global data report

True Religion Apparel, Inc. (TRLG) - Financial and Strategic SWOT Analysis Review

Reference Code: GDRT66451FSA

Source : www.globalcompanyintelligence.com


Reference Code: GDRT66451FSA Publication Date: OCT 2011

2263 East Vernon Avenue Phone +1 323 2663072 Revenue 363.7 (million USD)

Vernon, CA Fax +1 323 2668060 Net Profit 43.50 (million USD)

90058 Website www.truereligionbrandjeans.com Employees 1,663

United States Exchange TRLG [NASDAQ] Industry Retailing

Company Overview True Religion Apparel, Inc. (True Religion) is an US based in-store retailer. The company principally designs, markets, distributes and sells high fashion denim jeans in a wide variety of styles under the True Religion Brand Jeans trademarks. True Religion operates through four reportable business segments, which include US Wholesale; International Wholesale; Consumer Direct Channel; and Other. The company sells its products through retail stores and boutiques in 50 countries across the world including North America, Europe, Asia, Australia, Africa and South America. True Religion Apparel, Inc. was formerly known as Gusana Explorations Inc. It is headquartered in Vernon, California, the US.

Key Executives Name Title

Jeffrey Lubell Chairman

Joseph H. Coulombe Director

G. Louis Graziadio, III Director

Robert L. Harris, II Director

Mark Maron Director Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData

Share Data True Religion Apparel, Inc.

Share Price (USD) as on 10-Oct-2011

30.51

EPS (USD) 1.75

Market Cap (million USD) 779

Enterprise Value (million USD) 608

Shares Outstanding (million) 26 Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData

SWOT Analysis True Religion Apparel, Inc., SWOT Analysis

Strengths Weaknesses

Strong Growth Prospects

Efficient Use of Resources

Reliance on Contract Manufacturing

Increasing Operating Expense

Opportunities Threats

Expansion Strategy

Strategic Agreements

US Economic Slowdown

Changing Fashion Trends

Source: Annual Report, Company Website, Primary and Secondary Research, GlobalData

Financial Performance


Recent Developments Apr 08, 2010 True Religion opens store at The Westchester

in New York

Mar 16, 2010 True Religion inaugurates new retail store in Charlotte, North Carolina

Mar 13, 2010 True Religion to debut in London

Mar 01, 2010 True Religion launches new store in Walnut Creek, California





Table of Contents Table of Contents ............................................................................................................................................................................... 2 List of Tables ...................................................................................................................................................................................... 3 List of Figures ..................................................................................................................................................................................... 3 Section 1 - About the Company .......................................................................................................................................................... 4 True Religion Apparel, Inc. - Key Facts .............................................................................................................................................. 4 True Religion Apparel, Inc. - Key Employees ..................................................................................................................................... 5 True Religion Apparel, Inc. - Key Employee Biographies ................................................................................................................... 6 True Religion Apparel, Inc. - Major Products and Services ................................................................................................................ 7 True Religion Apparel, Inc. - History ................................................................................................................................................... 8 True Religion Apparel, Inc. - Company Statement ............................................................................................................................. 9 True Religion Apparel, Inc. - Locations And Subsidiaries ................................................................................................................. 11

Head Office ................................................................................................................................................................................... 11 Other Locations & Subsidiaries ..................................................................................................................................................... 11

Section 2 – Company Analysis ......................................................................................................................................................... 13 True Religion Apparel, Inc. - Business Description .......................................................................................................................... 13 True Religion Apparel, Inc. - SWOT Analysis ................................................................................................................................... 15

SWOT Analysis - Overview ........................................................................................................................................................... 15 True Religion Apparel, Inc. - Strengths ......................................................................................................................................... 15

Strength - Strong Growth Prospects.......................................................................................................................................... 15 Strength - Efficient Use of Resources ....................................................................................................................................... 15 Strength - Strong Liquidity Position ........................................................................................................................................... 15 Strength - Diversified Product Portfolio ..................................................................................................................................... 15 Strength - Strong Financial Performance .................................................................................................................................. 15

True Religion Apparel, Inc. - Weaknesses .................................................................................................................................... 16 Weakness - Reliance on Contract Manufacturing ..................................................................................................................... 16 Weakness - Increasing Operating Expense .............................................................................................................................. 16

True Religion Apparel, Inc. - Opportunities ................................................................................................................................... 16 Opportunity - Expansion Strategy ............................................................................................................................................. 16 Opportunity - Strategic Agreements .......................................................................................................................................... 16 Opportunity - Rising Popularity of Online Shopping .................................................................................................................. 16 Opportunity - Huge Potential in the Emerging Markets ............................................................................................................. 17

True Religion Apparel, Inc. - Threats ............................................................................................................................................ 17 Threat - US Economic Slowdown .............................................................................................................................................. 17 Threat - Changing Fashion Trends ........................................................................................................................................... 17 Threat - Growing Competitive Market ........................................................................................................................................ 17 Threat - Rising Counterfeit Goods Market ................................................................................................................................. 17

True Religion Apparel, Inc. - Key Competitors ................................................................................................................................. 19 Section 3 – Company Financial Ratios ............................................................................................................................................. 20 Financial Ratios - Capital Market Ratios........................................................................................................................................... 20 Financial Ratios - Annual Ratios ...................................................................................................................................................... 20 Performance Chart ........................................................................................................................................................................... 22 Financial Performance...................................................................................................................................................................... 22 Financial Ratios - Interim Ratios ....................................................................................................................................................... 23 Financial Ratios - Ratio Charts ......................................................................................................................................................... 24




True Religion Apparel, Inc., Recent Deals Summary ....................................................................................................................... 25 Section 4 – Company’s Recent Developments ................................................................................................................................ 26

True Religion Apparel, Inc., Recent Developments ...................................................................................................................... 26 Apr 08, 2010: True Religion opens store at The Westchester in New York............................................................................... 26 Mar 16, 2010: True Religion inaugurates new retail store in Charlotte, North Carolina ............................................................. 26 Mar 13, 2010: True Religion to debut in London ....................................................................................................................... 26 Mar 01, 2010: True Religion launches new store in Walnut Creek, California ........................................................................... 27 Feb 24, 2010: True Religion Apparel reports rise in total net sales ........................................................................................... 27 Feb 23, 2010: True Religion opens its new retail outlet in Portland, Oregon ............................................................................. 28

Section 5 – Appendix ....................................................................................................................................................................... 29 Methodology ................................................................................................................................................................................. 29 Ratio Definitions ............................................................................................................................................................................ 29 About GlobalData ......................................................................................................................................................................... 33 Contact Us .................................................................................................................................................................................... 33 Disclaimer ..................................................................................................................................................................................... 33

List of Tables True Religion Apparel, Inc., Key Facts ............................................................................................................................................... 4 True Religion Apparel, Inc., Key Employees ...................................................................................................................................... 5 True Religion Apparel, Inc., Key Employee Biographies .................................................................................................................... 6 True Religion Apparel, Inc., Major Products and Services ................................................................................................................. 7 True Religion Apparel, Inc., History .................................................................................................................................................... 8 True Religion Apparel, Inc., Other Locations .................................................................................................................................... 11 True Religion Apparel, Inc., Subsidiaries.......................................................................................................................................... 12 True Religion Apparel, Inc., Key Competitors ................................................................................................................................... 19 True Religion Apparel, Inc., Ratios based on current share price .................................................................................................... 20 True Religion Apparel, Inc., Annual Ratios ....................................................................................................................................... 20 True Religion Apparel, Inc., Interim Ratios ....................................................................................................................................... 23 True Religion Apparel, Inc., Recent Deals Summary ....................................................................................................................... 25 Currency Codes ............................................................................................................................................................................... 29 Capital Market Ratios ....................................................................................................................................................................... 29 Equity Ratios .................................................................................................................................................................................... 30 Profitability Ratios ............................................................................................................................................................................. 30 Cost Ratios ....................................................................................................................................................................................... 31 Liquidity Ratios ................................................................................................................................................................................. 31 Leverage Ratios ............................................................................................................................................................................... 32 Efficiency Ratios ............................................................................................................................................................................... 32

List of Figures True Religion Apparel, Inc., Performance Chart (2006 - 2010) ........................................................................................................ 22 True Religion Apparel, Inc., Ratio Charts ......................................................................................................................................... 24




Section 1 - About the Company

True Religion Apparel, Inc. - Key Facts True Religion Apparel, Inc., Key Facts

Corporate Address 2263 East Vernon Avenue, Vernon, CA, 90058, United States

Ticker Symbol, Exchange TRLG [NASDAQ]

Telephone +1 323 2663072 No. of Employees 1,663

Fax +1 323 2668060 Fiscal Year End December

URL www.truereligionbrandjeans.com

Revenue (in USD Million) 363.7

Industry Retailing

Locations Australia, Canada, China, France, Germany, Greece, Italy, Japan, Mexico, Republic of Korea, Spain, Sweden, United Kingdom, United States

Source: Annual Report, Company Website, Primary and Secondary Research GlobalData




True Religion Apparel, Inc. - Key Employees

True Religion Apparel, Inc., Key Employees

Name Job Title Board Level Since Age

Jeffrey Lubell Chairman, Chief Executive Officer

Executive Board

2003 53

Joseph H. Coulombe Director Non Executive Board 2005 78

G. Louis Graziadio, III Director Non Executive Board 2005 59

Robert L. Harris, II Director Non Executive Board 2005 50

Mark Maron Director Non Executive Board 2005 53

Marcello Bottoli Director Non Executive Board 2009 47

Pete Collins Chief Financial Officer Senior Management 2007 44

Michael F. Buckley President Senior Management 2006 45 Source: Annual Report, Company Website, Primary and Secondary Research GlobalData




True Religion Apparel, Inc. - Key Employee Biographies

True Religion Apparel, Inc., Key Employee Biographies

Jeffrey Lubell Job Title: Chairman, Chief Executive Officer Board Level: Executive Board Since: 2003 Age: 53

Mr. Lubell has been the Chairman and Chief Executive Officer of the company since 2003. He is also the President of company’s subsidiary, Guru Denim, Inc. Prior to this, he was the President and the Creative Director (Men’s) of Hippie Jeans based in Commerce, California from 2001 to 2002. Earlier, he was the Vice President and the Creative Director of Jefri Jeans & Bella Dahl, Los Angeles from 1998 to 2001. He served as the President and the Chief Executive Officer of Jeffrey Lubell Textiles from 1998 to 2001.

Pete Collins Job Title: Chief Financial Officer Board Level: Senior Management Since: 2007 Age: 44

Mr. Collins has been the Chief Financial Officer of the company since 2007. Prior to this, he worked as a divisional Vice President, the Corporate Controller and the Principal Accounting Officer for Nordstrom, Inc. from 2004 to 2007. Previously, he led many financial positions with Albertson’s, Inc., from 2002 to 2004.

Michael F. Buckley Job Title: President Board Level: Senior Management Since: 2006 Age: 45

Mr. Buckley has been the President of the company since 2006. Prior to this, he was the President and the Chief Executive Officer of Ben Sherman Group, Ltd.’s North America division. From 1996 to 2001, he served as the Vice President at Diesel Jeans.





True Religion Apparel, Inc. - Major Products and Services True Religion Apparel, Inc. is an in-store and online fashion apparel retailer. The key products offered by the company include the following:

True Religion Apparel, Inc., Major Products and Services

Products:

Apparel:

Jeans

T-Shirts & Tanks

Shirts

Jackets

Fleece

Skirts & Shorts

Shorts

Tops

Bottom

Accessories:

Fragrance

Leather Goods

Hats

Belts

Shoes

Scarves

Gloves

Bags

Brands:

True Religion Brand Jeans





True Religion Apparel, Inc. - History

True Religion Apparel, Inc., History

2008 New Products/Services The company began offering swimwear and fragrance licensee products.

2007 Corporate Changes/Expansions The company started 11 branded retail stores in the US and expanded its retail services.

2007 New Products/Services The company began offering footwear and headwear licensee products in its stores.

2005 Corporate Changes/Expansions Gusana Explorations Inc. was renamed as True Religion Apparel, Inc.

2004 Corporate Changes/Expansions The company started distributing its True Religion Apparel branded products to the premier fashion retailers and expanded its business operations.

2003 Acquisitions/Mergers/Takeovers The company acquired Guru Denim, Inc. and expanded its operations.

2001 Incorporation/Establishment True Religion Apparel, Inc. (True Religion) was incorporated as Gusana Explorations Inc.





True Religion Apparel, Inc. - Company Statement The following statement has been taken from True Religion Apparel, Inc. Management’s Discussion and Analysis. The following statement has been taken from the company’s 10-K 2008 report. We design, market, distribute and sell premium denim apparel, centered on our core denim products using the brand name "True Religion Brand Jeans." Our products include pants, tops, and jackets, made from denim, fleece, corduroy and other fabrics. We are known for our unique fit and styling details. Through multiple wholesale and retail segments, our expanding product line reaches fashion-conscious consumers on six continents, including North America, Europe, Asia, Australia, Africa and South America. Strategic Initiatives We believe that our core strengths have enabled us to be well positioned to expand our business and enhance shareholder value through execution of our strategy and focusing on key strategic initiatives which include: • Expansion of Product Lines—By continually developing innovative products, we strive to continue the sales growth momentum that we have created to date. New jean offerings, such as the Rockstar, Gold Disco, XXX, Stealth and Blacklight groups have been received well by consumers. Likewise, our product line offerings now feature an expanded sportswear collection, including shirts, hoodies, knit tops, jackets and handbags. We added swimwear and fragrance licensed product categories in 2008, supplementing the footwear and headwear licensed product categories that debuted in 2007. By expanding our product range, we are able to offer a more complete collection to our customers, and we are more balanced as fashion trends develop. • Growth of Consumer Direct Segment—Since launching our e-commerce portal and opening our first branded retail store in 2005, the Consumer Direct segment has expanded rapidly and is expected to continue to grow in 2009. We opened 27 stores in 2008, and plan to add approximately 25 stores in 2009. With these additional branded stores by the end of 2009, we expect that the higher margin Consumer Direct segment will continue to drive net sales growth and profitability. • Increase International Presence—We are confident that we are well positioned to further establish True Religion as a global premium apparel and accessories brand through our initiatives domestically and internationally. Since 2003, our merchandise has been sold in international markets through independent distributors and select retailers. In 2008, we established a company-owned business in Japan, our first foreign investment. We established our Japanese subsidiary to serve wholesale customers and open True Religion Brand Jeans stores in Japan. We believe that company-owned branded retail stores in key international markets will provide growth in future years as we showcase our complete product collection, which will increase sales across wholesale and Consumer Direct segments. • Strengthen U.S. Wholesale Sales—Our innovative jeans groups experienced robust net sales growth in the U.S. Wholesale segment in 2008. We will continue to bring new groups and updated styling details to the wholesale accounts, which we expect will solidify our position as a fashion leader in premium jeans. 2008 Compared to 2007 U.S. Wholesale net sales increased 37.6% to $153.2 million. In 2008, our sales to "major" (e.g. Nordstrom, Bloomingdale's) accounts increased 58.1% from the prior year as our consumers reacted favorably to the new jean groups that we introduced in 2008 and the updated styling of our on-going groups. We expect our net sales to majors will decrease by 3% to 5% in 2009 as consumers are impacted by the ongoing U.S. economic recession. We increased our net sales in 2008 to off-price retailers as we exited slower-moving styles and sold basic styles made from prior season fabrics. Our net sales to these customers represented 13.7% of our net sales in 2008 and 10.8% of our net sales in 2007. We expect our net sales to off-price retailers will decrease by 3% to 5% in 2009 as we will depend more on our outlet stores to sell our slower-moving styles. Our net sales to boutique customers decreased 11.4%, as the demand for our 2008 collection was tempered by the impact of the U.S. economic slowdown and our decision to not ship accounts that were past due or suspected of re-selling our merchandise. We expect that our net sales to boutiques will continue to be below the prior year net sales levels as long as the U.S. economy is in a recession. Consumer Direct net sales increased by 157.3% to $75.3 million in 2008. The increase was primarily driven by new store openings. We opened 11 stores in 2007 and 27 stores in 2008, bringing our total to 42 stores at the end of 2008. In addition to the store count increase, our Consumer Direct net sales benefited from the favorable reaction to our 2008 collections and the




expansion of our sportswear and licensed-product offerings, which comprised 24% of our retail store sales in 2008. We expect that this segment's net sales will increase by 60% to 65% in 2009 primarily from the 27 stores opened in 2008 and the 25 stores that we expect to open in 2009. International net sales increased 26.2% to $40.0 million due primarily to increased sales to distributors for Europe and North America. Offsetting this increase was a planned sales decrease in Japan as a result of our transition from a third party distributor to a company-owned subsidiary. Beginning with the spring 2008 season, we started the pre-season selling activities sooner than in the prior year, which we believe contributed to the growth in our international sales along with the favorable customer reaction to our newer collections. Operating Income U.S. Wholesale operating income increased $11.0 million from 2007 to 2008 but decreased as a percentage of U.S. Wholesale net sales from 32.7% in 2007 to 31.0% in 2008. The Consumer Direct operating income increased $15.9 million from 2007 to 2008 but decreased as a percentage of Consumer Direct net sales from 40.6% to 36.9%. This decrease as a percentage of net sales was due primarily to increased operating expenses associated with the expansion of the Consumer Direct segment. International operating income increased to $16.8 million from $14.7 million in 2007 but decreased as a percentage of International net sales from 46.4% in 2007 to 41.9% in 2008 due to costs to establish and ramp up our first international subsidiary, in Japan.




True Religion Apparel, Inc. - Locations And Subsidiaries

Head Office

True Religion Apparel, Inc. 2263 East Vernon Avenue Vernon CA 90058 United States Tel: +1 323 2663072 Fax: +1 323 2668060

Other Locations & Subsidiaries

True Religion Apparel, Inc., Other Locations Scottsdale Fashion Square 7014 E. Camelback Rd. Arizona (AZ) 85251 United States Tel: +1 480 9460359

True Religion Brand Jeans 451 Manhattan Beach Blvd. Manhattan Beach California (CA) 90266 United States Tel: +1 310 4063883

Park Meadows 8405 Park Meadows Center Drive #1125 Lone Tree Colorado (CO) 80124 United States Tel: +1 303 7906067

South Beach 644 Collins Ave Miami Beach Florida (FL) 33139 United States Tel: +1 305 6951919

Lenox Square 3393 Peachtree Road #4015E Atlanta Georgia (GA) 30326 United States Tel: +1 404 8466355

Ala Moana 1450 Ala Moana Blvd #2412 Honolulu Hawaii (HI) 96814 United States Tel: +1 808 9798400

2202 N Halsted Chicago Illinois (IL) 60614 United States Tel: +1 773 2819590

Newbury Street 119 Newbury St. Boston Massachusetts (MA) 02116 United States Tel: +1 617 5853050

Somerset Collection 2800 W. Big Beaver Road Space #Q-11 Troy Michigan (MI) 48084 United States Tel: +1 248 4586031





True Religion Apparel, Inc., Subsidiaries

Guru Denim, Inc.

2263 E Vernon Ave

Los Angeles

California (CA)

90058 1631

United States

Tel: +1 323 266 3072





Section 2 – Company Analysis

True Religion Apparel, Inc. - Business Description True Religion Apparel, Inc. (True Religion) was formerly known as Gusana Explorations Inc. It is engaged in designing, developing, manufacturing, marketing, distribution, and sale of apparels. The company principally designs, markets, distributes and sells high fashion denim jeans in a wide variety of styles under the True Religion Brand Jeans trademarks. During the fiscal year 2008, the company's denim bottoms accounted for 76% of total units sold. In addition to denim jeans, the company also sells corduroy pants and jackets, cotton, twill, linen and velvet pants and jackets, fleece sweat suits and hooded sweatshirts, skirts, knit shirts, t-shirts, shorts and sportswear for men, women and children. Further, the company is planning to launch new styles and styling details in jeans and sportswear category. The company sells its products through stores, specialty retailers, boutiques, distributors, and sales agents. True Religion operates through four reportable business segments namely, US Wholesale; International Wholesale; Consumer Direct Channel; and Other. Under the US Wholesale business segment, the company sells its products to premium stores, specialty retailers and boutiques. The company’s products are sold in major premium stores such as Nordstrom, Bloomingdale's, Neiman Marcus and Saks Fifth Avenue, as well as in more than 900 specialty retailers and boutiques. During the fiscal year 2008, the company generated USD 153.235 million of the total sales from this segment, an increase of 37.6% as compared to USD 111.390 million in 2007. Under the International Wholesale business segment, the company distributes its products to distributors and international sales agents who sell to upscale boutiques in their respective territories. It also distributes its products through a wholly-owned subsidiary, True Religion Japan, KK, which was formed in the second quarter of 2008. The company, through these distributors, offers its products across in Africa, Asia, Australia, Europe, the Middle East, North America and South America. During the fiscal year 2008, the company generated USD 40.044 million of the total sales from this segment, an increase of 26.2% as compared to USD 31.728 million in 2007. Under the Consumer Direct Channel business segment, the company sells its products through its branded retail stores and e-commerce website. As of June 30, 2009, True Religion operated 59 branded retail stores across the US. The company, through Consumer Direct Channel operates stores in street locations, shopping malls and outlet centers. Typical branded retail stores are about 1,600 square feet while branded stores in an outlet center are 2,500 square feet. The company relies on third party for its e-commerce sales and pays them commission for operating the website. These third party operators accept customer orders and fulfill them from their distribution center where they hold the company’s merchandise on consignment. True Religion also markets its products online through third-party sources. During the fiscal year 2008, the company generated USD 75.314 million of the total sales from this segment, an increase of 157.3% as compared to USD 29.268 million in 2007. The company, through its Other business segment, is engaged in licensing business. At the end of 2008, the company's licensed merchandise categories included footwear, fragrances, headwear, and swimwear. Two merchandise categories that were formerly licensed, handbags and outerwear, were transitioned to in-house development, sourcing, and sales in 2008. During the fiscal year 2008, the company generated USD 1.407 million of the total sales from this segment, an increase of 61.7% as compared to USD 0.870 million in 2007. The company has a design team comprising of 26 members and is headed by the Chief Executive Officer. All the business segments share the product design as well as the manufacturing and marketing resources. The company sources its fabrics for its denim products from fabric manufactures located in the US, Italy and Japan. These fabrics are purchased by the contract manufacturers. The company utilizes contract manufacturers located in the US for its denim jeans and other fabrications and brand them as “Made in the U.S.A.” Local manufacturing offers the company advantages such as cost control, faster turnaround of popular styles and lower fixed overhead costs. However, the company’s jackets and children’s products are manufactured in Mexico while shirts and sportswear are manufactured in the Far East. The company targets the fashion conscious, affluent consumers shopping in premium nationwide stores, specialty stores and select boutiques. True Religion Brand Jeans are sold mostly in the price range of USD 172 to USD 350 per pair at retail. The company markets its products, both in the US as well as in the international market through industry trade shows, agreements with sales agency and independent distribution agents. In the US, the company’s sales agent L’Atelier showcases its collections at their showrooms in Los Angeles and New York.

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In March 2009, the company signed a new licensing agreement with Revolution Eyewear Inc., a worldwide eyewear company, to produce and distribute True Religion branded eyewear. Further, in April 2009, the company signed a new licensing agreement with United Legwear Company, LLC to manufacture and distribute True Religion branded legwear. As of June 30, 2009, the company entered into a total of 78 lease agreements, which consists of 73 retail stores in the US, 3 retail stores in Japan and the offices in Vernon, California and Japan. For the first six months ended June 30, 2009, the company generated revenues of USD 135.7 million, an increase of 15.4% as compared to USD 117.6 million the previous year. The operating income and net income too increased by 15.9% and 14.7%, generating USD 31 million and USD 18.6 million, respectively. The strong growth was principally attributed to the continued expansions of consumer direct segment. Further, the gross profit, as a percentage of net sales, increased 420 basis points to 61.5% in the first six months of 2009 from 57.3% the previous year. This was primarily due to the increase in the higher margin consumer direct segment’s net sales.




True Religion Apparel, Inc. - SWOT Analysis

SWOT Analysis - Overview

True Religion Apparel, Inc. (True Religion) is an US based in-store and online fashion apparel retailer. Steady financial growth and diversified product portfolio are its key strengths. Going forward, economic recession and intense competition could impede its growth. However, strategic agreements and rising popularity of online shopping may offer growth opportunities for the company.

True Religion Apparel, Inc. - Strengths

Strength - Strong Growth Prospects

The company was trading at a price/earnings (P/E) ratio of 14.62 at the end of fiscal year 2008. This was above the S&P 500 companies average* of 9.2. A higher than S&P 500 companies average P/E may indicate that the company may have high growth prospects which is reflected in its stock's premium pricing. Investors may be expecting higher earnings growth in the future compared to other companies in the S&P 500 index.

Strength - Efficient Use of Resources

The company's return on equity (ROE) was 31.2% for fiscal year 2008. This was above the S&P 500 companies average* of 12.9%. A higher than S&P 500 companies average* ROE may indicate that the company is efficiently using the shareholders' money and that it is generating high returns for its shareholders compared to other companies in the S&P 500 index.

Strength - Strong Liquidity Position

The company's current ratio was 7.09 at the end of fiscal year 2008. This was above the S&P 500 companies average* of 1.4. The strong current ratio was mainly due to the rise in the company’s total current assets, which increased by 46.77% to USD 131.67 million in 2008. The increase was principally due to the rise in Cash & Equivalents by 99.51% to USD 57.24 million and Cash and Short Term Investments by 82.46% to USD 62.09 million over 2007. Thus a higher than S&P 500 companies average* current ratio indicates that the company is in a strong financial position and is more capable of meeting its short term obligations than other companies in the sector.

Strength - Diversified Product Portfolio

True Religion offers a strong product portfolio in the apparel retail industry, which helps it cater to the needs of a diversified customer base. The company principally designs, markets, distributes and sells high fashion denim jeans in a wide variety of styles under the True Religion Brand Jeans trademark. In addition to denim jeans, it is also sells corduroy pants and jackets, cotton, twill, linen and velvet pants and jackets, fleece sweat suits and hooded sweatshirts, skirts, knit shirts, t-shirts, shorts and sportswear for men, women and children. Further, the company is planning to launch new styles and styling details in jeans and sportswear category. The company currently sell men's, women's and kid's styles. Through branded retail stores, upscale retailers, boutiques and specialty stores, the company’s products are sold in the US and abroad. Thus the diversified product portfolio enables the company to position itself as a leading in-store and online fashion apparel retailer.

Strength - Strong Financial Performance

The company has been exhibiting a strong financial performance over the past few years. Its compounded annual growth rate (CAGR) for revenue was 76.75% during 2004-2008. This was above the S&P 500 companies average* of 11.1%. A higher than S&P 500 companies average* revenue CAGR indicates that the company has outperformed the average S&P 500 companies growth and gained market share over the last four years. Further, for the fiscal year ended December 2008, the company generated USD 270 million, an increase of 55.84% over 2007. Its operating and net profit too increased by 46.10% and 59.35%, generating USD 68.88 million and USD 44.37 million, respectively. The sales growth experienced in 2008 was principally due to the expanded product assortment and the continued growth in Consumer Direct business whose net sales increased 157.3% to USD 75.3 million and the US Wholesale segment whose net sales increased 37.6% to USD 153.2 million. Strong financial growth allows the company to pursue its growth plans and maintain its strong market position.




True Religion Apparel, Inc. - Weaknesses

Weakness - Reliance on Contract Manufacturing

Overdependence on contract manufacturing could cause a concern to the company. True Religion sources its products from independent manufacturers who purchase fabric and other raw materials. In an environment that is characterized by increasing cost pressure and demand for innovative products and speed-to-market, the company depends on independent manufacturers to maintain adequate financial resources, secure a sufficient supply of raw materials as well as maintain sufficient development and manufacturing capacity. The company’s operations are also subject to difficulty while obtaining timely deliver of quality goods. Failure to make timely deliveries to the customers could impose non-compliance charges through invoice deductions or other charge-backs. It could also result in cancellation of orders or reduction in future orders, any of which could negatively impact the company’s sales and margins. The company also does not have material long-term contracts with any of its independent manufacturers. If these manufacturers unilaterally terminate their relationships, the company’s business could be adversely affected.

Weakness - Increasing Operating Expense

The company’s operating expense has grown at a CAGR of 74.42% from 2004 to 2008, thereby impacting its profitability. The rise in operating expenses is primarily due to the increase in the general selling and administrative expenses of the company over the years caused mainly due to the decline in the store sales. Increasing manpower costs too have contributed to the increasing expenses. Further, in 2008, the company's operating margin has declined 170 basis points (bps) over 2007, which may indicate that the company's cost management and pricing strategy is weakening. Thus continued increase in expense could pose a major challenge for the company in sustaining its margins and profitability in the highly competitive retail industry.

True Religion Apparel, Inc. - Opportunities

Opportunity - Expansion Strategy

True Religion believes in expanding its presence in the apparel industry by strengthening its store network and market reach. The company's growth strategy is dependent on its ability to open and operate new stores and the availability of suitable store locations on acceptable terms. As of June 30, 2009, the company operated 59 branded retail stores. During the fiscal year 2009, the company opened 27 branded retail stores and plans to reach a total of 69 by the end of the fiscal year. Further, in the US, the company sells its products through leading national premium stores such as Bloomingdale's, Neiman Marcus, Nordstrom, Saks Fifth Avenue, and in approximately 900 boutique and specialty stores. The company has been expanding its international presence by entering into agreements with various independent agents and distributors. In Japan, the company set up a wholly-owned subsidiary, True Religion Japan, KK in the second quarter of 2008, for the distribution of its products. Thus a strong focus on expanding its operations enables the company to increase its market presence as well as brand equity.

Opportunity - Strategic Agreements

The company augments its internal growth at existing businesses with complementary and strategic agreements. In April 2009, the company signed a new licensing agreement with United Legwear Company, LLC to manufacture and distribute True Religion branded legwear, which includes men’s, women’s and children’s socks, leggings and tights that represents a natural extension of the True Religion Apparel product offerings. Further, in March 2009, the company signed a new licensing agreement with Revolution Eyewear Inc., a worldwide eyewear company, to produce and distribute True Religion branded eyewear. These strategic agreements could further broaden the product portfolio and expand the company's reach into existing and new markets, thereby increasing its revenues.

Opportunity - Rising Popularity of Online Shopping

The rising popularity of online shopping offers a huge growth potential for the company. With life getting busier and Internet penetration getting deeper, the retailing industry is undergoing a change favorable to the industry. Online retailing offers a variety of benefits to the customers like easy and convenient way of selecting the products online, placing order through credit card and doing away from the tiring store trips. According to a report by Forrester, the US online retail sales are expected to rise about 11% to USD 156 billion, in 2009. Earlier, in 2008, online retail sales grew by 13% to USD 141 billion. With this trend, the retailers are set to target the internet savvy customer segment and offer products through their direct online sales terminals. True Religion sells directly to consumers through its retail internet site located at www.truereligionbrandjeans.com. Thus the rising popularity of online shopping allows the company to share the cost advantage with the end customers as the middlemen get eliminated.




Opportunity - Huge Potential in the Emerging Markets

The fast paced growth in the emerging economies offers a huge growth potential for the company by leveraging its strong brand and product portfolio. According to the IMF, the GDP growth rate of advanced economies came down from 2.7% in 2007 to 1% in 2008. Further, it is estimated that almost all these economies will post negative growth in 2009. Despite the global economic slowdown, the emerging and developing economies recorded a GDP growth rate of 6.3% in 2008. The same was 8.3% in the previous year and is estimated to be 3.3% in 2009. China’s GDP grew at 9% while India grew at 7.3% in 2008. The growing economy in these countries has generated new employment opportunities for the residents and has provided a boost to their earnings. This rise in disposable income has changed their buying behavior. Now more and more people are shifting towards lifestyle and fashion goods compared to the basic necessity items earlier. Customers in the emerging countries are moving towards branded goods against the traditional shopping places. Further, China and Brazil are expected to become the two fastest growing luxury markets by 2012. India too is expected to witness a strong growth in this market with many luxury brands making inroads to cash on the rising upper class segment. With the competition at its peak and markets getting saturated, the company can leverage on its high quality and broad assortment of premium apparels to benefit from the rising inclination of consumers in emerging economies.

True Religion Apparel, Inc. - Threats

Threat - US Economic Slowdown

The company faces a major challenge in sustaining its revenue growth due to the slowdown in the US economy caused mainly due to the ongoing sub-prime crisis. As a result, the banks have tightened their credit lending process thereby affecting the consumers’ shopping activity. Their majority earnings are diverted to their home loan and other interest payments, resulting in little disposable income with them. Even the market volatility concerns has made them shop only for basic and essential goods, thereby creating a major challenge for the fashion apparel retailers whose sales have been witnessing a major decline. According to a consumer survey conducted in the US by Harris Interactive, more than half of adults (54%) said that they would reduce discretionary spending during an economic recession and the majority (63%) of adults said they would not make a purchase if there was no deal attached. Further, it is estimated that the GDP in the US will witness a negative growth of 0.2% in 2009. Thus the weak economy might create a major survival challenge for the retailers, especially True religion, whose operations are highly dependent on the US market.

Threat - Changing Fashion Trends

The company’s performance may be impacted by the changing consumer spending pattern. The rate of change in fashion trends has been increasing over the years, thereby forcing companies like True Religion to constantly update its product offerings with the latest market trends. To adopt the latest fashion trends, the customers often shift their loyalties to those brands that offer these trendy merchandises. Thus, the company may lose its dynamic brand image if it fails to change its collection according to the fashion trends and varying customer preferences.

Threat - Growing Competitive Market

The growing competition in the fashion apparel retail could impact the growth of the company. With the rising competition, the retailing industry has been witnessing consolidation wherein the smaller entities are being acquired or merged by the major players. The influx of private labels in the industry is also on the rise. To survive and succeed in a stiff competitive environment, it becomes very important for the company to distinguish its product and service offerings through a clear and unique value proposition. Key competitors of the company include 7 for All Mankind, AG Adriano Goldschmied, Diesel, Levi Strauss & Co., Rock and Republic and Citizens of Humanity. Some of these competitors have a longer operating history, greater brand recognition, established customer and supplier relationships and greater financial resources than the company. Rising competition will also force the company to reduce its prices, which in turn may adversely affect its margins.

Threat - Rising Counterfeit Goods Market

The company’s performance may be affected by the rising influx of counterfeited products in the market. The growing market for counterfeit goods has been on rise across industries and is affecting the sales as well as the image of the established brands. The US Chamber of Commerce estimates a cost of USD 500-600 billion a year on the global economy due to counterfeiting and piracy activities. It accounts for about 5-7% of the world trade. In US alone, these activities result in a yearly sales loss of about USD 200-250 billion, a figure that is steadily increasing. As a result of this, the imitated goods in this industry are eating into the market share of the branded products, especially due to their low price offerings. When the customers buy with copied brand labels, low quality of these counterfeits affects the consumer confidence and also tarnishes the brand image of the genuine company. Thus




the company is prone to these challenges and any underperformance of the counterfeit products will have a major affect on the company’s revenues. NOTE: * Sector average represents top companies within the specified sector The above strategic analysis is based on in-house research and reflects the publishers opinion only




True Religion Apparel, Inc. - Key Competitors

True Religion Apparel, Inc., Key Competitors

Name Headquarters Revenue (US$ m)

American Apparel Inc. United States 533

Blue Holdings, Inc. United States 34

Diesel S.p.A. Italy

Levi Strauss & Co. United States 4,411

Polo Ralph Lauren Corporation United States 5,660 Source: Annual Report, Company Website, Primary and Secondary Research GlobalData




Section 3 – Company Financial Ratios

Financial Ratios - Capital Market Ratios True Religion Apparel, Inc., Ratios based on current share price

Key Ratios 10-Oct-2011

P/E (Price/Earnings) Ratio 17.29

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 8.64

Enterprise Value/Sales 1.67

Enterprise Value/Operating Profit 8.69

Enterprise Value/Total Assets 2.05 Note: Above ratios are based on share price as of 10-Oct-2011, the above ratios are absolute numbers


Financial Ratios - Annual Ratios

True Religion Apparel, Inc., Annual Ratios

Key Ratios Unit/Currency 2006 2007 2008 2009 2010

Equity Ratios

EPS (Earnings per Share) USD 0.92 1.16 1.83 1.92 1.75

Book Value per Share USD 2.76 4.04 5.82 7.84 9.83

Cash Value per Share USD 1.93 1.22 2.34 4.18 6.07

Profitability Ratios

Gross Margin % 53.39 57.04 58.15 62.88 63.23

Operating Margin % 24.90 27.21 25.51 24.95 19.22

Net Profit Margin % 15.48 16.07 16.43 15.22 11.96

Profit Markup % 114.57 132.78 138.94 169.41

PBT Margin (Profit Before Tax) % 25.47 28.25 25.90 25.01 19.34

Return on Equity % 33.90 29.23 31.19 23.92 17.47

Return on Capital Employed % 54.17 48.91 46.57 37.23 26.44

Return on Assets % 27.27 24.59 26.66 20.60 14.70

Return on Fixed Assets % 610.74 200.21 198.03 185.39 132.92

Return on Working Capital % 59.44 64.71 60.89 46.59 33.01

Growth Ratios

Sales Growth % 36.11 23.32 55.84 15.19 16.95

Operating Income Growth % 11.14 34.78 46.10 12.66 -9.89

EBITDA Growth % 13.35 36.79 42.90 11.19 -9.57

Net Income Growth % 17.93 28.05 59.35 6.67 -8.10

EPS Growth % 13.18 26.22 57.24 4.99 -8.82

Working Capital Growth % 93.97 23.79 55.27 47.26 27.18

Cost Ratios

Operating Costs (% of Sales) % 75.10 72.79 74.49 75.05 80.78

Administration Costs (% of Sales) % 28.50 29.83 32.64 37.93 44.01

Liquidity Ratios

Current Ratio Absolute 4.88 5.32 7.09 8.79 7.74

Quick Ratio Absolute 4.26 4.09 5.70 7.18 6.41

Cash Ratio Absolute 2.96 2.02 3.34 5.17 4.89




Leverage Ratios

Net Debt to Equity % -69.96 -30.12 -40.24 -53.34 -61.76

Efficiency Ratios

Asset Turnover Absolute 1.76 1.53 1.62 1.35 1.23

Fixed Asset Turnover Absolute 28.05 14.96 9.64 7.84 7.51

Inventory Turnover Absolute 7.04 3.58 4.38 3.35 3.21

Current Asset Turnover Absolute 1.90 1.93 2.05 1.65 1.50

Capital Employed Turnover Absolute 2.19 1.82 1.90 1.57 1.46

Working Capital Turnover Absolute 2.39 2.38 2.39 1.87 1.72

Revenue per Employee USD 218,710

Net Income per Employee USD 26,155

Capex to Sales % 3.18 5.19 6.77 6.50 4.85 Source: Annual Report, Company Website, Primary and Secondary Research GlobalData




Performance Chart

True Religion Apparel, Inc., Performance Chart (2006 - 2010)


Financial Performance The company reported revenues of (U.S. Dollars) USD 363.71 million during the fiscal year ended December 2010, an increase of 16.95% over 2009. The operating profit of the company was USD 69.92 million during the fiscal year 2010, a decrease of 9.89% from 2009. The net profit of the company was USD 43.50 million during the fiscal year 2010, a decrease of 8.10% from 2009.




Financial Ratios - Interim Ratios

True Religion Apparel, Inc., Interim Ratios

Key Ratios Unit/Currency Jun-2010 Sep-2010 Dec-2010 Mar-2011 Jun-2011

Interim EPS (Earnings per Share) USD 0.30 0.48 0.63 0.36 0.38

Book Value per Share USD 8.54 9.08 9.83 10.01 10.48

Gross Margin % 64.09 62.07 62.90 64.79 65.51

Operating Margin % 14.58 19.84 23.61 15.84 15.44

Net Profit Margin % 9.17 12.70 14.24 9.58 9.60

Profit Markup % 178.50 163.62 169.55 183.98 189.90

PBIT Margin (Profit Before Interest & Tax)

% 14.58 15.84

PBT Margin (Profit Before Tax) % 14.58 20.04 23.79 15.76 16.01

Operating Costs (% of Sales) % 85.42 80.16 76.39 84.16 84.56

Administration Costs (% of Sales) % 44 42.23 39.29 48.94 50.07

Interest Costs (% of Sales) % 0.09

Current Ratio Absolute 8.75 8.26 7.74 10.29 9.08

Quick Ratio Absolute 7.06 6.36 6.41 8.32 7.43

Net Debt to Equity % -55.62 -55.25 -61.76 -60.56 -64.41

Interest Coverage Ratio % 399,400 18,568.75 Source: Annual Report, Company Website, Primary and Secondary Research GlobalData




Financial Ratios - Ratio Charts

True Religion Apparel, Inc., Ratio Charts

EPS Operating Margin

Return on Equity Return on Assets

Current Ratio





True Religion Apparel, Inc., Recent Deals Summary

True Religion Apparel, Inc., Recent Deals Summary

Deal Date Deal Status Deal Type Acquirer (s) / Investor (s)

/Surviving Entity

Target / Issuer / Partner (s)

Vendor Deal Value (US $ million)

09-Mar-2009 Completed Partnership Revolution Eyewear Inc., True Religion Apparel, Inc.

06-Nov-2006 Announced Partnership GMI Corporation, True Religion Apparel, Inc.

Note: Deals include recent 10 deals in the past 24 months. Above data is extracted from GlobalData’s Deals and Alliances Profile.

GlobalData




Section 4 – Company’s Recent Developments

True Religion Apparel, Inc., Recent Developments Apr 08, 2010: True Religion opens store at The Westchester in New York

True Religion Apparel Incorporation has announced the opening of a new branded retail store at The Westchester in White Plains, New York. The 1,500 square feet branded retail store will offer shoppers the entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim, sportswear and handbag collection, and a full range of licensed merchandise. The Westchester is located in the heart of White Plains, with convenient access to I-287 and less than two miles from I-684, which connects White Plains to all of Westchester County. With over 900, 000 square feet of retail space, The Westchester is one of suburban New York City’s premier shopping destinations and is home to many retailers including Neiman Marcus, Nordstrom, Gucci, Tiffany, Louis Vuitton, and Burberry. True Religion Apparel Incorporation is a design-based jeans and jean-related sportswear brand. The company designs, manufactures and markets True Religion Apparel products, including its premium True Religion Brand Jeans. Its expanding product line, which includes denim, sportswear, and licensed products, may be found in contemporary department stores and boutiques in 50 countries around the world, including the US, Canada, Germany, UK, Japan, Korea, France, Spain, Sweden, Greece, Italy, Mexico, Australia, South Africa and China.

Mar 16, 2010: True Religion inaugurates new retail store in Charlotte, North Carolina

US-based apparel retailer True Religion Apparel, Inc., has opened a new retail outlet at SouthPark Mall in Charlotte, North Carolina. The new retail store, which covers a retail space of 1,899 square feet, is located at 4400 Sharon Road. This new store offers entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim, sportswear and handbag collection, and a full range of licensed merchandise. Located in Charlotte's southeast quadrant, SouthPark Mall houses several brands including Neiman Marcus, Tiffany and Burberry. SouthPark Mall has 1.5 million square feet of retail space. This new store is True Religion’s first apparel store in the region. True Religion Apparel, Inc. is a design-based jeans and jean-related sportswear brand. The company designs, manufactures and markets True Religion Apparel products, including its True Religion Brand Jeans.

Mar 13, 2010: True Religion to debut in London

True Religion Apparel, an American premium clothing line has announced that the Company's first branded retail store in the UK is scheduled to open in June of 2010 in London. The new store is located at 27 James Street. The 1,507 square-foot store will be a freestanding location in heart of London's vibrant Covent Garden district. Similar to True Religion branded retail stores in the US, the store will offer shoppers the entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim, sportswear and handbag collection, and a full range of licensed merchandise. True Religion Apparel Incorporation, is a design-based jeans and jean-related sportswear brand. The company designs, manufactures and markets True Religion Apparel products, including its premium True Religion Brand Jeans. Its product line includes fit in denim, sportswear, and licensed products, found in contemporary department stores and boutiques in 50 countries around the world.




Mar 01, 2010: True Religion launches new store in Walnut Creek, California

True Religion Apparel Incorporation, an American clothing line has announced recently the opening of a new branded retail store at Broadway Plaza in Walnut Creek, California. Located at 1275 Broadway Plaza, the 1,476 square-foot branded retail store will offer shoppers the entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim, sportswear and handbag collection, and a full range of licensed merchandise. Broadway Plaza is a 700,000 square foot upscale, open-air shopping destination for the entire East Bay. With over 85 specialty retailers including Nordstrom, Coach, Juicy Couture, Kate Spade, Betsey Johnson and Lacoste, Broadway Plaza maintains the strongest collection of upscale retail brands in the East Bay. True Religion Apparel, Inc. is a jeans and jean-related sportswear brand. The company designs, manufactures and markets True Religion Apparel products, including its premium True Religion Brand Jeans. Its expanding product line may be found in contemporary department stores and boutiques in 50 countries around the world, including the United States, Canada, Germany, United Kingdom, Japan, Korea, France, Spain, Sweden, Greece, Italy, Mexico, Australia, South Africa and China.

Feb 24, 2010: True Religion Apparel reports rise in total net sales

True Religion Apparel, Inc., an apparel retailer based in US has reported 27.2% increase in fourth quarter total net sales, in its fourth quarter and full year financial results ended December 31, 2009. The company reported that, its total net sales were $92.8 million, an increase of 27.2% as compared to $73.0 million in the fourth quarter of 2008. The company’s fourth quarter same-store sales for 36 stores increased 22.3%. The retailer operated 70 branded stores as of December 31, 2009, compared to 42 as of December 31, 2008. Gross profit of the company was $58.7 million, or 63.2% of net sales, compared to $43.3 million, or 59.3% of net sales, in the fourth quarter of 2008. Selling, general and administrative expense of the company increased 48.6% to $34.8 million as compared to $23.4 million in 2008 period. The company also reported that, its operating income increased 20.4% to $23.9 million as compared to $19.8 million in the prior year period. Operating income of the company was 25.7% of sales in fourth quarter 2009 versus 27.2% in fourth quarter 2008. Net income of the company increased 15.2% to $14.6 million, or $0.59 per diluted share based on weighted average shares outstanding of 24.8 million, as compared to $12.7 million, or $0.53 per diluted share based on weighted average shares outstanding of 24.1 million in the 2008 fourth quarter. Total net sales of the company were $311.0 million, an increase of 15.2% as compared to $270.0 million in the 2009 year ended December 31, 2008. Net sales for the company’s consumer direct segment increased 71.3% to $129.0 million as compared to $75.3 million in 2008. Gross profit increased 24.6% to $195.6 million, or 62.9% of net sales, compared to $157.0 million, or 58.1% of net sales, in 2008. Operating income of the company increased 12.7% to $77.6 million, or 25.0% of net sales, from $68.9 million, or 25.5% of net sales, in 2008. Selling, general and administrative expense increased 33.9% to $118.0 million from $88.1 million in 2008, and as a percentage of net sales, increased 530 basis points to 37.9% from 32.6% in 2008. Net income of the company increased 6.7% to $47.3 million, or $1.92 per diluted share based on weighted average shares outstanding of 24.7 million, from $44.4 million, or $1.83 per diluted share based on weighted average shares outstanding of 24.3 million, in 2008. True Religion Apparel, Inc. designs, manufactures and markets True Religion Apparel products, including its True Religion Brand Jeans. The retail chain’s product line includes a wide variety of products in denim and sportswear. These products are found in




contemporary department stores and boutiques in 50 countries around the world, including the US, Canada, Germany, UK, Japan, Korea, France, Spain, Sweden, Greece, Italy, Mexico, Australia, South Africa and China

Feb 23, 2010: True Religion opens its new retail outlet in Portland, Oregon

True Religion Apparel, Inc. an apparel retailer from California has opened its new retail store at Washington Square in Portland, Oregon. The new retail outlet which occupies 1,485 square feet area of retail space is located at 9585 S.W. Washington Square road. This new store will offer the entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim, sportswear and handbag collection, and a full range of licensed merchandise. The new outlet is located at Washington Square, which is spread over 1.5 million square feet of retail space in Washington County. Washington houses over 170 shops and restaurants including Nordstrom, Coach, Apple, Sephora and MetroPark. Located within close proximity to Nike's world headquarters, Washington Square is easily accessible to many of Portland's educated and affluent communities. Over 400,000 residents with average annual household incomes exceeding $80,000 are located within five miles of Washington Square. True Religion Apparel, Inc. designs, manufactures and markets True Religion Apparel products, including its True Religion Brand Jeans. The retailer’s expanding product line includes fit in denim, sportswear, and licensed products, found in contemporary department stores and boutiques in 50 countries around the world, including the US, Canada, Germany, UK, Japan, Korea, France, Spain, Sweden, Greece, Italy, Mexico, Australia, South Africa and China.




Section 5 – Appendix The data and analysis within this report is driven by GlobalData. GlobalData gives you key information to drive sales, investment and deal making activity in your business. Our coverage includes 165,000 + reports on 150,000+ companies (including 100,000+ private) across 200+ countries and 29 industries. The key industries include Alternative Energy, Oil & Gas, Clean Technology, Technology and Telecommunication, Pharmaceutical and Healthcare, Power, Financial Services, Chemical and Metal & Mining.

Methodology

GlobalData company reports are based on a core set of research techniques which ensure the best possible level of quality and accuracy of data. The key sources used include: • Company Websites • Company Annual Reports • SEC Filings • Press Releases • Proprietary Databases Currency Codes

Currency Code Currency

USD U.S. Dollars GlobalData

Ratio Definitions

Capital Market Ratios

Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing stock.

Price/Earnings Ratio (P/E)

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of income, so the stock is more expensive compared to one with lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Price per share is as of previous business close, and EPS is from latest annual report. Calculation: Price per Share / Earnings per Share

Enterprise Value/Earnings before Interest, Tax, Depreciation & Amortization (EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that it is unaffected by a company's capital structure. It compares the value of a business, free of debt, to earnings before interest. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report. Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income + Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because market capitalization does not take into account the amount of debt a company has, which needs to be paid back at some point. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report. Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the operating profit. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report. Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating




Income Enterprise Value/Total Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total assets. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report. Calculation: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets

Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Calculation: Annual Dividend per Share / Price per Share

GlobalData

Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability. Calculation: Net Income / Weighted Average Shares

Dividend per Share

Dividend is the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Dividend Cover

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to shareholders. Calculation: Earnings per share / Dividend per share

Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Calculation: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance sheet) that is determined by dividing cash & equivalents by the total shares outstanding. Calculation: Cash & equivalents / Outstanding Shares

GlobalData

Profitability Ratios

Profitability Ratios are used to assess a company's ability to generate earnings, based on revenues generated or resources used. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

Gross Margin

Gross margin is the amount of contribution to the business enterprise, after paying for direct-fixed and direct-variable unit costs. Calculation: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating efficiency. Calculation: (Operating Income / Revenues) *100

Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that shows how much of each dollar earned by the company is translated into profits. Calculation: (Net Profit / Revenues) *100

Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of revenue. Calculation: Gross Income / Cost of Revenue

PBIT Margin (Profit Before Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest expense & taxation. Calculation: {(Net Profit+Interest+Tax) / Revenue} *100




PBT Margin (Profit Before Tax)

Profit Before Tax Margin measures the pre-tax income over revenues. Calculation: {Income Before Tax / Revenues} *100

Return on Equity Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. Calculation: (Net Income / Shareholders Equity)*100

Return on Capital Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a company's capital investments. ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings. Calculation: EBIT / (Total Assets – Current Liabilities)*100

Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets, the ratio measures how efficient management is at using its assets to generate earnings. Calculation: (Net Income / Total Assets)*100

Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant & equipment). Calculation: (Net Income / Fixed Assets) *100

Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital. Calculation: (Net Income / Working Capital) *100

GlobalData

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs (% of Sales)

Operating costs as percentage of total revenues measures the operating costs that a company incurs compared to the revenues. Calculation: (Operating Expenses / Revenues) *100

Administration costs (% of Sales)

Administration costs as percentage of total revenue measures the selling, general and administrative expenses that a company incurs compared to the revenues. Calculation: (Administrative Expenses / Revenues) *100

Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a company incurs compared to the revenues. Calculation: (Interest Expenses / Revenues) *100

GlobalData

Liquidity Ratios

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

Current Ratio

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. Calculation: Current Assets / Current Liabilities

Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. Calculation: (Current Assets - Inventories) / Current Liabilities




Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only looks at the most liquid short-term assets of the company, which are those that can be most easily used to pay off current obligations. It also ignores inventory and receivables, as there are no assurances that these two accounts can be converted to cash in a timely matter to meet current liabilities. Calculation: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

GlobalData

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.

Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries tend to have a higher debt-equity ratio. Calculation: Total Liabilities / Shareholders Equity

Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. This indicates to investors whether a company is more prone to using debt financing or equity financing. A company with high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and increase its default risk. Calculation: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on outstanding debt, calculated as earnings before interest & tax by interest expense. Calculation: EBIT / Interest Expense

GlobalData

Efficiency Ratios

Efficiency ratios measure a company's effectiveness in various areas of its operations, essentially looking at maximizing its use of resources.

Fixed Asset Turnover

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate sales. A higher ratio indicates the business has less money tied up in fixed assets for each currency unit of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets. Calculation: Net Sales / Fixed Assets

Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue to the company. A higher asset turnover ratio shows that the company has been more effective in using its assets to generate revenues. Calculation: Net Sales / Total Assets

Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to generate sales. Calculation: Net Sales / Current Assets

Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying. Calculation: Cost of Goods Sold / Inventory

Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital to the generation of sales. This provides some useful information as to how effectively a company is using its working capital to generate sales.




Calculation: Net Sales / Working Capital

Capital Employed Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity in generating sales revenue to the company. Calculation: Net Sales / Shareholders Equity

Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related assets' effectiveness when compared to the sales generated. Calculation: (Capital Expenditure / Sales) *100

Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of employees they have. Ideally, a company wants a higher profit per employee possible, as it denotes higher productivity. Calculation: Net Income / No. of Employees

Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a company. This ratio is most useful when compared against other companies in the same industry. Generally, a company seeks the highest revenue per employee. Calculation: Revenue / No. of Employees

Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is good for the bank and its shareholders. Calculation: Non-interest expense / Total Interest Income

GlobalData

Notes • Financial information of the company is taken from the most recently published annual reports or SEC filings • The financial and operational data reported for the company is as per the industry defined standards • Revenue converted to USD at average annual conversion rate as of fiscal year end

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