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PLANT OPERATIONS REPORT   Year 10

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

PlantEurope-Africa

PlantAsia-Pacific

PlantLatin America

PlantAll PlantsCombined

Plant Capacity at the End of Year 9+ New Construction (initiated in Year 9)+ Capacity Purchased (at beginning of Y10)

 – Capacity Sold-Off (at beginning of Y10)Capacity Available for Year 10 Production

New Construction Initiated in Year 10Total Capacity Available for Year 11

2,000   pairs

2,000   pairs

000

2,000

0

0  pairs

0  pairs

0000

0

4,000   pairs

4,000   pairs

000

4,000

0

0  pairs

0  pairs

0000

0

6,000  pairs

6,000  pairs

000

6,000

0

Plan t Up grade ——–Options Online(initiated prior to Y10)

Pending (initiated in Y10) nonenone nonenone nonenone nonenone

PLANT INVESTMENT ($000s)  North America

PlantEurope-Africa

PlantAsia-Pacific

PlantLatin America

PlantAll PlantsCombined

Gross Investment at the End of Year 9+ Upgrade Options (initiated in Year 9)+ New Construction (initiated in Year 9)+ Capacity Purchased (at beginning of Y10)

 – Capacity Sold-Off (at beginning of Y10)+ Energy Efficiency Initiatives (in Y10)

Gross Investment in Year 10 Capacity – Accumulat ed Depreciation (through Y9) – Current Depreciation (incurred in Y10)

Net Investment in Year 10 Capacity

Upgrade and Construction Work in Progress

75,0000000

75,00023,750

3,75047,500

0

00000

0000

0

180,0000000

180,00022,500

9,000148,500

0

00000

0000

0

255,00000000

255,00046,25012,750

196,000

0

LABOR STATISTICS  Year 9 Year 10

North America

 Year 9 Year 10

Europe-Africa

 Year 9 Year 10

Asia-Pacific

 Year 9 Year 10

Latin America

Compensat ion ——–($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 non-rejected pair)

3,979 4,000475 501

14.9 15.04.8 5.1

19.7 20.1

1.25 1.25

0 00 0

0.0 0.00.0 0.00.0 0.0

0.00 0.00

2,475 2,5001,400 1,412

2.8 2.80.9 0.93.7 3.7

0.40 0.40

0 00 0

0.0 0.00.0 0.00.0 0.0

0.00 0.00

Cumulat ive Best ——–Practices

$ Per Worker $ Per Branded Pair 

1,0000.25

00.00

5000.20

00.00

PRODUCTION STATISTICS   Branded P-LabelNorth America

Branded P-LabelEurope-Africa

Branded P-LabelAsia-Pacific

Branded P-LabelLatin America

Branded P-LabelOverall

Fo ot wear ———–Production

(000s of pairs)

Regular Pairs ProducedOvertime Pairs Produced

Rejected PairsNet Footwear Production

Reject Rate (% of regular + OT production)Number of Models Produced

S/Q Rating of Pairs Produced

1,766 2340 152

89 161,677 370

5 .0 % 4 .0 %200 100

5 ☆   4☆

0 00 00 00 0

0.0% 0.0%0 0

0 ☆   0☆

3,133 3940 0

220 242,913 370

7 .0 % 6.0%200 100

5 ☆   4☆

0 00 00 00 0

0.0% 0.0%0 0

0 ☆   0☆

4,899 6280 152

309 404,590 740

6.3% 5.1%

Capacity Utilization (max utilization at full OT = 120%)   107.6% 0.0% 88.2% 0.0% 94.7%

BRANDED PRODUCTION COSTS   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

This section listscosts for brandedproduction only.Private-Labelproduction costsare listed on thePrivate-LabelOperations report.

Materials Costs —– StandardSuperior 

Labor Costs —– Regu lar PayOvertime Pay

Best Practices TrainingPlant SupervisionEnhanced Styling/FeaturesTQM/6-Sigma Quality ProgramProduction Run Set-UpPlant MaintenanceDepreciation

Total Production CostsCost of Rejected Pairs

4,874 2.9111,444 6.82

8,732 5.210 0.00

363 0.222,468 1.472,000 1.19

821 0.496,000 3.583,848 2.293,079 1.84

43,629 26.022,198 1.32

0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00

0 0.000 0.00

8,647 2.9720,302 6.97

4,669 1.600 0.00

557 0.192,508 0.862,000 0.691,776 0.616,000 2.067,193 2.477,992 2.74

61,644 21.164,329 1.48

0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00

0 0.000 0.00

13,521 2.9531,746 6.9213,401 2.92

0 0.00920 0.20

4,976 1.084,000 0.872,597 0.57

12,000 2.6111,041 2.4111,071 2.41

105,273 22.946,527 1.42

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PLANT OPERATIONS REPORT   Year 10

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

PlantEurope-Africa

PlantAsia-Pacific

PlantLatin America

PlantAll PlantsCombined

Plant Capacity at the End of Year 9+ New Construction (initiated in Year 9)+ Capacity Purchased (at beginning of Y10)

 – Capacity Sold-Off (at beginning of Y10)Capacity Available for Year 10 Production

New Construction Initiated in Year 10Total Capacity Available for Year 11

2,000   pairs

2,000   pairs

000

2,000

0

0  pairs

0  pairs

0000

0

4,000   pairs

4,000   pairs

000

4,000

0

0  pairs

0  pairs

0000

0

6,000  pairs

6,000  pairs

000

6,000

0

Plan t Up grade ——–Options

Online (initiated prior to Y10)Pending (initiated in Y10)

nonenone

nonenone

nonenone

nonenone

PLANT INVESTMENT ($000s)  North America

PlantEurope-Africa

PlantAsia-Pacific

PlantLatin America

PlantAll PlantsCombined

Gross Investment at the End of Year 9+ Upgrade Options (initiated in Year 9)+ New Construction (initiated in Year 9)+ Capacity Purchased (at beginning of Y10)

 – Capacity Sold-Off (at beginning of Y10)+ Energy Efficiency Initiatives (in Y10)

Gross Investment in Year 10 Capacity – Accumulat ed Depreciation (through Y9) – Current Depreciation (incurred in Y10)

Net Investment in Year 10 Capacity

Upgrade and Construction Work in Progress

75,0000000

75,00023,750

3,75047,500

0

00000

0000

0

180,0000000

180,00022,500

9,000148,500

0

00000

0000

0

255,00000000

255,00046,25012,750

196,000

0

LABOR STATISTICS   Year 9 Year 10North America

 Year 9 Year 10Europe-Africa

 Year 9 Year 10Asia-Pacific

 Year 9 Year 10Latin America

Compensat ion ——–($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 non-rejected pair)

3,979 4,000475 501

14.9 15.04.8 5.1

19.7 20.1

1.25 1.25

0 00 0

0.0 0.00.0 0.00.0 0.0

0.00 0.00

2,475 2,5001,400 1,412

2.8 2.80.9 0.93.7 3.7

0.40 0.40

0 00 0

0.0 0.00.0 0.00.0 0.0

0.00 0.00

Cumulat ive Best ——–Practices

$ Per Worker $ Per Branded Pair 

1,0000.25

00.00

5000.20

00.00

PRODUCTION STATISTICS   Branded P-LabelNorth America

Branded P-LabelEurope-Africa

Branded P-LabelAsia-Pacific

Branded P-LabelLatin America

Branded P-LabelOverall

Fo ot wear ———–Production

(000s of pairs)

Regular Pairs ProducedOvertime Pairs Produced

Rejected PairsNet Footwear Production

Reject Rate (% of regular + OT production)

Number of Models Produced

S/Q Rating of Pairs Produced

1,766 2340 152

89 161,677 370

5 .0 % 4 .0 %

200 100

5 ☆   4☆

0 00 0

0 00 0

0.0% 0.0%

0 0

0 ☆   0☆

3,133 3940 0

220 242,913 370

7 .0 % 6.0%

200 100

5 ☆   4☆

0 00 0

0 00 0

0.0% 0.0%

0 0

0 ☆   0☆

4,899 6280 152

309 404,590 740

6.3% 5.1%

Capacity Utilization (max utilization at full OT = 120%)   107.6% 0.0% 88.2% 0.0% 94.7%

BRANDED PRODUCTION COSTS   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

This section listscosts for brandedproduction only.Private-Labelproduction costs

are listed on thePrivate-LabelOperations report.

Materials Costs —– StandardSuperior 

Labor Costs —– Regu lar PayOvertime Pay

Best Practices TrainingPlant SupervisionEnhanced Styling/FeaturesTQM/6-Sigma Quality Program

Production Run Set-UpPlant MaintenanceDepreciation

Total Production Costs

Cost of Rejected Pairs

4,874 2.9111,444 6.82

8,732 5.210 0.00

363 0.222,468 1.472,000 1.19

821 0.49

6,000 3.583,848 2.293,079 1.84

43,629 26.02

2,198 1.32

0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00

0 0.000 0.000 0.000 0.00

0 0.00

8,647 2.9720,302 6.97

4,669 1.600 0.00

557 0.192,508 0.862,000 0.691,776 0.61

6,000 2.067,193 2.477,992 2.74

61,644 21.16

4,329 1.48

0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00

0 0.000 0.000 0.000 0.00

0 0.00

13,521 2.9531,746 6.9213,401 2.92

0 0.00920 0.20

4,976 1.084,000 0.872,597 0.57

12,000 2.6111,041 2.4111,071 2.41

105,273 22.94

6,527 1.42

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MARKETING & ADMINISTRATIVE REPORT   Year 10

MARKETING EXPENSES   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

Internet ————–Segments

AdvertisingWeb Site MaintenanceCelebrity Endorsements

Total Internet Marketing

353 5.191,192 17.53

0 0.001,545 22.72

353 5.191,192 17.53

0 0.001,545 22.72

175 3.89788 17.51

0 0.00963 21.40

175 3.89788 17.51

0 0.00963 21.40

1,056 4.673,960 17.52

0 0.005,016 22.19

Who lesale ———Segments

AdvertisingRebate RedemptionRetailer SupportOn-Time DeliveryCelebrity Endorsements

Total Wholesale Marketing

6,647 5.18962 0.75

1,200 0.94962 0.75

0 0.009,771 7.62

6,647 5.18962 0.75

1,200 0.94962 0.75

0 0.009,771 7.62

3,325 3.89342 0.40600 0.70641 0.75

0 0.004,908 5.74

3,325 3.89342 0.40600 0.70641 0.75

0 0.004,908 5.74

19,944 4.672,608 0.613,600 0.843,206 0.75

0 0.0029,358 6.87

1. Total regional advertis ing 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 c elebrity 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 Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

General AdministrationOther Corporate Overhead

Total Administrative Expenses

540 0.401,800 1.332,340 1.73

540 0.401,800 1.332,340 1.73

360 0.401,200 1.331,560 1.73

360 0.401,200 1.331,560 1.73

1,800 0.406,000 1.337,800 1.73

CEOIndustry 8

PRIVATE-LABEL REPORT   Year 10

OFFERS SUBMITTED  North America

MarketEurope-Africa

MarketAsia-Pacific

MarketLatin America

MarketCompany

Total

Offers to Private ————Label Buyers

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

0☆0 pairs

0.000☆

0 pairs

0.000☆

0 pairs

0.000☆

0 pairs

0.00

0 pairs

Pairs Offered (000s)   185 pairs   185 pairs   185 pairs   185 pairs   740 pairs

PRODUCTION SHIPPING   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

Pro du ctio n ———–Costs

Mate rials ————–

Labor ——————–

 Standard Superior  Regular  Overtime

Styling / FeaturesProduction Run Set-UpOther Allocated Costs

Total Production Costs

1,737 4.691,158 3.131,342 3.63

571 1.54

500 1.35625 1.692,307 6.248,240 22.27

0 0.000 0.000 0.000 0.00

0 0.000 0.000 0.000 0.00

1,773 4.791,182 3.19

589 1.590 0.00

500 1.35625 1.692,525 6.827,194 19.44

0 0.000 0.000 0.000 0.00

0 0.000 0.000 0.000 0.00

3,510 4.742,340 3.161,931 2.61

571 0.77

1,000 1.351,250 1.694,832 6.53

15,434 20.86

Pairs Produced (000s of pairs after rejects) 370  pairs   0  pairs   370  pairs   0  pairs   740  pairs

Sh ipments To ———————–(000s of pairs)

N.A. WarehouseE-A WarehouseA-P WarehouseL.A. Warehouse

185  pairs00

185  pairs

0   pairs000   pairs

0  pairs185185

0  pairs

0   pairs000   pairs

185  pairs185185185  pairs

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

2. For more pr ivate-label 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 Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

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

6,475 35.000 0.00

6,475 35.004,120 22.27

0 0.00185 1.00

0 0.00185 1.00

1,985 10.73

6,475 35.000 0.00

6,475 35.003,597 19.44

0 0.00370 2.00740 4.00185 1.00

1,583 8.56

6,475 35.000 0.00

6,475 35.003,597 19.44

0 0.00185 1.00

0 0.00185 1.00

2,508 13.56

6,475 35.000 0.00

6,475 35.004,120 22.27

0 0.00370 2.00

0 0.00185 1.00

1,800 9.73

25,900 35.000 0.00

25,900 35.0015,434 20.86

0 0.001,110 1.50

740 1.00740 1.00

7,876 10.64

Company Operating Reports Copyright © GLO-BUS Software, Inc. Page 3

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

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INCOME STATEMENT   Year 10

CONSOLIDATED INCOME STATEMENT   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

Segment Revenues ——— Intern etWholesalePrivate-Label

Operating —–—Costs

Cost of Pairs SoldWarehouse ExpensesMarketing ExpensesAdministrative Expenses

Gross Revenues from Footwear Sales± Exchange Rate Adjustments

Net Revenues from Footwear Sales

Operating Profit (Loss)

5,780 85.0061,536 48.00

6,475 35.0073,791 48.07

0 0.0073,791 48.07

40,812 26.594,294 2.80

11,316 7.372,340 1.52

15, 029 9.79

5,780 85.0061,536 48.00

6,475 35.0073,791 48.07

0 0.0073,791 48.07

41,409 26.984,294 2.80

11,316 7.372,340 1.52

14, 432 9.40

3,825 85.0035,055 41.00

6,475 35.0045,355 41.80

0 0.0045,355 41.80

23,788 21.923,349 3.095,871 5.411,560 1.44

10,787 9.94

3,825 85.0035,910 42.00

6,475 35.0046,210 42.59

0 0.0046,210 42.59

30,408 28.033,349 3.095,871 5.411,560 1.445,022 4.63

19,210 85.00194,037 45.40

25,900 35.00239,147 45.64

0 0.00239,147 45.64

136,417 26.0315,286 2.9234,374 6.56

7,800 1.4945,270 8.64

PROFITABILITY & PAYOUT   Year 9 Year 10

Earnings Per Share   $2.35 $2. 50Dividend Per Share   $0.94 $1. 00

Interest Income (Expenses)Other Income (Expenses)Pre-Tax Profit (Loss)Income Taxes

Net Profit (Loss)

-9,556 -1.820 0.00

35,714 6.8210,714 2.0425,000 4.77

1. These items include revenues collected from and costs associated with inventory liquidated at the beginning of Y10. See the last sec tion 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 Y9, the loss is carr ied forward and may offset some or all taxable Y10 profit and reduce Y10 income taxes.

CEOIndustry 8

REVENUE-COST-PROFIT PERFORMANCEIN THE BRANDED SEGMENTS

 Year 10

INTERNET MARKET PERFORMANCE   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

Operating ——Costs

Cost of Pairs SoldWarehouse ExpensesMarketing ExpensesAdministrative Expenses

Revenues from Internet SalesCustomer-Paid Shipping FeesGross Internet Revenues

± Exchange Rate AdjustmentsNet Internet Revenues

Operating Profit (Loss)

5,100 75.00680 10.00

5,780 85.000 0.00

5,780 85.00

1,839 27.04731 10.75

1,545 22.72118 1.74

1,547 22.75

5,100 75.00680 10.00

5,780 85.000 0.00

5,780 85.00

1,849 27.19731 10.75

1,545 22.7211 8 1 .7 4

1,537 22.60

3,375 75.00450 10.00

3,825 85.000 0.00

3,825 85.00

1,000 22.22500 11.11963 21.40

78 1.731,284 28.53

3,375 75.00450 10.00

3,825 85.000 0.00

3,825 85.00

1,296 28.80500 11.11963 21.40

78 1.73988 21.96

16,950 75.002,260 10.00

19,210 85.000 0.00

19,210 85.00

5,984 26.482,462 10.895,016 22.19

392 1.735,356 23.70

MARKET STATISTICS   Year 9 Year 10 Year 9 Year 10 Year 9 Year 10 Year 9 Year 10 Year 9 Year 10

Pairs Sold (000s)Market ShareOperating Profit Margin

64 688.3% 8.3%

29.0% 26.8%

64 688.3% 8.3%

28.0% 26.6%

40 458.3% 8.3%

35.0% 33.6%

40 458.3% 8.3%

27.0% 25.8%

208 2268.3% 8.3%

29.5% 27.9%

WHOLESALE MARKET PERFORMANCE   $000s $ / pair North America

$000s $ / pair Europe-Africa

$000s $ / pair Asia-Pacific

$000s $ / pair Latin America

$000s $ / pair Overall

Operating —––Costs

Cost of Pairs SoldWarehouse ExpensesMarketing ExpensesAdministrative Expenses

Gross Wholesale Revenues± Exchange Rate Adjustments

Net Wholesale Revenues

Operating Profit (Loss)

61,536 48.000 0.00

61,536 48.00

34,668 27.043,378 2.639,771 7.622,222 1.73

11,497 8.97

61,536 48.000 0.00

61,536 48.00

34,853 27.193,378 2.639,771 7.622,222 1.73

11,312 8.82

35,055 41.000 0.00

35,055 41.00

19,006 22.232,664 3.124,908 5.741,482 1.736,995 8.18

35,910 42.000 0.00

35,910 42.00

24,622 28.802,664 3.124,908 5.741,482 1.732,234 2.61

194,037 45.400 0.00

194,037 45.40

113,149 26.4712,084 2.8329,358 6.87

7,408 1.7332,038 7.50

MARKET STATISTICS   Year 9 Year 10 Year 9 Year 10 Year 9 Year 10 Year 9 Year 10 Year 9 Year 10

Pairs Sold (000s)

Market ShareOperating Profit Margin

1,209 1,282

8.3% 8.3%19.0% 18.7%

1,209 1,282

8.3% 8.3%20.0% 18.4%

777 855

8.3% 8.3%18.0% 20.0%

777 855

8.3% 8.3%4.0% 6.2%

3,972 4,274

8.3% 8.3%16.2% 16.5%

Company Operating Reports Copyright © GLO-BUS Software, Inc. Page 4

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BALANCE SHEET & CASH FLOW REPORT  Year 10

Cash On Hand   5,000Accounts Receivable (see Note 1)   59,787Footwear Inventories   3,442

Total Current Assets   68,229Net Plant Investment (see Note 2)   196,000Construction Work in Progress   0

Total Fixed Assets   196,000

Total Assets   264,229

Accounts Payable (see Note 3)   12,779Overdraft Loan Payable (see Note 4)   01-Year Bank Loan Payable (see Note 5)   0Current Portion of Long-Term Loans (see Note 6)   16,300

Total Current Liabilities   29,079

Long-Term Bank Loans Outstanding (see Note 7)   83,400

Total Liabilities   112,479

Beginning

Balance

Change

in Y10

Common Stock (see Note 8)   10,000 0   10,000Additional Capital (see Note 9)   100,000 0   100,000Retained Earnings (see Note 10)   26,750 +15,000   41,750

Total Shareholder Equity   136,750 +15,000   151,750

Return on Average Equity for Year 10 (see Note 11)   17.3%

Note 1: Of the $239,147 net revenues reported in the Y10 income statement, 25% havenot been collected from customers (and will be collected in Y11).

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

Note 3: Of the $51,116 in materials used for footwear production in Y10, 25% have notbeen paid for (and will be paid for in Y11).

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

Note 5: The company's interest rate for a 1-year loan in Y10 was 7.0%.

Note 6: This item represents the principal portion of all outstanding 5-year and 10-year bank loans due to be repaid in Year 11.

Note 7: Long-term bank loans outstanding:

LoanNumber 

InitialYear 

OriginalPrincipal

InterestRat e Ter m

Out-standingPrincipal

 AnnualPrincipalPayment

Year 11InterestPayable

1 Y7 115,000 8.5% 10 - Yr 80,500 11,500 6,8432 Y9 24,000 7.5% 5 -Yr 19,200 4,800 1,4403 Y0 0 0.0% 0 -Yr 0 0 04 Y0 0 0.0% 0 -Yr 0 0 05 Y0 0 0.0% 0 -Yr 0 0 06 Y0 0 0.0% 0 -Yr 0 0 07 Y0 0 0.0% 0 -Yr 0 0 08 Y0 0 0.0% 0 -Yr 0 0 09 Y0 0 0.0% 0 -Yr 0 0 0

10 Y0 0 0.0% 0 -Yr 0 0 011 Y0 0 0.0% 0 -Yr 0 0 012 Y0 0 0.0% 0 -Yr 0 0 013 Y0 0 0.0% 0 -Yr 0 0 014 Y0 0 0.0% 0 -Yr 0 0 015 Y0 0 0.0% 0 -Yr 0 0 016 Y0 0 0.0% 0 -Yr 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 after-tax profits the company hasearned that have not been distributed to shareholders in the form of dividends.

Note 11: The formula for Returnon Average Equity is:

 After-Tax 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   2,550

Cash —————–Inflows

Receipts from Sales (see Note 1)   231,164Bank L oan s ———————— 1- Year 

5-Year 10-Year 

0

00

Stock Issues (0 shares issued)   0Sale of Existing Plant Capacity   0Loan to Cover Overdrafts   0Interest on Y9 Cash Balance   64Cash Refunds (awarded by instructor)   0

Total Cash Available from All Sources   233,778

Payments to Materials Suppliers (see Note 2)   49,893Production Expenses (see Note 3)   56,840Distribution and Warehouse Expenses   33,237Marketing and Administrative Expenses   42,174Capita l ———–

Outlays Plant Upgrade Options Initiated   0 Purchase of Used Plant Capacity   0  Construction of New Capacity   0

  Energy Efficiency Initiatives   0Repayment of Princip al ———–on Bank Loans (see Note 4)

Overdraft Loan   01-Year Loan   05-Year Loans   4,80010-Year Loans   11,500

Interest Payment s on ————— Overdraft Lo an   0Bank Loans   9,620

Stock Repurchases (0 shares repurchased)   0Income Tax Payments   10,714Dividend Payments to Shareholders   10,000Charitable Contributions   0Cash Fines  (assessed by instructor)   0

Total Cash Outlays   228,778

Net Cash Balance (at the end of Year 10)   5,000

Note 1: Receipts from Sales represents 75% of Year 10 revenues and 25% of Year 9revenues due to a 3-month lag in receivables collections.

Note 2: Payments to Materials Suppliers represents 75% of the cost of materials usedfor Y10 production and 25% of teh cost of materials used for Y9 production dueto a 3-month lag in payments made to materials suppliers.

Note 3: Production Expenses include all Y10 production-related expenses (adjusted for the exchange rate effects of shipping to regional warehouses) except for depreciation (which is a non-cash accounting charge).

Note 4: Overdraft and 1-year loans received in Year 9 were repaid in full in Year 10.Interest on an overdraft loan received in Y9 would also be repaid in Y10.

CASH AVAILABLE IN YEAR 10 $000s

CASH OUTLAYS IN YEAR 10 $000s

Cash Flow Notes

Credit ————RatingMeasures

 Interest Coverage Ratio (oper. profit ÷ interest exp.)   4.74 Debt-To-Assets Ratio (total debt ÷ total assets)   0.38 Default Risk Ratio (free cash flow ÷ principal payments)   1.70 Default Risk Rating (see Note 1)   Medium Credit Rating (at the end of Year 10)   B+

Current Ratio (current assets ÷ current liabilities)   2.35Operating Profit Margin (operating profit ÷ net sales revenues)   18.9%Net Profit Margin (after-tax profit ÷ net sales revenues)   10.5%Dividend Payout (dividend per share ÷ earnings per share)   40.0%

Free Cash Flow (after-tax profit + [depreciation – dividends] )   27,750Total Principal Payments ($000s to be paid in Year 11)   16,300

Note 1:  A default r isk ratio of 3.00 or higher results in a Low default risk rating, 1.00 to3.00 results in a Medium rating, and below 1.00 results in a High rating.

CASH FLOW STATEMENT

SELECTED FINANCIAL STATISTICS

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