Please advise which project should be accepted based on the calculations and why.

2012 2013 2014 2015 2016 2017 2018 Source 2.40 1.80 115.0 $ 115.0 $ 0.09 115.0 1.20 1.60 1.40 $ 115.0 $ 115.0 $ 115.0 $ $ 35.0 $ 15.0 55% 55% 55% $ 7.00 $ 7.00 $ 7.00 $ $ 2.00 $ 2.00 $ 2.00 $ $ 25.0 5 15.0 $ 10.05 8% 8% 8% 25% 25% 20% 20% 20% Sneaker 2013 Assumptions (5 millions) Sales (millions of pairs) Price/Pair Cannibalization Var Costs % of Rev) SG&A Expenses Endorsement Other advertising and promotion A/R (% of net revenue) Inventory (% of Var Costs) A/P (% of Var Costs) Factory Expansion Equipment Freight and Installation Inventory A/P Tax rate Factory MV (Year 6) Equipment MV (Year 6) 55% 7.00 $ 3.00 $ 30.0 5 8% 25% 20% 55% 7.00 $ 2.00 $ 250 $ 55% 7.00 2.00 15.0 25% 25% 20% 0% 0% Case p.2, #2 Case p.2, #3 Case p.2, #4 Case p.3, #8 Case p.3, #9 Case p.3, #10 Case p.3, #11 Case p.3, #7 Case p.3, #7 Case p.3, #7 Case p.2, #5 Case p.3, #6 Case p.3, #6 Case p.3, #7 Case p.3, #7 Case p.3, #7 Case p.2,3, #5 Case p.3, #6 $ $ $ $ $ 150.0 15.0 5.0 15.0 5.0 40% $ 102.0 3.0 MACRS Depreciation %: Factory MACRS Depreciation %: Equipment BV Factory BV Equipment 2.6% 5.0% 4.7% 20.0% 32.0% 19.0% 150.0 $ 146.1 $ 138.6 $ 131.6 $ 20.0 $ 16.0 $ 9.6 S 5.8 $ 4.5% 4.3% 12.0% 11.0% 124.8 $ 118,4 $ 3.4 $ 1.2 $ 4.0% 6.0% 112.4 $ $ Case p.2,3, #5 Case p.3, #6 Original factory cost-cumulative depreciation Original equipment ship inst cost-depreciation Account receiveable Inventory A/P NWC (CA-CL) Cash impact from NWC changes S 8.2 $ 15.0 S 14.2 $ 5.0 S 11.3 $ 10.0 $ 11.1 $ (10.0) $ (1.1) $ 13.5 $ 23.2 $ 18.6 S 18.2 $ (7.1) $ 12.9 $ 22.1 $ 16.6 S 22.1 $ 38.0 S 28.5 S 17.7 $ 30.4 $ 22.8 $ 17.3 29.722.3 $ - 0.9 $ (12.4) $ 7.4 $ 8% of Net Revenue 25% of Var Costs 20% of Var Costs A/R + Inv-A/P $ 22.3 2012 2013 2014 2015 2016 2017 2018 Calculation 103.5 Sneaker Projected Cash Flow Statements ($ millions) Revenues Cannaibalization Net Revenues (after cannabilazation) Var Costs SG & A Xpenses Endorsement Other advertising and promotion Factory Depreciation (39 years MACRS) Equipment Depreciation (5 years MACRS) EBIT Taxes EBIAT Plus Depreciation of Factory Plus Depreciation of Equipment Change in NWC New Factory Equipment, Freight and installation Project Net Cash Flows Cumulative Net Cash Flows $ 138.0 S 184,0 5 161.0 $ 276.0 5 207.0 S $ (35.0) $ (15.0) $ $ $ $ $ 103.0 $ 169.0 $ 161.0 $ 276.0 $ 207,0 $ $ (56.7) $ (93.0) 5 (88.6) $ (151.8) $ (113.9) $ $ (7.0) $ (7.0) S (7.0) $ (7.0) $ (7.0) $ S (2.0) $ (2.0) 5 (2.0) $ (3.0) $ (2.0) $ $ (25.0) $ (15.0) 5 (10.0) $ (30.0) $ (25.0) $ S (3.9) $ (7.5) S (7.1) $ (6.8) 5 (6.5) $ S (4.0) 5 (6.4) S (3.8) S (2.4) S (2.2) S $ 4.4 $ 38.25 42.6 $ 75.1 $ 50.5 S S (1.8) $ (15.3) $ (17.0) $ (30.0) $ (20.0) S $ 2.7 $ 22.9 $ 25.6 $ 45.0 $ 3.0 $ $ 3.9 $ 7.5 $ 7.1 $ $ 6.5 $ $ 4.0 S 6.4 S 3.8 $ 2.4 $ 2.2 S (10,0) $ (1.1) S (7.1) S 0.9 $ (12.4) S 7.4 5 (150.0) $ (20.0) $ (180.0) S 9.5 $ 29.7 $ 37.3 $ 41.8 $ 46.4 S (180.0) S (170.5) $ (140.8) S (103.5) $ (61.7) S (15.4) S Volume sale x Price/Pair Case p.2, #4 Subtotal Var Cost % x Net Revenue Case p.3, #9 Case p.3, #10 Case p.3, #11 Factory Costs x Depreciation % Equipment, Ship, Ins x Depreciation % Subtotal 103.5 (56.9) (7.0) (2.0) (15.0) (6.0) (1.2) 15.4 (6.2) 9.2 6.0 1.2 22.3 106.1 1.8 146.6 131.3 6.8 45 Annual Change $ $ $ S $ Total Project Analysis: Assumed Cost of Capital Payback Net Present Value IRR 0.11 5.10 years $ 13.36 12.82% Year 0 Year 1 Year 2 Year 3 Source UN 350.0 $ 462.9 15% 20% 15% 38% Persistence Assumptions ($ millions) Hiking/Walking market Growth of market Market share Var Costs (% of Sales) SG&A Expenses (% of sales) Other advertising and promotion Tax rate Purchase of technology Equipment costs Inventory & A/R A/P 402.5 $ 15% 18% 38% 10% 2.0 $ 38% 8% 2.0 12% 3.0 $ $ Case p.4, #3 Case p.4, #3 Case p.4, #3 Case p.4, #7 Case p.4, #9 Case p.4, #10 Case p.4, #11 Case p.4, #12 Case p.4, #5 Case p.4, #6 Case p.4, #6 40% $ 50.0 8.0 25.0 $ $ 10.0 Calculation Year 0 Year 1 Year 2 Year 3 Persistence Projected Cash Flow Statements ($ millions) Revenues 52.0 $ 72.5 S 92.6 Var Costs $ (20.0) $ (27.5) $ (35.2) G & A Expenses (6.3) $ (7.2) $ (7.4) Advertising and Promotion $ (3.0) $ (2.0) $ (2.0) Equipment Depreciation (5 years MACRS) $ (1.6) $ (2.6) $ (1.5) Technology Purchase (50.0) $ $ $ EBIT $ (50.0) $ 21.7 S 33.1 $ 46.5 Taxes 20.0 $ (8.7) $ (13.2) $ (18.6) EBIAT $ (30.0) $ 13.0 $ 19.9 $ 27.9 Plus Depreciation of Equipment $ 1.6 $ 2.6 $ 1.5 Change in NWC $ (15.0) $ $ $ 15.0 Change in Fixed Assets $ (8.0) Project Net Cash Flows $ (53.0) $ 14.6 $ 22.4 $ 46.7 Cumulative Net Cash Flows $ (53.0) $ (38.4) $ (16.0) $ 30.7 Market share x market size Revenue x Var Cost % Revenue x % Line 7 Line 8 10 million x Depreciation % Pre tax cost Subtotal Tax impact Subtotal Machinery sold for book value Total 0.14 Project Analysis: Assumed Cost of Capital Payback Net Present Value IRR 2.34 years $ 8.59 21.80% 2012 2013 2014 2015 2016 2017 2018 Source 2.40 1.80 115.0 $ 115.0 $ 0.09 115.0 1.20 1.60 1.40 $ 115.0 $ 115.0 $ 115.0 $ $ 35.0 $ 15.0 55% 55% 55% $ 7.00 $ 7.00 $ 7.00 $ $ 2.00 $ 2.00 $ 2.00 $ $ 25.0 5 15.0 $ 10.05 8% 8% 8% 25% 25% 20% 20% 20% Sneaker 2013 Assumptions (5 millions) Sales (millions of pairs) Price/Pair Cannibalization Var Costs % of Rev) SG&A Expenses Endorsement Other advertising and promotion A/R (% of net revenue) Inventory (% of Var Costs) A/P (% of Var Costs) Factory Expansion Equipment Freight and Installation Inventory A/P Tax rate Factory MV (Year 6) Equipment MV (Year 6) 55% 7.00 $ 3.00 $ 30.0 5 8% 25% 20% 55% 7.00 $ 2.00 $ 250 $ 55% 7.00 2.00 15.0 25% 25% 20% 0% 0% Case p.2, #2 Case p.2, #3 Case p.2, #4 Case p.3, #8 Case p.3, #9 Case p.3, #10 Case p.3, #11 Case p.3, #7 Case p.3, #7 Case p.3, #7 Case p.2, #5 Case p.3, #6 Case p.3, #6 Case p.3, #7 Case p.3, #7 Case p.3, #7 Case p.2,3, #5 Case p.3, #6 $ $ $ $ $ 150.0 15.0 5.0 15.0 5.0 40% $ 102.0 3.0 MACRS Depreciation %: Factory MACRS Depreciation %: Equipment BV Factory BV Equipment 2.6% 5.0% 4.7% 20.0% 32.0% 19.0% 150.0 $ 146.1 $ 138.6 $ 131.6 $ 20.0 $ 16.0 $ 9.6 S 5.8 $ 4.5% 4.3% 12.0% 11.0% 124.8 $ 118,4 $ 3.4 $ 1.2 $ 4.0% 6.0% 112.4 $ $ Case p.2,3, #5 Case p.3, #6 Original factory cost-cumulative depreciation Original equipment ship inst cost-depreciation Account receiveable Inventory A/P NWC (CA-CL) Cash impact from NWC changes S 8.2 $ 15.0 S 14.2 $ 5.0 S 11.3 $ 10.0 $ 11.1 $ (10.0) $ (1.1) $ 13.5 $ 23.2 $ 18.6 S 18.2 $ (7.1) $ 12.9 $ 22.1 $ 16.6 S 22.1 $ 38.0 S 28.5 S 17.7 $ 30.4 $ 22.8 $ 17.3 29.722.3 $ - 0.9 $ (12.4) $ 7.4 $ 8% of Net Revenue 25% of Var Costs 20% of Var Costs A/R + Inv-A/P $ 22.3 2012 2013 2014 2015 2016 2017 2018 Calculation 103.5 Sneaker Projected Cash Flow Statements ($ millions) Revenues Cannaibalization Net Revenues (after cannabilazation) Var Costs SG & A Xpenses Endorsement Other advertising and promotion Factory Depreciation (39 years MACRS) Equipment Depreciation (5 years MACRS) EBIT Taxes EBIAT Plus Depreciation of Factory Plus Depreciation of Equipment Change in NWC New Factory Equipment, Freight and installation Project Net Cash Flows Cumulative Net Cash Flows $ 138.0 S 184,0 5 161.0 $ 276.0 5 207.0 S $ (35.0) $ (15.0) $ $ $ $ $ 103.0 $ 169.0 $ 161.0 $ 276.0 $ 207,0 $ $ (56.7) $ (93.0) 5 (88.6) $ (151.8) $ (113.9) $ $ (7.0) $ (7.0) S (7.0) $ (7.0) $ (7.0) $ S (2.0) $ (2.0) 5 (2.0) $ (3.0) $ (2.0) $ $ (25.0) $ (15.0) 5 (10.0) $ (30.0) $ (25.0) $ S (3.9) $ (7.5) S (7.1) $ (6.8) 5 (6.5) $ S (4.0) 5 (6.4) S (3.8) S (2.4) S (2.2) S $ 4.4 $ 38.25 42.6 $ 75.1 $ 50.5 S S (1.8) $ (15.3) $ (17.0) $ (30.0) $ (20.0) S $ 2.7 $ 22.9 $ 25.6 $ 45.0 $ 3.0 $ $ 3.9 $ 7.5 $ 7.1 $ $ 6.5 $ $ 4.0 S 6.4 S 3.8 $ 2.4 $ 2.2 S (10,0) $ (1.1) S (7.1) S 0.9 $ (12.4) S 7.4 5 (150.0) $ (20.0) $ (180.0) S 9.5 $ 29.7 $ 37.3 $ 41.8 $ 46.4 S (180.0) S (170.5) $ (140.8) S (103.5) $ (61.7) S (15.4) S Volume sale x Price/Pair Case p.2, #4 Subtotal Var Cost % x Net Revenue Case p.3, #9 Case p.3, #10 Case p.3, #11 Factory Costs x Depreciation % Equipment, Ship, Ins x Depreciation % Subtotal 103.5 (56.9) (7.0) (2.0) (15.0) (6.0) (1.2) 15.4 (6.2) 9.2 6.0 1.2 22.3 106.1 1.8 146.6 131.3 6.8 45 Annual Change $ $ $ S $ Total Project Analysis: Assumed Cost of Capital Payback Net Present Value IRR 0.11 5.10 years $ 13.36 12.82% Year 0 Year 1 Year 2 Year 3 Source UN 350.0 $ 462.9 15% 20% 15% 38% Persistence Assumptions ($ millions) Hiking/Walking market Growth of market Market share Var Costs (% of Sales) SG&A Expenses (% of sales) Other advertising and promotion Tax rate Purchase of technology Equipment costs Inventory & A/R A/P 402.5 $ 15% 18% 38% 10% 2.0 $ 38% 8% 2.0 12% 3.0 $ $ Case p.4, #3 Case p.4, #3 Case p.4, #3 Case p.4, #7 Case p.4, #9 Case p.4, #10 Case p.4, #11 Case p.4, #12 Case p.4, #5 Case p.4, #6 Case p.4, #6 40% $ 50.0 8.0 25.0 $ $ 10.0 Calculation Year 0 Year 1 Year 2 Year 3 Persistence Projected Cash Flow Statements ($ millions) Revenues 52.0 $ 72.5 S 92.6 Var Costs $ (20.0) $ (27.5) $ (35.2) G & A Expenses (6.3) $ (7.2) $ (7.4) Advertising and Promotion $ (3.0) $ (2.0) $ (2.0) Equipment Depreciation (5 years MACRS) $ (1.6) $ (2.6) $ (1.5) Technology Purchase (50.0) $ $ $ EBIT $ (50.0) $ 21.7 S 33.1 $ 46.5 Taxes 20.0 $ (8.7) $ (13.2) $ (18.6) EBIAT $ (30.0) $ 13.0 $ 19.9 $ 27.9 Plus Depreciation of Equipment $ 1.6 $ 2.6 $ 1.5 Change in NWC $ (15.0) $ $ $ 15.0 Change in Fixed Assets $ (8.0) Project Net Cash Flows $ (53.0) $ 14.6 $ 22.4 $ 46.7 Cumulative Net Cash Flows $ (53.0) $ (38.4) $ (16.0) $ 30.7 Market share x market size Revenue x Var Cost % Revenue x % Line 7 Line 8 10 million x Depreciation % Pre tax cost Subtotal Tax impact Subtotal Machinery sold for book value Total 0.14 Project Analysis: Assumed Cost of Capital Payback Net Present Value IRR 2.34 years $ 8.59 21.80%