Treatment of Capital Leases and Operating Leases in Enterprise Value

($ in Millions Except Per Share and Per Unit Data)

General Assumptions:

Company - Current Share Price: $ 117.46

Shares Outstanding (Millions): 351.00

Effective Tax Rate: 30.0%

Lease Capitalization Multiple: 7.0 x

Capital Leases: 1,575.0

Historical
Valuation Multiples: Units: Year 1 Year 2

Enterprise Value: $M
Enterprise Value - Capital Leases: $M
Enterprise Value + Capitalized Op. Leases: $M

EBITDA: $M
EBITDA Adjusted for Capital Leases: $M
EBITDAR: $M

EV / EBITDA: x
(EV - Capital Leases) / EBITDA Adj. for Cap. Leases: x
(EV + Capitalized Op. Leases) / EBITDAR: x
 Historical
Income Statement: Units: Year 1 Year 2

Total Revenue: $M $ 14,135.0 $ 14,484.0

Cost of Goods Sold (COGS): $M 8,554.0 8,673.0

Gross Profit: $M 5,581.0 5,811.0

Operating Expenses:
(+) Selling, General & Administrative: $M 2,815.0 2,678.0
(+) Annual Rental Expense: $M 215.0 220.0
(+) Depreciation: $M 300.0 313.0
(+) Depreciation of Capital-Leased Assets: $M 100.0 108.0
(+) Amortization of Intangible Assets: $M 250.0 242.0
Total Operating Expenses: $M 3,680.0 3,561.0

Operating Income (EBIT): $M 1,901.0 2,250.0

Operating (EBIT) Margin: % 13.4% 15.5%

Other Income / (Expense):

(-) Interest Expense on Debt: $M (239.0) (250.0)
(-) Interest Expense on Capital Leases: $M (115.0) (112.0)
(+) Interest and Other Income: $M 72.0 61.0
Total Other Income / (Expense): $M (282.0) (301.0)

Pre-Tax Income: $M 1,619.0 1,949.0

(-) Provision For Income Taxes: $M (485.7) (584.7)
Income from Continuing Operations: $M 1,133.3 1,364.3

(+) Income from Discontinued Operations: $M 49.0 1,056.0

Net Income: $M $ 1,182.3 $ 2,420.3

 Current Equity Value: $ 41,228.5
(-) Cash & Cash-Equivalents: (3,090.0)
(-) Other Non-Core Assets, Net: -
(+) Total Debt: 7,422.0
(+) Preferred Stock: -
(+) Noncontrolling Interests: 5.0
(+) Other Items (Unfunded Pensions, etc.): -
(+) Capital Leases: 1,575.0
Current Enterprise Value: $ 47,140.5

Historical Projected
Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

$ 47,140.5
45,565.5
48,715.5

3,071.5 3,315.7 3,498.4 3,731.0 3,893.7

2,841.5 3,080.7 3,258.4 3,486.0 3,643.7
3,301.5 3,550.7 3,738.4 3,976.0 4,143.7

15.3 x 14.2 x 13.5 x 12.6 x 12.1 x

16.0 x 14.8 x 14.0 x 13.1 x 12.5 x
14.8 x 13.7 x 13.0 x 12.3 x 11.8 x
Historical Projected
Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

$ 13,405.0 $ 14,075.3 $ 14,638.3 $ 15,223.8 $ 15,680.5 $ 16,150.9

7,888.0 8,240.2 8,525.9 8,821.2 9,038.8 9,261.5

5,517.0 5,835.1 6,112.4 6,402.6 6,641.7 6,889.4

2,417.0 2,533.5 2,561.7 2,664.2 2,665.7 2,745.7

225.0 230.0 235.0 240.0 245.0 250.0
325.0 339.0 352.0 368.0 381.0 405.0
116.0 125.0 131.0 138.0 145.0 151.0
231.0 217.0 196.0 175.0 153.0 134.0
3,314.0 3,444.5 3,475.7 3,585.2 3,589.7 3,685.7

2,203.0 2,390.5 2,636.7 2,817.4 3,052.0 3,203.7

16.4% 17.0% 18.0% 18.5% 19.5% 19.8%

(226.0) (296.9) (267.2) (237.5) (207.8) (178.1)

(109.0) (105.0) (104.0) (102.0) (100.0) (99.0)
78.0 15.5 11.9 8.9 6.6 4.4
(257.0) (386.4) (359.3) (330.6) (301.2) (272.8)

1,946.0 2,004.1 2,277.4 2,486.8 2,750.8 2,931.0

(583.8) (601.2) (683.2) (746.0) (825.2) (879.3)
1,362.2 1,402.9 1,594.2 1,740.7 1,925.5 2,051.7

- - - - - -

$ 1,362.2 $ 1,402.9 $ 1,594.2 $ 1,740.7 $ 1,925.5 $ 2,051.7