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Tara Inc.
Tara – A Buddhist savior-goddess with numerous forms.
Emerging Markets
Campbell Harvey
March 8th, 2001
Yves McMullen
Jason Kam
Uche Osuji
James Sherrill
Tara Inc.
In the spring of 2000, while the U.S. capital market was experiencing some trepidation, Tara
Inc. was in the midst of finalizing its largest investment in a foreign country. To facilitate this
investment, the company needed to raise capital in a capital market that was not very
receptive to bolds ideas.
As the sun set over the horizon painting a picturesque view in her office window, Melanie
Hamilton, President of the Tara Inc., checked the company’s ground breaking business plan
for any overlooked mistakes. Satisfied with the correctness of the document, she leaned back
in her chair and reflected on the momentous point in her infant company’s life cycle.
Tomorrow, she has to present the business plan to several strategic investors for alignment
and capital. Miss. Hamilton reassessed the corporate development strategy and how feasible
the business plan is, given the market conditions.
Hamilton’ only comfort was that several international investors were thrilled about her
business plan and had requested a meeting tomorrow. These investors included among others,
the International Finance Corporation, the Christian Children’s Fund, Oxfam and several
African developmental banks. Earlier this morning, the IFC representative had indicated an
interest to raise 75% of the debt financing required if the presentation answered their concerns
with the project. If aligned to the plan, CCF and Oxfam would each present 50% of the
equity needed. The rest of the financing would come from the regional developmental banks.
The Athletic Footwear Investment Opportunity
The investment opportunity that Tara has created is an attempt to forge a working relationship
with organizations that have shared missions, while providing investors with competitive
financial returns. The participants are Tara, International Financial Corporation, Christian
Children’s Fund, Oxfam, and other development banks.
The investment opportunity would be to establish an athletic footwear manufacturing plant in
Gabon with the purpose of designing and marketing footwear abroad. The initial market will
be the United States, where the majority of the market share is held by three
designers/manufacturers.
The Athletic Footwear project of Tara would benefit not only the investors, shareholders, but
will look to add value to the community of Gabon. Infrastructure, agriculture, hospitals,
housing, and schools would be all be areas Tara would invest directly in.
Project Specifics
Melanie and other investors had to consider several project specifics that would allow them to
assess the feasibility of the project. Issues such as types of shoes produced, the prices and
costs associated, initial startup costs, and the corporate tax rate were of prominent concern.
While the athletic footwear industry encompasses several different types of footwear, Tara
has decided to only manufacture and market running shoes and cross trainers. This allows
Tara to focus its resources in a specialize manner. Although running shoes and cross trainers
can be sold at premium to other shoes, Tara plans to sell its shoes at a discount to the market.
In other words, Tara’s price will most likely be around the average for the entire athletic shoe
market.
The costs associated directly with Tara manufacturing are obviously labor, overhead, and
materials. The industry average for cost of sales is approximately 65%. More specifically,
labor is 37% of revenue while material and overhead are 18% and 8% of revenue respective.
Tara expects its labor costs will be lower than that of the industry average but potentially vary
due to changes in the currency and inflation. This, and other key strategic decision, allows
Tara the ability to sell its shoes cheaper than its competitors.
There are also other costs that are not directly linked to Tara’s sales that must be considered.
Tara’s building of its property, plant and equipment are substantial. Tara expects that it will
have to spend approximately $1.5 million for a plot of land near the port. To build the factory
Tara will spend approximately $13 million. This will cover not only the assembly plant but
also the cost of the offices and facilities for the expatriates that are needed to help run the
plant. Once the plant and facilities are up and running, it is assumed that it will cost $100
thousand a year to keep the plant and facilities maintained. It will cost Tara and estimated
$7.4 million to acquire the necessary machinery and $300 thousand to maintain the newest
machines.
To successfully penetrate the athletic shoe industry, Tara will have to spend a substantial
amount to market and sell the shoes. To do so, Tara will need to spend a total of nearly $10
million on marketing costs in the first few years. Afterwards, the initial marketing
expenditure, Tara expects its SG&A budget will level off to closely mirror industry standards,
7% of sales. Additionally, to maintain a level of quality that will be associated with the Tara
brand, the company estimates that it will need to spend approximately $10 million initially to
design a shoe that will be competitive in the US market. Once the initial expenditure is
outlaid, R&D should revert closer to the industry average of 11% of sales.
The tax that will be paid to the government is relatively low. Given that Tara will be operating
in a low tax zone of Gabon, the corporate tax rate is expected to be as low as 2%.
Tara Inc.
Tara is a significant departure from many traditional business models. The Tara model is a
for profit company, with non-profit ideology. For profit, in the sense that all positive NPV
projects would be done and dividends would only be paid out when management deems that
capital is best used with in the “equity holders” hands. Non-profit in the sense that the
company’s benefactors are impoverished people of the host country (in this case Gabon).
The Tara model is:
Identifying an opportunity to grasp a niche market share in a US market.
Gaining investment from key strategic investors.
Developing a production facility in a developing country.
Supporting company operations.
Using company surplus (dividends) to assist in developing an impoverished country.
The inaugural implementation of this model is the creation of an athletic shoe company who
markets their products in the US, but whose production is in Gabon. Tara has chosen to enter
the athletic shoe market for a 4 reasons.
1) There are only three main competitors and few players with a niche marketing
strategy.
2) The products are extremely labor intensive.
3) The market players have all had labor exploitation problems publicized in the media.
4) Simply capturing 1% of the market can create a thriving company.
Product:
Tara will focus on the running and cross-country segment of the shoe market. While a key
strength is the effective means in which the revenues are used, Tara’s mission statement will
highlight the importance of quality and performance issues along with our cheaper shoes.
Fundamentally this is the major concern of our market and will be the focus of Tara’s
products.
Promotion:
Tara has a unique marketing strategy. The cornerstones (but not the only avenue) of this
marketing strategy are Point of Sale advertising (POS), Positive PR and the Internet. The goal
is obviously to remind people that their quality purchases are making a difference. To
achieve this goal, it is essential that we relay the message of both quality and stewardship.
The Internet plays a major roll in that all purchases and donations can be tracked to show
pictures of where the profits are going. POS advertising includes a strong sales force that
deals with retail outlets and informs salesmen on product performance and quality issues (not
to mention traditional POS material).
The Athletic Footwear Industry
The athletic footwear industry has experience unparalleled growth, however, with increasing
competition, and changing consumer preference, designers/manufacturers are beginning to see
their sales steady off.
The athletic footwear industry is reaching the mature portion of its growth curve. It is an
industry that is comprised of various styles of footwear, which includes athletic, casual, dress,
sandals and sport/hiking. The end product in this case (the athletic shoe) can be made of
leather, canvas, or other materials that are either natural or man- made. Thus, it is imperative
that footwear designers/manufacturers understand their customers in order to determine what
is most important: fashion or function. Additionally, designers/manufacturers must invest in
innovative technology to continuously improve comfort and performance.
Competition
With the athletic industry being highly fragmented it is no surprise that the competition is
fierce. With the majority of the market share (approximately 60% of retail sales) being held
by three companies, Nike, Adidas, and Reebok, the remaining portion of the pie is up for
grab. Once in the market, staying becomes the challenge. Below is a breakdown of the
athletic footwear industry. [Exhibit 1]
Trends in the Industry
Sales of footwear increased slightly over 1998 in terms of both dollars and units. Retail sales
in the U.S. footwear market totaled $37.4 billion in 1998 and rose to $38.4 billion in 1999.
An estimated 1.163 billion pairs of shoes were sold in 1999, up about 5.6% from 1.101 billion
pairs in 1998. Analysts forecast that the footwear industry will experience a 2% growth in
2000, which is consistent with what the industry observed in 1999. From there, Tara projects
a conservative 1.5% growth rate into the future. [Exhibit 2]
The athletic footwear industry experienced substantial growth between the 1980's and most of
the 1990's. However, more recently the industry has experienced slowing growth in sales.
Spending for athletic footwear totaled $13.7 billion in 1999, which was down .4% from $13.8
billion in 1998. Additionally, unit volume declined 3.8% to 313 million pairs over the same
period. Given that the unit volume decline was much steeper than the sales decline, one can
assume that consumers were willing to spend more per shoe. The average per-pair price for
this period rose from $42.42 in 1998 to $43.89 in 1999.
According to the Footwear Industries of America, the national footwear association in
Washington, D.C., 94% of the 1.35 billion pairs of non-rubber shoes purchased in the U.S.
were imported. China was the main exporter to the United States, with 75% of all imported
non-rubber footwear. Brazil and Indonesia, with 7% and 5%, respectively, rounded out the top
three.
In 1999, 19% of the retail sales in athletic footwear were from running shoes. Sales rose in
this category by 11% to $2.61 billion. Cross trainers accounted for 15.7% of the retail sales, a
7% decline from 1998. Basketball shoes sales also experienced declining sales of 14%,
decreasing from $2.33 billion in 1998 to $2.00 billion in 1999. The highest growth rate in
sales came from sport sandals, rising 24% to $346 million from $279 million in 1998.
With the increased competition, as mention above, industry participants are examining ways
to lower their costs of sourcing offshore. Thus, recently the use of the Internet as a
distribution channel (e-tailing) has become increasingly popular. Retailers are promoting
their goods on the Internet, and for reasons of convenience, consumers are increasingly
shopping for footwear online. Acknowledging this trend, designers/manufacturers have
begun considering the Internet as a channel of distribution. However, the foremost concern of
designers/manufacturers is what affects will using the Internet have on their relationship with
the traditional bricks-and- mortar retail model?
Tara believes they can position themselves in Niche position and garner 1% of the market for
running and cross trainers. There base case forecasts show no more than 1% of the market.
Additionally, Tara has identified a 10% chance that they are forced out of the market by year
2 or are unable to run production properly. If they can get up and going, the upside is they
could acquire nearly 3% of their target market. Finally, since most shoe companies have
some outsourcing and there is demand in the market, there is a chance they can produce up to
80% of their capacity of 8.5 million pairs of shoes.
Republique Gabonaise (Gabon)
Gabon gained its independence as a French colony in 1961. After independence, the country
developed a one-party political system to govern for several decades. Due to corruption,
opposition to the party grew and the first multiparty election was held in September 1990.
Their current president, Omar Bongo has ruled Gabon since 1967, he won re-election fair
democratic race in December 1998. [Exhibit 3]
Gabon has a population of 1.01 million people, comprised of over 40 ethnic groups. Overall
illiteracy rate for people over aged 15 was estimated at 34% of the population in 1992-1998.
Tertiary education is sparse in the country as there are only two universities in the country.
Development of a road network has been hampered by difficult tropical terrain. There is still
no road between the two principal cities, Port-Gentil and Libreville. Road development does
not seem to be a government priority, although they have seen the benefits of transportation
on commerce. For example, the Transgabonais railway brought large economic benefits to
the country by facilitating trade between Franceville area and Congo.
Beyond transportation, the country is endowed with natural energy resources with the fifth
highest estimated hydroelectricity potential in Africa and plentiful oil. Gabon is the Sub-
Saharan third largest oil producer. Oil revenue is 42% of government revenue and 69% of
total exports. With such a dependency on oil, the Gabon economy is extremely vulnerable to
changes in oil prices, as evidenced by the large economic crisis that resulted when oil prices
fell in 1998. Beyond dependency on oil, unemployment is also a significant problem in
Gabon. Unemployment is believed to be around 20-30% in the country. Lastly, Gabon’s
currency (CFA franc) was pegged to the French Franc at CFAfr100:FFr1, which also pegs the
currency to the Euro.
Gabon historically has a very low inflation rate and good fiscal policy. The country is a test-
bed for African banks and showpiece for a well-run government. Recently, the International
Monetary Fund has renewed its relationship with Gabon. With that has come the creation of a
central bank. The currency, having been pegged, in combination with historic low inflation
rate has meant that new businesses are starting to enter. The Government is actively seeking a
way to diversify itself from oil. Finally, the United States is establishing a base and
distribution point to help with Sub-Saharan aid efforts. All this has given Gabon better credit
ratings and a renewed since of confidence of an impoverished nation. [Exhibit 6]
The International Finance Corporation
The International Finance Corporation, a member of the World Bank Group, promotes private
sector investment in developing countries with an objective aimed at reducing poverty and
improving people’s lives. The IFC is the largest multilateral source of loan and equity
financing for private sector projects in developing world. Its share capital is provided by its
174 member countries, which collectively determine its policies and activities.
Since its founding in 1956, and as of June 30, 1999, IFC has committed more than $26.7
billion in financing for its own account and has arranged $17.9 billion in syndications and
underwriting for 2,264 companies in 132 developing countries. Most of these investments,
particularly the manufacturing projects, were in risky country environments.
IFC invests in projects primarily through three types of activities: financing private sector
projects, helping companies in the developing markets to mobilize financing in the
international financial markets, and providing advice and technical assistance to businesses
and governments. To be eligible for IFC funds, projects must be privately owned, be
commercially viable and environmentally sound. Additionally, projects must be economical
beneficial to the host country.
The IFC in Africa
The IFC has implemented a Sub-Saharan Africa strategy that reflects its commitment to
develop individual countries with the potential to become globally competitive.
In 2000, IFC approved almost double that of any previous year at $765 million on its own
account, with $1.25 billion in gross approvals. Its commitments and disbursements reached
$341 and $240 million respectively during FY2000.
Approvals on its own account represent a 214% increase over FY99 figures. As the IFC’s
strategy matures, it expects to deploy more resources toward investments in financial markets,
infrastructure, and small and medium enterprises.
The IFC as an Investor
The IFC offers a basket of financial products and services to companies in its developing
member countries:
Long-term loans in major currencies, at fixed or variable rates
Equity investments
Quasi-equity instruments (subordinated loans, preferred stock, income notes)
Guarantees and standby financing
Risk management (intermediation of currency and interest rate swaps, provision of
hedging facilities)
These instruments can be allocated singly or in whatever combination in necessary to ensure
that the projects are adequately funded from the outset. IFC charges market rates for its
products and does not accept government guarantees. To ensure the participation private
investors and lenders, IFC limits the total amount of debt and equity financing it will provide
for any single project to 25 percent of the estimated project costs. Moreover, IFC will provide
up to 35 percent of the equity capital for a project provided it is not the largest shareholder.
IFC investments typically range from $1 million to $100 million.
For the Tara project, IFC has agreed to assist in raising $35 million in debt, which will be
raised with other development banks. The IFC will provide 75% of the debt while the
development banks will provide the remaining 25%.
Christian Children’s Fund
The Christian Children’s Fund strives to create an environment of hope for needy children of
all cultures and beliefs. CCF programs promote long-term sustainable development and are
designed to help break the cycle of poverty. Founded by a Presbyterian minister who had
witnessed first-hand the devastation arising out of events leading to World War II, CCF began
helping the children of C hina in 1938.
During more than 60 years of service, CCF has succeeded at broadening its scope of
assistance to children around the world. CCF currently assists more than 2.5 million children
in over 30 countries, including the United States. Since its inception, CCF has provided more
than $1.6 billion of program services to children and their communities.
CCF and Tara
As the CCF has grown in geographical reach and number of children covered, other
opportunities to service impoverished people were being considered. The major concern of
CCF is that its mission is not jeopardized in any form or fashion. Although several projects
have been presented to CCF, none of the projects have proven to be consistent with its
mission.
On February 3, 2000, Melanie Hamilton met with the executive board of CCF. Her intentions
were to present the Tara project and show how the project was consistent with the CCF’s
mission. First, the Tara project was designed to create value for its shareholders. Second,
customers would be able to track where their dollars were being allocated by use of the
Internet. This was similar to CCF’s Annual Impact Monitoring and Evaluation System,
which allow the CCF to measure the impact of contributors’ assistance on each sponsored
child. Moreover, the Tara project objective is focused on bringing economic stability to the
impoverished people of the host country, Gabon. If the CCF decides to invest in the project,
or has its large sponsors fund the project, they would assume a 50% equity position.
Oxfam
Oxfam International was founded in 1995 with the aim of addressing structural causes of
poverty and related injustices across the globe. As of January 2000, Oxfam International
consisted of 11 autonomous non-government organizations. Member organizations are
diverse cultures, history, and language, but have a common commitment.
Through a concerted effort, Oxfam International attempts to target influential players in
governments and institutions such as the World Bank, United Nations, and International
Monetary Fund, to construct policies that affect the lives of millions of poor people.
Oxfam works primarily through local organizations in different countries. As a group, in
1997/8, Oxfam International raised $390 million in the U.S. alone to support the fight against
poverty in more than a hundred countries around the world.
Oxfam International organizes planning, management, implementation and evaluation of
projects and allows people from the participating groups or communities to run or influence
the projects at different levels. Oxfam tends to base their partnerships on a supportive
relationship where partners themselves propose, conceive, plan, manage, implement and co-
evaluate the projects. For example, Oxfam International has implemented procedures to
ensure women and, where relevant, other marginalized people can significantly influence the
projects.
Oxfam International is built upon five fundamental economic and social rights:
A sustainable livelihood
Basic social services
Life and security
The right to be heard
An identity
Oxfam and Tara
The Athletic Footwear project of Tara would be Oxfam’s first investment directly in a private
company. However, Oxfam believes that Tara’s shared mission and the financial and
economic returns are substantial. Oxfam is slated to also have a 50% portion of the necessary
20 million U.S. dollars Tara is looking to raise. [Exhibit 7]
Conclusion
With the majority of the strategic pieces in place, Melanie had to prepare her model and
presentation to the boards of each shareholder. She had to provide evidence that this project
would result in both financial and economic returns for the shareholders.
Melanie wasn’t only worried about the feasibility of the project; she was concerned whether
the returns would be substantial enough to account for the risks that would be assumed from
the project. She new her project was idealistic but she also new it could, and would, work.
Under her base case assumptions, her numbers were coming up positive. She also new that
there was other upside potential avenues that could be taken that would insure project success
but she was having trouble quantifying them.
If Melanie Hamilton were to get the required funds, she would have to build a model that
made sense and proved her hypotheses. Then, she would have to answer a series of questions
that would help her prepare for her biggest challenge:
1. What are the risks that the stakeholders are worried about?
2. What are the mitigating factors?
3. What is an appropriate discount rate to use?
4. What is the Financial Return?
5. What is the total expected Economic Return assuming a rational cash balance and no
other positive NPV projects?
6. Do you think the investors will invest?
Tara Inc.
Exhibit 1
YTD as of 03/02/2000
Company Unit Share $ Share
NIKE 34.1% 38.3%
ADIDAS 16.5% 15.0%
REEOK 11.9% 10.7%
NEW BALANCE 8.4% 9.1%
K-SWISS 4.3% 4.2%
TIMBERLAND 2.5% 4.0%
SAUCONY 1.7% 1.5%
VANS 0.5% 0.4%
FILA 0.4% 0.5%
OTHERS 19.7% 16.3%
Category Category Leader YTD Share
Aerobics REEBOK 59.4%
Basketball NIKE 66.9%
Running NIKE 35.1%
Tennis NIKE 23.4%
Walking REEBOK 34.6%
Source: Sportstrendinfo.com
Exhibit 2
U.S. NONRUBBER FOOTWEAR SALES
1991 1992 1993 1994 1995 1996 1997 1998 1999
BILLIONS OF DOLLARS
Men's 13.0 13.7 14.1 15.0 14.5 15.4 16.5 17.4 16.8
Women's 15.7 15.4 14.9 14.3 15.0 16.3 16.2 12.8 18.0
Boys' 1.5 1.5 1.4 1.4 1.3 1.7 1.7 1.6 1.6
Girls' 1.0 1.0 1.0 0.9 1.0 1.2 1.1 1.1 1.1
Infants' 0.9 0.8 0.8 0.8 0.7 0.8 0.8 0.8 0.9
Total 32.1 32.4 32.2 32.4 32.5 35.4 36.3 33.7 38.4
M ILLIONS OF PAIRS
Men's 256.4 272.5 282.1 300 294.5 308.6 320.1 341.1 340
Women's 541.2 524.3 511.3 494.6 509.1 559.3 538.4 560.9 609
Boys' 61.1 62.1 60.4 62.9 57.1 73.6 78 74.9 78.1
Girls' 59.3 59.6 59.8 58.6 60.6 69.7 68.3 69.2 76.1
Infants' 54.1 53 51.9 50.7 49.1 53.9 53 54.8 59.5
Total 972.1 971.5 965.5 966.8 970.4 1,065.1 1,057.8 1,100.9 1,162.7
AVERAGE PRICE ($) 32.93 33.36 33.38 33.56 33.50 33.13 34.30 34.16 33.03
Source: Footwear News , Footwear Market Insights.
Exhibit 3
• Population: 1.14 MM
• GDP Growth: 1.9%
• GDP/Capita: $3,915 US
• Inflation Rate: 2.9%
• Short Term Interest Rates:
22%
• Unemployment Rate: 22%
• Exchange Rate: US$1:
647CFAF
Exhibit 4
Tara Inc.
Gabon Data (MM$) Historic EIU Estimate
1996 1997 1998 1999 2000 2001 2002
US$ GDP 2782 2816 2745 2721
Real GDP Growth (%) 3.6 5.7 3.4 (9.6) 1.2% -2.5% -0.90%
GDP/Capita (US$) 5214.5 4759.2 3908.0 3,915
Consumer Price Inflation (Avg) 0.88% 4.68% 0.30% -1.3% 1.5% 1.0% 1.0%
Consumer Price Inflation (Year End) 2.9% 3.0% 3.4% (0.8) 1.5 0.5 0.5
Short Term Interest Rates 22.0 22.0 22.0 22.0 21.0 20.0 17.0
Government Balance (% of GDP) 1.3 1.1 0.4 (6.6) 0.8 10.6 4.0
Export of goods fob (US$ bn) 3.2 3.1 1.9 2.4 3.4 2.5 2.0
Imports of goods fob (US$ bn) 1.0 1.0 1.1 0.8 1.0 1.1 1.0
Current-account balance (US$ bn) 0.1 (0.01) (0.02) (0.1) 0.4 0.1 (0.4)
Exchange rates (CFAfr:US$ (avg) 511.55 583.67 589.95 615.7 712.0 694.1 624.7
Discount Rate 7.6% 7.0%
Net Foreign Direct Investment (US$ MM)
Institutional Investor Country Risk Rating
Umemployment Rate 18% 21% 23.0% 20.0% 18% 18% 18%
Source: ISI Emerging Markets - The Economist Intellegence Unit
Source:Ministry of Economy, Finance, Budget, and Privatization
Source: CIA World Fact Book
Exhibit 5
Exhibit 6
R eal Y ields and Institutional Investor C ountry
C redit R atings from 1990 through 1998:03
14.00%
12.00%
Real Yields
10.00%
8.00% 2
R = 0.8784
6.00%
4.00%
2.00%
0.00%
0 20 40 60 80 100
Rating
Exhibit 7
Source s of Cas h ($ Millions )
Equity
Chris tian Children's Fund $10.00
Oxfam International $10.00
Subordinated Debt
IFC $26.75
Other development $8.25
financial ins titutions
Total $55.00
Additional Relevant Industry Information:
Cash runs at about 18% of revenue
Other income runs about 1% of revenue
Accounts Receivable including doubtful accounts runs at 9.8 of revenue
Inventories run at 15.6% of revenue
Prepaid expenses run at 5.9% of SG&A
Accounts Payable run at 5% of CGS
Accrued Liabilities run at 2% of SG&A
3% U.S. Inflation rate is an adequate assumption
COMPARATIVE COMPANY ANALYSIS - FOOTWEAR
Operating Revenues
Millions $ Compound Growth Rate (%)
Company Yr. End 1994 1995 1996 1997 1998 1999 1-Yr. 5-Yr. 10-Yr.
BROWN SHOE INC. Jan 1,464.6 1,458.9 1,527.8 1,569.3 1,539.9 1,594.1 3.5 1.7 -1.3
K-SWISS INC Dec 154.9 120.3 106.8 116.2 161.5 285.5 76.7 13.0 15.2
NIKE INC May 4,760.0 6,470.6 9,186.5 9,553.1 8,776.9 8,995.1 2.5 13.6 14.9
REEBOK INTERNATIONAL LTD Dec 3,280.4 3,481.4 3,478.6 3,643.6 3,224.6 2,899.9 -10.1 -2.4 4.8
STRIDE RITE Nov 523.9 496.4 448.3 515.7 539.4 572.7 6.2 1.8 2.3
Net Income
Millions $ Compound Growth Rate (%)
Company Yr. End 1994 1995 1996 1997 1998 1999 1-Yr. 5-Yr. 10-Yr.
BROWN SHOE INC. Jan 33.6 0.7 20.3 -20.9 23.7 35.5 50.0 1.1 1.4
K-SWISS INC Dec 14.9 1.9 0.7 4.2 12.5 34.3 173.3 18.2 21.8
NIKE INC May 399.7 553.2 795.8 399.6 451.4 579.1 28.3 7.7 9.1
REEBOK INTERNATIONAL LTD Dec 254.5 164.8 138.9 135.1 23.9 11.0 -53.8 -46.6 -24.1
STRIDE RITE Nov 19.8 -8.4 2.5 19.8 21.1 26.4 25.5 5.9 -5.4
Source: Apparel & Footwear Industry Survey, Standard & Poor’s, October 5, 2000
COMPARATIVE COMPANY ANALYSIS - FOOTWEAR
Return on Reveneus (%) Return on Assets (%) Return on Equity (%)
Company Yr. End 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999
BROWN SHOE INC. Jan 0.0 1.3 NM 1.5 2.2 0.1 2.9 NM 3.5 5.4 0.3 8.7 NM 11.4 15.2
K-SWISS INC Dec 1.5 0.7 3.6 7.8 12.0 1.8 0.7 4.1 11.6 26.1 2.2 0.9 5.4 15.8 35.1
NIKE INC May 8.5 8.7 4.2 5.1 6.4 15.6 17.1 7.4 8.5 10.4 25.2 28.5 12.5 13.7 17.9
REEBOK INTERNATIONAL LTD Dec 4.7 4.0 3.7 0.7 0.4 10.0 8.1 7.6 1.4 0.7 17.5 21.8 30.4 4.6 2.1
STRIDE RITE Nov NM 0.6 3.8 3.9 4.6 NM 0.7 5.6 6.2 7.8 NM 0.9 7.9 8.6 10.7
Current Ratio Debt/Capital Ratio (%) Debt as a % of Net Working Capital
Company Yr. End 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999
BROWN SHOE INC. Jan 1.7 2.1 1.9 2.0 2.2 30.3 44.4 48.9 43.5 38.5 50.4 65.5 75.7 68.6 60.0
K-SWISS INC Dec 9.7 8.1 5.7 5.5 7.5 0.5 0.5 0.1 0.0 0.0 0.6 0.3 0.1 0.0 0.0
NIKE INC May 1.9 2.1 2.1 2.3 1.7 0.4 8.6 10.4 10.4 13.0 0.8 15.1 20.7 21.2 32.3
REEBOK INTERNATIONAL LTD Dec 3.1 2.8 2.5 2.2 2.0 20.8 67.3 54.2 49.2 41.2 27.9 90.3 72.1 74.0 59.8
STRIDE RITE Nov 3.3 3.1 2.8 3.0 2.8 0.3 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0
Price/Earnings Ratio (High-Low) Earnings Per Share ($) Book Value Per Share ($)
Company Yr. End 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999
BROWN SHOE INC. Jan NM-NM 20-10 NM-NM 15-9 11-6 0.04 1.15 -1.19 1.34 1.99 12.92 13.19 11.04 11.95 13.69
K-SWISS INC Dec 75-35 NM-70 28-14 14-7 19-3 0.14 0.05 0.35 1.15 3.12 6.00 6.13 6.36 7.34 10.04
NIKE INC May 19-9 24-12 55-27 33-19 32-18 1.88 2.68 1.38 1.59 2.10 6.81 9.30 9.85 10.30 NA
REEBOK INTERNATIONAL LTD Dec 19-12 23-13 22-11 79-30 NM-39 2.07 2.00 2.41 0.42 0.20 11.97J 6.83J 8.99J 9.27J 9.4J
STRIDE RITE Nov NM-NM NM-NM 40-25 35-15 24-9 -0.17 0.05 0.40 0.45 0.57 5.29 5.20 5.04 5.20 5.54
Note: J-This amount includes intangibles that cannot be identified.
