Wal-Mart Stores, Inc. and Subsidiaries - Page 11

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          and they were responding to the return of merchandise from                  
          customers.  Wal-Mart's inventory was generally at its lowest                
          during the month of January.                                                
                Wal-Mart counted the inventory at some of its stores                  
          during the last 3 weeks in January.  The results of some of these           
          inventories were posted in January of the same taxable year,                
          while the results of most of these inventories were posted in               
          February of the subsequent taxable year.  The ending inventory              
          for the year of the counts was not corrected for verified                   
          shrinkage for those stores inventoried in January and posted in             
          February.  The following chart shows the number of inventories              
          taken in January, the number of January inventories posted in               
          January, and the number of January inventories posted in                    
          February for the taxable years at issue:                                    
                               Number of                                              
                               January         Posted in      Posted in               
                     Year      Inventories     January        February                
                     1983           39              39        - 0 -                   
                     1984           73              9         64                      
                     1985           73              1         72                      
                     1986      93 or 95         - 0 -       93 or 95                  
          During the subject years, the highest percentages of physical               
          inventories took place from March through September.                        
                In general, it takes 4 to 6 weeks to prepare a store for              
          inventory.  Forty-five days prior to a scheduled count,                     
          Wal-Mart's internal audit department would send a preparation               
          package to the store for completion before the inventory was                





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