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Footwear Industry Report

FIR 24-Jul-2019

Industry 1 Biegala MGT495-01

Summer

Year 13

Year 13 Scoreboard

Rank

Company Name

Investor Expectation

Score

Best-In- Industry Score

Weighted Average

Score

Change

from Y12

1 J - Doyen 118 97 108 +13 2 H Company 116 94 105 -3 3 K ASM 116 80 98 +2 4 B Cielo 112 73 93 +1 5 DTigers 105 77 91 -6 6 FFlying wings 106 67 87 -3 7 G - Star 94 60 77 +2 8 E Elite Footwear 86 57 72 -6 9 I Company 77 53 65 -14

10 A Company 66 46 56 -22 11 C Shoe 58 43 51 -15

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 98 108 1 109 2 J - Doyen 116 90 103 3 106 3 K ASM 115 80 98 0 98 4 B Cielo 115 78 97 1 98 5 DTigers 104 74 89 0 89 6 FFlying wings 105 68 87 1 88 7 G - Star 97 62 80 1 81 8 E Elite Footwear 85 58 72 1 73 8 I Company 85 58 72 1 73

10 A Company 79 54 67 1 68 11 C Shoe 71 50 61 0 61

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 13

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. (3.00) I.E. BII

Y13 Score I.E. BII

G-T-D Score

A 2.57 2.94 1.89 2.47 11 5 16 8 A B 4.61 4.22 4.79 4.54 24 13 24 15 B C 2.26 2.57 1.10 1.91 6 3 13 6 C D 2.37 4.59 5.19 4.05 24 14 24 13 D E 1.42 2.94 2.97 2.44 17 8 16 8 E F 1.48 3.86 3.96 3.09 21 11 20 10 F G 2.32 2.84 2.90 2.69 17 8 18 9 G H 4.05 6.74 7.40 6.07 24 20 24 20 H I 2.71 3.11 2.70 2.84 15 7 19 9 I J 2.27 4.74 7.14 4.72 24 19 24 16 J K 2.31 4.19 5.29 3.93 24 14 23 13 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

Y13 Score I.E. BII

G-T-D Score

A 21.8 20.2 11.2 17.1 10 6 16 10 A B 36.0 24.5 22.1 26.3 19 12 22 15 B C 19.4 18.6 7.7 14.3 7 4 13 8 C D 22.7 41.5 38.4 34.7 24 20 24 20 D E 12.6 21.9 18.1 17.8 16 9 16 10 E F 13.2 28.1 23.3 22.2 20 12 20 13 F G 19.9 20.0 19.2 19.7 17 10 18 11 G H 33.0 38.7 29.4 33.2 23 15 24 19 H I 22.9 21.0 15.3 19.2 13 8 17 11 I J 19.6 31.8 34.2 29.8 24 18 24 17 J K 19.8 28.1 26.9 25.5 22 14 22 15 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

Y13 Score I.E. BII

G-T-D Score

A 33.46 45.06 18.88 6 2 6 2 A B 121.59 83.05 88.69 24 10 24 10 B C 22.86 21.18 8.49 3 1 3 1 C D 48.77 120.70 122.75 24 13 24 13 D E 11.86 35.44 32.74 10 4 10 4 E F 11.76 58.38 68.43 21 7 21 7 F G 20.47 31.72 57.28 18 6 18 6 G H 102.76 178.88 185.71 24 20 24 20 H I 35.55 46.77 24.37 7 3 7 3 I J 22.39 102.04 186.55 24 20 24 20 J K 26.32 92.42 111.75 24 12 24 12 K

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Industry 1 SCORING MEASURES Year 13 (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

Y13 Score I.E. BII

G-T-D Score

A A A A– 22 18 22 18 A B A A+ A+ 24 20 24 20 B C A– A A+ 24 20 24 20 C D A A– B– 12 11 12 11 D E B A A+ 24 20 24 20 E F B A A+ 24 20 24 20 F G A– A A+ 24 20 24 20 G H A A A 23 19 23 19 H I A A A 23 19 23 19 I J A– A A+ 24 20 24 20 J K A– A A+ 24 20 24 20 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)

Y11-Y13 Average I.E. BII

Y13 Score I.E. BII

G-T-D Score

A 70 67 61 66 17 15 19 16 A B 75 74 76 75 21 18 21 18 B C 68 57 64 63 18 15 18 15 C D 71 68 81 73 21 19 20 17 D E 68 69 68 68 19 16 19 16 E F 76 73 72 74 20 17 20 18 F G 65 68 66 66 18 16 19 16 G H 84 85 84 84 22 20 22 20 H I 68 65 68 67 19 16 19 16 I J 64 71 83 73 22 20 20 17 J K 74 87 84 82 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 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 13

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 13 Forecast

Year 13 Actual

Percent Variance

Revenues (within ± 5%) Year 13

Forecast Year 13 Actual

Percent Variance

EPS (within ± 5% or ± 10¢) Year 13

Forecast Year 13 Actual

Point Variance

Image Rating (within ± 4 points) Year 13 Bull's Eye

Award

Cumu- lative

Awards A 510,236 440,347 -13.7% 3.08 1.89 -38.6% 66 61 -5 pts. No 1 A B 653,244 656,355 +0.5% 4.83 4.79 -0.9% 77 76 -1 pts. Yes 1 B C 443,962 448,369 +1.0% 1.41 1.10 -22.1% 63 64 +1 pts. No 0 C D 729,247 887,882 +21.8% 3.55 5.19 +46.2% 71 81 +10 pts. No 0 D E 586,678 535,508 -8.7% 4.23 2.97 -29.8% 73 68 -5 pts. No 1 E F 460,454 454,274 -1.3% 4.28 3.96 -7.6% 75 72 -3 pts. No 0 F G 470,648 451,803 -4.0% 3.36 2.90 -13.8% 71 66 -5 pts. No 1 G H 930,358 889,776 -4.4% 8.31 7.40 -10.9% 87 84 -3 pts. No 1 H I 549,319 509,375 -7.3% 3.48 2.70 -22.4% 69 68 -1 pts. No 1 I J 824,926 809,425 -1.9% 7.51 7.14 -5.0% 84 83 -1 pts. Yes 2 J K 650,983 716,324 +10.0% 4.76 5.29 +11.1% 77 84 +7 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 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 0 A B 107 -15 92 +1 93 0 B C 74 -8 66 -15 51 0 C D 86 +11 97 -6 91 0 D E 55 +23 78 -6 72 0 E F 58 +32 90 -3 87 1 F G 73 +2 75 +2 77 0 G H 105 +3 108 -3 105 0 H I 84 -5 79 -14 65 0 I J 73 +22 95 +13 108 1 J K 77 +19 96 +2 98 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 13

Materials Prices

Price Adjustments

Materials Usage Facilities Utilization

Base Prices of Materials ($ per pair)

Materials Prices in Year 13 ($ per pair)

$6.00 -0.16 +0.29 $6.13

Standard $12.00 +1.22 +0.58

$13.80

Superior High industry-wide superior materials usage (45.1%) lead to superior materials prices that were 10.2% 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 4.8%.

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

40% 113.3% 36,507 31,286 31,141 31,140

2 1

3,003 3,737 2,917

Europe Africa

39% 120.0% 30,433 26,556 26,422 26,423

2 0

3,003 2,111 1,911

Asia Pacific

50% 115.4% 24,909 22,066 22,220 22,220

3 0

3,168 3,356 3,156

Latin America

43% 120.0% 22,761 22,055 22,341 21,834

5 508

3,168 2,151 1,951

Average or Total

45% 114.8% 114,610 101,963 102,124 101,617

509

12,342 11,355 9,935

⇦ % usage up 3.5 points from Year 12. ⇦ % usage up 0.1 points from Year 12.

⇦ 12.2% higher than Year 13 demand.

⇦ From page 4 of FIR for Year 12. ⇦ Actual branded demand was about equalto forecast branded demand.

⇦ 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 12. ⇦ Private-label pairs offered was lower than

actual private-label demand by 8.0%.

Notes

Demand Forecast

Branded Demand (internet + wholesale)

Year 14 Year 15 Year 16

Private-Label Demand Year 14 Year 15 Year 16

North America

32,920 34,895 36,294 3,333 3,696 4,026

Europe Africa 28,025 29,712 30,900 3,333 3,696 4,026

Asia Pacific 24,372 26,813 28,954 3,575 4,037 4,477

Latin America

24,517 26,973 29,126 3,575 4,037 4,477

Global Total

109,834 118,393 125,274

13,816 15,466 17,006

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 14 Inventory Potential Y14 Production (with OT)

Potential Global Supply

12,993 134,400 147,393

Potential Footwear Suppy in Year 14 Branded Demand Forecast Private-Label Demand Forecast

Expected Global Demand

109,834 13,816

123,650

Expected Footwear Demand in Year 14 Potential global supply (at max OT) in the upcoming year is 19.2% 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 13 Facility Space (000s of pairs available for prod. equipmernt)

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

Construction of New Space (initiated in Y13 and available in Y14)

Total Space

Available in Y14 N.A. E-A A-P L.A. Total

Year 13 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 5,000 0 5,000 0 10,000 B C 5,000 0 6,000 0 0 0 0 0 11,000 C 4,000 0 4,250 0 8,250 C D 7,000 2,000 7,000 2,000 0 0 0 0 18,000 D 5,000 1,000 6,000 1,000 13,000 D E 5,000 0 6,000 0 1,000 1,000 1,000 1,000 15,000 E 4,250 0 4,000 0 8,250 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 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 7,000 3,000 0 0 1,000 2,000 18,000 J 5,000 0 6,000 3,000 14,000 J K 5,000 0 6,000 0 0 0 2,000 3,000 16,000 K 5,000 0 6,000 0 11,000 K

58,000 2,000 71,000 7,000 1,000 1,000 4,000 6,000 150,000 49,000 1,000 56,000 6,000 112,000

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Industry 1 FINANCIAL PERFORMANCE SUMMARY Year 13

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 100,369 336,471 0 440,347 227,872 39,378 98,215 16,966 57,916 3,823 16,228 37,865 A B 163,178 493,177 0 656,355 330,918 50,537 116,075 18,565 140,260 3,408 41,056 95,796 B C 115,231 298,537 34,601 448,369 246,246 44,629 97,285 16,817 43,392 4,128 11,779 27,485 C D 196,357 555,514 87,813 887,882 430,776 73,252 161,521 26,964 195,369 30,527 48,958 114,236 D E 163,010 372,498 0 535,508 252,692 49,635 121,849 18,711 92,621 5,485 25,880 60,385 E F 98,695 306,008 41,588 454,274 226,281 45,161 52,567 16,564 113,701 3,138 33,169 77,394 F G 133,844 317,959 0 451,803 244,091 50,879 51,825 17,566 87,442 4,504 24,881 58,057 G H 202,125 687,651 0 889,776 415,365 72,186 148,419 24,964 228,842 15,182 64,098 149,562 H I 124,385 356,086 28,904 509,375 260,893 44,871 106,015 16,867 80,729 3,693 23,111 53,925 I J 189,454 536,065 75,849 809,425 404,473 71,234 103,371 22,466 207,881 6,041 60,552 141,288 J K 150,606 473,176 88,344 716,324 368,987 53,747 113,672 21,465 158,453 5,820 45,332 105,775 K

148,841 430,286 32,464 618,131 309,872 54,137 106,438 19,810 127,873 7,795 35,913 83,797

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 138,241 250,849 197,852 448,701 41,274 49,500 90,774 320,062 0 37,865 357,927 A B 157,869 300,534 268,454 568,988 40,087 49,500 89,587 386,605 0 92,796 479,401 B C 142,195 266,170 224,184 490,354 29,128 49,500 78,628 299,541 84,700 27,485 411,726 C D 71,103 282,457 446,607 729,064 70,988 290,000 360,988 226,684 115,220 26,172 368,076 D E 0 121,488 355,910 477,398 57,683 49,500 107,183 297,639 12,191 60,385 370,215 E F 81,711 173,246 203,568 376,814 21,868 0 21,868 309,930 -14,783 59,799 354,946 F G 55,905 158,791 214,946 373,737 32,653 49,500 82,153 313,527 0 -21,943 291,584 G H 62,256 318,810 455,616 774,426 85,480 88,000 173,480 415,962 35,422 149,562 600,946 H I 97,509 243,387 230,252 473,639 43,830 49,500 93,330 326,384 0 53,925 380,309 I J 16,215 194,159 395,930 590,089 56,515 49,500 106,015 342,786 0 141,288 484,074 J K 16,408 183,219 364,962 548,181 52,951 49,500 102,451 339,955 0 105,775 445,730 K

76,310 226,646 305,298 531,945 48,405 70,364 118,769 325,370 21,159 66,646 413,176

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 48.3% 13.2% 8.6% 0.00 0 0.0% 15.15 0.20 3.59 Medium 6.08 49 days 20,000 A B 49.6% 21.4% 14.6% 0.15 3,000 3.1% 41.16 0.16 7.61 Low 7.50 21 days 20,000 B C 45.1% 9.7% 6.1% 0.00 0 0.0% 10.51 0.16 4.93 Low 9.14 67 days 25,000 C D 51.5% 22.0% 12.9% 4.00 88,064 77.1% 6.40 0.50 1.86 High 3.98 61 days 22,016 D E 52.8% 17.3% 11.3% 0.00 0 0.0% 16.89 0.22 5.24 Low 2.11 44 days 20,350 E F 50.2% 25.0% 17.0% 0.90 17,595 22.7% 36.23 0.06 2.42 Medium 7.92 10 days 19,550 F G 46.0% 19.4% 12.9% 4.00 80,000 137.9% 19.41 0.22 4.93 Low 4.86 34 days 20,000 G H 53.3% 25.7% 16.8% 0.00 0 0.0% 15.07 0.22 3.73 Medium 3.73 78 days 20,200 H I 48.8% 15.8% 10.6% 0.00 0 0.0% 21.86 0.20 4.73 Low 5.55 79 days 20,000 I J 50.0% 25.7% 17.5% 0.00 0 0.0% 34.41 0.18 10.98 Low 3.44 26 days 19,800 J K 48.5% 22.1% 14.8% 0.00 0 0.0% 27.23 0.19 8.43 Low 3.46 33 days 20,000 K

49.9% 20.7% 13.6% 0.82 17,151 21.9% 22.21 0.21 5.31 5.25 46 days 20,629

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Industry 1 PERFORMANCE BENCHMARKS Year 13

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% 37,296 4,950 7.59

61,206 6%

1.00 12,959 20.50 2.6% 3.06

100% 43,664 5,191 8.76

62,293 39% 1.82

25,504 27.28 5.6% 5.10

100% 55,477 5,592 10.31

70,094 84% 4.80

66,595 33.45 7.9% 6.79

100% 46,984 5,189 9.49

61,206 36% 1.50

19,000 27.95 5.6% 5.82

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% 27,536 3,769 7.63

37,091 58% 1.50

1,800 29.22 6.5% 5.73

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% 13,998 3,524 3.89

25,503 6%

0.90 12,272 17.62 2.8% 2.80

23% 16,607 3,772 4.55

25,883 48% 1.85

27,879 23.26 7.1% 4.58

50% 22,329 4,170 5.57

28,660 96% 4.80

69,970 28.64

10.5% 6.22

50% 17,628 3,947 4.68

25,503 50% 1.50

21,864 23.07 6.6% 4.81

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)

67% 15,833 3,947 4.22

25,588 52% 1.50

4,200 24.27 5.7% 4.65

0% 17,421 3,816 4.77

25,758 58% 1.50

1,800 26.20 6.5% 5.14

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 13 (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)

4.71 22.19 6.11

14.64 17.2%

6.18 6.99

13.7%

6.09 28.24 20.81 23.69

27.2% 10.11 11.71

20.8%

8.39 34.43 33.87 31.06

36.6% 12.82 16.84

30.5%

5.98 28.95 21.37 27.08

29.1% 12.74 16.84

25.9%

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)

10.71 27.12 5.85

11.28 13.5%

3.45 2.54

5.1%

12.30 32.77 20.40 23.26

25.6% 9.23

10.22 17.2%

14.06 39.67 30.95 29.80

35.8% 12.98 16.80

24.4%

11.09 32.40 23.94 26.31

26.8% 12.98 16.80

24.4%

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)

5.90 22.59 6.11 7.07

8.1% 6.04 4.95

10.3%

7.22 25.59 23.50 20.63

24.6% 9.13

11.95 22.3%

11.57 29.67 35.16 28.39

36.8% 13.21 18.78

29.9%

5.90 24.07 24.79 25.24

28.1% 13.21 18.78

29.9%

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)

6.37 23.83 9.52 7.07

8.3% 6.86

-0.08 -0.2%

15.33 34.02 23.76 17.96

20.0% 9.29 9.61

15.6%

18.36 41.49 37.75 31.11

37.2% 14.71 18.94

33.8%

13.12 31.79 29.03 23.57

23.6% 14.71 16.76

23.9%

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) 25.53 +0.94

29.34 +4.82

32.21 +8.15

32.21 +6.79

Europe-Africa Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 27.56 -3.79

32.70 +4.13

37.18 +15.66

36.19 +2.12

Asia-Pacific Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 20.89 -1.69

25.73 +6.44

31.61 +12.35

25.30 +12.35

Latin America Cost Per Pair Sold (production, freight, tariffs, x-rates)Margin Over Direct Cost ($ per pair sold) 22.48 -3.73

31.60 +6.14

37.73 +12.78

34.99 +4.01

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 13

Celebrity Endorsements

Celebrity Year 14

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 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 Cielo 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 270 250 220 215 C 0 0 0 0 D 140 145 175 140 E 0 0 0 0 F 85 65 60 40 G 0 0 0 0 H 235 240 235 220 I 60 50 60 95 J 320 340 350 400 K 0 0 0 0

Avg. 101 99 100 101

Year 14 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

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