.005,7 SellingGeneral&AdminExp. 88.629,0 91.353,0 93.418,0 96.524,8 100.385,8 105.405,1 110.675,4 116.209,2 120.857,5 125.691,8 130.719,5 135.948,3 141.386,2 147.041,7 R&DExp. - - - - - - - - - - - - - -Depreciation&Amort. - - - - - - - - - - - - - -

OtherOperatingExp.,Total 88.629,0 91.353,0 93.418,0 96.524,8 100.385,8 105.405,1 110.675,4 116.209,2 120.857,5 125.691,8 130.719,5 135.948,3 141.386,2 147.041,7

OperatingIncome 27.725,0 26.872,0 27.147,0 28.860,0 30.014,4 31.515,1 33.090,9 34.745,4 36.135,3 37.580,7 39.083,9 40.647,2 42.273,1 43.964,1 InterestExpense (2.249,0) (2.335,0) (2.461,0) (2.471,9) (2.475,3) (2.479,7) (2.484,3) (2.489,2) (2.493,2) (2.497,5) (2.501,9) (2.506,5) (2.511,3) (2.516,2) InterestandInvest.Income 186,0 119,0 113,0 140,9 168,7 196,6 224,5 252,3 280,2 308,1 335,9 363,8 391,7 419,5 NetInterestExp. (2.063,0) (2.216,0) (2.348,0) (2.331,0) (2.306,5) (2.283,1) (2.259,8) (2.236,8) (2.213,0) (2.189,4) (2.166,0) (2.142,7) (2.119,6) (2.096,7)

EarningsBeforeTaxses 25.662,0 24.656,0 24.799,0 31.191,0 27.707,9 29.232,1 30.831,1 32.508,6 33.922,2 35.391,3 36.917,9 38.504,6 40.153,5 41.867,4 IncomeTaxExpense 7.958,0 8.105,0 7.985,0 10.043,2 8.921,6 9.412,4 9.927,3 10.467,4 10.922,6 11.395,6 11.887,2 12.398,0 12.929,0 13.480,8 MinorityInt.inEarnings (757,0) (673,0) (736,0) (588,0) (682,1) (791,2) (917,8) (1.064,7) (1.235,0) (1.432,6) (1.661,8) (1.927,7) (2.236,1) (2.593,9)

NetIncome 16.999,0 16.022,0 16.363,0 20.559,9 18.104,2 19.028,5 19.986,0 20.976,5 21.764,6 22.563,1 23.369,0 24.178,8 24.988,4 25.792,6

Balance Sheet 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026Cash And Equivalents 7.781,0 7.281,0 9.135,0 9.500,4 9.880,4 10.374,4 10.893,2 11.437,8 11.895,3 12.371,1 12.866,0 13.380,6 13.915,9 14.472,5 Trading Asset Securities 29,0 5,0 - 18,0 18,7 19,7 20,6 21,7 22,5 23,4 24,4 25,4 26,4 27,4 Accounts Receivable 6.768,0 6.677,0 6.778,0 6.918,9 7.195,6 7.555,4 7.933,2 8.329,8 8.663,0 9.009,5 9.369,9 9.744,7 10.134,5 10.539,9 Inventory 43.803,0 44.858,0 45.141,0 45.771,1 47.602,0 49.982,1 52.481,2 55.105,2 57.309,4 59.601,8 61.985,9 64.465,3 67.043,9 69.725,7 Prepaid Exp. 1.002,0 1.082,0 1.496,0 1.263,9 1.314,5 1.380,2 1.449,2 1.521,7 1.582,6 1.645,9 1.711,7 1.780,2 1.851,4 1.925,4 Deferred Tax Assets, Curr. 520,0 822,0 728,0 550,8 572,8 601,4 631,5 663,1 689,6 717,2 745,9 775,7 806,7 839,0 Other Current Assets 37,0 460,0 0 175,5 182,5 191,6 201,2 211,3 219,7 228,5 237,6 247,1 257,0 267,3

Total Current Assets 59.940,0 61.185,0 63.278,0 64.198,5 66.766,5 70.104,8 73.610,1 77.290,6 80.382,2 83.597,5 86.941,4 90.419,0 94.035,8 97.797,2 Gross Property, Plant & Equipment 171.724,0 178.678,0 182.634,0 200.287,02 218.469,63 237.197,72 256.487,65 276.356,28 296.820,97 317.899,60 339.610,59 361.972,90 385.006,09 408.730,27 Accumulated Depreciation (55.043,0) (60.771,0) (65.979,0) (68.308,3) (74.509,5) (80.896,8) (87.475,6) (94.251,9) (101.231,4) (108.420,3) (115.824,9) (123.451,6) (131.307,1) (139.398,3) Net Property, Plant & Equipment 116.681,0 117.907,0 116.655,0 131.978,7 143.960,1 156.301,0 169.012,0 182.104,4 195.589,6 209.479,3 223.785,7 238.521,3 253.699,0 269.332,0 Long-term Investments 581,0 716,0 512,0 649,9 675,9 709,7 745,1 782,4 813,7 846,2 880,1 915,3 951,9 990,0 Goodwill 20.497,0 19.510,0 18.102,0 20.875,2 21.710,2 22.795,7 23.935,5 25.132,3 26.137,5 27.183,0 28.270,4 29.401,2 30.577,2 31.800,3 Other Intangibles 0 0 419,0 150,5 156,5 164,4 172,6 181,2 188,5 196,0 203,8 212,0 220,5 229,3 Deferred Tax Assets, LT 757,0 1.151,0 1.033,0 1.056,5 1.098,8 1.153,7 1.211,4 1.272,0 1.322,9 1.375,8 1.430,8 1.488,0 1.547,6 1.609,5 Other Long-Term Assets 4.649,0 4.282,0 3.707,0 4.540,1 4.721,7 4.957,8 5.205,7 5.466,0 5.684,6 5.912,0 6.148,5 6.394,4 6.650,2 6.916,2

Total Assets 203.105,0 204.751,0 203.706,0 223.449,5 239.089,7 256.187,0 273.892,4 292.228,8 310.118,9 328.589,8 347.660,7 367.351,3 387.682,1 408.674,5

Accounts Payable 38.080,0 37.415,0 38.410,0 39.529,6 41.110,8 43.166,3 45.324,6 47.590,9 49.494,5 51.474,3 53.533,3 55.674,6 57.901,6 60.217,6 Accrued Exp. 18.804,0 18.793,0 19.152,0 19.918,1 20.714,8 21.750,5 22.838,1 23.980,0 24.939,2 25.936,7 26.974,2 28.053,2 29.175,3 30.342,3 Short-term Borrowings 6.805,0 7.670,0 1.592,0 1.655,7 1.721,9 1.808,0 1.898,4 1.993,3 2.073,1 2.156,0 2.242,2 2.331,9 2.425,2 2.522,2 Curr. Port. of LT Debt 5.591,0 4.103,0 4.810,0 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 4.958,9 Curr. Port. of Cap. Leases 327,0 309,0 287,0 241,2 218,2 197,5 179,5 197,5 217,2 238,9 262,8 289,1 318,0 349,8 Curr. Income Taxes Payable 2.211,0 966,0 1.021,0 1.753,2 1.557,4 1.643,1 1.733,0 1.827,3 1.906,7 1.989,3 2.075,1 2.164,3 2.257,0 2.353,3 Other Current Liabilities 0 89,0 0 0 0 0 0 0 0 0 0 0 0 0

Total Current Liabilities 71.818,0 69.345,0 65.272,0 68.056,7 70.282,0 73.524,4 76.932,5 80.547,8 83.589,6 86.754,2 90.046,6 93.472,0 97.036,0 100.744,2 Long-Term Debt 38.485,0 41.772,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 41.696,0 Additional Funds Needed 1.040,8 3.086,7 4.947,3 6.617,8 7.757,9 8.537,1 9.248,9 9.900,6 10.502,0 11.065,6 11.607,4 Capital Leases 3.023,0 2.788,0 2.606,0 2.190,0 1.981,0 1.793,0 1.630,0 1.793,0 1.972,3 2.169,5 2.386,5 2.625,1 2.887,6 3.176,4 Pension & Other Post-Retire. Benefits 684,0 350,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 308,0 Def. Tax Liability, Non-Curr. 4.373,0 5.110,0 4.671,0 8.836,0 9.085,0 9.334,0 9.589,8 9.852,7 10.122,7 10.400,1 10.685,2 10.978,0 11.278,9 11.588,1 Other Non-Current Liabilities 2.465,0 2.556,0 3.216,0 2.610,8 2.715,3 2.851,0 2.993,6 3.143,3 3.269,0 3.399,7 3.535,7 3.677,2 3.824,3 3.977,2

Total Liabilities 120.848,0 121.921,0 117.769,0 124.738,4 129.154,0 134.453,7 139.767,7 145.098,7 149.494,7 153.976,5 158.558,6 163.258,3 168.096,4 173.097,3

Common Stock 332,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 323,0 Additional Paid In Capital 3.620,0 2.362,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 2.462,0 Retained Earnings 72.978,0 76.566,0 85.777,0 98.524,1 109.748,7 121.546,3 133.937,7 146.943,1 160.437,2 174.426,3 188.915,0 203.905,9 219.398,7 235.390,2 Treasury Stock - - - 0 0 0 0 0 0 0 0 0 0 0 Comprehensive Inc. and Other (587,0) (2.996,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0) (7.168,0)

Total Common Equity 76.343,0 76.255,0 81.394,0 94.141,1 105.365,7 117.163,3 129.554,7 142.560,1 156.054,2 170.043,3 184.532,0 199.522,9 215.015,7 231.007,2

Minority Interest 5.914,0 6.575,0 4.543,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0 4.570,0

Total Equity 82.257,0 82.830,0 85.937,0 98.711,1 109.935,7 121.733,3 134.124,7 147.130,1 160.624,2 174.613,3 189.102,0 204.092,9 219.585,7 235.577,2

Total Liabilities And Equity 203.105,0 204.751,0 203.706,0 223.449,5 239.089,7 256.187,0 273.892,4 292.228,8 310.118,9 328.589,8 347.660,7 367.351,3 387.682,1 408.674,5

22

Pro-Forma with Revenue Growth stable at 3%, E-commerce yoy growth of 22%.

CASHFLOWSTATEMENT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Net Income 16.022,00$ 16.363,00$ 20.559,86$ 18.104,17$ 19.028,45$ 19.986,00$ 20.976,55$ 21.764,64$ 22.563,06$ 23.368,95$ 24.178,82$ 24.988,41$ Depreciation & Amortization 115.814,00$ 126.750,00$ 134.287,29$ 142.817,80$ 155.406,27$ 168.372,39$ 181.727,49$ 195.483,25$ 209.651,69$ 224.245,17$ 239.276,46$ 254.758,69$ Change in Accounts Receivable 91,00$ -101,00 $ -140,86 $ -276,75 $ -359,78 $ -377,77 $ -396,66 $ -333,19 $ -346,52 $ -360,38 $ -374,80 $ -389,79 $ Change in Inventory -1.055,00 $ -283,00 $ -630,11 $ -1.830,84 $ -2.380,10 $ -2.499,10 $ -2.624,06 $ -2.204,21 $ -2.292,38 $ -2.384,07 $ -2.479,43 $ -2.578,61 $ Change in Prepaid Exp. -80,00 $ -414,00 $ 232,07$ -50,56 $ -65,72 $ -69,01 $ -72,46 $ -60,87 $ -63,30 $ -65,83 $ -68,47 $ -71,21 $ Change in Deferred Tax Assets, Curr. -302,00 $ 94,00$ 177,24$ -22,03 $ -28,64 $ -30,07 $ -31,58 $ -26,52 $ -27,58 $ -28,69 $ -29,84 $ -31,03 $ Change in Other Current Assets -423,00 $ 460,00$ -175,47 $ -7,02 $ -9,12 $ -9,58 $ -10,06 $ -8,45 $ -8,79 $ -9,14 $ -9,51 $ -9,89 $ Change in Income Taxes -1.245,00 $ -2.093,00 $ -920,54 $ -2.567,94 $ -3.338,32 $ -3.505,24 $ -3.680,50 $ -3.091,62 $ -3.215,29 $ -3.343,90 $ -3.477,65 $ -3.616,76 $ Change in Accounts Payable -665,00 $ 995,00$ 1.119,60$ 1.581,18$ 2.055,54$ 2.158,32$ 2.266,23$ 1.903,63$ 1.979,78$ 2.058,97$ 2.141,33$ 2.226,98$ Change in Accrued Exp. -11,00 $ 359,00$ 766,08$ 796,72$ 1.035,74$ 1.087,53$ 1.141,90$ 959,20$ 997,57$ 1.037,47$ 1.078,97$ 1.122,13$ Change in Short-term Borrowings 865,00$ -6.078,00 $ 63,68$ 66,23$ 86,10$ 90,40$ 94,92$ 79,73$ 82,92$ 86,24$ 89,69$ 93,28$ Change in Curr. Port. of LT Debt -1.488,00 $ 707,00$ 148,95$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Change in Curr. Port. of Cap. Leases -18,00 $ -22,00 $ -45,81 $ -23,02 $ -20,70 $ -17,95 $ 17,95$ 19,75$ 21,72$ 23,89$ 26,28$ 28,91$ Change in Curr. Income Taxes Payable -1.245,00 $ 55,00$ 732,21$ -195,78 $ 85,67$ 89,88$ 94,29$ 79,46$ 82,57$ 85,81$ 89,18$ 92,69$ Change in Other Current Liabilities 89,00$ -89,00 $ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Operating Cash Flow 126.349,00$ 136.703,00$ 156.174,17$ 158.392,16$ 171.495,37$ 185.275,78$ 199.504,03$ 214.564,80$ 229.425,45$ 244.714,50$ 260.441,04$ 276.613,81$ Investment in PP&E -6.954,00$ -3.956,00$ -17.653,02$ -18.182,61$ -18.728,09$ -19.289,93$ -19.868,63$ -20.464,69$ -21.078,63$ -21.710,99$ -22.362,32$ -23.033,19$InvestmentinOtherLong-termAssets 367,00$ 575,00$ -833,10$ -181,60$ -236,09$ -247,89$ -260,28$ -218,64$ -227,38$ -236,48$ -245,94$ -255,78$InvestmentInGoodwill&Intangibles 987,00$ 989,00$ -2.504,70$ -841,03$ -1.093,34$ -1.148,00$ -1.205,40$ -1.012,54$ -1.053,04$ -1.095,16$ -1.138,97$ -1.184,53$

Investing Cash Flow -5.600,00 $ -2.392,00 $ -20.990,82 $ -19.205,24 $ -20.057,51 $ -20.685,82 $ -21.334,32 $ -21.695,87 $ -22.359,05 $ -23.042,63 $ -23.747,22 $ -24.473,49 $ Debt Issuance 2.411,00$ 275,87$ 278,78$ 301,87$ 327,09$ 354,62$ 384,70$ Retirement of Debt -5.651,00 $ -249,18 $ -165,79 $ -122,61 $ -90,55 $ Dividends -$ -6.218 $ -7.813 $ -6.880 $ -7.231 $ -7.595 $ -7.971 $ -8.271 $ -8.574 $ -8.880 $ -9.188 $ -9.496 $

Financing Cash Flow 2.411,00$ -11.868,94 $ -8.061,93 $ -7.045,38 $ -7.353,42 $ -7.685,23 $ -7.695,22 $ -7.991,78 $ -8.272,09 $ -8.553,12 $ -8.833,33 $ -9.110,90 $

Free Cash Flow 123.160,00$ 122.442,06$ 127.121,42$ 132.141,54$ 144.084,44$ 156.904,72$ 170.474,49$ 184.877,15$ 198.794,31$ 213.118,75$ 227.860,48$ 243.029,42$

0%

5%

10%

15%

20%

25%

0

100.000,0

200.000,0

300.000,0

400.000,0

500.000,0

600.000,0

700.000,0

800.000,0

900.000,0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

REVENUEGROWTHbySEGMENT

E-Commerce

Brick&Mortar

E-CommerceGrowth

Brick&MortarGrowth

23

Projected FCF, with Revenue Growth stable at 3% EXHIBIT 14

$-

$20.000,00

$40.000,00

$60.000,00

$80.000,00

$100.000,00

$120.000,00

$140.000,00

$160.000,00

$180.000,00

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

FreeCashFlow

0%

5%

10%

15%

20%

25%

30%

0

100.000,0

200.000,0

300.000,0

400.000,0

500.000,0

600.000,0

700.000,0

800.000,0

900.000,0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

REVENUEGROWTHbySEGMENT

E-Commerce

Brick&Mortar

E-CommerceGrowth

Brick&MortarGrowth

24

EXHIBIT 15: Amazon Forecasted Income Statement and Balance Sheet

FORECAST2015E 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F

Sales 106,306$99 9 126,742$999 9 150,581$999 9 178,051$999 9 209,292$999 9 244,326$999 9 283,024$999 9 325,075$999 9 369,961$999 9 416,933$999 9 465,012$999 9Sales&growth 19% 19% 19% 18% 18% 17% 16% 15% 14% 13% 12%Media 23,292.7&&&& & 24,107.9&&&& & 24,951.7&&&& & 25,825.0&&&& & 26,728.9&&&& & 27,664.4&&&& & 28,632.6&&&& & 29,634.8&&&& & 30,672.0&&&& & 31,745.5&&&& & 32,856.6&&&& &YoY#Growth#% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%Electronics 75,145.1&&&& & 91,735.2&&&& & 110,756.9&& & 132,236.6&& & 156,107.5&& & 182,192.5&& & 210,191.4&& & 239,672.4&& & 270,072.1&& & 300,703.5&& & 330,773.9&& &YoY#Growth#% 23.42% 22.08% 20.74% 19.39% 18.05% 16.71% 15.37% 14.03% 12.68% 11.34% 10.00%AWS&and&other&Business&lines 7,868.1&&&&&& & 10,898.9&&&& & 14,872.8&&&& & 19,989.7&&&& & 26,455.6&&&& & 34,468.7&&&& & 44,199.5&&&& & 55,767.9&&&& & 69,216.6&&&& & 84,484.2&&&& & 101,381.1&& &YoY#Growth#% 40.58% 38.52% 36.46% 34.40% 32.35% 30.29% 28.23% 26.17% 24.12% 22.06% 20.00%

COGS 69,962$&&&&& & 83,412$&&&&& & 99,101$&&&&& & 117,180$&&& & 137,740$&&& & 160,796$&&& & 186,264$&&& & 213,939$&&& & 243,479$&&& & 274,393$&&& & 306,035$&&& &COGS#(%#sales) 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66%

SG&A 19,609$&&&&& & 23,044$&&&&& & 26,980$&&&&& & 31,431$&&&&& & 36,393$&&&&& & 41,839$&&&&& & 47,718$&&&&& & 53,948$&&&&& & 60,419$&&&&& & 66,989$&&&&& & 73,484$&&&&& &SG&A#(%#sales) 18.45% 18.18% 17.92% 17.65% 17.39% 17.12% 16.86% 16.60% 16.33% 16.07% 15.80%R&D 10,804$&&&&& & 12,552$&&&&& & 14,522$&&&&& & 16,708$&&&&& & 19,097$&&&&& & 21,659$&&&&& & 24,354$&&&&& & 27,129$&&&&& & 29,914$&&&&& & 32,629$&&&&& & 35,184$&&&&& &R&D#(%#sales) 10.16% 9.90% 9.64% 9.38% 9.12% 8.86% 8.60% 8.35% 8.09% 7.83% 7.57%

Depreciation&&& 6,100$&&&&&&& & 7,299$&&&&&&&& & 9,584$&&&&&&&& & 11,751$&&&&& & 12,100$&&&&& & 11,149$&&&&& & 12,579$&&&&& & 15,726$&&&&& & 17,592$&&&&& & 19,481$&&&&& & 21,343$&&&&& &D&A#(%#sales) 5.7% 5.8% 6.4% 6.6% 5.8% 4.6% 4.4% 4.8% 4.8% 4.7% 4.6%EBIT (170)$999999999 9 436$99999999999 9 395$99999999999 9 981$99999999999 9 3,962$99999999 9 8,883$99999999 9 12,108$99999 9 14,333$99999 9 18,556$99999 9 23,442$99999 9 28,966$99999 9EBIT#(%#sales) F0.2% 0.3% 0.3% 0.6% 1.9% 3.6% 4.3% 4.4% 5.0% 5.6% 6.2%

EBITDA 5,930$&&&&&&& & 7,735$&&&&&&&& & 9,979$&&&&&&&& & 12,732$&&&&& & 16,063$&&&&& & 20,032$&&&&& & 24,687$&&&&& & 30,059$&&&&& & 36,148$&&&&& & 42,923$&&&&& & 50,309$&&&&& &EBITDA#(%#sales) 5.6% 6.1% 6.6% 7.2% 7.7% 8.2% 8.7% 9.2% 9.8% 10.3% 10.8%

Interest&Expense (172)$&&&&&&&&& & (198)$&&&&&&&&&& & (242)$&&&&&&&&&& & (310)$&&&&&&&&&& & (409)$&&&&&&&&&& & (549)$&&&&&&&&&& & (726)$&&&&&&&&&& & (946)$&&&&&&&&&& & (1,217)$&&&&&& & (1,547)$&&&&&& & (1,943)$&&&&&& &Interest#Income#(%# F3.31% F3.31% F3.31% F3.31% F3.31% F3.31% F3.31% F3.31% F3.31% F3.31% F3.31%

Interest&Income 33$&&&&&&&&&&&& & 35$&&&&&&&&&&&&& & 38$&&&&&&&&&&&&& & 42$&&&&&&&&&&&&& & 54$&&&&&&&&&&&&& & 78$&&&&&&&&&&&&& & 112$&&&&&&&&&&& & 156$&&&&&&&&&&& & 215$&&&&&&&&&&& & 293$&&&&&&&&&&& & 393$&&&&&&&&&&& &Interest#Income#(%# 0.24% 0.26% 0.28% 0.30% 0.31% 0.33% 0.35% 0.37% 0.38% 0.40% 0.42%

EBT (374)$999999999 9 203$99999999999 9 115$99999999999 9 629$99999999999 9 3,500$99999999 9 8,256$99999999 9 11,270$99999 9 13,230$99999 9 17,124$99999 9 21,602$99999 9 26,630$99999 9EBT#(%#sales) F0.35% 0.16% 0.08% 0.35% 1.67% 3.38% 3.98% 4.07% 4.63% 5.18% 5.73%

Taxes (112)$&&&&&&&&& & 61$&&&&&&&&&&&&& & 34$&&&&&&&&&&&&& & 189$&&&&&&&&&&& & 1,050$&&&&&&&& & 2,477$&&&&&&&& & 3,381$&&&&&&&& & 3,969$&&&&&&&& & 5,137$&&&&&&&& & 6,481$&&&&&&&& & 7,989$&&&&&&&& &Tax#rate 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%Net9Income9(excluding9unusual9items) (262)$999999999 9 142$99999999999 9 80$9999999999999 9 440$99999999999 9 2,450$99999999 9 5,780$99999999 9 7,889$99999999 9 9,261$99999999 9 11,987$99999 9 15,121$99999 9 18,641$99999 9NI#(%#sales) F0.2% 0.1% 0.1% 0.2% 1.2% 2.4% 2.8% 2.8% 3.2% 3.6% 4.0%

ESTIMATES

25

FORECAST2015E 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F

ASSETS

33Total3Cash3&3ST3Investments 3315,419.33 3315,660.53 3315,912.93 3316,621.83 3333319,458.73 3333325,760.73 3333334,320.23 3333344,405.23 3333357,366.93 3333373,603.93 3333393,480.63

As#a#%#of#sales 14.5% 12.4% 10.6% 9.3% 9.3% 10.5% 12.1% 13.7% 15.5% 17.7% 20.1%

Accounts(Receivable

33Total3Receivables 333336,654.13 333337,873.73 33339,283.83 3310,893.73 3333312,706.63 3333314,718.63 3333316,916.63 3333319,277.23 3333321,764.93 3333324,332.13 3333326,919.13

As#a#%#of#sales 6.26% 6.21% 6.17% 6.12% 6.07% 6.02% 5.98% 5.93% 5.88% 5.84% 5.79%

Inventory (((((9,875.9( ((11,729.3( ((13,882.3( ((16,352.4( (((((19,148.7( (((((22,269.7( (((((25,699.9( (((((29,407.8( (((((33,343.4( (((((37,437.2( (((((41,599.5(

Inventory#turns 7.08######## # 7.11######## # 7.14######## # 7.17######## # 7.19########### # 7.22########### # 7.25########### # 7.27########### # 7.30########### # 7.33########### # 7.36########### #

Prepaid(Exp. (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

Deferred(Tax(Assets,(Curr. (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

Other(Current(Assets (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

33Total3Current3Assets 3331,949.43 3335,263.53 3339,079.03 3343,867.83 3333351,314.03 3333362,749.03 3333376,936.73 3333393,090.13 333112,475.23 333135,373.23 333161,999.23

Gross(Property,(Plant(&(Equipment ((25,437.3( ((28,547.5( ((31,662.2( ((34,988.3( (((((39,581.5( (((((46,230.3( (((((53,866.1( (((((61,729.1( (((((70,524.9( (((((80,265.2( (((((90,936.7(

CAPEX ((5,757.4)(( ((6,759.5)(( ((7,906.5)(( ((9,201.8)(( ((10,643.4)(( ((12,223.2)(( ((13,925.4)(( ((15,725.9)(( ((17,591.6)(( ((19,480.7)(( ((21,343.0)((

%#of#sales <5.42% <5.33% <5.25% <5.17% <5.09% <5.00% <4.92% <4.84% <4.75% <4.67% <4.59%

Depreciation (((((6,100.2( (((((7,298.6( ((((9,583.7( ((11,751.3( (((((12,100.4( (((((11,148.9( (((((12,579.0( (((((15,725.9( (((((17,591.6( (((((19,480.7( (((((21,343.0(

%#of#PPE 20.69% 20.50% 20.31% 20.12% 19.92% 19.73% 19.54% 19.35% 19.16% 18.97% 18.78%

Accumulated(Depreciation (((((6,711.8( (((((7,801.9( ((((8,643.3( (((((9,457.4( (((((11,322.6( (((((15,060.4( (((((19,646.6( (((((24,377.5( (((((30,027.4( (((((36,688.1( (((((44,435.6(

33Net3Property,3Plant3&3Equipment 3318,725.53 3320,745.63 3323,018.93 3325,530.93 3333328,258.93 3333331,169.83 3333334,219.53 3333337,351.63 3333340,497.43 3333343,577.13 3333346,501.23

LongSterm(Investments

Goodwill (((((3,319.0( (((((3,319.0( ((((3,319.0( (((((3,319.0( (((((((3,319.0( (((((((3,319.0( (((((((3,319.0( (((((((3,319.0( (((((((3,319.0( (((((((3,319.0( (((((((3,319.0(

Other(Intangibles ((((((((764.0( ((((((((764.0( ((((((((764.0( ((((((((764.0( ((((((((((764.0( ((((((((((764.0( ((((((((((764.0( ((((((((((764.0( ((((((((((764.0( ((((((((((764.0( ((((((((((764.0(

Deferred(Tax(Assets,(LT (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

Deferred(Charges,(LT (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

Other(LongSTerm(Assets (((((2,446.0( (((((2,857.2( ((((3,324.5( (((((3,848.1( (((((((4,425.8( (((((((5,052.9( (((((((5,721.4( (((((((6,420.1( (((((((7,134.3( (((((((7,846.0( (((((((8,534.2(

As#a#%#of#sales 2.30% 2.25% 2.21% 2.16% 2.11% 2.07% 2.02% 1.97% 1.93% 1.88% 1.84%

Total3Assets 3357,203.93 3362,949.33 3369,505.53 3377,329.93 3333388,081.73 333103,054.73 333120,960.63 333140,944.83 333164,189.93 333190,879.33 333221,117.53

LIABILITIES

Accounts(Payable ((19,442.9( ((22,919.2( ((26,919.7( ((31,463.4( (((((36,552.4( (((((42,167.2( (((((48,262.4( (((((54,762.9( (((((61,561.7( (((((68,518.3( (((((75,460.6(

Deferral#period 101.44#### # 100.29#### # 99.15###### # 98.00###### # 96.86######### # 95.72######### # 94.57######### # 93.43######### # 92.29######### # 91.14######### # 90.00######### #

Accrued(Exp. (((((5,384.0( (((((6,418.8( ((((7,625.9( (((((9,016.9( (((((10,598.7( (((((12,372.4( (((((14,331.7( (((((16,460.7( (((((18,733.0( (((((21,110.9( (((((23,544.7(

As#a#%#of#sales 5.06% 5.06% 5.06% 5.06% 5.06% 5.06% 5.06% 5.06% 5.06% 5.06% 5.06%

Curr.(Port.(of(LT(Debt ((((((((750.0( ((((((((751.0( ((((((((752.0( ((((((((753.0( ((((((((((754.0( ((((((((((755.0( ((((((((((756.0( ((((((((((757.0( ((((((((((758.0( ((((((((((759.0( ((((((((((760.0(

Curr.(Port.(of(Cap.(Leases (((((1,024.4( (((((1,024.4( ((((1,024.4( (((((1,024.4( (((((((1,024.4( (((((((1,024.4( (((((((1,024.4( (((((((1,024.4( (((((((1,024.4( (((((((1,024.4( (((((((1,024.4(

Unearned(Revenue,(Current (((((4,133.5( (((((4,838.7( ((((5,642.5( (((((6,546.1( (((((((7,546.9( (((((((8,637.7( (((((((9,805.9( (((((11,033.4( (((((12,295.6( (((((13,562.3( (((((14,797.9(

As#a#%#of#sales 3.89% 3.82% 3.75% 3.68% 3.61% 3.54% 3.46% 3.39% 3.32% 3.25% 3.18%

Other(Current(Liabilities (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

33Total3Current3Liabilities 3330,734.83 3335,952.13 3341,964.53 3348,803.83 3333356,476.43 3333364,956.73 3333374,180.43 3333384,038.33 3333394,372.63 333104,974.93 333115,587.53

LongSTerm(Debt (((((8,265.0( (((((8,265.0( ((((8,265.0( (((((8,265.0( (((((((8,265.0( (((((((8,265.0( (((((((8,265.0( (((((((8,265.0( (((((((8,265.0( (((((((8,265.0( (((((((8,265.0(

As#a#%#of#sales 7.77% 6.52% 5.49% 4.64% 3.95% 3.38% 2.92% 2.54% 2.23% 1.98% 1.78%

Capital(Leases (((((4,224.0( (((((4,224.0( ((((4,224.0( (((((4,224.0( (((((((4,224.0( (((((((4,224.0( (((((((4,224.0( (((((((4,224.0( (((((((4,224.0( (((((((4,224.0( (((((((4,224.0(

As#a#%#of#sales 3.97% 3.77% 3.56% 3.35% 3.15% 2.94% 2.74% 2.53% 2.32% 2.12% 1.91%

Unearned(Revenue,(NonSCurrent (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( (((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0( ((((((((((((((((((0(

Def.(Tax(Liability,(NonSCurr. ((((((((928.2( ((((((((835.4( ((((((((742.5( ((((((((649.7( ((((((((((556.9( ((((((((((464.1( ((((((((((371.3( ((((((((((278.5( ((((((((((185.6( ((((((((((((92.8( ((((((((((((((0.0(

Other(NonSCurrent(Liabilities (((((2,575.9( (((((3,058.6( ((((3,619.1( (((((4,261.9( (((((((4,989.1( (((((((5,800.2( (((((((6,691.1( (((((((7,653.3( (((((((8,673.7( (((((((9,734.0( (((((10,810.7(

As#a#%#of#sales 2.42% 2.41% 2.40% 2.39% 2.38% 2.37% 2.36% 2.35% 2.34% 2.33% 2.32%

Total3Liabilities 3346,727.93 3352,335.23 3358,815.33 3366,204.43 3333374,511.43 3333383,710.03 3333393,731.83 333104,459.13 333115,721.03 333127,290.73 333138,887.33

Common(Stock ((((((((((((5.0( ((((((((((((5.0( ((((((((((((5.0( ((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0( ((((((((((((((5.0(

Additional(Paid(In(Capital ((11,135.0( ((11,135.0( ((11,135.0( ((11,135.0( (((((11,135.0( (((((11,135.0( (((((11,135.0( (((((11,135.0( (((((11,135.0( (((((11,135.0( (((((11,135.0(

Retained(Earnings (((((1,684.0( (((((1,822.2( ((((1,898.2( (((((2,333.5( (((((((4,778.3( (((((10,552.6( (((((18,436.8( (((((27,693.7( (((((39,676.9( (((((54,796.6( (((((73,438.2(

Treasury(Stock ((1,837.0)(( ((1,837.0)(( ((1,837.0)(( ((1,837.0)(( ((((1,837.0)(( ((((1,837.0)(( ((((1,837.0)(( ((((1,837.0)(( ((((1,837.0)(( ((((1,837.0)(( ((((1,837.0)((

Comprehensive(Inc.(and(Other (((((511.0)(( (((((511.0)(( (((((511.0)(( (((((511.0)(( ((((((((511.0)(( ((((((((511.0)(( ((((((((511.0)(( ((((((((511.0)(( ((((((((511.0)(( ((((((((511.0)(( ((((((((511.0)((

33Total3Common3Equity 3310,476.03 3310,614.23 3310,690.23 3311,125.53 3333313,570.33 3333319,344.63 3333327,228.83 3333336,485.73 3333348,468.93 3333363,588.63 3333382,230.23

Total3Equity 3310,476.03 3310,614.23 3310,690.23 3311,125.53 3333313,570.33 3333319,344.63 3333327,228.83 3333336,485.73 3333348,468.93 3333363,588.63 3333382,230.23

Total3Liabilities3And3Equity 3357,203.93 3362,949.33 3369,505.53 3377,329.93 3333388,081.73 333103,054.73 333120,960.63 333140,944.83 333164,189.93 333190,879.33 333221,117.53

ESTIMATES

26

EXHIBIT16: Discounted Cash Flow and Valuation

FORECAST

2015E 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F

Net$Income $$$$$$(265.0)$$ $$$$$$$$$$138.2$ $$$$$$$$$$$$76.0$ $$$$$$$$$$435.3$ $$$$$$$2,444.9$ $$$$$$$5,774.3$ $$$$$$$7,884.2$ $$$$$$$9,256.9$ $$$$$11,983.2$ $$$$$15,119.7$ $$$$$18,641.6$

Depreciation$&$Amort.,$Total $$$$$$$6,100.2$ $$$$$$$7,298.6$ $$$$$$$9,583.7$ $$$$$11,751.3$ $$$$$12,100.4$ $$$$$11,148.9$ $$$$$12,579.0$ $$$$$15,725.9$ $$$$$17,591.6$ $$$$$19,480.7$ $$$$$21,343.0$

Depreciation$in$AR $$$$$$$6,100.2$ $$$$$$$7,298.6$ $$$$$$$9,583.7$ $$$$$11,751.3$ $$$$$12,100.4$ $$$$$11,148.9$ $$$$$12,579.0$ $$$$$15,725.9$ $$$$$17,591.6$ $$$$$19,480.7$ $$$$$21,343.0$

Change$in$Acc.$Receivable $$$(1,042.1)$$ $$$(1,219.5)$$ $$$(1,410.1)$$ $$$(1,609.8)$$ $$$(1,812.9)$$ $$$(2,012.0)$$ $$$(2,198.1)$$ $$$(2,360.5)$$ $$$(2,487.7)$$ $$$(2,567.2)$$ $$$(2,587.0)$$

Change$In$Inventories $$$(1,576.9)$$ $$$(1,853.4)$$ $$$(2,153.0)$$ $$$(2,470.1)$$ $$$(2,796.3)$$ $$$(3,120.9)$$ $$$(3,430.2)$$ $$$(3,707.9)$$ $$$(3,935.6)$$ $$$(4,093.8)$$ $$$(4,162.3)$$

Change$in$Acc.$Payable $$$$$$$2,983.9$ $$$$$$$3,476.3$ $$$$$$$4,000.5$ $$$$$$$4,543.7$ $$$$$$$5,089.0$ $$$$$$$5,614.8$ $$$$$$$6,095.2$ $$$$$$$6,500.6$ $$$$$$$6,798.7$ $$$$$$$6,956.6$ $$$$$$$6,942.3$

Change$in$Unearned$Rev. $$$$$$$$$$610.5$ $$$$$$$$$$705.1$ $$$$$$$$$$803.8$ $$$$$$$$$$903.6$ $$$$$$$1,000.8$ $$$$$$$1,090.8$ $$$$$$$1,168.3$ $$$$$$$1,227.4$ $$$$$$$1,262.2$ $$$$$$$1,266.7$ $$$$$$$1,235.6$

Change$in$Other$Net$Operating$Assets $$$$$$$1,644.9$ $$$$$$$1,928.8$ $$$$$$$2,235.0$ $$$$$$$2,557.2$ $$$$$$$2,886.7$ $$$$$$$3,212.0$ $$$$$$$3,518.6$ $$$$$$$3,789.9$ $$$$$$$4,006.9$ $$$$$$$4,149.9$ $$$$$$$4,198.7$

Cash6from6Operations 66666668,455.56 6666610,474.16 6666613,135.86 6666616,111.26 6666618,912.56 6666621,707.86 6666625,617.06 6666630,432.26 6666635,219.46 6666640,312.66 6666645,611.96

Capital6Expenditure 666(5,757.4)66 666(6,759.5)66 666(7,906.5)66 666(9,201.8)66 6(10,643.4)66 6(12,223.2)66 6(13,925.4)66 6(15,725.9)66 6(17,591.6)66 6(19,480.7)66 6(21,343.0)66

H5.42% H5.33% H5.25% H5.17% H5.09% H5.00% H4.92% H4.84% H4.75% H4.67% H4.59%

66666665,757.46 66666666,759.56 66666667,906.56 66666669,201.86 6666610,643.46 6666612,223.26 6666613,925.46 6666615,725.96 6666617,591.66 6666619,480.76 6666621,343.06

FCF$as$stated$in$annual$report

FCF 2,698.05666 6 3,714.56666 6 5,229.31666 6 6,909.45666 6 8,269.13666 6 9,484.60666 6 11,691.606 6 14,706.336 6 17,627.786 6 20,831.876 6 24,268.876 6

Discount)Factor 1.00 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59

406,421.5$ $

Discounted6CF 2,698.166666 6 3,376.966666 6 4,321.766666 6 5,191.266666 6 5,647.966666 6 5,889.266666 6 6,599.666666 6 7,546.766666 6 8,223.566666 6 8,834.766666 6 9,356.766666 6

2015

Entreprise6Value 215,022.66 6

O$Debt 8,265.0$$$$$ $

+$Cash 15,419.3$$$ $

=Equity$Value 222,176.9$ $

/$Outstanding$diluted$shares 479.6$$$$$$$$ $

=6Share6Price 459.266666666 6

ESTIMATES

27

END-NOTES

1 http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756 2 World bank 3 http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756 4 Based on Amazon’s 2014 North America Sales (minus AWS) and a e-commerce US market of $307B 5 http://www.emarketer.com/Article/Internet-Hit-3-Billion-Users-2015/1011602 6 Market capitalization used Q2 1997: $441M; Market Cap Q3 2015: $234,348M; Source:Bloomberg 7 CapIQ, weighted average from 2000 to 2014 actuals of R&D line and CAPEX line 8 Represents all Amazon facilities in the world; Source: Amazon annual reports (2012, 2013, 2014) 9 Amazon annual reports (2012, 2013, 2014) 10 RBC Equity Research report on Amazon, September 11 2015 11 #1 in YouGov Brand Index, http://www.huffingtonpost.com/2014/01/13/amazon-vs-walmart_n_4589724.html 12 Amazon annual reports, excerpt from 1997 letter to shareholders 13 http://www.techrepublic.com/article/aws-now-10x-the-size-of-its-competitors-is-the-cloud-arms-race-over/ 14Amazon Q3 2015 report : « reflects additional investments in support of continued business growth due to investments in technology infrastructure, the majority of which is to support AWS”, http://recode.net/2015/04/23/how-amazons-cloud-business-is-growing/15 https://www.forrester.com/The+Public+Cloud+Market+Is+Now+In+Hypergrowth/fulltext/-/E-RES113365?intcmp=blog:forrlink 16http://www.cnbc.com/2015/10/05/amazon-race-to-zero-with-microsoft-google.html17 https://www.srgresearch.com/articles/aws-market-share-reaches-five-year-high-despite-microsoft-growth-surge 18 Amazon annual reports (2012, 2013, 2014) 19Amazonannualreports(2013,2014)20 Based on Close on Oct. 22nd and open on Oct 23rd of 2015; Source: Bloomberg 21 Amazon annual report 2014 22 Morningstar Equity Research, July 25th 2015 and The Guardian, June 2015 (Third-party sellers and Amazon - a double-edged sword in e-commerce) 23 CapIQ Financial Statements of Amazon, 2001 to 2014 actuals 24 CapIQ Financial Statements of Amazon, 2001 to 2014 actuals 25 ROIC = (EBIT*(1-tax rate)) / Invested capital of prior year. Calculated on CapIQ Financial Statements of Amazon, 2001 to 2014 actuals 26 http://www.statista.com/statistics/263265/top-companies-in-the-world-by-revenue/ 27 http://corporate.walmart.com/_news_/news-archive/2014/02/20/walmart-raises-annual-dividend-to-192-per-share-representing-the-41st-consecutive-year-of-dividend-increases 28 https://www.internetretailer.com/2015/10/14/wal-mart-will-spend-nearly-2-billion-web-imrovements 29 http://corporate.walmart.com/our-story/our-locations 30 2015 Walmart Annual Report 31 2015 Walmart Annual Report 32 2015 Walmart Annual Report 33 http://www.wsj.com/articles/wal-mart-to-open-115-stores-in-china-by-2017-1430270579 34 2015 Walmart Annual Report 35 http://money.cnn.com/2015/10/14/news/economy/china-middle-class-growing/

36 http://marketrealist.com/2015/08/walmarts-yihaodian-buyout-wmt-upped-ante-china/

37 http://marketrealist.com/2015/08/walmarts-yihaodian-buyout-wmt-upped-ante-china/ 38 http://www.businessinsider.com/chinas-rising-middle-class-will-create-opportunities-the-world-has-never-seen-before-2015-5?r=UK&IR=T 39 http://www.statista.com/statistics/323115/market-share-of-b2c-online-retailers-in-china/ 40 http://growwithtrellis.com/blog/top-10-ecommerce-markets-by-country/ 41 http://www.forbes.com/sites/dougyoung/2015/07/24/walmart-eyes-alibaba-amazon-with-china-buyout/ 42 http://corporate.walmart.com/our-story/locations/nigeria#/nigeria 43 http://www.mckinsey.com/insights/africa/nigerias_renewal_delivering_inclusive_growth 44 http://www.nytimes.com/2015/06/06/business/walmart-lagging-in-online-sales-is-strengthening-e-commerce.html?_r=0

28

45 2015 Walmart Annual Report 46http://www.theguardian.com/environment/2012/sep/05/climate-change-food-oxfam47 http://www.cnbc.com/2015/05/08/amazons-grocery-delivery-business-quietly-expands-to-parts-of-new-jersey.html 48 2015 Walmart Annual Report 49 http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=1303 50 https://ycharts.com/companies/AMZN/return_on_equity 51 2015 Walmart Annual Report 52 http://www.forbes.com/sites/stevedenning/2012/03/07/emulate-wal-mart-and-dare-to-be-bad/ 53 http://www.forbes.com/sites/rahimkanani/2014/07/07/how-the-worlds-largest-company-thinks-about-social-responsibility/ 54 http://s2.q4cdn.com/056532643/files/doc_financials/2015/annual/2015-annual-report.pdf