INTERNATIONAL PRODUCTION COST COMPARISON 2014

Spinning / Texturing / Weaving / Knitting INTERNATIONAL PRODUCTION COST COMPARISON 2014 INTERNATIONAL TEXTILE MANUFACTURERS FEDERATION FÉDÉRATION INTERNATIONALE DES INDUSTRIES TEXTILES INTERNATIONALE VEREINIGUNG DER TEXTILINDUSTRIE

International Production Cost Comparison 2014 Spinning/Texturing/Weaving/Knitting The world s primary textile industry is engaged in a continuing modernization and restructuring process, spurred by the advent of entirely new or more sophisticated textile technology together with increasing competition for markets and products. Originating in the industrialized countries, the process has spread to newly industrialized and to developing countries, many of which are increasingly turning to the latest textile technology as a means of ensuring their competitive position, especially in export markets. This trend has been clearly evidenced by the survey on world textile machinery shipments conducted by ITMF since 1974 (International Textile Machinery Shipment Statistics). ITMF s International Production Cost Comparison, first published in 1979, is designed to trace the implications of the growing capital intensity in the primary textile industry. Thus, the presentation in this study of manufacturing costs and of total yarn/fabric costs includes a breakdown into the various cost elements which allows for a better appreciation of the relative importance of these elements and their respective influence on the total costs. When reading the report, the objectives of the study - as outlined above - must constantly be borne in mind. It should also be noted that international competition takes place between a much wider array of producers working not only with the most modern and highly capital intensive equipment of the type assumed in this study, but with depreciated old or second-hand machinery, leading to wide variations in manufacturing costs. Attention is furthermore drawn to the fact that the cost pattern as emerging from this report reflects but one of the elements entering into the calculation of the final sales price for yarns and fabrics, others being overheads, incentive schemes, transport and insurance, import and export duties, etc. Moreover, competitiveness is determined increasingly by such factors as quality and style, reliability, promptness of delivery, flexibility, etc., which fall outside the scope of this study. An international comparison of this order can therefore never be more than an approximation to the real market situation. Finally, the changing nature of macro-economic factors (wage levels, inflation, interest and exchange rates, tariffs, etc.) renders it difficult to make production cost calculations which are valid for a longer period. Hence, as no attempt is being made in this study to neutralize the effects of changes in the economic environment, the cost data presented are those valid at the beginning of the investment period, their validity for the later phases of the period being dependent on changes in macro-economic factors. December 2014 INTERNATIONAL TEXTILE MANUFACTURERS FEDERATION FÉDÉRATION INTERNATIONALE DES INDUSTRIES TEXTILES INTERNATIONALE VEREINIGUNG DER TEXTILINDUSTRIE Wiedingstrasse 9 Phone (+41-44) 283 63 80 CH-8055 Zürich Fax (+41-44) 283 63 89 Switzerland E-mail secretariat@itmf.org Web http:/www.itmf.org

Contents 4 Acknowledgements Basis of Calculation 5 Scope and Coverage 6 Exchange Rates 7 Raw Material Costs 8 Definition of Cost Factors 9 Spinning 10 Texturing 11 Weaving 13 Knitting Cost Factors 2014 Calculated Costs 15 Definition of Cost Elements 16 18 19 22 25 27 29 Manufacturing Costs 2014 Spinning Texturing Weaving Knitting Total Costs 2014 Yarns Woven Fabrics Knitted Fabrics 31 Annex How to calculate company-specific depreciation and interest costs ITMF International Production Cost Comparison 2014 3

Acknowledgements The cooperation in this study of the following is gratefully acknowledged: Mayer & Cie. Circular Knitting Machines, Albstadt, Germany Oerlikon Barmag Zweigniederlassung der Oerlikon Textile GmbH & Co. KG, Remscheid, Germany Picanol N.V., Ieper, Belgium Rieter Machine Works Ltd., Winterthur, Switzerland Hermann Buehler AG, Sennhof, Switzerland Associação Brasileira da Indústria Têxtil e de Confecção, Sao Paulo, Brazil China National Textile & Apparel Council, Beijing, China Textile Consolidation Fund, Cairo, Egypt Confederation of Indian Textile Industry, New Delhi, India PT Apac Inti Corpora, Jacarta, Indonesia Fondazione Industrie Cotone e Lino, Milan, Italy Spinners & Weavers Association of Korea, Seoul, Korea Rep. Roberts, Curry & Company, Greenville, SC, USA Cotlook Limited, Birkenhead, UK International Cotton Advisory Committee, Washington, DC, USA ITMF International Production Cost Comparison 2014 4

Scope and Coverage Geographically, the study covers Brazil, China, Egypt, India, Indonesia, Italy, Korea, Turkey and the USA. These countries all actively participate in international textile trade as exporters and/or importers. Every year, the machinery manufacturers on whose equipment the present study is based are conducting numerous cost calculations for prospective clients around the world. Based on factors supplied by these clients, manufacturing costs are calculated and enter as an important element into the evaluation process of a given investment project. By using the same approach, ITMF s International Production Cost Comparison attempts to simulate reality within the limits outlined in the study. Cost factors for the participating countries are supplied by individual companies, consultants and textile trade associations. They are carefully reviewed by the four machinery manufacturers cooperating in the study, with a view to arriving at representative average factors for the country concerned. The results are presented in a way enabling the reader to see the repercussions on the costing structure of diverging factors (e.g. labour and capital costs). The product base in spinning is a Ne 30 (Nm 50 / 20 tex) combed yarn made of 100% cotton of 1-1/8" staple length and a Ne 20 (Nm 33 / 30 tex) carded yarn made of 100% cotton of 1-1/16 staple length. In texturing, it is a 100% polyester POY 75 f72 den textured yarn. The cotton yarns are woven into a "print cloth" fabric of 27.6/27.6 threads per cm (ring yarn) and a print cloth fabric of 24.0/24.0 threads per cm (rotor yarn), and a textured fabric of 38.0/31.0 threads per cm. Fabric dimensions are 168 cm grey width (cotton ring and rotor yarn), and 177 cm grey width (textured yarn). In knitting, the fabric constructions are of the Single Jersey type, 192 cm unfinished width (cotton ring) and of the Lapique type, 224 cm (cotton rotor) and of the Interlock type, 190 cm unfinished width (textured yarn), resp. The cost calculations are based on the assumption that the cotton yarn is spun in a new mill equipped with 16,320 Rieter ring spindles and 1,380 Rieter open-end rotors producing 400 kg per hour while the textured yarn is produced on 10 Barmag efk with an output of 800 metres per machine and minute, or 2,000 kg of yarn per day (9 machine efficiency). In weaving, 96 Picanol air-jet weaving machines OMNIplus Summum-2-P-190 produce 19.4 meters of fabric per machine and hour (9 machine efficiency), 72 Picanol air-jet weaving machines OMNIplus Summum-2-P-190 produce 22.3 meters of fabric per machine and hour (9 machine efficiency) while 60 Picanol rapier weaving machines OptiMax-4-R-190 have an output of 12 meters per machine and hour (9 machine efficiency). For knitting Single Jersey (Lapique), 17 (13) circular knitting machines of Mayer & Cie, type Relanit 3.2 II, 30 inch diameter, gg 24, 96 feeders, with an output of 25.3 kg (31.4 kg) per machine and hour (8 machine efficiency) are assumed, while for knitting Interlock, 8 circular knitting machines of Mayer & Cie, type OV 3.2 QC, 30 inch diameter, gg 28, 96 feeders, producing 10.7 kg per machine and hour (8 machine efficiency), are needed. Rates of output are assumed to be identical for all 9 countries concerned. The different efficiency standards prevailing in the countries have been taken into consideration by v arying the number of workers required to obtain the output levels indicated. The calculations are based on cost factors that prevailed in the 1st quarter of 2014. Cotton/polyester prices are those of the last week of May and June, respectively. Geographical Coverage Methodology Product Coverage Mill Type and Size Efficiency Standards Reference Period ITMF International Production Cost Comparison 2014 5

Exchange Rates In view of rapidly changing currency relationships, especially vis-à-vis the US dollar (USD), production cost factors are surveyed in domestic currencies, and converted to USD for ease of comparison. Average exchange rates for Q1/2014 were employed, as outlined below: Brazil 1 USD = 2.36 Real China 1 USD = 6.12 Yuan Renminbi Egypt 1 USD = 6.93 Egyptian Pound India 1 USD = 61.58 Rupees Indonesia 1 USD = 11,758.63 Rupiah Italy 1 USD = 0.73 Euro Korea 1 USD = 1,076.41 Won Turkey 1 USD = 2.21 Turkish New Lira All values appearing in the tables detailing Cost Factors, Manufacturing (Conversion) and Total Costs are expressed in USD. ITMF International Production Cost Comparison 2014 6

Raw Material Costs 2014* Price (fine) 1-1/8": USD 1.940 per kg Local market price for representative Brazilian Esalq index (basis 41-4) Real 1.9113 per pound. Plus premium for Superfine 1-1/8" of 2 cents per pound. Exchange rate: 1 USD = Real 2.219053 Price (medium) 1-1/16": USD 1.863 per kg Brazil Price (fine) 1-1/8": USD 2.856 per kg China Cotton Index for representative Chinese style (T328) Yuan 17,392 per ton. Plus premium for Superfine 1-1/8" of 1.75 cents per pound. Exchange rate: 1 USD = Yuan 6.17213 Price (medium) 1-1/16": USD 2.812 per kg China Price (fine) 1-1/8": USD 3.847 per kg Export price for representative Egyptian style Giza 86. Minus discount for Superfine 1-1/8" of 5 cents per pound. Exchange rate: 1 USD = Pound 7.12958 Price (medium) 1-1/16": USD 3.78 per kg Egypt Price (fine) 1-1/8": USD 2.06 per kg Bombay quotation for representative Indian style Shankar-6 Rupees 42,250 per candy. Plus premium for Superfine 1-1/8" of 1.00 cents per pound. Exchange rate: 1 USD = Rupees 58.93 Price (medium) 1-1/16": USD 1.983 per kg India Price (fine) 1-1/8": USD 2.04 per kg Medium count cotton used in the production of 30-count 100% combed cotton yarn. Quotes for SM 1-1/8" in Cotton Outlook (May 29, 2014) are weighted by proportions in Indonesian imports; trade with Egypt, Sudan and other extra-fine cotton producers is excluded. Exchange rate: 1 USD = Rupiah 11,614.4 Price (medium) 1-1/16: USD 1.962 per kg Indonesia Price (fine) 1-1/8": USD 2.00 per kg Medium count cotton used in the production of 30-count 100% combed cotton yarn. Quotes for SM 1-1/8" in Cotton Outlook (May 29, 2014) are weighted by proportions in Italian imports; trade with Egypt, Sudan and other extra-fine cotton producers is excluded. Exchange rate:1 USD=Euro 0.73432 Price (medium) 1-1/16": USD 1.923 per kg Price (fine) 1-1/8": USD 2.06 per kg Medium count cotton used in the production of 30-count 100% combed cotton yarn. Quotes for SM 1-1/8" in Cotton Outlook (May 29, 2014) are weighted by proportions in Korean imports; trade with Egypt, Sudan and other extra-fine cotton producers is excluded. Exchange rate: 1 USD = Won 1,021.24 Price (medium) 1-1/16": USD 1.984 per kg Italy Korea Rep. Price (fine) 1-1/8" = USD 2.205 per kg Izmir quotation for representative Turkish style (Izmir, Standard 1 white) YTL 4.50 per kg. Plus premium for Extra 1-1/8" of 2.00 cents per pound. Exchange reate: 1 USD = TL 2.086771 Price (medium) 1-1/16": USD 2.150 per kg Turkey Price (fine) 1-1/8" = USD 1.809 per kg 7-region SLM 1-1/16" average of 78.55 cents per pound. Plus premium for SM 1-1/8" of 3.5 cents per pound = 82.05 US cents per pound. Price (medium) 1-1/16": USD 1.732 per kg USA Sources: Cotton Outlook and ICAC *last week of May 2014 ITMF International Production Cost Comparison 2014 7

Definition of Cost Factors Manufacturing costs relate to the production area only, i.e. excluding overheads. Wages include social charges, fringe benefits and shift work premiums. Note that the study is based on expenditure in the production area only and therefore excludes overheads (management, accounting, sales). Since, from experience, this cost factor differs widely from one company to the other, its impact on the total costing structure may clearly be considerable. The number of operatives required are determined by work-study methods. The individual times are according to Mayer, Oerlikon Barmag, Picanol and Rieter standards. Overlookers and supervisors, as well as staff for laboratories, workshops, despatch, etc. are not included. The requirements of skilled and unskilled workers for machine maintenance are determined according to Mayer, Oerlikon Barmag, Picanol and Rieter standards for the overhaul and maintenance of their machines. The values indicated give the requirements per shift, similar to those for operatives. The necessary average floor space for machines, gangways and reserve (can space etc.) was evaluated on the basis of a great number of spinning, texturing, weaving and knitting mill layouts. Certain alterations may arise, according to specific machinery layouts. The cost of the buildings refers to the production area only and includes the costs of the air conditioning ducts for supply and recycled air; the lighting system; the installations for high and low voltage electricity supply; fire protection; etc. The dimension of the air conditioning installation is in direct relation to the specific climatic conditions in the respective countries. The straight-line method (as against the degressive method) was used to calculate depreciation costs which are based on the period most commonly applied in the countries concerned (as against those provided for in tax laws). Where depreciation rates differ from those assumed, the company-specific depreciation costs may be re-calculated using the formula in the Annex. Interest rates vary not only from country to country but also from company to company within one single country. In this study the average interest rates that prevailed in the first quarter of the reference year were assumed. Reference Area Wages Operating Personnel Overhauling and Maintenance Personnel Floor Space Building Costs Depreciation Interest Rates ITMF International Production Cost Comparison 2014 8

Cost Factors 2014: Spinning Brazil China Egypt India Indonesia Italy Korea Turkey USA 9 Hourly wage for skilled personnel 6.55 3.25 1.90 1.10 2.05 31.90 19.05 7 7.40 17.80 10/11 Hourly wage for machine tenders 3.45 2.80 1.50 0.70 1.20 25.60 9.75 7 4.25 14.55 11 Hourly wage for unskilled personnel 2.75 2.30 1.15 0.55 0.80 25.05 8.65 7 3.20 11.85 11 Operating hours (per year) Cost of electric power (per kwh ) Cost of buildings (per m 2 ) Annual building maintenance (%) Depreciation period for machinery (years) Depreciation period for accessories (years) Depreciation period of buildings (years) Customs, import tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (Ring) (per kg of cotton 1-1/8 ) Raw material costs (Rotor) (per kg of cotton 1-1/16 ) 8,600 8,400 7,700 8,400 8,600 5,500 8,400 7,800 7,800 0.12 1 0.13 2 0.04 0.09 0.08 0.22 0.09 0.08 0.05 12 394 261 231 175 154 1,370 583 181 1,128 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 10 10 12 10 12 8 8 10 7 14 8 6 5 5 5 5 5 7 5 14 20 20 30 29 20 30 32 39 39 17.5 21.0 3 0.0 5 13.0 5.0 0.0 5.0 0.0 0.0 14.24 6.15 4 10.40 12.80 11.00 4.00 4.80 9.30 4.25 15 1.940 2.856 3.847 2.060 2.040 2.000 2.060 2.205 1.809 1.863 2.812 3.780 1.983 1.962 1.923 1.984 2.150 1.732 Notes See page 13 Type Rieter ring spinning Yarn Data Raw material - 100% cotton (incl. winding) Staple length - 1-1/8 inches Yarn count - Ne 30 combed Rate of Output 400 kg per hour Type Rieter rotor spinning Yarn Data Raw material - 100% cotton Staple length - 1-1/16 inches Yarn count - Ne 20 carded Rate of Output 400 kg per hour ITMF International Production Cost Comparison 2014 9

Cost Factors 2014: Texturing Brazil China Egypt India Indonesia Italy Korea Turkey USA 9 Hourly wage for skilled personnel 6.35 3.95 1.80 1.40 2.10 32.00 19.05 7 8.50 18.70 10/11 Hourly wage for machine tenders 4.25 2.55 1.35 0.90 1.35 27.00 9.75 7 6.80 15.25 11 Hourly wage for unskilled personnel 3.40 1.65 1.00 0.80 0.90 23.00 8.65 7 6.00 12.45 11 Operating hours (per year) Cost of electric power (per kwh ) Cost of buildings (per m 2 ) Annual building maintenance (%) Depreciation period for machinery (years) Depreciation period for accessories (years) Depreciation period of buildings (years) Customs, import tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per kg polyester POY) 8,200 7,400 7,700 8,400 8,600 8,000 8,000 7,800 8,300 0.12 1 0.13 2 0.04 0.09 0.08 0.16 0.09 0.09 0.05 12 421 228 202 175 154 1,000 613 226 1,250 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 10 10 12 10 12 8 8 10 5 14 10 8 5 6 5 5 8 7 5 14 20 20 30 29 20 30 32 39 39 15.0 17.0 3 15.0 5 13.0 5.0 0.0 7.0 4.0 8 0.0 14.24 6.15 4 10.4 12.00 11.00 4.20 4.80 9.30 4.25 15 1.75 1.72 1.93 1.70 6 1.66 1.98 1.80 1.75 2.10 16 Notes See page 13 Size of Mill 10 Barmag efk, 240 positions Yarn Data Raw material - 100% polyester POY Yarn count - 75 den textured (India: 85 den) Rate of Output 1,039 yards of yarn per machine and minute/ 2,600 kg per day (9 machine efficiency) ITMF International Production Cost Comparison 2014 10

Cost Factors 2014: Weaving Brazil China Egypt India Indonesia Italy Korea Turkey USA 9 Hourly wage for skilled personnel (USD/h) Hourly wage for machine tenders (USD/h) Hourly wage for unskilled personnel (USD/h) Operating hours (per year) Cost of electric power (per kwh ) Cost of water (per m 3 ) Cost of steam (per lb. yarn ) Sizing cost (per lb. yarn ) Cost of oil (per kg) Cost of gas (per m 3 ) Cost of buildings (per m 2 ) Annual building maintenance (%) Depreciation period for machinery (years) Depreciation period for accessories (years) Depreciation period of buildings (years) Customs, import tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per meter of woven fabric) 7.00 2.95 1.90 1.10 2.15 31.35 19.05 7 6.80 19.70 10/11 3.75 2.80 1.15 0.70 1.30 26.85 9.75 7 5.00 16.90 11 3.05 1.45 1.00 0.55 0.85 25.35 8.65 7 3.30 12.45 11 7,950 8,400 7,700 8,400 8,600 5,400 8,400 7,800 7,800 0.12 1 0.13 2 0.04 0.09 0.08 0.22 0.09 0.08 0.05 12 0.69 0.57 0.15 0.18 0.12 1.10 1.35 0.30 2.10 13 0.11 0.12 0.08 0.11 0.03 0.48 0.14 0.18 0.05 0.11 0.16 0.29 0.24 0.06 0.27 0.26 0.28 0.11 0.61 oil 0.80 oil 0.58 oil 0.88 oil 1.06 gas 0.62 gas 0.88 gas 0.41 oil 0.35 gas 424 245 216 171 154 1,370 557 208 1,128 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 10 10 12 10 12 8 10 10 7 14 10 5 5 5 5 5 5 6 5 14 20 20 30 29 20 30 32 39 39 19.0 23.0 3 10.0 5 13.0 5.0 0.0 5.0 0.0 3.7 14.24 6.15 4 10.40 12.80 11.00 4.00 4.80 9.30 4.25 15 - Cotton 1-1/8 0.369 0.543 0.731 0.391 0.388 0.380 0.391 0.419 0.344 - Cotton 1-1/16 0.462 0.697 0.938 0.492 0.487 0.477 0.492 0.533 0.430 - Polyester POY 0.185 0.182 0.205 0.180 6 0.176 0.210 0.191 0.185 0.223 16 Notes See page 13 ITMF International Production Cost Comparison 2014 11

Print Cloth (ring yarn) Size of Mill 96 Picanol airjet weaving machines Fabric Data Cloth type - print cloth OMNIplus Summum-2-P-190, air conditioning, Construction - 27.6/27.6 threads/cm weaving preparation, Yarn type - 100% cotton cloth inspection, transportation units, Yarn count - Ne 30 warp & weft warp beam diameter 1100 mm, Grey width - 168 cm big batch winders 1000 mm Grey weight - 190 g/m Rate of Output 19.4 meters of fabric per machine and hour (9 machine efficiency) Print Cloth (rotor yarn) Size of Mill 72 Picanol airjet weaving machines Fabric Data Cloth type - print cloth OMNIplus Summum-2-P-190, air conditioning, Construction - 24.0/24.0 threads/cm weaving preparation, Yarn type - 100% cotton cloth inspection, transportation units, Yarn count - Ne 20 warp & weft warp beam diameter 1100 mm Grey width - 168 cm big batch winders 1000 mm Grey weight - 248 g/m Rate of Output 22.3 meters of fabric per machine and hour (9 machine efficiency) Print Cloth (textured yarn) Size of Mill 60 Picanol rapier weaving machines Fabric Data Cloth type - textured fabric OptiMax-4-R-190, air conditioning, Construction - 38.0/31.0 threads/cm weaving preparation, Yarn type - PES filament/textured cloth inspection, transportation units, Yarn count - 75 den warp & weft warp beam diameter 1000 mm, Grey width - 177 cm cloth beam diameter 600 mm Grey weight - 106 g/m Rate of Output 12.0 meters of fabric per machine and hour (9 machine efficiency) ITMF International Production Cost Comparison 2014 12

Cost Factors 2014: Knitting Brazil China Egypt India Indonesia Italy Korea Turkey USA 9 Hourly wage for skilled personnel 6.80 3.35 1.15 0.80 2.15 25.90 19.05 7 4.25 17.80 10/11 Hourly wage for machine tenders 3.40 2.80 0.95 0.70 1.30 24.80 9.75 7 3.35 15.25 11 Hourly wage for unskilled personnel 2.95 2.30 0.80 0.65 0.85 23.55 8.65 7 2.70 11.85 11 Operating hours (per year) Cost of electric power (per kwh ) Cost of buildings (per m 2 ) Annual building maintenance (%) Depreciation period for machinery (years) Depreciation period for accessories (years) Depreciation period of buildings (years) Customs, import tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per meter of knitted fabric) 6,500 8,200 4,800 8,400 8,600 4,000 6,624 8,100 7,800 0.12 1 0.13 2 0.04 0.09 0.08 0.22 0.09 0.08 0.05 12 339 229 202 171 154 1,370 557 183 1,128 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 10 10 8 10 12 8 8 10 7 14 10 5 5 6 5 5 5 9 5 14 20 20 30 29 20 30 32 39 39 19.0 23.0 3 0.0 5 13.0 5.0 0.0 7.0 0.0 0.0 14.24 6.15 4 10.40 12.80 11.00 4.00 4.80 9.30 4.25 15 - ring yarn (Single Jersey) 0.446 0.657 0.885 0.474 0.469 0.460 0.474 0.507 0.416 - rotor yarn (Lapique) 0.667 1.007 1.353 0.710 0.702 0.689 0.710 0.770 0.620 - textured yarn (Interlock) 0.366 0.359 0.403 0.355 6 0.347 0.414 0.376 0.366 0.439 16 Notes 1 Spread from 0.26 0.30 BRL 2 Average for Provinces Jiangsu, Zhejiang and Fujian 3 Only VAT of 1 (local) + import duty 4 1-3 years long term benchmark interest rate for loans 5 Country of origin = EU 6 85 den 7 Remark: Wages in the IPCC 2012 were too low 8 In some regions the VAT is 0% 9 Based on conditions in south-eastern United States 10 Rate for loom technician 11 Includes 2 fringe benefits 12 Average rate for industrial user in South Carolina for 12 month ending 12/31/13 13 Including 70% waste water treatment. For industrial user in Greenville County, S.C. 14 Recovery period (in years) GDS (MACRS) 15 Defined as prime plus. Current as of April 2014. Prime rate effective since Dec 16, 2008 16 115 den POY feed yarn drawn down to 70 den finished yarn ITMF International Production Cost Comparison 2014 13

Single Jersey (ring yarn) Size of Mill 17 Mayer & Cie Relanit 3.2 II circular Fabric Data Construction - Single Jersey knitting machines, 30 inch diameter, Yarn type - 100% cotton 24 gg, 96 feeders Yarn count - Ne 30 with side creel Unfinished width (open) - 192 cm Unfinished weight - 230 g/m Rate of Output 25.3 kg per machine and hour (8 production efficiency) Lapique (rotor yarn) Size of Mill 13 Mayer & Cie Relanit 3.2 II circular Fabric Data Construction - Lapique knitting machines, 30 inch diameter, Yarn type - 100% cotton 24 gg, 96 feeders Yarn count - Ne 20 with side creel Unfinished width (open) - 224 cm Unfinished weight - 358 g/m Rate of Output 31.4 kg per machine and hour (8 production efficiency) Interlock (textured yarn) Size of Mill 8 Mayer & Cie OV 3.2 QC circular Fabric Data Construction - Interlock knitting machines, 30 inch diameter, Yarn type - 100% PES 28 gg, with side creel Yarn count - 75 den / 72 f Unfinished width (open) - 190 cm Rate of Output 10.7 kg per machine and hour Unfinished weight - 209 g/m (8 production efficiency) ITMF International Production Cost Comparison 2014 14

Definition of Cost Elements In spinning, revenue from the sale of waste (waste from slivers, filters, flats and grid droppings, etc.) is considered when calculating waste costs. Wage costs are calculated on the basis of the wages paid to operatives and to skilled and unskilled labour for maintenance work. All social charges and shift-work premiums are included. For reserve personnel a percentage figure is added. Energy costs include the costs relating to the actual power consumption of the machines, the illumination and the air conditioning (in weaving, also steam and heating). It is assumed that the mill is lit for the entire production time. The costs for spare parts, lubricants, cleaning materials and maintenance work on the buildings represent the costs for auxiliary material (in weaving this includes preparation costs). This element includes depreciation of machines, accessories and buildings. Machinery costs include free delivery to the mill, erection and - where applic-able - customs duty and taxes. Costs of capital interest. The sum of the above group of costs gives the total manufacturing costs. Cotton/polyester. The sum of the above group of costs gives the total yarn or fabric costs. With regard to total fabric costs one has to bear in mind that these consist of manufacturing costs both in spinning/texturing and weaving/knitting of one meter fabric plus the respective raw material costs. Waste Auxiliary Material Depreciation Interest Total Manuf. Costs Raw Material Total Costs ITMF International Production Cost Comparison 2014 15

Manufacturing Costs 2014: Spinning/Ring (Ne 30) Waste 0.313 1 0.462 2 0.623 4 0.333 2 0.330 2 0.323 1 0.333 0.359 2 0.292 1 0.131 0.095 0.062 0.031 0.051 0.803 2 0.335 0.170 1 0.448 2 0.386 2 0.418 2 0.128 0.289 0.257 0.706 2 0.289 1 0.257 1 0.160 0.144 0.142 0.142 0.141 0.141 1 0.168 0.147 0.141 0.156 Depreciation 0.382 2 0.395 2 0.297 0.361 2 0.279 2 0.685 2 0.431 2 0.337 2 0.515 30% Interest 0.374 2 0.142 0.246 1 0.304 2 0.234 1 0.181 0.114 0.208 1 0.129 Total manufacturing costs (USD per kg of yarn) 1.730 1.654 1.498 1.459 1.292 2.866 1.649 1.472 1.700 Index (Italy: 100) (60) (58) (52) (51) (45) (100) (58) (51) (59) ITMF International Production Cost Comparison 2014 16

Manufacturing Costs 2014: Spinning/Rotor (Ne 20) Waste 0.140 1 0.211 30% 0.284 4 0.148 2 0.147 2 0.144 1 0.148 2 0.161 2 0.130 0.033 0.024 0.016 0.013 0.207 1 0.081 1 0.041 0.116 1 0.171 2 0.185 2 0.056 0.128 2 0.114 2 0.312 2 0.128 0.114 1 0.071 1 0.085 1 0.084 1 0.084 1 0.083 1 0.083 1 0.096 0.086 1 0.084 1 0.090 1 Depreciation 0.148 2 0.154 2 0.117 1 0.140 2 0.110 0.272 2 0.168 2 0.129 2 0.201 30% Interest 0.145 0.054 0.096 1 0.116 1 0.090 1 0.076 0.045 0.081 1 0.054 Total manufacturing costs (USD per kg of yarn) 0.722 0.712 0.653 0.623 0.557 1.107 0.656 0.610 0.662 Index (Italy: 100) (65) (64) (59) (56) (50) (100) (59) (55) (60) ITMF International Production Cost Comparison 2014 17

Manufacturing Costs 2014: Texturing (75den/72f) Waste 0.060 1 0.050 1 0.060 1 0.040 0.050 1 0.090 1 1 1 0.090 1 0.040 0.03 0.400 4 0.200 3 0.140 2 0.220 40% 0.130 2 0.130 3 0.040 1 0.110 2 0.090 2 0.180 2 0.080 1 0.100 1 0.050 Depreciation 0.060 1 0.060 1 1 1 0.080 1 1 0.100 1 Interest 0.120 2 0.090 2 0.110 3 0.130 3 0.130 3 0.090 0.090 1 0.110 2 0.080 1 Total manufacturing costs (USD per kg) 0.490 0.400 0.340 0.410 0.400 0.860 0.550 0.520 0.550 Index (Italy: 100) (57) (47) (38) (46) (45) (100) (64) (60) (64) ITMF International Production Cost Comparison 2014 18

Manufacturing Costs 2014: Weaving Ring Yarn Waste 0.005 0.047 1 0.036 1 0.016 0.009 0.017 0.244 3 0.120 3 0.053 0.146 4 0.085 2 0.092 3 0.028 1 0.064 2 0.057 3 0.156 2 0.064 1 0.057 2 0.036 0.037 1 0.042 1 0.050 2 0.048 2 0.023 1 0.094 1 0.054 1 0.059 2 0.033 Depreciation 0.077 2 0.072 2 0.058 2 0.065 2 0.049 2 0.132 0.064 0.062 2 0.099 2 Interest 0.060 1 0.024 0.039 0.044 1 0.034 1 0.031 0.018 0.031 1 0.022 Total manufacturing costs (USD per meter of fabric) 0.312 0.274 0.198 0.235 0.186 0.665 0.326 0.268 0.342 Index (Italy: 100) (47) (41) (30) (35) (28) (100) (49) (40) (51) ITMF International Production Cost Comparison 2014 19

Manufacturing Costs 2014: Weaving Rotor Yarn Waste 0.005 0.005 0.005 0.053 1 0.038 1 0.017 0.010 0.018 0.227 3 0.136 40% 0.062 2 0.154 4 0.075 2 0.082 3 0.025 1 0.057 2 0.050 2 0.138 2 0.057 1 0.050 1 0.031 0.042 1 0.049 1 0.060 30% 0.057 2 0.024 1 0.114 1 0.064 1 0.071 2 0.037 1 Depreciation 2 0.066 2 0.053 2 0.058 2 0.045 2 0.121 1 0.058 1 0.056 2 0.090 2 Interest 0.055 1 0.021 0.035 1 0.040 1 0.031 1 0.017 0.028 0.020 Total manufacturing costs (USD per meter of fabric) 0.301 0.264 0.197 0.227 0.174 0.636 0.338 0.274 0.337 Index (Italy: 100) (47) (42) (31) (36) (27) (100) (53) (43) (53) ITMF International Production Cost Comparison 2014 20

Manufacturing Costs 2014: Weaving Textured Yarn Waste 0.005 0.003 0.005 0.074 1 0.055 1 0.018 0.016 0.024 0.341 4 0.160 40% 0.075 2 0.226 4 0.099 2 0.108 3 0.033 1 0.074 2 0.066 2 0.182 2 0.074 1 0.066 0.041 0.033 0.032 0.032 1 0.031 0.031 1 0.042 0.033 0.031 0.037 Depreciation 0.123 2 0.115 3 0.093 3 0.103 3 0.078 3 0.210 2 0.102 2 0.098 30% 0.158 3 Interest 0.096 2 0.038 1 0.062 2 2 0.054 2 0.050 0.029 0.050 1 0.035 Total manufacturing costs (USD per meter of fabric) 0.430 0.352 0.242 0.298 0.256 0.831 0.402 0.325 0.501 Index (Italy: 100) (52) (42) (29) (36) (31) (100) (49) (39) (60) ITMF International Production Cost Comparison 2014 21

Manufacturing Costs 2014: Knitting Ring Yarn 1 0.005 1 0.002 0.001 0.002 0.050 5 0.019 4 2 0.026 5 0.005 1 0.002 1 1 0.010 1 0.002 1 2 0.010 2 2 2 0.013 1 1 2 1 Depreciation 0.011 2 0.009 30% 0.015 4 3 2 0.020 2 0.012 2 2 0.011 2 Interest 0.009 2 0.003 1 2 2 0.005 0.003 1 0.003 Total manufacturing costs (USD per meter of fabric) 0.039 0.029 0.036 0.025 0.022 0.098 0.045 0.027 0.049 Index (Italy: 100) (40) (30) (37) (26) (22) (100) (46) (28) (50) ITMF International Production Cost Comparison 2014 22

Manufacturing Costs 2014: Knitting Rotor Yarn 1 1 0.002 0.002 0.002 0.063 5 0.023 4 2 0.033 5 1 0.002 0.005 1 1 0.012 0.005 13 0.003 0.009 1 2 0.013 2 2 2 0.016 1 0.009 1 2 1 Depreciation 0.014 2 0.011 30% 0.019 4 0.010 3 2 0.025 2 0.015 2 0.009 2 0.014 2 Interest 0.011 2 1 0.009 2 2 0.005 0.005 1 0.003 Total manufacturing costs (USD per meter of fabric) 0.049 0.035 0.045 0.031 0.025 0.122 0.056 0.033 0.061 Index (Italy: 100) (40) (29) (37) (25) (20) (100) (46) (27) (50) ITMF International Production Cost Comparison 2014 23

Manufacturing Costs 2014: Knitting Textured Yarn 0.010 1 1 0.003 0.002 0.003 0.082 40% 3 0.010 1 0.043 4 0.009 0.010 1 0.003 1 1 0.016 0.021 2 0.016 2 0.028 2 0.016 2 0.015 2 0.035 1 0.020 2 0.016 2 0.018 1 Depreciation 0.031 3 0.025 3 0.043 4 0.022 3 0.017 3 0.056 2 0.034 3 0.020 3 0.031 30% Interest 0.025 2 0.009 1 0.021 2 0.016 2 0.012 2 0.013 0.011 1 Total manufacturing costs (USD per meter of fabric) 0.096 0.068 0.098 0.063 0.053 0.202 0.099 0.063 0.103 Index (Italy: 100) (47) (34) (49) (31) (26) (100) (49) (31) (51) ITMF International Production Cost Comparison 2014 24

Total Costs 2014: Ring Yarn Waste 0.313 0.462 0.623 1 0.333 0.330 0.323 0.333 0.359 0.292 0.131 0.095 0.062 0.031 0.051 0.803 1 0.335 0.170 0.448 1 0.386 0.418 0.128 0.289 0.257 0.706 1 0.289 0.257 0.160 0.144 0.142 0.142 0.141 0.141 0.168 0.147 0.141 0.156 Capital (depreciation & interest) 0.756 2 0.537 1 0.543 0.665 1 0.513 1 0.866 1 0.544 1 0.545 1 0.644 1 Raw material 1.940 5 2.856 6 3.847 7 2.060 5 2.040 6 2.000 4 2.060 5 2.205 60% 1.809 5 Total yarn costs (per kg of yarn) 3.670 4.510 5.345 3.519 3.332 4.866 3.708 3.677 3.509 Index (Italy: 100) (75) (93) (110) (72) (68) (100) (76) (76) (72) Total Costs 2014: Rotor Yarn Waste 0.140 0.211 0.284 0.148 0.147 0.144 0.148 0.161 0.130 0.033 0.024 0.016 0% 0% 0.013 0% 0.207 0.081 0.041 0.116 0.171 0.185 0.056 0.128 0.114 0.312 0.128 0.114 0.071 0.085 0.084 0.084 0.083 0.083 0.096 0.086 0.084 0.090 Capital (depreciation & interest) 0.294 1 0.207 0.213 0.257 0.200 0.348 1 0.213 0.210 0.254 1 Raw material 1.863 7 2.812 80% 3.780 8 1.983 7 1.962 7 1.923 6 1.984 7 2.150 7 1.732 7 Total yarn costs (per kg of yarn) 2.586 3.523 4.433 2.607 2.519 3.030 2.640 2.760 2.393 Index (Italy: 100) (85) (116) (146) (86) (83) (100) (87) (91) (79) ITMF International Production Cost Comparison 2014 25

Total Costs 2014: Textured Yarn Waste 0.060 0.050 0.060 0.040 0.050 0.090 0.090 0.040 0.400 1 0.200 0.140 0.220 0.130 0.130 0.040 0.110 0.090 0.180 0.080 0.100 0.050 Capital (depreciation & interest) 0.180 0.150 0.180 0.200 0.200 0.160 0.170 0.180 0.180 Raw material 1.750 7 1.720 8 1.930 8 1.700 8 1.660 8 1.980 70% 1.800 7 1.750 7 2.100 7 Total yarn costs (per kg of yarn) 2.240 2.120 2.270 2.110 2.060 2.840 2.350 2.270 2.650 Index (Italy: 100) (79) (74) (79) (74) (72) (100) (83) (80) (93) ITMF International Production Cost Comparison 2014 26

Total Costs 2014: Woven Ring Yarn Fabric Waste 0.066 0.096 0.126 0.069 0.068 0.069 0.074 0.061 0.072 0.054 0.027 0.015 0.026 0.396 2 0.184 1 0.086 0.232 2 0.159 1 0.172 1 0.053 0.119 1 0.106 1 0.291 1 0.119 1 0.106 1 0.066 0.064 0.069 0.077 0.075 0.050 0.126 0.082 0.086 0.063 Capital (depreciation & interest) 0.281 2 0.198 1 0.200 1 0.235 2 0.181 2 0.327 2 0.186 1 0.197 0.243 2 Raw material 0.369 3 0.543 4 0.731 60% 0.391 4 0.388 4 0.380 2 0.391 3 0.419 4 0.344 3 Total fabric costs (USD per meter of fabric) 1.010 1.132 1.214 0.904 0.819 1.589 1.031 0.967 1.009 Index (Italy: 100) (64) (71) (76) (57) (52) (100) (65) (61) (63) Total Costs 2014: Woven Rotor Yarn Fabric Waste 0.040 0.061 0.078 0.042 0.044 0.042 0.042 0.045 0.038 0.061 0.044 0.021 0.012 0.024 0.278 0.156 16 % 0.072 0.183 0.118 1 0.128 1 0.039 0.088 0.083 0.216 1 0.088 0.078 0.049 0.063 0.069 0.081 0.078 0.085 0.138 0.086 0.092 0.059 Capital (depreciation & interest) 0.198 2 0.138 1 0.141 1 0.162 1 0.117 1 0.236 1 0.128 1 0.136 1 0.173 1 Raw material 0.462 4 0.697 6 0.938 7 0.492 5 0.487 5 0.477 3 0.492 50% 0.533 5 0.430 4 Total fabric costs (USD per meter of fabric) 0.942 1.137 1.297 0.874 0.840 1.387 0.992 0.957 0.931 Index (Italy: 100) (68) (82) (93) (63) (61) (100) (72) (69) (67) ITMF International Production Cost Comparison 2012 27

Total Costs 2014: Woven Textured Yarn Fabric Packing 0.011 0.009 0.011 0.016 0.012 0.012 0.011 0.084 1 0.060 0.021 0.020 0.028 0.383 3 0.181 2 0.090 1 0.249 3 0.113 1 0.121 2 0.037 0.086 1 0.076 1 0.203 1 0.083 1 0.078 1 0.046 0.036 0.035 0.035 0.034 0.034 0.045 0.036 0.035 0.040 Capital (depreciation & interest) 0.238 3 0.169 2 0.173 3 0.194 3 0.152 3 0.277 2 0.150 2 0.167 30% 0.212 2 Raw material 0.185 2 0.182 3 0.205 4 0.180 3 0.176 3 0.210 1 0.191 2 0.185 3 0.223 2 Total fabric costs (USD per meter of fabric) 0.667 0.576 0.482 0.523 0.474 1.135 0.653 0.567 0.782 Index (Italy: 100) (59) (51) (42) (46) (42) (100) (57) (50) (69) ITMF International Production Cost Comparison 2014 28

Total Costs 2014: Knitted Ring Yarn Fabric Waste 0.072 0.106 0.143 1 0.077 0.076 0.074 0.077 0.082 0.067 0.036 0.027 0.016 0.014 0.235 1 0.096 1 0.045 0.129 1 0.094 1 0.102 0.031 0.063 0.172 1 0.063 0.039 0.041 0.039 0.043 0.038 0.038 0.052 0.041 0.039 0.043 Capital (depreciation & interest) 0.194 2 0.136 1 0.147 1 0.167 0.128 1 0.224 1 0.140 1 0.136 1 0.162 1 Raw material 0.446 5 0.657 6 0.885 70% 0.474 5 0.469 60% 0.460 3 0.474 5 0.507 5 0.416 4 Total fabric costs (USD per meter of fabric) 0.883 1.067 1.266 0.834 0.788 1.217 0.898 0.873 0.856 Index (Italy: 100) (73) (88) (104) (69) (65) (100) (74) (72) (70) Total Costs 2014: Knitted Rotor Yarn Fabric Waste 0.050 0.075 0.102 0.053 0.053 0.051 0.053 0.058 0.046 0.020 0.015 0% 0.005 0% 0.137 1 0.052 0.022 0.074 0.068 0.073 0.022 0.051 0.045 0.124 0.051 0.045 0.028 0.039 0.037 0.043 0.037 0.037 0.050 0.040 0.038 0.040 Capital (depreciation & interest) 0.130 1 0.089 0.104 0.109 1 0.083 0.155 1 0.095 0.089 0.108 1 Raw material 0.667 6 1.007 7 1.353 8 0.710 7 0.702 7 0.689 5 0.710 7 0.770 7 0.620 6 Total fabric costs (USD per meter of fabric) 0.974 1.297 1.632 0.964 0.926 1.207 1.001 1.021 0.918 Index (Italy: 100) (81) (107) (135) (80) (77) (100) (83) (85) (76) ITMF International Production Cost Comparison 2014 29

Total Costs 2014: Knitted Textured Yarn Fabric Waste 0.013 0.010 0.013 0.010 0.019 0.015 0.015 0.015 0.029 0.016 0.009 0.009 0.166 2 0.072 1 0.039 0.089 1 0.036 0.037 0.011 0.028 0.025 0.054 0.024 0.027 0.014 0.027 0.022 0.034 0.022 0.021 0.041 0.026 0.022 0.024 Capital (depreciation & interest) 0.094 1 0.065 1 0.100 1 0.080 1 0.071 1 0.102 1 0.078 1 0.069 1 0.076 1 Raw material 0.366 6 0.359 7 0.403 70% 0.356 7 0.347 7 0.414 5 0.376 6 0.366 6 0.439 6 Total fabric costs (USD per meter of fabric) 0.564 0.511 0.570 0.502 0.484 0.796 0.590 0.537 0.657 Index (Italy: 100) (70) (64) (71) (63) (60) (100) (73) (67) (82) ITMF International Production Cost Comparison 2014 30

Annex How to calculate company-specific depreciation and interest costs The separate presentation in this study of depreciation and interest costs makes it possible to calculate company-specific capital costs. Note that the share of machinery in total depreciation in spinning varies from 8-9 in the different countries and that for weaving from 80% - 90%, whereas the machinery part makes up more than 9 of total depreciation in knitting. The remainder is for accessories and buildings. Example: United States Depreciation Costs (Machinery) Weaving Ring Yarn Share of machinery in total depreciation: 8 Assumed depreciation period (see page 11): 7 years Depreciation costs (machinery) per meter/fabric (see page 19): 8 of USD 0.099 = USD 0.084 Company-specific depreciation period: 10 years Company-specific depreciation costs (machinery) per meter/fabric: USD 0.084 x 7 / 10 = USD 0.059 Interest Costs Weaving Ring Yarn Assumed interest rate (see page 11): 4.2 Interest costs per meter/fabric (see page 19): USD 0.022 Company-specific interest rate: 9.0% Company-specific interest costs per meter/fabric: USD 0.022 x 9.0 / 4.25 = USD 0.047 ITMF International Production Cost Comparison 2014 31