Marketing segment

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C Company (Industry 87)

FACILITIES AND EQUIPMENT Year 10

FACILITY SPACE Facility Space Available in Year 9 (000s of pairs) Completion of New/Additional Space (construction initiated in Y9)

Facility Space Available (to house construction equipment in Y10)

North America

4,000 pairs 1,000 5,000 pairs

Europe-Africa

0 pairs 0 0 pairs

Asia-Pacific

4,000 pairs 2,000 6,000 pairs

Latin America

0 pairs 0 0 pairs

Total (all facilities)

8,000 pairs 3,000

11,000 pairs

Beginning Gross Investment in Facility Space ($000s) + Investment in Additional Facility Space (initiated in Y9) + Capital Cost for Improved Working Conditions (CSRC)

Gross Investment in Facility Space ($000s) – Accumulated Depreciation (through Year 9) – Current Year 10 Depreciation (2.5% of gross investment)

Net Investment in Facility Space ($000s)

$ 76,000 20,000

0 96,000 17,100 2,400

$ 76,500

$ 0 0 0 0 0 0

$ 0

$ 76,000 38,000

0 114,000

9,500 2,850

$ 101,650

$ 0 0 0 0 0 0

$ 0

$ 152,000 58,000

0 210,000

26,600 5,250

$ 178,150

Construction Work-In-Progress (new space to be available in Y11) Capital Cost of Construction Work-In-Progress ($000s)

0 pairs $ 0

FOOTWEAR PRODUCTION EQUIPMENT

Purchase of Additional Equipment (at the beginning of Year 10)

New Refurbished

Production Equipment In-Place in Y9 (000s of pairs without OT)

Equipment Sold (at the beginning of Year 10) Production Equipment Available in Y10 (000s of pairs w/o OT)

Percentage of New vs. Refurbished Equipment in Y10

North America

4,000 pairs 0 0 0

4,000 pairs 100.0% 0.0%

Europe-Africa

0 pairs 0 0 0 0 pairs

0.0% 0.0%

Asia-Pacific

4,000 pairs 0 0 0

4,000 pairs 0.0% 100.0%

Latin America

0 pairs 0 0 0 0 pairs

0.0% 0.0%

Total (all facilities)

8,000 pairs 0 0 0

8,000 pairs 50.0% 50.0%

Beginning Gross Investment in Equipment (000s) + Capital Cost of New Equipment (purchased in Year 10) + Capital Cost of Refurbished Equipment (purchased in Y10) + Capital Cost of Production Improvement Options + Capital Cost of Energy Efficiency Initiatives – Capital Cost of Equipment Sold

Gross Investment in Produciton Equipment – Accumulated Depreciation (through Year 9) – Current Year 10 Depreciation (10% of gross investment)

Net Investment in Produciton Equipment ($000s)

$ 80,000 0 0 0 0 0

80,000 40,000 8,000

$ 32,000

$ 0 0 0 0 0 0 0 0 0

$ 0

$ 57,600 0 0 0 0 0

57,600 17,280 5,760

$ 34,560

$ 0 0 0 0 0 0 0 0 0

$ 0

$ 137,600 0 0 0 0 0

137,600 57,280 13,760

$ 66,560

Production Improvement Options

New Option Ordered in Year 10 Capital Cost of Option Ordered ($000s)

Options in Place (ordered in prior year) $ 0

none

none $ 0

none

none $ 0

none

none $ 0

none

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C Company (Industry 87)

PRODUCTION AND WORKFORCE Year 10

PRODUCTION STATISTICS

Footwear Production (000s of pairs)

Regular-Time Pairs Overtime Pairs

Rejected Pairs Net Footwear Production

S/Q Rating of Pairs Produced Number of Models Produced

North America Branded

4,000 33

–282 3,751 4.0★

200

P-Label 0

430 –30 400

3.0★ 100

Europe-Africa Branded

0 0

–0 0

0.0★ 0

P-Label 0 0

–0 0

0.0★ 0

Asia-Pacific Branded

4,000 249

–429 3,820 4.0★

200

P-Label 0

444 –44 400

3.0★ 100

Latin America Branded

0 0

–0 0

0.0★ 0

P-Label 0 0

–0 0

0.0★ 0

Total (all facilities)

Branded 8,000

282 –711

7,571

P-Label 0

874 –74 800

Cost of Rejected Pairs $ Thousands $ Per Pair

Reject Rate (% of regular + overtime pairs) Branded

7.0% 6,302 1.68

P-Label 6.9%

752 1.88

Branded 0.0%

0 0.00

P-Label 0.0%

0 0.00

Branded 10.1% 8,175 2.14

P-Label 10.0%

916 2.29

Branded 0.0%

0 0.00

P-Label 0.0%

0 0.00

Branded 8.6%

14,477 1.94

P-Label 8.5% 1,668 2.12

Production Capability (000s of pairs without OT) Total Production (including rejected pairs) Utilization of Production Capability (max = 120%)

4,000 pairs 4,463 pairs

112%

0 pairs 0 pairs

4,000 pairs 4,693 pairs

117%

0 pairs 0 pairs

8,000 pairs 9,156 pairs

115%

WORKFORCE STATISTICS

Workforce Compensation

(in Year 10)

Base Wages Incentive Pay Fringe Benefits

Total Regular Comp. Overtime Pay

Total Compensation Best Practices Training Expenditures (in Y10) Supervisory Compensation (salary + benefits)

North America Annual $ per

Worker 34,000 4,650 3,007

41,657 6,443

48,100 600

60,000

Total Cost ($000s)

27,200 3,720 2,406

33,326 5,154

38,480 480

1,200

Europe-Africa Annual $ per

Worker 0 0 0 0 0 0 0 0

Total Cost ($000s)

0 0 0 0 0 0 0 0

Asia-Pacific Annual $ per

Worker 12,000 1,573 1,536

15,109 3,391

18,500 400

25,000

Total Cost ($000s)

13,716 1,798 1,756

17,270 3,876

21,146 457 725

Latin America Annual $ per

Worker 0 0 0 0 0 0 0 0

Total Cost ($000s)

0 0 0 0 0 0 0 0

Total (all facilities)

Total Cost ($000s)

40,916 5,518 4,162

50,596 9,030

59,626 937

1,925

Incentive Pay as % of Regular Compensation Cumulative Best Practices (total $ per worker)

11.2% 600

0.0% 0

10.4% 400

0.0% 0

Workforce Productivity (pairs per worker per year) Number of Workers Employed Number of Supervisors Employed

Year 9 5,000 800 20

Year 10 5,000 800 20

Year 9 0 0 0

Year 10 0 0 0

Year 9 3,500 1,143

Year 10 3,500 1,143

Year 9 0 0 0

Year 10 0 0 0

Year 9

1,943 49

Year 10

1,943 49

BRANDED PRODUCTION COSTS

This section lists costs for branded production only. Private-Label pro- duction costs are listed separately in the Private-Label Operations report.

Materials Costs Production Labor Best Practices Training Supervisory Costs Enhanced Styling/Features TQM/6-Sigma Program Production Run Setup Facilities Maintenance Depreciation Expense

Total Production Costs

North America $000s

31,942 33,693

434 1,085 2,000 4,033 4,500 2,854 9,402

89,943

$/Pair 8.52 8.98 0.12 0.29 0.53 1.08 1.20 0.76 2.51

23.98

Europe-Africa $000s

0 0 0 0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Asia-Pacific $000s

39,261 18,663

414 656

2,000 3,824 4,500 3,698 7,792

80,808

$/Pair 10.28 4.89 0.11 0.17 0.52 1.00 1.18 0.97 2.04

21.15

Latin America $000s

0 0 0 0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (all facilities)

$000s 71,203 52,356

848 1,741 4,000 7,857 9,000 6,552

17,194 170,751

$/Pair 9.40 6.92 0.11 0.23 0.53 1.04 1.19 0.87 2.27

22.55

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C Company (Industry 87)

DISTRIBUTION AND WAREHOUSE Year 10

WAREHOUSE OPERATIONS (branded) All pair figures in thousands.

Incoming Year 10 Shipments from

North America Facility Europe-Africa Facility Asia-Pacific Facility Latin America Facility

Pairs Sold Internet Segment Wholesale Segment

Total Branded Sales

Ending Inventory from Year 9 Inventory Clearance (at the beginning of Y10)

Beginning Year 10 Inventory

Pairs Available for Sale in Year 10

Required Inventory (needed to achieve delivery time) Inventory Surplus (Shortfall)

Ending Year 10 Inventory (unsold pairs)

North America Pairs

0 0 0

2,421 0 0 0

2,421

Models 0 0

200 0 0 0

200

S/Q 0.0★

0 4.0 0.0 0.0 0.0 4.0★

353 1,997 2,350

Actual Branded Demand

71 0

71 200

4.0★

Europe-Africa Pairs

0 0 0

1,330 0

730 0

2,060

Models 0 0

200 0

200

S/Q 0.0★

0 4.0 0.0 4.0 0.0 4.0★

300 1,700 2,000

Actual Branded Demand

60 0

60 200

4.0★

Asia-Pacific Pairs

0 0 0 0 0

1,545 0

1,545

Models 0 0 0 0

200 0

200

S/Q 0.0★

0 0.0 0.0 4.0 0.0 4.0★

225 1,275 1,500

Actual Branded Demand

45 0

45 200

4.0★

Latin America Pairs

0 0 0 0 0

1,545 0

1,545

Models 0 0 0 0

200 0

200

S/Q 0.0★

0 0.0 0.0 4.0 0.0 4.0★

225 1,275 1,500

Actual Branded Demand

45 0

45 200

4.0★

Total Pairs

0 0 0

3,751 0

3,820 0

7,571 1,103 6,247 7,350

221 0

221

COST OF BRANDED PAIRS SOLD

Cost of Beginning Year 10 Inventory + Production Cost of Incoming Pairs ± Exchange Rate Cost Adjustments + Freight on Incoming Pairs + Import Tariffs on Incoming Pairs – Cost of Ending Year 10 Inventory

Cost of Branded Pairs Sold in Year 10

North America $000s

0 58,049

0 2,421

0 1,773

58,697

$/Pair 0.00

24.70 0.00 1.03 0.00 0.75

24.98

Europe-Africa $000s

0 47,336

0 4,120

12,360 1,859

61,957

$/Pair 0.00

23.67 0.00 2.06 6.18 0.93

30.98

Asia-Pacific $000s

0 32,687

0 1,545

0 997

33,235

$/Pair 0.00

21.79 0.00 1.03 0.00 0.66

22.16

Latin America $000s

0 32,687

0 3,090

15,450 1,492

49,735

$/Pair 0.00

21.79 0.00 2.06

10.30 0.99

33.16

Total $000s

0 170,759

0 11,176 27,810 6,121

203,624

$/Pair 0.00

23.23 0.00 1.52 3.78 0.83

27.70

WAREHOUSE EXPENSES

Packaging/Shipping Costs Internet Wholesale

Inventory Storage Costs (on Y9 carried over)

Warehouse Lease and Maintenance Total Warehouse Operating Expenses

North America $000s

0 4,413 6,991 1,000

12,404

$/Pair 0.00 1.88 2.97 0.43 5.28

Europe-Africa $000s

0 3,750 6,100 1,000

10,850

$/Pair 0.00 1.88 3.05 0.50 5.43

Asia-Pacific $000s

0 2,813 4,825 1,000 8,638

$/Pair 0.00 1.88 3.22 0.67 5.76

Latin America $000s

0 2,813 4,825 1,000 8,638

$/Pair 0.00 1.88 3.22 0.67 5.76

Total $000s

0 13,789 22,741 4,000

40,530

$/Pair 0.00 1.88 3.09 0.54 5.51

INVENTORY CLEARANCE

Direct Costs Production / Freight / Tariffs Inventory Storage Packaging / Shipping

Gross Revenues from Pairs Cleared ± Exchange Rate Cost Adjustments

Net Revenues from Pairs Cleared

Margin Over Direct Costs

North America $000s

0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Europe-Africa $000s

0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Asia-Pacific $000s

0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Latin America $000s

0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total $000s

0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00

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C Company (Industry 87)

MARKETING AND ADMINISTRATIVE EXPENSES Year 10

MARKETING EXPENSES

Internet Segments

Search Engine Advertising Website Maintenance Brand Advertising (Note 1) Celebrity Endorsements (Note 2)

Total Internet Marketing

North America $000s 5,000 1,150 1,502

0 7,652

$/Pair 14.16 3.26 4.25 0.00

21.68

Europe-Africa $000s 4,500 1,150 1,350

0 7,000

$/Pair 15.00 3.83 4.50 0.00

23.33

Asia-Pacific $000s 4,000 1,150 1,200

0 6,350

$/Pair 17.78 5.11 5.33 0.00

28.22

Latin America $000s 4,000 1,150 1,125

0 6,275

$/Pair 17.78 5.11 5.00 0.00

27.89

Total $000s 17,500 4,600 5,177

0 27,277

$/Pair 15.87 4.17 4.69 0.00

24.73

Wholesale Segments

Brand Advertising (Note 1) Rebate Redemption On-Time Delivery Retailer Support Celebrity Endorsements (Note 2)

Total Wholesale Marketing

$000s 8,498 2,496 1,498 4,000

0 16,492

$/Pair 4.26 1.25 0.75 2.00 0.00 8.26

$000s 7,650 2,125 1,275 4,000

0 15,050

$/Pair 4.50 1.25 0.75 2.35 0.00 8.85

$000s 6,800 1,594

956 1,925

0 11,275

$/Pair 5.33 1.25 0.75 1.51 0.00 8.84

$000s 6,375 1,594

956 1,925

0 10,850

$/Pair 5.00 1.25 0.75 1.51 0.00 8.51

$000s 29,323 7,809 4,685

11,850 0

53,667

$/Pair 4.69 1.25 0.75 1.90 0.00 8.59

Note 1: Brand advertising expenditures in each region are allocated to the internet and wholesale segments based on each segment's percentage of total branded pairs sold in the region. Note 2: Expenditures for celebrity endorsements are allocated to the internet and wholesale segments based on each segment's percentage of total branded pairs sold in the region.

ADMINISTRATIVE EXPENSES

CSRC Initiatives

Ethics Training / Enforcement Cafeteria / On-Site Child Care Ventilation / Lighting / Safety Supplier Code of Conduct

Executive Salaries (Note 1) Corporate Overhead (Note 2)

Fixed Costs of Idled Prodcution Facility (Note 3) Total Administrative Expenses (Note 4)

North America $000s 1,599 3,197

0 0 0 0 0

4,796

$/Pair 0.68 1.36 0.00 0.00 0.00 0.00 0.00 2.04

Europe-Africa $000s 1,361 2,721

0 0 0 0 0

4,082

$/Pair 0.68 1.36 0.00 0.00 0.00 0.00 0.00 2.04

Asia-Pacific $000s 1,021 2,041

0 0 0 0 0

3,062

$/Pair 0.68 1.36 0.00 0.00 0.00 0.00 0.00 2.04

Latin America $000s 1,021 2,041

0 0 0 0 0

3,062

$/Pair 0.68 1.36 0.00 0.00 0.00 0.00 0.00 2.04

Total $000s 5,000

10,000 0 0 0 0 0

15,000

$/Pair 0.68 1.36 0.00 0.00 0.00 0.00 0.00 2.04

Note 1: Executive salaries totaled $5 million in Year 10 and increase at a rate of 3% annually. Note 2: Corporate overhead expenses include $1.00 for each pair of production capability (without overtime) company-wide and $1 million for each production facility. Corporate overhead will

increase or decrease as company-wide footwear production capability increases or decreases. Also, if the company holds celebrity endorsement contract(s) but sells no branded pairs (private-label sales only), then the total annual cost of celebrity contracts is assigned to corporate overhead.

Note 3: If no pairs are produced at a production facility in a given year, the annual maintenance and depreciation expenses (fixed costs) for the facility are treated as administrative expenses rather than allocated to the production costs at other active facilities.

Note 4: Administrative expenses are calculated for the company in total and then allocated to the branded segments based on each segment's percentage of total branded pairs sold. For accounting purposes and for purpose of profit/loss calculations, no administrative expenses are allocated to private-label sales.

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C Company (Industry 87)

PRIVATE–LABEL OPERATIONS Year 10

CONTRACT OFFERS Offers to Private

Label Buyers Offer Price ($ per pair) Pairs Offered (000s) S/Q Rating Number of Models

North America

32.00 200 pairs

3.0★ 100

Europe-Africa

37.00 200 pairs

3.0★ 100

Asia-Pacific

32.00 200 pairs

3.0★ 100

Latin America

37.00 200 pairs

3.0★ 100

Total

800 pairs

Offer Accepted / Declined Pairs Produced / Sold (000s)

Accepted 200 pairs

800 pairs

PRODUCTION AND SHIPPING

Production Costs

Materials Costs Labor Costs Best Practices Training Supervisory Costs Enhanced Styling / Features TQM/6-Sigma Program Production Run Setup Facilities Maintenance Depreciation Expense

Total Production Costs

North America Facility

$000s 2,993 4,787

46 115 600 430 500 303 998

10,772

$/Pair 7.48

11.97 0.12 0.29 1.50 1.08 1.25 0.76 2.50

26.93

Europe-Africa Facility

$000s 0 0 0 0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Asia-Pacific Facility

$000s 3,356 2,483

43 69

1,200 400 500 388 818

9,257

$/Pair 8.39 6.21 0.11 0.17 3.00 1.00 1.25 0.97 2.05

23.14

Latin America Facility

$000s 0 0 0 0 0 0 0 0 0 0

$/Pair 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (all facilities)

$000s 6,349 7,270

89 184

1,800 830

1,000 691

1,816 20,029

$/Pair 7.94 9.09 0.11 0.23 2.25 1.04 1.25 0.86 2.27

25.04

Private-Label Production (000s of pairs)

Regular-Time Pairs Overtime Pairs

Rejected Pairs Net Production

0 pairs 430 –30 (6.9%) 400 pairs

0 pairs 0

–0 (0.0%) 0 pairs

0 pairs 444 –44 (10.0%) 400 pairs

0 pairs 0

–0 (0.0%) 0 pairs

0 pairs 874 –74 (8.5%) 800 pairs

Shipments To (000s of pairs)

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

200 pairs 200

0 0 pairs

0 pairs 0 0 0 pairs

0 pairs 0

200 200 pairs

0 pairs 0 0 0 pairs

200 pairs 200 200 200 pairs

REVENUES / COSTS / MARGINS

Direct Costs

Production Costs ± Exchange Rate Adjustments Freight Import Tariffs Packaging / Shipping

Gross Private-Label Revenues ± Exchange Rate Adjustments

Net Private-Label Revenues

Margin Over Direct Costs

North America $000s 6,400

0 6,400 5,386

0 200

0 200 614

$/Pair 32.00 0.00

32.00 26.93 0.00 1.00 0.00 1.00 3.07

Europe-Africa $000s 7,400

0 7,400 5,386

0 400

1,200 200 214

$/Pair 37.00 0.00

37.00 26.93 0.00 2.00 6.00 1.00 1.07

Asia-Pacific $000s 6,400

0 6,400 4,628

0 200

1,372

$/Pair 32.00 0.00

32.00 23.14 0.00 1.00 0.00 1.00 6.86

Latin America $000s 7,400

0 7,400 4,628

0 400

2,000 200 172

$/Pair 37.00 0.00

37.00 23.14 0.00 2.00

10.00 1.00 0.86

Total $000s 27,600

0 27,600 20,028

0 1,200 3,200

800 2,372

$/Pair 34.50 0.00

34.50 25.04 0.00 1.50 4.00 1.00 2.97

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C Company (Industry 87)

INCOME STATEMENT Year 10

CONSOLIDATED INCOME STATEMENT Segment

Revenues Internet Wholesale (see Note 1) Private-Label

Operating Costs

Cost of Pairs Sold (see Note 1) Warehouse Expenses Marketing Expenses Administrative Expenses

Gross Revenues from Footwear Sales ± Exchange Rate Adjustments

Net Revenues from Footwear Sales

Operating Profit (Loss)

North America

28,064 95,856 6,400

130,320 0

130,320 64,283 12,604 24,144 4,796

24,493

Europe- Africa 25,350 90,100 7,400

122,850 0

122,850 68,944 11,050 22,050 4,082

16,724

Asia- Pacific 17,888 61,200 6,400

85,488 0

85,488 38,063 8,838

17,625 3,062

17,900

Latin America

19,013 67,575 7,400

93,988 0

93,988 56,763 8,838

17,125 3,062 8,200

Company Total 90,315

314,731 27,600

432,646 0

432,646 228,053

41,330 80,944 15,002 67,317

Earnings Per Share Dividends Per Share

Profitability and Payout $2.00 $1.00

Year 9 $2.00 $1.00

Year 10 Interest Income (Expense) Other Income or (Expense) (see Note 2)

Pre-Tax Profit (Loss) Income Taxes (see Note 3)

Net Profit (Loss)

-10,174 0

57,143 17,143 40,000

Note 1: These items also include revenues collected from and costs associated with inventory clearance at the beginning of the year. For more details on inventory clearance, see the last section of the Distribution and Warehouse report.

Note 2: This item includes charitable contributions and/or instructor-awarded refunds and/or instructor-imposed fines (appearing as negative). Note 3: The income tax rate is 30%. If a net loss was recorded in the prior year, the loss is carried forward and may offset some or all taxable income in

the current year and reduce current-year income taxes.

BRANDED MARKET PERFORMANCE

INTERNET MARKET PERFORMANCE

Operating Costs

Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses

Gross Revenues from Internet Sales ± Exchange Rate Adjustments

Gross Internet Revenues Customer-Paid Shipping Fees

Net Internet Revenues

Operating Profit (Loss)

North America $000s

23,651 0

23,651 4,413

28,064 8,817 4,563 7,652

720 6,312

$/Pair 67.00 0.00

67.00 12.50 79.50 24.98 12.93 21.68 2.04

17.88

Europe-Africa $000s

21,600 0

21,600 3,750

25,350 9,294 3,900 7,000

612 4,544

$/Pair 72.00 0.00

72.00 12.50 84.50 30.98 13.00 23.33 2.04

15.15

Asia-Pacific $000s

15,075 0

15,075 2,813

17,888 4,985 2,963 6,350

459 3,131

$/Pair 67.00 0.00

67.00 12.50 79.50 22.16 13.17 28.22 2.04

13.92

Latin America $000s

16,200 0

16,200 2,813

19,013 7,460 2,963 6,275

459 1,856

$/Pair 72.00 0.00

72.00 12.50 84.50 33.16 13.17 27.89 2.04 8.25

Total $000s 76,526

0 76,526 13,789 90,315 30,556 14,389 27,277 2,250

15,843

$/Pair 69.38 0.00

69.38 12.50 81.88 27.70 13.05 24.73 2.04

14.36

Segment Statistics

Pairs Sold (000s) Market Share Operating Profit Margin

Year 9 353

10.0% 25.4%

Year 10 353

10.0% 22.5%

Year 9 300

10.0% 18.0%

Year 10 300

10.0% 17.9%

Year 9 225

10.0% 22.8%

Year 10 225

10.0% 17.5%

Year 9 225

10.0% 17.6%

Year 10 225

10.0% 9.8%

Year 9 1,103 10.0% 21.2%

Year 10 1,103 10.0% 17.5%

WHOLESALE MARKET PERFORMANCE

Operating Costs

Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses

Gross WHolesale Revenues ± Exchange Rate Adjustments

Net Wholesale Revenues

Operating Profit (Loss)

North America $000s

95,856 0

95,856 49,880 7,841

16,492 4,076

17,567

$/Pair 48.00 0.00

48.00 24.98 3.93 8.26 2.04 8.80

Europe-Africa $000s

90,100 0

90,100 52,664 6,950

15,050 3,470

11,966

$/Pair 53.00 0.00

53.00 30.98 4.09 8.85 2.04 7.04

Asia-Pacific $000s

61,200 0

61,200 28,250 5,675

11,275 2,603

13,397

$/Pair 48.00 0.00

48.00 22.16 4.45 8.84 2.04

10.51

Latin America $000s

67,575 0

67,575 42,275 5,675

10,850 2,603 6,172

$/Pair 53.00 0.00

53.00 33.16 4.45 8.51 2.04 4.84

Total $000s

314,731 0

314,731 173,069

26,141 53,667 12,752 49,102

$/Pair 50.38 0.00

50.38 27.70 4.18 8.59 2.04 7.86

Segment Statistics

Pairs Sold (000s) Market Share Operating Profit Margin

Year 9 1,997 10.0% 13.0%

Year 10 1,997 10.0% 18.3%

Year 9 1,700 10.0% 4.4%

Year 10 1,700 10.0% 13.3%

Year 9 1,275 10.0% 13.7%

Year 10 1,275 10.0% 21.9%

Year 9 1,275 10.0% 7.5%

Year 10 1,275 10.0% 9.1%

Year 9 6,247 10.0% 9.5%

Year 10 6,247 10.0% 15.6%

1/31/2019 BSG Decisions & Reports

https://www.bsg-online.com/users/sim/cor/facilities-equipment 7/7

C Company (Industry 87)

BALANCE SHEET & CASH FLOW STATEMENT Year 10

BALANCE SHEET ASSETS $000s

Cash On Hand Accounts Receivable (see Note 1) Footwear Inventories

Total Current Assets Net Investment in Facilities and Equipment Construction Work In Progress (for new space) Production Improvement Options On Order

Total Fixed Assets (see Note 2) Total Assets

6,074 85,583 6,121

97,778 244,710

0 0

244,710 342,488

LIABILITIES $000s Accounts Payable (see Note 3) 1-Year Bank Loan Payable (see Note 4) Current Portion of Long-Term Bank Loans (see Note 5) Overdraft Loan Payable (see Note 6)

Total Current Liabilities Long Term Bank Loans Outstanding (see Note 7)

Total Liabilities

19,388 0

15,900 0

35,288 97,200

132,488 SHAREHOLDER EQUITY BeginningBalance Changein Y10 $000s

Common Stock (see Note 8) Additional Capital (see Note 9) Retained Earnings (see Note 10)

Total Shareholder Equity

20,000 110,000

60,000

190,000

0 0

20,000

20,000 110,000

80,000 210,000

Return On Average Shareholder Equity (see Note 11) 20.0% Note 1: Of the $342,331 of wholesale and private-label net revenues reported on the Y10

income statement, 75% was collected in Y10 and 25% will be collected in Y11. Note 2: For more details on fixed asset investment, see the Facilities and Equipment report

(page 1 of these Company Operating Reports). Note 3: Of the $77,552 of materials used for footwear production in Year 10, 75% was paid for

in Year 10 and 25% will be paid for in Year 11. Note 4: The company's Year 10 interest rate for a 1-year bank loan was 5.0%. Note 5: This item represents the principal portion of all outstanding 5-year and 10-year bank

loans due to be repaid in the upcoming year (Year 11). Note 6: Loans for overdrafts are incurred automatically to prevent a negative year-end cash

balance at an interest rate that is 2.0% higher than the company's 1-year loan rate. Note 7:

Loan

Number

Initial Year

Original Principal

Interest

Rate

Term

Out- standing Principal

Annual Principal Payment

Year 11 Interest Payable

1 Y4 60,000 8.2% 10-yr 24,000 6,000 1,968 2 Y9 99,000 7.7% 10-yr 89,100 9,900 6,861 3 4 5 6 7 8 9

10 11 12 13 14 15 16

Long-term bank loans outstanding:

Note 8: There are 20,000k shares of stock issued and outstanding at a par value of $1.00 per share. The authorized maximum number of shares outstanding is 50,000k.

Note 9: Additional Capital represents the dollar amount over and above par value that share- holders have paid to purchase new shares of common stock.

Note 10: Retained Earnings is a summation of all after-tax profits the company has earned that have not been distributed to shareholders in the form of dividends.

Note 11: After-Tax Profit

(Beginning Equity + Ending Equity) ÷ 2

The formula for Return On Average Shareholder Equity is:

CASH FLOW STATEMENT CASH AVAILABLE IN YEAR 10 $000s

Cash Inflows Bank Loans 1-Year Loan

5-Year Loan 10-Year Loan

Receipts from Footwear Sales (see Note 1)

Stock Issue (0 shares issued) Sale of Production Equipment Interest Income on Y9 Cash Balance Loan to Cover Overdraft (1-year loan @ 9.0%) Cash Refund (awarded by instructor)

Beginning Cash Balance (carried over from prior year)

Total Cash Available from All Sources

400 421,433

0 0 0 0 0 8 0 0

421,841 CASH OUTLAYS IN YEAR 10 $000s

Cash Outlays

Capital Outlays

Facility Expension (new space) Equipment Purchases Production Imp. Options Energy Efficiency Initiatives

Bank Loan Repayment (see Note 4)

1-Year Loan 5-Year Loans 10-Year Loans

Interest Payments

Bank Loans Y9 Overdraft Loan

Payments to Materials Suppliers (see Note 2) Production Expenses (excluding depreciation – see Note 3) Distribution and Warehouse Expenses Marketing and Administrative Expenses

Stock Repurchase (0 shares repurchased) Income Tax Payments Dividend Payments to Shareholders Charitable Contributions Cash Fine (assessed by instructor)

Total Cash Outlays

76,164 94,218 84,716 95,944

0 0 0 0

1,500 0

15,900 10,182

0 0

17,143 20,000

0 0

415,767 Net Cash Balance (at the end of Year 10) 6,074 Note 1: This item consists of all internet revenues recorded in Y10, 75% of wholesale and

private-label revenues recorded in Y10, and accounts receivable from Y9 sales. Note 2: This item consists of 75% of the cost of Y10 production materials and 25% of Y9

production materials costs due to a 3-month lag in payments to materials suppliers. Note 3: This item includes all Y10 production-related expenses (adjusted for exchange rate cost

impacts) except for depreciation (which is a non-cash accounting charge). Note 4: All 1-year loans (including overdraft loans) received in Year 9 were repaid in full in Year

10. Interest on all 1-year loans received in Year 9 was also paid in Year 10.

SELECTED FINANCIAL STATISTICS Credit

Rating Measures

Interest Coverage Ratio (oper. profit ÷ interest exp.) Debt to Assets Ratio (total liabilities ÷ total assets) Default Risk Ratio (cash flow from ops ÷ principal paymts) Risk of Default (see Note 1) Credit Rating (at the end of Year 10)

Current Ratio (current assets ÷ current liabilities) Operating Profit Margin (operating profit ÷ net sales revenues) Net Profit Margin (net profit ÷ net sales revenues) Dividend Payout (dividends per share ÷ earnings per share) Cash Flow from Operations (after-tax profit + depreciation) Total Principal Payments ($000s to be paid in Year 11)

6.62 0.39 2.24

Medium B

2.77 15.6% 9.2%

50.0% 39,010 17,400

Note 1: A default risk ratio of 4.00 or higher results in a Low default risk, 2.00 to 4.00 results in a Meduim default risk, and below 2.00 results in a High default risk.

Note: Because demand and sales figures are rounded to the nearest 1000 pairs, minor anomalies in the company's financial statements may occasionally occur. Any rounding inconsistencies that do appear will be smaller than ±50 and will likely average-out over time. Such rounding anomalies have no significant impact on company performance.