Company HotNess!Presentation

Co-Managers:Erica Y. ContrerasMelo J. Encinas

Phoebe Zhu

Trends in Company HotNess! Annual Total

Revenues

$900

HotNess! Net Revenues

$1000

$700

$800

$600

$100

$400

$200

$500

$300

15 16 17Year

10 11 12 20

(millions of dollars)

14 1913 18

250271 258

309331 330

363 364

Trends in Company HotNess! Annual Earnings

Per ShareHotNess! Earnings Per Share

$18.00$20.00

$8.00

–$2.00–$4.00

$6.00

Year = Annual investor expectation of EPS performance.

14 1910 11

(EPS)

$0.00

12 13

$10.00

$16.00$14.00$12.00

2016

$2.00$4.00

15 17 18

2.50

3.412.56 2.18 0.95

-0.24

2.05 2.06

Trends in Company HotNess! Annual Return On Equity

Investment

40%

50%

= Annual investor expectation of ROE performance.

18 19 2012 13Year

10 11

HotNess! Return On Equity(ROE)

14 15 16 17

–10%

–20%

30%

20%

10%

0%

70%

60%

15.0%

20.8%

14.1%11.2%

4.9%

-1.2%

9.9% 9.2%

Trends in Company HotNess! Year-End Stock

Price

$275$250

$200

(dollars per share)

$100

$175$150$125

10

$25

13 14Year

= Annual investor expectation of Stock Price performance.

15 16 17 1811 12 19 20

$225

$325

$50$75

$300

HotNess! Stock Price

30.00

61.54

30.15 23.83 13.78 8.77 20.43 26.18

Trends in Company HotNess! Annual Credit

Rating

Year = Annual investor expectation of Credit Rating performance.

2018 1914 15 16 17

B–

C+

C

C–

A

A–

B+

B

10 11 12 13

HotNess! Credit Rating

A+

Trends in Company HotNess! Annual Image

Rating

40

70

60

50

100

90

HotNess! Image Rating

1714

= Annual investor expectation of Image Rating performance.

15 161310 11 12

80

20Year

18 19

10

30

20

7072

6872

74

69

63 63

Company HotNess! Strategic Vision Statement

HotNess! Athletic Shoe Company is striving everyday to be the customers' choice of athletic footwear in the market. Within the next 5 years we plan on being the customers' top choice by having them recognize our label and our high quality products. By increasing our employee incentives to reduce our overall reject rate, we will increase the overall quality and SQ rating of our products making them a high quality product our customers will find hard to resist. We are also committed to being socially responsible by using recycled packaging as well adapting energy efficiency initiatives in our plants. With all this and our competitive prices, HotNess! Athletic Shoe Company will surely become the next favorite shoe to buy.

Company HotNess! Performance Targets for

Year 19

Earnings Per Share:

Return On Equity:

Stock Price:

Credit Rating:

Image Rating:

Company HotNess! Performance Targets for

Year 20

Earnings Per Share:

Return On Equity:

Stock Price:

Credit Rating:

Image Rating:

Company HotNess! Competitive Strategy for the

Internet Market

Overall Beginning Goals:

Higher model availability

S/Q rating = at least 4, preferably 5

Goal = market share of at least 8.3%

Delivery Time = 2-3 weeks

Advertising = above industry average

Rebate offer = approx. $3

Retailer support = above industry average

Celebrity appeal = Oprah Letterman & Kobe

Company Strategy: Wholesale Market

Y11: (highest market share)

200 models, S/Q rating = 5, 7.6% market share, $2 rebate offer (lowest), 2 week delivery time , industry average advertising ($7,300), sold 1,222 MIL pairs

Y15: (lowest market share)

213 models, S/Q rating = 4, 6.7% market share, $4 rebate offer (higher than industry average), 3 weeks delivery time, lower advertising than industry average, sold 1,303 MIL pairs

Y18: (highest market share since improving)

60 models, S/Q rating = 6, 7.7% market share, $3 rebate offer (lower than industry ave), 2 week delivery time, +14.5% higher than industry ave advertising, sold 1, 564 MIL pairs

Wholesale Market: North America

Wholesale Market: Europe Africa

Y11: (highest market share)

200 models, S/Q rating = 5, 8.3% market share, $2 rebate offer (lowest), 2 week delivery time , +1.4% higher than industry average advertising, sold 1,335 MIL pairs

Y14: (lowest market share)

200 models, S/Q rating = 4, 6.0% market share, $4 rebate offer (higher than industry average), 2 weeks delivery time, + 2.5% higher than industry average advertising, sold 1,097 MIL pairs

Y17: (highest market share since improving)

248 models, S/Q rating = 5, 7.3% market share, $4 rebate offer (lhigher than industry ave), 2 week delivery time, +39.9% higher than industry ave advertising, sold 1, 468 MIL pairs

Y11: (early market share)

200 models, S/Q rating = 5, 8.6% market share, $2 rebate offer (lowest), 3 week delivery time , -11.6% higher than industry average advertising, sold 960 MIL pairs

Y15: (lowest market share)

200 models, S/Q rating = 5, 7.5% market share, $3 rebate offer (higher than industry average), 3 weeks delivery time, -22.3% lower than industry average advertising, sold 1917 MIL pairs

Y15: (highest market share)

171 models, S/Q rating = 4, 9.2% market share, $4 rebate offer (higher than industry ave), 3 week delivery time, +37.6% higher than industry ave advertising, sold 1, 462 MIL pairs

Wholesale Market: Asia Pacific

Y11: (early market share)

200 models, S/Q rating = 5, 8.3% market share, $2 rebate offer (lowest), 3 week delivery time , -9.7% higher than industry average advertising, sold 923 MIL pairs

Y12: (lowest market share)

213 models, S/Q rating = 5, 7.3% market share, $3 rebate offer (lower than industry average), 3 weeks delivery time, -19.1% lower industry average advertising, sold 888 MIL pairs

Y18: (highest market share)

58 models, S/Q rating = 6, 11.0% market share, $4 rebate offer (higher than industry ave), 2 week delivery time, +68.4% higher than industry ave advertising, sold 1, 789 MIL pairs

Wholesale Market: Latin America

Overall Evolving Goals:

Higher model availability => Smallest number of models

S/Q rating = at least 4, preferably 5 => 5

Goal = market share of at least 8.3% => achieved AP (9.2%) & LA (11.0%)

Delivery Time = 2-3 weeks => 2 except in EA (3)

Advertising = above industry average => GREAT

Rebate offer = approx. $3 => $4 except in NA ($3)

Retailer support = above industry average

Celebrity appeal = Oprah Letterman & Kobe

Company Strategy: Wholesale Market

Competitive Strategy:Private-Label Market

Overall:

Competitive Strategy:Production

Overall:

Competitive Strategy:Finance

Overall:

Competitive Strategy:Finance

Dividends: