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Footwear Industry Report

FIR 28-Jul-2019

Industry 1 Biegala MGT495-01

Summer

Year 14

Year 14 Scoreboard

Rank

Company Name

Investor Expectation

Score

Best-In- Industry Score

Weighted Average

Score

Change

from Y13

1 J - Doyen 117 99 108 0 2 K ASM 116 87 102 +4 3 B Cielo 113 74 94 +1 4 H Company 109 70 90 -15 5 DTigers 107 67 87 -4 6 FFlying wings 98 61 80 -7 7 E Elite Footwear 88 56 72 0 7 G - Star 87 56 72 -5 9 I Company 73 49 61 -4

10 C Shoe 63 43 53 +2 11 A Company 56 41 49 -7

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 J - Doyen 117 98 108 3 111 2 H Company 115 86 101 1 102 3 K ASM 114 86 100 1 101 4 B Cielo 114 79 97 2 99 5 DTigers 110 76 93 0 93 6 FFlying wings 99 65 82 1 83 7 G - Star 88 60 74 1 75 8 E Elite Footwear 87 58 73 1 74 9 I Company 81 57 69 1 70

10 A Company 68 50 59 1 60 10 C Shoe 68 49 59 0 59

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 14

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. (3.25) I.E. BII

Y14 Score I.E. BII

G-T-D Score

A 2.57 2.94 1.89 1.74 2.28 9 3 14 7 A B 4.61 4.22 4.79 6.70 5.08 24 13 24 16 B C 2.26 2.57 1.10 2.19 1.99 11 4 12 6 C D 2.37 4.59 5.19 5.21 4.36 23 10 23 14 D E 1.42 2.94 2.97 3.66 2.76 18 7 17 9 E F 1.48 3.86 3.96 4.14 3.35 20 8 20 11 F G 2.32 2.84 2.90 3.58 2.91 18 7 18 9 G H 4.05 6.74 7.40 6.57 6.20 24 13 24 20 H I 2.71 3.11 2.70 2.87 2.85 14 5 18 9 I J 2.27 4.74 7.14 10.47 6.15 24 20 24 20 J K 2.31 4.19 5.29 7.81 4.85 24 15 24 16 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. (23.0) I.E. BII

Y14 Score I.E. BII

G-T-D Score

A 21.8 20.2 11.2 9.2 14.7 8 5 13 9 A B 36.0 24.5 22.1 24.5 25.7 20 14 21 16 B C 19.4 18.6 7.7 12.4 13.7 10 7 12 9 C D 22.7 41.5 38.4 24.4 30.6 20 14 23 19 D E 12.6 21.9 18.1 18.3 18.0 15 10 16 11 E F 13.2 28.1 23.3 24.6 22.8 20 14 20 14 F G 19.9 20.0 19.2 21.9 20.3 18 12 18 13 G H 33.0 38.7 29.4 19.9 28.1 17 11 22 18 H I 22.9 21.0 15.3 14.1 17.6 12 8 15 11 I J 19.6 31.8 34.2 35.3 31.9 24 20 24 20 J K 19.8 28.1 26.9 32.8 27.9 24 19 22 17 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

Y14 Score I.E. BII

G-T-D Score

A 33.46 45.06 18.88 8.82 2 1 2 1 A B 121.59 83.05 88.69 130.89 24 9 24 9 B C 22.86 21.18 8.49 14.03 4 1 4 1 C D 48.77 120.70 122.75 99.07 22 7 22 7 D E 11.86 35.44 32.74 58.32 15 4 15 4 E F 11.76 58.38 68.43 72.32 18 5 18 5 F G 20.47 31.72 57.28 38.44 10 3 10 3 G H 102.76 178.88 185.71 124.92 24 9 24 9 H I 35.55 46.77 24.37 24.71 6 2 6 2 I J 22.39 102.04 186.55 275.83 24 20 24 20 J K 26.32 92.42 111.75 191.48 24 14 24 14 K

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Industry 1 SCORING MEASURES Year 14 (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

Y14 Score I.E. BII

G-T-D Score

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

Y12-Y14 Average I.E. BII

Y14 Score I.E. BII

G-T-D Score

A 70 67 61 58 62 15 13 17 14 A B 75 74 76 82 77 21 18 21 18 B C 68 57 64 51 57 14 11 16 13 C D 71 68 81 76 75 20 17 20 17 D E 68 69 68 75 71 20 17 19 16 E F 76 73 72 67 71 18 15 19 16 F G 65 68 66 64 66 17 14 18 15 G H 84 85 84 78 82 20 17 21 19 H I 68 65 68 62 65 17 14 18 15 I J 64 71 83 85 80 21 19 21 18 J K 74 87 84 90 87 22 20 22 20 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 18,323 6,596 0 1.45 0.61 0.00 12 6 0 Year 14 22,403 5,486 0 2.13 0.53 0.00 15 7 0 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 E Elite Footwear K ASM Y15 Y16 Y17 Y18 Y19 Y20

Corporate Responsibility Award for Exemplary Corporate Citizenship

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Industry 1 BONUS POINT AWARDS Year 14

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 14 Forecast

Year 14 Actual

Percent Variance

Revenues (within ± 5%) Year 14

Forecast Year 14 Actual

Percent Variance

EPS (within ± 5% or ± 10¢) Year 14

Forecast Year 14 Actual

Point Variance

Image Rating (within ± 4 points) Year 14 Bull's Eye

Award

Cumu- lative

Awards A 0 416,365 0.0% 0.00 1.74 0.0% 0 58 0 pts. No 1 A B 843,797 836,143 -0.9% 6.82 6.70 -1.8% 83 82 -1 pts. Yes 2 B C 492,640 413,828 -16.0% 3.12 2.19 -29.9% 56 51 -5 pts. No 0 C D 918,600 878,349 -4.4% 5.57 5.21 -6.5% 81 76 -5 pts. No 0 D E 705,222 636,749 -9.7% 4.91 3.66 -25.4% 78 75 -3 pts. No 1 E F 472,184 419,552 -11.1% 5.20 4.14 -20.4% 75 67 -8 pts. No 0 F G 504,731 456,120 -9.6% 4.15 3.58 -13.8% 67 64 -3 pts. No 1 G H 760,340 785,696 +3.3% 6.10 6.57 +7.6% 77 78 +1 pts. No 1 H I 0 502,569 0.0% 0.00 2.87 0.0% 0 62 0 pts. No 1 I J 1,103,840 1,044,790 -5.3% 11.21 10.47 -6.6% 87 85 -2 pts. No 2 J K 852,561 915,104 +7.3% 6.68 7.81 +16.8% 85 90 +5 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 +27.4%

-3.3% -20.0% +27.4%

Year 14 +10.0%

-4.8% -18.9%

-5.7%

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 -22 56 -7 49 0 A B 107 -15 92 +1 93 +1 94 0 B C 74 -8 66 -15 51 +2 53 0 C D 86 +11 97 -6 91 -4 87 0 D E 55 +23 78 -6 72 0 72 0 E F 58 +32 90 -3 87 -7 80 1 F G 73 +2 75 +2 77 -5 72 0 G H 105 +3 108 -3 105 -15 90 0 H I 84 -5 79 -14 65 -4 61 0 I J 73 +22 95 +13 108 0 108 1 J K 77 +19 96 +2 98 +4 102 1 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 14

Materials Prices

Price Adjustments

Materials Usage Facilities Utilization

Base Prices of Materials ($ per pair)

Materials Prices in Year 14 ($ per pair)

$6.00 -0.16 +0.16 $6.00

Standard $12.00 +1.25 +0.32

$13.57

Superior High industry-wide superior materials usage (45.2%) lead to superior materials prices that were 10.4% above the base and standard materials prices that were 2.6% below the base. Industry-wide utilization of production capability was above 110% and resulted in materials price increases of 2.7%.

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

41% 111.2% 43,432 32,920 33,583 33,586

1 0

3,333 3,939 1,400

Europe Africa

37% 96.6% 37,038 28,025 28,666 28,668

1 0

3,333 2,570 1,577

Asia Pacific

49% 114.3% 32,166 24,372 24,519 24,520

0 0

3,575 3,756 1,493

Latin America

48% 114.6% 26,571 24,517 24,574 24,524

3 48

3,575 2,656 1,811

Average or Total

45% 112.7% 139,207 109,834 111,342 111,298

13,816 12,921 6,281

⇦ % usage up 0.1 points from Year 13. ⇦ % usage down 2.1 points from Year 13.

⇦ 25.0% higher than Year 14 demand.

⇦ From page 4 of FIR for Year 13. ⇦ Actual branded demand was 1.4% 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 13. ⇦ Private-label pairs offered was lower than

actual private-label demand by 6.5%.

Notes

Demand Forecast

Branded Demand (internet + wholesale)

Year 15 Year 16 Year 17

Private-Label Demand Year 15 Year 16 Year 17

North America

35,622 37,049 38,533 3,696 4,026 4,389

Europe Africa 30,419 31,635 32,896 3,696 4,026 4,389

Asia Pacific 26,906 29,055 31,381 4,037 4,477 4,972

Latin America

27,066 29,227 31,567 4,037 4,477 4,972

Global Total

120,013 126,966 134,377

15,466 17,006 18,722

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 15 Inventory Potential Y15 Production (with OT)

Potential Global Supply

27,909 153,900 181,809

Potential Footwear Suppy in Year 15 Branded Demand Forecast Private-Label Demand Forecast

Expected Global Demand

120,013 15,466

135,479

Expected Footwear Demand in Year 15 Potential global supply (at max OT) in the upcoming year is 34.2% greater than projected global demand. This much excess potential supply is certain to greatly intensify competition for the next few years and reduce industry profitability. It is advisable to NOT add more production capability at this time.

Analysis

Facility Space Production Equipment

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

Year 14 Facility Space (000s of pairs available for prod. equipmernt)

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

Construction of New Space (initiated in Y14 and available in Y15)

Total Space

Available in Y15 N.A. E-A A-P L.A. Total

Year 14 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 1,000 0 2,000 16,000 B 6,000 0 6,000 0 12,000 B C 5,000 0 6,000 0 1,000 1,000 0 1,000 14,000 C 4,000 0 4,250 0 8,250 C D 7,000 2,000 7,000 2,000 0 2,000 0 2,000 22,000 D 6,000 2,000 6,000 2,000 16,000 D E 6,000 1,000 7,000 1,000 0 0 0 0 15,000 E 4,250 750 4,500 750 10,250 E F 5,000 0 6,000 0 0 1,000 0 1,000 13,000 F 4,000 0 4,250 0 8,250 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 2,000 0 0 0 0 15,000 H 5,000 0 8,000 2,000 15,000 H I 5,000 0 6,000 0 0 0 0 0 11,000 I 4,000 0 5,000 0 9,000 I J 5,000 0 8,000 5,000 0 0 2,000 2,000 22,000 J 5,000 0 8,000 5,000 18,000 J K 5,000 0 8,000 3,000 0 0 0 1,000 17,000 K 5,000 0 8,000 3,000 16,000 K

59,000 3,000 75,000 13,000 1,000 5,000 2,000 9,000 167,000 51,000 2,750 61,750 12,750 128,250

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Industry 1 FINANCIAL PERFORMANCE SUMMARY Year 14

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 106,603 309,762 0 416,365 212,883 38,846 96,185 17,127 51,324 1,748 14,873 34,703 A B 205,481 611,310 14,054 836,143 411,041 62,994 148,736 20,727 192,645 1,277 57,410 133,958 B C 98,683 306,659 0 413,828 194,652 42,779 80,182 16,977 79,238 1,161 23,423 54,654 C D 250,569 587,309 0 878,349 396,568 76,021 176,535 30,128 199,097 21,444 52,763 123,113 D E 185,645 451,104 0 636,749 314,184 61,727 119,662 24,375 116,801 7,137 32,899 76,765 E F 115,450 299,575 0 419,552 191,392 45,958 53,706 16,979 111,517 -1,469 33,896 79,090 F G 131,485 322,209 0 456,120 245,221 46,826 39,382 17,730 106,961 3,724 30,671 71,566 G H 201,143 584,553 0 785,696 361,470 69,574 132,410 25,125 197,117 7,658 56,838 132,621 H I 145,894 356,675 0 502,569 241,640 48,070 110,968 17,027 84,864 2,726 24,641 57,497 I J 230,099 669,755 132,547 1,044,790 513,908 83,780 119,648 26,630 300,824 4,677 88,844 207,303 J K 214,651 588,722 102,691 915,104 464,030 75,336 130,685 28,374 216,679 4,672 62,966 146,921 K

171,428 462,512 22,663 664,115 322,454 59,265 109,827 21,927 150,642 4,978 43,566 101,654

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 148,356 288,400 178,566 466,966 34,728 39,600 74,328 357,935 0 34,703 392,638 A B 134,772 357,036 339,568 696,604 43,621 39,600 83,221 479,425 0 133,958 613,383 B C 134,430 266,890 265,256 532,146 26,118 39,600 65,718 411,774 0 54,654 466,428 C D 103,227 354,665 523,044 877,709 63,770 175,000 238,770 368,162 183,088 87,689 638,939 D E 0 172,274 407,427 579,701 73,635 39,600 113,235 370,621 19,080 76,765 466,466 E F 85,821 167,623 232,469 400,092 112,687 0 112,687 355,092 -32,237 -35,450 287,405 F G 96,506 229,887 201,900 431,787 28,969 39,600 68,569 291,652 0 71,566 363,218 G H 98,241 452,887 411,282 864,169 78,585 52,000 130,585 600,963 0 132,621 733,584 H I 133,857 304,817 207,526 512,343 34,940 39,600 74,540 380,306 0 57,497 437,803 I J 52,322 309,515 486,170 795,685 64,700 39,600 104,300 484,082 0 207,303 691,385 J K 20,447 249,151 497,943 747,094 72,052 225,000 297,052 445,777 -142,656 146,921 450,042 K

91,634 286,650 341,014 627,663 57,619 66,291 123,910 413,254 2,480 88,021 503,754

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 48.9% 12.3% 8.3% 0.00 0 0.0% 29.36 0.16 3.40 Medium 8.30 114 days 20,000 A B 50.8% 23.0% 16.0% 0.00 0 0.0% 150.86 0.12 10.27 Low 8.18 62 days 20,000 B C 53.0% 19.1% 13.2% 0.00 0 0.0% 68.25 0.12 7.74 Low 10.22 108 days 25,000 C D 54.9% 22.7% 14.0% 1.50 35,424 28.8% 9.28 0.27 4.75 Low 5.56 111 days 23,616 D E 50.7% 18.3% 12.1% 0.00 0 0.0% 16.37 0.20 2.52 Medium 2.34 70 days 20,950 E F 54.4% 26.6% 18.9% 6.00 114,540 144.9% 1,000.00 0.28 16.54 Low 1.49 14 days 19,090 F G 46.2% 23.5% 15.7% 0.00 0 0.0% 28.72 0.16 5.79 Low 7.94 79 days 20,000 G H 54.0% 25.1% 16.9% 0.00 0 0.0% 25.74 0.15 4.21 Low 5.76 220 days 20,200 H I 51.9% 16.9% 11.4% 0.00 0 0.0% 31.13 0.15 5.05 Low 8.72 126 days 20,000 I J 50.8% 28.8% 19.8% 0.00 0 0.0% 64.32 0.13 15.73 Low 4.78 49 days 19,800 J K 49.3% 23.7% 16.1% 0.00 0 0.0% 46.38 0.40 11.97 Low 3.46 53 days 18,800 K

51.4% 22.7% 15.3% 0.68 13,633 15.8% 47.04 0.19 8.00 6.07 91 days 20,678

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Industry 1 PERFORMANCE BENCHMARKS Year 14

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)

88% 37,130 4,900 7.33

61,818 10% 0.50

16,992 20.65 3.0% 3.08

99% 42,980 5,155 8.63

62,966 40% 1.73

34,993 27.03 6.1% 5.09

100% 48,042 5,398 9.55

70,094 64% 5.00

99,595 31.71 9.8% 6.70

100% 46,686 5,309 8.79

61,818 50% 1.50

28,000 27.34 4.6% 5.36

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)

42% 25,409 3,835 6.84

37,462 30% 1.66

2,960 29.64 7.9% 7.36

50% 28,935 3,979 7.28

37,462 50% 1.32

4,119 35.17 9.5% 7.18

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% 13,359 3,414 3.73

25,758 10% 0.30

16,096 17.94 2.7% 2.94

29% 16,399 3,765 4.51

26,166 46% 1.61

38,610 22.51 7.3% 4.57

61% 19,109 4,136 4.83

28,947 96% 5.00

105,970 26.68

12.5% 6.83

50% 19,109 4,051 4.82

25,758 50% 1.50

31,659 22.56 5.1% 4.60

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)

33% 12,363 3,713 3.48

25,758 10% 1.00

1,890 19.55 4.3% 4.02

77% 15,951 3,936 4.21

25,913 46% 1.54

6,432 25.43 7.3% 5.27

100% 18,578 4,086 4.69

26,273 64% 2.10

12,000 32.66

10.3% 6.80

50% 18,578 3,956 4.69

26,016 50% 1.28

3,989 32.66 9.7% 6.80

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.

8/13/2019 BSG Decisions & Reports

https://www.bsg-online.com/users/sim/fir/page5 8/9

Industry 1 PERFORMANCE BENCHMARKS Year 14 (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)

3.77 22.64 5.64

18.33 22.4%

3.20 7.50

13.2%

5.90 28.09 17.94 26.16

30.1% 9.68

11.22 20.3%

9.07 32.72 26.73 31.52

37.5% 13.30 16.69

28.4%

5.79 28.35 20.66 25.57

28.4% 12.66 16.69

26.1%

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)

9.60 28.04 6.91

12.29 15.7%

3.53 3.39

6.7%

11.84 32.88 18.78 24.00

26.4% 8.91 9.14

15.8%

14.16 37.92 27.14 29.30

33.6% 13.05 14.12

23.9%

9.60 34.51 21.90 29.20

28.9% 11.57 10.54

16.7%

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)

5.22 19.56 6.18

13.79 16.6%

0.84 6.54

13.1%

6.49 24.93 21.15 24.40

28.7% 8.48

14.55 26.5%

10.91 29.57 36.09 33.47

39.8% 13.04 21.60

37.4%

5.22 24.15 26.03 23.94

26.7% 13.04 20.09

31.5%

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)

5.81 24.14 8.15

11.35 11.8%

6.60 3.37

5.7%

14.67 33.40 20.90 23.30

25.2% 8.88

10.40 17.6%

19.29 39.66 30.71 37.63

44.6% 13.17 19.15

34.7%

11.08 34.09 24.00 27.65

27.3% 13.17 9.31

14.8%

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) 28.69 +5.30

29.23 +6.22

29.76 +7.13

0.00 0.00

Europe-Africa Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 29.08

+10.51 29.95

+13.33 30.81

+16.14 0.00 0.00

Asia-Pacific Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 21.84 +8.92

23.48 +10.35

25.93 +11.18

0.00 0.00

Latin America Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 21.79 -2.73

27.43 +12.95

37.21 +22.00

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 14

Celebrity Endorsements

Celebrity Year 15

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 FFlying wings 7 5,500 (F) 4,000 (G) 4,000 (I) Kimmie Jimmel B Cielo 9 7,250 (B) 6,001 (G) 6,000 (F) Bud Birkenstock B Cielo 9 7,250 (B) 5,557 (K) 4,000 (I) Jose Montana I Company 6 4,000 (I) 3,000 (H) 2,005 (K) Samuelle Jackson J - Doyen 4 9,000 (J) 2,000 (G) 1,500 (E) Bronko Mars J - Doyen 4 8,800 (J) 8,000 (D) 1,500 (E) Steff Caraway J - Doyen 4 9,100 (J) 2,009 (E) 2,000 (G) Jay XYZ E Elite Footwear 4 9,100 (J) 2,005 (E) 2,000 (G) Nunchuck Norris DTigers 5 8,001 (B) 8,000 (D) 8,000 (J) Roger Federation H Company 5 3,500 (H) 3,000 (D) 2,499 (J) Nick Shavan E Elite Footwear 4 5,500 (J) 3,525 (E) 3,500 (D) Anderson Blooper J - Doyen 4 3,500 (H) 2,499 (J) 850 (E) Mic Jagermeister DTigers 5 8,800 (J) 8,001 (B) 8,000 (D) Jim Hardball J - Doyen 5 3,500 (H) 2,499 (J) 725 (E) LaBron Game B Cielo 5 9,050 (B) 8,600 (J) 8,000 (D)

Co. N.A. E-A A-P L.A. A 0 0 0 0 B 270 250 220 215 C 0 0 0 0 D 170 180 175 140 E 145 145 125 145 F 85 65 60 40 G 0 0 0 0 H 75 85 65 100 I 60 50 60 95 J 305 315 395 375 K 0 0 0 0

Avg. 101 99 100 101

Year 15 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

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