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Footwear Industry Report

FIR 21-Jul-2019

Industry 1 Biegala MGT495-01

Summer

Year 12

Year 12 Scoreboard

Rank

Company Name

Investor Expectation

Score

Best-In- Industry Score

Weighted Average

Score

Change

from Y11

1 H Company 117 98 108 +3 2 DTigers 113 81 97 +11 3 K Company 116 75 96 +19 4 J - Doyen 115 75 95 +22 5 B Company 113 71 92 -15 6 FFlying wings 111 68 90 +32 7 I Company 99 58 79 -5 8 A Company 98 58 78 -5 8 E Company 96 59 78 +23

10 G Company 92 57 75 +2 11 C Shoe 81 51 66 -8

Game-To-Date Scoreboard

Rank

Company Name

Investor Expectation

Score

Best-In- Industry Score

Weighted Average

Score

Bonus Points

Overall G-T-D Score

1 H Company 117 99 108 1 109 2 B Company 116 79 98 0 98 3 DTigers 113 78 96 0 96 4 J - Doyen 111 74 93 1 94 5 K Company 111 73 92 0 92 6 FFlying wings 104 66 85 1 86 7 I Company 102 63 83 1 84 8 A Company 99 62 81 1 82 9 G Company 92 60 76 1 77

10 E Company 88 57 73 1 74 11 C Shoe 84 55 70 0 70

Investor Expectation Score (I.E.)

Investors and company boards of directors have established targets for the five scoring measures that appear on pages 2 and 3 of this report. The I.E. score ranges from 0 to 120 (if all targets are exceeded by 40% or more). Click the Help button (upper-right) for more information.

Best-In- Industry Score (BII)

The B-I-I score measures each company's performance relative to the best performing company on each of the five scoring measure. The B-I-I score ranges from 0 to 100. To score 100 a company must be the best performing company in the industry on all five scoring measures.

Weighted Average Score

The weighted average score combines the Investor Expectation Score and the Best-In-Industry Score using a 50%-50% weighting as specified by the course instructor. Detailed explanations of scoring are provided in the Help documents asociated with pages 1, 2, and 3 of this report.

Page 1

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Industry 1 SCORING MEASURES Year 12

Earnings Per Share ($ per share)

Earnings Per Share scores are based on a 20% (20-point) weighting. A bolded number indicates achievement of the investor expected EPS shown below each yearly column head. A highlighted number indicates best-in- industry performance. Game-To-Date EPS scores are based on a weighted average of the annual EPS performances.

Y11 (2.50)

Y12 (3.00)

Y13 (3.50)

Y14 (4.00)

Y15 (4.50)

Y16 (5.25)

Y17 (6.00)

Y18 (7.00)

Y19 (8.50)

Y20 (10.00)

Wgt. Avg. (2.75) I.E. BII

Y12 Score I.E. BII

G-T-D Score

A 2.57 2.94 2.75 20 9 20 10 A B 4.61 4.22 4.41 24 13 24 16 B C 2.26 2.57 2.42 17 8 18 9 C D 2.37 4.59 3.47 24 14 23 13 D E 1.42 2.94 2.18 20 9 16 8 E F 1.48 3.86 2.67 23 11 19 10 F G 2.32 2.84 2.58 19 8 19 10 G H 4.05 6.74 5.40 24 20 24 20 H I 2.71 3.11 2.91 20 9 21 11 I J 2.27 4.74 3.51 24 14 23 13 J K 2.31 4.19 3.25 24 12 22 12 K

Return On Equity (%)

Return On Equity scores are based on a 20% (20-point) weighting. A bolded number indicates achievement of the investor expected ROE shown below each yearly column head. A highlighted number indicates best-in- industry performance. Game-To-Date ROE scores are based on a weighted average of the annual ROE performances.

Y11 (21.0)

Y12 (22.0)

Y13 (23.0)

Y14 (24.0)

Y15 (25.0)

Y16 (26.0)

Y17 (27.0)

Y18 (28.0)

Y19 (29.0)

Y20 (30.0)

Wgt. Avg. (22.0) I.E. BII

Y12 Score I.E. BII

G-T-D Score

A 21.8 20.2 20.9 18 10 19 12 A B 36.0 24.5 29.4 21 12 23 16 B C 19.4 18.6 19.0 17 9 17 10 C D 22.7 41.5 32.3 24 20 24 18 D E 12.6 21.9 17.7 20 11 16 10 E F 13.2 28.1 21.4 23 14 19 12 F G 19.9 20.0 19.9 18 10 18 11 G H 33.0 38.7 36.3 24 19 24 20 H I 22.9 21.0 21.9 19 10 20 12 I J 19.6 31.8 26.4 24 15 22 15 J K 19.8 28.1 24.4 23 14 21 13 K

Stock Price ($ per share)

Stock Price scores are based on a 20% (20-point) weighting. A bolded number indicates achievement of the investor expected stock price shown below each yearly column head. A highlighted number indicates best-in- industry performance. Game-To-Date scores are based solely on the most recent year's stock price.

Y11 (40.00)

Y12 (50.00)

Y13 (65.00)

Y14 (80.00)

Y15 (100.00)

Y16 (125.00)

Y17 (150.00)

Y18 (180.00)

Y19 (215.00)

Y20 (250.00) I.E. BII

Y12 Score I.E. BII

G-T-D Score

A 33.46 45.06 18 5 18 5 A B 121.59 83.05 24 9 24 9 B C 22.86 21.18 8 2 8 2 C D 48.77 120.70 24 13 24 13 D E 11.86 35.44 14 4 14 4 E F 11.76 58.38 22 7 22 7 F G 20.47 31.72 13 4 13 4 G H 102.76 178.88 24 20 24 20 H I 35.55 46.77 19 5 19 5 I J 22.39 102.04 24 11 24 11 J K 26.32 92.42 24 10 24 10 K

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Industry 1 SCORING MEASURES Year 12 (concluded)

Credit Rating Credit Rating scores are based on a 20% (20-point) weighting. A bolded credit rating indicates achievement of the investor expected credit rating shown below each yearly column head. Game-To-Date credit rating scores are based solely on the most recent year's credit rating performance.

Y11 (B+)

Y12 (B+)

Y13 (B+)

Y14 (A–)

Y15 (A–)

Y16 (A–)

Y17 (A)

Y18 (A)

Y19 (A)

Y20 (A) I.E. BII

Y12 Score I.E. BII

G-T-D Score

A A A 23 19 23 19 A B A A+ 24 20 24 20 B C A– A 23 19 23 19 C D A A– 22 18 22 18 D E B A 23 19 23 19 E F B A 23 19 23 19 F G A– A 23 19 23 19 G H A A 23 19 23 19 H I A A 23 19 23 19 I J A– A 23 19 23 19 J K A– A 23 19 23 19 K

Image Rating Image Rating scores are based on a 20% (20-point) weighting. A bolded number indicates achievement of the investor expected image rating shown below each yearly column head. A highlighted number indicates best-in- industry performance. Game-To-Date scores are based on an average of the most recent three years.

Y11 (70)

Y12 (72)

Y13 (72)

Y14 (75)

Y15 (75)

Y16 (77)

Y17 (77)

Y18 (80)

Y19 (80)

Y20 (80)

Y10-Y12 Average I.E. BII

Y12 Score I.E. BII

G-T-D Score

A 70 67 69 19 15 19 16 A B 75 74 75 20 17 21 18 B C 68 57 63 16 13 18 15 C D 71 68 70 19 16 20 16 D E 68 69 69 19 16 19 16 E F 76 73 75 20 17 21 18 F G 65 68 67 19 16 19 16 G H 84 85 85 22 20 22 20 H I 68 65 67 18 15 19 16 I J 64 71 68 20 16 19 16 J K 74 87 81 22 20 21 19 K

High Average Low Total Dollars ($000s)

High Average Low Per Unit Sold ($/unit)

Industry 1 Cash Outlays for Corporate Social Responsibility and Citizenship

High Average Low

Image Rating Points Generated from

CSRC Expenditures

Year 11 15,457 8,714 0 1.85 1.03 0.00 5 3 0 Year 12 15,222 4,502 0 1.77 0.51 0.00 9 4 0 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

Corporate Social Responsibility and Citizenship

Beginning in Year 14, the World Council for Exemplary Corporate Citizenship presents a distinguished award to the company making the highest cash outlays as a percentage of revenues for corporate social respon- sibility and citizenship initiatives.

Award Winner 2nd Place

Y14 Y15 Y16 Y17 Y18 Y19 Y20

Corporate Responsibility Award for Exemplary Corporate Citizenship

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Industry 1 BONUS POINT AWARDS Year 12

BULL'S EYE AWARD for Accurately Forecasting Total Revenues,

Earnings Per Share, and Image Rating

One bonus point added to any company's game-to-date score when actual performance on Total Revenues AND Earnings Per Share vary by no more than 5% from projected performance AND when Image Rating varies by no more than 4 points from the projected image rating.

Year 12 Forecast

Year 12 Actual

Percent Variance

Revenues (within ± 5%) Year 12

Forecast Year 12 Actual

Percent Variance

EPS (within ± 5% or ± 10¢) Year 12

Forecast Year 12 Actual

Point Variance

Image Rating (within ± 4 points) Year 12 Bull's Eye

Award

Cumu- lative

Awards A 500,297 503,768 +0.7% 2.92 2.94 +0.8% 68 67 -1 pts. Yes 1 A B 558,343 616,619 +10.4% 3.40 4.22 +24.3% 72 74 +2 pts. No 0 B C 462,480 408,451 -11.7% 3.47 2.57 -25.9% 62 57 -5 pts. No 0 C D 496,835 609,684 +22.7% 3.00 4.59 +53.2% 63 68 +5 pts. No 0 D E 503,106 511,844 +1.7% 3.10 2.94 -5.1% 68 69 +1 pts. No 1 E F 473,716 469,399 -0.9% 4.33 3.86 -10.8% 78 73 -5 pts. No 0 F G 416,914 450,978 +8.2% 2.50 2.84 +13.8% 64 68 +4 pts. No 1 G H 779,516 827,318 +6.1% 6.03 6.74 +11.9% 84 85 +1 pts. No 1 H I 496,790 491,988 -1.0% 3.21 3.11 -3.1% 67 65 -2 pts. Yes 1 I J 564,383 577,886 +2.4% 4.61 4.74 +2.9% 70 71 +1 pts. Yes 1 J K 552,338 650,805 +17.8% 3.05 4.19 +37.6% 76 87 +11 pts. No 0 K

Trends in Variances Between Projected and Actual Performance (company and industry variances bertween projected and actual revenues, EPS, and image rating)

Industry 1 Variance

Largest Average Smallest

Company D Variance

Year 11 +9.6% -0.4% -7.4% -3.7%

Year 12 +30.1% +5.2%

-15.2% +27.9%

Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

Y11 Score Δ

Y12 Score Δ

Y13 Score Δ

Y14 Score Δ

Y15 Score Δ

Y16 Score Δ

Y17 Score Δ

Y18 Score Δ

Y19 Score Δ

Y20 Score

Current-Year Scores and Net Changes Cumu- lative

Awards A 83 -5 78 0 A B 107 -15 92 0 B C 74 -8 66 0 C D 86 +11 97 0 D E 55 +23 78 0 E F 58 +32 90 1 F G 73 +2 75 0 G H 105 +3 108 0 H I 84 -5 79 0 I J 73 +22 95 0 J K 77 +19 96 0 K

Δ = net change in score between years Highlighted figure = Leap Frog Award winner

for Most Improved Overall Score (current year to current year)

LEAP FROG AWARD Beginning in Year 12, one bonus point is added to the game-to-dateoverall score of the company whose current-year overall score is most improved over the prior year. If all companies fail to improve their scores from one year to the next, then no Leap Frog bonus is awarded.

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Industry 1 INDUSTRY OVERVIEW Year 12

Materials Prices

Price Adjustments

Materials Usage Facilities Utilization

Base Prices of Materials ($ per pair)

Materials Prices in Year 12 ($ per pair)

$6.00 -0.05 +0.28 $6.23

Standard $12.00 +0.38 +0.56

$12.94

Superior High industry-wide superior materials usage (41.6%) lead to superior materials prices that were 3.2% above the base and standard materials prices that were 0.8% below the base. Industry-wide utilization of production capability was above 110% and resulted in materials price increases of 4.7%.

Notes

Footwear Production and Sales

Branded Demand

(000s of pairs) Forecast Actual

Stockouts No. of Companies Unfilled Orders (000s)

Pairs Available (000s)

Pairs Sold (internet + wholesale)

Private Label

Demand Forecast (000s of pairs) Pairs Offered (000s) Pairs Sold (000s)

Superior Materials Usage Utilization of Production Capability

North America

36% 113.5% 31,579 29,214 29,458 29,460

4 0

2,706 2,997 2,316

Europe Africa

0% 0.0%

27,431 24,643 25,047 25,046

5 0

2,706 2,356 1,677

Asia Pacific

47% 115.5% 21,407 19,905 20,075 19,970

5 104

2,805 3,169 2,491

Latin America

37% 120.0% 20,722 19,905 20,064 19,923

5 141

2,805 2,173 1,493

Average or Total

42% 114.7% 101,139

93,667 94,644 94,399

245

11,022 10,695 7,977

⇦ % usage down 0.4 points from Year 11. ⇦ % usage down 0.1 points from Year 11.

⇦ 6.9% higher than Year 12 demand.

⇦ From page 4 of FIR for Year 11. ⇦ Actual branded demand was 1.0% higherthan forecast branded demand due to

increased competitive intensity.

⇦ Extent to which orders for branded pairs went unfilled due to inventory shortages at one or more companies.

⇦ From page 4 of FIR for Year 11. ⇦ Private-label pairs offered was lower than

actual private-label demand by 3.0%.

Notes

Demand Forecast

Branded Demand (internet + wholesale)

Year 13 Year 14 Year 15

Private-Label Demand Year 13 Year 14 Year 15

North America

31,286 33,164 35,155 3,003 3,333 3,696

Europe Africa 26,556 28,150 29,845 3,003 3,333 3,696

Asia Pacific 22,066 24,276 26,707 3,168 3,575 4,037

Latin America

22,055 24,264 26,693 3,168 3,575 4,037

Global Total

101,963 109,854 118,400

12,342 13,816 15,466

Global demand for Y11-Y15 is expected to grow by 7%-9% annually, slowing to 5%-7% during Y16-Y20. The projected growth rates are not the same for all regions, as shown in the table on page 5 of the Player's Guide. Actual demand growth may vary from the forecast due to stronger or weaker competitive efforts on the part of rival companies.

Notes

Supply / Demand Analysis

Beginning Year 13 Inventory Potential Y13 Production (with OT)

Potential Global Supply

6,740 120,000 126,740

Potential Footwear Suppy in Year 13 Branded Demand Forecast Private-Label Demand Forecast

Expected Global Demand

101,963 12,342

114,305

Expected Footwear Demand in Year 13 Potential global supply (at max OT) in the upcoming year is 10.9% greater than projected global demand. This much excess potential supply is likely to significantly intensify competition until growth in demand enables use of most of the currently installed production capability industry-wide.

Analysis

Facility Space Production Equipment

N.A. E-A A-P L.A.

Year 12 Facility Space (000s of pairs available for prod. equipmernt)

N.A. E-A A-P L.A.

Construction of New Space (initiated in Y12 and available in Y13)

Total Space

Available in Y13 N.A. E-A A-P L.A. Total

Year 12 Production Equipment (000s of pairs available for production)

A 5,000 0 6,000 0 0 0 0 0 11,000 A 4,000 0 4,000 0 8,000 A B 6,000 0 7,000 0 0 0 0 0 13,000 B 4,000 0 4,000 0 8,000 B C 5,000 0 6,000 0 0 0 0 0 11,000 C 4,000 0 4,000 0 8,000 C D 5,000 0 6,000 0 2,000 2,000 1,000 2,000 18,000 D 5,000 0 6,000 0 11,000 D E 5,000 0 6,000 0 0 0 0 0 11,000 E 4,000 0 4,000 0 8,000 E F 5,000 0 6,000 0 0 0 0 0 11,000 F 4,000 0 4,000 0 8,000 F G 5,000 0 6,000 0 0 0 0 0 11,000 G 3,750 0 3,750 0 7,500 G H 5,000 0 8,000 0 0 0 0 2,000 15,000 H 4,500 0 8,000 0 12,500 H I 5,000 0 6,000 0 0 0 0 0 11,000 I 4,000 0 4,000 0 8,000 I J 5,000 0 6,000 2,000 0 0 1,000 1,000 15,000 J 4,000 0 4,000 2,000 10,000 J K 5,000 0 6,000 0 0 0 0 0 11,000 K 5,000 0 6,000 0 11,000 K

56,000 0 69,000 2,000 2,000 2,000 2,000 5,000 138,000 46,250 0 51,750 2,000 100,000

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Industry 1 FINANCIAL PERFORMANCE SUMMARY Year 12

Income Statement Data ($000s)

Internet Wholesale P-label Total Net Sales Revenues Cost of

Pairs Sold Warehouse Expenses

Marketing Expenses

Admin Expenses

Operating Profit

Interest Exp (Inc)

Income Taxes

Net Profit

A 105,349 370,355 28,064 503,768 259,914 41,524 94,970 16,803 90,557 6,695 25,159 58,703 A B 144,658 437,163 34,798 616,619 320,825 45,649 107,659 15,305 127,181 6,747 36,130 84,304 B C 104,739 301,758 0 408,451 192,403 40,233 79,168 16,405 80,242 6,752 22,047 51,443 C D 135,239 464,137 0 609,684 259,883 48,022 133,737 21,309 146,733 7,555 41,336 96,450 D E 155,407 351,552 0 511,844 243,808 53,127 104,097 18,306 92,506 6,912 25,165 58,717 E F 98,009 319,802 51,588 469,399 239,684 44,375 51,217 16,406 117,717 8,626 32,727 76,364 F G 105,459 319,068 25,419 450,978 240,697 44,736 59,480 17,803 88,262 6,995 24,380 56,887 G H 195,252 632,066 0 827,318 395,877 69,947 134,406 20,207 206,881 14,225 57,797 134,859 H I 103,598 360,326 28,064 491,988 244,074 41,661 94,043 16,805 95,405 6,665 26,622 62,118 I J 121,887 411,661 43,649 577,886 297,803 51,249 68,957 18,307 141,570 7,367 40,261 93,942 J K 154,970 424,924 68,947 650,805 351,127 56,702 93,409 21,308 128,259 7,430 35,886 83,735 K

129,506 399,347 25,503 556,249 276,918 48,839 92,831 18,088 119,574 7,815 33,410 77,957

Selected Balance Sheet Data ($000s)

Cash On Hand

Current Assets

Fixed Assets

Total Assets

Assets Current Liabilities

Long-Term Loans

Total Liabilities

Liabilities Beginning

Equity Stock Sale (Purchase)

Earnings Retained

Ending Equity

Shareholder Equity

A 99,873 210,159 217,138 427,297 41,847 65,400 107,247 261,347 0 58,703 320,050 A B 116,492 249,577 240,090 489,667 37,661 65,400 103,061 302,302 0 84,304 386,606 B C 48,311 151,894 234,678 386,572 27,666 59,400 87,066 255,063 0 44,443 299,506 C D 168,292 339,433 426,230 765,663 108,117 431,000 539,117 238,307 -24,147 12,386 226,546 D E 33,388 131,881 261,504 393,385 30,733 65,400 96,133 238,535 0 58,717 297,252 E F 69,828 168,443 221,254 389,697 55,926 24,000 79,926 233,407 0 76,364 309,771 F G 72,625 177,014 234,462 411,476 32,662 65,400 98,062 256,527 0 56,887 313,414 G H 93,501 265,548 426,730 692,278 86,937 189,400 276,337 281,082 0 134,859 415,941 H I 105,062 212,445 217,138 429,583 37,829 65,400 103,229 264,236 0 62,118 326,354 I J 11,153 142,089 308,740 450,829 42,649 65,400 108,049 248,838 0 93,942 342,780 J K 19,989 155,780 296,978 452,758 47,441 65,400 112,841 256,182 0 83,735 339,917 K

76,229 200,388 280,449 480,837 49,952 105,600 155,552 257,802 -2,195 69,678 325,285

Selected Financial Statistics

Gross Profit

Margin

Operating Profit

Margin

Net Profit

Margin

Profitability Measures Div. Per Share ($/share)

Total Div. Payment

($000s)

Payout (percent of net profit)

Dividend Data Credit Rating Measures Interest Coverage

Ratio

Debt to Assets Ratio

Default Risk Ratio

Risk of

Default Current Ratio

Days of Inventory

Shares of Stock

Outstanding (000s of shares)

A 48.4% 18.0% 11.7% 0.00 0 0.0% 13.53 0.25 4.90 Low 5.02 17 days 20,000 A B 48.0% 20.6% 13.7% 0.00 0 0.0% 18.85 0.21 6.54 Low 6.63 19 days 20,000 B C 52.9% 19.6% 12.6% 0.35 7,000 13.6% 11.88 0.23 4.45 Low 5.49 50 days 20,000 C D 57.4% 24.1% 15.8% 4.00 84,064 87.1% 19.42 0.70 7.83 Low 3.14 87 days 21,016 D E 52.4% 18.1% 11.5% 0.00 0 0.0% 13.38 0.24 4.97 Low 4.29 16 days 20,000 E F 48.9% 25.1% 16.3% 0.00 0 0.0% 13.65 0.21 4.37 Low 3.01 10 days 19,800 F G 46.6% 19.6% 12.6% 0.00 0 0.0% 12.62 0.24 4.74 Low 5.42 29 days 20,000 G H 52.1% 25.0% 16.3% 0.00 0 0.0% 14.54 0.40 4.68 Low 3.05 13 days 20,000 H I 50.4% 19.4% 12.6% 0.00 0 0.0% 14.31 0.24 5.12 Low 5.62 18 days 20,000 I J 48.5% 24.5% 16.3% 0.00 0 0.0% 19.22 0.24 7.42 Low 3.33 22 days 19,800 J K 46.0% 19.7% 12.9% 0.00 0 0.0% 17.26 0.25 7.04 Low 3.28 15 days 20,000 K

50.2% 21.5% 14.0% 0.40 8,279 9.2% 15.33 0.29 5.64 4.39 27 days 20,056

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Industry 1 PERFORMANCE BENCHMARKS Year 12

Production Benchmarks

North America Low Average High Industry 1 Company

Labor Statistics

Total Regular Compensation ($ / worker / year) Workforce Productivity (pairs / worker / year) Production Labor Cost ($ per pair after rejects) Supervisory Compensation ($ / supervisor / year)

Branded Production TQM/6-Sigma Spending Current ($/pair produced)

Cumulative ($000s)

Superior Materials Usage

Total Production Cost ($ per pair produced) Reject Rate

Percentage of New Production Equipment

Cost Per S/Q Star (total production cost per pair ÷ S/Q rating)

100% 38,969 4,984 7.83

60,600 0%

0.90 8,539 22.18 1.6% 3.70

100% 42,649 5,174 8.58

61,212 36% 1.78

16,410 26.32 6.0% 5.53

100% 47,770 5,417 9.30

65,508 64% 5.00

43,555 33.51 8.8% 7.74

100% 46,185 5,344 8.65

60,600 42% 1.10

10,300 25.97 3.8% 5.77

Europe-Africa Low Average High Industry 1 Company

Labor Statistics

Total Regular Compensation ($ / worker / year) Workforce Productivity (pairs / worker / year) Production Labor Cost ($ per pair after rejects) Supervisory Compensation ($ / supervisor / year)

Branded Production TQM/6-Sigma Spending Current ($/pair produced)

Cumulative ($000s)

Superior Materials Usage

Total Production Cost ($ per pair produced) Reject Rate

Percentage of New Production Equipment

Cost Per S/Q Star (total production cost per pair ÷ S/Q rating)

0% 0 0

0.00 0

0% 0.00

0 0.00

0.0% 0.00

Asia-Pacific Low Average High Industry 1 Company

Labor Statistics

Total Regular Compensation ($ / worker / year) Workforce Productivity (pairs / worker / year) Production Labor Cost ($ per pair after rejects) Supervisory Compensation ($ / supervisor / year)

Branded Production TQM/6-Sigma Spending Current ($/pair produced)

Cumulative ($000s)

Superior Materials Usage

Total Production Cost ($ per pair produced) Reject Rate

Percentage of New Production Equipment

Cost Per S/Q Star (total production cost per pair ÷ S/Q rating)

0% 14,377 3,431 3.98

25,250 0%

0.90 8,448 19.24 4.4% 3.21

13% 16,152 3,720 4.49

25,482 46% 1.69

17,461 22.86 8.3% 4.97

50% 19,754 3,997 5.09

27,038 96% 5.00

46,930 29.45

10.8% 8.05

33% 17,302 3,966 4.40

25,250 60% 1.10

11,140 22.12 4.9% 4.71

Latin America Low Average High Industry 1 Company

Labor Statistics

Total Regular Compensation ($ / worker / year) Workforce Productivity (pairs / worker / year) Production Labor Cost ($ per pair after rejects) Supervisory Compensation ($ / supervisor / year)

Branded Production TQM/6-Sigma Spending Current ($/pair produced)

Cumulative ($000s)

Superior Materials Usage

Total Production Cost ($ per pair produced) Reject Rate

Percentage of New Production Equipment

Cost Per S/Q Star (total production cost per pair ÷ S/Q rating)

0% 0 0

0.00 0

0% 0.00

0 0.00

0.0% 0.00

Note: To protect individual companies from having competitively sensitive data revealed to rival companies, only the industry averages are reported for regions with 2 or 3 production facilities. Industry low and high numbers are reported only for regions with 4 or more production facilities. No benchmark data is reported for regions with only 1 production facility.

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Industry 1 PERFORMANCE BENCHMARKS Year 12 (concluded)

Branded Operating Benchmarks

North America Low Average High Industry 1 Company

Internet Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Wholesale Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Distribution and Warehouse Costs ($ per pair available for sale) Cost of Branded Pairs Sold (production, freight, x-rate cost adjustment)

5.11 24.47 7.02

18.46 21.9%

6.14 7.92

15.8%

6.29 27.43 19.22 24.36

28.4% 9.14

10.95 20.4%

9.07 34.48 28.25 29.57

34.7% 13.16 13.57

26.1%

5.11 26.97 25.59 29.57

30.3% 13.16 13.52

22.5%

Europe-Africa Low Average High Industry 1 Company

Internet Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Wholesale Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Distribution and Warehouse Costs ($ per pair available for sale) Cost of Branded Pairs Sold (production, freight, x-rate cost adjustment)

10.79 28.77 7.32

15.64 18.1%

3.75 8.16

14.6%

12.84 32.56 20.22 23.60

25.9% 9.01

11.73 19.4%

13.85 39.80 29.69 28.83

31.4% 13.70 22.60

30.5%

12.51 32.40 29.69 28.38

26.8% 13.70 13.38

20.3%

Asia-Pacific Low Average High Industry 1 Company

Internet Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Wholesale Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Distribution and Warehouse Costs ($ per pair available for sale) Cost of Branded Pairs Sold (production, freight, x-rate cost adjustment)

4.89 21.20 7.15

18.32 21.8%

5.59 11.51

23.8%

6.75 24.22 23.61 24.47

28.1% 8.51

15.50 28.2%

9.69 30.39 31.78 32.49

33.7% 12.49 20.17

32.4%

4.89 23.12 29.68 32.49

32.2% 12.49 20.17

32.4%

Latin America Low Average High Industry 1 Company

Internet Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Wholesale Segment Marketing Expenses ($ per pair sold) Operating Profit ($ per pair sold) Operating Profit Margin

Distribution and Warehouse Costs ($ per pair available for sale) Cost of Branded Pairs Sold (production, freight, x-rate cost adjustment)

6.44 25.87 10.29 9.84

11.5% 5.70 0.88

1.8%

16.72 34.83 23.70 17.70

19.4% 8.41 8.62

14.3%

18.78 42.29 32.15 29.62

35.5% 12.71 19.02

33.5%

17.74 34.62 32.15 23.54

22.2% 12.71 12.00

18.2%

Private-Label Operating Benchmarks

Low Average High Industry 1 Company

North America Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 24.64 +1.02

29.05 +4.37

33.48 +11.64

0.00 0.00

Europe-Africa Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 27.56 -0.35

34.95 +1.97

39.99 +8.99

0.00 0.00

Asia-Pacific Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 20.12 +3.12

25.50 +7.61

29.10 +12.35

0.00 0.00

Latin America Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 24.09 -0.59

33.93 +2.99

39.80 +10.41

0.00 0.00

8/13/2019 BSG Decisions & Reports

https://www.bsg-online.com/users/sim/fir/page5 9/9

Industry 1 CELEBRITY ENDORSEMENTS AND INDUSTRY TRENDS Year 12

Celebrity Endorsements

Celebrity Year 13

Contract Holder No. of Offers

Highest Offer

2nd Highest

3rd Highest

Most Recent Contract Offers (letter in parens indicates company that made offer)

Judy Judge H Company 5 3,000 (H) 678 (E) 650 (B) Kimmie Jimmel H Company 8 3,000 (H) 2,200 (D) 1,731 (K) Bud Birkenstock H Company 4 3,000 (H) 607 (K) 515 (E) Jose Montana K Company 4 2,000 (H) 607 (K) 507 (E) Samuelle Jackson J - Doyen 4 2,000 (H) 1,199 (J) 607 (K) Bronko Mars DTigers 6 3,000 (H) 2,200 (D) 1,199 (J) Steff Caraway J - Doyen 4 3,000 (H) 1,199 (J) 1,031 (K) Jay XYZ J - Doyen 4 2,000 (H) 1,199 (J) 1,031 (K) Nunchuck Norris H Company 6 3,500 (H) 2,500 (E) 2,500 (G) Roger Federation H Company 5 3,500 (H) 3,000 (D) 2,499 (J) Nick Shavan H Company 5 3,500 (H) 2,600 (C) 1,500 (E) Anderson Blooper J - Doyen 4 3,500 (H) 2,499 (J) 850 (E) Mic Jagermeister DTigers 7 3,500 (H) 3,000 (D) 2,760 (B) Jim Hardball J - Doyen 5 3,500 (H) 2,499 (J) 725 (E) LaBron Game B Company 8 4,000 (D) 4,000 (B) 4,000 (F)

Co. N.A. E-A A-P L.A. A 0 0 0 0 B 100 80 85 85 C 0 0 0 0 D 140 145 175 140 E 0 0 0 0 F 0 0 0 0 G 0 0 0 0 H 490 475 430 390 I 0 0 0 0 J 320 340 350 400 K 60 50 60 95

Avg. 101 99 100 101

Year 13 Consumer Appeal (sum of consumer appeal indexes for each company in the upcoming year)

Pricing and S/Q Rating Trends

NORTH AMERICA EUROPE-AFRICA

ASIA-PACIFIC LATIN AMERICA

Internet Price Wholesale Price S/Q Rating

10 11 12 13 14 15 16 17 18 19 20 $0

$20

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10 11 12 13 14 15 16 17 18 19 20 $0

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10 11 12 13 14 15 16 17 18 19 20 $0

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