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11/9/15, 11:46 AM
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FOOTWEAR INDUSTRY REPORT Industry 20 Monday, November 9th, 2015 Year 12
Year 12 Scoreboard
Rank
Company Name
InvestorExpectation
Score
Best-In-IndustryScore
OverallScore
Change
from Y11
1 A The Road X 116 98 107 +132 Dynamite Footwear 114 78 96 +103 E Sole Train 114 65 90 –164 B Barefoot 107 60 84 –185 Cynergy 83 45 64 –38
Game-To-Date Scoreboard
Rank
Company Name
InvestorExpectation
Score
Best-In-IndustryScore
OverallScore
BonusPoints
OverallG-T-DScore
1 A The Road X 115 98 107 1 1082 E Sole Train 116 75 96 1 973 Dynamite Footwear 112 78 95 0 954 B Barefoot 111 70 91 1 925 Cynergy 96 58 77 0 77
Investor Expectation ——–Score (I.E.)
Investors and company boards of directors have established annual targets for five key performance measuresand the importance weighting of each: EPS (20 points), ROE (20 points), Stock Price ( 20 points), Credit Rating(20 points), and Image Rating (20 points). Pages 2 and 3 of this report show the investor expectation targets (inparenthesis just under the column heads for each year). The investor expectation score on a performancemeasure is equal to the percentage of the target that was achieved. Achieving higher than targeted performanceresults in additional awards of 0.5% for each 1% overachieved (capped at 40% over the target). Thus the investorexpectation score ranges from 0 to a max of 120 (if all targets are exceeded by 40% or more).
Best-In-Industry ——————Score (B-I-I)
This scoring standard is based on how well each company performs relative to the best-performing company inthe industry on EPS (20 points max), ROE (20 points max), Stock Price (20 points max), Credit Rating (20 pointsmax), and Image Rating (20 points max). In order to get a score of 100 a company must be the best performingcompany in the industry on all five measures, achieve no lower than the investor expectation on EPS, ROE, StockPrice, and Image Rating, and have an A+ Credit Rating.
This measure is used to determine each company's ranking in the Year 12 Scoreboard and the Game-To-DateScoreboard above. The overall score is calculated by combining the Investor Expectation Score and the Best-In-Industry Score into a single score using the 50%-50% weighting as specified by the course instructor.
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INDUSTRY 20 COMPANY PERFORMANCE OVERVIEW YEAR 12
Earnings Per Share ($)
EPS scores are based on a 20% or 20 point weighting. Bold numbers indicate achievement of the investor expected EPS shownbelow each yearly column head. Best-In-Industry performers earn a top score, and scores of other companies are a percentage of theindustry-leading EPS performance. Game-To-Date scores are based on a weighted average of the annual EPS performances.
Y11(2.67)
Y12(2.85)
Y13(3.05)
Y14(3.26)
Y15(3.49)
Y16(3.66)
Y17(3.84)
Y18(4.03)
Y19(4.23)
Y20(4.44)
Wgt. Avg.(2.76)
Y12 ScoreI.E. B-I-I
G-T-D ScoreI.E. B-I-I
A 3.30 7.13 5.22 24 20 24 20 AB 3.88 3.38 3.63 22 9 23 14 BC 4.37 2.41 3.39 17 7 22 13 CD 3.00 5.31 4.15 24 15 24 16 DE 3.98 4.08 4.03 24 11 24 15 E
Return on Equity (%)
ROE scores are based on a 20% or 20 point weighting. Bold numbers indicate achievement of the investor expected ROE shownbelow each yearly column head. Best-In-Industry performers earn a top score, and scores of other companies are a percentage of theindustry-leading ROE performance. Game-To-Date scores are based on a weighted average of the annual ROE performances.
Y11(15.0)
Y12(15.0)
Y13(15.0)
Y14(15.0)
Y15(15.0)
Y16(15.0)
Y17(15.0)
Y18(15.0)
Y19(15.0)
Y20(15.0)
Wgt. Avg.(15.0)
Y12 ScoreI.E. B-I-I
G-T-D ScoreI.E. B-I-I
A 20.3 34.9 28.4 24 20 24 20 AB 22.7 16.6 19.4 21 10 23 14 BC 25.2 11.6 17.8 15 7 22 13 CD 18.0 25.5 22.2 24 15 24 16 DE 23.3 19.4 21.1 23 11 24 15 E
Stock Price ($ per share)
Stock Price scores are based on a 20% or 20 point weighting. Bold numbers indicate achievement of the investor-expected stockprice shown below each yearly column head. Best-In-Industry performers earn a top score, and scores of other companies are apercentage of the industry-leading performance. Game-To-Date scores are based solely on the most recent year's stock price.
Y11(32.00)
Y12(34.25)
Y13(36.75)
Y14(39.25)
Y15(42.00)
Y16(44.25)
Y17(46.25)
Y18(48.75)
Y19(51.25)
Y20(53.50)
Y12 ScoreI.E. B-I-I
G-T-D ScoreI.E. B-I-I
A 56.22 153.94 24 20 24 20 AB 56.79 39.76 22 5 22 5 BC 70.87 33.47 20 4 20 4 CD 36.29 93.48 24 12 24 12 DE 70.48 57.22 24 7 24 7 E
INDUSTRY 20 COMPANY PERFORMANCE OVERVIEW YEAR 12(concluded)
Credit RatingCredit Rating scores are based on a 20% or 20 point weighting. Bolded credit ratings indicate meeting or beating the B+ investorexpectation shown below each column head. For the Best- In-Industry scoring, companies with an A+ credit rating earn a score of 20points and lesser credit ratings earn lower scores. Game-To-Date scores are based soley on the most recent year's credit rating.
Y11(B+)
Y12(B+)
Y13(B+)
Y14(B+)
Y15(B+)
Y16(B+)
Y17(B+)
Y18(B+)
Y19(B+)
Y20(B+)
Y12 ScoreI.E. B-I-I
G-T-D ScoreI.E. B-I-I
A B A– 22 18 22 18 AB A A 23 19 23 19 BC A B 16 14 16 14 CD A– A 23 19 23 19 DE A A 23 19 23 19 E
Image RatingImage Rating scores are based on a 20% or 20 point weighting. Bolded image ratings indicate meeting or beating the yearly targetshown below each column head. Best-In-Industry performers earn top scores; scores of other companies are a percentage of theindustry-leading image rating. Game-To-Date scores are based on company's average image rating over the last three years.
Y11(70)
Y12(70)
Y13(70)
Y14(70)
Y15(70)
Y16(70)
Y17(70)
Y18(70)
Y19(70)
Y20(70)
Y10-Y12Average
Y12 ScoreI.E. B-I-I
G-T-D ScoreI.E. B-I-I
A 79 81 80 22 20 21 20 A B 71 67 70 19 17 20 18 B C 57 52 55 15 13 16 14 C D 57 67 60 19 17 17 15 D E 80 70 77 20 17 21 19 E
Corporate Social Responsibility and Citizenship
Total ($000s) Per Pair Sold ($/unit)
Industry 20 Expenditures for CorporateSocial Responsibility and Citizenship
Image Rating PointsGenerated from
CSRC ExpendituresHigh Avg. Low High Avg. Low High Avg. Low
Beginning in Year 14, the World Council forExemplary Corporate Citizenship presents aGold Star Award to the company spendingthe highest percentage of its revenues forsocial responsibility and citizenship initiatives.
Award Winner 2nd Place
Y14 A Company B CompanyY13 A Company B CompanyY12 none none
—Variance—Image Rating (within ± 4 points) Year 12
Bull's EyeAward
Cumu-lative
AwardsA 423,872 448,367 +5.8 % 6.47 7.13 +10.2 % 78 81 +3 +3.8 % No 0 AB 251,319 242,411 –3.5 % 3.99 3.38 –15.3 % 74 67 –7 –9.5 % No 1 BC 399,269 157,653 –60.5 % 11.68 2.41 –79.4 % 74 52 –22 –29.7 % No 0 CD 332,191 314,001 –5.5 % 6.02 5.31 –11.8 % 74 67 –7 –9.5 % No 0 DE 335,251 293,514 –12.4 % 5.72 4.08 –28.7 % 80 70 –10 –12.5 % No 1 E
Comparisons and Trends in Projected Versus Actual VariancesRange of Average Percent Variances (for Revenues, EPS, and Image Rating) for all Industry 12Companies, World-Wide Average Percent Variance, and Company D Average Percent Variance
Industry High/Low Company D Average World Average
Δ = net change in score between years Highlighted figure = Leap Frog Award winnerY11
Score Δ Y12Score Δ Y13
Score Δ Y14Score Δ Y15
Score Δ Y16Score Δ Y17
Score Δ Y18Score Δ Y19
Score Δ Y20Score
Current-Year ScoresCumu-lative
AwardsA 94 +13 107 0 1 AB 102 –18 84 0 0 BC 102 –38 64 0 0 CD 86 +10 96 0 0 DE 106 –16 90 0 0 E
BULL'S EYE AWARDfor Accurately Forecasting Total Revenues,
Earnings Per Share, and Image Rating
One bonus point added to any company's game-to-date score whenactual performance on Total Revenues and Earnings Per Share vary by nomore than 5% from projected performance AND when Image Ratingvaries by no more than 4 points from the projected image rating.
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 mostimproved over the prior year. If all companies fail to improve their scoresfrom one year to the next, then no Leap Frog bonus is awarded.
Lower than normal (49.7%) superior materals usage lead to superiormaterials prices that were 0.2% below the base and standardmaterials prices that were 0.6% above the base. Capacity utilizationfalse resulted in materials price increases of 0.0%.
Footwear Production (industry totals) N.A.Plants
E-APlants
A-PPlants
L.A.Plants
AllPlants Notes
Total Year 12 Production (000s of pairs) 9,725 0 20,257 3,600 33,582Pairs Rejected 532 0 1,223 237 1,992
Net Year 12 Production (000s of pairs) 9,193 0 19,034 3,363 31,590Superior Materials Usage 47.7% 0.0% 49.2% 58.0% 49.7%Capacity Utilization (branded + private-label) 104.6% 0.0% 101.3% 120.0% 104.0%
! Total pairs produced before rejects! Overall average reject rate = 5.9%! Total pairs available after rejects! % usage unchanged from 0.0 points from
Beginning Y12 Inventories 668 434 563 111 1,776Plus New Pairs Produced in Y12 6,921 7,945 6,999 5,622 27,487
Pairs Available for Sale in Year 12 7,589 8,379 7,562 5,733 29,263
! Unsold pairs from Y11! Average inventory clearance of 23.1%! Incurred a 1-star S/Q rating penalty! New Y12 production shipped from plants! 15.0% higher than Y12 demand
Branded Demand & Sales (industry tot.) N.A.Market
E-AMarket
A-PMarket
L.A.Market
AllMarket Notes
Projected Y12 Demand (000s of pairs) 7,518 7,590 5,346 5,346 25,800Actual Year 12 Demand 7,357 7,389 5,392 5,309 25,449Branded Pairs Sold (internet + wholesale) 6,541 6,840 5,331 5,048 23,760No. of Companies Unable to Fill All Orders 2 1 1 2 not meaningfulUnfilled Orders (000s of pairs ordered but not shipped) 816 550 60 261 1,687
! From page 4 of FIR for Year 11! Actual demand was -1.4% lower than
pro- jected demand due to decreasedcom- petitive intensity.
{ Shows extent to which orders for brand- ed pairs went unfilled due to inventoryshortages at one or more companies.
Global demand for Y11-Y15 is expecrted togrow at a rate of 7%-9% annually, slowingto about 5%-7% annual growth during Y16-Y20. The projected growth rates are not thesame for all four regions, as indicated in thetable on page 4 of the Player's Guide. Actualdemand growth may vary from the forecastdue to increases/decreases in competitiveintensity industry-wide.
Excess supply of 38.0% is likely to produce FIERCEcompetition and hurt industry profitability in Year 13 andbeyond. Construction of new capacity will not beneededfor several years, and it may be wise for some companiesto sell-off unneeded production capacity.
Plant Capacity (000s of pairs of production capacity not including overtime)
Capacity Beginning Year 12N.A. E-A A-P L.A.
Capacity Purchased (Sold)N.A. E-A A-P L.A.
Capacity Available for Y12 ProductionN.A. E-A A-P L.A. Total