FnC KOLON

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FnC KOLON
2002. Q3 Performance
November , 2002
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The information in this presentation is based
upon management forecasts and reflects prevailing
conditions and our views as of this date, all of
which are accordingly subject to change. In
preparing this presentation, we have relied upon
and assumed, without independent verification,
the accuracy and completeness of all information
available from public sources of which was
provided by us or which was reviewed by us. The
information in this presentation does not take
into account the effects of a possible
transaction or transactions involving an actual
or potential change of control, which may have
significant valuation and other effects.
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Contents

• Corporate Information
• 2002. Q3 Performance
• Strategy Vision

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1. Corporate Information

• Establishment of FnC Kolon
• Profile
• Business Area
• Shareholding Structure

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Establishment of FnC Kolon
FnC KOLON
Demerged from the former KOLON International
Corp. in December 1st 2001, FnC KOLON was
transformed into a Fashion Sports specialty
apparel company
Kolon International Corp.
Sports Div. Casual Div. Textile Garment
Div. Textile Material Div. General Merchandise
Div. Management Div.
High Return Business Sector
FnC KOLON (Sports/Casual Div.)

• To Specialize in Fashion Sports Business
• To Maximize Shareholders Value
• To Focus on Performance-based
• Management

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Profile
FnC KOLON

• Name of Company FnC KOLON Corp. (
  FnC stands for Fashion and Culture )
• C E O Baek, Duk hyun
• Date originally Established Dec 17. 1954
• Initial Public Offering May 25. 1988
• Paid in Capital 61 Billion Won
• Market Capitalization 164 Billion Won (As of
  Nov 8th. 2002)
• Number of Employees 525 (As of Oct 1st. 2002)
• Major Products Sports, Casual and Fashion
  apparel accessories
• Website Address www.fnckolon.com

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Business Area
FnC KOLON
Casual
Sports


Kolon Sport Jack Nicklaus Elord Elord Club Activ
1492Miles Henry Cottons Cascade
Head Lucas
New Business

• Golf Brand Launching Head Golf
• Imported distribution of Marc Jacobs (Brand of
  L.V.M.H)
• Jack Nicklaus, market entry into China

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Shareholding Structure
FnC KOLON
As of Nov 8. 2002
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2. Q3 Business Performance
1) Income Statement 2) Balance Sheet 3)
Performance by Division 4) Key Financial
Ratios 5) Q4 Forecast
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Income Statement
FnC KOLON
(billion won)

• Reinforced marketing efforts accompanied by
  increase in advertising and sales promotion
  made a significant contribution to margin and
  sales volume, resulting in a improvements in
  operating profit.
• Despite operating profit improvement, Q2 and Q3
  profits slightly decreased, mainly
• due to non-operating losses such as losses on
  sales of shares of Kolon Engineering
• Construction Co.,Ltd. (3.1billion won),
  losses on disposal of fixed assets (3.4billion
• won), and losses from operations of affiliated
  companies (4.1billion won).

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Financial Structure
FnC KOLON
(billion won,)

• Debts reduced in Q3 47Billion Won Decrease
  compared to the end of 01 resulting from
  operating income and
  disposal of non-operating assets
  (fixed assets and shares of
  Kolon Engineering Construction Co.,Ltd.)
• Improvement in borrowing rate 9.49(Q2) ?
  9.11(Q3) ? 8.30(Q4)
• Expected improvement in financial structure in
  Q4 Debt reduction to 153 billion won ? 21
  billion won redemption with operating income

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Performance by Division
FnC KOLON
Sports
(billion won)

• Growth of KOLON Sport (131) Jack Nicklaus
  (120)

Casual
(billion won)

• Growth of 1492Miles(153) Henry Cottons (129)

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Key Financial Ratios
FnC KOLON

• Before the demerge of the 3 companies

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Q4 Forecast
FnC KOLON
Market forecast

• Slower growth of overall apparel market expected
  for Q4, but impact on FnC Kolon sales
• will be minimal due to the strength of its
  brands
• High sales expected in Q4 due to seasonality
  (Q4 sales accounted for 30.9 of the total annual
  sales of 2001)

Company forecast

• Market leaders position in sports and casual
  apparel. - Expected boost in sales due to
  increase in leisure and sports activities
  resulting from
• the upcoming 5 day work week
• Continued strength in portfolio of high equity
  brands. (J/N, HEAD, K/S, etc.)
• The highest operating margin ratio in the
  industry (24.1 expected for 2002)
• Overall improvement of non-operating income
  - Decrease in financial expenses by redemption of
  debts - Decrease in evaluation losses
  resulting from affiliated companies -
  Liquidation of a local subsidiary in L.A 8
  billion won losses expected

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Q4 Forecast
FnC KOLON
(billion won)
Debt ratio
Operating Profit
Current profit
Sales
104 of the plan
112 of the plan
110 of the plan
65.5
32.6
271.8
8.6
19.6
76.0
7.9
16.0
68.7
7.0
13.3
59.5
6.0
15.4
66.5
8.3
14.9
63.8
14.5
10.1
7.7
60.6
12.6
55.0
plan
result
plan
result
plan
result
Q2
Q3
Q4(E)
Q1
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3. Strategy Vision

• 1) Brand Positioning
• 2) Distribution channel and sales structure
• 3) Business Process
• 4) Business Strategy
• 5) Financial Strategy
• 6) Vision of FnC KOLON

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Brand Positioning
FnC KOLON
Athletic
Sports Casual Market
Nike Adidas Reebok Asics Puma
Head Fila
Outdoor
Traditional
Kolon Sport North Face Columbia
Polo Bean Pole Henry Cottons Nautica
Activ
Jack Nicklaus BW
Lacoste Elord Wolsey Daks
Golf
Fubu MLB Roots
Giordano Maru 1492Miles
Cascade
Munsing Wear
Renoma
Trendy
Golf wear
Casual
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Distribution Channel Sales Structure
FnC KOLON
? Distribution Channel (Oct. 2002)
Brand
DepartmentStore
Franchise
DiscountOutlet
CompanyOwned
Total
Kolon sport
31
36
6
3
76
Jack Nicklaus
44
34
8
2
88
Elord
30
2
6
2
40
Lucas
15
26
-
3
44
Head
34
48
7
3
92
1492Miles
29
9
2
2
42
Henry Cottons
23
-
-
1
24
Cascade
4
14
1
1
20
Total
210
169
30
17
426
? Sales Structure ( 02.01.01 02.09.30 )
Sales
At MSRP
At Discount
At Discount (outlet)
Weights
80.5
6.0
13.5
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Business Process
FnC KOLON

? Rigorous planning to predict market
(Quarterly?Monthly) ?Quickly adapt to market
results (Increase Repeat / Spot orders)
? Driving all suppliers to get ISO
certification to ensure quality ?
Establishing partnerships to build Kolon
community
Production
Product Planning
System

Sales

Marketing
? Securing the best commercial locations ?
Implementing Dept store sales management
system ?pioneer in the industry ? Operation
logistics
? Image-building Events ? Cultural marketing by
brand ? Creative marketing (PPL, Star-based)
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Business Strategy
FnC KOLON
Profitablevalue-based brands
Establishing as leaders in market segments
Kolon Sport No. 1 outdoor brand in Korea Jack
Nicklaus Solidify current market leadership,
total Golf brand Head Continue to grow as
the leading brand in sports
and casual wear through brand extensions (golf,
kids)
High-growth potential brands
Establishing Identity with differentiating
products marketing
1492Miles Campus casual segment Henry Cottons
Capturing the market in traditional zone Elord
Exclusive golfwear targeting women seeking
individuality Lucas Fashion bags and
accessories for the young generation Cascade
Casual wear focused on mass distribution channels
New business strategy
Developing future strategic businesses

New distribution channels
New brands
Global business
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Financial Strategy
FnC KOLON

• Achieve financial soundness
• Mid-to-long term goal debt-free
  management
• Enhance credit rating through continued
  efforts to improve financial structure
• Increase shareholders value by resolving
  consolidated debts

(billion won)
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Financial Strategy
FnC KOLON

• Secure profitability of invested companies
• Establish a bridge to an early turnaround
  to profitable operations through corporate
  restructuring and enhancement of sales efforts

• Expected ordinary income of the affiliated
  companies

(billion won)

• Other invested companies Nexfree Co..Ltd. (0.6
  Billion), Marrys Wedding Consulting
  Inc.(1.3 Billion),
  FnC Kolon Shanghai Corp. (1.2
  Billion), Kolon Fashion Corp. (13.2
  Billion, Shareholding 18.8)

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Vision of FnC KOLON
FnC KOLON
FnC KOLON In The World !
Global sports and fashion specialty apparel
company retaining top brands recognized
world-wide
The Best in Korea 1st in the industry
- Profit
- Growth
- Brand Power
Focused Vision
Core competitiveness
Specialized business system
Corporate Culture

• Employ strategic brand management
• Develop and grow
• future core businesses

• Strengthening product development
• Enrich product marketing activities

• Build information and know-how as assets
• Develop efficient organiza- tion and
  management tools

• Instill a creative culture change
  challenge
• Put People First

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Vision of FnC KOLON
FnC KOLON
(billion won)
Sales
Operating Profit
Current Profit
CAGR 18
CAGR 15
CAGR 53
375
87
312
76
272
72
55
66
32
02
04
02
03
04
03
02
03
04

• Increasing sales due to growing demand of
  leisure and sports activities
• Introducing 2 new brands and entering China
• From 2004, realize further growth in
  profitability by economies of scale from
  continued sales growth
• Higher profitability through reduction in
  borrowings and non-operating losses such as
  evaluation and investment losses