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I Company PLANT OPERATIONS REPORT Year 11

Industry 18 (practice)
North America Europe-Africa Asia-Pacific Latin America All Plants
PLANT CAPACITY (000s of pairs w/o OT) Plant Plant Plant Plant Combined
Plant Capacity at the End of Year 10 2,000 pairs 0 pairs 4,000 pairs 0 pairs 6,000 pairs
+ New Construction (initiated in Year 10) 0 0 0 0 0
+ Capacity Purchased (at beginning of Y11) 0 0 0 0 0
Capacity Sold-Off (at beginning of Y11) 0 0 0 0 0
Capacity Available for Year 11 Production 2,000 0 4,000 0 6,000
New Construction Initiated in Year 11 0 0 0 0 0
Total Capacity Available for Year 12 2,000 pairs 0 pairs 4,000 pairs 0 pairs 6,000 pairs

Plant Upgrade Online (initiated prior to Y11) none none none none
Options Pending (initiated in Y11) none none none none
North America Europe-Africa Asia-Pacific Latin America All Plants
PLANT INVESTMENT ($000s) Plant Plant Plant Plant Combined
Gross Investment at the End of Year 10 75,000 0 180,000 0 255,000
+ Upgrade Options (initiated in Year 10) 0 0 0 0 0
+ New Construction (initiated in Year 10) 0 0 0 0 0
+ Capacity Purchased (at beginning of Y11) 0 0 0 0 0
Capacity Sold-Off (at beginning of Y11) 0 0 0 0 0
+ Energy Efficiency Initiatives (in Y11) 0 0 0 0 0
Gross Investment in Year 11 Capacity 75,000 0 180,000 0 255,000
Accumulated Depreciation (through Y10) 27,500 0 31,500 0 59,000
Current Depreciation (incurred in Y11) 3,750 0 9,000 0 12,750
Net Investment in Year 11 Capacity 43,750 0 139,500 0 183,250
Upgrade and Construction Work in Progress 0 0 0 0 0
North America Europe-Africa Asia-Pacific Latin America
LABOR STATISTICS Year 10 Year 11 Year 10 Year 11 Year 10 Year 11 Year 10 Year 11

Worker Productivity (pairs per worker per year) 4,000 4,051 0 0 2,500 2,524 0 0
Number of Workers Employed 501 371 0 0 1,412 1,242 0 0
Compensation Annual Base Wage 15.0 15.0 0.0 0.0 2.8 2.8 0.0 0.0
($000s per worker) Incentive Pay 5.1 4.7 0.0 0.0 0.9 0.9 0.0 0.0
Total Compensation 20.1 19.7 0.0 0.0 3.7 3.7 0.0 0.0
Incentive Pay Per Pair ($ per non-rejected pair) 1.25 1.20 0.00 0.00 0.40 0.40 0.00 0.00
Cumulative Best $ Per Worker 1,000 0 500 0
Practices $ Per Branded Pair 0.25 0.00 0.20 0.00
North America Europe-Africa Asia-Pacific Latin America Overall
PRODUCTION STATISTICS Branded P-Label Branded P-Label Branded P-Label Branded P-Label Branded P-Label

Footwear Regular Pairs Produced 1,500 0 0 0 3,133 0 0 0 4,633 0

Production Overtime Pairs Produced 0 0 0 0 0 0 0 0 0 0
(000s of pairs) Rejected Pairs 62 0 0 0 185 0 0 0 247 0
Net Footwear Production 1,438 0 0 0 2,948 0 0 0 4,386 0
Reject Rate (% of regular + OT production) 4.1% 0.0% 0.0% 0.0% 5.9% 0.0% 0.0% 0.0% 5.3% 0.0%
Number of Models Produced 100 0 0 0 100 0 0 0
S/Q Rating of Pairs Produced 5 0 0 0 4 0 0 0
Capacity Utilization (max utilization at full OT = 120%) 75.0% 0.0% 78.3% 0.0% 77.2%
North America Europe-Africa Asia-Pacific Latin America Overall
BRANDED PRODUCTION COSTS $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Materials Costs Standard 4,826 3.36 0 0.00 10,080 3.42 0 0.00 14,906 3.40
Superior 8,276 5.76 0 0.00 17,285 5.86 0 0.00 25,561 5.83
Labor Costs Regular Pay 7,291 5.07 0 0.00 4,649 1.58 0 0.00 11,940 2.72
This section lists
Overtime Pay 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
costs for branded Best Practices Training 371 0.26 0 0.00 621 0.21 0 0.00 992 0.23
production only. Plant Supervision 2,226 1.55 0 0.00 2,484 0.84 0 0.00 4,710 1.07
Private-Label Enhanced Styling/Features 1,600 1.11 0 0.00 2,200 0.75 0 0.00 3,800 0.87
production costs TQM/6-Sigma Quality Program 1,400 0.97 0 0.00 2,800 0.95 0 0.00 4,200 0.96
are listed on the Production Run Set-Up 2,500 1.74 0 0.00 2,500 0.85 0 0.00 5,000 1.14
Private-Label Plant Maintenance 4,875 3.39 0 0.00 8,550 2.90 0 0.00 13,425 3.06
Operations report.
Depreciation 3,750 2.61 0 0.00 9,000 3.05 0 0.00 12,750 2.91
Total Production Costs 37,115 25.81 0 0.00 60,169 20.41 0 0.00 97,284 22.18
Cost of Rejected Pairs 1,533 1.07 0 0.00 3,552 1.21 0 0.00 5,085 1.16

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I Company DISTRIBUTION & WAREHOUSE REPORT Year 11

Industry 18 (practice)
(thousands of North America Europe-Africa Asia-Pacific Latin America Company
WAREHOUSE OPERATIONS branded pairs) Warehouse Warehouse Warehouse Warehouse Total
Ending Inventory from Year 10 39 pairs 39 pairs 26 pairs 26 pairs 130 pairs
Inventory Clearance (at the beginning of Y11) 0 0 0 0 0
Beginning Inventory (carried over from Y11) 39 39 26 26 130
Incoming North America Plant 1,055 0 0 383 1,438
Shipments from Europe-Africa Plant 0 0 0 0 0
Asia-Pacific Plant 374 1,170 1,404 0 2,948
Latin America Plant 0 0 0 0 0
Pairs Available for Sale (inventory + shipments) 1,468 1,209 1,430 409 4,516
Pairs Sold Internet Segment 64 61 44 51 220
Wholesale Segment 1,295 1,123 1,006 349 3,773
Total Branded Sales 1,359 1,184 1,050 400 3,993
Required Inventory (needed to achieve delivery time) 25 25 17 9 76
Inventory Surplus (Shortfall) 84 -35 363 -510 -98
Ending Inventory (pairs left over at the end of Y11) 109 pairs 25 pairs 380 pairs 9 pairs 523 pairs

Weighted average of
Model Availability (weighted average) 103 103 102 106 beginning inventory +
S/Q Rating (weighted average) 5 4 4 5 new incoming pairs
shipped from plants.
North America Europe-Africa Asia-Pacific Latin America Overall
COST OF BRANDED PAIRS SOLD $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair

Cost of Beginning Year 11 Inventory 1,055 27.05 1,060 27.18 578 22.23 749 28.81 3,442 26.48
+ Production Cost of Incoming Pairs 34,863 24.40 23,880 20.41 28,656 20.41 9,885 25.81 97,284 22.18
Exchange Rate Cost Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
+ Freight on Incoming Pairs 1,803 1.26 2,340 2.00 1,404 1.00 766 2.00 6,313 1.44
+ Import Tariffs on Incoming Pairs 0 0.00 4,680 4.00 0 0.00 0 0.00 4,680 1.07
Cost of Ending Year 11 Inventory 2,801 25.70 661 26.44 8,142 21.43 251 27.89 11,855 22.67
Cost of Branded Pairs Sold in Year 11 34,920 25.70 31,299 26.43 22,496 21.42 11,149 27.87 99,864 25.01
North America Europe-Africa Asia-Pacific Latin America Overall
WAREHOUSE OPERATING EXPENSES $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Inventory Storage Costs 20 0.01 20 0.02 13 0.01 13 0.03 66 0.02
Packaging / Shipping Internet 640 0.47 610 0.52 440 0.42 510 1.27 2,200 0.55
Wholesale 2,443 1.80 2,185 1.85 2,009 1.91 698 1.75 7,335 1.84
Warehouse Lease and Maintenance 1,000 0.74 1,000 0.84 1,000 0.95 1,000 2.50 4,000 1.00
Total Warehouse Operating Expenses 4,103 3.02 3,815 3.22 3,462 3.30 2,221 5.55 13,601 3.41
North America Europe-Africa Asia-Pacific Latin America Overall
INVENTORY CLEARANCE $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair

Net Revenues from Pairs Cleared 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Direct Costs Production/Freight/Tariffs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
of Pairs Inventory Storage 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Cleared Packaging/Shipping 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Margin Over Direct Costs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

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I Company MARKETING & ADMINISTRATIVE REPORT Year 11

Industry 18 (practice)
North America Europe-Africa Asia-Pacific Latin America Overall
MARKETING EXPENSES $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Internet Advertising1 330 5.16 361 5.92 147 3.34 446 8.75 1,284 5.84
Segments Web Site Maintenance 598 9.34 570 9.34 411 9.34 476 9.33 2,055 9.34
Celebrity Endorsements2 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Total Internet Marketing 928 14.50 931 15.26 558 12.68 922 18.08 3,339 15.18

Wholesale Advertising1 6,670 5.15 6,639 5.91 3,353 3.33 3,054 8.75 19,716 5.23
Segments Rebate Redemption 971 0.75 842 0.75 402 0.40 140 0.40 2,355 0.62
Retailer Support 1,200 0.93 1,200 1.07 600 0.60 600 1.72 3,600 0.95
On-Time Delivery 971 0.75 842 0.75 755 0.75 262 0.75 2,830 0.75
Celebrity Endorsements2 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Total Wholesale Marketing 9,812 7.58 9,523 8.48 5,110 5.08 4,056 11.62 28,501 7.55
1. Total regional advertising expenditures are allocated to internet and wholesale seg- 2. Total expenditures for celebrity endorsements are allocated to internet and whole-
ments based on each segment's percentage of total branded pairs sold in the region. sale segments based on each segment's percentage of total branded pairs sold.
North America Europe-Africa Asia-Pacific Latin America Overall
ADMINISTRATIVE EXPENSES $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair

General Administration 631 0.46 550 0.46 488 0.46 186 0.47 1,855 0.46
Other Corporate Overhead 2,399 1.77 2,090 1.77 1,854 1.77 706 1.77 7,049 1.77
Total Administrative Expenses 3,030 2.23 2,640 2.23 2,342 2.23 892 2.23 8,904 2.23
Total company administrative expenses are allocated to each region based on the region's percentage of total branded pairs sold.

I Company PRIVATE-LABEL REPORT Year 11

Industry 18 (practice)
North America Europe-Africa Asia-Pacific Latin America Company
OFFERS SUBMITTED Market Market Market Market Total
Offers to Private Pairs Offered (000s) 185 pairs 0 pairs 0 pairs 185 pairs pairs
Label Buyers S/Q Rating 3 0 0 3
Bid Price ($ per pair) 35.00 35.00 35.00 35.00

Pairs Offered (000s) 0 pairs 0 pairs 0 pairs 0 pairs 0 pairs

North America Europe-Africa Asia-Pacific Latin America Overall
PRODUCTION SHIPPING $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Production Materials Standard 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Costs Superior 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Labor Regular 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Overtime 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Styling / Features 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Production Run Set-Up 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Other Allocated Costs 1 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Total Production Costs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

Pairs Produced (000s of pairs after rejects) 2 0 pairs 0 pairs 0 pairs 0 pairs 0 pairs

Shipments To N.A. Warehouse 0 pairs 0 pairs 0 pairs 0 pairs 0 pairs

(000s of pairs) E-A Warehouse 0 0 0 0 0
A-P Warehouse 0 0 0 0 0
L.A. Warehouse 0 pairs 0 pairs 0 pairs 0 pairs 0 pairs

1. Best practices, plant supervision, TQM/6-Sigma, plant maintenance, and deprecia- 2. For more private-label production info (rejected pairs, reject rate, number of models,
tion cost allocations based on percentage of total pairs produced before rejects. and S/Q rating) see the Production Statistics section of the Plant Operations Report.
North America Europe-Africa Asia-Pacific Latin America Overall
REVENUES / COSTS / MARGINS $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair

Gross Private-Label Revenues 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

Exchange Rate Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Net Private-Label Revenues 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Direct Production Costs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Costs Exchange Rate Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Freight 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Import Tariffs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Packaging / Shipping 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Margin Over Direct Costs 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00

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I Company INCOME STATEMENT Year 11

Industry 18 (practice)
North America Europe-Africa Asia-Pacific Latin America Overall
CONSOLIDATED INCOME STATEMENT $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair

Segment Revenues Internet 5,120 80.00 4,880 80.00 3,520 80.00 4,080 80.00 17,600 80.00
Wholesale1 62,160 48.00 53,904 48.00 41,246 41.00 14,658 42.00 171,968 45.58
Private-Label 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Gross Revenues from Footwear Sales 67,280 49.51 58,784 49.65 44,766 42.63 18,738 46.85 189,568 47.48
Exchange Rate Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Net Revenues from Footwear Sales 67,280 49.51 58,784 49.65 44,766 42.63 18,738 46.85 189,568 47.48
Operating Cost of Pairs Sold1 34,921 25.70 31,300 26.44 22,497 21.43 11,150 27.88 99,868 25.01
Costs Warehouse Expenses 4,103 3.02 3,815 3.22 3,462 3.30 2,221 5.55 13,601 3.41
Marketing Expenses 10,740 7.90 10,454 8.83 5,668 5.40 4,978 12.45 31,840 7.97
Administrative Expenses 3,030 2.23 2,640 2.23 2,342 2.23 892 2.23 8,904 2.23
Operating Profit (Loss) 14,486 10.66 10,575 8.93 10,797 10.28 -503 -1.26 35,355 8.85

Interest Income (Expenses) -8,178 -2.05

PROFITABILITY & PAYOUT Year 10 Year 11 Other Income (Expenses)2 0 0.00
Earnings Per Share $2.50 $1.90 Pre-Tax Profit (Loss) 27,177 6.81
Dividend Per Share $1.00 $0.00 Income Taxes3 8,153 2.04
Net Profit (Loss) 19,024 4.76
1. These items include revenues collected from and costs associated with inventory liquidated at the beginning of Y11. See the last section of the Distribution & Warehouse Report.
2. This item includes any charitable contributions and/or instructor-imposed fines (appearing as negative) and/or instructor-awarded refunds (appearing as positive).
3. The income tax rate is 30%. If a net loss was recorded in Y10, the loss is carried forward and may offset some or all taxable Y11 profit and reduce Y11 income taxes.

I Company REVENUE-COST-PROFIT PERFORMANCE Year 11

Industry 18 IN THE BRANDED SEGMENTS (practice)
North America Europe-Africa Asia-Pacific Latin America Overall
INTERNET MARKET PERFORMANCE $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Revenues from Internet Sales 4,480 70.00 4,270 70.00 3,080 70.00 3,570 70.00 15,400 70.00
Customer-Paid Shipping Fees 640 10.00 610 10.00 440 10.00 510 10.00 2,200 10.00
Gross Internet Revenues 5,120 80.00 4,880 80.00 3,520 80.00 4,080 80.00 17,600 80.00
Exchange Rate Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Net Internet Revenues 5,120 80.00 4,880 80.00 3,520 80.00 4,080 80.00 17,600 80.00
Operating Cost of Pairs Sold 1,645 25.70 1,613 26.44 943 21.43 1,422 27.88 5,623 25.56
Costs Warehouse Expenses 688 10.75 663 10.87 482 10.95 639 12.53 2,472 11.24
Marketing Expenses 928 14.50 931 15.26 558 12.68 922 18.08 3,339 15.18
Administrative Expenses 143 2.23 136 2.23 98 2.23 114 2.24 491 2.23
Operating Profit (Loss) 1,716 26.81 1,537 25.20 1,439 32.70 983 19.27 5,675 25.80
MARKET STATISTICS Year 10 Year 11 Year 10 Year 11 Year 10 Year 11 Year 10 Year 11 Year 10 Year 11
Pairs Sold (000s) 68 64 68 61 45 44 45 51 226 220
Market Share 8.3% 6.2% 8.3% 5.9% 8.3% 6.1% 8.3% 7.1% 8.3% 6.3%
Operating Profit Margin 26.8% 33.5% 26.6% 31.5% 33.6% 40.9% 25.8% 24.1% 27.9% 32.2%
North America Europe-Africa Asia-Pacific Latin America Overall
WHOLESALE MARKET PERFORMANCE $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair $000s $ / pair
Gross Wholesale Revenues 62,160 48.00 53,904 48.00 41,246 41.00 14,658 42.00 171,968 45.58
Exchange Rate Adjustments 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00
Net Wholesale Revenues 62,160 48.00 53,904 48.00 41,246 41.00 14,658 42.00 171,968 45.58
Operating Cost of Pairs Sold 33,276 25.70 29,687 26.44 21,554 21.43 9,728 27.87 94,245 24.98
Costs Warehouse Expenses 3,415 2.64 3,152 2.81 2,980 2.96 1,582 4.53 11,129 2.95
Marketing Expenses 9,812 7.58 9,523 8.48 5,110 5.08 4,056 11.62 28,501 7.55
Administrative Expenses 2,887 2.23 2,504 2.23 2,244 2.23 778 2.23 8,413 2.23
Operating Profit (Loss) 12,770 9.86 9,038 8.05 9,358 9.30 -1,486 -4.26 29,680 7.87
MARKET STATISTICS Year 10 Year 11 Year 10 Year 11 Year 10 Year 11 Year 10 Year 11 Year 10 Year 11
Pairs Sold (000s) 1,282 1,295 1,282 1,123 855 1,006 855 349 4,274 3,773
Market Share 8.3% 8.2% 8.3% 7.5% 8.3% 9.6% 8.3% 3.9% 8.3% 8.0%
Operating Profit Margin 18.7% 20.5% 18.4% 16.8% 20.0% 22.7% 6.2% -10.1% 16.4% 17.3%

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I Company BALANCE SHEET & CASH FLOW REPORT Year 11

Industry 18 (practice)

BALANCE SHEET CASH FLOW STATEMENT

ASSETS $000s CASH AVAILABLE IN YEAR 11 $000s
Cash On Hand 21,798 Beginning Cash Balance 5,000
Accounts Receivable (see Note 1) 47,392
Footwear Inventories 11,855 Cash Receipts from Sales (see Note 1) 201,963
Inflows Bank Loans 1-Year 0
Total Current Assets 81,045 5-Year 0
Net Plant Investment (see Note 2) 183,250 10-Year 0
Construction Work in Progress 0 Stock Issues (0 shares issued) 0
Total Fixed Assets 183,250 Sale of Existing Plant Capacity 0
Loan to Cover Overdrafts 0
Total Assets 264,295 Interest on Y10 Cash Balance 105
Total Cash Available from All Sources 207,068
LIABILITIES $000s
Accounts Payable (see Note 3) 10,117 CASH OUTLAYS IN YEAR 11 $000s
Overdraft Loan Payable (see Note 4) 0
1-Year Bank Loan Payable (see Note 5) 0 Payments to Materials Suppliers (see Note 2) 43,129
Current Portion of Long-Term Loans (see Note 6) 16,300 Production Expenses (see Note 3) 44,067
Distribution and Warehouse Expenses 24,594
Total Current Liabilities 26,417 Marketing and Administrative Expenses 40,744
Long-Term Bank Loans Outstanding (see Note 7) 67,100 Capital Plant Upgrade Options Initiated 0
Outlays Purchase of Used Plant Capacity 0
Total Liabilities 93,517 Construction of New Capacity 0
Energy Efficiency Initiatives 0
Beginning Change
SHAREHOLDER EQUITY Balance in Y11 $000s Repayment of Principal Overdraft Loan 0
on Bank Loans (see Note 4) 1-Year Loan 0
Common Stock (see Note 8) 10,000 0 10,000 5-Year Loans 4,800
Additional Capital (see Note 9) 100,000 0 100,000 10-Year Loans 11,500
Retained Earnings (see Note 10) 41,750 +19,028 60,778 Interest Payments on Overdraft Loan 0
Bank Loans 8,283
Total Shareholder Equity 151,750 +19,028 170,778 Stock Repurchases (0 shares repurchased) 0
Income Tax Payments 8,153
Return on Average Equity for Year 11 (see Note 11) 11.8% Dividend Payments to Shareholders 0
Balance Sheet Notes (all dollar and share figures in thousands) Charitable Contributions 0

Note 1: Of the $189,568 net revenues reported in the Y11 income statement, 25% Total Cash Outlays 185,270
have not been collected from customers (and will be collected in Y12).
Note 2: For more details on net plant investment, see the Plant Investment section of Net Cash Balance (at the end of Year 11) 21,798
the Plant Operations Report.
Cash Flow Notes
Note 3: Of the $40,468 in materials used for footwear production in Y11, 25% have not
been paid for (and will be paid for in Y12). Note 1: Receipts from Sales represents 75% of Year 11 revenues and 25% of Year 10
Note 4: Loans for overdrafts are incurred automatically to prevent a negative year-end revenues due to a 3-month lag in receivables collections.
cash balance and carry an interest rate 2% above the rate for 1-year loans. Note 2: Payments to Materials Suppliers represents 75% of the cost of materials used
Note 5: The company's interest rate for a 1-year loan in Y11 was 7.0%. for Y11 production and 25% of teh cost of materials used for Y10 production
due to a 3-month lag in payments made to materials suppliers.
Note 6: This item represents the principal portion of all outstanding 5-year and 10-year
bank loans due to be repaid in Year 12. Note 3: Production Expenses include all Y11 production-related expenses (adjusted for
the exchange rate effects of shipping to regional warehouses) except for
Note 7: Long-term bank loans outstanding: depreciation (which is a non-cash accounting charge).
Out- Annual Year 12
Loan Initial Original Interest standing Principal Interest Note 4: Overdraft and 1-year loans received in Year 10 were repaid in full in Year 11.
Number Year Principal Rate Term Principal Payment Payable Interest on an overdraft loan received in Y10 would also be repaid in Y11.
1 Y7 115,000 8.5% 10-Yr 69,000 11,500 5,865
2 Y9 24,000 7.5% 5-Yr 14,400 4,800 1,080
3 Y0 0 0.0% 0-Yr 0 0 0
4 Y0 0 0.0% 0-Yr 0 0 0
5 Y0 0 0.0% 0-Yr 0 0 0
6 Y0 0 0.0% 0-Yr 0 0 0
7 Y0 0 0.0% 0-Yr 0 0 0
8 Y0 0 0.0% 0-Yr 0 0 0
9 Y0 0 0.0% 0-Yr 0 0 0 SELECTED FINANCIAL STATISTICS
10 Y0 0 0.0% 0-Yr 0 0 0
11 Y0 0 0.0% 0-Yr 0 0 0
12 Y0 0 0.0% 0-Yr 0 0 0 Credit Interest Coverage Ratio (oper. profit interest exp.) 4.32
13 Y0 0 0.0% 0-Yr 0 0 0 Rating Debt-To-Assets Ratio (total debt total assets) 0.32
14 Y0 0 0.0% 0-Yr 0 0 0 Measures Default Risk Ratio (free cash flow principal payments) 1.95
15 Y0 0 0.0% 0-Yr 0 0 0
16 Y0 0 0.0% 0-Yr 0 0 0 Default Risk Rating (see Note 1) Medium
Note 8: There are 10,000 shares issued and outstanding at a par value of $1.00 per Credit Rating (at the end of Year 11) B+
share. The authorized maximum number of shares outstanding is 40,000.
Current Ratio (current assets current liabilities) 3.07
Note 9: Additional Capital represents the amount over and above par value that share- Operating Profit Margin (operating profit net sales revenues) 18.7%
holders have paid to purchase new shares of stock.
Net Profit Margin (after-tax profit net sales revenues) 10.0%
Note 10: Retained Earnings is a summation of all after-tax profits the company has Dividend Payout (dividend per share earnings per share) 0.0%
earned that have not been distributed to shareholders in the form of dividends.
Note 11: The formula for Return After-Tax profit Free Cash Flow (after-tax profit + [depreciation dividends] ) 31,774
on Average Equity is: (Beginning Equity + Ending Equity) 2 Total Principal Payments ($000s to be paid in Year 12) 16,300
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.

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