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9/17/2015

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Advanced shoes Industry 12

PLANT OPERATIONS REPORT Year 14 (projected)

PLANT CAPACITY (000s of pairs w/o OT) North AmericaPlant EuropeAfrica

Plant AsiaPacific

Plant Latin America

Plant All Plants Combined

Plant Capacity at the End of Year 13 + New Construction (initiated in Year 13) + Capacity Purchased (at beginning of Y14) – Capacity SoldOff (at beginning of Y14)

Capacity Available for Year 14 Production New Construction Initiated in Year 14 Total Capacity Available for Year 15

2,100 pairs

2,200 pairs

100 0 0

2,200 0

0 pairs

0 0 0 0 0

4,000 pairs

0 0 0

4,000 0

0 pairs

0 0 0 0 0

6,100 pairs

6,200 pairs

100 0 0

6,200 0

Plant Upgrade ——– Options

Online (initiated prior to Y14) Pending (initiated in Y14)

D none

none none

C none

none none

PLANT INVESTMENT ($000s) North AmericaPlant EuropeAfrica

Plant AsiaPacific

Plant Latin America

Plant All Plants Combined

Gross Investment at the End of Year 13 + Upgrade Options (initiated in Year 13) + New Construction (initiated in Year 13) + Capacity Purchased (at beginning of Y14) – Capacity SoldOff (at beginning of Y14) + Energy Efficiency Initiatives (in Y14)

Gross Investment in Year 14 Capacity – Accumulated Depreciation (through Y13) – Current Depreciation (incurred in Y14)

Net Investment in Year 14 Capacity Upgrade and Construction Work in Progress

92,322 0

4,750 0 0

2,896 99,968 39,749 4,998 55,221

0 0 0 0 0 0 0 0 0 0 0

218,633 0 0 0 0

5,264 223,897 60,699 11,195 152,003

0 0 0 0 0 0 0 0 0 0 0

310,955 0

4,750 0 0

8,160 323,865 100,448 16,193 207,224

LABOR STATISTICS Year 13 Year 14 North America

Year 13 Year 14 EuropeAfrica

Year 13 Year 14 AsiaPacific

Year 13 Year 14 Latin America

Compensation ——– ($000s per worker)

Annual Base Wage Incentive Pay Total Compensation

Worker Productivity (pairs per worker per year) Number of Workers Employed

Incentive Pay Per Pair ($ per nonrejected pair)

5,092 5,156 347 343 15.5 15.6 6.5 6.6 22.0 22.2 1.35 1.35

0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.00

2,451 2,377 1,441 1,485 2.9 2.9 0.9 0.9 3.8 3.8 0.40 0.40

0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.00

Cumulative Best ——– Practices

$ Per Worker $ Per Branded Pair

888 0.20

0 0.00

500 0.20

0 0.00

PRODUCTION STATISTICS Branded PLabel North America

Branded PLabel EuropeAfrica

Branded PLabel AsiaPacific

Branded PLabel Latin America

Branded PLabel Overall

Footwear ———– Production (000s of pairs)

Regular Pairs Produced Overtime Pairs Produced Rejected Pairs

Net Footwear Production Reject Rate (% of regular + OT production) Number of Models Produced S/Q Rating of Pairs Produced

1,766 0 0 0 91 0

1,675 0 5.1% 0.0% 200 0 4☆ 4☆

0 0 0 0 0 0 0 0

0.0% 0.0% 0 0 0☆ 0☆

3,133 393 0 0

223 24 2,910 369 7.1% 6.1% 200 100 5☆ 4☆

0 0 0 0 0 0 0 0

0.0% 0.0% 0 0 0☆ 0☆

4,899 393 0 0

314 24 4,585 369 6.4% 6.1%

Capacity Utilization (max utilization at full OT = 120%) 80.3% 0.0% 88.1% 0.0% 85.4%

BRANDED PRODUCTION COSTS $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

This section lists costs for branded production only. PrivateLabel production costs are listed on the PrivateLabel Operations report.

Materials Costs —– Standard Superior

Labor Costs —– Regular Pay Overtime Pay

Best Practices Training Plant Supervision Enhanced Styling/Features TQM/6Sigma Quality Program Production Run SetUp Plant Maintenance Depreciation Total Production Costs

Cost of Rejected Pairs

5,256 3.14 12,607 7.53 7,615 4.55

0 0.00 274 0.16

2,058 1.23 2,000 1.19 1,100 0.66 6,000 3.58 7,248 4.33 4,998 2.98 49,156 29.35 2,532 1.52

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

9,325 3.20 22,366 7.69 5,001 1.72

0 0.00 587 0.20

2,640 0.91 1,600 0.55 1,778 0.61 6,000 2.06 10,947 3.76 9,952 3.42 70,196 24.12 4,997 1.71

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

14,581 3.18 34,973 7.63 12,616 2.75

0 0.00 861 0.19

4,698 1.02 3,600 0.79 2,878 0.63 12,000 2.62 18,195 3.97 14,950 3.26 119,352 26.03 7,529 1.64

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Advanced shoes Industry 12

DISTRIBUTION & WAREHOUSE REPORT Year 14 (projected)

WAREHOUSE OPERATIONS (thousands of branded pairs) North America Warehouse

EuropeAfrica Warehouse

AsiaPacific Warehouse

Latin America Warehouse

Company Total

Incoming ——————— Shipments from

North America Plant EuropeAfrica Plant AsiaPacific Plant Latin America Plant

Pairs Sold ——————— Internet Segment Wholesale Segment Total Branded Sales

Ending Inventory from Year 13 Inventory Clearance (at the beginning of Y14)

Beginning Inventory (carried over from Y14)

Pairs Available for Sale (inventory + shipments)

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

Ending Inventory (pairs left over at the end of Y14)

43 pairs

40 pairs

0 43

1,377 0 0 0

1,420 137

1,243 1,380

40 505

36 pairs

33 pairs

0 36 0 0

1,377 0

1,413 144

1,236 1,380

33 561

29 pairs

27 pairs

0 29 0 0

918 0

947 108 812 920 27

625

29 pairs

27 pairs

0 29 298 0

615 0

942 110 805 915 27

680

137 pairs

127 pairs

0 137

1,675 0

2,910 0

4,722 499

4,096 4,595 127

2,371

Model Availability (weighted average) S/Q Rating (weighted average)

200 4☆

200 5☆

Weighted average of beginning inventory + new incoming pairs shipped from plants.

COST OF BRANDED PAIRS SOLD $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Cost of Beginning Year 14 Inventory + Production Cost of Incoming Pairs ± Exchange Rate Cost Adjustments + Freight on Incoming Pairs + Import Tariffs on Incoming Pairs – Cost of Ending Year 14 Inventory Cost of Branded Pairs Sold in Year 14

1,274 29.63 40,411 29.35

0 0.00 1,377 1.00

0 0.00 1,213 30.33 41,849 30.33

1,030 28.61 33,216 24.12 +2,129 +1.55 2,754 2.00 5,508 4.00 1,042 31.58 43,595 31.59

715 24.66 22,144 24.12

0 0.00 918 1.00 0 0.00

678 25.11 23,099 25.11

977 33.69 23,580 25.83

+2 +0.00 1,826 2.00 3,690 4.04 862 31.93

29,213 31.93

3,996 29.17 119,351 26.03 2,131 0.46 6,875 1.50 9,198 2.01 3,795 29.88

137,756 29.98

WAREHOUSE OPERATING EXPENSES $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Packaging / Shipping ——– Internet Wholesale

Inventory Storage Costs

Warehouse Lease and Maintenance Total Warehouse Operating Expenses

22 0.02 1,397 1.01 2,614 1.89 1,000 0.72 5,033 3.65

18 0.01 1,469 1.06 2,601 1.88 1,000 0.72 5,088 3.69

15 0.02 1,102 1.20 1,786 1.94 1,000 1.09 3,903 4.24

15 0.02 1,122 1.23 1,771 1.94 1,000 1.09 3,908 4.27

70 0.02 5,090 1.11 8,772 1.91 4,000 0.87 17,932 3.90

INVENTORY CLEARANCE $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Direct Costs ——– of Pairs Cleared

Production/Freight/Tariffs Inventory Storage Packaging/Shipping

Net Revenues from Pairs Cleared

Margin Over Direct Costs

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

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Advanced shoes Industry 12

MARKETING & ADMINISTRATIVE REPORT Year 14 (projected)

MARKETING EXPENSES $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Internet ————– Segments

Advertising Web Site Maintenance Celebrity Endorsements Total Internet Marketing

696 5.08 1,087 7.93

0 0.00 1,783 13.01

708 4.92 1,143 7.94

0 0.00 1,851 12.85

411 3.81 857 7.94 0 0.00

1,268 11.74

421 3.83 873 7.94 0 0.00

1,294 11.76

2,236 4.48 3,960 7.94

0 0.00 6,196 12.42

Wholesale ——— Segments

Advertising Rebate Redemption Retailer Support OnTime Delivery Celebrity Endorsements Total Wholesale Marketing

6,315 5.08 932 0.75 923 0.74 932 0.75 0 0.00

9,102 7.32

6,080 4.92 1,483 1.20 876 0.71 618 0.50 0 0.00

9,057 7.33

3,089 3.80 325 0.40 498 0.61 609 0.75 0 0.00

4,521 5.57

3,079 3.82 604 0.75 518 0.64 604 0.75 0 0.00

4,805 5.97

18,563 4.53 3,344 0.82 2,815 0.69 2,763 0.67

0 0.00 27,485 6.71

1. Total regional advertising expenditures are allocated to internet and wholesale seg ments based on each segment's percentage of total branded pairs sold in the region.

2. Total expenditures for celebrity endorsements are allocated to internet and whole sale segments based on each segment's percentage of total branded pairs sold.

ADMINISTRATIVE EXPENSES $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

General Administration Other Corporate Overhead Total Administrative Expenses

608 0.44 2,177 1.58 2,785 2.02

406 0.44 1,451 1.58 1,857 2.02

403 0.44 1,443 1.58 1,846 2.02

2,025 0.44 7,248 1.58 9,273 2.02

Advanced shoes Industry 12

PRIVATELABEL REPORT Year 14

OFFERS SUBMITTED North AmericaMarket EuropeAfrica

Market AsiaPacific

Market Latin America

Market Company Total

Offers to Private ———— Label Buyers

Pairs Offered (000s) S/Q Rating Bid Price ($ per pair)

4☆ 0 pairs

35.00 0☆

185 pairs

35.00 4☆

184 pairs

35.00 0☆

224 pairs

35.00

593 pairs

Pairs Offered (000s) 0 pairs 185 pairs 184 pairs 0 pairs 369 pairs

PRODUCTION SHIPPING $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Production ———– Costs

Materials ————–

Labor ——————–

Standard Superior Regular Overtime

Styling / Features Production Run SetUp Other Allocated Costs Total Production Costs

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

1,907 5.17 1,299 3.52 629 1.70 0 0.00

600 1.63 625 1.69

3,235 8.77 8,295 22.48

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

1,907 5.17 1,299 3.52 629 1.70 0 0.00

600 1.63 625 1.69

3,235 8.77 8,295 22.48

Pairs Produced (000s of pairs after rejects) 0 pairs 0 pairs 369 pairs 0 pairs 369 pairs

Shipments To ———————– (000s of pairs)

N.A. Warehouse EA Warehouse AP Warehouse L.A. Warehouse

0 pairs 0 0 0 pairs

0 pairs 185 184 0 pairs

0 pairs 0 0 0 pairs

0 pairs 185 184 0 pairs

1. Best practices, plant supervision, TQM/6Sigma, plant maintenance, and deprecia tion cost allocations based on percentage of total pairs produced before rejects.

2. For more privatelabel production info (rejected pairs, reject rate, number of models, and S/Q rating) see the Production Statistics section of the Plant Operations Report.

REVENUES / COSTS / MARGINS $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Direct ————– Costs

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

Gross PrivateLabel Revenues ± Exchange Rate Adjustments

Net PrivateLabel Revenues

Margin Over Direct Costs

0 0.00 0.00

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

6,475 35.00 –172 –0.93 6,303 34.07 4,159 22.48 267 1.44 370 2.00 740 4.00 222 1.20 545 2.95

6,440 35.00 +242 +1.32 6,682 36.32 4,136 22.48

0 0.00 184 1.00 0 0.00

221 1.20 2,141 11.64

0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

12,915 35.00 70 0.19

12,985 35.19 8,295 22.48 267 0.72 554 1.50 740 2.01 443 1.20

2,686 7.28

Total company administrative expenses are allocated to each region based on the region's percentage of total branded pairs sold.

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Advanced shoes Industry 12

INCOME STATEMENT Year 14 (projected)

CONSOLIDATED INCOME STATEMENT $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Segment Revenues ——— Internet Wholesale PrivateLabel

Operating —–— Costs

Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses

Gross Revenues from Footwear Sales ± Exchange Rate Adjustments

Net Revenues from Footwear Sales

Operating Profit (Loss)

11,645 85.00 59,664 48.00

0 0.00 71,309 51.67

0 0.00 71,309 51.67 41,849 30.33 5,033 3.65 10,885 7.89 2,785 2.02 10,757 7.79

12,240 85.00 59,328 48.00 6,475 35.00 78,043 49.87 2,030 1.30 76,013 48.57 49,131 31.39 5,310 3.39 10,908 6.97 2,785 1.78 7,879 5.03

9,180 85.00 33,292 41.00 6,440 35.00 48,912 44.30 1,794 1.63 50,706 45.93 27,419 24.84 4,124 3.74 5,789 5.24 1,857 1.68 11,517 10.43

9,350 85.00 33,810 42.00

0 0.00 43,160 47.17

980 1.07 44,140 48.24 29,213 31.93 3,908 4.27 6,099 6.67 1,846 2.02 3,074 3.36

42,415 85.00 186,094 45.43 12,915 35.00 241,424 48.63

744 0.15 242,168 48.78 147,612 29.74 18,375 3.70 33,681 6.79 9,273 1.87 33,227 6.69

PROFITABILITY & PAYOUT Year 13 Year 14 Earnings Per Share $1.99 $1.88 Dividend Per Share $0.00 $0.00

Interest Income (Expenses) Other Income (Expenses) PreTax Profit (Loss) Income Taxes Net Profit (Loss)

5,336 1.07 1,000 0.20 26,891 5.42 8,067 1.63 18,824 3.79

1. These items include revenues collected from and costs associated with inventory liquidated at the beginning of Y14. See the last section of the Distribution & Warehouse Report. 2. This item includes any charitable contributions and/or instructorimposed fines (appearing as negative) and/or instructorawarded refunds (appearing as positive). 3. The income tax rate is 30%. If a net loss was recorded in Y13, the loss is carried forward and may offset some or all taxable Y14 profit and reduce Y14 income taxes.

Advanced shoes Industry 12

REVENUECOSTPROFIT PERFORMANCE IN THE BRANDED SEGMENTS

Year 14

INTERNET MARKET PERFORMANCE $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Operating —— Costs

Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses

Revenues from Internet Sales CustomerPaid Shipping Fees Gross Internet Revenues ± Exchange Rate Adjustments

Net Internet Revenues

Operating Profit (Loss)

10,275 75.00 1,370 10.00 11,645 85.00

0 0.00 11,645 85.00 4,155 30.33 1,498 10.93 1,783 13.01 277 2.02

3,932 28.70

10,800 75.00 1,440 10.00 12,240 85.00 286 1.99

11,954 83.01 4,549 31.59 1,575 10.94 1,851 12.85 290 2.01

3,689 25.62

8,100 75.00 1,080 10.00 9,180 85.00 304 2.81

9,484 87.81 2,712 25.11 1,221 11.31 1,268 11.74 218 2.02

4,065 37.64

8,250 75.00 1,100 10.00 9,350 85.00 192 1.75

9,542 86.75 3,512 31.93 1,244 11.31 1,294 11.76 222 2.02

3,270 29.73

37,425 75.00 4,990 10.00 42,415 85.00

210 0.42 42,625 85.42 14,928 29.92 5,538 11.10 6,196 12.42 1,007 2.02 14,956 29.97

MARKET STATISTICS Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Pairs Sold (000s) Market Share Operating Profit Margin

115 137 9.0% 9.0% 32.8% 33.8%

125 144 9.8% 9.4% 37.4% 30.9%

89 108 9.3% 9.1% 40.6% 42.9%

89 110 9.3% 9.2% 23.4% 34.3%

418 499 9.3% 9.2% 33.8% 35.1%

WHOLESALE MARKET PERFORMANCE $000s $ / pair North America

$000s $ / pair EuropeAfrica

$000s $ / pair AsiaPacific

$000s $ / pair Latin America

$000s $ / pair Overall

Operating —–– Costs

Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses

Gross Wholesale Revenues ± Exchange Rate Adjustments

Net Wholesale Revenues

Operating Profit (Loss)

59,664 48.00 0 0.00

59,664 48.00 37,694 30.33 3,535 2.84 9,102 7.32 2,508 2.02 6,825 5.49

59,328 48.00 1,572 1.27 57,756 46.73 39,046 31.59 3,513 2.84 9,057 7.33 2,495 2.02 3,645 2.95

33,292 41.00 1,248 1.54 34,540 42.54 20,387 25.11 2,682 3.30 4,521 5.57 1,639 2.02 5,311 6.54

33,810 42.00 788 0.98

34,598 42.98 25,701 31.93 2,664 3.31 4,805 5.97 1,624 2.02 196 0.24

186,094 45.43 464 0.11

186,558 45.55 122,828 29.99 12,394 3.03 27,485 6.71 8,266 2.02 15,585 3.80

MARKET STATISTICS Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Year 13 Year 14 Pairs Sold (000s) Market Share Operating Profit Margin

1,260 1,243 9.5% 8.1% 12.7% 11.4%

1,242 1,236 9.9% 8.1% 20.2% 6.3%

828 812 9.5% 6.8% 14.8% 15.4%

829 805 9.9% 6.7%

16.9% 0.6%

4,159 4,096 9.7% 7.6% 9.5% 8.4%

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Advanced shoes Industry 12

BALANCE SHEET & CASH FLOW REPORT Year 14 (projected)

Cash On Hand 0 Accounts Receivable (see Note 1) 60,542 Footwear Inventories 3,795 Total Current Assets 64,337

Net Plant Investment (see Note 2) 207,224 Construction Work in Progress 0 Total Fixed Assets 207,224

Total Assets 271,561

Accounts Payable (see Note 3) 13,190 Overdraft Loan Payable (see Note 4) 27,166 1Year Bank Loan Payable (see Note 5) 0 Current Portion of LongTerm Loans (see Note 6) 0 Total Current Liabilities 40,356

LongTerm Bank Loans Outstanding (see Note 7) 0 Total Liabilities 40,356

Beginning Balance

Change in Y14

Common Stock (see Note 8) 10,000 0 10,000 Additional Capital (see Note 9) 100,000 0 100,000 Retained Earnings (see Note 10) 102,385 +18,820 121,205

Total Shareholder Equity 212,385 +18,820 231,205

Return on Average Equity for Year 14 (see Note 11) 8.5%

Note 1: Of the $242,168 net revenues reported in the Y14 income statement, 25% have not been collected from customers (and will be collected in Y15).

Note 2: For more details on net plant investment, see the Plant Investment section of the Plant Operations Report.

Note 3: Of the $52,760 in materials used for footwear production in Y14, 25% have not been paid for (and will be paid for in Y15).

Note 4: Loans for overdrafts are incurred automatically to prevent a negative yearend cash balance and carry an interest rate 2% above the rate for 1year loans.

Note 5: The company's interest rate for a 1year loan in Y14 was 8.2%. Note 6: This item represents the principal portion of all outstanding 5year and 10year

bank loans due to be repaid in Year 15. Note 7: Longterm bank loans outstanding:

Loan Number

Initial Year

Original Principal

Interest Rate Term

Out standing Principal

Annual Principal Payment

Year 15 Interest Payable

1 Y7 115,000 8.5% 10Yr 0 0 0 2 Y9 24,000 7.5% 5Yr 0 0 0 3 Y0 0 0.0% 0Yr 0 0 0 4 Y0 0 0.0% 0Yr 0 0 0 5 Y0 0 0.0% 0Yr 0 0 0 6 Y0 0 0.0% 0Yr 0 0 0 7 Y0 0 0.0% 0Yr 0 0 0 8 Y0 0 0.0% 0Yr 0 0 0 9 Y0 0 0.0% 0Yr 0 0 0 10 Y0 0 0.0% 0Yr 0 0 0 11 Y0 0 0.0% 0Yr 0 0 0 12 Y0 0 0.0% 0Yr 0 0 0 13 Y0 0 0.0% 0Yr 0 0 0 14 Y0 0 0.0% 0Yr 0 0 0 15 Y0 0 0.0% 0Yr 0 0 0 16 Y0 0 0.0% 0Yr 0 0 0

Note 8: There are 10,000 shares issued and outstanding at a par value of $1.00 per share. The authorized maximum number of shares outstanding is 40,000.

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

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

Note 11: The formula for Return on Average Equity is:

AfterTax profit (Beginning Equity + Ending Equity) ÷ 2

ASSETS $000s

LIABILITIES $000s

SHAREHOLDER EQUITY $000s

Balance Sheet Notes (all dollar and share figures in thousands)

BALANCE SHEET

Beginning Cash Balance 0 Cash —————– Inflows

Receipts from Sales (see Note 1) 241,539 Bank Loans ————————1Year

5Year 10Year

0 0 0

Stock Issues (0 shares issued) 0 Sale of Existing Plant Capacity 0 Loan to Cover Overdrafts 27,166 Interest on Y13 Cash Balance 0 Cash Refunds (awarded by instructor)

Total Cash Available from All Sources 268,705

Payments to Materials Suppliers (see Note 2) 52,764 Production Expenses (see Note 3) 61,092 Distribution and Warehouse Expenses 35,742 Marketing and Administrative Expenses 42,957 Capital ———– Outlays

Plant Upgrade Options Initiated 0 Purchase of Used Plant Capacity 0 Construction of New Capacity 0 Energy Efficiency Initiatives 8,160

Repayment of Principal ———– on Bank Loans (see Note 4)

Overdraft Loan 48,787 1Year Loan 0 5Year Loans 4,800 10Year Loans 0

Interest Payments on —————Overdraft Loan 4,976 Bank Loans 360

Stock Repurchases (0 shares repurchased) 0 Income Tax Payments 8,067 Dividend Payments to Shareholders 0 Charitable Contributions 1,000 Cash Fines (assessed by instructor)

Total Cash Outlays 268,705

Net Cash Balance (at the end of Year 14) 0

Note 1: Receipts from Sales represents 75% of Year 14 revenues and 25% of Year 13 revenues due to a 3month lag in receivables collections.

Note 2: Payments to Materials Suppliers represents 75% of the cost of materials used for Y14 production and 25% of teh cost of materials used for Y13 production due to a 3month lag in payments made to materials suppliers.

Note 3: Production Expenses include all Y14 productionrelated expenses (adjusted for the exchange rate effects of shipping to regional warehouses) except for depreciation (which is a noncash accounting charge).

Note 4: Overdraft and 1year loans received in Year 13 were repaid in full in Year 14. Interest on an overdraft loan received in Y13 would also be repaid in Y14.

CASH AVAILABLE IN YEAR 14 $000s

CASH OUTLAYS IN YEAR 14 $000s

Cash Flow Notes

Credit ———— Rating Measures

Interest Coverage Ratio (oper. profit ÷ interest exp.) 6.23 DebtToAssets Ratio (total debt ÷ total assets) 0.10 Default Risk Ratio (free cash flow ÷ principal payments) 1.29 Default Risk Rating (see Note 1) Medium Credit Rating (at the end of Year 14) B+

Current Ratio (current assets ÷ current liabilities) 1.59 Operating Profit Margin (operating profit ÷ net sales revenues) 13.7% Net Profit Margin (aftertax profit ÷ net sales revenues) 7.8% Dividend Payout (dividend per share ÷ earnings per share) 0.0% Free Cash Flow (aftertax profit + [depreciation – dividends] ) 35,017 Total Principal Payments ($000s to be paid in Year 15) 27,166 Note 1: A default risk ratio of 3.00 or higher results in a Low default risk rating, 1.00 to

3.00 results in a Medium rating, and below 1.00 results in a High rating.

CASH FLOW STATEMENT

SELECTED FINANCIAL STATISTICS