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Philip Morris U.S.A. Materials Purchasing Direct Materials Buying Plans

Date: 1993
Length: 390 pages
2053487905-2053488294
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Author
Blackburn, D.E.
Carter, R.E.
Cline, S.L.
Comes, C.M.
Emig, F.J.
Forsmark, F.W.
Griffin, J.H.
Harper, P.M.
Hawkins, J.
Johnson, B.B.
Keithley, D.N.
Kelly, R.D.
Lewis, J.Y.
Long, B.F.
Mays, A.C.
Nixon, G.L.
Waring, J.S. III
Type
REPT, REPORT, OTHER
CHAR, CHART, GRAPH, TABLE, MAPS
FORM, FORM
Area
GROTH,MARK/FILE AREA
Recipient (Organization)
PM, Philip Morris
Named Person
Davis, J.
Hamrick, L.W.
Laskins, M.
Maclean, L.
Madden, B.
Nixon, G.L.
Perelman, R.
Suchard, J.
Recipient
Long, B.F.
Mays, A.C.
Packer, S.E.
Polson, A.T., J.R.
Robinson, L.L.
Ward, D.P.
Campbell, T.R.
Davis, D.A.
Forsmark, F.W.
Groth, H.M.
Gugino, J.R.
Kelly, R.D.
Latshaw, R.D.
Lewis, J.Y.
Document File
2053484825/2053488850/960000 Buying Plan Direct Materials Printed Packaging 951200
2053487904/2053488295/Missing
Author (Organization)
Gravure Packaging
Optimization Team
PM, Philip Morris
Named Organization
Adm
Ae Staley
Afl Cio
Agi
Airco
Ajax
Ajinomoto
Alcan
Alford Packaging
Alternant Denaturant
Aluminum Brick + Glass Intl
Amalgamated Clothing + Textile Worke
Amalgamated Grain Millers
Amalgamated Union
Amerada Hess
American Inks
American Maize
Amoco
Arcadian
Arco Supplier Alliance
Arlin
Armour Dial
at Massey
Bakery Confectionery + Tobacco Workers
Bayer
Bct
Bcu
Bell Printing Pressman Union
Bellwood Prtg + Spec Union
Bemis
Boc Airco
Boise Cascade
Bp Chemical
Bppa
Bppasu
Brawsey Trading
Brockville
Burden
Bvle
Calgon Carbon
Cargill
Cbi Liquid Carbonics
Cf Sauer
Chem Bac Lab
Chp
Co Union
Cocoa Africa
Cocoline
Coke
Corn Products
Cpc Intl
Ct Johnson
Dap
Degussa
Devon
Dexter Nonwoven
Dial
Domino
Dow Chemical
Ea Bobbin
Eastman Chemical
Ecusta
Epa, Environmental Protection Agency
Etoh Etbe
Exxon
Federal
Fertilizers + Chemicals
Findley Adhesives
Forbes
Fuel Oils
Fuerst Day
Gcui
Givaudan
Golden Belt
Gpc
Grain Processing
Graphic Communication Union
Gravure Packaging
Haarmann Reimer
Hb Fuller
Henkel Adhesives
Hercules
Hermetite
Histadrut
Histar
Hoechst Celanese
Holding Brothers
Humko
Iam
Ibew
Ibsmw
Ig Chemie
Independent Oil + Chemical Workers
Indian + Chinese Menthol
Inland
Intl Assn of Machinists + Aerospace Wkrs
Intl Brotherhood of Electrical Workers
Intl Brotherhood of Firemen + Oilers
Intl Chemical Workers
Intl Paper
Intl Union of Operating Engineers
Investment Banking Group
Ipc+L
Ipu
Isosweet
James River Berlin
Japan Federation of Synthetic Chemistry
Joint Purchasing Council for Corn Sweete
Jw Fergusson
Kgf
Kimberly Clark
Koch Fuels
Kt Ind
Kti
Laroche Ind
Licorice + Paper Employees Assn
Little Oil
Lmcp
Louisville Gas + Electric
Macandrews
Mafco
Mays Chemical
Mebane Packaging
Metal Trades Council
Mf Neal
Miller
Milprint
Minority Supplier
Mitsui
Mji
Mobil
Monsanto
Monsanto Eastman
Morton Chemical
Morton Intl
Morton Thiokol
Mundet Hermetite
Narrows
Natl Starch
Net
Newport News
Nutrasweet
Ocaw
Olin
P+G Cellulose
Pac
Pacific Activated Carbon
Paperboard Industries
Papeteries De Mauduit
Payne
Pdm
Pepsi
Pg
Ph Glatfelter
Philip Morris Coal Synergies Council
Pica
Pol, Product Opinion Lab
Procter Gamble
Public Service of NC
Rayonier
Rci
Resin Hinmont
Rhodia
Rhone Poulenc
Richmond Dept of Public Utilities
Richmond Gravure
RJR, R.J.Reynolds
Robb Moody
Savannah
Sbs Board
Shell Coal Marketing
Shell Mining
Simpson Plainwell Paper
Smith Falls Gciu
Som
Somerville Packaging
Sonoco
Springtree
Ssa
Ssa Team
Stauffer
Steelworkers
Stone North + So
Supa Strip
Takasago Intl
Tate Lyle
Teamster Warehousing
Teamsters Local
Tervakoski
Tex Par Energy
Thermice
Umw
Unichema
Unifoil
Unilever
Unilever Board
Union Camp
Union Carbide
United Paper Workers Intl
United Steelworkers
Upaco Adhesives
Upiu
Upwi Afl Cio
Upwiu
US Industrial
Usda, U.S. Dept of Agriculture
Utw
Va Folding Box
Var
Vfb
Vi Tex
Vitex
W Baker
Western Forest
Western Pulp
Westmoreland Coal
Westvaco
Weyerhaeuser
Wilbur
Williamsburg
Winter Bell
Wiu
Wixon Fontarome
Wwbg
Yah Sheng Chong
Yancy Minerals
Ziegler Coal Shell
1st Union Commercial
2nd Source
Abgwiu
Litigation
Fali/Produced
Characteristic
CONF, CONFIDENTIAL
ILLE, ILLEGIBLE
MISS, MISSING PAGES
Site
M150
Date Loaded
22 May 2001
Brand
Benson & Hedges
Alford
Alpine
Basic
Best Buy
Brica
Bristol
Cambridge
Generic
Lark
Marlboro
Merit
Parliament
Philip Morris
Players
Premium
Private Generics
Various
Virginia Slims
UCSF Legacy ID
gzk28d00

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Philip Morris U.S.A. Materials Purchasing DIRECT MATERIALS BUYING PLANS 1993 ConFdential Distribution: R. D. Latshaw T. R. Campbell R.. D. Kelly (2) H. M. Groth S. E. Packer D. A. Davis F. W. Forsmark J. R. Gugino J. Y. Lewis B. F. Long A. T. Polson, Jr. L. L. Robinson D. P. Ward
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I 0 • 0 TABLE OF CONTENTS CIGARETTES COMPONENTS (Section A) Filter Tow Triactein Plasticizer Coconut Carbon. Activated-Coal Carbon Plug Wrap Mouthpiece Paper Cigarette Paper Adhesives Base Tipping Paper PACKAGING (Section B) Laminated Aluminum Foil Innerframe FTB's Labels Closures Polypropylene Film Tear Tape Cartons Corrugated Cases CHEMICALS & FLAVORS (Section C) Shiloh Police Petreo Cochise SDA-4 Ethanol Glen Casing 70 Sagno Cagno Bagno Potassium Sorbate Carbon Dioxide Aqua Ammonia Al - A16 A17 - A26 A27'- A37 A38 - A46 A47 - A50 A51 - A59 A60 - A63 A64 - A67 A68 - A76 B1-B8 B9-B15 B16 -B23 B24 - 133 3 B34 - B44 B45 - B53 B54 - B59 B60 - B76 B77 - B84 C1- C7 C8-C15 C16 - C21 C22 - C28 C29 - C38 C39 - C50 C51 - C62 C63 - C71 C72 - C77 C78 - C84 C85 - C94 C95 -C104 C105-C112
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0 CHEMICALS & FLAVORS (Section C) (Continued) DAP C113-C122 Candy C123 - C132 Lass C133 - C140 Urea 'C141 - C148 Isosweet C149-C159 P.M. Flavor S-600 C160-C168 Dispersant 100-PG C169 - C176 P.M. Flavor 122742 C177 - C185 ENERGY (Section D) Coal D1-D9 Fuel Oil D10-D27 Natural Gas D28 - D38 0
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tiQ53487so8 r
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1993 DIRECT M'ATERIAL BUYING PLAN' SUMMARY PAGE Material Code/Super Class 05 Description Filter Tow Unit of Measure lb. Std. Cost $ 1.649 Est. $ Purchase $167,373,500.00 Est. Usage 101,500,000 Est. Purch. Quantity 101,500,000 i - Annual Purchases Est. 1992 Proj. 1993 Overall Vendor Name Units a Units % Commitment(*) Rating 1. Eastman 40,500,000 40_52 43,100,000 42.5 2 - Fast Flow 4.5 2. Hoechst Celanese 64,100,000 61.28 58,400,000 57.5 2 - Fast Flow 4.1 3. Rhodia 0 0 4. 5. 6. 7. 8. 9. 10. Total 104,600,000 100.0 101,500,000 100.0 ' * 1. Contract 2. Purchase Order 3. Other Blanket P.O. - Fast Flow ! EXPLANATION The 1993 projected volume is based on a sales forecast of 331 billion cigarettes. sOV^^9vcSoti Page 1 of 16 Class/Code 05-Fi er To+ Approval - _Date: h 1v 91 Prepared By B. B. Jo ison Date:
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, OBJECPIVES/STlFATEGIES/ISSUSS OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN,QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $. 985,335.00 A N STRATEGIES- 1. Convert the total FT222 requirement to 2.6DPF/39,OO0TD. This specification change is projected to reduce filter tow usage by approximately 5%. 1993 Forecast for FT222 = 12,090,000 lbs. Annualized Savings = $985,335.00 Monthly Savings = $82,111.00 OTHER ISSUES: 0 TIMETIfELE March/93 This change is dependant on Operation Service's ability to duplicate the current filter performance. ! ots4eVCsoz Page 2 of 16 Class Cede 05/Filter Tow
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0 Maberial codpl3uper aazz 05 Unit of Measure LBS. Philip Ws U.S.a. Materials Purchasing 19M Direct IiaEerial Buying Plan Five-Year Buying Plan Projection Desaription FiI6erTow . ForeoastE)aEs October 1gBQ 1993 1994 1995 1996 1997 Supplier Name ttrols % tkllts % Units % t.kllts % tkyis % I II Eastman 43,100,000 40.5 45,300,400 43.4 46,500,000 44.1 48,200,000 45_0 49,400,000 45.6 HoechslCelanese 58,400,000 59.5 59,000,000 56.6 59,000,00U 55.9 59,000,000 55.0 59,000,000 54.4 101,500,000 100.0 104,900,000 100.0 105,500,000 100.0 107,200,000 100.0 108,400,000 100.0 ISSUES: 1. Rhodia's future with PM U.S.A is dependent on competitive pricing, the potential for U.S. storage an d enough capacity to support one PM U.S.A. faoility. 2. Will market conditions continue to drive the competitivenessof suppliers and wilt suppliers be encouraged to support volume sensitiveprograms due to idle oapaaity? Page 3 of 16 • Class/Code: O5/Filter Tow
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0 OBJECTIVi3/STRATEGIES • PURCHASING OBJECTIVES: 1. The primary objective is establishing long-range buying programs for 1993. 2. Reduce PM/Supplier cost. STRATEGIES TO MEET OBJECTIVES: la. Promote a long-range buying program with Hoechst Celanese and Eastman: • Only allow cost driven price adjustments • Solicit volume sensitive programs L lb. Maintain an internal database to track the worldwide supply and demand for filter tow and its raw materials. ic. Promote competitive delivered pricing and U.S. storage for the Rhodia filter tow to improve competitiveness and to gain technology. 2. Eliminate all non-value added procedures. FUTURE SUPPLY oUTLOOK: - The worldwide supply for filter tow is currently exceeding demand. The short-term and long-term availability of filter tow is driven by China's filter tow demand. China's filter tow.consumption is forecasted to grow at a rate of 4% to 5% per year for the next five years. The long-term impact of environmental cost on filter tow pricing. , zis4eKsoz Page 4 of 16 Class Code 05-Filter Tow
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0 • SUPPLIERZVALUATION SUPPLIER Eastman Hoechst Celanese YTEIGHT USING LOCATION A11 Locations A11 Locations 30 A. COST FACTORS (FT107) (FT107) 50 1. DELIVERED COST/# 1.64/lb. (5) 1.64/lb. (5) 10 2. VOLUME INCENTIVES (1) (1) 10 3. COST SAVINGS PROVIDED (3) (3) 20 4. PRICE LEADERSHIP (5) (1) TOTAL COST RATING 3.9 3.1 30 B. QUALITY FACTORS 40 1. % REJECTS .035% (5) .04% (5) - 20 2. QUALITY CONTROL (5) (5) 40 3. PROCESSABILITY/ NACHIIIABILITY (5) (5) TOTAL QUALITY RATING (5.0) , (5.0) 20 C. TOTAL SERVICE RATING (4.9) (4.6) 20 D. TOTAL SECURITY RATING . (SEE PAGE(S) 4 ) (4.0) (3.9) 100% OVERALL RATING 4.5 4.1 7 Page 5 of 16 Class Code 05-Filter Tow
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BECORITY EvP,L11k,Txoti ! WEIGHT SUPPLIER Eastman Hoechst Celanese 10 D. SECURITY 1. RAW MATERIALS (4) (3) 15 2. CAPACITY (3) (3) 5 3. FLEXIBILITY (5) (5) 10 4. SUPPLIER INVENTORY (4) (4) 10 5. PLANTS & LOCATIONS (4) (4) 10 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE 5) 4) 5 7. ENERGY (5) (5) 5 8. EPA COMPLIANCE (4) (4) 10 9. FINANCIAL . STRENGTH (SEE PAGE(S) 8 ) (3) (4) 10 10. CORPORATE MANAGEMENT STRENGTH (4) (4) 10 11. CORPORATE MANAGEMENT . COMMITMENT (5) (5) 100% TOTAL SECURITY RATING 4.0 3.9 tis49vesoz Page 6 of 16 Class Code 05-Filter Tow
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3ECURITY-13VALUATION WEIGHT SUPPLIER Eastman 10 D. SECURITY 1. RAW MATERIALS Wood pulp -1) Rayonier-Ga. and Florida; 2) International Paper-Miss.; 3) Western Pulp-Canada; 4) Weyerhauser-Washington; 5) P&G Cellulose-Fla. Inventory - 4 weeks; Acetic Anhydride - captive; Acetone - captive Flake - 2 weeks 15 2. CAPACITY Flake - 450 M lbs. Percentage available Tow - 312 M lbs. to PM is not fixed. Buying Plan Volume = 13% 5 3. FLEXIBILITY Good response time 10 4. SUPPLIER INVENTORY 2 weeks 10 5. PLANTS & LOCATIONS Kingsport, Tenn Plant/Equipment Good - 10 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE None 5 7. ENERGY Coal/Electrical Back-Up 5 8. EPA COMPLIANCE ** 10 9. FINANCIAL , STRENGTH (SEE PAGE(S) B ) 10 10. CORPORATE MANAGEMENT STRENGTH 10 11. CORPORATE MANAGEMENT COMMITMENT 100% TOTAL SECURITY RATING ** No threatening environmental issues Page 7 of 16 SUZIgtrEsoZ Class Code 05-Filter Tow
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SECORITYI3VALUATION 1 WEIGHT SUPPLIER Hoechst Ce anese '. D. SECURITY Wood Pulp-2 Suppliers-Rayonier-Ga.& Washington & Int'l Paper-Miss. Weyer- 10 1. RAW MATERIALS hauser-Washington, Western Forest-Canada. Inv.-4-6 wks. Acetic Anhydride- HC manufactured in TX., VA., and S.C. (Inventory 1 month) Acetone - many suppliers, PA, OH, IN., (Inventory 1 month) 15 2. CAPACITY Flake - 500 M lbs. Percentage available Tow - 197 M lbs. to PM is not fixed. Buying Plan Volume = 30% 5 3. FLEXIBILITY Excellent response time 10 4. SUPPLIER INVENTORY (A) Policy 2 weeks (B&C) Policy Up to 2 weeks 10 5. PLANTS & LOCATIONS Narrows, Va Plant/Equipment Good 10 6. LABOR a. UNION Amalgamated Clothing and Textile Workers Union b. CONTRACT EXPIRATION DATE June 19, 1995 c. SITUATION Good I d. SCORE 5 7. ENERGY - Coal/Fuel Oil Powered Electric Generating Equip. 5 - 8. EPA COMPLIANCE x* ~ 10 9. FINANCIAL . , j STRENGTH (SEE PAGE(S) 8 ) . 10 10. CORPORATE MANAGEMENT STRENGTH 10 11. CORPORATE MANAGEMENT COMMITMENT 100% TOTAL SECURITY RATING ** No threatening environmental issues sisLsV[:soz Page 8 of 16 Class/Code 05-Filter Tow
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FINANCIAL Ax IS WORKSHEET (NILLIONS OF DOLLARS; ALL DATA AS OF DE 31, 1991 UNLESS OTHERWISE INDICATEb.) • r VENDOR: Hoechst Celanese CURRENT RATIO: I 1991 I 1990 1989 1. Enter Current Assets 2,422 2,123 2,227 2. Enter Current Liabilities 1,487 • 1,399 1,522 3. Current Ratio (Line 1/Line 2) 1.629 1.517 1.463 DEBT TO ASSETS RATIO: 1. Enter Total Debt 752 741 803 2. Enter Total Assets 6,630 6,082 6,062 3. Debt To Assets Ratio (Line 1/Line 2) .113 .122 .132 PROFIT MARGIN ON SALES: n ~ 1. Enter Net Income 172 201 267 2. Enter Sales 6,794 5,881 6,016 3. Profit Margin On Sales (Line 1/Line 2) 2.5% 3.4% 4.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 172 201 267 2. Enter Total Assets 6,630 6,082 6,062 3. Return On Total Assets (Line 1/Line 2) 2.6 3.3% 4.4% EARNINGS PER SNARE: I I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I Page 9 of 16 Class/Code 05/Filter Tow 4Ts4sVesaz
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FINANCIAL ANAL aIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DEClR 31, 1991 UNLESS OTHERWISE INDICATED.) I VENDOR: Hoechst Celanese CURRENT RATIO: I 1988 I I • 1. Enter Current Assets 1,886 2. Enter Current Liabilities 1,302 3. Current Ratio (Line 1/Line 2) 1.449 DEBT TO ASSETS RATIO: 1. Enter Total Debt 8.4 2. Enter Total Assets 5,708 3. Debt To Assets Ratio (Line 1/Line 2) .143 b 0 PROFIT MARGIN ON SALES: 1. Enter Net Income 250 2. Enter Sales 5,679 3. Profit Margin On Sales (Line 1/Line 2) 4.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 250 2. Enter Total Assets 5,708 3. Return On Total Assets (Line 1/Line 2) 4.4 EARNINGS PER SHARE: I I Page 10 of 16 ~ Class/Code 05/Filter Tow
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~ FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) I VENDOR: Eastman Chemical Company CURRENT RATIO: I 1988 I I 0 1. Enter Current Assets 8,684 2. Enter Current Liabilities 5,850 3. Current Ratio (Line 1/Line 2) 1.48 DEBT TO ASSETS RATIO: 1. Enter Total Debt 16,184 2. Enter Total Assets 22,964 3. Debt To Assets Ratio (Line 1/Line 2) 70 A ti PROFIT MARGIN ON SALES: 1. Enter Net Income 1,397 2. Enter Sales 17,034 3. Profit Margin On Sales (Line 1/Line 2) 8.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,397 2. Enter Total Assets 22,964 3. Return On Total Assets (Line 1/Line 2) 6.1% EARNINGS PER SHARE: ! 4.31 Page 11 of 16Tow S'ISLB~~'•OZ Code OS/Filter
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• 0 FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) I VENDOR: Eastman Chemical Company CURRENT RATIO: EARNINGS PER SHARE: ozs4svCsoz I I 0 1. Enter Current Assets 8,258 8,608 8,591 2. Enter Current Liabilities 6,899 7,163 6,573 3. Current Ratio (Line 1/Line 2) 1.20 1.20 1.31 DEBT TO ASSETS RATIO: 1. Enter Total Debt 18,066 17,388 17,010 2. Enter Total Assets 24,170 24,125 23,652 3. Debt To Assets Ratio (Line 1/Line 2) 0.75 0.72 .72 PROFIT MARGIN ON SALES: 1. Enter Net Income *17 703 529 2. Enter Sales 19,419 18,908 18,398 3. Profit Margin On Sales (Line 1/Line 2) 0.09% 3.7% 2.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income '17 703 529 2. Enter Total Assets 24,170 24,125 23,652 3. Return On Total Assets (Line 1/Line 2) 0.07% 2.9% 2.2% , 1991 0.05 1990 2.17 *After deducting $1,605 million of restructuiing cost associated with the Resource Redeployment and Retirement plan which reduced net earning by $1,032 million. I 1989 1.63 Page 12 of 16 Class Code 05/Filter Tow
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• 0 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 99.1 M 101.8 M 110.8 M 104.3 M 104.6 M 101.5 M SUPPLIER % % % % % % Eastman 49.5 46.2 43.5 45.07 40.52 42.5 Hoechst Celanese 50.4 53.3 53.0 54.47 61.28 57.5 Rhodia 0.1 0.5 3.4 0.46 0 0 Page 13 of 16 Class/Code 05-Filter Tow ' azs~,e~ESOz
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Eastman Savings 1. Conversion form FT107 to 2.7/35,000 on the full value brands resulted in a three percent reduction in tow usage. 1992 Total Savings = $229,960.00 ! zzs~,e~~soz Page 14 of 16 Class/Code 05-Filter Tow
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• PHILIP MORRIS U.S.A • 1992 LONG RANGE BUYING PLAN MATERIAL CODE/SUPER CLASS 05 DESCRIPTION FILTER TON UNITS OF MEASURE LBS. PRODUCTION FORECAST DATED_OCTOBHR, 1992 ISSUES: SUPPLY SECURITY 1993 1994 1995 1996 1997 Filter Tow Supply Forecast 116425 lbs. 1225M lbs. 1286M lbs. 1334M lbs. 1352M lbs. (Based on an Average of Eastman and Hoechst Celanese World supply Forecast) Filter Tow Demand Forecast 098M lbs. 135P1 lbs. 165ii lbs. 200M lbs. 225M lbs. A :. (Based on an Average of Eastman ~ and Hoechst Celanese World Demand Forecast) Hoechst Celanese World 407.7 lbs. 407.7 lbs. 436.5 lbs. 462.9 lbs. 462.9 lbs. supPly Eastman World Supply 358 lbs. 383 lbs. 395 lbs. 395 lbs. 395 lbs. PM's Forecasted Utilization of 19.4% 19.1% 17.8% 18.1% 18.3% Hoechst Celanese and Eastman Domestic Supply . ~ Page 15 of 16 Class/Code 05-Filter Tow
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0 0 Worldwide Filter Tow Supply Vs. Demand a rn ! Vzs4aMoz Supply 1993 1994 1995 1996 Demand ® 1997 0 Page 16 of 16 C1ass/Code - 05 Filter Tow
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• 1993 DIRECT MATEI2I8L BUYING PLAN • SUMMARY PAGE Material Code/Super Class 05-800-A Description Triacetin Plasticizer Unit of Measure lb. Std. Cost $ .857121 Est. $ Purchase $7,924,941.00 Est. Usage 9,246,000 Est. Purch. Quantity 9,246,000 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units % Units o Cortunitment-(*) Overall Rating 1. Eastman 4,430,000 47.5 4,523,000 48.9 2 - Monthly 4.1 2. Hoechst Celanese 4,900,000 52.5 4,523,000 48.9 2 - Monthly 4.1 3. Unichema 0 200,000 2.2 4. 5. 6. 7. 8. 9. 10. Total 9,330,000 100.0 9,246,000 100.0 * 1. Contract EXPLANATION 2. Purchase Order (Annual Blanket) 3. Other Based on a forecast of 329 billion filtered cigarettes. szsLsVCsaz Page 1 of 10 Class/Code o5-800-A , _ Approval, ~lftRn~, ~~ Date:/~3 ~',q Pre ared B B B 'Johnso67 Dat p y . . e:
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OBJECTIVESTRATEGIES PURCHASING OBJECTIVES: 1. 2. 3. STRATEGIES TO MEET OBJECTIVES: 1. 2. 3. • supply security continues to be the major objective since the two qualified sources of supply primarily rely on one source of raw material. Maintain the level of quality and pricing consistent with price adjustments for the raw material. Promote Volume Sensitive programs: a. that will reduce the total manufacturing cost b. net a lower delivered price. Establish a specification for synthetic and natural glycerine based triacetin that will allow interchangeable usage in all locations. Qualify Hoechst Celanese and Unichema's triacetin produced from 100% natural glycerine. Use Unichema's presence to promote competition. FUTURE SUPPLY OUTLOOK: - Triacetin capacity is adequate for future needs. However, the long- term supply availability of synthetic glycerine is questionable. Dow Chemical Co. continues to control the supply availability for synthetic glycerine in the U.S.A. due to their flexibility of shifting the output from glycerine to Epichlorohydrin. Dow tends to use this mechanism to control pricing when necessary. Pricing erosion and new natural glycerine capacity are forecasted to force Dow to charge a premium for their product or exit the market. - Page 2 of 10 Class Code 05-800-A szs4eiYesoz
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Philip loris U.SA. 0 • Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material CodelSupor Gass OT.r-800-A Unit oF Measure LBS. Descriptioa Triacetin Ptuiicimt Forecast DvaEs October 1992 1993 1994 1995 1996 1997 $uWier Name UnitS % Ur111S % Lk1itS % Unlts % Unlt3 % Hoechst Celanese 4,523,000 48.9 4,275,000 45.0 4,324,950 45-0 4,392,900 45,0 4,445,550 45.0 Eastman 4,523,000 48.9 4,275,000 45.0 4,324,950 45.0 4,392,900 45.0 4,445,550 45.0 Unichema' 200,000 22 950,000 10.0 961,100 10.0 976,200 10.0 987,900 i0.0 9,246,000 100.0 9,500,000 100.0 9,611,000 100.0 9,762,000 100.0 9,879,000 100.0 ISSUES: - Qualify Natural Glycerine Based Triacetin - Qualify Unichema as a third source of supply to address the syntheti c glycerine security concerns. ` The voe u me forecasted for Unichema is based on the assumption that the U niche ma product will be approved by R & D by 1993. The 19M volume reflects quantities needed to complete the Unichema qualification. Page 3 of 10 4zs4sV>rsoz Class/Code: 05-80-A
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0 SUPPLIER~VALUATION • SUPPLIER Eastman Hoechst Celanese WEIGHT USING LOCATION All Locations All Locations 25 A. COST FACTORS 50 1. DELIVERED COST/# $.78/lh. (5) $.78/lb (5) 10 2. VOLUME INCENTIVES (1) (1) 20 3. COST SAVINGS PROVIDED (1) (1) 20 4. PRICE LEADERSHIP (1) (1) TOTAL COST RATING 3.0 3.0 30 B. QUALITY FACTORS 50 1. % REJECTS . 1.1% (5) 0.95% (5) 25 2. QUALITY CONTROL (4.5) (4.5) 25 3. PROCESSABILITY/ MACHINABILITY (5) (5) TOTAL QUALITY RATING 4.9 4.9 15 C. TOTAL SERVICE RATING 4.7 4.8 30 D. TOTAL SECURITY RATING (SEE PAGE(S) "6 ) 4.1 3.9 100% OVERALL RATING 4.1 4.1 ezs4evCsaz Page 4 of 10 Class/Code 05-800-A I
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SECURITY-EVALUATION WEIGHT SUPPLIER Eastman Hoechst Celanese 15 D. SECURITY 1. RAW MATERIALS Glycerine sourced by Dow Chem.& P&G. Inv.level= 10 days. Acetic Anhydride - Captive (4) Glycerine sourced by Dow Chemical. Inventory 4 weeks. Acetic Anhydride - HC manu- factured in Pampa, Texas and Edmonton, Canada. Acetic Anhydride Average Inventory = 4 weeks (3) 10 2. CAPACITY • 40 M lbs. Availability to PM negotiable. Buying Plan Volume = 13% (4) 12 M lbs. 57% available to PM. Buying Plan Vo1=44%(3) 10 3. FLEXIBILITY Excellent response time (5) Excellent response time (5) 5 4. SUPPLIER INVENTORY 2 weeks (4) 4-6 weeks (4) 10 5. PLANTS & LOCATIONS Kingsport, Tenn Rock Hill, SC (3) Plant/Equipment Good (3) Plant/Equipment Good 10 . 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE - c. SITUATION d. SCORE None . 5) Amalgamated Clothing & Textile Workers June 21, 1992 Good (4) 5 7. ENERGY Coal/Electricity (5) Coal/Fuel Oil (5) 5 8. EPA COMPLIANCE ** (4) ** (4) 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 5 ) (3) (4) 10 10. CORPORATE MANAGEMENT STRENGTH (4) (4) 10 11. CORPORATE MANAGEMENT COMMITMENT (5) (5) 100% TOTAL SECURITY RATING 4.1 3.9 ** No threatening environmental issues Page 5 of 10 class/Code 05-800-A szs~,e~~sa~
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0 SUPPLIER CURRENT RATIO: FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) Eastman 1991 1990 I • 1. Enter Current Assets 8,258 8,608 8,591 2. Enter Current Liabilities 6,899 7,163 6,573 3. Current Ratio (Line 1/Line 2) 1.20 1.20 1.31 DEBT TO ASSETS RATIO: 1. Enter Total Debt 18,066 17,388 17,010 2. Enter Total Assets 24,170 24,125 23,652 3. Debt to Assets Ratio (Line 1/Line 2) 0.75 - 0.72 ..72 b i nN PROFIT MpRGIN ON SALES: 1. Enter Net Income *17 703 529 2. Enter Sales 19,419 18,908 18,398 3. Profit Margin On Sales (Line 1/Line 2) 0.09% 3.7% 2.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income *17 703 529 2. Enter Total Assets 24,170 24,125 23,652 3. Return on Total Assets (Line 1/Line 2) 0.07& 2.9% 2.2% Earnings Per Share: 11 0.05 I *After deducting $1,605 million of restructuring cost associated with the Resource Redeployment and Retirement plan which reduced net earnings by $1,032 million. MV649trusoz 2.17 I 1989 1.63 Page 6 of 10 Class/Code 05-800-A I
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FINANCIAL ANAL2SIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER CURRENT RATIO: Eastman I 1988 I I 0 1. Enter Current Assets 8,684 2. Enter Current Liabilities 5,850 3. Current Ratio (Line 1/Line 2) 1.48 DEBT TO ASSETS RATIO: 1. Enter Total Debt 16,184 2. Enter Total Assets 22,964 3. Debt to Assets Ratio (Line 1/Line 2) .70 n i W PROFIT MARGIN ON SALES: 1. Enter Net Income 1,397 2. Enter Sales 17,034 3. Profit Margin On Sales (Line 1/Line 2) 8.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,397 2. Enter Total Assets 22,964 3. Return on Total Assets (Line 1/Line 2) 6.1% Earnings Per Share: 11 4.31 I I Page 7 of 10 1E6G8t?C$O2: Class/Code 05-800-A
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0 SUPPLIER CURRENT RATIO: FINANCIAL ANALYSIS WORRSBEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) Hoechst Celanese I 1991 1990 I 1989 1. Enter Current Assets 2,422 2,123 2,227 2. Enter Current Liabilities 1,487 i,399 1,522 3. Current Ratio (Line 1/Line 2) 1.629 1.517 1.463 DEBT TO ASSETS RATIO: 1. Enter Total Debt 752 741 803 2. Enter Total Assets 6,630 6,082 6,062 3. Debt to Assets Ratio (Line 1/Line 2) .113 .122 .132 D v PROFIT MARGIN ON SALES: ~ 1. Enter Net Income . 172 201 267 2. Enter Sales 6,794 5,881 6,016 3. Profit Margin On Sales (Line 1/Line 2) 2.5% 3.4% 4.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 172 201 267 2. Enter Total Assets 6,630 6,082 6,062 3. Return on Total Assets (Line 1/Line 2) 2.6% 3.316 4.4% Earnings Per Share: ! , Us4smsoz I I Page 8 of 10 Class/Code 05-800-A J
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• FINANCIAL ANALYSIS WORKS&EET • (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER CURRENT RATIO: Hoechst Celanese I 1988 I I. Enter Current Assets 1,886 2. Enter Current Liabilities _ 1,302 3. Current Ratio (Line 1/Line 2) 1.449 DEBT TO ASSETS RATIO: 1. Enter Total Debt 8.4 2. Enter Total Assets 5,708 3. Debt to Assets Ratio (Line 1/Line 2) .143 b N ~ PROFIT MARGIN ON SALES: 1. Enter Net income 250 2. Enter Sales 5,679 3. Profit Margin On Sales (Line 1/Line 2) 4.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income ~ 250 2. Enter Total Assets 5,708 3. Return on Total Assets (Line 1/Line 2) 4.4% Earnings Per Share: 11 I I Page 9 of 10 EE6G&VUSOZ Class/Code 05-8o0-A
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• 0 O 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 8,416,425 8,852,530 9,249,085 8,812,926 9,330,000 9,246,000 SUPPLIER o % a ~ o 0 Eastman 61.2 54.1 47.0 45.3 47.5 48.9 Hoechst Celanese 38.8 45.9 53.0 54.7 52.5 48.9 ' Unichema 0 0 0 0 0 2.2 tss4evesoz Page 10 of 10 C1ass Code - 05-800-A
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• 1993 DIRECT MATERIAL BUYING PLAN • SUMMARY PAGE Material Code/Super Class 05-873-A/P Description PMTC (20 x 70 Mesh Coconut Carbon) Unit of Measure lbs. Std. Cost $ 1.504737 Est. $ Purchase $5,025,822.00 Est. Usage 3,340,000 lbs_ Est. Purch. Quantity 3,340,000 lbs. Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units " ~ Units o Commitment (*) Overall Rating 1. Calgon 2,135,025 72 2,243,000 67 3 - Fast Flow 3.6 2. PICA - 808,858 28 1,097,000 33 2 - Monthly 3.3 3. 4. 5. 6. 7. 8. 9. 10. Total 2,943,883 100.0 3,340,000 100.0 * 1. Contract 2. Purchase Order (Annual Blanket) 3. Other Page 1 Class/Code S4VF.aSM4SQz Approval Prepared By Date: ~/3Z' 9 Date:
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• OBJECTIVES/STRATEGIES/ISSUES , • PURCHASING OBJECTIVES: 1) 2) STRATEGIES TO MEET OBJECTIVES: la. 1b. lc. Supply security is the primary objective since raw material availability is extremely sensitive to political unrest, weather, and demand fluctuations. Quality maintenance and competitive pricing. Continue to support storage of the Pica product in the U.S.A. Requalify the Neville Island activation process. Assure that-contingencies are developed by Calgon for their contract period. Promote long-term agreements and volume sensitive programs. ISSUES: Short term supply for coconut shell carbon is adequate but the production location for coconut char continues to be a concern. Calgon is equipped to activate coconut char in Neville Island, Penn., however, it is now time to requalify this facility. * Calgon is sourced from the Philippines and Pica from Vietnam and Sri Lanka Page 2 of 11 Class Code 05-873-A/P ses4stYMaz
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. Philip YWs U.S.A. • Ma6erials Purchasing 19St Direct IYlatetiat Buying PFan Five-Year Buying Plan Projection Material CoaetSup.r cx>asa os-srJ-nrP oescription PWC. (4d x 7a hfealr Coaonut Carban} Unit of Measure LBS: Forecast i9aee 1QM - 1993 1994 1995 1996 1997 Supplier Name Wvts % UOits % Units % lMits 96 Units % Calgan 2,243.000 67.0 2.304,682 67.0 23,316,473 67.0 2,358,254 67.0 2,396,555 67.0 PICA 1,097,000 35.0 1,127,168 33.0 1,140,356 33.0 1,158,259 33.6 1,172,100 33.0 3,340,000 100.0 3,431,850 100.0 24,456,829 100A 3,516,513 100.0 3,56$655 100.0 ISSUES: Su pply security and the promotion of competitive pricing - Promote volume sensitivellong>-terln programs. Page 3 of 11 4es4stesaz Class/Code: 05-873-AlP
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SUPPLIER EVALUATION . SUPPLIER . Calgon PICA WEIGHT USING LOCATION Stockton Street All Locations . 20 A. COST FACTORS 40 1. DELIVERED COST/# $1.37 (3) $1.39 (2) 20 2. VOLUME INCENTIVES (0) (0) 20 3. COST SAVINGS PROVIDED . (0) (0) 20 4. PRICE LEADERSHIP (0) (0) TOTAL COST RATING (1.2) (0.8) 30 B. QUALITY FACTORS 50 1. % REJECTS 0.00% (5) 0.00% (5) 25 2. QUALITY CONTROL (5) (5) 25 3. PROCESSABILITY/ MACHINABILITY (5) (5) TOTAL QUALITY RATING (5.0) (5.0) 15 C. TOTAL SERVICE RATING (4.0) (3.0) 35 D. TOTAL SECURITY RATING (SEE PAGE(S) 6 ) (3.6) (3.55) 100e OVERALL RATING 3.6 3.3 - Page 4 of 11 SE6L.S~~SQ~.. . Class/Code 05-873-A/P _
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SECURITY E4ALDATION a w ~ WEIGHT SUPPLIER Calgon . 15 D. SECURITY 1. RAW MATERIALS Coconut Shell - Philippines and Sri Lanka. Inventory 2-3 months. 30 days of coconut char in Neville Island. (2) 5 2. CAPACITY 20_M lbs.- Philippines. 40% available to PM. Buying Plan Volume = 11.20% 9 M lbs_ - USA. - . (5) 10 3. FLEXIBILITY Two Plants-Philippines - 16 to 31 activation kilns. One Plant - USA. Excellent response time. (5) 5 4. SUPPLIER INVENTORY Finished Product 1 - 2 months . In process - 1 month (2) 15 5. PLANTS & LOCATIONS (1) Neville Island, PA. (2) Cagayan De Oro, Luzon Plant/Equipment - Good Carmona, Philippines (3) - 10 6. LABOR Neville Island, PA Philippines a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE United Steelworkers February 1, 1993 Excellent (3) Non-Union - 10 7. ENERGY Natural Gas/Oil (5) 5 8. EPA COMPLIANCE (4) 10 9. FINANCIAL ~ STRENGTH (SEE PAGE(S) 7 ) (4) 10 10. CORPORATE MANAGEMENT STRENGTH (4) 5 11. CORPORATE MANAGEMENT COMMITMENT (4) 100% TOTAL SECURITY RATING 3.6 Note: The two plants operating in the Philippines are owned by PACCO (Pacific Activated Carbon Co.). Calgon provides the technical expertise and the majority of the finished product is sold to Calgon. Page 5 of 11 Class/Code 05-873-A/P
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SECURITY.VALUATION I WEIGHT SUPPLIER Pica 15 D. SECURITY 1. RAW MATERIALS Coconut shell from Sri Lanka, Philippines, Indonesia, Vietnam, and the Ivory Coast. Inventory 3-4 months. (4000 MT) (2) 5 2. CAPACITY 20 M lbs. 30% available to PM. Buying Plan Volume = 5.5% (5) . 10 3. FLEXIBILITY One Plant with four buildings and nine activation furnaces (3) 5 ~ 4. SUPPLIER INVENTORY Finished Product and shipments in route 1 - 1.5 months. (3) , 15 5. PLANTS & LOCATIONS Vierzon, France (3) Product warehoused in Charlotte Bonded Distribution 10 6. LABOR, a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION ' d. SCORE None 5) 10 7. ENERGY Natural Gas/Elec. (4) 5 8: EPA COMPLIANCE (4) 10 9. FINANCIAL - STRENGTH (SEE PAGE(S) 7) (4) 10 10. CORPORATE MANAGEMENT . STRENGTH (4) 5 11. CORPORATE MANAGEMENT COMMITMENT (4) 10Do TOTAL SECURITY RATING 3.55 otFs4eV[:saz Page 6 of 11 Class/Code 05-873-A/P
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~ FINANCIAL ANAL45IS WORKSHEET • (MILLIONS OF DOLLARS;'ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER Calgon Carbon Corporation CURRENT RATIO: I 1991 I 1990 I 1989 I 1. Enter Current Assets 124 129 129 2. Enter Current Liabilities 46 47 39 3. Current Ratio (Line 1/Line 2) 2.70 2.74 3.31 DEBT TO ASSETS RATIO: 1. Enter Total Debt *31 **105 *30 **85.3 *22 **72 2. Enter Total Assets - 336 285 234 3. Debt to Assets Ratio (Line 1/Line 2) .092 **0.31 .105 **0.30 .094 **0.31 PROFIT MARGIN ON SALES: 1. Enter Net Income 38 38 35 2. Enter Sales 308 285 253 3. Profit Margin On Sales (Line 1/Line 2) 12.3% 13.3% 13.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income 38 38 35 2. Enter Total Assets 336 285 234 3. Return on Total Assets (Line 1/Line 2) 11.3% 13.3% 15% *Adjusted 2/1 stock split in 1991. Earnings Per Share: T.Vs4evESOz .94* 1.89 I .94 1.89 I .87 1.74 *Debt as reported by Calgon Page 7 of 11 **PM's Calculation (Total Liabilities Minus Shareholder's Equity) Class Code 05-873-A/P
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• FINANCIAL ANALYSIS WORKSHEET 0 (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER Calgon Carbon Corporation CtTRRENT RATIO: I 1988 I 1987 I 1986 I 1. Enter Current Assets 107 2. Enter Current Liabilities 35 ' 3. Current Ratio (Line 1/Line 2) 3.06 DEBT TO ASSETS RATIO: a 1. Enter Total Debt *31 **75,9 , 2. Enter Total Assets 196 3. Debt to Assets Ratio (Line 1/Line 2) .158 **39 w -Ph PROFIT MARGIN ON SALES: 1. Enter Net Income 29 2. Enter Sales 226 3. Profit Margin On Sales (Line 1/Line 2) 12.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income 29 2. Enter Total Assets 196 3. Return on Total Assets (Line 1/Line 2) 14.8% Earnings Per Share: ztFG4gMS0Z *Debt as reported by Calgon 1.47 **PM's Calculation (Total Liabilities Minus Shareholder's Equity) I Page 8 of 11 Class Code 05-873-A/P
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0 SUPPLIER CURRENT RATIO: FINANCIAL ANALY5IS WORRSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTEERWISE INDICATED.) PICA I 1991 1990 I 1989 • l. Enter Current Assets 56.593 65.722 72.073 2. Enter Current Liabilities 33.169 41.131 39.814 3. Current Ratio (Line 1/Line 2) 1.71 1.59 1.81 DEBT TO ASSETS RATIO: 1. Enter Total Debt 56.723 56.068 56.477 2. Enter Total Assets 98.825 102.096 106.697 3. Debt to Assets Ratio (Line 1/Line 2) .57 .55 .53 a ~ PROFIT MARGIN ON SALES: 1. Enter Net Income 7.087 7.350 8.030 2. Enter Sales 126.125 125.913 116.596 3. Profit Margin On Sales (Line 1/Line 2) 5.61% 5.84% 6.89% RETURN ON TOTAL ASSETS: 1. Enter Net Income 7.087 7.350 8.030 2. Enter Total Assets 98.825 102.096 106.697 3. Return on Total Assets (Line 1/Line 2) 7.17$ 7.20% 7.50% Earnings Per Share: 11 1.039 I 1.147 I 1.254 Page 9 of 11 MLgvesoZ Class Code 05-873-A/P
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0 SUPPLIER CURRENT RATIO: FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERiiISE INDICATED.) PICA I 1988 I 1. Enter Current Assets 62.636 2. Enter Current Liabilities 31.931 3. Current Ratio (Line 1/Line 2) 1.96 , DEBT TO ASSETS RATIO: 1. Enter Total Debt 49.197 2. Enter Total Assets 91.921 3. Debt to Assets Ratio (Line 1/Line 2) 53.52 n i ~ PROFIT MARGIN ON SALES: 1. Enter Net Income _ 9.071 2. Enter Sales 107.949 3. Profit Margin On Sales (Line 1/Line 2) 8.40% RETURN ON TOTAL ASSETS: 1. Enter Net Income 9.071 2. Enter Tota1 Assets 91.921 3. Return on Total Assets (Line 1/Line 2) 9.89% Earnings Per Share: 1.416 I I ! $$6G9$ESOZ ciass Coae 05f8731A/P
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1988 - 92 BUYING HISTORY ANI) 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 1.792M 3.113 M 3.271 M 3.101 M 2.943 M 3.340 M SUPPLIER % % % % , o Calgon 61.8% 72.5% 62.9 66 72 67% PICA 38.2% 27.5% 37.1 34 28 33% Specification changes in Dec/1992 consolidated the coconut carbon requirement to one specification. Please reference 05-866-A and 05-870-A for the Buying History of Calgon and PICA, respectively. Class/Code 05-873-A/P SV6L8tFESOz Page 11 of 11
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1993 DIRECT MATER •BUYING PLAN SUMMARY PAGE Material Code/super Class 05-875-A Description PMCC 14 x 40 Mesh Unit of Measure lb. std. Cost $ 1.445250 Est. $ Purchase $4,769,325.00 Est. Usage 3,300,000 Est. Purch. Quantity 3,300,000 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units % Units , Commitment (*) Overall Rating 1. Calgon 3,440,000 100 , 3,300,000 100 2- Monthly 4.2 2. 3. 4. 5. 6. 7. 8. 9. 10. Total 3,440,000 100.0 3,300,000 100.0 * 1. Contract 2. Purchase Order 3. Other (Annual Blanket) EXPLANATION Page 1 of Class/Code 05-875- Approval - Approval Date: ~~ T i.t Prepared By B. B. Johnson '~ Date: sVs4wsaz 9
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• OBJECTTVES/STRATEGIES/ISSUBS • OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1992 SAVINGS: $ 132,000.00 STRATEGIES TIETABLE Calgon offered PM the opportunity to enter into a long-term Jan/1993 - Dec/95 agreement for the activated coal carbon to discourage further consolidated to one carbon specification. 1993 Forecasted Savings = $132,000.00 1994 Forecasted Savings = $271,260.00 1995 Forecasted Savings = $411,650.00 Total Savings = $814,910.00 OTHER ISSUES: 1. Development of high speed combiners by Engineering. . t 2. Long range plans to consolidate to one activated carbon specification. 446L8~7~as.oz Page 2 of 8 Class Code 05-875-A
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S OBdECTIVES/S • GIES/ISSUES • PURCHASING OBJECTIVES: Establish a long-term agreement to avoid potential price increases through 1995. STRATEGIES TO MEET OBJECTIVES: Assure that R & D and Engineering long-term projects will not require a specification change for the Lark carbon through 1995. Page 3 of 9 Class/Code o5-s75-A
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~ Philip is U.SA. • AAalerialrchasing 1993 Direct Material Buying Plan Five Year Buying Plan Projection Mseerial Coddsuper Cfaes o5-975-a Description PRACC 14 X 40 Activated Carban Unit of Measure LBS. Forccaa! DaEe 10192. 1993 1994 1995 1996 1997 SupplierNarfie Unils % Urits % lkvls % Urils % Units %. Calgon 3,300,000 100.0 3,390,750 100.0 3,430,422. 10D.0 3,484,279 100.0 3,525,916 100.0 Second Source 0.0 0.0 0.0 0.0 - 0.0 3,300,000 100.0 3,390,750 100.0 3,430,422 100.0 3,484,279 100.0 3,525,916 100.0 ISSUES: Qualification of a second source of supply is dependent on future R & D projects. Page 4 of 9 Class/Code: 05-875-A
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• • o SUPPLIER EVALUATION SUPPLIER Calgon P7EIGHT USING LOCATION M/C, S/5. 25 A. COST FACTORS 60 1. DELIVERED COST/# $1.41 (3) 2. VOLUME INCENTIVES 40 3. COST SAVINGS PROVIDED (5) -- 4. PRICE LEADERSHIP --- TOTAL COST RATING (3.8) ' 30 B. QUALITY FACTORS 50 1. % REJECTS 0.00% (5) 25 2. QUALITY CONTROL (5) 25 3. PROCESSABILITY/ MACHINABILITY (5) TOTAL QUALITY RATING (5) - 15 C. TOTAL SERVICE RATING (4.0) 30 D. TOTAL SECURITY RATING (SEE PAGE(S) 6 ) (4.1) 100% OVERALL RATING 4.2 Page 5 of 9 QSS4gvcS0Z Class/Code 05-875-A
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SECURITY,ZVALUATION WEIGHT SUPPLIER Calgon D. SECURITY High grade metallurgical coal - W.Va. and 10 1. RAW MATERIALS Kentucky. Inventory 90 days. Long-term supply agreements. (5) 5 2. CAPACITY Processing capacity 103 M lbs. 19% available to PM. Buying Plan Vol.= 3.9% No internal requirements. (5) 10 3. FLEXIBILITY . One processing plant with six activation lines . one plant with 3 furnaces for impregnating. Excellent response time. (5) 5 4. SUPPLIER INVENTORY Finished product - 15-60 days (5) 10 5. PLANTS & LOCATIONS **Catlettsburg, Ky. Product is sized and and activated. (3) 10 6. LABOR a_ UNION United Steelworkers, , Catlettsburg, Ky. b. CONTRACT June 6, 1993 EXPIRATION DATE Neville Island, Penn February 1, 1993 _ c. SITUATION Good d. SCORE (3) 10 7. ENERGY Natural Gas/Oil. (5) 10 8. EPA COMPLIANCE (4) 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 7 ) (3) 10 10. CORPORATE MANAGEMENT STRENGTH (4) ' 10 11. CORPORATE MANAGEMENT - COMMITMENT (4) ' 100% TOTAL SECURITY RATING 4_1 ** Neville Island, Penn - The product is moistured, screened and packaged. Plant/Equipment Good. issLsVssaz Page 6 of 9 Class/Code 05-875-A
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0 FINANCIAL ANALYSIS WORKSEEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.) I SUPPLIER Calgon Carbon Corporation CURRENT RATIO: 1991 I 1990 I e 1989 1. Enter Current Assets 124 129 129 2. Enter Current Liabilities 46 47 39 3. Current Ratio (Line 1/Line 2) 2.70 2.74 3.31 DEBT TO ASSETS RATIO: 1. Enter Total Debt *31 **105 *30 **85.3 *22 **72 2. Enter Total Assets 336 285 234 3. Debt to Assets Ratio (Line 1/Line 2) .092 **0.31 .105 **0.30 .094 **0.31 a a PROFIT MARGIN ON SALES: 1. Enter Net Income 38 . 38 35 2. Enter Sales 308 285 253 3. Profit Margin On Sales (Line 1/Line 2) 12.3% 13.3% 13.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income 38 38 35 2. Enter Total Assets 336 285 234 3. Return on Total Assets (Line 1/Line 2) 11.3% 13.3% 15% *Adjusted 2/1 stock split in 1991. Earnings Per Share: zSSLgtyus()Z *Debt as reported by Calgon .94* 1.89 s*PM's Calculation (Total Liabilities Minus Shareholder's Equity) I .94 1.89 .87 1.74 Page 7 of 9 Class Code 05^875-A 1
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0 FINANCIAL ANALYSIS WORKSNEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTNERWISE INDICATED.) I SUPPLIER Calgon Carbon Corporation CURRENT RATIO: 1988 1987 I 19B6 I 1. Enter Current Assets 107 2. Enter Current Liabilities 35 3. Current Ratio (Line 1/Line 2) 3.06 DEBT TO ASSETS RATIO: 1. Enter Total Debt *31 **75.9 2. Enter Total Assets 196 3. Debt to Assets Ratio (Line 1/Line 2) .158 **39 A ~"., PROFIT MARGIN ON SALES: 1. Enter Net Income 29 2. Enter Sales 226 3. Profit Margin On Sales (Line 1/Line 2) 12.8$ RETURN ON TOTAL ASSETS: 1. Enter Net Income 29 2. Enter Total Assets 196 3. Return on Total Assets (Line 1/Line 2) 14.8% Earnings Per Share: VSGMQVCS0Z ? *Debt as reported by calgon 1.47 **PM's Calculation (Total Liabilities Minus Shareholder's Equity) I I Page 8 of 9 Class Code 05-875-A
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN s 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 2.60 M 3.04 M 3.44 M 3.415M 3.44 M 3.300 M SUPPLIER % o ~ e % Calgon 100 100 . 100 100 100 100 Page 9 of 9 Class/Code 05-875-A tss4evcsoz
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0 • 1993 DIRECT MATL+RIBL BUYING PLAN SUMMARY PAGE Material Code/Super Class 06 Description Plug Wrap Unit of Measure Bob Std. Cost $ 11.265 Est. $ Purchase $17,859,768.00 Est. Usage 1,585,421 Est. Parch. Quantity 1,585,421 Annual Purchases Est. 1992 Proj. 1993 * Supplier Name Units ~ Units ~ . Comnitment (*) * Overall Evaluation 1. Kimberly-Clark 1,055,774 66.0 1,585,421 100% 2- Monthly A 2. Dexter Nonwoven 275,141 17.2 0 0% N 3. Ecusta 268,743 16.8- 0 0% N 4. 5. 6. 7. 8. 9. 10. Total 1,599,658 100.0 1,585,421 100.0 * 1. Contract 2. Purchase Order 3. other - **See summary in the Fine Paper Accessment. ***For review of cost, quality, service, security and financial performance, please see Fine Paper Accessment. sss~s~~soz Page 1 of 4 Class/Code 06 Plu Wra Approval ' Date: i~ 9 5-T PrcnaraA Rv ~ ' nntn•
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OBJECTIVES/STRATEGIES/ISSUES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 2,200,000.00 • STRATEGIES• TIMETABLE A m o o o o Generated data base to review all Plug Wrap suppliers' performance in the area of quality, cost, service and security to support the final conclusions in the Fine Paper Assessment. Expedite program implementation. Qualify all remaining non-qualified materials. Assure that the purcbasing program is consistent with contract administration. Feb./93 - Dec./93 OTHER ISSUES• Ecusta's and Dexter's response to loss of business. Page 2 of 4 ) Class Code 06/Plug Wrap 9S6M6~~SOx
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i Material CodelSuQer Class tJB Philip !•ris U.S.A. Materials Purchasing 1993 Direct Ma6erial Buying.Ptan Five-Year Buying Plan Projection Descriptiwr Plug Wrap . Unit of Measure Bobbin Foreqst Date October199F2. - 1993 1994 1995 1996 1997 SuppGerName Unils % Units % Uni,s 96 thtits % Urv1s % Kim6erly-Clar1c 1,585,421 100.0 1,629,000 100.0 1,648,079 100.0 1,673,954 100.0 1,693,958 100,0 1,585,421 100.0 1,629,000 100.0 1,648,079 100.0 1,673,954 100.0 1,693,958 100.0 ISSUES: Supply security concerns resUlting from quality related issues. Page 3 of 4 Class/Code:06lPlug Wrap
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0 0 0 1988 - 92 BUYING HISTORY AND'1993 BUYING PLF1N 19B8 1989 1990 1991 1992 (E) 1993 (P) TOTAL ¢UANTITY 1,431,644 1,498,521 1,638,153 1,571,839 1,599,658 1,585,421 SUPPLIER % % % Kimberly-Clark 45.4 42.9 46.1 43.4 66.0 100 Dexter Nonwoven 35.1 38.8 31.3 41.5 17.2 0 Ecusta 19.5 18.4 22.6 15.1 16.8 0. : Page 4 of 4 t Class/Code 06-Plua Wrap ~S6r.S~~SO~
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• 1993 DIRECTINWEBIAh BUY3NG PLAN Y PAGE Material Code/Super Class 06-816-A Description Mouthpiece Paper Unit of Measure Bob Std.'Cost $ 20.789723 Est. $ Purchase $4,636,108.00 Est. Usage- 223,000 Est. Purch. Quantity 223,000 0 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units % Units o Commitment (*) Overall Rating 1. Milprint 210,690 100 212,650 95.48 2- Monthly 3.6 2. Hermetite 0 10,350 4.6 - - 3. 4. 5. 6. 7. 8. 9. 10. Total 210,690 100.0 223,000 100.0 * 1. Contract 2. Purchase Order (Annual Blanket) FXPLANATION 3. other Page 1 of 9 Hermetite's volume represents quantity required to complete Class/Code 06-816-A their qualification. Approval .ti~ j9 Date:/ /n %4 . Prepared By B.B. JohnsoDate: sssLSVCsaz
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• OBJECTIVES/STRAT•IES/ISSUES • OBJECTIVE: TO REDUCE MATERIAL COSTS WITR NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ *68,015.00 STRATEGIES- TIMETABLH - Confirm PM's decision to qualify a second converter. Jan./93 - June/93 -- Milprint announced a price reduction for Jan., 1993. This announcement was made in July, 1992 - Milprint is taking the necessary measures to assure their position in this market. OTHER ISSUES- None. *1993 Actual compared to 1992 Actual. Page 2 of 9Q9&z1gtFC!;0.Lr Class Code 06-816-A
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• OBJECTIVES/STRATEGIES - _ PURCHASING OBJECTSVES: 1. Supply security continues to be the major objective since the coating and the converted product are single sourced from Morton Thiokol Inc. - and Milprint, respectively. 2. Quality Maintenance STRATEGIES TO MEET OBJECTIVES: la. Complete the qualification of a second source for the MPP coating by the second quarter 1993. 1b. Complete the evaluation of Hermetite converted material by September 1993. 1c. Assure supply security for Mouthpiece Paper during the Milprint and Glatfelter contract negotiations. -- • 2a. Maintain programs in place for eliminating loose winds. ISSUE: Assure that a contingency plan is completed by Milprint to cover the . January 1993 contract renewal in Denmark. Page 3 of 8 Class Code 06-816-A TssLaVCsaz
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• Philip leris U.S.A. • Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Sup.r Class 0Cr816-A Unit of Measure Bobbins Description 26.25mm x2225MM1tIF, Forecast.Oate 10/92 1993 1994 1995 1996 1997 SupplierFJame Unils % tkuts % Unils % llnits % Ututs % Milprint 212,650 95.4 193,492 84S 115,906 50.0 117,726 50.0 119,133 50.0 Hermetite 10,350 4.6 ? 35,690 15.5 ? 115,906 50.0 ? 117,726 50.0 ? 119,133 50.0 9 223,000 100.0 229,182 100.0 231,812 100_0 235,452 100.0 238,266 100.0 ISSUES: Qualification of a second converter. Second source must demonstrate ability to meet a required acceptance level long term. ` 2'96 ~g~~saZ Page 4 of 9 Class/Code:06-816-A
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0 0 SUPPLIER EVALUATION s SUPPLIER Milprint WEIGHT USING LOCATION Stockton Street 25 A. COST FACTORS 1. DELIVERED COST/# 80 * $20.0673 (3) ' 2. VOLUME INCENTIVES 20 3. COST SAVINGS PROVIDED (4) -- 4. PRICE LEADERSHIP - --- .TOTAL COST RATING (2.3) 30 B. QUALITY FACTORS 50 1. % REJECTS 0.36% (3) 20 2. QUALITY CONTROL (5) 30 3. PROCESSABILITY/ MACHINABILITY (4) TOTAL QUALITY RATING (3.7) . ' 15 C. TOTAL SERVICE RATING (4 0) . 30 D. TOTAL SECURITY RATING (SEE PAGE(S) 6 ) _ (4.5) L 100% OVERALL RATING - (3.6) *Allows for a 1% net 10 days rebate. Page 5 of 9 Class/Code 06-816-A
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SECURITY,,XyALUATION rn WEIGHT SUPPLIER Milprint 10 D. SECURITY 1. RAW MATERIALS Basesheet Supplier - Simpson Plainwell Paper Co., Plainwell, MI and P. H. Glatfelter Co. Spring Grove PA Inventor - 5 weeks C ti S li , , y . oa ng upp er Morton Thiokol Inc. Inventory 6 weeks, Greenville, SC and Chicago, IL (5) 10 2. CAPACITY , (1) Denmark - 1,039,500 Bobs. (2) Lancaster-594,000 Bobs. 82% available to PM. Buying Plan Volume is 21% of Denmark's capacity,37% Lancast.(5) 5 3. FLEXIBILITY Two plants. Denmark, Wis. - Three coaters . - Lancaster, Wis. - Three coaters. Excellent response time. (5) 5 4. SUPPLIER INVENTORY Converted Material 7-10 days (5) 5 5. PLANTS & LOCATIONS Denmark, Wisconsin. Lancaster, Wisconsin Plant/Manufacturing Equipment - Excellent (5) 15 6. LABOR a. UNION . b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE Simpson Plainwell Paper Co. P. H. Glatfelter Co. United Paper Workers United Paper Workers United Paper Workers Int'l. (Denmark) Int'l. Local 1062 International - January, 28, 1993 December 1, 1994 January 19; 199a Good Good Good (3) 10 7. ENERGY Natural Gas/Electric (5) 10 8. EPA COMPLIANCE ** (4) 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 7 ) (4) 10 10. CORPORATE MANAGEMENT STRENGTH . (5) ' 10 11. CORPORATE MANAGEMENT COMMITMENT (5) 100% TOTAL SECURITY RATING 4.5 - - Morton Thiokol Inc. Teamsters Local 28 10/31/92 Excellent . Page 6 of 9 **No threatening environmental issues. Class/Code 06-816-A
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0 FINANCIAL SI5 WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1990 UNLESS OTHERWISE INDICATED.) SUPPLIER Milprint CURRENT RATIO: 1991 I 1990 I 1989 0 1. Enter Current Assets **10.206 12.338 2. Enter Current Liabilities 6.178 9.364 3. Current Ratio (Line 1/Line 2) 1.65 1.32 1.03 Industry Average: 2.6 1.7 1.2 DEBT TO ASSETS RATIO: 1. Enter Total Debt *None 22.083 4.841 2. Enter Total Assets - **46.092 47.681 16.769 3. Debt to Assets Ratio (Line 1/Line 2) .46 .29 Industry Average: 0.51 _ _ PROFIT MARGIN ON SALES: N 1. Enter Net Income 2.331 2.755 3.245 2. Enter Sales **63.641 67.586 62.365 3. Profit Margin On Sales (Line 1/Line 2) 4% 4.08% 5.20% Industry Average: 6.6 4.4 1.7%. ~ RETURN ON TOTAL ASSETS: 1. Enter Net Income 2.331 2. Enter Total Assets 46.092 3. Return on Total Assets (Line 1/Line 2) 5% 2.755 47.681 5.78% 3.245 16.769 19.35% ! Industry Average: 7.6 5.2 3.0% *Bemis has chosen to carry the Milprint debt as goodwill and equity. Page 7 of 9 **Certain Milprint assets and sales were transfered to Bemis in 1991 and 1992. Class/Code 06-816-A
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0 0 FINANCIAL ANALYSIS WORICSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1990 UNLESS OTHPRWISE INDICATED.) I SUPPLIER Milprint CURRENT RATIO: I 1988 I I 1. Enter Current Assets 2. Enter Current Liabilities 3. Current Ratio (Line 1/Line 2) 1.14 Industry Average: 2.6 1.7 1.2 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 8.160 2. Enter Total Assets 16.628 3. Debt to Assets Ratio (Line 1/Line 2) .49 Industry Average: 0.51 PROFIT MARGIN ON SALES: 1. Enter Net Income 2.235 2. Enter Sales 58.705 3. Profit Margin On Sales (Line 1/Line 2) 3.81% Industry Average: 6.6 4.4 1.7% ~ RETURN ON TOTAL ASSETS: 1. Enter Net Income 2. Enter Total Assets 3. Return on Total Assets (Line 1/Line 2) Industry Average: 7.6 5.2 3.0% Page 8 of 9 9961,~8V~'S02. czass/Code 06-s16-A
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 192,930 231,720 202,310 201,150 210,690 223,000 SUPPLIER % % Milprint 100 100 100 100 100 95.4% Hermetite - - - - - 4.6% zss1,svcsoz Page 9 of 9 Class/Code 06-816-A
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~ 1993 DIRECT MATERIAL BUYING PLAN O SUMMARY PAGE Material Code/Super Class 10 Description Cigarette P Unit of Measure 6,700M BBS Std. Cost $ Est. $ Purchase $68,731,555.18 Est. Usage 3,351,757 Est. Porch. Quantity 3,351,757 Annual Purchases Est. 1992 Proj. 1993 - ll Supplier Name Units ~ Units % Co®aitment (*) Overa Rating 1. Kimberly-Clark 1,682,736 49.8 2,848,993 85.0 Contract Acceptable 2. Ecusta 1,379,440 40.8 0 0.0 Note #1 3. PDN 319,680 9.5 502,764 15.0 Note #2 Note #2 4. 5. Note: Assumes 6. 354,000 bobbins ' 7. will be run on 8. wood pulp paper. 9. 10. Total 3,381,856 100.0 3,351,757 100.0 * 1. Contract 2. Porchase Order 3. Other uxnr.ANATION See the "1992 Fine Paper Vendor Consolidation" report for the explaination supporting this decision. Note #1: An evaluation of Ecusta does not apply due to the FPVC. Note #2: K-C is the Agent for PDM. sssGSVCsOz Page 1 of 4 Class/Code _ 10 Approval Jt ~ Date: Prepared By Fred 7. Emia Date: 11 17 92
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• OBJECTIVES/STRATEGIES/ISSUES . ~ OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 7,078,307 STRATEGIES: TIMETABLE Support the 55A relationships (Enhance, Promote) i.e. communications. Ongoing OTHER ISSUES: 1) PDM Acceptability in manufacturing Page 2 of 4 Class Code 10 sgsGevCsaz
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Philip 1•ris U.S.A. Materials Purchasing • 1g93 Direct Material Buying Plan Five-Year Buying Plan Projection Material CodelSuper fYass 10 Deseription C'.agaratta Paper Unit of Measure Bobbins Forecast Data 10192 1993 1994 1995 1996 1997 Supplier Name lfiits % Units %. Units % Units % units % Kimberiy-4Clark 2,848,993 85.0 3,083,970 85.0 3,120,121 85_O 3,169,182 85_0 3,207,054 85.0 Ecusta 0 (.0 0 0.0 ~ 0 0.0 0 0_0 0 0.0 PDM 502,764 15.0 544,231 15.0 550,610 15.0 559,268 15.0 565,951 15.0 3,351,757 100.0 3,628,201 100.0 3,670,731 100.0 3,728,450 100.0 3,773,005 100.0 NOTES: For support, please refer to the "Fine Paper Vendor Consolidation" report_ Dependant upon the orderly implementation and the continued success of the contract between PM and K-C. ISSUES: 1) Conversion from flax to wood. 2) Defusing manufacturing's material preference:fvr domestic cigarettepaper. ! oMGLsVesoz Page 3 of 4 Class/Code:10 I
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0 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 3,024,720 3,129,124 3,584,610 3,480,942 3,371,294 3,351,757 SUPPLIER o - Kimberly-Clark Corp. 52.4 49.5 47.3 48.7 49.8 85.0 Ecusta 39.2 41.7 44.2 42.1 40.7 0.0 Papeteries Do Mauduit 8.3 8.9 8.6 9.2 9.5 15.0 Page 4 of 4 Class/Code 10 UsLetresoz
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• 1993 DII2ECT MAT• BIIYING PLHN ~ SUMMARY PAGE Material Code/Super Class 61 & 62 Description • Adhesives Unit of Measure Pounds Std. Cost $ Est. $ Purchase $13.011,942.67 Est. Usage 14,645,898 Est. Purch. Quantity 14,645,898 Annual Purchases Est. 1992 Proj. 1993 O ll Supplier Name Units % Units ~ Commitment (*) vera Rating 1. Fuller 6,758,817 45.7 6,605,300 45.1 Purchase Orders 2. National 4,046,225 27.4 3,954,392 27.0 Purchase Orders 3. Findley 1,408,767 9.5 1,376,714 9.4 Purchase Orders 4. Ajax 1,577,999 10.7 776,233 5.3 Purchase Orders 5. Upaco 862,059 5.8 424,731 2.9 Purchase Orders 6. Mortoa 124,773 0.6 58,584 0.4 Purchase Orders 7. Henkel 0 0.0 131,813 0.9 Purchase Orders 8. **Unassigned** 0 0.0 1,318,131 9.0 9. 10. Total 14,778,640 100.0 14,645,898 100.0 * 1. Contract 2. Purchase order 3. Other uxvraNnTIOM Final breakdown will be determined by the results of the Adhesive SSA to be done in 1993. Page 1 of 4 zesI.etresoz Class/Code 61 & 6 Approval y Date: 11/17/92 Prepared By Fred J. E~iq ~-Date: 11/17/92
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• . osJECTIVES/sAGIES/ISSUES 0 OBJECTIVE: To REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 savings: $ 450,000 STRATEGIES: 1) SSA Team Team members and level of management are to be determined. 2) SSA Implementation The implementation of the "Adhesives SSA"on schedule in 1993 will be dependant upon objective evaluation and team work. . NOTES• 1) Annual savings are prorated. • 2) Anticipated MAXIMUN savings are $75.000/month. 3) Expected' implementation in July of 1993. Page 2 of 4 Class Code 61 & 62 Ms4stesaz
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0 Philip Oris U.S.A. Materials Purchasing 1993 Direct Maberial Buying Plan Five-Year Buying Plan Projection Material CodelSuper Class 61 & 62 Description Adhesives Unit of Measure Pounds ForecastDaUe 1®/1Cii9Q 1993 1994 1995 1996 1997 Supplier Name Units % Units % Units % Units % Units 96 H.B.FWler . 6,605,300 45.1 7,822,853 49.3 7,914,553 49.3 8,039,003 49.3 8,135,069 49.3 National Starch 3,954,392 27.0 4,683,304 29.5 4,738,202 29.5 4,812,706 29.5 4,870,2t8 29-5 FindleyAo}esives 1,376,714 9.4 1,630,483 10.3 1,649,596 10.3 t,675,534 10.3 1,695,557 10.3 AjaX 776,233 5.3 0 0.0 -'0 0.0 0 0.0 0 0.0 UpacoAdhesives 424,731 2.9 0 0.0 0 0_O 0. 0.0 0 0.0 Morton Int'1. 58.584 0.4 0 0.0 0 0.0 0 0_0 0 0.0 Henkel Adhesives 131,813 0.9 156,1 t0 1_0 157,940 1_O 160,423 1.0 162,341 1.0 "Unassigned" 1,318,131 9_D 1,561,102 9.8 1.579,401 9.8 1,604,235 9.8 1,623,406 9.8 14,645,898 100.0 15, 853, 852 100.0 16, 039, 692 100.0 16, 291, 902 100. 0 16, 486, 591 100.0 ISSUES: 1) Implementation of SSA in the Adhesivesarea; 2) Value of HenkeE to PM U.S.A. I KGF synergyr_ 3) Satisfying manufacturing's material pn:ference: Page 3 of 4 t46LSKSaZ Class/Code:61 and 62
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• 1988 - 92 BUYI[dG HISTORY AND 1993 BUYING PLAN TOTAL QUANTITY SUPPLIER H.H. Fuller National Starch Findley Adhesive Ajax Upaco Adhesives Morton Chemical Henkel ***Unassigned*** 1988 1989 1990 1991 1992 (E) 1993 (P) 13,781,318 13,730,317 14,441,327 14,188,861 14,778,640 14,645,898 33.8 36.6 39.5 42.3 45.7 49.6 27.1 25.1 27.0 28.0 27.4 29.7 14.6 16.2 14.8 13.3 9.5 10.3 20.5 18.3 14.3 11.8• 10.7 .. 5.8 2.3 2.0 3.1 3.6 5.8 3.2 1.7 1.8 0.7 0.8 0_8 0.4 0.0 0.0 0.6 0.1 0.0 1.0 0.0 0.0 0.0 0.0 0.0 9.9 4 4 of Page class/Code 61 & 62 s4sLsVCs0z
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• 1993 DIRECT MATAL BUYING PLAN • SUMMARY PAGE Material Code/Super Class 11 Description Base Tippinv Paper Unit of Measure Bob Std. Cost $ N.A. Est. $ Purchase 53,439,000 (est.) Est. Usage 1,555,000 (ext) Est. Purch. Quantity 1,555,000 (est) Annual Purchases Est. 1992 Proj. 1993 Supplier Name Units Units % x Con®itment ( ) overal7 . Evaluation 1. CHP 358,405 23.4 -0- 0 2 2. Ecusta 36,564 2.4 -0- 0 2 3. Golden Belt 62,963 4.1 -0- 0 2 4. Hermetite 643,218 42.1 see M-H 2 A 5. RCI 427,648 28.0 see M-H 2 A 6. Mundet-Hermetite - 0 1,555,000 (est) 100% 2 A 7. 8. 9. 10. Total 1,528,798 100.0 100.0 x 1. Contract NOTE: Mundet-Hermetite purchased CHP6/1/92 and renamed facility RCI. The 1993 requirements split between the two plants will be determined by M-H. Based on 1993 volume of 331 billion cigs. Total purchases to be finalized when forecast detail is available. 9LsZ1sVCsaz 2. Purchase Order 3. other Page 1 of 9 Class/Code Approva]PGU7ea~y Date• !r llw Prepared By S,~, Datec 11 ( l7/9
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• OBJECTIVES/STRATEGISS/ISSUES _ OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALI'1T, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 3,300,000 (KC, M-M Strategic Agreements) OTBEL2 STRATEGIES 1. Manage the SSA with Mundet emphasizing projects improving operating efficiencies: a. Standardize KS tipping for price value brands. b. Convert Parliament from TypeC to 38gm paper c. Reduce packing material required for pallets d_ Standardize inks (color, type, and application) 2. Implement conversion of all items to Kimberly Clark paper 3. Proceed with evaluation of white paper with lip release properties to eliminate the cost and environmental concerns of printing nitrocel. 4. Proceed with the evaluation of the new ink system to meet anticipated future PM needs. 5. Develop a cross functional team with Philip Morris, Mundet, and Kimberly Clark to address specific quality issues (splices, basis weight, roll meterage) OTHER ISSUES: • Expansion of Fast Flow to LMCP will be evaluated as appropriate, . Consolidation of Hermetite and RCI into Mundet Hermetite for Quality Evaluation in 2nd Quarter . Develop improved data base to provide Mundet and KC with the required forecasting information . Evaluation of Mundet and LMCP supplying the EC region with perforated tipping paper TIMETABLE lst Qtr 1993 lst Qtr 1993 lst Qtr 1993 Ongoing 1st Qtr 1993 4th Qtr 1993 to be determined 4th Qtr 1993 Page 2 of 9 class Code 4L6Z19tFe30z
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0 Philip Morris U.S.A. Materials Purchasing bobbin 1999 _ 1994 1995 1996 1997 Suppllor Neme Units % _ Units Units % Units % _ Units % _ Mundet Hexnetite 1,555,000 100 1,684,000 100 1,700,000 100 1 4 1,730,000 100 1,751,000 100 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 Material Code/Super Class Unit of Measure 1993 Direct Material Buying Plan Five-Year Buying Plan Projection 11 Description Base Tipping Paper ForecastDate 10/15/92 ' ISSUES: has been developed. Volunes based on usage factor of 4.7 bobbins per million cigarettes. Per G. Nixon's meno dated October 15, 1992, Five Year forecasted requirenents are 1994 (P) 358.3 billion, 1995 (F) 362.5 billion, 1996 (F) 368.2 billion, and 1997 (F) 372.6 billion cigarettes. Forecasted requirements used for 1993 were 331 billion cigarettes. I will reconmend Mundet I3exmetite be evaluated as a candidate for certification once the certification program s4sL gItvsaz Page 3 of 9 Class/Code:
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0 ® SUPPLIER EVALUATION SUPPLIER HERMETITE B.V. RCI USING LOCATION ALL ALL A. COST SEE 1992 SSA SEE 1992 SSA DELIVERED COST/UOM EA./BOBBIN EA./BOBBIN ANNUAL COST SAVINGS (YES/NO) YES YES REBATE OFFERED (YES/NO) NO NO OVERALL COST (A/U) A A B. QUALITY 4Q-99.98%, 1 Q-99.83%, % ACCEPTANCE 2Q-99.73%,3Q-98.46% 3RD QTR - 99.98% OVERALL QUALITY , (A/U) A A I C. SERVICE D. SECURITY (FROM PAGE(S) ) OVERALL EVALUATION (NUMBER OF A's; 1-4) A= ACCEPTABLE U= UNACCEPTABLE (A/U) (AIU) A A A's-4 Page Class/Code A A A's-4 4 of 9 11 G-#sz,stFcs0z
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0 0 0 SECURITY EVALUALTION SUPPLIER MUNDET - HERMITITE SECURITY PAPER : EC & KC - JIT (3 DAYS) & TERV 30 DAYS 1. RAW MATERIALS INKS: ICI 7 DAYS CYLINDERS: MULTIPLE SUPPLIERS 2. PLANTS & LOCATION BUENA VISTA, VA. - COLONIAL HTS„ VA. - BASE TIPPING & PERF. BASE TIPPING ONLY 3. LABOR BUENA VISTA - COLONIAL HTS - a. UNION UPWI A.F.L. - C.I.O BELLWOOD PRTG & LOCAL 1374 SPEC. UNION #670 b. CONTRACT EXPIRATION 11/01/93 11/01/94 c. SITUATION GOOD EXCELLENT 4. ENERGY SOURCES GAS, ELECECTRIC, PROPANE 5. CAPACITY (A/U) #5 - 2 COL., #7 - 5 COL., COATER - 630,000 #8 - 7 COLOR ROTOMEC - 300,000 TOTAL - 1,184,000 Bob. TOTAL - 930,000 Bob. A 6. FLEXIBILITY A/U A 7. EPA COMPLIANCE A/U A 8. FINANCIAL RATING A/U A 9. CORPORATE MANAGEMENT (AlU) STRENGTH A 10. CORPORATE MANAGEMENT (A/U) COMMITMENT ' A OVERALL SECURITY A!U A A= ACCEPTABLE U= UNACCEPTABLE Page Class/Code 5 of 9 11 Oss~.~~~soz
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0 Supplier: Mundet-Hermetite Current Ratio: 1. Enter Current Assets 2. Enter Current Liabilities 3. Current Ratio (Line 1/Line2) Debt To Assets Ratio: • Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise Indicated. 1991 1.08 1990 1.35 i 1989 1.41 1. Enter Total Debt 2. Enter Total Assets 3, Debt To Assets Ratio (Line 1lLine 2) 0.58 0.54 0.58 b Profit Margin On Sales: 1. Enter Net Income 2, Enter Sales 3. Profit Margin On Sales (Line 1/Line 2) Return On Total Assets: 0.088 0.096 1. Enter Net Income 2. Enter Total Assets 3, Return On Total Assets (Line 11Lino 2) 25% 27% 17. 72% Earnings Per Share: I ~NOTE: Fiscal Year End October 31st I `CONFIDENTIAL...Not to be removed from Philip Morris Materlals Purchasing Department. I Page 6 of 9 ClasstCode 1 Te64gVCSaZ
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Supplier. Mundet-Hermetite Current Ratio: 11. Enter Current Assets 2. Enter Current Liabilities 3. Current Ratio (Line 1/Line2) Debt To Assets Ratio: L1. Enter Total Debt 2. Enter Total Assets 0 (Millions of Dollars; all data as of December 31, 1991 unless otherwise Indicated. 1988 3. Debt To Assets Ratio (Line 1liJne 2) ! Profit Margin On Sales: 1. Enter Net Income 2. Enter Sales 3. Profit Margin On Sales (Line 1/Line 2) Return On Total Assets: 1. Enter Net Income 2. Enter Total Assets 3. Return On Total Assets (Line 1/Line 2) Earnings Per Share: I bONFIDENTIAL...Not to be removed from Philip Morrl5 Materials Purchasing Department. 1.04 0.74 1Q.17i 1987 I 1986 Page___2_ of 9 Class/Code 0 zesLstFCsaz
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1988-92 BUYING PLAN HISTORY AND 1993 BUYING PLAN - BASE TIPPING 1988 1989 1990 1991 1992(E) 1993(P) TOTAL QUANTITY (BOB.) 1,383,405 1,444,107 1,634,762 1,521,000 1,528,798 1,597,000 SUPPLIER % % % % % % CHP 32.60% 32.50% 30.30% 33.10% 23.44% 0.00% ECUSTA 20.30% 21.60% 24.30% 10.20% 2.39% 0.00% GOLDEN BELT 23.10% 22.10% 23.30% 25.70% 4.12% 0.00% HERMETITE 24.00% 23.80% 22.10% 31.00% 42.07% 0.00% RCI 0.00% 0.00% 0.00% . 0.00% 27.97% 0.00% MUNDET-HERMETITE 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Page 8 of 9 Class/Code 11 E86G8KS02.
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0 0 0 1988-92 BUYING PLAN HISTORY AND 1993 BUYING PLAN - BASE PAPER 1988 1989 1990 1991 1992(E) 1993(P) TOTAL QUANTITY (LBS) 19,500,055 19,895,104 23,550,786 . 22,280,230 22,193,078 22,193,078 SUPPLIER % % % % % % ECUSTA 44.70% 38.70% 42.71% 34.73% 26.98% 0.00% KIMBERLY CLARK 55.30% 61.10% 56.28% 60.10% 69.97% 100.00% TERVAKOSKI 0.00% 0.20% 1.01 % 5:17"/0 3.05% 0.00% 100.00% 100.00% 100.00°/a 100.00% 100.00% 100.00% Page 9 of 9 Cfass/Code 11 wqsLgvcSOz
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...u.~~:e, ..__..._.....,..._.......,. :..N:='~'-~......,_ .x.+.... 2053487985
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0 0 1993 DIRECT NATEBIAI. BUYING PLAN SUMMARY PAGE Material Code/Super Class 15 Description AIAMINOH FOIL Unit of Heasure LBS Std. Cost $ Est. $ Purchase A54.180.000 Est- Usage 40,750,000 Est. Purch. Quantity 40.750.000 - 0 Annual Purchases Est. 1992 Proj. 1993 Supplier Name IInits/Mti LBS Y Units/M!i LBS X Co®itment (*) Overall Ratin g 1. AL('.AN 11.2 28.7 27.62 67.8 2-QUARTERLY 4 2. GOLDEN BELT 13_5 34_5 1.83 4`.5 2-QUARTERLY 4 3. BEYNOLDS - 14.4 36.8 11.30 27.7 2-QUARTERLY 4 4. 5. 6. 7. 8. 9. 10. Total 39.1 100.0 40.75 100.0. * 1. Contract EXPL9NATION 2. Purchase Order *1993 Forecast 333.8 Billion Cigarettes s8sLeVEsoz Other Page 1 of 8 Class/Code I~5 FOIL _ 6pproval ~- Date ~ /S~ Prepared Bq Date: ~ ~
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OBJECTIOES/STRATEGIES/ISSOES OBSECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 4,198,000 STBATF.GIES- TIMETABLE 1. DEVELOP S.S.A. CONTRACT WITH ALCAN. INCREASE VOLUME AS CAPACIT7[ ALLOWS TO HA%IIiIZE AGREED RERATE. 2. MAINTAIN REYNOLDS AS SECOND LARGEST FOIL SUPPLIER CONPL7CING WITH S.S.A. AGRFxMWT. 3. DECREASE VOLUME WITH GOLDEN BELT AND PHASE OUT PRINTED FOIL AS ALCAN MEETS REQIIIRP.KENTS FOR REPLACING EACH MATERIAL CODE. " ASSUMPTIONS: AUCAN COMPLIES WITH S.S_A. AND DELIVERS 50% FOIL REQDIrtF.wmrrS 10/1/92 AND 75% 6/1/93. OTHER ISSOES• 1. PRINTED QDALIPICATION INCLUDING NACNINABILITY.- 2. DEVELOP JANLS RIVER BERLIN BOND (30f) FOR ALCAN. 3. APPROVAL AMERICAN INKS, BOTH PIGMENT AND COATING. 4p6Lgt~s~.O2 rPage 2 ~ of 8 O Class Code 15 FOIL
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• . SECURITY•EVALUATION SUPPLIER ALCAN GOLDEN BELT REYNOLDS SECURITY 21 DAYS INV. - PAPER 30 DAYS INV. - PAPER 4 pRS - PAPER - 21 DAYS INV. - METAL 30 DAYS INV. - METAL 1 WK - METAL (FINISHED) 1. RAW NATEtTATS RE-ROLL INO. 5 WEEKS HOT SPRINGS (.045') • LODISVILiE, KY REIDSVILLE, NC MOVED RICNNOND, VA 2. PLANTS & LOCATIONS GIASGON, SCOTLAND TO DURNAN, NC LOUISVILLE, RY - BERLIN, GERMANY RANDLENAN, NC NOVED TO (BACK-UP) SAO PAULO, BBAZIL DURNAM 3. LABOR a. UNION ABG{7i11,IBM,IBEW BCT, I71U ABG4AII,BCO,IBEl7,IBSHN, BPPASO b. CONTRACT EXPIRATION DATE 8/1/97 (5 YR) 9/30/93 5/31/93 c. SITUATION STABLE (ACCEPTABLE) STABLE (ACCEPTABLE) STABLE (ACCEPTABLE) 4. ENERGY SOURCES ELEC/NAT.GAS/FVEL OIL ELEC/NAT GAS,F<lEL OIL ELEC/NAT GAS, FOF.L OIL 5. CAPACITY (A/U) 50.It LES 53% *29H LBS 15.5x **28N LBS 34.5% 6. FLEXIBILITY (A/U) A A A 7. EPA COMPLIANCE (A/O) A A A 8. FINANCIAL RATING (A/O) A A A 9. CORPORATE IfANAGEHENT •. STRENGTN (A/O) A A A 10. CORPORATE MANAGEMENT - COHISITdEL1T (A/U) A A A OVERALL SECURITY (A/U) A A A A - ACCEPTABLE *15.5Z ASSUMES CONVERSION TO 752 ALCAN JUNE 1, 1993 Page 4 of B ) II= UNACCEPTABLE Class/Code 15 FO **34.5X ASSUMES CONVERSION TO 752 ALCAN JUNE 1. 1993 s9sLstesoz
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1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QIIANTITY (NILLIONS/LBS) 36.4 36.8 42.3 41.1 39.1 40.8 SoPrLIER x z z z z z A7.CAN 23.5 21.5 18.4 18.5 28.7 67.8 GOLDEN BELT 40.3 38.6 41.8 40.1 34.5 4.5 - REYNOLDS 36.2 39.9 39.8 41.4 36.8 27.7 Page 5 of 8 15 FO 06649r„~~5o,~ Class/Code
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0 Supplier.• REYNOLDS Current Ratio: 0 Financial Analysis Worksheet (Millions of Dollars; all data as of December 31,1991 unless otherwise indicated.) 1991 1990 1989 • 1. Enter Current Assets 1,780.0 1,815.6 1,763.1 2. Enter Current Liabilities 1,016.4 973.9 981.5 3. Current Ratio (Line 1/Line2) 1.75 1.86 1.796 Debt To Assets Ratio: 1. Enter Total Debt 3,725.2 3,598.7 2,871.5 2. Enter Total Assets 6,685.3 6,527.1 t 5,555.6 3, Debt To Assets Ratio (Line 1/Line 2) .557 .551 .516 Profit Margin On Sates: 1. Enter Net Income 154.1 296.6 532.7 2. Enter Sales 5,784.5 6,075.7 6,211.1 3. Profit Margin On Sales (Line 1/Line 2) 2.66% 4.88% 8.57% Return On Total Assets 1. Enter Net Income 154.1 296.6 532.7 2. Enter Total Assets 6,685.3 6,527.1 5,555.6 3. Return On Total Assets (Line 1/Line 2) 2.30"/0 4.54% 9.58% Earnings Per Share: 2.60 I 5.01 9.20 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. Page_6_ of 8_ ClasslCode.__15 FOIL_ YsGL®VE.T O7i
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Supplier.• ALCAN Current Ratio: e Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise indicated.) 1991 1990 I 1. Enter Current Assets 3,070 3,370 3,471 2. Enter Current Liabilities 1,960 2,148 2,095 3. Current Ratio (Line 1/Line2) 1.56 1.568 1.656 Debt To Assets Ratio: 1. Enter Total Debt 6,086 5,707 4,898 2. Enter Total Assets 10,816 10,649 9,508 3. Debt To Assets Ratio (Line 1/Line 2) .562 .535 .515 Profit Margin On Sales: 1. Enter Net Income (36) 543 835 2. Enter Sales 7,830 8,919 9,047 3. Profit Margin On Sales (Line 1/Line 2) (NA) 6.08% 9.22°/a Return On Total Assets: 1. Enter Net Income (36) 543 835 2. Enter Total Assets 10,816 10,649 9,508 3. Return On Total Assets (Line 1/Line 2) (NA) 5.09% 8.78% 1 Earnings PerShare: CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department, 2.33 1989 3.58 Page 7_ of 8_ Class/Code 15 zssLaVUsaz
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` PhIllp Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan - Flve-Year Buying Plan Projection Material Code/Super Class Unit of Measure 15 LBS Descrlptlon Forecast Date ALU FOIL 10121192 1993 1994 1995 1996 1997 Vendor Name Units - °~ Units °h Units °k Units °h Units ^h VendorA ALCAN 27,620.000 67.8 37,056,100 89.0 42,136,000 100.0 42,262,408 100.0 42,311,221 100,0 Vendor B GOLDEN BELT 1,830,000 4.5 0 0.0 0 0.0 0 0.0 0 0.0 Vendor C REYNOLDS 11,300,000 27.7 4.580,000 11.0 0 0.0 0 0.0 0 0.0 Total: 40,750,000 100.0 41,636,100 100.0 42,136,000 100.0 42,262,408 100.0 ISSUES: 'CONTINUE TO OPTIMIZE INCLUDING SiANDARDIZATION 'REDUCE VENDOR BASE FROM THE CURRENT3T021N 1993,TO ONE IN 1994 42,311,221 100.0 Page 8 018 ClasslCode:15 sss~s~~saz
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1993 DIEECT NATEftIAL BUYING PI1fN SDMMAev PAGE Material Code/Super Class 20 Description Innerfraue (Ahite_ Printed. Laninated) Unit of Measure LS Std. Cost $ N A Est. $ Purchase Est. Usage - Est_ Porch. Quantity Annual Purchases Est. 1992 Proj. 1993 Overall Supplier Name Units X Units X Commitment (*) Evaluation 1. WESTVACO 8,064 46 7,308 49 2 . 4 2_ WINTEE,BELL 6,975 40 5,410 36 2 . 4 3. VI-TER 1,486 9 1,110 7 2 4 4. UNIPOIL 850 5 1,085 7 2 , 4 5. 6. 7. 8. 9_ 10. Total 17,375 100.0 14,913 100.0 * 1. Contract 2. Purchase Order 3. Other tssLeVCsoz Page 1 of 6 Class/Code Innerframe ra VO Approval Date _ !,z Prepared By Paul N. i[aroa er Date; 12-].0-92
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1993 PRODUCTIVITY INITIATIVES INNERFRAME RESOURCING VITEX BUSINESS TO UNIFOIL n t, 1 1 !P Y )IJ : sIGG49VEsoz
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0 SECURITY.EVALUATION • SUPPLIER Westvaco Winter,Bel1 SECURITY .012 SBS Board .012, .014 SBS Board - Westvaco Westvaco 1. RAW MATERIALS B=30 Ba30 2_ PL9NTS & LOCATIONS Low Moor, VA High Point, N. C. 3. LABOR a_-UNION UPIU #490 Non-Union b_ CONTRACT EXPIRATION DATE 12/1/93 c. SITUATION Ca1m 4. ENERGY SOURCES Coal, Wood Waste Electricity 5_ CAPACITY (A/U) A A 6. FLEXIBILITY (A/U) A A - 7. EPA COMPLIANCE (A/U) A A 8. FINANCIAL RATING (A/0) A A 9. CORPORATE NANAGENENT .. ' . STRENGTH (A/U) A A . 10. CORPORATE NANA.GFxFN'r - COMMITMENT (A/O) A A OVERALL SECURITY (A/U) A A A - ACCEPTABLE U - UNACCEPTABLE Page 2 of 6 Class/Code Intierfrane sssLsvusoz
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0 SECURITY EVALUATION 0 Si1PPLIER Unifoil Vitex SECURITY .012, .014 SBS Board .012 SBS Board .012 535 Laminate Westvaco 1. RAW NATuRTATC to foil Wcstvaco B-a5 1=45 F-45 B=TI. I=TL 2. PLANTS & If)CATIONS Passaic Park, NJ Suffolk, VA 3_ LABOR a. UNION UTW #273 Non-Union b. CONTRACT EXPIRATION DATE 11/23/93 . c. SITUATION Caln 4. ENE&GY SODRCES. Natural Gas • Electricity, Nat. Gas 5. CAPACITY (A/U) A A 6. FLEXIBILITY (A/U) A A 7. EPA COMPLIANCE (A/U) A A 8. FINANCIAL RATING (A/U) A A 9. CORPORATE MANAGEMENT . STRENGTH (A/U) A A 10. CORPORATE MANAGEMENT COffiSITNF.NT (A/0) A A OVERALL SECURITY (A/U) A - ' A A m ACCEPTABLE U = UNACCEPTABLE Page 3 of 6 Class/Code InnerfLame ZssLsvesaz
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2053487998 amei3.zauui 9 3o apo0/sseZO tj a`dea fi V V v V V azsazaaDDvtaa - n Tifl9Zd300V - V ('7-'[ = . s . V. 30 x39AnN) xoiiemeea Tivxaeo n/a ( (s)aova Hox3) asixonas -a (o%) aoznxss -o V V (o/v) asinvnb Zzvaano +76'66 oo'oot aoxaiasoaa z lsari.vnb ' a n v (a/v) zsoo 'rivtIIno oN ON (oN/sHlt) ammao 37.va3u .E Z6/ZT/TC 3° SV z e-ioo-oz 96'SZ SL'ZZ 'T IZOn/rSOO aziIIdTI3a iso0 'V o`1'x Z`x xoiavaoz oaisn '[j0$ `304llim oaEA4saj1 x."{]-"jaaos xox2emeea xsriaans ~ , • •
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SUPPLIER EVAIAATION SUPPLIER. Unifoil Vitex USING LOCATION R,L R.I. A. COST ' DELIVERED COST/UOM 1. 55.55 R As of 11/12/92 20-303A 2. % 40.69 rL4F 20-203B 3. REBATE OFFERED (YES/NO) NO NO OVERALL COST (A/U) A A B. QUALITY X ACCEPTANCE 100.00 100.00 OVERALL QUALITY (A/U) A A C. SERVICE (A/U) A A D. SECURITY (FROH PAGE(S) ) A/U A A OVERALL EVALUATION (NUMBER OF "A's"; 1-4) 4 4 A = ACCEPTABLE U - UNACCEPTABLE Page 5 of 6 Class/Code Innerframe GssLeKsoz
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e 1993 DIRECT Rn'rFaTnT. BUYING PLAN SUMl19RY PACE Material Code/Super Class 1fiB Description Fliv Top Boxes - 20's. 14•s. 10's Unit of Measure EA Std. Cost $ N~~ Est. $ Purchase Est. Usage Est. Purch. Quantity • Annual Purchases Est. 1992 Proj. 1993 Overall Supplier Name Units X Units X Comitment (*) Evaluation 1. VFB 5,865 71 5,474 64 2 4 2_ SOMERVILLE 1,607 19 2,330 27 2 4 3. A'L.FORD . 828 10 685 8 2 3 4. GRAVURE PACKAGING 0 0 100 1 2 4 5_ 6. 7. 8. 9. 10. Total 8,300 100.0 8,589 100_0 - * 1. Contract Y00psYCiSV`.. 2. Purchase Order 3. Other Page 1 of 6 Class/Code ~~'/fl"9Z Approval ~ Date: Prepared By Paul M. Naroer Date: 12-10-92
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MEGABUCKS 1993 PRODUCTIVITY INITIATIVES FTB'S I f DIE / BRAND STRATEGY IMPLIMENTATION 0 ABLH. CFF.IGV.,C,ClJ Gl,if=G III -'tAi?I'L6 , P-'PAC.4' GE'i;UrJ-LIfIIV- I:ICIfJC3 ~..,_..VGG) ~PAND-~RATIbP'%:!.I'P,TICI: . 0 - 1 f)G "If IGRAVURE PACKAGING COMPETITIVE PRICING ON MARL LS CODES IRESOURCING ALFORD BRANDS TO SOM NFB - ° o _.z~ 1(JO;U{!u .. TOTAL ! zoasRVEsaz
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=L21NATION ( S ) (RE IIIItED FOR A7.L °U° RATINGS) Alford's Financial Rating still remains unfavorable even though there have been signs that investment and competitive pricing positions point to a committment of financial backing at the corporate level. • N O N Ca ,A Cr ~ O W B-18
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0 0 SECURITY EVALUATION • SUPRLIER VFB Somerville Alford SECURITY .012, .014 SBS Board .072, .014 SBS Board .012, .014 SBS Board Westvaco Westvaco Westvaco 1. RAW HATERIAIS Foil Laminate Foil Laminate Westvaco Westvaco Days of Inventory (B) Board (I) Inks B-30 Is7 B-40 I 14 B 30 Im30 2. PLANTS & IACATIONS Ricbuond - 2 Plants Canada - 2 Plants Ridgefield Park, N.J_ Williamsburg - 1 Plant Baltimore, HD 3. LABOR U41BG & BVLE-Non Union AFL-CIO #8463 - a_ UNION BPPA & SW #670 Smith Falls - GCIU#763 UPpIU #344 b. CONTRACT E%PIRATION DATE 4/15/93 5/20/93 c_ SITUATION Calm Calm Calm ' '' 4. ENERGY SOURCES Electricity, Fuel Oil, Electricity, Nat. Gas Electricity, Nat. Gas Nat. Gas, Propane - 5. CAPACITY (A/U) A A A 6. FLEXIBILITY (A/U) A A A ... 7. EPA COMPLIANCE (A/U) A A A 8. FINANCIAL RATING (A/0) A ~ A U 9. CORPORATE HANAGEMENT S11LFS7GT71 (A/U) A* A . A 10. CORPORATE MANAGEMENT CONNITHE[TP (A/U) - A A A OVERALL SECURITY . (A/0) A A U A - ACCEPTABLE U - UNACCEPTABLE *VFB Management weak page 2 of _ Class/Code )MB 6
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e e SECOR.ITY EVATAATION e SOPPLIER Gravure Packaging SECORITY . .012 SBS Board I7estvaco 1. RAW MATERIALS B-3 I=3 2. PLANTS & 7ACATIONS Rictmond - 1 P1ant 3. LABOR a. UNION Non-Union - b. CONTRACT EKPIRATION DATE c. SITUATION 4. ENEBGY SOURCES - 5. CAPACITY (A/U) A 6. FLFXIBILITY (A/U) A • . 7. EPA COMPLIANCE (A/U) A . ' 8. FINANCIAL RATING (A/l/) A 9. CORPORATE MANAGEMENT ` STRENGTN (A/U) A 10. CORPORATE MANAGEMENT CONHI1tENl (A/U) A OVERALL SECURITY (A/U) A A = ACCEPTABLE U = UNACCEPTABLE Page 3 of 6 Cless/Code FTB sooSetr soz
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0 s SUPPLIER EVAIAATION SUPPLIEW . VFB Soaerville Alford USING IACATION R,C,L R,C,L R,L A. COST DELIVERED COST/UOM 1. 70m L3rk Milds 27-400-D 2. 12.59 R 12.43 70m Marl KS 22-405-B 3. 9.39 - 9.44 x REBATE OFFERED (YES/NO) NO NO NO . OVERAll. COST (A/U) A' • A A B_ QUALITY Z ACCEPTANCE 99_15 99.61 95.21 ovt:2AT:r_ QUALITY (A/O) A A A C. SERVICE (A/D) A A A U A A Z~ s D. SECURITY (FROM PACE(S) EVALUATION (NUMBER OVERALL 3 4 4 OF "A•s"; 1-4) ~ - 1 A = ACCEPTABLE U = UNACCEPTABLE Page 4 of Class/Code 6 9009eVEsoz
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SUPPLIER EVALUATION SUPPLIER Gravure Packaging USING IOCATION - R A. COST DELIVEBED COST/QOH 1. 21-068-B (only) 2. 11.00 3. REBATE OFFE@ED (YES/NO) NO . . OVERALL COST (A/U) A B. QUALITY . . . X ACCEPTANCE 100.00 OVERALL QUALITY (A/U) A C. SERVICE (A/U) A D. SECURITY (F@OH PAGE(S) ) A/U OVERALL EVALUATION (N@iBEB OF "A's"; 1-4) A = ACCEPTABLE U = UNACCEPTABLE A 4 Page 5 of 6 Class/Code FTB 40099tcsoz
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLSLI • 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 6,025 6,768 7,683 8,891 9,135 8,589 SUPP7.iE[t x X . X X X X VFB 51% 49% ' 51% 48X 65X 64% SOMER.VILLE 6% 11% 15% 18X 17% 27% A7FoRU - 13X 12% 11X 1LZ 11X 8X GRAVURE PACKAGING OX 0X 0X OX 1% 1X Ck1P 31% 281 23X 23% 6% 0X Page 6 of 6 eOpgRt4SaZ - Class/Code rTB
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0 0 . 1993 DIBECT HATEItIAl. BUYING PLAN SUffiiARY PAGE Material Code/Super Class 30-35/L_H.N Description Soft Pack Labels Unit of Measure Each Std. Cost $ NLA Est. $ Purcbase 0 Est. Usage 8.768mm Est. Purch. Quantity 8.768mm . Annual Purchases Est. 1992 Proj. 1993 l Supplier Name Units X Units S Commitment (*) Overa l Evaluation 1. IPC & L 6,556 mm 68.5% 5,250 mm 64.7% 2 Weekly 4 2. J.W. Fergusson 2,803 mm. 29.3Y 3,513 om< 35.2x ." 4 3. Alford 214 mm 2.2Y 5 ma .1X ` 1 4. 5. 6. 7. 8 9 10. Total 9,573 ~ 100.0 8,768 mm 100.0 * 1. Contract 2. Purchase Order 3. Other 1993 Buying Plan projections do not take into account current inventories. sooaRVESoz Page 1 of 10 Class/Code 0-3` 1 ~ 4n,~Approval S r Date:`~ 11'r Prepared By D_ E. BLackL~ ~Date: 1 fll/92
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• OBJECTIVES/STRATEGIES/ISSIIES OBJECTIVE- TO REDUCE lfATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 800.000.00 - 2.000 000 00 STRA TEGIES DOLLARS - TIMETABLE 1. Resource B&H "New Graphics" to IPC $600,00.00 4th Qtr., '92- lst Qtr., '93 2. Limit labels produced at Alford to $150,000.00 - $200,000.00 lst Qtr., '93 . - PM hot stamped - until satisfactory technology and cost available with IPC - B&N "old graphics" - until phased out by new graphics Begin water base top laquer approval process BD nd Qtr., 93 - Already done on other tobacco business - Reduced decay time - Reduced cost/eliminated environmental chamber - Testing underway on Marlboro at IPC & JWF. Material to be evaluated by QA, PTS. 4. Initiate formal monthly supplier reviews for productivity initiatives o1oegMaz TBD NOW Page 2 of 10 • Class Code 30-35/L.M.N
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OB.7ECTIVES/S'PRATEGIES/ISSUES (cont.)_ S7RATEGIES DOLLARS TIMETABLE S. Initiate new purchasing strategy for generics $10,000.00 - $50,000.00 NOW - 50 Million & less - annual purchase except for Basic & Best Buy - Negotiate lower cost/m based on quality and annual purchases. 6. Convert all 25's packings from 65# to 60# Cls. 7. Convert JWF red ink from T-E to Cavalier .• 8. Convert Va. Slims from 65# to 60# C1S OTHER ISSUES: . See Attached Initiatives - Top laquer/R&D approval: Based on X-500 equipment. Testing will be completed in second quarter. - Westvaco C1S 60#, PM 90, 65fk - Service to suppliers - IPC conducting vendor review with Westvaco - Trim waste on PM 90 - Identify possible use for trim waste. - Development of cost model for labels ASSUMPTIONS: - December forecast used to project1993 volume is based on sales forecast, not production forecast, in order to meet financial goals of P.M. -• This buying plan assumes moving labels froro Alford to IPC resulting in a savings of $612,640.00. $15,000.00 - $25,000.00 3rd Qtr., '93 $12,000.00 - $30,000.00 2nd Qtr., '93 $13,000.00 - $30,000.00 2nd Qtr., '93 Page 3 of 10 Class Code 30-35 L M N TI088ve50z
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r '92 - '93 lntiatives - Labels OpTem 11/3/92 tl r Brand Descrbt ion PlSavinas Status IPC B&H Embossed Labels Consolidation B&H volume at IPC 612,640 Need development cost approval 2 x IPC B&H Hot Stamped Consolidation PM volume at 177,148 Need development to be 0 ~ ~ Labels IPC completed and costs approved ~ i C wo IPC Parliament SP's Eliminate 100% Rewind 169,260 Needs Review Team approval 0 a e c JWF VS FF SP PM-t 65#to PM-1 60# 31,500 Need Samples a1 v m a ac JWF Marlboro "Red" SP Convert Red Ink from T-E to Cav. 28,590 Need subjective approaval IPC Marlboro 25's SP PM-1 65#to PM-t60# 9,605 Need samples IPC Marlboro 25's SP PM-1 65#to PM-1 60# 7,824 Need samples IPC Marlboro Lts 25's SP PM-1 65#to PM-1 60# °• 4,479 . Need samples IPC Players 25's SP PM-1 65#to PM-1 60# 3,600 Need samples •WF VS FF SP VS-94 to PM-1 65ff 0 Need Samples Var Merit SP's Reduce Tolerances Needs Graphics Review N O t1'I G! ~ TotalPlSavings 1,044,346 B-27
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0 . LABELS Export labels in forecast: Non Rotating WN Rotating WN Formula 1 & 70 TOTAL Domestic labels in 20 wk. forecast: Premium Brands 48 x 2 (wn) - 96 Generic Brands 116 x 2 (wn) - 232 . TOTAI. Tota7l labels analyzed weekly - 718* 228 49 x 2 (wn) - 98 64 390 328 With addition of all warning notices: Domestic: Premium Brands 48 x 4 - 192 Generic Brands 116 x 4 - 464 Export: Rotating Warning 49 x 4 - 196 Total label material codes - 1,144* Closures: Export closures in forecast 143 Domestic closures in 20 wk. 51 TOTAL 194 Total materials analyzed weekly: labels 718 closures 194 912* Total materials (active) - 1,338* *This does not include items set up but not in forecast. B-28
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/U5A Furchasing Pruject Na 000 U T91 PM U_SA ® PM Internafional Z Requested By^. Date Requested; ' ' PIS Agent OPTIMIZATION TEAM 11/18/92 John Hawkins Brand: Charge Code B&H 990-SPT-645 Project Title: B&H EMBOSSED LABEL PACKAGE -- Paclaging Infrnmation: Q Devgn Ocx3c~l o Marhine Tosl: 0 King Size El Inner Foil ® Soft Pack .InY SyslrJrt,s Pepcr/Fkmd Stodc 11 100mm El Tear Tape ~ Flip-Top-t.3ox El 11 o o ]nner Frame ~ Carton 0 O ~ ® Embossed 0 0 n BrieF _ ...----•-- ------- __._---.. . _ _ ------ - --- A N N U A L-MA I EF3JAL-SA_V1N G.S-OJ 3 TAI N ED-B_Y-MQ V I NG. B&F_LEMBQ$,S.E D-LA BELS- E R QM_-- ALFORO TOJ.EC-AF3.E_ESTIMAIED-TQ.BE -S613,000.._ TNE_ MAT.ERIAL GODES WHI.C1-R EQUIRF- DEVEL.QP_MEN_T-ABE-----,-- ~.-`N_4Q0A_ `N_401.A___.-`N_4_42A_..._. ...._ __'N_4-47/i_._.-..._..'N "N-523A-. .-. _ .N.524A....,._,......,.30 SQZ~ ---- --.~--- --- .._...._.. --- DEVELQ2MENT COSJ ES7IMAT_E-(t1-L18C92):_-__. 14 MATEH(AL-COD.ES_(56_cyL@._3240Q.ea.)._ _-.. $134,400... 1viONETARY APPROVAL ES'iTMP.TE $13 4, DUE DATE t~7 40 0 O C11 W 0011 Cn DATE CB DATE ~ DATE r B-29
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0 0 ! SUPPLIER EVALUATION m 0 - SUPPLIER IPC & L J. W. Fergusson Alford USING LOCATION R, L, C R, L, C R, L, C A. COST DETTVE2Rn COST/QON . 1. L-291A $3.35/m L-291A $3.36/m L-441A $9.29/m 2. L-441A $9.12/m L-515B $9.43/m 3. L-515B $5.64/m REBATE OFFERED (YES/NO) NO NO NO OVEEALL COST (A/U) A A U B. QUALITY Z ACCEPTANCE 99.42X 99.31i 99.62% OVERALL QUALITY (A/U) A A A C. SERVICE (A/U) A A U D. SECURITY (F ROM PAGE(S) ) A/U A A U OVERALL EVASA ATION (NUMBER OF "A's "; 1-4) A;4 A;4 U;(A-1) A - ACCEPTAELE Page 6 of 10 U - UNACCEPTABLE Class/Code 30-35/L.H.N OR NUMERICAL RATING DEPENDING UPON MATERIAL
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0 0 r SECURITY EVALUATION A SUPPLIER IPC & L J. A. Fergusson Alford SECURITY 60 lb. PHL - 30 days 60 lb. CIS 65 lb. C1S - 30 days 65 lb. PHl - 30 days 30-45 days 1. RAW MATERIALS PH 90 - 30 days PM 90 - 30 days 2_ PLANTS & LOCATIONS Rogersvi.lle, TN. Richmond, VA Baltimore, !O) 3. LABOR a- UNION 5 Unions GCIU Local 788-5 United Steelworkers AFL-CIO b. CONTRACT E%PIEATION DATE 6/30/93 • 6/30/93 c. SITUATION Excellent Excellent Good . 4. ENERGY SOURCES Gas, Electricity, Oil Gas, Electricity Gas, Electricity, Oil 5_ CAPACITY (A/U) A A U 6. FLERIBILITY (A/U) A A U 7. EPA COMPLIANCE (A/U) A A A 8. FINANCIAL RATING (A/0) A A U 9. CORPORATE NANAGEHE[iT . STRENGTH (A/U) A A A 10. CORPORATE NANAGElIEOT COHAMCra'r (A/U) A A A OVERALL SECURITY (A/U) A A U A - ACCEPTABLE U - UNACCEPTABLE Page 7 of 10 Class/Code 30-35/L.H.N ,~ sToesMoz
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• ExP1nNAA'A(s) . 0 CRFAUIRED FOR ALL •II• RATINGS) Alford Packaging: - ' Cost: Hot stamped items have been acquired at a premium cost to Philip Morris. Re-sourcing evaluation showed cost per thousand to be $.30 higher at Alford. *Service: With 8-12 weeks lead times Alford still requests changes in delivery dates and partial shipments. Security: Normal business in jeopardy every time new business utilizes the label press. Schedule is not flexible except when there is no new business. Alford can only produce cut labels. Cut label requirements are down significantly across, soft pack brands. * The service rating is more appropriately defined as a flexibility issue. Documentation over the past two years supports the fact that Alford cannot meet delivery dates as requested in the quantity requested. The label press is shared with flip top boxes as well as numerous new brands. - Page 8 of 10 Class/Code 30-35/L.N_N 1 I 4TOQ9VC5OZ
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0 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY SUPPLIER X X X X X x IPC & L 41.9 43.2 49.2 52.3 68.52 64.7X J. A. 8ergusson 25.5 29.7 26.7 29.6 29.3% 35.2X Alford 7.9 5.2 5.2 4.7 2.2X .1X Citp 23.7 22.0 18.8 13.0 --- --- Golden Belt --- -- .1 .4 --- --- . Page 9 of l0 e'jQf~, ,~ACas,r - Class/Code ^,30-35/L.H.N
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1993 DIRECT Na'rxaTAi- BUYING PTAN SUHIfARY PAGE Haterial Code/Super Class 40-42 Description Soft Pack Closures Unit of Heasure Each Std. Cost $ N_L Est. $ Purchase Est. Usage 8.768~t Est. Purch_ Quantity 8.768me Annual Purchases Est. 1992 Proj. 1993 O ll Supplier Name Units x Units X Commitment (~) vera Evaluation 1. IPC & L 5,203 am¢ 50.3 6,444 ® 73.5 2 Weekly 4 2. J. W. Fergusson 4,177 um 40.3 2,324 mm 26.5 2 Weekly 4 3. 9itex 977 mm 9.4 -0- 0 2 Week'ly 4 4. 5. 6. 7. 8. 9. 10. Total 10,357 mm 100_0 8,768 a~ 100.0 * L. Contract 2. Purchase Order 3. Other 1993 Buying Plan projections do not take into account current inventories. GFOQRifF.,UM Page 1 of ' 11 Class/Code 40-4 " q Z Approval S~ r --Date: /2 '/k Prepared By _ D. E. 1aDate• 2 1 92_
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O'BJECPIVES/STRATEGIES/ISSDES OBSECTIVE: TO REDUCE MATERIAL COSTS LIITN NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 200.000.00 - 550.000.00 STRATEGIES 1. Eliminate third closure supplier, Vitex, by 2nd quarter as a strategic move with slight cost savings DOLLARS ' TIMETABLE lst Qtr-, `93 - No dev - Tandem - Reduct - Improv - Improv - Improv elopment costs to move business run savings ion of formulation approvals ed appearance ed resource utilization ed quality 2. Resour ce Vitex closure volume to IPC 4th Qtr., '92 ° - Capaci ty available n - All it (No de ems currently produced at IPC velopment costs) Reduce - Reduce cost of all American generic closure $170,000.00 d graphics tolerance: six versions lst Qtr., '93 in pro t N cess to be presented to New Yoik. hics adds h l t f f ' ew e to sav grap c no ogy rans er o ings. ~ , 4_ Elimin for Ba - No dev ate 5 different closures required TBD sic elopment cost, just do it. ~ lst Qtr., '93 S. Conver Bristo t value price generics (i.e. Alpine, $30,000.00 -$370,000.00 l, Cambridge) to standard closure ' 2nd Qtr., '93 - No development costs Page 2 of 11 Class Code 40-42 OZQ138VESM
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OBJEGTIVES/STRATEGIES/ISSIISS fcont.l ASSUMPTIONS A. December forecast used to project 1993 volume is based on sales forecast not production forecast in order to meet financial goals of P.2S. B. This buying plap assumes moving closures from Vitea to IPC_ iSSIIES . How to develop a cost model. Page 3 of 11 T?QRRVCSf1 ~Z Class Code 40-42
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i '92 - '93 Intiatives - Closures OpTeam 111552 ti Brand pescri t~ PI ~vinas Status ~ 'IPC Value Priced Convert to Standard Closure 372,627 Need Management Approval N Generics 1 i '. 0 ~ ~ IPC Private Generics Reduce Graphics Tolerances 171,000 Need Art Revisions w 0 e v IPC Various Optimize Vitex Need Project Approval .t U ~ N b1 m a m ~ wo t • 0 Total PI Savings 543,627 B-37
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a$ea 2053488023 ~ M m S9t1ISViI . 7ZV 7iQd ~~isenwxasa t
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0 SECORII'AAiAATION • SUPPLIER IPC & L ,7. B. Pergusson Oitex SECURITY . 60 lb. PML - 30 days 60 lb. PN1. 30-45 days 60 lb. PliL - 30 days - 65 lb. PM1 - 30 days - 1. RAA MATEBIALS r Blue Bond 30-60 days Blue Bond - 30 days Blue Bond - 30 days 2. PLANTS & LOCATIONS Rogersville, TN Richmond, VA Suffolk, VA . 3. IABOR . a. UNION 5 Unions CCIU Local 788-5 None . b. CONTRACT EXPIRATION DATE 6/30/93 6/30/93 N/A . c- SITUATION Excellent Excellent Excellent 4. ENERGY SOURCES Gas, Electricity, Oil Gas, Electricity Gas, Electricity 5. CAPACITY (A/U) A . A A , 6. FLEXIBILITY (A/U) , A A A - 7. EPA COHPi7ANCE (A/U) A A . A 8. FINANCIAL RATING (A/U) A A A 9. CORPORATE NANAGEMENT STRENGPN (A/0) A ~ A A 10. CORPORATE MANAGEMENT CONNITl42iT (A/U) A A A OVERALL SECURITY (A/U) • A A A A - ACCEPTABLE Page 6 of 1 1 t II- UNACCEPTABLE Class/Code 40-42 fizoe9vesoz
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2053488025 zIV-oV upoo/5~io ' 5rcsvlmovNa - n ii 3o ZaaLa TIffVSd3o0v - V h IV 7 (9-i =.s.v. 30 Xa8FL1N) NoISVff19p3 TLVMAo v v n/v ( (s)awa Houa) azlgooas •a v v v (n/v) ZOIeNas •o v v v (n/v) xslzvnb Tzamo X08"66 X6S"86 X95'86 HONV7d300V X ErTI9nb 'g v v v (n/v) asoo z-zvaHpo ON ON - ON (ON/sH7C) 03H3d30 TZFlBau £ W/Z£'$ VSBi-047 m/0*Y $ V58i-Oh 'Z w/6Z'$ fli0i-Oh m/S£"$ ffl0i-03 ID/S£'$ EIOi-04 'i ROI1/SSOO OH2IIATTHO as0o -v 0 `'I `8 0 'T `7I '0 `T `ZI NOIS9JOT 9HIS0 zaaip uossn`d.iag •n -r 'i q OaI ZIII'IaaOs tioI7.VL[IVAR iIITTaans ° m 0
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• • 1988 - 92 BUYING HISTORY AND 1993 BDYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QIIAHTSTY SIIPPLIER Z z z z z x IPC & L 35.5 39.9 39.9 51.0 50.3 73_5X d. A. Fergusson 38.6 37.1 38.3 33.2 40.3 26_5z . Vitex 25.5 23.0 21.3 - 15.8 9.4 -0- , 1 g2OB8bTSM Page ~ 8 of 11 Class/Cade 40-42
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0 Philip Morris USA Printed Packaging N Vitex - Closure Analysis W ~ a ~ a ~ U ~ Vl In the '92 Buying Plan, closures had total projected volume of: ba va '92 Total Closures 9,605.960 m W V The projected volume was to have shared as outlined below: Vitex 3,588.780 m 37.36 % IPC 3,912.440 m 40.73 % JWF 2,104.740 m 21.91 % 9,605.960 m 100.00 % However, the current share is: Vitex 976.900 m 9.43 % IPC 5,208.411 m 50.24 % JWF 4,177.013 m 40.33 % 0 10,362.324 m 100.00 %n The difference in share has been explained quarterly through the Buying Plan Deviation Report. The closures produced by Vitex have been limited to the following codes: 40-101B Blue Bond 20 Class A Closure - GD RF 41-005B Blue Leaf USTE Closure - GD RF The total volumes for these items in the '92 BP was projected to be: 40-101B 41-005B 973.200 m 980.620 m 1,953.820 m However, the actual volume of closures received to date have been: ~ 40-101B 306.650 m VI 41-005B 351.300 m p,,7 657.950 m ~ • O ~ B-42
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i • IPC is the targeted source for these two items in '93. Therefore, based on the '92 BP volumes: Code# Volume Std IPC diff PI Savings 40-101B 973.200 m .313 .300 .013 12,651.60 41-005B 980.620 m .295 .300 -.005 -4,903.10 1,953.820 m $ 7,748.50 Benefits: Tandem Run Savings Addtional Savings could be attained Reduction of Formulation Approvals Fewer formulations of inks / varnishes Improved Appearance Improved Color Consistency between the Packs and Closures when the same inks are used. Improved Graphic Consistency, within a mat'l code, that is inherent when one supplier produces an item Improved Quality The closures would gain the benefit of improved slitting tolerances at IPC with state of the art equipment Improved Resources Utilization An overall reduction of Purchasing, QA, and PTS contacts ~
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i ---- -- ------------------------------------- Vftex ]PC LF_ Total 40-112B 603.650 • 603.650 36.6 % ..., 40-1O1B 306.650 98.000 404.650 24.5 % N 41-577B 245.950 245.950 14.9 % .o v 41 005B 351 300 440 44 740 395 0 % 24 - . . . . w 0 m v Totals 657.950 746.090 245.950 1,649.990 -i o 39 9% 45 2% 14 9% 100% ..c, . . . Ul N N ro~ ac~ ~ ~ ~ ~ ~ ~ ~ \•. ~ f B-44
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1993 DIRECT HATERIAL BUYiNG PLAN SUMMARY PAGE Material Code/Super Class 44 Description POLYPROPYLENE FILH Unit of Measure LBS Std. Cost $ Est. $ Purchase A30,075.000 Est. Usage 17_088.000 Est. Porch. Quantity 17,088,000 Annual Purchases Est. 1992 Proj. 1993 _ Supplier Name Uni.tsMi lbs X Units NIR-lbs Z Commitment (*) Overall Rating 1. HE2CULES .8 4_8 .7 4.1 2-QUARTERLY 4 - 2. HOECHST 8.1 49.1 8.4 49.5 2-QUARTERLY 4 3. MOBIL 7.6 46_1 7.9 46.4 2-QUAR'rrmis 4 4. 5. 6. 7. 8 9. 10. Total 16.5 100.0 17.0 100.0 * 1. Contract 2. Purchase Order EKPIANATTON 1 1993 FORECAST 334 BILLION CIGARETTES VCQOCS Ma2 3. Other Page 1 of 9~^ Class/COde ! _~LX Approval 7Ca Date= S Prepared By ' ' Date•
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OBJECfIVES/STRATEGIES/ISSOES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QIIALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 250.000 STRATEGIES- - T7METABLE 1_ DEVELOP AND QUALIFY BILHS Wf1ICH WILL MAXIMIZE SAVINGS (UTILIZING MEXICAN PACK 1JRAP). 2. COORDINATE PROGRAHS WITH VENDORS TNAT RELATE TO PRODUCT DEVELOPMENT AND MARREra7G STRATEGIES. 3. NEGOTIATE COMPETITIVE PRICE WITH MOBIL AND HERCULES USING HOECHST AS STANDARD. OTHER ISSUES- ' 1. CONTINUE DUTY DRAWBACK PROGRAM FOR OFF SHORE MATERIAL. 2. EVAi.IIATE THE DEVELOPMENT OF COST EFFECTIVE SUBSTRATES WITH IMPROVED MOISTURE BARRIER FIIXS. 3. OPTIMIZE THE PACR WRAP WIDTH AND CONTINUE THE STUDY FOR REDUCED WIDTH ON CARTON OVERURAP., Page 2 of 9 Class Code 44 POLY ieaggtesaz
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SOPPLIEft EVALIIATION SUPPLIER HERCULES HOECHST NOBIT. USING LOCATZON - RICH-LVL-CAB RICN-LVL-CAB EICN-LVL-CAB A. COST DELIVERED COST/UOK PACKGRAP 1. PER PODND $1.785/LB* $1.7622/LB 2. CARTON O/W PER POlIND3. $1.78/LB 1.735/LB 1.7222/LB REBATE OFFERED (YES/NO) NO YES NO OVaRA7.r. COST (A/O) A A A B. QIIALITY - Z ACCEPTANCE 99.97X 99.99% 99.90% OVERALL QUALITY (A/U) A A A C. SERVICE (A/Q) D. SECURITY (FROH PAGE(S) 5 ) A/U OVERALL EVA1pATION (NONBER OF 'A's'; 1-4) A A 4 A A 4 A = ACCEPTABLE *$1.655 PRICE FOR QTY PURCHASES BEYOND 7.4N LB. TO BE TAEEN Page _ D> IINACCEPlABLE 500,000 LBS FIRST QTB, 500,000 LBS 4TN QTR. Class/Code zEasSATsoz 3 A A 4 of 44 POLY 9
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• SECORIT'Y"EVA7AATION • SUPPLIER HERCOLES HOECHST - MOBIL SECURITY RESIN-HTNNONT HOECHST GERMANY RESIN RESIN-E%%ON/ANOCO 20-25 DAYS 30 DAY. HOECHST HEXICO 20 DAYS 1. RAW HATEBTAL RESIN 30-60 DAYS COVINGTON, VA NEORIRCHEN, GE6HAHY MACEDON, N.Y. 30H 2. PIANTS & LOCATIONS TERRE HAUTE IND ZACAPU, !D?4ICO STRATFORD, CT 40H VAREtINE5, QUEBEC SHAWNEE, OR 509 LAGR9NGE, CA 50F( 3. LABOR a, UNION IYO IG CNERffE NON UNION - b. CONTRACT EBPIRATION DATE 7/27/92 12/31/92 c. SITUATION STABLE (ACCEPTABLE) STABLE (ACCEPTABLE) 4. ENE2GY SOURCES ET.EC/GAS COAL ELEC, NUC ELEC ELEC, GAS-DRYERS 5. CAPACITY (A/U) USA 90t~T _6X 99N GHR 8_5X USA 17UH 4.6% 6. FZEgiBILITY (A/U) A A A 7. EPA COMPLIANCE (A/U) A A A 8. FINANCIAL RATING (A/(I) A A A 9. CORPORATE HANAGEl1M , STRENGTH (A/U) A . A A 10. CORPORATE MANAGEMENT COMMITMENT (A/U) A A A - OVERALL SECURITY (A/Q) A A A A m ACCEPTABLE U - UNACCEPTABLE Page 4 of 9 Class/Code 44 POLY ssoeeMSOz
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2053488034 Vi araa/sseTa 6 9'97 i'97 Z'Lh S'Lh 0'OS 8'Oh TI80H S'63 1'6*! 5'S7 .I'£7 T'6Z 3'9Z ZSH08OH Z''h B £'L Ji'6 6'0Z 8'ZE STIIIJlffit x x x x x x TlHriaaHs C[ S'9T S'9T Z'Li 8'hT £'Vi (saz a0 sxorrnw) ]LtISNVAD 'IdSOi (a) E66i (H) Z661 i66i 0661 686T 9861 HVId 92UA4ff E66i OHV EMOISIH 9NI]C(lE Z6 - 886T e e
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0 Supplier: MOBIL Current Ratio: 0 Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless othenvise indicated. 1991 1990 I ) 0 1. Enter Current Assets 12,401 13,231 N/A 2. Enter Current Liabilities 13,602 13,653 N/A 3. Current Ratio (Line 1/Line2) .91 .969 N/A Debt To Assets Ratio: 1. Enter Total Debt 24,653 24,593 22,666 2. Enter Total Assets 42,187 41,665 t- 39,080 3. Debt To Assets Ratio (Line 1/Line 2) .58 .59 .58 w o Profit Margin On Sales: 1. Enter Net Income 1,920 1,929 1,809 2. EnterSales 63,227 64,472 56,188 3. Prof'it Margin On Sales (Line 1/Line 2) 3.03% 2.99% 3.21% Retum On Total Assets: 1. Enter Net Income 1,920 1,929 1,809 2. Enter Total Assets 42,187 41,665 39,080 3. Return On Total Assets (Line 1/Line 2) 4.55% 4.62% 4.62% EarningsPerShare: 4.65 I CONPIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. 4.60 I 1989 4.40 Page 6_ of 9_ ClasslCode 44 SE08RMaZ
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0 I Supplier HOECHST Current Ratio: s Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise Indicated.) 1991 i 1990 • 1989 1. Enter Current Assets 6,539 6,766 2. Enter Current Liabilities 3,073 2,965 3. Current Ratio (Line 1/Line2) 2.13 2.28 Debt To Assets Ratio: 1. Enter Total Debt 14,487 14,396 2. Enter Total Assets 23,498 22,946 3. Debt To Assets Ratio (Line 1lLine 2) .62 .63 ~ Profit Margin On Sales: 1. Enter Net Income 893 1,138 2. Enter Sales 28,425 27,865 3. Profit Margin On Sales (Line 1/Line 2) 3.14% 4.08% Return On Total Assets 1. Enter Net Income 893 1,138 2. Enter Total Assets 23,498 22,946 3. Return On Total Assets (Line 1/Line 2) 3.80% 4.96% Earnings Per Share: 14.07 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. 15.59 Page_7_ of 9, ClasslCode 44 9E08streSf?z
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Supplier.• HERCULES Current Ratio: I 1991 1990 I 1. Enter Current Assets 1,411.1 1,599.8 1,502 2. Enter Current Liabilities 764.3 907.8 883 3. Current Ratio (Line 1/Line2) 1.84 1.76 1.7 Debt To Assets Ratio: 1. Enter Total Debt 1,648 1,757.7 1,609.2 2. Enter Total Assets 3,466.8 3,699.6 3,653.2 3. Debt To Assets Ratio (Line 1/Line 2) .446 .475 .440 Profit Margin On Sales: 1. Enter Net Income 94.9 96 (81.3) 2. Enter Sales 2,928.9 3,199.9 3,091.7 3. Profit Margin On Sales (Line 1/Line 2) 3.24% 3.0% (NA) Return On TotalAssets: 1. Enter Net Income 94.9 96 (81.3) 2. Enter Total Assets 3,466.8 3,699.6 3,653.2 3. Return On Total Assets (Line 1/Line 2) 2.73% 2.59% (NA) Earnings Per Share: 0 Financial Analysis Worksheet 0 (Millions of Dollars; all data as of December 31,1991 unless otherwise indicated.) 2.01 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. 2.04 1989 (2.09) Page 8_ of 9_ ClasslCode 44 POLY_ L400Sve.soz
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0 Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 44 Description POLYPROPYLENE Unit of Measure LBS Forecast Date 10/21/92 1993 1994 1995 1996 1997 Vendor Name Units % _ Units % Units ^/o Units % Units 0h Vendor A HERCULES 700,000 4.1 714,665 4.1 723,027 4.1 725,535 4.1 733,444 4.1 Vendor B HOECHST 8,400,000 49.5 8,575,980 49.4 8,676,319 49.4 8,706,426 49.4 8,801,326 49.4 Vendor C MOBIL 7,900,000 46.4 8,065,505 46.5 8,159,871 46.5 8,188,186 46.5 8,277,437 46.5 TOTAL: 17,000,000 100.0 17,356,150 100.0 ISSUES: ' RETAIN MOBIL AS DOMESTIC SOURCE (STRATEGIC PLAN) 'ELIMINATE HERCULES -IS NOT QUALIFIED ON PACK COEX (STRATEGIC PLAN) 'ALLIANCE WITH HOECHST IN PLACE EXCEPT FOR CERTIFICATION 'CONTINUE TO DEVELOP HIGH BARRIER FILM ' EVALUATE THE REPLACEMENT OF FOIL WffH METALLIZED POLY 17,559,217 100.0 17,620,147 100.0 17,812,207 100.0 Page 9 of 9 Class/Codet44 ) 84QpS Y 4Soz
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0 0 r 1993 DIRECT MATERIAL BUYING PLAN SUMMARY PACE Material Code/Super Class 47 Description TEAR TAPE Unit of Measure LBS Std. Cost $ Est. $ Purchase 2 500 000 Est. Usage 487.972 Est. Perch. Quantity 487.972 Annual Purchases Est. 1992 Proj. 1993 Supplier Nane Units Z Units X Cdnaitinent (*) Overall Rating 1. ARLIN 456,213 91.7 456,213 93.5 2-QUAR9'RRTY 4 2- KT IND 8,451 1-7 9,111 1.8 2-QUARTERLY N/A 3. SONOCO 326 (1) 2-QUARTERLY N/A 4- PAYNE 33,060 6.6 22,648 4.7 2-QUARTEELY N/A 5. - 6. 7. 8- 9. 10. Total 497,724 100•0 487,972 100.0 1 * 1. E%PLANATION (1) ELIMINATED AS A SOURCE OF SUPPLY DUE TO QU,ALITY PEEFORMANCE- 1993 FORECAST 334 SIIJSON CIGARETTES seaeetusaz Contract . Purchase Order 3. Other Page ~ Class/Co Approval 1 Date..$ Date• Prepared By
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. oBJEG1TVFS/ST6ATEGIES/ISSOES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 143 000 STRATEGIES: TTMiTAR2$ 1. COORDINATE WITH OPERATIONS SERVICES AND VENDORS THE DEVEtAPMBNP AND QUALIFICATION OF NEW TEAR TAPES FOR TNE REPLACEMENTS OF AA% POTS CURRENTLY BEING USED. ' 2. CONTINUE TO OPTIMIZE THE USE OF ERIRUDED TAPE VERSUS TDE rawraATED PRINTED TAPES FOR ADDITIONAL COST SAVING. OTHER ISSUES-- 1. DEVELOP KTI CARTON 0/[J TEAR TAPE FOR COST SAYIIZGS AND IMPROVED SERVICE. 2. QUALIFY ARLIN'S PRE-APPLIED HEAT RELEASE TEAR TAPE FOR ALTERNATIVE TO PRESSURE SENSITIVE TEAR TAPE. Page 2 of 6 Class Code 47 TEAR TAPE QtQsOY4SVz
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0 • 0 SUPPLIER EVALIIATION m rn SUPPLIER A~ 7;N USING LOCATION g1CH_LVL-CAg A. COST DELIVERED COST/UON EXTRUDED 1. $2.14/LB xFrATTTyED 2. $20.00/LB . TT~'an 3. ~ T T~'an $12.85/LB REBATE OFFERED (YES/NO) NO OVERALL COST (A/U) A B. QUALITY Z ACCEPTANCE OVERALL QUALITY (A/U) C. SERVICE (A/U) D. SECURITY (FROM PAGE(S) 5 ) A/U A A A OVERALL EVALUATION 4 I (NUMBER OF 1 ''s'; 1-4) 4 i i A - ACCEPTABLE U - UNACr~TARiF. 6 Class/Code 47 TEAR TAPE Page 3 of ,i'VUSQYF..Sll4
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• SECORITSrE9ALIIATION 0 SOPPLIER ARLIN SECURITY 1. RAW 1fA9Ti.RTAT Q EESINS - 6 MONTHS 2. PLANTS & LOCATIONS LOI7ELL, MASS 2 BUILDINGS 3. LABOR a. UNION b. CONTRACT E%PIRATION DATE c. SITUATION NON UNION . 4. ENERGY SOURCES ELEC/GAS ' S- CAPACITY (A/U) 6M LBS 0PP 6. PLS82BILi1'4 (A/U) A 7. EPA COMPLIANCE (A/U) A 8. FINANCIAL RATING (A/U) A 9. CORPORATE NANAGENF.N'P STRENGTH (A/U) y A 10. CORPORATE MANAGEMENT COMMITMENT (A/U) A - OVERALL SECURITY (A/U) A A - ACCEPTABLE U ~ DHACCEPTABLE Page 4 Class/Cade of 6 47 TEAR TAPE Z'6a8ebeSOZ
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' 1988 - 92 BUYING NISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY THOUSAND OF LBS 448 443 531 500 500 _ 488 SUPPLIER X X X Z X S ARLIN 79.2 74.3 77.6 91_7 91.7 93.5 BEMIS N/A N/A N/A N/A N/A N/A - HOECHST .3 .3 .2 N/A N/A N/A ICT 4.3 7.7 9.5 1-7 1.8 1.8 N.I1 6.9 11.1 1.9 N/A N/A N/A SONOCO 5.3 1.4 1.7 N/A N/A N/A PAYNE 4.0 5.2 9.1 6.6 6.6 4.7 Page 5 of 6 Class/Code 47 TAPE 4V [dIR0 V ESQZ
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Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan ProJection MaterlalCode/SuperClass 47 Descrlptlon TEAR TAPE Unit of Measure LBS Forecast Date 10121192 1993 _ 1994 _ 1995 1996 1997 Vendor Name Units ^h Units ^.5 Units °/b Units % Units ~h VendorA ARLIN 456,213 93.5 465,885 93.5 471,336 93.5 472,971 93.5 478,126 93.5 Vendor B KR 9,111 1.8 9,304 1.9 9,413 1.9 9,446 1.9 9.549 1.9 Vendor C SUPA STRIP 22,648 4.7 23,128 4.6 23,399 4.6 23,480 4.6 23,736 4.6 Total: 487,972 100.0 498,317 100.0 504,147 100.0 505,897 100.0 511,411 100.0 ISSUES: ' RETAIN ALL SUPPLIERS 1993 'THERE WILL BE NO PLANNED ALLIANCE WITH TEAR TAPE SUPPLIERS DUETOTHE SPECIALIZATION REQUIREMENTS WHICH SPLITTHIS SMALL VOLUME BUSINESS •DEVELOP IR FOR TEAR TAPE CARTON OAN FOR COST SAVINGS Page 6 of 6 ClasslCode:47 r b~iOB®~~SO~
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• • s 1993 DIRECT NATE@lAi. BtIYING P7I1N SOMHARY PAGE Material Code/Super Class C.D.S_50=53 Description DOHESTIC &_EICPORT CARTONS ~ Unit of Measure EA Std. Cost $ N/A Est. $ Purchase Est. Usage 1.755.730.000 Est. Purch. Quantity 1 75 730 000 Annnal Purchases Est. 1992 Proj. 1993 Supplier Name Units Y Units X Cor®ituent (*) Overall Evaluation 1. VA. FOLDING BOX 840,000,000 48.8 756,270,000 43.07 2 4.0 . 2. RICHHOND GRAVURE 620,000,000 36.0 683,440,000 38.93 2 4_0 3_ SONERVILLE PKG 160,000,000 9.3 247,190,000 14.08 2 4.0 4. GRAVURE PRG 90,000,000 5.2 42,790,000 2.44 - 2 .4.0 5_ AGI, INC- 10,500,000 .61 26,040,000 1.48 2 4.0 6. ALFORD PACKAGING 1,470,000 .09 -0- 0.00 N/A 7. 8. 9. 10_ Total 1,721,970,000 100_0 1,755,730,000 100.0 * 1. Contract 2. Purchase Order 3_ Other Page _ 1 of 17 stog86eSt}2 Class/Co D S 50 & 53 proval Prepared By A C. ~
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0 OBIECTIVES/STRATEGIES/ISrS CARTON +S 1993 BUYING PLAN • OBIECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. - P~D 19,93 SAVINGS: ,54,850;ll00 ;$6;500,009-' - ' OVERALL STRATEGY FOR CARTONS: CONTINUE OPTIMIZATION EFFORTS WITH AN EMPHASIS ON COST SAVINGS, DIE/BRAND CONSOLIDATION/STANDARDIZATION AND FURTHER SUPPLIER REDUCTION STRATEGIES . APPROXIMATE $ SAVINGS TIMETABLE CONTINUE EFFORTS TO FURTHER $3,000,000 - DECEMBER, 1992 REDUCE GENERIC CARTON $3,500,000 §3,308,768 PI SAVINGS PRICING SUBMITTED 12192 1993 REBATE PROGRAM y"200,000 - 4TH QTR, 1992 - ~m WITH SOMERVILLE $400,000 3RD QTR, 1993 0' ~ CHECK ISSUED 4TH 1993 GRAPHICSITEXTURE $500,000- CRITICAL PROJECT STANDARDIZATION (I.E. $1,000,000 SCANDANAVIA) BRAND RATIONALIZATION IDENTIFY SPECIFIC BRANDS $50,000 - 1ST QTR, 1993 FOR ANNUAL PURCHASES $100,000 1 ft08stcSt)z Page 2 of 17 Class/Code C,D,S,50 & 53
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OBIECTI V ES/STRATEGIES/ISOS CARTONS 1993 BUYING PLAN • OBIECTIVE: TO REDUCE MATERiAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, ORSECURITY. PROlEC1ED 1993 sAVWG$~~SA O;U07 - F, 0,( i I OVERALL STRATEGY FOR CARTONS: CONTINUE OPTIMIZATION EFFORTS WITH AN EMPHASIS ON COST SAVINGS DIEBRAND CONSOLIDATION/STANDARDiZATION AND FURTHER SUPPLIER REDUCTION STRATEGIES APPROXIMATE $ SAVINGS TIMETABLE OP'L'IMIZE RICHMOND GRAVURE $900,000 - 4TH QUARTER, 1992 BEGAN WITH IIIGH VOLUME, DUAL $1,500,000 OPTIMIZING PROCESS WLTH SOURCED BRANDS. MARLBORO KS; PI SAVINGS DEVELOP PLAN TO ELIMINATE SUBMTCI'ED 9/92. RG AS A SUPPLIER IN 1995. . FURTHER OPTIMIZATION TO FURTHER SUPPLIER CONSOLIDATION $200,000 - 1993 GRAVURE PACKAGING SCHEDULED $400,000 - FOR END OF 1993. (GP ONLY) ct Page 3 of 17 C1ass/Code C,D,S,50 &53
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ENh 10~75 ~ ~.p:~irtnrni I OWoBOYCwSI/Cr 0 FTe':< i r,rE!_I; 5/z 4/2 3/2 3/2 4l2 0 Page 4 of 17 Class/Code C,D,S,50 &53
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SUPPLIER CAPITAL EXPENDITURE STATUS VIRGINIA FOLDING BOX NEW GRAVURE PRESS REVIEW PROCESS; ONE YEAR LEAD TIME RICHMOND GRAVURE NEW GRAVURE PRESS TlMETABLE- PENDING REVIEW AND APPROVAL, OPERATIONAL 1995 REVIEW PROCESS SOMERVILLE PACKAGING OFFSET PRESS IN WILLIAMSBURG NEW PLANT IN DANVILLE GRA VURE PRESS IN DANVILLE (8 COLOR-OPERATlONAL 1ST QUARTER, 1993) APPROVED, OPERATIONAL 2ND QUARTER, 1993 APPROVED APPROVED GRAVURE PACKAGING PLANT EXPANSION (BEGINNING 11/92) , NEW GRAVURE PRESS (54 - INCH, 8 COLOR, EMBOSSING CAPABILITIES TIMETABLE, JULY 1993) APPROVED APPROVED ~., Page 5 of 17 Class/Code C,D,S,50 & 53
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2 s SECUR1TPhVALIIATION SUPPLIER VIRGINIA FOLDING BOX RICHMOND GRAVURE SOMERVILLE PACKAGING SECORITY pESTVACO - VERTICALLY {7ESTVACO {7ESTVACO - INTEGRATED 45 DAYS. WILLIAMSBURG - 6 WEEKS 1. RAW MATERIALS 4 WEEKS BROCKVILLE-dUST IN TIME NEST{//ACO xATNTATNS 3-4 WEEKS OF BOARD IN SYRACUSE, NEW RICBHOND, VIRGINIA RICHMOND, VIRGINIA NEWPORT NEWS, VIRGINIA 2. PLANTS & LOCATIONS CLEOELAND, TENNESSEE RALEIGN, NORTH BROCRVIId.E, CANADA CAROLINA SNITDFALLS, CANADA 3. LABOR BELL PRINTING PRESSMAN NON-17NION WILLIAMSBURG & BROCKVILLE UNION LOCAL 670-RICONOND NON-UNION a. UNION TENNESSEE GRAPHIC SMITOFALLS-CCIO LOCAL 763 CONMUNICATION UNION, 1/31/94 b. CONTRACT E%PIEATION DATE LOCAL 5275 TENNESSEE 4/14/93; 9/26/94 c. SITUATION CALN; CAIH STABLE 4. ENERGY SOURCES NATURAL GAS #2 FUEL ELECTRICITY, NATURAL ELECTRICITY, NATURAL GAS • ELECTRICITY 5. CAPACITY (A/U) A A A 6. FLEIQBILITY (A/U) A' A A 7. EPA COMPLIANCE (A/U) A A A 8. FINANCIAL RATING (A/U) A • A A 9. CORPORATE NANAGElIE[iT STRENGTH (A/U) . A A A 10. CORPORATE MANAGEMENT CONNIT!ffiOT (A/0) A ,A A OVERALL SECURITY (A/U) A A A A - ACCEPTABLE U - UNACCEPTABLE osoestrusoz Page 6 of 17 Class/Code O.D.S.50 & 53
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• SECORIITEVA7AATION . SUPPLIER GRAVURE PACKAGING A.G.I., IttC. SECURITY 1. RAW lfATRRTAT S iTF.STVACO 2-3 WEEKS UESTVACO 2. PIANTS S:IAC.ATIONS. RICHMOND, VIRGINIA fOIIAOSE PARK, ILLINOIS 3. LABOR a. URION b. CONTRACT EXPIRATION DATE c. SITUATION NON-UNION . NON-UNION 4. ENERGY SOURCES NATURAL GAS ELECTRICITY 5. CAPACITY (A/U) A A 6. FLEXIBILITY (A/U) A A 7. EPA COHPLIANCE (A/O) A A S. F7.NANCIAL RATING (A/U) A A 9. CORPORATE lfANAGE!ffiiT STRENGTIf (A/U) A - A 10. CORPORATE NANAGEHE[iT COHpffTNEt1T (A/U) ' A , A OVERALL SECURITY (A/O) A A - ACCEPTAR73! U - UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL Page 7 oP 17 Class/Code _C.D.S.50 & 53 isoestcsoz
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0 SUPPLIER EVALUATION w m V A SUPPLIBR VIRGINIA FOLDING BOX RICfBSOND GRAVURE SONERVILLE PACKAGING USING IACATION R, L, C R, L, C R, L, C A. COST DRi.IVmtun COST/OOH 1. P.M. SUPER LTS NARL KS P!i SUPER LTS 2. 5,184,000 $42.18/!S 17,280,000 $36.80/H 5,184,000 $47.79/N . . 3. - XARL KS 17,280,000 $40,63/M REBATE OFFERED (YES/NO) ' NO . NO . (GENERIC BRANDS REBATE PROGRAM) YES OVERALL COST (A/U) A A A B. QUALITY Z ACCEPTANCE 99.42 98.48 99.64 O9ERAid. QUAL'LTY (A/U) A A A C. SERVICE (A/U) A A A D. SECURITY (FRO3L PAGE(S) ) A/U OVIItALL EVALUATIOft (NUHBER OF "A's"; 1-4) A = ACCF.PTABLE U - UNACCEPTABLE A 4 A 4 4 Page 8 af v 17_ Class/Code C.D.S.50 & 53 zsoeWsoz
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0 SUPPLIER EVALUATION SUPPLIER A.C.I., INC. GRAVUR$ PACKAGING USING LOCATION . R, L, C R, L, C A. COST A A DELIVERED COST/OOH i. 2. 3. REBATE OFFERED (YES/NO) NO NO OVERALL COST (A/U) A A B. QUALITY A Z ACCEPTANCS ~ N/A 99.94 OVF1tAiS, QUALITY (A/O) A A C. SERVICE (A/U) D. SECURITY (FROM PAGE(S) ) A/U N/A A A A OVERALL B~ALUATION OF 'A•s'; 1-4) (NUMBER 3 4 *X Acceptance not available since they began supplying A - ACCEPTABLE cartons fourth quarter, 1992. U - UNACCEPTABLE OR N~RTCAL RATING DEPENDING UPON MATERIAL E S088~'£SOZ , Page 9 of I„~ 7 Class/Code C D S_50 & 53
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0 I Su lier. 0 Financial Arbysis Worksheet ~ a e (Millions of Dollars; all data as ot~Beeem~er 31, 1991 unless otherwise Indicated.) WL'STVACO CORPORATION Current Ratio: I 1991 1990 I 1989 1. Enter Current Assets 623.8 667.9 624.4 2. Enter Current Liabilities 314.1 297.8 296.2 3. Current Ratio (Line 1/Line2) 2.0 2.2 2,1 Debt To Assets Ratio: 1. Enter Total Debt 987.7 p 2. Enter Total Assets 3461.9 3332.0 2 3. Dobt To Assels Ratio (Line 1lLlno 2) 0.29 0.29 0.27 Profit Margin On Sales: 1. Enter Net Income 137.4 183.2 223.1 2. Enter Sales 2301.2 2410.8 2284.1 3. Profit Margin On Sales (Line 1/Llne 2) 6.0% 7.8`/. 9.8^ Return On Total Assets: 1. Enter Net Income 137.4 188.2 223.1 2. Enter Totai Assets 3461.8 3332.0 2960.1 3. Return On Total Assets (Line 1lLine 2) . 4.0% 5. 6/ 7.5% Earnings Per Share: $2.10 j $2.90 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. j~sQeRtFESOZ I $3.45 l I Page 10 of 17 ClasslCode C,n,S,50 & 53
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0 e Financial Analysis Worksheet ** (Millions of Dollars; all data as of December 31, 1991 unless otherwise Indicated.) Supplier: PAPERBOARD INDUSTRIES Current Ratio: i 1991 I 1990 I 1 1. Enter Current Assets 164 172 210 2. Enter Current Liabilities 104 96 116 3. Current Ratio (Line 1tLine2) 1.58 1.72 1.81 Debt To Assets Ratio: 1. Enter Total Debt 328 336 348 2. Enter Total Assets • 778 797 838 3. Debt To Assets Ratio (Line 1lLine 2) .42 .42 .42 w ° Profit Margin On Sales: 1. Enter Net Income (14) 4 7 2. Enter Sales 571 628 660 3. Profit Margin On Sales (Line 1/Line 2) (2.5%) .6% 1.1% Return On Total Assets: 1. Enter Net Income (14) 4 7 2. Enter Total Assets 778 797 838 3. Return On Total Assets (Line 1/Line 2) (1.8%) .5 -.8 Earnings Per Share: I NLA i tI CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. 1989 N1A Page 11 of17 Class/Code c.n.S,50_& 53 Ss48elVeSaZ, ** PRIVATE HELD COMPANY DATA IS EXPRESSED IN CANADIAN DOLLARS AS OF 8/3I/89; 8/31/90; 8/3I/91
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0 Supplier: International Paper Current Ratio: Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise indicated.) 1991 1990 1989 1. Enter Current Assets 4,131 3,939 3,096 2. Enter Current Liabilities 3,727 3,155 2,730 3. Current Ratio (Line 1/Line2) 1.11 1.25 1.13 Debt To Assets Ratio: 1. Enter Total Debt 51050 4,183 3,341 2. Enter Total Assets 14,941 13,669 11,582 3. Debt To Assets Ratio (Line 1/Line 2) .33 .31 .29 m V ~ Profit Margin On Sates: 1. Enter Net Income 184 569 845 2. Enter Sales 12.703 12,960 11,378 3. Profit Margin On Sales (Line 1/Line 2) 4. ' 7.4% Return On Total Assets: 1, Enter Net income 184 ~ 569 845 2. Enter Total Assets 14,941 13,669 11,582 3. Return On Total Assets (Line 1/Line 2) . 1.2% 4.2% 7.3% Earnings Per Share: 1.66 5.21 7.72 r Page 12 of 17 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. ClasslCode ~& 53 G
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0 Financial Analysis Worksheet (Milllons of Dollars; all data as of December 31, 1991 unless otherwise Indicated.) As of October 31 Supplier:' GRAVURE PACKAGING Current Ratio: 1991 1990 1989 0 1. Enter Current Assets 2. Enter Current Liabilitles 4.765 2.687 3.908 3. Current Ratio (Line 1/Line2) 1.18 Debt To Assets Ratio: 1. Enter Total Debt 4.179 2.357 3.180 2. Enter Total Assets 11.843 7.471 8.591 3. Debt To Assets Ratio (Line 1/LIne 2) -39 .32 .37 j I Profit Margin On Sales: 1. Enter Net Income 2. Enter Sales 13. Profit Margin On Sales (Line 1/L1ne 2) Returrt On Total Assets: 1. Enter Net Income 2. Enter Total Assets 3. Return On Total Assets (Line 1/Line 2) Earnings Pe'i Share: I I t CONFIDENTIAL...Not to be removed from Philip Morris Materials Purctiasing Department. Page_13 of17 Class/Code C,D,S,5a & 53 1
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EL-8 Ms. Arlene C. Mays Philip Morris USA P.O. Box 26603 Richmond, Virginia 23261 Dear Arlene: October 29, 1992 In response to your request for financial information for the 1993 Buying Plan, we offer the following: On May 5, 1992,.the management shareholders of Gravure Packaging, in conjunction with First Union Commercial Corporation (First Union), acquired the interests of the remaining share- holders. This transaction was made possible because First Union was impressed with the performance of the Gravure Packaging management, and preferred to participate in the future growth of the company on an equity basis, rather than strictly as a lender. The management has always been committed to growing the company and is delighted to have a strong financial equity partner who is motivated to provide the capital to continue to do this. As part of the package, Gravure Packaging now has a four million dollar five-year working capital line and commitments to expand our plant and add an additional press line. Several years ago First Union participated in a very successful similar investment with Mebane Packaging, an offset printer in North Carolina, and has thus far provided the financial resources for three expansions and one aquisition within a 3-year period. We believe our present arrangement with First Union places Gravure Packaging in a very strong financial position to continue our program of growth and expansion to meet our customers' needs. If you would like to discuss this information further, please call us, or, if you would like to talk directly to First Union, you may contact Mr. L. Watts Hamrick, Vice President of the Investment Banking Group, at (704)374-4767. incprely, n Fd H G w ao c u ' ~ '-~rohn S. Waring, III President o ~- a ~ fD JSW/dmr 0 7 0 Vl M • o I~ Gravure Packaging, Inc. . 4500 Sarellen Road . Richmond, VA 23231 ~ ~ (804) 222-1016 • FAX (804) 226-2350 ~ w
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tiL-8 GRAVURE PACKAGING SERVICE OBJECTIVES 1. Implement a computerized carrier bill of lading system which will interface with our shipping release system and invoicing system. Completion Date: December 1992 2. Implement a computerized carrier tracking system to track on- time delivery. Completion Date: June 1993 3. implement a computerized cylinder tracking system. Completion Date: June 1993 4. Write and implement a computerized docket system. Completion Date: June 1993 5. Implement transmission of pricing matrices by electronic data interchange as requested by Philip Morris. Completion Date: April 1993 ~ N O M • • Gravure Packaging, Inc. . 4500 Sarellen Road . Richmond, VA 23231 (804) 222-1016 . FAX (804) 226-2350
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0 AGI, INC. Current Ratio: 0 Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise indicated.) 1991 1990 1989 0 1. Enter Current Assets 12,479,532 11,598,000 10,776,601 2. Enter Current Liabilities 9,455,601 9,658,550 7,012,436 3. Current Ratio (Line 1/Line2) 1.32 1.20 1.54 Debt To Assets Ratio: 1. Enter Total Debt 10,716,365 12,288,423 11,621,757 2. Enter Total Assets 25,412,274 24,676,325 24,014,427 3. Debt To Assets Ratio (Line 1/Line 2) .42 .50 .48 Profit Margin On Sales: 1. Enter Net Income 3,277,917 3,238,502 2,038,608 2. Enter Sales 55,992,101 52,597,300 42,627,015 3. Profit Margin On Sales (Line 1/Line 2) .058 .061 .047 Return On Total Assets: 1. Enter Net Income 3,277,917 3,238,502 2,038,608 2. Enter Total Assets 25,412,274 t 24,676,325 24,014,427 3. Return On Total Assets (Line 1/Line 2), .129 .131 .085 Earnings Per Share: NIA N/A I N/A Page 16 of 17 Class/Code C.D.S.50 & 53 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. ogaeeMsoz
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1988 - 92 BUYING IiISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 1,457,830IS 1,570,725H 1,698,764K 1,716,531K 1,721,970K 1,755,730K SOPPLIER z Z z z z z VIltGINIA FOLDING BOX 34.9 34_0 32.8 31.98 48.8 43.07 RICHMOND GRAVORE 25.1 28.2 30.9 29.41 36.0 38.93 SOIiE2VI1d.E PACKAGING 3.1 1.4 4.8 6.97 9.3 14.08 GBAVORE PACKAGING 7.80 13.0 7.7 10.67 5.2 2.44 INC. -0- -0- -0- -0- .61 1-48 ALFORD PACKAGING 4.4 3.3 3.9 ' 1.37 .09 -0- FEDgRgL 24.8 20.1 19.9 19.60 -0- -0- *Until 4th quarter, 1992, AGI's participation has been limited to the pronotional area. . Page 17 of 17 Class/Code C.D.3.50 & 53 1soesVCsaz
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• 1993 DIRECT MATEEIAI. BUYING PLAN SUMMARY PAGE Material Code/Super Class 54.55.56.57. Description RICfl/LVL/CAB-CORRUGATED QASES 58 Unit of Measure EA Std. Cost $ Est. $ Purchase _S Est. Usage 31,569,453 Est. Parch. Quantity 31,569,453 0 Annual Purchases Est. 1992 Pro3. 1993 Supplier Name Units X Units X Commitment (*) Overall Ratin g 1. BOISE CASCADE (L) 2,050,060 6.4 0 0.0 2. INLAND (C) 0 0.0 5,347,215 16.9 1 AND 2 3. INLAND (L) 1.739,983 5_4 6,749,821 21.4 1 AND 2 4 4. INLAND (R) 12,176,163 37.9 16,946,860 53.7 1 AND 2 3 5. PCA (C) 231,535 0.7 0 0.0 ' 6. STONE NORTH (R) 1,728,686 5.4 0 0.0 7. UNION CAlO' (R) 4,363,023 13.6 315,695 1.0 2 8. WEYERHAEUSER (C) 6,959,726 21.7 2,209,862 7.0 2 9. WEYERHAEUSER (L) 2.877,455 8.9 0 ? 0.0 10. Total 32,126,631 100.0 31,569,453 100.0 * 1. Contract 2. Purchase Order ERPLANATION 1993 FORECAST 333.9 BILLION CIGARETTES Zsoes~~soz 3. Other Page 1 of 8 Class/Code 5 Approval > /ILgY I . ~]Ate Prepared By ,Z ' Date:~`\0.3
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OBJECTTV+LS/SOTEGIES/ISSUES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUAISTY, SERVICE, OR SECORITY. PROJECTED 1993 SAVINGS: $ 3.200.000-3.800.000_ STRATEGIES: TRANSITION TO INLAND CONTAINER (SOUTHEAST STRATEGIC SUPPLIER ALLIANCE) 100X OF PN USA CONTAINER VOIAHE. • TIHETABLE -TRANSFER AND INSPECTION OF EXISTING SUPPLIER'S DIES TO THE APPROPRIATE INLAND FACILITY. NOV. 92-JAN 93 -ASSINILATE THE PHILIP MORRIS CITY VOLUHB TO THE PRIMARY INLAND PL1NT AS CAPACITY BECOMES AVAILABLE - LOUISVILLE (ALL VOLUME) JANUARY 1, 1993 . - RICHMOND (ALL VOLUME), MAINTAIN UNION CAMP UNTIL CORRUGATOR MODIFICATION IS COMPLETE AND NEW JANUARY 31, 1993 - RO IS INSTAT T.RO FLF . _ - CABARRUS (ALL VOLUNE), MAINTAIN WEYERHAF.OSER (CHARIATlE) UNTIL INLAND (ROCK HILL) PLANT MARCH 31, 1993 QUALIPICATION IS COMPLETED. . OTHER ISSUES• - 1993 COST SAVING WILL BE DEPENDENT ON THE AVAILABILITY OF RESOURCES TO TEST AND IMPLEMENT PROPOSALS, ALTfIOUGH INLAND HAS GUARANTEED SAVINGS OF 132 ON TOTAL DOLLAR VOLUME. -' ' - QUALIFICATION OF INLAND (ROCK HILL) - STABLE 'PRODUCTION ZONE• BY PHILIP MORRIS. - INCREASED INVENTORY DUE TO BRAND PROT.IFFRATION AND IDENTIFIER CASES. THE INLAND CONTAINER NAREETING AND TECHNICAL CENTER HAS A NEA-GENESATION PROGRAMMABLE VIBRATION TEST UNIT WHICH PERMITS IN-LAB TESTING THAT CLOSELY SIMULATES REAL IN-TRANSIT CONDITIONS- THIS CAPABILITY NILL BE USED TO EVALUATE NEW HATERIAL COMBINATIONS IN THE CIGARETTE PACK, CARTON AND CORRUGATED CASE. WITH THE TECHNICAL CENTER CAPABILITIES, AE AILL FIRST DETERMINE TEE ACTUAL SHIPPING AND HANDLING ENVIRONMENTS TO 1iNICH TfiE NEW DESIGN WILL BE SUBJECTED AND THEN USE THE APPROPRIATE TEST SERIES TO MATCH THESE CONDITIONS. Page 2 of 8 Class Code _ 54_55_56.57.58 EsOestesaz
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• Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 54,55,56,57&58 Description RICH/LVUCAB-CORRUGATED CASES Unit of Measure EA Forecast Date DECEMBER 15,1992 1993 - 1994 1995 1996 1997 Supplier Name Units % Units % Units % Units % Units % INLAND 29,043,896 92.0 32,353,466 100.0 32,805,866 100.0 32,967,066 100.0 33,396,934 100.0 UNION CAMP (R) 315,695 1.0 0.0 0.0 0.0 0.0 WEYERHAEUSER(C) 2,209,862 7.0 0.0 0.0 0.0 0.0 - 31,569,453 100.0 32,353,466 100.0 32,805,866 100.0 32,967,066 100.0 33,396,934 100.0 ISSUES: FORECAST 1993 - 333.9 BILLION CIGARETTES 1994 -341.1 BILLION CIGARETTES 1995 - 345.1 BILLION CIGARETTES 1996 - 346.3 BILLION CIGARETTES 1997 - 350.1 BILLION CIGARETTES Page 3 of 8 Class/Code:54,55,56,57, 58 t9Us8VeSaz
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0 SUPPLIER EVALUATION SUPPLIER INLAND INLAND IftLAND (1993) USING LOCATION RICNHOND LOUISVILL6 STABILIZATION A. COST DELIVEEED COST/UGH 54-OI2R 1. 437.50/M - 480.20/K 443.30/tl 54-180G 2. 514.45/N 560.90/iS 504.30/H 54-290U 3. 454.20/N 489.25/K 454.35/K 1tEBATE OFFERF.O (YES/NO) YES YES YES OVERALL COST (A/U) A A A B. QUALITY , X ACCEPTANCE 98.57 99.84 . ' OVE6ALL QUALITI( (A/U) U A i C. SERVICE . (AN) D. SECURITY (FROM PACE(S) ) A/U' OVERALL EVALUATION (N@ffiEB OF •A's'; 1-4) A - ACCEP',CABLE U ~ UNACCEPTADLE ssoeevesaz J A A 3 A A 4 I Page 4 of 8 Class/CoJe _54,55,56,57,58 i
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0 SECURITY EVALIJATION SUPPLIER INLAND (R) INLAND (L) INLAND (C) SECURITY LINERBOARD-6 WEEKS LINERBOARD 6 WEEKS LINERBOARD - 6 WEEKS INTEGRATED LINE[tBOARD- INTEGRATED LINERBOARD- INTEGRATED LINEELBOARD- 1. RAW NATERIAi.S ROME,C& PLUS TRADE AGRE- ROHE,GA. MEDIUH,NEO- RONE,GA. NEDIUN,NEW- EFff.NTS; riEDIUK* PORT,IND;ORARGE,TEISAS@ PORT,IND; ORANGE,TE%AS RICHMOND, VA LOUISVILT.E, KY ROCK NILL, SC 2. PLANTS & LOCATIONS - - 3. LABOR a. UNION UPIU LOCAL 1408 UPIU - LOCAL 1737 -UPIU b. CONTRACT EXPIRATION DATE 12/10/94 • 4/30/96 1/1/94 c. SITUATION GOOD GOOD GOOD 4. ENERGY SOURCES NAT. GAS/#2 FUEL OIL NAT. GAS/#2 FUEL OIL NATORAL GAS/#SkUEL OIL**. 5. CAPACITY (A/O) A A 6. FIT:SIBILITY (A/U) A A 7. EPA CONPLIANCE (A/U) A A 8. FINANCIAL RATING (A/U) 9. CORPORATE NANAGEHENT ` - STRENGTH (A/U) A A 10. CORPORATE NANAGEHENT • CONNITHENT (A/U) A A OVERALL SECURITY (A/U) A A A - ACCEPTABLE *NEW JOIINSONVILLE, TN (aNEU JO[INSONVILLE, TN Page 5 of 8 U - UNACCEPTABLE . NEWPORT, IND. **BACK UP FUEL • Class/Code 54,55,56,57,58 .9soestesoz
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P•.]{PLnNATION(S) (REQIIIRED POR ALL °U° RATINGS) INLAND - RICHMOND INLAND MOVED INTO THEIR NEW PLANT IN DECEMBER, 1991, AND EXPERIENCED MAJOR PROBLEMS WITH THE NEW STARCH SYSTEM AND NEW CORRUGATOR CREATING SPORADIC BOARD DELAMINATION. IN APRIL, 1992, ALL ISSUES WERE RESOLVED AND THEIR ACCEPTANCE LEVEL WENT BACK TO 99.77 IN THIRD QUARTER 1992. Page 6 of 8 ~9088i~~S0~ cias8/coae 54,55,56,57,58
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1988 - 92 BUYING NISTORY AND 1992 BUYING PLAN 1988 1909 1990 1991 1992 (B) 1993 (P) TOTAL QUANTITY 28,521,604 29,682,644 32,238,071 31,982,252 32,126,631 SUPPLIER x z x z • z x BOISE CASCADE (L) .10.5 10.8 11.1 13.3 6.4 INLAND (C, L, R) 35.3 37.7 36.7 33.7 43.3 PCA (C) 7.8 7.0 7.3 6.3 0.7 STONE NO. & SO. (R) 15.3 ' 11.1 13.1 9.8 5.4 UNION CANP 14.4 13.2 13.9 18.0 . 13.6 ABSTVACO (R & L) 2.8 3.8 1.9 0 0 ABYERNAEUSER (C, L, R) 13.9 16.4 16.0 18.9 30.6 ssoeetesoz Page 7 af 8 Class/Code SE,55,56,57,58
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0 Supplier.• INLAND Current Ratio: . ~ Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless othenvise.Indicated. 1991 1990 I 1989 1. Enter Current Assets 481.413 451.111 407.569 2. Enter Current Liabilities 242.107 250.295 175.422 3. Current Ratio (Line 11Line2) 2.0 1.8 2.3 Debt To Assets Ratio: 1. Enter Total Debt 1,426.711 1,066.285 879.535 2. Enter Total Assets 2,958.250 2,505.601 2,138.460 3. Debt To Assets Ratio (Line 1/Line 2) .48 .43 .41 Profit Margin On Sales: 1. Enter Net income 138.418 232.473 207.374. 2. Enter Sales 1,952.409 1,892.531 2,138.460 3. Profit Margin On Sales (Line 11Line 2) 7.1% 12.3% 9.7% Return On Total Assets: 1. Enter Net Income 138.418 232,473 207.374 2. Enter Total Assets 2,958.250 2,505.601 2,138.460 3. Return On Total Assets (Line 1tLine 2) 4.7% 9.3% 9.7% Earnings PerShare: 2.51 I CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. 4.20 3.75 Page 8 of 8 ClasslCode 54,55,56,57,58 ssOBeVEs0Z
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CASING Z05'348go ld
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1993 DIRECT MA74AL BUYING PLAN SUMMARY PAGE Material Code/Super Class 02-080A Description Shiloh Unit of Measure lb. Std. Cost $ 4.188124 Est.'$ Purchase 15,077,246 Est. Usage 3,600,000 Est. Purch. Quantity 3,600,000 • Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units _ , Units , Commitment (*) Overall Rating 1. Mafco 3,744,000 100 3,600,000 100 Annual A 2. 3. 4. 5. - ' 6. 7. 8. 9. 10. Total 3,744,000 100.0 3,600,000 100.0 * 1. Contract 2. Purchase Order 3. Other EXPLANATION Based on cigarette forecast of 331B. Project reduction in usage due to removal of shilob from price value brands. I4088veSOx Page 1 of 7 Class/Code 02-080A Approval .~Vs- 7_ ~Date: / i, r Prepared By - C. M. Comes Date: 10/15/92
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0 OBJECTIVES/9TRATEGIBS/ISSUES i PURCHASING OBJECTIVES: 1) To reduce cost of licorice without jeopardizing supply security or compromising the subjective quality of the finished products. PURCHASING STRATEGIES: - 1) Continue to pursue available alternatives with R&D. These alternatives include: Timetable a. development of 100% substitute licorice. Ongoing _b. further reduction/removal of licorice from other brands. Ongoing c. development and qualification of new manufacturer. 1993 . d. purchase of MAFCO by outside company. TBD e. substitution of licorice block with powder. 4th QTR 1993 f. begin implementation of alternatives. lst QTR 1994 2) Track status of alternate strategies with R&D. 3) Complete economic and subjective evaluations of viable alternatives. PM is sole sourced on this product with MAFCO. Significant changes in the total business with MAFCO, including block, powder and cochise, may result in increased pricing and reduced supply security. The total relationship with MAFCO needs to be carefully monitored to avoid jeopardizing supply security on this critical item. During the third quarter 1992, shiloh was removed from the price value brands .which resulted in a projected annual cost avoidance of approximately $845,000 and a 206,000 lbs reduction in annual requirements. Page 2 of 7 Class Code 02-OSOA
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• Phi!~' orris U.S.A. MatePSSIs Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 02-080A Description Shiloh Unit of Measure !bs Forecast Date October 22, 1992 1993 1994 1995 /996 1997 9upplierName Units % Uhits % Units % Unils % Urvts % Matco 3,600,000 100.0 n 2,922,750 75.0 n 1,971,000 50.0 n 0 0.0 n O 0.0 n Unassigned 0 0.0 974,250 25.0 n 1,971,000 50.0 4,005,000 100.0 4,055,000 100.0 3,600,000 100.0 3,897,000 100.0 3,942,000 100.0 4,005,000 100.0 4,055,000 100.0 ISSUES: Currently R&D has not found a subjectively acceptable "substitute:" !ioorioe. Initial tests.evaluating 10001o substitution do not look favorable. Project over the next 5 years Philip Morris will continue to have a requirement for b!ook!icorice. Projections for years 1994-1997 have been calculated based on 1993 forecasted mix(approximkte!y20% pricevalue). Page 3 of 7 EG08~b~SOZ C!ass/code, 02-osoA
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0 SUPFLIER 1S'7ALUATION • SUPPLIER MAFCO - USING LOCATION R, L, C A. COST DELIVERED COST/UOM 1. 2. 4.08/lb 3. REBATE OFFERED (YES/NO) No OVERALL COST (A/U) U B. QUALITY <1% A % ACCEPTANCE A , , OVERALL QUALITY (A/U) A C. SERVICE (A/U) D. SECURITY (FROM PAGE(S) ) A/U OVERALL EVALUATION (NUMBER OF "A's"; 1-4) A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL A Page 4 of 7 Class/Code 02-080A V4©SSvesoz
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-SECURITY-ALUATION • SUPPLIER Mafco SECURITY Licorice Root China ' Turkey 1. RAW MATERIALS Russia Afghanistan 2. PLANTS & LOCATIONS Camden, NJ 3. LABOR a. UNION Licorice and Paper Employees Assoc. b. CONTRACT EXPIRATION DATE 5/31/94 c. SITUATION A _ 4. ENERGY SOURCES #6 oil/electric 5.CAPACITY (A/U) 28 M lbs 6. FLEXIBILITY (A/U) A 7. EPA COMPLIANCE (A/U) n/a - - , 8. FINANCIAL RATING (A/U) A 9. CORPORATE MANAGEMENT STRENGTH (A/U) U . . 10. CORPORATE MANAGEMENT COMMITMENT (A/U) U OVERALL SECURITY (A/U) A A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL Page 5 of 7 Class/Code 02-08OA Tl.rlAL29M=
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• EXPLANA9.SON(S) • (REQUIRED FOR ALL "U" RATINGS) cost Since 1989, licorice costs have continued to increase at an unacceptable rate. PM is sole sourced on this product and there has been no competitive incentive to MacAndrews and Forbes to control costs. Corporate Management Strength - . MacAndrews and Forbes does not appear to have a strong succession plan in place for key positions. Meyer Laskins and Laughlin Maclean are both nearing retirement age and their departure could have major impact on the future success of tfie company. Corporate Management Commitment Ronald Perelman is President of the holding company that controls MAFCO. PM management does not have an interactive, mutually beneficial relationship with Perelman on this strategically important ingredient. 94Q39DESOZ Page ' 6 of! 7 Class/Code 02-080A
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 0 1968 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 4,284,904 *3,646,904 4,326,400 **3,910,400 ***3,744,000 3,600,000 SUPPLIER $ % % % .$ % MAI'CO 100 100 100 100 100 100 *Purchases appear low due to higher inventories at the end of 1988 Page 7 of 7 **Inventories reduced from 2-3 months duration to 1-2 months duration Class/Code 02-080A ***Slight decrease due to change in formula for BRICA blend ~,~.oee~~s~z
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• 1993 DIRECT MATEiFIAL HUYING PLAN • SUl44ARY PAGE Material Code/Super Class 02-lOlA Description Police Unit of Measure lb. Std. Cost $ 4.2755 Est. $ Purchase 4,685,948 Est. Usage 1,096,000 Est. Purch. Quantity _ 1,096,000 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units ~ Units % Con¢nitment (*) Overall Rating 1. Mafco 640,031 52.8 480,000 43.8 2 (Quarterly) 3.0 2. F & C 572,000 47.2 616,000 56.2 2 Annual 2.9 3. 4. 5. 6. 7. 8. 9. 10. Total 1,212,031 100.0 1,096,000 100.0 * 1.- Contract 2. Purchase Order 3. other EXPLANATION Page 1 of - Class/Code 02-101 B4047SKSOZ Approval Prepared 9y 8 Date:! iO/ft Date: 10/15/92
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0 oBJECTIVES/sTRA'1'EGIES/ISSUES PURCHASING OBJECTIVES: 1) To control escalating costs without jeopardizing supply security. PURCHASING STRATEGIES: 1) Monitor volume allocations to ensure that maximum benefit is obtained from F&C's competitive_pricing. 2) Pursue alternate source of powder as a back-up in case MAFCO becomes even less competitive due to shrinking volumes. 3) Visit Fertilizers and Chemicals to evaluate their manufacturing capabilities and potential to become the primary supplier of this strategic material. PURCHASING ISSUES: Volumes - PME has received approval for Project "Amethist." Beginning in 1993, PME will no longer purchase powder from MAFCO USA. As a result, MAFCO will lose approximately 500,000 lbs of powder business. Even though PM USA licorice purchase will remain stable, this drop in total volume for PM companies may have a negative impact on pricing for the 2nd half of 1993. Longterm, Ron Perelman may decide to divest himself of the licorice manufacturing operations. Page 3 of S class Code 02-lOlA oSaeMsoz
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Phi*Aorris U.S.A. 0 . Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 02-101A Description Police Unit of Measure lbs Forecast Date October 22, 1g92 1993 1994 1995 1996 1997 SiWier tdame - tkuls % lkiils % Units % Units % 1 1 Unils 96 Matco 480,000 43.8 n 480,000 39.8 n 200,000 15.1 n 0 0.0 n 0 0.0 n F$C 616,000 56.2 n 616,000 51.t n 704,000 53.1 n 729,388 50.0 n 802,327 50.0 n Unassigned 0 0., n 109,600 9.1 n 422,160 31.8 729,388 50.0 802,327 50.0 1,096,000 100.0 1,205,600 100.0 1 ~26,160 100.0 1,458,776 100.0 1,604,654 100.0 ~ J ISSUES: Annual requirements arc difficult ta project due to a lack of accurate foreoasts for export dry ffavor requirementr. Five year buying plan projections assume a 10c/a annual growth rate using 1Ni purchases asthe baseline. Assu mes alternate supplier developed for block licorice also has the capacity to produce spray dried l icorice. Page 4 of 8 Class/Code: 02-101A
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0 0 0 SUPPLIER EVBLUATION SUPPLIER MacAndrews & Forbes Fertilizers & Chem. WEIGHT USING LOCATION F/C, 20th St., R. F/C, 20th St., R. 20 A. COST FACTORS 50 1. DELIVERED COST/# 4.80/lb (2) 3.31/lb. (3) 10 2. VOLUME INCENTIVES (2) (3) 20 3. COST SAVINGS PROVIDED (2) (3) 20 4. PRICE LEADERSHIP (2) (3) , TOTAL COST RATING 2.0 3.0 20 - B. QUALITY FACTORS 30 1. % REJECTS ' 0% (3) 0% (3) 30 2. QUALITY CONTROL (3) (3) 40 3. PROCESSABILITY/ MACHINABILITY (3) 2.5 TOTAL QUALITY RATING 3.0 2.8 10 C. TOTAL SERVICE RATING . 4 3 50 D. TOTAL SECURITY RATING (SEE PAGE(S) ) 3.2 3.0 100% OVERALL RATING 3.0 3.0 Page 5 of 8 M ~• Class/Code - 02-IOlA
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SECURITY UATION WEIGHT SUPPLIER MacAndrews & Forbes Fertilizers & Chem. 20 D. SECURITY 1. RAW MATERIALS Licorice Root Licorice Root 12-18 months (3) 12 months (3) 10 2. CAPACITY 28 M lbs. (4) 4.4 M (3) 5 3. FLEXIBILITY (3) (3) 10 4. SUPPLIER INVENTORY _ 1 1/2 months (3) 2 shipments - Israel 2 shipments - NC (3) 15 5. PLANTS & LOCATIONS Camden, NJ (3) Haifa, Israel (2) 10 6. LABOR . a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE Licorice and Paper Employees Assoc. 5/31/94 3 4 Histadrut April 1993 3 3 - - 5 7. ENERGY #6 Oil/electric (3) Draw from Central Complex (4) steam/electrical N A 8. EPA COMPLIANCE N/A N/A 10 9. FINANCIAL STRENGTH (SEE PAGE(S) ) (3) (3) 5 10. CORPORATE MANAGEMENT STRENGTH (3) ' (3) 10 11. CORPORATE MANAGEMENT - COMMITMENT 2.5 (3) 100% TOTAL SECURITY RATING 3.2 2.9 ~. Page 6 of 8 ESQ~~ ye,~Qz Class/Code 02-101A
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FINANCIAL ANALY IS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECE,4 31, 1991 IIHIaSS OTHEHNISE I[mICATEO.) VENDOR: Fertilizers & Chemicals CURRENT RATIO: I 1991 1990 1989 • 1. Enter Current Assets 860 841 760 2. Enter Current Liabilities 527 584 514 3. Current Ratio (Line 1/Line 2) 1.63 1.44 1.47 DEBT TO ASSETS RATIO: 1. Enter Total Debt 984 991 - 930 2. Enter Total Assets 1,652 1,652 1,562 3. Debt To Assets Ratio (Line 1/Line 2) 0.59 0.59 0.59 PROFIT MARGIN ON SALES: > 1. Enter Net Income 62 78 86 2. Enter 3ales 1,096 1,107 1,042 3. Profit Margin On Sales (Line 1/Line 2) 5.6% 7.0 8.27 RETURN ON TOTAL ASSETS: 1. Enter Net Income 62 78 86 2. Enter Total Assets 1,652 1,652 1,562 3. Return On Total Assets (Line 1/Line 2) 3.7 4.7% 5.5% EARNINGS PER SHARE: 0.05 I 0.06 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 0.06 Page 7 of 8 Class Code tsA96vcSoZ
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0 0 1988 - 92 BUYING HISTORY ATID 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUAti'TITY 900,000 976,000 1,232,000 1,072,000' 1,212,031 1,096,000 SUPPLIER & % % % % % MAFCO 76 73 71 67 53 44 F&C 24 27 29 33 47 56 *1991 Purchases appear low due to a reduction in inventory policy from 2-3 months duration to 1-2 months. Page 8 of 8 Class/Code 02-101A I CNaeeVEsoz
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1993 DIRECT MAAAT. BUYING PLAN . SUMMARY PAGE Material Code/Super Class 02-110A Description Petreo Unit of Measure lb. Std. Cost $ 1.3496 Est. $ Purchase $715,288 Est. Usage 526,576 lbs Est. Purch. Quantity 530,000 • Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units . % Units % Commitment (*) Overall Rating 1. Wilbur 145,000 27.3 250,000 48 Contract - Quarterly 3.4 2. Cocoline 100,000 18.8 150,000 28 Contract - Quarterly 2.9 3. Baker 286,000 53.9 80,000* 15 Contract - 1992 A 4. Unassigned 0 0 50,000 . 9 5. 6. 7. 8. 9. 10. Total 531,000 100.0 530,000 100.0 * 1. Contract 2. Purchase Order 3. Other EXPLANATION - Page 1 of 6 *Project inventory carryover from 1992. Dover manufacturing Class/Code 02-110A operations due to be closed November, 1992. Approval ~_y ' Date: /z ~a c z Based on forecast of 331B cigarettes. Prepared ~B C. M. ComeDate:/D 1h Lh - 9BO99VVS0z
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OBJECTIVE0 TABTEGIES PURCHASING OBJECTIVES: 1) 2) 3) PURCHASING STRATEGIES: . 1) 2) 3) ~ V 4) • To minimize cost impact associated with the closure and subsequent replacement of W. Baker. To continue to develop Cocoline as a minority supplier. To maintain supply security and quality of this'material. Continue to work with KGF to identify potential opportunities to consolidate purchases and suppliers for this product. Coordinate necessary testing with R&D and suppliers to evaluate alternate sources. Increase allocation of business with Cocoline to support their continued operations. Utilize Wilbur as primary supplier for this product. PURCHASING ISSUES: Inventory - At the end of 1992, Baker will have 80,000 lbs of material in stock for PM. PM will withdraw this inventory 1st QTR 1993. Supply Security - Cocoline has entered into a joint venture with a farming co-op, Cocoa AFrica. Cocoline will become a marketing agent for the West African Market. , I Effective October, 1992, Cargill bought Wilbur 'from Empire of Caroline. This acquisition should strengthen Wilbur's presence in the industry because Cargill is one of the largest processors of cocoa in Europe. Page 2 of 6 Class Code 02-110A f 49088MOZ
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~ Ph*4lorris U.S.A. • Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 02-110A Desoription Petreo Unit of Measure lbs Forecast Date October 15, 1992 _ 1993 1994 1995 1996 1997 ,SOpplierName Units % lklits % Units % Units % Units % Wilbur 250,000 47.2 200,000 35.1 0 0.0 0 OA 0 . 0.0 Cocoline 150,000 2A3 - 175,000 30.7 200,000 34.7 250,000 4a7 250,000 422 9aker 80,000 15.1 0 0.0 0 0.0 0 0.0 0 0.0 Unastiglled 50,000 9.4 195,000 34.2 377,000 r~3 336,00i0 57_3 343,000 578 530,000 100.0 570,000 100.0 577,000 10Q0 586,000 100.0 593,000 100.0 ISSUES: Baker purchases.for 1993 are carrynuerstronr 1992. Baker Chocolate nranufactur.irrgoperatinns will be discontinued during 4th qTR 1992. Page 3 of 6 Class/Code: 02-110A
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0 0 SUPPLIER EVALUATION SUPPLIER Wilbur Cocoline WEIGHT USING LOCATION R, L, & C. R, L, & C. 20 A. COST FACTORS 75 1. DELIVERED COST/# $1_3104/lb. (3) $1.294/lb. (3) . 0 2. VOLUME INCENTIVES 0 3. COST SAVINGS PROVIDED 25 4. PRICE LEAbERSHIP 2 2 TOTAL COST RATING 2.8 2.8 -. .. 25 B. QUALITY FACTORS 30 1. % REJECTS 0% (3) 0% (3) _ 30 2. QUALITY CONTROL (3) (2) 40 3. PROCESSABILITY/ MACHINABILITY (3) (3) TOTAL QUALITY RATING 3 2.7 20 C. TOTAL SERVICE RATING 4 3 35 D. TOTAL SECURITY RATING (SEE PAGE(S) ) 3.6 2.9 100% OVERALL RATING 3.4 2.9 Page 4 of 6 G9Q99MQ',° Class/Code 02-110A
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WEIGHT SUPPLIER SECf7RITY E9ALUATION Wilhur Cocoline 10 D. SECURITY 1. RAW MATERIALS Cocoa Beans South America Cocoa Beans South America West Africa 1 month (4) West Africa 4 10 2. CAPACITY 60 million lbs./yr. 8-9 million lbs / r (4) . y . (3) 10 3. FLEXIBILITY (3) (3) 10 4. SUPPLIER INVENTORY Liquor - 1 month Liquor - None (3) (2) 10 5. PLANTS & LOCATIONS Lititz, PA Mount Joy, PA (4) Brooklyn, NY (3) 10 6. LABOR a. UNION b. CONTRACT - EXPIRATION DATE c. SITUATION d. SCORE Bakery & Confectionary AFL/CIO Local 272 10/13/94 3 - 4 Amalgamated Union Local 5 5/30/93 3 3 10 7. ENERGY Nat, gas, #6 Oil (3) Nat. gas, #4 Oil (3) N/A 8. EPA COMPLIANCE N/A N/A 10 9. FINANCIAL STRENGTH (SEE_ PAGE(S) 5-6) (3) (2) 10 10. CORPORATE MANAGEMENT - STRENGTH (4) (3) 10 11. CORPORATE MANAGEMENT COMMITMENT 4 (3) 100% TOTAL SECURITY RATING 3.6 2.9 ** Coal Cogeneration Facility, #6 Oil Page 5 of 6 OJcOCIC7 ~~yV~F~.~S02: Class/Code 02-110A .
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0 0 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY - 558,000 577,600 521,600 505,300 531,000 530,000 SUPPLIER % °s Wilbur 36 35 29 10 27 48 Cocoline 18 17 19 15 19 28 Baker 46 48 52 75 54 15 Unassigned 9 Page 6 of 6 Class/Code 02-110A tsaseMsoz
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O 1993 DIRECT MATER2AL BUYING PLAN • SUMMARY PAGE Material Code/Super Class 02-140A Description Cochise Unit of Measure lbs. Std. Cost $ .3229 Est. $ Purchase $1,517,630 Est. Usage 4,642,877 Est. Purch. Quantity 4,700,000 - Annual Purchases Est. 1992 Proj. 1993 O ll Vendor Name Units . % Units % Commitment (*) vera Rating 1. M. F. Neal 5,370,000 100 2,500,000 53.2 2 (Quarterly) 3.2 2. Wixon-Fontarome 0 0 1,100,000 23.4 1 (Annual) 3.2 3. Unassigned 0 0 1,100,000 23.4 4. 5. 6. 7. 8. 9. 10. Total 5,370,000 100.0 4,700,000* 100.0 * 1. Contract EXPLANATION Based on implementation of liquid flavor system at the BL Plant beginning of 1993. Based on forecast of 331B cigarettes. 2. Purchase Order 3. Other Page 1 of 7 Class/Code 02-140A Approval r - _ Date: P e d~ C M Co es D te• 10/15/92 are r m a . Y . p
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OHJECTIVES/STRATSGIESJISSIIES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED ANNUAL SAVINGS: $ 63.000 STRATEGIES .. TIl4LTABLE 1. Qualify Wixon-Fontarome as alternate supplier for 02-140A. 4th QTR 1992 2. Allocate part of business with Wixon-Fontarome to take advantage of competitive pricing. 1st QTR 1993 n OTHER ISSUES: 1. PME is currently trying to qualify Jacob Suchard in Germany as a supplier of raw cocoa shell which PME would then have ground to their specifications. If approved PME would only utilize M.F. Neal as a back-up supplier. 2. R&D is evaluating the removal of cochise from the burley spray. This would result in a 80-9096 reduction in PM USA's annual requirements. Anticipate cochise would still be used in dry flavor blends for export. Page 2 of 7 Class Code 02-140A Esoeg~~soz
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oHJE(.TIVES/STRATEGIES/ISSUES PURCHASING OBJECTIVES: . 1) To ensure stable source of supply while maintaining the quality and - reducing the product cost. PURCHASING STRATEGIES: 1) Manage the business relationship with M. F. Neal and MAFCO to minimize short term impact of proposed volume allocations for 1993. 2) Coordinate qualification of alternate supplier to improve supply security and reduce costs. 3) Monitor ongoing projects in R&D and PME to assess longterm impact on requirements and suppliers. - PURCHASING ISSUES: alit : Continue to work with suppliers to ensure compliance with PM specifications and conformance with PM ingredient requirements. Management: Continue to assess and monitor the management commitment at M. F. Neal and MAFCO. Evaluate the relationship between Wixon, KGF and PM USA to see if any synergy opportunities exist. Page 3 of 7 Class/Code 02-140A 'bs0RSKsaZ
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~ Phi&orris U.S.A. ~ Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class 02-140A Description Cochise Unit of Measure lbs Forecast Date October ?2,.1992 1993 1994 1995 1996 1997 Supplier Name tJnits % Units % LMits % tJrits % Units % M. F. Neal 2,500,000 532 2,500,000 49_7 2,500,000 49.2 2,500,000. 4&4- 2,500,000 47s Wixon 1,100,000 23.4 1,526,000 30.4 1,585,000 31.2 1,665,000 32.2 1,726,000 33.0 Unassigned 1,100,000 23.4 1,000,000 19.9 1,000,000 19.7 1,000,000 i9A 1.000,000 19_i 4,700,000 100.0 5,026,000 100_O . 5,085,000 100A 5,155;000 100.01 1 5,226,000 100.0 ISSUES: 1. R&Diseva{uatingtheremovatofcochisefromhurleysprayand wilf make,afinat_recommendationbythe end of 1993. 2. Based on the results from the above study and on longterm PM ingredient requirements, R&D may evaluate the substitution of cochise with M-1Q. This projectwould impact projected requirements past 1993. Page 4 of 7 Class/Code: 02-140A
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0 SUPPLIER EVALUATION 0 SUPPLIER M. F. Neal Wixon WEIGHT USING LOCATION R, L, and C. R, L, and C. 20 A. COST FACTORS 65 1. DELIVERED COST/# .3108/lb. (3) .275/lb. (4) 10 2. VOLUME INCENTIVES (2) (3) 10 3. COST SAVINGS PROVIDED (2) (3) 15 4. PRICE LEADERSHIP (2) (3) TOTAL COST RATING 2.7 3.7 25 B. QUALITY FACTORS 60 1. % REJECTS • <1% (3) N/A (3) 20 2. QUALITY CONTROL (2) (3) 20 3. PROCESSABILITY/ MACHINABILITY (3) (3) TOTAL QUALITY RATING 2.8 3.0 20 C. TOTAL SERVICE RATING 4.0 3 35 D. TOTAL SECURITY RATING (SEE PAGE(S) ) 3.3 3.2 100% OVERALL RATING 3.2 3.2 ssaeBDEsoz Page 5 of 7 Class/Code 02-140A
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Adhk WEIGHT SUPPLIER M. F. Neal Wixon 10 D. SECURITY 1. RAW MATERIALS Cocoa Shells Whitman's, Nestle, Nestle Hershey (4) Bmbrosia (4) 10 2. CAPACITY 15 million 3 million (4) (3) 5 3. FLEXIBILITY (3) (3) 10 4. SUPPLIER INVENTORY 250,000 lbs (3/4 months) (4) (3) 20 5. PLANTS & LOCATIONS Richmond, VA Milwaukee, WI (3) (3) 10 6. LABOR , a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE Bakery, Confectionary, Tobacco Wrkrs. Local 300 12/31/93 3 3 Non-Union - N/A 3 4 5 7. ENERGY Electric (3) Electric (3) N/A 8. EPA COMPLIANCE N/A N/A 10 9. FINANCIAL - , STRENGTH (SEE PAGE(S) ) (3) (3) 10 10. CORPORATE MANAGEMENT - STRENGTH (3) , (3) 10 11. CORPORATE MANAGEMENT A COMMITMENT (3) (3) 100& TOTAL SECURITY RATING 3.3 3.2 Page 6 of 7 C1ass/Code 02-140A SECURITY EVALUATION I
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0 0 r 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 6,132 M 6,354 M 6,824 M 6,392 M 5,370,000 4,800,000 SUPPLIER $ %k % M. F. Neal 86 87 92 92 100 53 Springtree 14 13 8 8 0 0 Wixon 0 0 0 0 0 23 Unassigned , . 24 Page 7 of 7 Class/Code 02-140A esoeevusoz
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1993 DIRECT MATIIlI11L HUYING P.LAN SUMMARY PAGE Material Code/Super Class 03-010A Description SDA-4 Ethanol 190 proof Unit of Measure Gal. std. Cost $ 2.00 Est. $ Purchase 1,254,000 Est. Usage 627,000 Est. Purch. Quantity 627,000 • Annual Purchases Est. 1992 Proj. 1993 O ll Vendor Name Units % Units % Commitment (*) vera Rating 1. Union Carbide 541,000 57.6 460,000 73.4 1 - 1 Year 3.86 2. US Industrial 371,000 39.5 167,000 26.6 1 - 2 Year 3.22 - 3. Grain Processing . 27,000 2.9 0 0 4. 5. 6. 7. 8. 9. 10. Total 939,000 100.0 627,000 100.0 * 1.--Contract EBPLANATION Purchase volumes reflect implementation of Project Grain. 2. Purchase Order 3. Other Page 1 of 10 Class/Code 03-010A Approval Date: /zlil9Z Prepared y G. L. Nixon Date: 10/15/92 V609p MGSV4
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• OBJECTIVES/STR2PIEGIES/ISSUES _ PURCHASING OBJECTIVES: o Maintain a high level of security and service while controlling cost as Philip Morris continues to reduce their requirement for ETOH. o Monitor qualification of an Alternant Denaturant. PURCHASING STBATEGIES: o As PM's requirement continues to decline, we should consider sole sourcing from Union Carbide. o Monitor the qualification of an alternant denaturant which would save an additional $125 M/yr., and address regulatory concerns. FUTURE SUPPLY OUTLOOK: o Supply of industrial alcohol will be tight next year due to the improved economics of selling alcohol for fuel. The clean air act will probably continue to firm prices. The strength of our relationship may be the best negotiating tool to be used over the next• 18 months. The only likely reversal of this trend could be a political turnaround toward the corn growers due to an EPA concern over using ETOH/ETBE - it increases smog. INVENTORY POLICY: o 15-20 days . Page 2 of 10 Class Code 03-OlOA 09T99MOt.
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~ Philip Is U.S.A. • ~risl: Purah.>ong 19xi Direct IAsteriat Buying Pfm Five-Year Buying Plafs Projection luaterial. CodutSuQac ClaaM3:-0.M Ua>cociPtiw~ SQdlrb 19Q Praof. Aleofwl Unit oF hteesrna g.! Foteo.st C?.tc Navem6er 1992. 1993 1994 1995 1996 1997 SuPpGerName Units % Uni19 % ltr7its % LkvfS % Ukvts % UniOn Carbide . 460,000 73.4 y 460,000 71.8 y 460,000 70.9 y 460,000 69.8 y 460.000 69.0 USI 167,000 26.6 18i,OQU' 28.2 189,000 29.1 199.000 30.2 207,000 31.0 ~ 627,000 100.0 641,000 100.0 649,000 100.0 659,000 100.0 667,000 100.0 ISSLlES: ProjectGrainisaemed.atultirnatetyretiminatingtha:usaoFETOtt. Phass:twilElaimpteman6ert Fe6rua.ry1993,a.34°Ysreduof9on. PhasaIl,whialsisout:onPoL,willreduaesmm.tumptioabyaram#tmc third if suonessful. Thepfan almve. doamnatincludeanyraduotion beyanct:Phasnk, 6utif Phaselk is imple mented, I would consolidate ta only one supplier - Union Carbide. Page 3 of 10 ~ Clas;fCode: 03-U10A
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SUPPLIER EVALUATION SUPPLIER US Industries Union Carbide WSIGHT USING LOCATION L/V C/C Ric., C/C 20 A. COST FACTORS 40 1 1. DELIVERED COST/# 1.97 3 1.90 4 0 2. VOLUME INCENTIVES n/a - n/a 30 3. COST SAVINGS PROVIDED 4 offered 2 year contract at discount 5 30 4. PRICE LEADERSHIP 3 4 TOTAL COST RATING 3.30 4.30 20 B. QUALITY FACTORS 1. & RESECTS_ . 50 - 4.0% 3 (2 of 50) - (1.4%) 4 (1 of 69) 50 2. QUALITY CONTROL 4 4 0 3. PROCESSABILITY/ MACHINABII,ITY n/a n/a TOTAL QUALITY RATING . 3.50 4.00 . 20 C. TOTAL SERVICE RATING 3.00 3.50 40 D. TOTAL SECURITY RATING (SEE PAGE(S) ) 3.15 - 3.75 100% OVERALL RATING 3.22 3.06 40 YSd V (+SVLs Page 4 of 10 Class/Code 03-010A
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WEIGHT SUPPLIER USI U.C. 15 D. SECURITY 1. RAW MATERIALS Ethylene Nicotine Sulfate 4 Crude Ethanol from Saudi or ADM Nicotine Sulfate 4 Diversified Sourcing 10 2. CAPACITY 60 t1 gals/year 3 Refines 120 M 5 gals/year 10 3. FLEXIBILITY Alternate Feedstock 3 sourcing Worldwide 5 Crude Sourcing 10 4. SUPPLIER INVENTORY 6-8 weeks 3 10-12 weeks 4 15 5. PLANTS & LOCATIONS Tuscola, Ill. 3 Texas City, Tx. 3 Refining Only 10 6. LABOR ' - a. UNION b. CONTRACT ' EXPIRATION DATE c. SITUATION d. SCORE Intl. Union of 0 operating Engineers 8/1/93 0 Good 3 - 3 Metal Trades 0 Council 4/1/93 ' 0 Good 3 3 5 7. ENERGY . Coal/Electric 4 Nat. Gas/Electric 3 5 8. EPA COMPLIANCE 3 3 5 9. FINANCIAL ' STRENGTH (SEE PAGE(S) ) 2 2 5 10. CORPORATE MANAGEMENT STRENGTH . 3 3 10 11. CORPORATE MANAGEMENT COMMITMENT - 3 4 100% TOTAL SECURITY RATING 3.15 3.75 SECDRITY ALUATION Page 5 of 10 EMgMSO'Z Class/Code 03-010
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FINANCIAL ANALWS WORRSBRET • (NILLION9 OF DOLLARS; ALL DATA AS OF DECHWR 31, 1991 UNLESS OTffii1FiSH INDICATBD.) VENDOR: USI CURRENT RATIO: 1992 I 1991 1990 0 1. Enter Current Assets _ 987.3 897.1 2. Enter Current Liabilities 438.0 427.9 3. Current Ratio (Line 1/Line 2) - 2.25 2.10 DEBT TO ASSETS RATIO: 1. Enter Total Debt 3,402.2 3,323 2. Enter Total Assets 3,198.9 3,220 3. Debt To Assets Ratio (Line 1/Line 2) - 1.06 1.03 PROFIT MARGIN ON SALES: w A 1. Enter Net Income (123.3) 21.2 2. Enter Sales 2,532.4 2,656.1 3. Profit Margin On Sales (Line 1/Line 2) (4.9%) 0.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income (123.3) 21.2 2. Enter Total Assets 3,198.9 3,220 3. Return On Total Assets (Line 1/Line 2) (3.9%) 0.66% EARNINGS PER SHARE: I (4.26) F CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. .79 Page 6 of 10 Class Code 03-010A taTesvesoz
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• FINANCJ* ANAI,YSIS WORRSHEgT (MILLIONS OF DOLLARS; ALL DATA AS OF DECMW 31, 1991 UPLESS OT9ER1lISE I2mIC11TEQ.) • VENDOR: USI CURRE[T RATIO: 1989 I 1988 1987 1. Enter Current Assets 868 1,339 836 2. Enter Current Liabilities 503 1,720 577 3. Current Ratio (Line 1/Line 2) ' 1.73 .78 1.45 DEBT TO ASSETS RATIO: w PROFIT MP,RGIN ON SALES: 1. Enter Net Income 247 383 252 2. Enter Sales 2,671 2,922 2,264 3. Profit Margin On Sales (Line 1/Line 2) 9.3% 13.1% 11.1% RETURN ON TOTAL ASSETS: 1. Enter Net Income 247 383 252 2. Enter Total Assets 3,004 2,908 2,581 3. Return On Total Assets (Line 1/Line 2) 8.2% 13.2% 9.7% EARNINGS PER SHARE: 1. Enter Total Debt 3,176 3,315 1,536 2. Enter Total Assets 3,004 2,908 2,581 3. Debt To Assets Ratio (Line 1/Line 2) 1.06 1.14 .59 S®T98tesoz 9.85 I 14.57 I 7.75 I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 10 Class Code 03-010A
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0 FINANCIAL A2iALY&S WORICS$SET (MIIS.IONS OF DOIS,ARS; ALL DATA AS OF DEl'2AM 31, 1991 UNLESS OTHE84ISE IINDICRTSD. ) VENDOR: Union Carbide CURRENT RATIO: 1992 I 1991 I I 1. Enter Current Assets 2,641 2,216 2. Enter Current Liabilities 2,432 2,088 3. Current Ratio (Line 1/Line 2) 1.09 1.06 DEBT TO ASSETS RATIO: 1. Enter Total Debt 2,442 2,883 ' 2. Enter Total Assets 6,826 7,389 3. Debt To Assets Ratio (Line 1/Line 2) .36 .39 n PROFIT YdARGIN ON SALES: w rn 1. Enter Net Income (28) 308 . 2. Enter Sales 4,877 5,238 3. Profit Margin On Sales (Line 1/Line 2) (.6%) 5.9% RETURN ON TOTAL ASSETS: 1. Enter Net Income (28) 308 2. Enter Total Assets 4,877 7,389 3. Return On Total Assets (Line 1/Line 2) ' (.6%) 4.2% EARNINGS PER Sf1ARE: (.22) ~ CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I 1990 2.13 Page 8 of 10 Class Code 03-O10A 9OT9$VES'OZ
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FINANCW ANALYSIS WORK-GEMM O (MILLIONS OF U.r.nAS; ALL DATA AS OB DECp1W 31, 1941 UFEESS oTHER1Zg8 Il®I®MM.) . VENDOR: Union Carbide CURRENT RATIO: I 1989 I 1988 1 1987 I 1. Enter Current Assets 2,787 2,883 2,555 2. Enter Current Liabilities 2,328 2,455 1,811 3. Current Ratio (Line 1/Line 2) 1.20 1.17 1.41 DEBT TO ASSETS RATIO: 1. Enter Total Debt 5,557 6,020 6,074 2. Enter Total Assets 8,546 8,441 7,892 3. Debt To Assets Ratio (Line 1/Line 2) .65 .71 .77 . ~ PROFIT MARGIN ON SALES: v 1. Enter Net Income 573 662 • 232 2. Enter sales 8,744 8,324 6,914 3. Profit Margin On Sales (Line 1/Line 2) 6.6% 8.0% 3.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 573 662 232 2. Enter Total Assets 8,546 8,441 7,892 3. Return On Total Assets (Line 1/Line 2) 6.7% 7.8% - 2.9% EARNINGS PER SHARE: I 3.92 I 4.66 I 1.75 0 r CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 9 of 10 T(~ (~~,y~~.. ry Class Code 03-010A ~~ Y06 V 43~ii
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1988 - 92 BUYING HISTORY Atm 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 851 M 831 M 911 M 905 M 939 M 627 M SUPPLIER USI 56.3 50.0 40.0 40.0 39.5 26.2 Union Carbide 23.5 25.0 34.0 40.0 57.6 73.4 Devon 9.1 11.0 6.0 0 0 0 GPC 11.1 14.0 20.0 20.0 2.9 0 , ~ Page 10 of 10 Class/Code 03-010A eoTeatcsoz
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1993 DIRECT MATERSAL BIIYING PLAN SUMMARY PAGH Material Code/Super Class 03-070A Description Glen Unit of Measure lb. Std. Cost $ .625 Est. $ Purchase 10.062,500 Est. Usage 16,100,000 Est. Purch. Quantity 16,100,000 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units ~ Units ~ Coimnitment (*) Overall Ratin 4 1. Proctor & Gamble 9,375,000 56.6 11,000,000 68.3 1 - Annual 3.43 2. Henkel 3,800,000 23.0 2,250,000 14.0 1 - Annual 3.10 3. Unichema 2,880,000 17.4 2,250,000 14.0 1 - Annual 3.25 4. Mays Chemical 500,000 3.0 600,000 3.7 2 - Annual N/A 5. 6. 7. S. 9. 10. Total 16,555,000 100.0 16,100,000 100.0 Class/Code 03-070A * 1. Contract EXPLANATION 2. Purchase Order 3. Other Page 1 of 12 saT9eMoz Approval 1/.6,"ta, - . Date: /z/i Prepared ~y G. L. Nixon Date: 11/01/92
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• OBJECTZVES/STRA1`EGIES/ISSUES • PURCHASING OBJECTIVES: c Continue to buy glycerine at a competitive advantage_ - o Reduce the quality rejects to less than 2.0%. o Maintain a high level of Supply Security and service. o Continue to increase minority expenditures. STRATEGIES TO MEET OBJECTIVES: o Using the pricing mechanism in place with P&G, continue to maintain a 3 cent/lb competitive advantage to the Tobacco Market. o Monitor the subjective testing and possible development of a new specification on odor. o Continue multiple supplier/production site sourcing. o Develop a long term agreement with Unichema. FUTURE SUPPLY OUTLOOK: Supplies will probably continue to be snug through at least the first half of 1993. Weak European economies have diminished supplies, moving price there high enough to discourage exports to the U.S. This has been further complicated by the weak dollar. Production problems at Dial and Dow in 1992 have reduced U.S. inventories. INVENTORY POLICY: 15 days minimum and 20 days maximum Page 2 of 12 Class Code 03-070A Qlisetcsoz
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~ Phijk4ortis U.SA. • MaEetialsPurch~sing 1993 Diraot AAaterial BuyingPlut Five-Year Buying Plan Projection Materad Coae[Supnr eFaw ai-0-MA. Unit of Meastun tbs; oescriptioR Forecastnahm GtyoKine uSP Narember 1SB2 1993 1994 1995 1996 1997 SQpplier Name tkvts % Uriis % thits % tlnils % I PI Uruts % P8dG 11,000,000 68.3 y 11,000,00Q 65.9 y 11,000,000 65.5 y 10,000.000 58.8 y 10,000,000 5&1 y HMikel 2,250,000- 14.0 1,000,000 6.0 0 0.0 0 0.0 O 0.0 Urtidlema 2,250,000 14.0 4,000,000 24.Q y 5,000,000 2A8 6,0oQ000 35.3 y 6,200,000 36A y Mays 600,000 3.7 700,000 4.2 800,000 4.8 1,000,000 5.9 1,000,000 5.8 I ri 16,100,000 100.0 16,700,000 100.0 16,800,000 100.0 17,000,000 100.0 17,200,000 100.0 ISSUES: This plan i s based oa ttre followingassumptions: 1. We are able too redefine to odor specifiaation: sc that ador quality is no longer an issue. 2. The Unilever Board has approveda plan for Unichemato huilda.seoanrtU.Sd nefinery45,000,000.1bs, nearly triple their current capacity. If they don'tfollow through an those plans,. HenkeEwoutd.ha the strongercandidate. 3. R&UisseriouslylookingforseveralattematehumeotantsforthepRmanfpurpass.afcostreduatiomx (Isosweet, PG, HiSTAR). The volumes above arc based an current farncula rafios: Zjj,88t7~,TSOZ Note: PM USAshouldoontinue.tapursueapoasi6hm slmergisfiafitwithPME Page 3 of 12 ClasslCode: 03-070A
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0 r 0 SUPPLIER EVALUATION SUPPLIER Proctor & Gamble Unichema BenkeZ WEIGHT USING LOCATION Richmond, L/V, C/C Richmond, L/V, C/C RS.chmond, L/V, C/C 25 A. COST FACTORS 40 1. DELIVERED COST/# $.5213/lb 4 $.5525/lb 3 $.5525/lb _ 3 15 2. VOLUME INCENTIVES 4 4 4 15 3. COST SAVINGS PROVIDED 3 3 3 30 4. PRICE LEADERSHIP 1 3 4 TOTAL COST RATING 2.95 3.15 3.45 25 B. QUALITY FACTORS . 60 1. % REJECTS * 6.1% (12 of 196) 3 22.6% (12 of 53) 2 5.7% (5 of 87) 3 40 2. QUALITY CONTROL 3 3 3 0 3. PROCESSABILITY/ MACHINABILITY N/A N/A N/A TOTAL QUALITY RATING 3.00 2.40 . 3.00 20 C. TOTAL SERVICE RATING 4.00 3.50 3.00 30 D. TOTAL SECURITY RATING ' (SEE PAGE(S) 4 ) 3.88 3.38 3.46 100% OVERALL RATING 3.43 3.10 3.25 Page 4 . of 12 .ar C1ass/COde 03-070A
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WEIGHT SUPPLIER Proctor & Gamble Unichema Henkel 15 D. 1. SECURITY RAW MATERIALS Tallow ' Vegetable oil Crude Glycerine 4 _ Tallow . Vegetable Oil Crude Glycerine 4 Tallow Vegetable oi1 Crude Glycerine 4 10 2. CAPACITY (220M lbs. Nameplate) 25 (U_.S.) 60 M 160 M lbs. 5 221 M lbs.(World) 3 _ 300 M lbs. (World) 4 5 3. FLEXIBILITY 4 3 3 10 4. SUPPLIER INVENTORY 6 M lbs. 2.5 M lbs. 6 weeks 4 4 weeks 3 2-4 weeks 3 15 5. PLANTS & LOCATIONS Balt. Md.,Cincinnati,oH Hanavond, Ind. Cincinnati, OH - 4 3 3 10 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE Independent Oil & Chemical Workers 10/95 . Stable 0 1 3 4 Teamsters Local 7336 11/95 Stable - 0 1 .3 4 Steelworkers 0 - 2/93 0 Stable 3 3 5 7. ENERGY #6 Oil/Coal 3 Nat.Gas/R6 Oil 3 Coal,Nat.Gas,Propane 3 5 8. EPA COMPLIANCE 3 3 3 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 5-7) 4 4 4 S 10. CORPORATE MANAGEMENT STRENGTH ' 4 ' 4 4 10 11. CORPORATE MANAGEMENT COMMITMENT 4 4 3 100% TOTAL SECURITY RATING 3.88 3.38 3.46 SECURITY UATION • E~~BB$~SOZ 12 Class/Code 3-070A
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FINANCIAL ANALMIS WORKSHSE'.C • (MILLIONS OF DOLLARS; ALL DATA AS OF J11W30, 1991 UHLESS OTffiIIISE IlIDICATEe.) VENDOR: Proctor & Gamble CURRENT RATIO: 1992 I 1991 1990 I 1. Enter Current Assets 8,435 7,644 2. Enter Current Liabilities 6,733 5,417 3. Current Ratio (Line 1/Line 2) 1.25 1.41 DEBT TO ASSETS RATIO: 1. Enter Total Debt 12,732 10,969 2. Enter Total Assets 20,468 18,487 3. Debt To Assets Ratio (Line 1/Line 2) .62 .59 PROFIT MARGIN ON SALES: 1. Enter Net Income 1,773 1,602 2. Enter Sales 27,026 24,081 3. Profit Margin On Sales (Line 1/Line 2) 6.6% 6.7% a a RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,773 1,602 2. Enter Total Assets 20,468 18,487 3. Return On Total Assets (Line 1/Line 2) 8.7% 8.7% EARNINGS PER SHARE: 4.62 4.27 coNFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 6 of 12 Class Code 03-070A ~1TSBVCS07i
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• FINANCIAL ANALYMS WOp'RSHR'T' (MILLIONS OF DOLLARS; ALL DATA AS OF JRAM0, 1991 UNLES9•OTEMi1/ISH ILmICBTED.) VENDOR: Proctor & Gamble CLTRRENT RATIO: 1989 1988 I 1. Enter Current Assets 6,578 5,598 4,981 2. Enter Current Liabilities 4,656 4,224 3,458 3. Current Ratio (Line 1/Line 2) 1.41 1.33 1.44 DEBT TO ASSETS RATIO: 1. Enter Total Debt 10,136 8,483 7,725 2. Enter Tota1 Assets 16,351 14,820 13,715 3. Debt To Assets Ratio (Line 1/Line 2) .62 .57 .56 ~ PROFIT MARGIN ON SALES: 1. Enter Net Income 1,206 1,020 327 2. Enter Sales 21,398 19,336 17,000 3. Profit Margin On Sales (Line 1/Line 2) 5.6% 5.3% 1.9% RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,206 1,020 327 2. Enter Total Assets 16,351 14,820 13,715 3. Return On Total Assets (Line 1/Line 2) 7.4% 6.9% 2.4% EARNINGS PER SHARE: 3.47. 5.96 ~ CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 1987 *1.87 I Page 7 of 12 Class Code 03-070A *Includes a $2.72/share charge for restructuring. STT13QFVC5;0z
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FINANCIAL ANALYAfiS WOQACHER' • (MILLIONS OF DOLLAR3; ALL DATA AS OF pgCFAW 31, 1991 UNLESS OTHES1fISE INpI(MTBTf.) • VENDOR: Unilever ' CURRENT RATIO: 1992 I 1991 I 1990 1. Enter Current Assets 13,834 13,654 2. Enter Current Liabilities 10,530 10,418 3. Current Ratio (Line 1/Line 2) 1.31 1.31 DEBT TO ASSETS RATIO: 1. Enter Total Debt 18,872 19,191 2. Enter Total Assets 25,394 24,737 3. Debt To Assets Ratio (Line 1/Line 2) - , .74 .78 ~ PROFIT MARGIN ON SALES: 1. Enter Net Income 2,030 2,081 2. Enter Sales 40,767 . 39,620 3. Profit Margin On Sales (Line 1/Line 2) 5.0% 5.3% ~ rn RETURN ON TOTAL ASSETS: 1. Enter Net Income 2,030 2,081 2. Enter Total Assets 25,394 24,737 3. Return On Total Assets (Line 1/Line 2) . 8.0% 8.4% EARNINGS PER SHARE: I 7.23 I 7.06 I CONFIDENTIAL..Not to be removed from-Philip Morris Materials Purchasing Department. Page 8 of 12 t Class Code 03-070A s~tiee~v~saz
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0 1988 - 92 BUYING HLBTORY AND 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) . 1993 (P) TOTAL QUANTITY 14.92 M 15.40 H - 16.66 M 16.80 M 16.56 M 16.10 M SUPPLIER . % % $ % % . % Proctor & Gamble 51.8 49.0 54.0 54.5 56.6 68.3 Henkel 14.8 17.2 17.0 17.9 23.0 14.0 Unichema 16.2 16.6 19.0 20.8 • 17.4 14.0 Mays Chemical 0 0 0 1.8 3.0 3.7 Humko ' 7.4 10.8 7.0 0 0 0 Armour-Dial 9.9 6.4 3.0 0 0 0 , Page 12 of 12 Note: Reduction in the 1993 forecast reflects a formula change in RCB and RL Class/Code 03-070A 1st QTR 1993 ~~,~ga$,~ss~,Z
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0 OBJEECPIVES/SAGIES/ISSUHS _ PURCHASING OBJECTIVES: 1) 2) 3) 4) PURCHASING STRATEGIES: , 1) rebate of 2.5 cents/lb equaling $350 M for 1993. Arco has set up a terminal in Richmond and Charlotte to optimize the supply chain. Olin will be a niche supplier for L/V at a cost of 3 cents/lb below market, and brings some added measure of security by having a back up PG unit to . Arco. Cost savings for 1993 are $410 M already included in standard costs. 2) We continue to grow the business between PME and Arco Europe. We are currently taking steps to set up Arco as the primary supplier to PM affiliates in all of Latin America. 3) Continue to encourage Arco to build a second PG unit in the US. FUTURE SUPPLY OUTLOOK: Supplies will be adequate next year with capacity utilization to 85%. Demand will increase with the economy. A severe winter could cause temporary tightness in the de-icer market. INVENTORY POLICY: 15 - 20 days. Page 2 of 12 Class Code 03-lOOAA Improve long term security. • Reduce costs while maintaining suppliers margin. Strengthen the PM Companies/Arco Supplier Alliance worldwide. Maintain a significant volume of minority purchases. We entered into a 3 year agreement with Arco beginning 1992 with a volume . ? ZZTB9bES0Z
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Phi*Aorris U.S.A. Materials Purdrasirtg Material CadelSuperclams ai-•1L10rOt Unit of.IMeasure lbs • 199:i Direct Material Buying.Phm: Five-Year Buying Plan Projection Desariptiart Pmpytene. Glyaok USP- Faresast.llata November 19M. 1993 1994 1995 1996 1997 Suppi1er Name iJnits % Uni:ts % lkuts % tki(s % Lkefs % Arco 12,400,000 77.5 y 13,O0Q;0i00 78.3 y 13,W0,000 78.3 y 13,000,000 77.4 y 13,200,000 77.6 y Olin 2.000.000 125 y 2;000,000 120 y 2,000,000 120 2,o0D,080 i1.9 Y 2,01D(J,000 11.8 y Easlman ~~n 0 1,600,000 0.0 10.0 0 1,600,000 0.0 9.6 0 1,600,000 0.0 9.6 0 1,800,000 0.0 10.7 0 1,800,000 0.0 10.6 16,000,000 100.0 16,600,000 100.0 i6,6aO,00p 100.0 16,800,000 i0Q.0 i7,000,00Q 100.0 ISSUES: 1. Arco only has one PCs unit in the US. They have sufficient inventory in the pipetineto: cover adisruptionwhile.awaitingproduct'rmpartedfronrFrance. Theyplam tabuildaseeonrkunit. 2. Olin's plant is located M m'rtea fronr L/V. They havara longterm contraetwith Arco for P.O. wittr Dow asa backup. 3. PM's curtent contract with Arco ends 12194. 4. Texaco building a PO/MTBE plant. 5. Arco extends PM pricing to KGF. [:ZTgg$C9QZ Page 3 of 12 6. R&D projects could drastically alter PM oonsumptiorr. ClasstCode: 03-100A
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0 SUPPLIER EVALIIATION 0 SUPPLIER Arco Olin Eastman WEIGHT USING LOCATION R, L/V, C/C R, L/V, C/C R, L/V, C/C 20 A. COST FACTORS 30 1. DELIVERED COST/# $.47/lb. 4 $.47/lb. 4 $.50/lb_ 3 20 2. VOLUME INCENTIVES 4 ' 3 3 20 3. COST SAVINGS PROVIDED 5 3 3 30 4. PRICE LEADERSHIP 5 . 3 3 TOTAL COST RATING 4.50 3.30 3.00 20 B. QUALITY FACTORS 50 1. % REJECTS - (2 of 240) 3 (0 of 38) 4 (0 of 32) 4 50 2. QUALITY CONTROL 4 3 3 0 3. PROCESSABILITY/ MACHINABILITY N/A - N/A N/A TOTAL QUALITY RATING 3.50 ~ 3.50 3.50 20 C. TOTAL SERVICE RATING 5.00 3 50 3 00 . . 40 D. TOTAL SECURITY RATING (SEE PAGE(S) ). 4.05 3.00 3.10 100~ OVERALL RATING 4.22 3.26 3.14 12 tZIS9M~7 .~7 Class/Code 03-100A
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SECURITY X VALIIATION WEIGHT SUPPLIER Arco Olin Eastman D. SECURITY Propylene Oxide 20 1. RAW MATERIALS Propylene Long-term reciprocal Propylene oxide P.O. (Basic) contract with Arco from Arco & Dow 5 2 2 5 2. CAPACITY 360 M lbs. 4 70 M 1bs. 3 SO M lbs. 3 10 3. FLEXIBILITY 4 2 2 10 4. SUPPLIER INVENTORY 40-60 days 14-30 days 4 3 15-30 days 3 10 5. PLANTS & LOCATIONS Bayport, Texas 4 Doe Run, Ky. 3 S.Charleston, W.Va. 3 Other World Plants 10 6. LABOR Int'l Union of Int'l Brothenccod of Int'l Assoc. of Machin- a. UNION Operating Engineers 0 Firemen & Oilers 0 ists & Aerospace Wkrs. 0 b. CONTRACT EXPIRATION DATE 2/94 1 1/31/93 . 0 10/94 1 C. SITUATION Very Good 3 Very.Good 3 Very Good 3 d. SCORE 4 3 4 5 7. ENERGY Elec/Cogen. 3 Coal/Elec. 3 Elec/Coal 3 10 5. EPA COMPLIANCE & Safety 3 3 3 5 9. FINANCIAL STRENGTH (SEE PAGE(S)6-8 ) 4 2 3 5 10. CORPORATE MANAGEMENT ', STRENGTH 4 3 3 10 11. CORPORATE MANAGEMSNT , COMMITMENT 5 3 3 100% TOTAL SECURITY RATING 4.05 3.00 3.10 . Page 5 of 12 ~'~'T9~t7~'f~`Q~; Class/Code 03-100A
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a VENDOR: Arco CURRENT RATIO: FINANCIAL ANALYSIS WORRSH6ET (HII3,IONS OF DOLLARS; ALL DATA AS OF DH 31, 1991 II1oIRSS aTMMWJ,'SS INDICAT&[l.) 1990* 1. Enter Current Assets 1,124 1,406 2. Enter Current Liabilities 533 541 3. Current Ratio (Line 1/Line 2) 2.11 ' 2.60 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,696 1,981 2. Enter Total Assets 3,676 3,739 3. Debt To Assets Ratio (Line 1/Line 2) .46 .53 PROFIT MARGIN ON SALES: 1. Enter Net Income 188 351 2. Enter Sales 2,937 2,830 3. Profit Margin On Sales (Line 1/Line 2) 6.4% 12.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 188 351 2. Enter Total Assets 3,676 3,739 3. Return On Total Assets (Line 1/Line 2) 5.1% 9.4% EARNINGS PER SHARE:. QZT'qBTVCS,0z I 1992 I 1991 1.96 3.21 CONFIDENTIAL..Not to be removed from Philip Morris Haterials Purchasing Department.- Page 6 of 12 - Class Code 02-100A *1990 incorporated the loss of $210 M due to the Channelview explosion. Also incorporated were the French plant, Channelview expansions, and U.S. polyol business.
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VENDOR: Arco CURRENT RATIO: FINANCIAL ANALYSIS WOHKSHEET (MII,LIONS OF DOLLARS; ALL DATA AS OF 31, 1991 UNLESS OTHERWISE g~Ip1TEp.) . 1989 1988 1987 -0 1. Enter Current Assets 852 1,170 1,291 2. Enter Current Liabilities 414 637 976 3. Current Ratio (Line 1/Line 2) 2.06 1.84 ' 1.32 DEBT TO ASSETS RATIO: 1. Enter Total Debt_ 1,064 1,173 1,418 2. Enter Total Assets 2,655 2,548 2,534 3. Debt To Assets Ratio (Line 1/Line 2) .40 .46 .56 PROFIT MARGIN ON SALES: 1. Enter Net Income 405 494 257 2. Enter Sales 2,663 2,700 1,952 3. Profit Margin On Sales (Line 1/Line 2) 15% 18% 13% RETURN ON TOTAL ASSETS: 1. Enter Net Income 405 494 257 2. Enter Total Assets 2,655 2,548 2,534 3. Return On Total Assets (Line 1/Line 2) 15% 19% 10% EARNINGS PER SHARE: 4.22 5.00 I 2.58 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 12 Class Code 03-100A
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VENDOR: Olin CURRENT RATIO: FINANCIAL ANALYSIS WORRSHEET (MILLIONS OF DOT•r.Anc; ALL DHTA AS OF DECEW 31, 1991 UNLESS a'.CBEEtWISE IlIDICATSD. ) 1992 1991 I 1990 1. Enter Current Assets 768 734 2. Enter Current Liabilities 683 522 3. Current Ratio (Line 1/Line 2) 1.12 ' 1.41 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,346 1,151 2. Enter Total Assets 2,012 1,866 3. Debt To Assets Ratio (Line 1/Line 2) .67 .62 • PROFIT MARGIN ON SALES: n m 1. Enter Net Income • (13) - 84 2. Enter Sales 2,275 2,592 3. Profit Margin On Sales (Line 1/Line 2) (0.6%) 3.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income (13) 84 2. Enter Total Assets 2,012 1,866 3. Return On Total Assets (Line 1/Line 2) (0.6%) . 4.5% EARNINGS PER SBARE: I (.92) CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 3.88 Page 8 of 12 Class Code 03-10OA I BZT9Q V S:'-l- OS,e
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-0 VENDOR: Olin CURRENT RATIO: 1989 1988 I 1987 1. Enter Current Assets 790 801 680 2. Enter Current Liabilities 585 617 404 3. Current Ratio (Line 1/Line 2) 1.35 1.30 ' 1.68 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,239 1,257 985 2. Enter Total Assets 1,904 1,940 1,6B5 3. Debt To Assets Ratio (Line 1/Line 2) .65 .65 .58 PROFIT MARGIN ON SALES: 1. Enter Net Income 124 98 78 2. Enter Sales 2,509 2,308 1,930 3. Profit Margin On Sales (Line 1/Line 2) 4.9% 4.2% 4.0% RETURN ON TOTAL ASSETS: 1. Enter.Net Income 124 98 78 2. Enter Total Assets . 1,904 1,940 1,685 3. Return On Total Assets (Line 1/Line 2) 6.5% 5.196 4.6% EARNINGS PER SHARE: 5.85 4.59 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I G4 hl7d V4JlJli FINANCIAL ANALYSIS PTORSSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DE 31, 1991 UNLESS OTD13RiFISE TNDICATED.) 3.32 Page 9 of 12 Class Code 03-100A
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FINANCIAL ANALYSIS WORRSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECE! 31, 1991 UNLESS OTHERWISE I1mICATED.) VENDOR: Eastman 1993 I 1992 1991 CURRENT RATIO: 1. Enter Current Assets 8,258 2. Enter Current Liabilities . 6,899 3. Current Ratio (Line 1/Line 2) ' 1.20 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 18,066 2. Enter Total Assets 24,170 3. Debt To Assets Ratio (Line 1/Line 2) . 0.75 PROFIT MARGIN ON SALES: 1. Enter Net Income *17 2. Enter Sales 19,419 3. Profit Margin On Sales (Line 1/Line 2) . 0.09% RETURN ON TOTAL ASSETS: 1. Enter Net Income *17 2. Enter Total Assets 24,170 3. Return On Total Assets (Line 1/Line 2) 0.07% EARNINGS PER SHARE: CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 0.05 Page 10 of 12 Class Code 03-100A I VCMt71qF V[.+-74f4
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FINANCIAL ANALYSIS WORKSHEET •Y. (MILLIONS OF DOLLARS; ALL DATA AS OF DECF& 31, 1991 UNLESS 078MWISE IH{yICATM,) VENDOR: Eastman CURRENT RATIO: 1988 5 1. Enter Current Assets 8,608 - 8,591 8,684 2. Enter Current Liabilities 7,163 6,573 5,850 3. Current Ratio (Line 1/Line 2) 1.20 1.31 • 1.48 DEBT TO ASSETS RATIO: 1. Enter Total Debt 17,388 17,010 16,184 2. Enter Total Assets 24,125 23,652 22,964 3. Debt To Assets Ratio (Line 1/Line 2) 0.72 .72 .70 PROFIT MARGIN ON SALES: 1. Enter Net Income 703 529 1,397 2. Enter Sales 18,908 18,398 17,034 3. Profit Margin On Sales (Line 1/Line 2) 3.7% 2.8% 8.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income 703 529 1,397 2. Enter Total Assets 24,125 23,652 22,964 3. Return On Total Assets (Line 1/Line 2) 2.9% 2.2% 6.1% EARNINGS PER SHARE: CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 4.31 Page 11 of 12 Class Code 03-100A I . ,LUc3Q MO4 1990 2.17 I I 1989 1.63
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY . 14.24 M 14.80 M 16.51 M 16.67 M 16.4 M 16.0 M SUPPLIER =k % % % .% ~ Arco 51.3 50.0 51.1 60.0 70.0 77.5 Eastman 20.1 18.0 15.0 7.0 9.8 0 Olin 18.7 21.7 26.0 25.0 11.6 12.5 Burden 3.9 4.3 6.6 8.0 8.6 10.5 Devon 5.8 6.0 1.4 0 0 0 Mays 0 0 0 0 0 0 Page 12 of 12 t . Class/Code 03-100A ZEtiB~i~~S~Z
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0 Material Code/Super Class 03-220A Description Sagno Unit of Measure kg , Std. Cost $ 19.88 Est_ $ Purchase 1,888,600 Est. Usage 95,000 Est. Purch. Quantity . 95,000 0 1993 DIRECT MATERIAL gUYING PLAN SUMMARY PAGE 0 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units ~ Units ~ Commitment (') overa11 Rating 1. Haarmann & Reimer 105,600 85.8 80,750 85.0 2- Annual 3.75 2. Takasago 17,450 14.2 14,250 15.0* 3. 4. 5. 6. 7. 8. 9. 10. Total 123,050 100.0 95,000 100.0 * 1. Contract EXPLANATION 3. Other 2. Purchase Order * Takasago percentage assumes competitive pricing. EETi38vf:SQz Page 1 of 9 Class/Code 03- 220A Approval J9 Date: Prepared y J._H. Griffin Date: 12
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OBJECTIVES/STRATEGIES/ISStTES OB,7ECTItlE• TO REDUCE MATEEIAL COSTS WITH NO CORRESPONDING DECREASE IN QIIALITY, SERVICE, OR SECORITY. PROJECTED 1992 SAVINGS: $ 126.065 STRATEGIES• - TIMBTABL% Negotiated price reductions from both Haa.mA,,,, & Reimer and Takasago for 1993. Excess supply and 1993 Calendar market share gains by Indian and Chinese Menthol have forced synthetic suppliers to be more flexible Year in pricing. Savings_ Based on Concessions To Date: H&R Takasago 1. 1993 Volume 80,750 kg 14,250 kg 2. 1993 Price $18.52/kg $18.74/kg ~ 3. 1993 Standard $19.88/kg $19.88/kg ~ 4. Savings vs Standard $109,820 $16,245 Total $126,065 OTHER ISSUES: Continue to negotiate volume sensitive pricing. Both H6& and Ta&a.sago reduced prices for additional volumes in 1992. VUT8gVCS0Z Page 2 of 9 Class Code 03-220A
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Philip Oim u.S.A_ Mhterials Purchasing 1953 direot Umbem1. Baying PFan Five-Year Buying Plan Projection FRatniat Coaetsuper Class 03-2M Description sagrao•; Unit of L4emsure kg_ ForearssE E1Sts PJarnm6er,1g82 1993 1994 1995 1996 1997 SupplierNaroe Ckwts % Units % Uriis % Utdls % UriIs % Haarmam & Reiffer 80,750 85A 74,800 85.0 133,500 75.0 112,700 70.0 105,700 70.0 Takasago 14,250 i5.0 13,200 15.0 44,500 25.0 48,300 30.0 45,300 30.0 95,000 100.0 88,000 100.0 178,000 100.0 161,000 100.0 151,000 100.0 I3St1ES- As Bagna is phasect-out, Sagna purctrasesasu.peroentoPtotaE menthal purclnaeainoream - 1993: 48%, 1994; 81 %, 1995: 90%, 1996: 8046, 1997: 79% Total Sagnc purchases each year wiit depenct on price relationship.wittr Cagna, beginning 1995. 0 SE'G9sVEaOz Page 3 of 9 ClasslCode: 03-220A
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• 0 SUPPLIER EVALUATION i SUPPLIER Naaxmann & Reimer Takasago WEIGHT USING LOCATION Rich, Lvl & Cab Richmond 30 A. COST FACTORS " 50 1. FOB SHIP PT. COST KG. $19.09/$17.64 3 (volume-sensitive) $19.51/$17.64 3 (volume-sensitive) - 10 2. VOLUME INCENTIVES 4 4 10 3. COST SAVINGS PROVIDED 2 2 30 4. PRICE LEADERSHIP 4 3 TOTAL COST RATING 3.3 3.0 35 B. QUALITY FACTORS 50 1. % RE~'ECTS 0.0% 5 0.0% 5 30 2. QUALITY CONTROL 4 3 20 3. PROCESSABILITY/ MACHINABILITY 3 3 TOTAL QUALITY RATING 4.3 4.0 10 C. TOTAL SERVICE RATING 3.0 3.0 25 D. TOTAL SECURITY RATING (SEE PAGE(S) 5 ) 3.8 3.35 100% OVERALL RATING 3.75 3.44 Page 4 of 9 Class/Code 03-220A
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SECURITYAVALUATION WEIGHT SUPPLIER Haarmann & Reimer Takasago D. SECURITY m cresol in Germany myrcene - turpentine 10 1. RAN MATERIALS primary raw materials derivatives under ebtained from parent, annual contract with Bayer AG 4• primarily US suppliers 4 15 2. CAPACITY 1,000 MT USA (8.8%) 1,200 MT/year 400 NT Germany 5 (0.8%) 4 NA 3. FLE7CIDILITY NA NA 15 4. SUPPLIER INVENTORy 2 months 3 months in stock 3 3 15 5. PLANTS & LOCATIONS Bushy Park, S.C. Shizuoka, Japan Holtzminden, Germany 5 Whse in Norwood, NJ 4 5 6. LABOR Japan Federation of a. UNION 1 Synthetic Chemistry . Workers b. CONTRACT I EXPIRATION DATE 1 Annual Contract j Renewal C. SITUATION 3 Renewal is Obligatory d. SCORE 5 3 . 5 7. ENERGY Elec,steam from Mobay 3 Heavy Oil 2 NA 8. EPA COMPLIANCE NA NA 10 9. FINANCIAL • STRENGTH (SEE PAGE(S)6-8 ) ' 3 . 3 10 10. CORPORATE MANAGEMENT STRENGTH 3 3 15 11. CORPORATE MANAGEMENT COMMITMENT 3 . 3 100% TOTAL SECURITY RATING 3.8 3.35 Page 5 of 9 Class/COde 03-220A
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SUPPLIER: HAARMANN & REIMER * CURRENT RATIO: I 1991 I 1990 I 1989 1. Enter Current Assets 2,547.4 2,493.8 2,310.0 2. Enter Current Liabilities 1,262.8 1,370.7 - 1,034.0 3. Current Ratio (Line 1/Line 2) 2.0 1.8 2.2 DEBT TO ASSETS RATIO: 1. Enter Total Debt 2,943.4 2,975.3 2,654.6 2. Enter Total Assets 5,110.5 5,035.7 4,562.1 3. Debt to Assets Ratio (Line 1/Line 2) .58 .59 .58 PROFIT MARGIN ON SALES: 1. Enter Net Income 101.0 149.2 153.9 2. Enter Sales 6,197.4 5,903.7 5,424.7 3. Profit Margin On Sales (Line 1/Line 2) 1.6% 2.5% 2.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income 101.0 149.2 153.9 2. Enter Total Assets 5,110.5 5,035.7 4,562.1 3. Return on Total Assets (Line 1/Line 2) 2.0% 3.0% 3.4% EARNINGS PER SHARE: , RCT81317J~SOZ d I I Page 6 of 9 CONFIDENTIAL ... Not to be removed from Philip Morris Materials Purchasing Department. Class Code 03-220A * INFORMATION THROUGH 1990 IS FOR BAYER USA. 1991 FINANCIAL INFORMATION IS FOR MILES FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.)'
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FINANCIAL ANAL S WORKSHEET • . (MILLIONS OF DOLLARS; ALL DATA AS OF DECR 31, 1991 UNLESS OTfIERWISE INDICATED.) F SUPPLIER: NAARMANN & REIMER * CURRENT RATIO: I 1988 I 1. Enter Current Assets 1,873.8 2. Enter Current Liabilities 830.1 3. Current Ratio (Line 1/Line 2) 2.3 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,226.2 2. Enter Total Assets 3,626.9 3. Debt To Assets Ratio (Line 1/Line 2) .34 PROFIT MARGIN ON SALES: ~ rn ~ 1. Enter Net Income 124.4 2. Enter Sales 4,718.5 3. Profit-Margin On Sales (Line 1/Line 2) 2.6% RETURN ON TOTAL ASSETS: 1. Enter•Net Income 124.4 2. Enter Total Assets 3,626.9 3. Return on Total Assets (Line 1/Line 2) 3.4% EARNINGS PER SHARE: I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I Page 7 of 9 Class Code 03-220A GstesVEs©z
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0 0 FINANCIAL ANALYSIS WORKSHEET (ALL FIGURES EXCEPT EARHrraGS PER SNARE IN MM YEN) I SUPPLIER: TAKASAGO INTERNATIONAL CURRENT RATIO: o ,~'iZ99veso7, 1991 * I 1990 * 0 1. Enter Current Assets 52,446 46,057 40,724 2. Enter Current Liabilities 37,372 28,417 24,151 3. Current Ratio (Line 1/Line 2) 1.4 - 1.6 1.7 DEBT TO ASSETS RATIO: 1. Enter Total Debt 54,663 43,493 34,457 2. Enter Total Assets 81,917 70,078 60,323 3. Debt to Assets Ratio (Line 1/Line 2) .67 .62 .57 PROFIT MARGIN ON SALES: 1. Enter Net Income 1,393 1,303 1,271 2. Enter Sales 80,260 77,282 71,783 3. Profit Margin On Sales (Line 1/Line 2) 1.7% 1.7% 1.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,393 1,303 1,271 2. Enter Total Assets 80,260 77,078 60,323 3. Return on Total Assets (Line 1/Line 2) 1.7% 1.9% 2.1% t EARNINGS PER SHARE: I 1992 * 13.82 I I 12.94 12.67 Page 8 of 9 CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. Class Code 03-220A * YF.AR ENDING MARCH 31.
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0 1988 - 92 BUYING HISTORY AND 1993 BUYIHG PLAN UNITS OF MEASURE = KG • . 1988 1989 1990 1991 1992 (E) 1993 (P) TaTAL QUANTITY 101,200 92,850 98,500 97,550 123,050 95,000 SUPPLIER $ $ $ $ $ $ Haarmann & Reimer 100 88.9 89.5 90.2 85.8 85.0 Takasago 11.1 10.7 9.8 14.2 15.0 Page 9 of 9 ~,, ~ Class/Code 03-220A ,~~7~~~ M ~~'h /~`.e
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! 0 1993 DIRECT MATERIAL BUYING PLAN SUMMARY PAGE Material Code/Super Class 03-225A Description Cagno Unit of Measure ]cg_ Std. Cost $ 16.83 Est. $ Purchase _ $168,200 Est. Usage 20,000 • Est. Purch. Quantity 10,000 e Annual Purchases Est. 1992 Proj. 1993 - Supplier Name Units $ Units % C~mitment (•) Overall Evaluation 1. Fuerst Day Lawson 20,000 100.0 10,000 100.0 1,2 2. 3. 4. 5. 6. 7. 8. 9. 10. Total 20,000 100.0 10,000 100.0 * 1. Contract ..2. Purchase Order zVi6eVESoz 3. Other Page 1 of 6 Class/Code 03-225A Approval Date • / g h z Prepared y J. H. Griffin 19 Date: 11/12/92
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OBJECTI9ES/S e GIES/ISSOES • PRIMIIRY Ol.&2ECTIVE: Reduce inventory duration. SECONDARY OBJECTIVES: Cost - Take advantage of periodic cost advantages of Chinese menthol. ~ STRATEGIES• ~ w Increase usage of Cagno to reduce the duration of current inventory (R&D has agreed to do this). Develop a strategy to make Cagno eonssmption flexible, dependent on the coat savings opportunities associated with the market price of Cagno. Continue negotiations with Faerat Day Lawson to reduce some of the price and availability volatility associated with Cagno. Examine Indian menthol product if India appears to be heading toward- market drmi,..+.rn, or if price/qnalitp considerations waxxaIIt. Page 2 of 6 ^-. Class Code 03-225A
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• Philip &s U.SA. ~ AAateriafs Purdr~ning . 198:i Dinsct Alntatial Buqing PFstt Five-Year Buying Plan Projectiorr MateriaI. Codel5upec Class03-MS/! Desatiplioa Cagnm I supplier Name Fuersl6ay Lawson issUt_s: Unit of Meawre kg_ Forecaetda6a Woramber, 1g82 ts93 1994 i995 1996 1997 Units 96 Ihifts % thvts 96 Urits 96 Units 96 10,000 100.0 20,000 100.0 20,000 100.0 q0,000 100.0 40,000 100.0 10,000 100.0 20,000 100.0 ' 20,000 100.0 40,000 100.0 40,000 100.0 Phasr-Cut of Bagna is the primary menthol o6jxLivc. Longer term goal calls for greater participation by Chinese menthoi-itr PM's Purchases, depen dent on the attractiveness ot pricing and security issues_ Participation by ChinesE'is ennsiderertnecesaa:Seta ofefainahmoptimum prieaforsynthetia menthol andto minimize overall menthot cosb^_ ttTggVCSOz Page 3 of 6 Class/Code: 113-225A
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5t5ZZ-£0 9 30 apo0/sseTO q abea 2(}53488145 TZ' E 9HZ.IStA fitiTNEAO %00T . Z'E ~ s (S)H9*dd 8HS) OHIZ42T aZIHOJas 'IFrsaL a sE 0'3 JNISitEt HJIANES 7.5TdA,L 'O OT r E OtutSiu aa.27Fnaa sdim E dSI'IIHUNIO1tR /7SSI92HYSS9~O2id '£ OE Z 'IOu,LN0.7 7,SS'IFIo ' Z OE • V . S7ofiL'e'Cii $ •T Oir sBOSAea ]Lrs'Ifrn2S •a sE E 9HISY2I SSOo 2FISOS . E ~HHaFtB'I S;lIgd ''Y OE E OEDIAOHd S9HIAiiB SSOJ 'E OT E saA7TmHI at[1'IDA 'Z 0T E ~IC~3~OH 'P3ed Z4na 'PaZOATTea Bi'LTt 0s VS5OJ rfBTPHnTREa 'T SN=U SSOJ •H OZ 4eJ/TA'I/qDTH lioIS~IJO'I JHIsII MI8ld nosavridaa ;saanH 2IU7ddOS 0 HolZsmZFreiI xSl7aanS 0 0
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WSIGBT SUPPLIER Fuerst Day Lawson D. SECURITY 10 1. RAW MATERIALS Dealer 3 NA 2. CAPACITY 10 3. RL88TBILITY 3 20 4. SUPPLIER INVffii7bRY Usually has inventory . available 3 NA 5. PLANTS & LOCATIONS -- NA 6. LABOR - Chinese Government a. UNION ContxoLl.ed. b. CONTRACT EXPIRATION DATE -- o. SITUATION d. SCORE NA 7. ENERGY -- NA 8. EPA COMPLIANCE -- 20 9. FINANCIAL STRBNGTS (SHS PAGE(S) ) 3 20 10. CORPORATE IMANAGRMT!NT STRENGTB 3 20 11. CORPORATE MANAGEMENT COMNI7.glSNT 4 100% TOTAS. SECURITY RATING 3.2 SBCORITY ALUATION Page 5 of 6 9VIeevesoz Class/Code 03-225A
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0 0 0 1988 - 92 BUYING HISTORY F1t1D 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QtTBNTITY 18,663 25,000 29,990 20,000 10,000 SUPPLIER $ ~ ~ $ $ % Fuerst Day Lawson 53.6 100.0 100.0 100.0 100.0 Braswey Trading 46.4 Page 6 of 6 Class/Code 03-225A l..Y/TOC7 V 4: •ll/(r
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1993 DIRECT MATERIAL BIIYING PLAN SUMMARY PAGE Material Code/Super Class 03-230A Description Bagno Unit of Measure kg. Std. Cost ~ 32.25 Eat. $ Purchase $3,225,000 Est. Usage 110,000 Eat. Purch. Quantity 100,000 kg. Annual Purchases Est. 1992 Proj. 1993 e O ll Vendor Name Units % Units $ Comnitment (') v .ra Rating 1. Braswey 126,000 100.0 100,000 100.0 1. Annual (through 1993) 3.2 2. 3. 4. 5. 6. 7. 8. 9. 10. Total 126,000 100:0 100,000 100.0 . * 1. contract 2. Purchase Order 3. other Page 1 of 9VTSi8VESOZ Class/Code _ 03-23 Approval Prepared Date:/d 8'. Date: 12 92
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o&7ECTIVES/STRATECIES/ISSOES PRIFlARY OHJECTIVE: Eliminate dependence on Bagno. Qualify Sagno as a totally interchangeable substitute. ! SECONDARY OBJECTIVES: Reduce Bagno inventory (longer term) which is currently at 14 montha. Supply Security: Assure availability of adequate stocks of Bagno in the event interchnn~~ +;lity of Sagno does not pass final YOL tests. STRATEGIES: Complete POL testing of synthetic menthol substitute for Bagno (R&D, Jan. 1993). Negotiate with Braswey the final purchases of Hagna - No further purchases if synthetic menthol becames fully qnalifi.ed; a minimsm purchase at competitive pricing in the event Sagno cannot be fully implemeated. Determine the optimum approach for lrorking darn inventory of Bagno which will be about 140,000 kg. at the end of 1992 (14 months). OTM ISSQEB: Totally withdrawing hnsiness fram Brasway may pnsh Braswey out of menthol altogether. GVTgBVCSDZ Page 2 of 7 Class Code 03-230A
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• oBJSCTIVSS/STRA2BGISISSIISS • o&7ECTIVE: TO REDUCE BfATERIEL COSTS L4ITe NO COR1i8SPOQiDI2& DECREASE IN QUALITY, SHHV'ICB, OR S8C[02ITY. PROJECTEO 1993 SE4IAGS: $ 628,300 STRATEGIES TIMETABLE BAGNO: in June, 1992, negotiated with BLaHwep a reduction in the FOB price of Bagnn 2nd half, 1993 from $37.588/kg to $25.022/kg for 50,000 kg Bagno to be delivered the second half of 1993. . 50,000 x (37.588 - 25.022) = $628,300 (This reduct3on has been incorporated into the 1993 standard cost) OTHER ISSUES: Note: In the event further purchases maY be required, pricing is to be competit£ve with Sagno. Page 3 of 7 Class Code - 03-230A
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0 riateiat codets,w aas:. at-z3EUt Unit of RAeasrue. kg_ Supplier Name 8raswey a ISSUES_ Forccast Dete Novambmr, 1592 P 1995 1996 1997 I.lttils SupplySeaurity. BrasweyisonaoftworamainingBagno.suppfiars: Baceusaof iner~ forces, Braswey was forced to out prices in 1993 by 33% Further auts would be- nsquired to continue business in 1994 and beycnd_ EfLVatLd inventory iLYelSlitIIfCe.a. gt3dtnd phaS6-Cllt:pf B3R)[KYpuCOEtESQSun{eas1blC. (kiits Page 4 of 7 ClasslCode: 0.3-230A 1993 tlni[s 100,000 100,000 % 100.0 100.0 n Philip ~is U.SA. Matei~ls Purdnsing. 1g93 pined AAatr.riei BuyingPFm Five-Year Buying Plan Projection Desotiptiaa BsgnQ 1994 lkris
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SUPPLIER EVALOATION SUPPLIER . Braswey . SPSIGHT USING LOCATION Aich/Lvl/Cab 25 A. COST FACTORS Cost - 1992 crop 50 1. DHL2mm COST/# $26.00/kg (3) Avg.'93 price: $32.25/kg 15 2. VOLUME INCENTIVES 2 15 3. COST SAVINGS PROVIDffi1 3 20 4. PRICE T.xarntuaala 3 TOTAL COST RATING 2.9 35 B. QUAL= FACTDRS 50 1. % REJECTS 4 (0.0%) 25 2. QUALITY CONTROL 3 25 3. FROCBSSABILITY/ MACEISNABILIT4 3 TOTAL QUALITY RATING 3.5 10 C. TOTAL SERVICE RATING 3.0 30 D. TOTAL SECURITY RATING - (SBE PAGS(S) 6 ) 3.2 100~ OVERALL RATING 3.21 Z~`'~gevusoz Page 5 of 7 Class/Code - 03-230A
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wasmm SUPPLIER B =es~ 10 D. SECURITY 1. RAN MA'~'~rar a Paraguayan mint oil Maintains good relations with farmers and distillers 3 5 2. CAPACITY Brazil 500 tons/year . Para. 1000 tons/year 4 . 5 3. FLS7~II,ITY 3 10 4. SUPPLIER INVSHT'ORY Covers PH reqmts v/exist- ' ing stks/oil & crystals 3 10 - 5. PLANTS & LOCATIONS Brazil Paraguay 4 10 6. LBBOR . a. UNION b. CONTRACT EXPIRATION DATE a. SZTUATION d. SCORE 1 1 . 3 5 10 7. ENERGY Electricity 3 NA 8. EPA C~LIANCH N.A. 15 9. F'~N'raT. STRENGTS (SEE PAGE(S) ) • 2 . 10 10. CORPORATS MANAGEMENT STRENGTH 3 15 11. CORPORATE MANAGEMENT 1 C010Mr~'MTZN'~ ' ' 3 100~ TOTAL SECURITY RATING 3.2 sECORITR IIATION Page 6 of 7 esT88tesoz Class/Code 03-23oA
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0 0 9 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAIIF 1988 1989 - 1990 1991 1992 (K) 1993 (P) TO4RlL QIIANTITY 147,000 132,150 183,500 140,000 126,000 100,000 SUPPLIER & % % % g & Brasrtoy 76.2 92.5 85.7 100.0 100.0 Yah Sheng Chong 17.0 7.5 14.3 -- -- Mitsui 6.8 Page 7 of 7 t7SjgS ~~~~z Class/Code 03-230A
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0 OBJECTIVES/STRATEGIMISS[]ES • OBJECTIVE: TO REDUCE 14ATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECQRITY. PROJECTED ANNUAL SAVINGS: $ 208,000 POTENTIALLY STRATEGIES . • TI2SL+TARTF o Continue to monitor the progress of a project in R&D looking at removing the product 1994 from RCB. R&D claims that the pH of the slurry in the RCB sheet process would prohibit any biostatic efficiency contributed by K-Sorbate. - ~ OTHER ISSUES• o PM continues to benefit from KGF contract pricing, although Eastman is not a major supplier to KGP. Hoechst is the majority supplier to KGF, and Eastman agrees to be competitive. o Pricing should be stable through the end of 1993. o Eastman is the only domestic producer and has been forced to invest heavily in their newly acquired plant. Page 2 of 10 Class Code 03-300A 9S Yc36MLL1Gi
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0 Material CodelStrper Gtassi Phi•Morris U.SA. Materials Purchasing 1993 Direct Mnber'rat Buying Plan Five-Year Buying Plan Projection Descriptim Potasmr,msab.bW , Unit of Measum Ibs Foreeast Ut6e • ~ 1993 1994 1995 1996 1997 SuppWierName Units % Units % Units % Units % 1 0 Units % Eastman 172,800 66.7 140,000 625 y 140,000 62.5 y 140,000 62.5 y 140,000 62.5 y Hoech.stCelanese- 86,400 33_3 1f71'84,000 37.5 84,000 37.5 84,000 37.5 84,000 37.5 259,200 100.0 224,000 100.0 224,000 100.0 2_'~4,000 100.0 224,000 100.0 "Redvetian if R&D app:a.es n=amF fiora RGB: ISSUES: LsTgetrcsaz o A project is underway to investigate the feasibility of remouing4he product frum B/t__ Purchasing should encourage completion of this prajectduring 1993. o KGF is one of the largest single aansumers ofi this penduatin the U.S., and PRf enjoys.the: benefit of their contract price. o Long term goal should be to: participatewith the KGF Ingrndients; counc'sF on this, material and en courage the development ot-Eastman asa.supply pxtnerfortheoox+ncit, whilcmaintaining:astrang position with Hoechst. Page 3 of 10 ClasslCode: 03-300IX
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0 SUPPLIER EVALUATSON 0 SUPPLIER Eastman Hoechst Celanese WEIGHT USING LOCATION Pk.500 & B/L Park 500 & BL 15 A. COST FACTORS . 40 1. DELIVERED COST/# $3.05 4 $3.05 4 10 2. VOLUME INCENTIVES 2 2 10 3. COST SAVINGS PROVIDED 2 2 40 4. PRICE LEADERSHIP 3 4 TOTAL COST RATING 3.2 3.6 , 15 B. QUALITY FACTORS 40 1. % REJECTS 0% 5 0% 5 40 2. QUALITY CONTROL 4 4 20 3. PROCESSABILITY/ NACHINABILITY , - 4 4 TOTAL QUALITY RATING 4.4 ' 4.4 10 C. TOTAL SERVICE RATING 2.5 3.0 60 D. TOTAL SECURITY RATING (SEE PAGE(S) 4 ) 3.4 3.1 100% OVERALL RATING 3.43 3.36 g(~+'~SBS..Csc,o. ZZ Page 4 of 10 V [..~ Class/Code 03-300A
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SECURITY EVALUATION WEIGHT SUPPLIER Eastman Hoechst Celanese 10 D. SECURITY 1. RAW MATERIALS Crotonaldehyde Crotonaldehyde and Ketene both produced Acetic Acid KOH 4 in-house. 4 5 2. CAPACITY 11 M lbs. 4 _ 15.4M 1bs. 4 10 3. FLEXIBILITY 2 2 10 4. SUPPLIER INVENTORY - 60 days in the U.S.A. 45 days 3 3 20 5. PLANTS & LOCATIONS Chocolate Frankfurt Bayou, TX. 3 West Germany 2 5 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION . d. SCORE Non-Union 1 ----- 1 Very Good 3 5 Non-Union 1 ----- 1 Very Good 3 . 5 5 7. ENERGY E1ect./Nat.Gas 3 Elect./Nat. Gas 3 10 8. EPA COMPLIANCE 4 3 5 9. FINANCIAL STRENGTH (SEE PAGE(S) 5-7) ~ 3 5 10. CORPORATE MANAG srMRrrr STRENGTH " 3 3 15 11. CORPORATE MANAGEMENT COMMITMENT 4 4 100% TOTAL SECURITY RATING 3.40 3.10 Page 5 of 10 Class/Code 03-300A
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FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLIIRS; ALL DATA AS OF DEC@" 31, 1990 UNLESS OTHBRRIFISE INDICATSD,) VENDOR: Eastman CURRENT RATIO: 1992 1991 1990 1. Enter Current Assets 8,258 8,608 2. Enter Current Liabilities 6,899 7,163 3. Current Ratio (Line 1/Line 2) 1.20 ' 1.20 DEBT TO ASSETS RATIO: 1. Enter Total Debt 18,066 17,388 2. Enter Total Assets 24,170 24,125 3. Debt To Assets Ratio (Line 1/Line 2) 0.75 .72 PROFIT MARGIN ON SALES: 1. Enter Net Income *17 703 2. Enter Sales . 19,419 - 18,908 3. Profit Margin On Sales (Line 1/Line 2) 0.09% 3.7% RETURN ON TOTAL ASSETS: 1. Enter Net Income *17 703 2. Enter Total Assets 24,170 24,125 3. Return On Total Assets (Line 1/Line 2) 0.07% 2.9% EARNINGS PER SHARE: 0.05 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 2.17 Page 6 of 10 Class Code 03=300A O919stusaz
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A VENDOR: Eastman CURRENT RATIO: I 1989 1988 I 1987 A 1. Enter Current Assets 8,591 8,684 6,791 2. Enter Current Liabilities 6,573 . 5,850 , 4,140 3. Current Ratio (Line 1/Line 2) 1.31 1.48 1.64 DEBT TO ASSETS RATIO: 1. Enter Total Debt 17,010 16,184 8,685 2. Enter Total Assets 23,652 . 22,964 14,698 3. Debt To Assets Ratio (Line 1/Line 2) .72 .70 ,59 PROFIT MARGIN ON SALES: 1. Enter Net Income 529 1,397 1,178 2. Enter Sales 18,398 17,034 13,305 3. Profit Margin On Sales (Line I/Line 2) 2.8% 8.2% . 8.9% RETURN ON TOTAL ASSETS: 1. Enter Net Income 529 1,397 1,178 2. Enter Total Assets 23,652 22,964 14,698 3. Return On Total Assets (Line 1/Line 2) 2.2% 6.1% 8.0 EARNINGS PER SHARE: 1.63 4.31% CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. FINANCIAL ANALYSIS WO.RRSHBET (MILLIONS O:F DOLLARS; ALL DATA AS OF DECHI& 31, 1991 UNLESS OTffEHff1SS I2IDIt71TED.) 3.52 Page 7 of 10 Class Code 03-300A zs1ssvusoz
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FINANCIAL ANALYSIS WORRSHSET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEW 31, 1990 UtiLL+SS OTHERWISE ItmltATSD. ) VENDOR: Hoechst Celanese CURRENT RATIO: 1992 -0 1990 1. Enter Current Assets 2,422 2,123 2. Enter Current Liabilities 1,487 1,399 3. Current Ratio (Line 1/Line 2) 1.629 1.52 DEBT TO ASSETS RATIO: 1. Enter Total Debt . , 752 741 2. Enter Total Assets 6,630 6,082 3. Debt To Assets Ratio'(Line 1/Line 2) .113 .122 PROFIT MARGIN ON SALES: 1. Enter Net Income 172 201 2. Enter Sales . 6,794 5,881 3. Profit Margin On Sales (Line 1/Line 2) 2.5 3.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 172 201 2. Enter Total Assets '` 6,630 6,082 3. Return On Total Assets (Line 1/Line 2) . 2.6 3.3% , EARNINGS PER SHARE: I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 8 of 10 Class Code 03-300A [+'J Yc3&V (.-0"Uti
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FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECE01'R 31, 1991 UNLESS OTtIERf1ISE INDICATED.) I VENDOR: Hoechst Celanese 1989 1988 I 1987 CURRENT RATIO: 1. Enter Current Assets 2,227 1,886 ---- 2. Enter Current Liabilities 1,522 1,302 ---- 3. Current Ratio (Line 1/Line 2) 1.46 1.45 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 803 814 860 2. Enter Total Assets 6,062 5,708 5,441 3. Debt To Assets Ratio (Line 1/Line 2) _132 .143 .158 PROFIT MARGIN ON SALES: 1. Enter Net Income 267 250 - 169 2. Enter Sales - 6,016 5,679 4,614 3. Profit Margin On Sales (Line 1/Line 2) 4.4% 4.4% 3.7% RETURN ON TOTAL ASSETS: 1. Enter Net Income 267 250 169 2. Enter Total Assets 6,602 5,708 5,441 3. Return On Total Assets (Line 1/Line 2) 4.4% 4.4% 3.1% EARNINGS PER SHARE: CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I Page 9 of 10 Class Code 03-300A es188DESOZ
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• 0 0 1988 - 92 BIIlING HISTORY ANI) 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 216 M 230 M 241 M 261 M 259 M 259 M SUPPLIER & Monsanto/Eastman 100 100 96 80 67 67 Hoechst Celanese 0 0 4 20 33 33 ~ Page 10 of 10 Class/Code 03-300A Meetcsoz
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1993 DIRECT MAT& BDYING PLAN SUMMARY PAGE Material Code/Super Class 03-330A Description Carbon Dioxide Unit of Measure Ton Std. Cost $ 77.00 Est. $ Purchase 1,386,000 Est. Usage 18,000 Est. Purch. Quantity 18,000 Annual Purchases Est. 1992 Proj. 1993 O ll Vendor Name Units % Units % Comnitment (*) vera Rating 1. Liquid Carbonics 7,840 49 6,5D0 49 2 - Annual 3.40 2. Airco 8,160 51 6,500 51 2 - Annual 3.35 3. Unallocated* 5,000 30 4. 5. 6. 7. 8. 9. 10. Total 16,000 100.0 18,000 100.0 7 * 1. Contract EXPLANATION 2. Purchase Order 3. Other *This volume will be allocated based on the contract proposals submitted to the council for 1993, incorporating Millers surplus volume. . Page 1 of 10 Class/Code 03-330A A roval 7 " ~ Date: d/ / z pp . . _ / i ~ Prepared ~ixon ~-Date: 10 15 92 .491eevusaz C
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• OHJECTIVES/STRATEGISSJISSUES • OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ Undetermined STRATEGIES . TIMETpgLE o Participate in the 1992 Co2 purchasing council negotiations with the following 92/93 objectives: 1) Convince the council that developing supply partnerships with the majors in CO2 is critical to maintaining security and service. 2) Assist the council in developing a bid approach which will be used as par't of a larger evaluation to select primary suppliers at each location. 3) Investigate the feasiblity of developing Miller as a C02 source for PM Inc. Quality issues could delay implementation. o Carefully observe the development of Thermice (Bob Madden is President) in this region. His plan is to develop sourcing and compete with Liquid and Airco in this region. OTHER ISSUES: o NET project- slated to begin production of expanded product in 1993 which will increase PM's total consumption by 1200 Tons that same year. ' o Guaranteed availability of temporary auxillary storage should be a requirement of any supply agreement. o Long term, PM companies leverage with feed gas producers should be used'to drive down costs. Page 2 of 10 Class Code 03-330A
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• Phi'tsflorris U.SA. • Mateerials Purohasingg 19Mpin:ct Material Buying Pfan Five-Year Buying Plan Projection - 1993 1994 1995 1996 1997 Supplier Name Units % Llrvis % Urvts. % Units % Uni[s % LiqOidCarbad[s 10,220 50.0 y 10,a00 50.0 y _ 11,000 50_0 y 11,300 50.0 y t1,370 50.0 y Airco 10,220 50_0 y 10,800 50.0 y 11,000 50.0 y 11,300 50.0 y 11,370 50.0 y 20,440 100.0 21,600 100.0 22,000 100.0 22,600 100.0 22,7A0 100.0 ISSUES: o PM will participate on the C02 purchasFng council, and attempt to: positiuety affeottha<overalf. strategy of the council. a NET is slated to begin production in 1993 increasing PM's consumptiaa. o We need to securee guaranteedd auxillary storage from bottrsrrppliers in the event of another tank outage, since both the M/C and C!C will each havea singfe lasge storage tank. o Bob Madden with Thermice is aggressively in pursuitaf groivirrg, his businessin this nec'on_ ' Th is volu me will be al loeaterx basel on the contract proposals submitted tathts council for 190, incorporatingMillerssurplus; however, the magnitude:el=va{ume page: 3 of 10 Z+9188[7ESOZ swing will notexceett651~"i4'a. Class/Code: t>3-330A
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0 SUPPLIER EVALUATION SUPPLIER Liquid Carbonics Aircc WEIGHT USING LOCATION Ric, B-100, C/C Ric, C/C 20 A. COST FACTORS • 50 1. DELIVERED COST/# $77.00/ton 3 $76.00/ton 3 10 2. VOLUME INCENTIVES 3 3 10 3. COST SAVINGS PROVIDED 3 3 30 4. PRICE LEADERSHIP 2 3 TOTAL COST RATING 2.70 3.00 10 B. QUALITY FACTORS 1. % REJECTS 50 0% 3 0% 3 CO is not currently tested. 50 2. QUALITY CONTROL 3 3 0 3. PROCESSABILITY/ MACHINABILITY N/A N/A • TOTAL QUALITY RATING 3.00 ~ 3.00 20 C. TOTAL SERVICE RATING 4.00 4.00 50 D. TOTAL SECURITY RATING - (SEE PAGE(S) 4 ) 3.55 3.30 100% OVERALL RATING 3.40 3.35 Page 4 of 10 B9T€38tCS0z Class/Code 03-330A
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r WEIGHT SECURITY EVALUATION SUPPLIER Liquid Carbo s Airco 20 D. SECURITY 1. RAW MATERIALS Byproduct:Crude CO2 from NH Chemical Byproduct:Crude CO2 from NH chemical 3, , alcohol, Co-gen, and natural well prod. 3 3, , alcohol, Co-gen, and natural well prod. 3 5 2. CAPACITY . 500 tons/day 4 410 tons/day • 4 10 3. FLEXIBILITY 4 4 15 4. SUPPLIER INVENTORY 1,500 Tons 000 Tons 1 - (300 for PM) 4 , (200 for PM) 3 15 5. PLANTS & LOCATIONS Hopewell, Va. Hopewell Va. - Augusta, Ga. 4 , Augusta, GA 3 5 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE Teamster Local 592 0 10/1/95 1 Stable 3 4 Non-Union 1 N/A 1 Stable 3 5 5 7. ENERGY Elect. 2 Elect. 2 5 S. EPA COMPLIANCE 3 3 5 .9. FINANCIAL STRENGTH (SEE PAGE(S) 5-6) 3 3 5 10. CORPORATE MANAGEMENT STRENGTH 3 3 10 11. CORPORATE MANAGEMENT COMMITMENT 4 4 100% TOTAL SECURITY RATING 3.55 3.30 6919evesoz Page 5 of 10 Class/Code 03-330A
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a - FINANCIAL ANALYSIS WORKSHEET (MILLIONS 0F POUNDS; ALL DATA AS 0F DE 31, 1991 UNLESS OTHET2lFISE IPIDICiITED.) VENDOR: BOC/Airco CURRENT RATIO: 1992 1991 1990 1. Enter Current Assets 1,114 1,035 2. Enter Current Liabilities 1,000 1,043 3. Current Ratio (Line 1/Line 2) 1.11 .99 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 1,708 1,532 2. Enter Total Assets 3,138 2,821 3. Debt To Assets Ratio (Line 1/Line 2) .54 .54 PROFIT MARGIN ON SALES: 1. Enter Net Income 194 242 2. Enter Sales 2,844 2,802 3. Profit Margin On Sales (Line 1/Line 2) 6.8% 8.6% RETURN ON TOTAL ASSETS: 1. Enter Net Income 194 242 2. Enter Total Assets 3,138 2,821 3. Return On Total Assets (Line 1/Line 2) 6.2% 8.6% EARNINGS PER SMARE: 1.64 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 2.05 Page 6 of 10 Class Code 03-330A OLT88VESOZ
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FINANCIAL ANALYSIS wORRSSrnna' (MILLIONS OF POUNDS; ALL DATA AS OF DBCMq&31, 1991 UNLESS OTH@iMISE INDICATE[3.) CURRENT RATIO: 1988 1987 1. Enter Current Assets 1,006 907 879 2. Enter Current Liabilities 971 791 623 3. Current Ratio (Line 1/Line 2) 1.04 1.15 1.41 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,579 1,388 1,217 2. Enter Total Assets 2,773 2,416 2,274 3. Debt To Assets Ratio (Line 1/Line 2) .57 .57 .54 PROFIT MARGIN ON SALES: 1. Enter Net Income 229 205 167 2. Enter Sales 2,822 2,562 2,356 3. Profit Margin On Sales (Line 1/Line 2) 8.1% 8.0 7.1% RETURN ON TOTAL ASSETS: 1. Enter Net Income 229 205 167 2. Enter Total Assets 2,773 2,416 2,274 3. Return On Total Assets (Line 1/Line 2) 8.3% 8.5% 7.3% EARNINGS PER SHARE: 1.97 1.77 1.45 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 10 Class Code 03-330A T4ZSBVCS0Z
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n u VENDOR: CSI/Liqu id Carbonics CURRENT RATIO: FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF POUNDS; ALL DATA AS OF DE 31, 1991 UNLSSS OTFIENIPISE INDICATED.) 1992 1991 n u 1990 1. Enter Current Assets 457 451 2. Enter Current Liabilities 338 318 3. Current Ratio (Line 1/Line 2) 1.35 1.42 DEBT TO ASSETS RATIO: 1. Enter Total Debt 813 920 2. Enter Total Assets 1,479 1,432 3. Debt To Assets Ratio (Line 1/Line 2) _ .55 . .64 n 0 N PROFIT MARGIN ON SALES: 1..Enter Net Income . 53 55 2. Enter Sales 1,615 1,576 3. Profit Margin On Sales (Line 1/Line 2) 3.3% 3.5% RETURN ON TOTAL ASSETS: 1. Enter Net Income 53 55 2. Enter Total Assets ` 1,479 1,432 3. Return On Total Assets (Line 1/Line 2) 3.6% 3.8% EARNINGS PER SHARE: 1.54 1.58 CONPIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 8 of 10 y ry~T ,g.~± ~ay Class Code 03-330A
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FINANCIAL ANALYSIS WORICSHEET (MILLIONS OF POUNDS; ALL DATA AS OF DE 31, 1991 IIMLESS OTflSffi1ISE IPDICL4TBD.) VENDOR: CBI/Liquid Carbonics 1989 1988 1987 -T CURRENT RATIO: 1. Enter Current Assets 429 431 406 2. Enter Current Liabilities 291 281 240 3. Current Ratio (Line 1/Line 2) 1.47 1.53 1.69 DEBT TO ASSETS RATIO: 1..Enter Total Debt . 975 983 736 2. Enter Total Assets 1,359 1,343 1,265 3. Debt To Assets Ratio (Line 1/Line 2) .72 .73 .58 n PROFIT MARGIN ON SALES: 1. Enter Net Income 34 28 18 2. Enter Sales 1,495 1,376 1,161 3. Profit Margin On Sales (Line 1/Line 2) 2.3% 2.0% 1.6% 0 w RETURN ON TOTAL ASSETS: 1. Enter Net Income 34 28 18 2. Enter Total Assets 1,359 1,343 , . 1,265 3. Return On Total Assets (Line 1/Line 2) 2.5% 2.1% 1.4% EARNINGS PER SHARE: .94 .58 Page 9 .38 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 4f.r1 /+00 V uSYJz of 10 Class Code 03-330A
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0 0 • 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY (tons) 17.7 M 19.7 M 19.9 M 19.7 M 16.0 M 18.0 M SUPPLIER , % % Airco 50.1 49.0 50.0 48.0 51.0 65/35 Liquid Carbonics . 49.9 51.0 50.0 52.0 49.0 65/35 ~Z,T99vc30z Page 10 of 10 Class/Code 03-330A
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0 1993 DIRECT MATEFRL BUYING PLAN SUMMARY PAGE Material Code/Super Class 03-350A Description Aqua Armnonia Unit of Measure lb. Std. Cost $ .1509 Est. $ Purchase 279,165 Est. Usage 1,850,000 Est. Parch. Quantity 1,850,000 is Annual Purchases - Est. 1992 Proj. 1993 Vendor Name Units ~ - Units % Commitment (*) Overall Rating 1. La Roche, Ind. 1,800,000 100 1,850,000 100 2-Annually 4.00 2. 3. 4. 5. 6. 7. 8. 9. 10. ` Total 1,800,000 100.0 1,850,000 100.0 * 1. Contract EXPLANATION SLTg8VCS0z 2. Purchase Order 3. Other Page 1 of 8 Class/Code 03 Approval ~y.~~ Date: Z i `3z. Prepared`~y G. L. Ni•xon-Zf'~Date:
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e OBJECTIVES/STAATEGIL3JISSUSS Is OBJECTIVE: TO REDUCE NATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURIT'Y. PROJECTED 1993 SAVINGS: $ Undetermined STRATEGIES TIMETABLE o Investigate the feasibility of entering into a evergreen contract with LaRoche, and 92/93 tie an annual contract price to some average annual an¢nonia price, less a discount, plus blending and freight. In essense developing a Toll arrangement. ~ ~ ^ OTHER ISSUES: o We have enjoyed stable pricing for the last five years while ammonia prices have been quite volatile. The purpose of the Tolling mechanism is to assure both companies of fair pricing over the entire contract period. Page 2 of 8 Class Code 03-350A °4TgBibESOZ
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~ i oBJECmxvES/smt~EGIES/ISSUES • PURCHASING OBJECTIVES: 1) Investigate the feasibility of contracting at a lower delivered price. 2) Develop a stronger relationship with LaRoche Management. 3) Consolidate this spec with the reagent grade NH3. PURCHASING STRATBGIES: 1) Determine what LaRoche needs to do, or what P.M. can do for LaRoche to achieve a lower cost, and pursue that goal. 2) Visit and evaluate LaRoche with BL Plant's Q.A. Manager. 3) Arrange for LaRoche to visit the BL Plant and determine any additional service needs. 4) Attempt to qualify this product as a replacement for the reagent grade NH3 used in drmus at the Flavor Center. This will save money, operations problems, and reduce safety risks. 5) Continue to encourage LaRoche management to come in with a Market presentation annually. Page 3 of 8 Class Code 03-350A
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• Philip W-s U.S.A_ ~ Materials Purohasing 1M3 Direct 1Fate€ial Buqing.Ptarr Five-Year Buying Plan Projection- MaferialCodrJSuperClas03-35QCi Descriptporr AcpreousAmrryanir Unit of Measure Ibs Fort:oast Datt:- November 1991t 1993 1994 1995 1996 1997 Supplier Name Units % Units % 1 0 Units % lJrits % Urits % LaROChe 1,850,000 100.0 y 2,010,000 t00A y 1,980,000 100A y 1,980,000 100.1] y 2,040.000 10a0 y 1,850,000 100.0 2,010,000 100.0 1,980,000 100.0 1,980,000 100.0 2,040,000 100.0 I ISSUES: o A sotC~ sOurOC parblCfSfllpttaw9YOr1[ed 'Qnlto .1/0{~NIttR~7f.~17S'fOE IIIfnyjl.7rT. TflesE(1mmORGt.'1M.p[Or~lOtlQm facility, but two storagn and blending. sites_ We use only.6%o€ their totat oapatsity, and.thrair capaoity, represents 5% of the tatal U.S. merchant market capacity. o Attempt to negotiate a long term agreamentand.tie our annual contract prioetto tha:averagmatrnual FOB price for NH3, less a discount, plus a toll rate for-blendirrg; plus height. Page 4 of 8 ClasslCode.: C:i-35E1A
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• SUPPLIE<2OALUATION • SUPPLIER ' ' LaRoche USING LOCATION A. COST A DELIVERED COST/UOM 1_ $.1506 ' 2. 3. REBATE OFFERED (YES/NO) No OVERALL COST (A/U) A B. QUALITY 100% ~ ACCEPTANCE • A OVERALL QUALITY (A/U) A C. SERVICE (A/U) A D. SECURITY (FROM PAGE(S) ) A/U OVERALL EVALUATION (NUMBER OF "A's"; 1-4) A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL A 4 Page 5 of S Class/Code 03-350A Gh.e i'l}B L' GS0~'i
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e SECUHITYVUATION SUPPLIER LaRoche SECURITY Natural Gas via 1. RAW MATERIALS pipeline 2. PLANTS & LOCATIONS Production - Cherokee, Ala. Blending - Suffolk Virginia 3. LABOR a. UNION Aluminum Brick & Glass International b. CONTRACT EXPIRATION DATE- August 30, 1994 c. SITUATION Very Good 4. ENERGY SOURCES Natural Gas 5. CAPACITY (A/U) A • 6. FLEXIBILITY (A/U) A 7. EPA COMPLIANCE (A/U) A 8. FINANCIAL RATING (A/U) A 9. CORPORATE MANAGEMENT - STRENGTH (A/U) A 10. CORPORATE MANAGEMENT COMMITMENT (A/U) A OVERALL SECURITY (A/U) A A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL Page 6 of 8 Class/Code 03-350A 43cs3198veSoZ
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0 VENDOR: LaRoche CURRENT RATIO: FINANCIAL ANALYSIS WORRSHEET (MILISONS OF DOLLAHS; ALL DATA AS OF DE 31, 1991 tRII,BSS OTMM1FISE ItmICATBD. ) 1991 I 1990 1989 1. Enter Current Assets 36.6 47.4 43.4 2. Enter Current Liabilities 24.4 32.0 32.6 3. Current Ratio (Line 1/Line 2) 1.50 1.48 1.33 DEBT TO ASSETS RATIO: 1. Enter Total Debt 73.5 81.5 79.7 2. Enter Total Assets 87.2 99.6 84.5 3. Debt To Assets Ratio (Line 1/Line 2) .84 .82 .94 M PROFIT MARGIN ON SALES: 1. Enter Net Income (4.4) 5.1 4.4 2. Enter Sales 157.4 - 147.8 157.6 3. Profit Margin On Sales (Line 1/Line 2) (2.8%) 3.4% - 2.8% RETURN ON TOTAL ASSETS: 1. Enter Net Income (4.4) 5.1 4.4 2. Enter Total Assets 87.2 99.6 84.5 3. Return On Total Assets (Line 1/Line 2) (5.0%) 5.1% 5.2% . EARNINGS PER SNARE: I I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 8 Class Code 03-350A 'YC3~f36~[..~~(!Qi
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• 1988 - 92 BUYING HISTORY AHA 1993 BUYiNG PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 1.41 M 1.56 M 1.69 M 1.84 M 1.80 M 1.85 M SUPPLIER LaRoche 100 100 100 100 100 100 Page 8 of 8 Z8T[n9Ve:S0Z Class/Code 03-350A
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1993 DIRECT HAAL BUYING PLAN SUMMARX PAGE Material Code/Super Class 03-360A Description DAP Unit of Measure lb. Std. Cost $ .6103 Est. $ Purchase 3,051,500 Est. Usage 5,000,000 Est. Purch. Quantity _ 5,000,000 • Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units _ , Units % CoTmitment (*) overall Rating 1. Monsanto 2,948,000 61 3,000,000 60 1 - (3 years) 3.49 2. Rhone Poulenc 1,852,000 39 2,000,000 40 1 - (3 years) 3.15 3. 4. 5. 6. 7. S. 9. 10. Total 4,800,000 100.0 5,000,000 100.0 * 1. Contract EXPLANATION £919gKSOZ 2. Purchase Order 3. Other " ~ - Page 1 of 10 Class/Code 03-360A Approval Date:lZ ib z.. Prepared y G. L. Nixon Date:
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OBJECTIVB'S/STRATSGI0 TSSIISS Purchasing Objectives o Continue to maximize supply security in a very tight market. o Stabilize price over the next two years, minimizing price increases in a virtually sold out market. Strategies to Meet Objectives o Continue to source significant share from each of the only two U.S. producers of food grade DAp. o Currently negotiating 3 year contracts with both suppliers_ o KGF council may provide synergistic advantages in phosphates. n ~ Future Supply outlook In 1991, 16% of the effective capacity for P4 was lost, and capacity utilization is expected to exceed 95% for the next two years. Food Grade DAP is a niche market derivative and supply should be adequate for contract customers. Inventory Policy 2-3 weeks. Compression caking is a real problem, which prevents larger safety stock to be held by either PM or our ~ suppliers. Page 2 of 10 - - Class Code 03-360A
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f~is U.SA. • S Philip g Ma6eriala Purdta~in 1993 dDirect iWa6eri.F f3uying Pl.rr Five-Year Buying Plarr Projection Matieria! CodeFSupsc CFau 03-360h. Descriptim diiaammonium Phoaplxte. Unitof Measure Ibs Forecast Datn Qctobar21,19g2 T993 1994 1995 1996 1997 Sl$)wiEY Nflm@ Units % tlnits % Lnlt3 % tJftits % tJn1t3 % Monsanto 3,000.000 60.0 y 3,000,000 60.0 y 3,000,000 60.0 y 3,000,000 60.0 y 3,000,000 60A y Rhone-Poulenc 2,000,000 40.0 y 2,000,000 40_0 y 2,000,000 40.0- Y P,000,000 40.0 y 2,000,000 40.0 Y O.0 O.0 0.0 0.0 0.0 O.O 0.0 0.0 0.0 0.0 0.0 0.0 0_0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0, 0.0 0.01 0.0 0.0 O_0 0.0 0.0 0_0 0.0 o.o o.0 0.0 0.0 0.0 5,000,000 100.0 5,0oO,ooo 100.0 5,000,000 100.0 5,000,000 100_0 5,000,000 100.0 ISSUES: o Negotiate langternr agreementswitlr both supptiersm a. Monsanto - renew currentt agreement to an Evergreen. b. Rhone-Poulenc-enterinto3yearagneementatadiscou.ntcompetitivewithMonsanta. o We use 12-14% of combined capacity of bath campanies. o The KGF council on Phosphates is.currentlyevaluating consotidationfronrfeurtatvo suppfiers:of afk phosphate:compounds_ TheremaybeadvarttagesifPMpartfcipatet},butse.ouri.ty.woulctdictatumaintainingbottx - Monsanto and Rhone-Poulene. Page 3 of 10 Class(Code: 03-360A
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0 0 SUPPLIER EVALUATION rn SUPPLIER Monsanto Rhone Poulenc WEIGHT USING LOCATION P500 & B/L P500 & B/L 25 A. COST FACTORS ' 40 1. DELIVERED COST/# $.5829 4 $.6162 3 30 2. VOLUME INCENTIVES 4 3 10 3. COST SAVINGS PROVIDED 3 3 20 4. PRICE LEADERSHIP 3 2 TOTAL COST RATING 4.00 3.10 .. .. 20 B. QUALITY FACTORS DAP is not currently 30 1 1. % REJECTS 0% 3 0% 3 tested on incoming 40 2. QUALITY CONTROL 4 4 30 3. PROCESSABILITY/ MACHINABILITY . 2 ' 2 • TOTAL QUALITY RATING 3.10 3.10 15 C. TOTAL SERVICE RATING 3.00 3.00 40 D. TOTAL SECURITY RATING (SEE PAGE(S) 4 ) 3.55 3.25 100% OVERALL RATING 3.49 3.15 q&Te8vC30Z Page 4 of 10 C1ass/Code 03-360A
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SECURITY EVALUATION WEIGHT SUPPLIER Monsanto Stauffer 15 D. SECURITY 1. RAW MATERIALS Phosphorus A1n[nonia Phosphorus Amnonia Thermal Phos-Acid 4 Wet Acid 4 . 10 2. CAPACITY 25 M lbs. 15 M lbs 3 . 3 5 3. FLEXIBILITY - 2 2 5 4. SUPPLIER INVENTORY 3 3 15 5. PLANTS & LOCATIONS Trenton Mi Chicago Ill , 4 , . 3 15 6. LABOR - a. UNION b. CONTRACT E%PIRATION DATE c. SITUATION d. SCORE OCAW 0 1 11/23/95 Good 3 4 OCAW 0 1/16/96 1 Good 3 4 5 7. ENERGY Elect./Nat.Gas 3 Elect./Nat.Gas 3 10 8. EPA COMPLIANCE 4 3 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 5&6) 3 3 5 10. CORPORATE MANAGEMENT STRENGTH 3 3 5 11. CORPORATE MANAGEMENT COMMITMENT 4 3 100% TOTAL SECURITY RATING 3.55 3.25 hC319p V i,.sM.1C. Page 5 of 10 Class/Code 03-360A I I
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0 FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOT.rauS; ALL DATA AS OF DECV 31, 1991 UNLESS OTffitI/IS6 IHDI[BTED.) VENDOR: Monsanto CURRENT RATIO: 1991 I 1990 1989 1. Enter Current Assets 3,711 3,513 3,248 2. Enter Current Liabilities 2,175 2,190 1,922 3. Current Ratio (Line 1/Line 2) 1.71 1.60 ' 1.69 DEBT TO ASSETS RATIO: 1. EnterTota1 Debt . 5,573 5,147 4,663 2. Enter Total Assets 9,227 9,236 8,604 3. Debt To Assets Ratio (Line 1/Line 2) .60 .56 .54 PROFIT MARGIN ON SALES: 1. Enter Net Income 296 ' 546 679 2. Enter Sales 8,864 8,995 8,681 3. Profit Margin On Sales (Line 1/Line 2) 3.3% 6.1F6 7.8 m RETURN ON TOTAL ASSETS: 1. Enter Net Income 296 546 679 2. Enter Total Assets 9,227 - 9,236 8,604 3. Return On Total Assets (Line 1/Line 2) 3.2% 5.9% 7.9% EARNINGS PER SHARE: 2.33 4.23 CONFIDENTIAL..Not to be,removed from Philip Morris Materials Purchasing Department. 5.01 Page 6 of 10 Class Code 03-360A
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A FINANCIAL ANALYSIS WORRSHBET (MILLIONS OF DOLLARS; ALL DATA AS OF DE 31, 1991 UNLESS 6TIffi2RISE INDICATED.) VENDOR: Monsanto CURRENT RATIO: 1988 I 1987 1986 1.Enter'Current Assets 3,097 3,003 2. Enter Current Liabilities 1,980 1,800 3. Current Ratio (Line 1/Line 2) 1.56 1.67 • DEBT TO ASSETS RATIO: 1. Enter Total Debt 4,661 4,554 2. Enter Total Assets 8,461 8,455 3. Debt To Assets Ratio (Line 1/Line 2) .55 .54 PROFIT MARGIN ON SALES: 1. Enter Net Income 591 436 ' ' 2. Enter Sales 8,293 7,639 3. Profit Margin On Sales (Line 1/Line 2) 7.1% 5.7% RETURN ON TOTAL ASSETS: 1. Enter Net Income 591 436 2. Enter Total Assets 8,461 8,455 3. Return On Total Assets (Line 1/Line 2) 7.0% 5.2% EARNINGS PER SHARE: 4.14 2.82 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 10 Class Code ®619sV LJYJ4
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0 FINANCIAL ANALYSIS WORRSHEET (HILLIONS OF FRANCS; SLL DATA AS OF DECEl4~ 31, 1991 DNLESS OTIffiRIFISH INDICATED.) VENDOR: Rhone-Poulenc CURRENT RATIO: 1991 I 1990 1989 1. Enter Current Assets 42,742 41,110 35,839 2. Enter Current Liabilities 40,738 41,861 30,349 3. Current Ratio (Line 1/Line 2) 1,05 .98 . 1.2 DEBT TO ASSETS RATIO: 1. Enter Total Debt 88,055 88,100 61,910 2. Enter Total Assets 113,293 109,147 83,182 3. Debt To Assets Ratio (Line 1/Line 2) .78 .81 .74 PROFIT MARGIN ON SALES: 1. Enter Net Income 2,004 1,942 4,092 2. Enter Sales . 83,817 78,810 73,068 3. Profit Margin On Sales (Line 1/Line 2) 2.4% 2.5% 5.6% RETURN ON TOTAL ASSETS: 1. Enter Net Income 2,004 1,942 4,092 2. Enter Total Assets 113,293 109,147 83,182 3. Return On Total Assets (Line 1/Line 2) 1.8% 1.8% 4.9% EARNINGS PER SHARE: 26 25 I 66.2 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 8 of 10 Class Code 03-360A OsTsevusoz
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FINANCIAL ANALYSIS WORRSH6S'P (MILLIONS OF DOLLARS; ALL DATA AS OF pL: 31, 1991 IItbSSS OTNBRIFISH INDICATED.) VENDOR: Rhone-Poulenc 1988 1987 CURRENT RATIO: ! 1986 1. Enter Current Assets 30,420 28,321 2. Enter Current Liabilities 21,670 21,962 ' 3. Current Ratio (Line 1/Line 2) 1.4 1.3 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 48,881 43,960 2. Enter Total Assets 67,688 60,069 3. Debt To Assets Ratio (Line 1/Line 2) .72 .73 . PROFIT MARGIN ON SALES: 1. Enter Net Income 3,457 2,360 2. Enter Sales 65,334 56,159 3. Profit Margin On Sales (Line 1/Line 2) 5.3% 4.2% RETURN ON TOTAL ASSETS: 1. Enter Net Incame ' 3,457 2,360 2. Enter Total Assets - 67,688 60,069 3. Return On Total Assets (Line 1/Line 2) 5.1% 3.9% EARNINGS PER SHARE: 63.3 50.3 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. '? tY6Y9BVua'l/<i Page 9 of 10 Class Code 03-360A
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0 0 0 1988 - 92 BUYING HISTORY AtiD 1992 BUYING PLAN 1988 1989 1990' 1991 1992 (E) 1993 (P) TOTAL QUANTITY . 4.13 M 4.05 M 4.70 M 4.93 M 4.8 M 5.0 M SUPPLIER $ % % Monsanto 63.8 58.0 . 61.0 61.0 61.0 60.0 Rhone-Poulenc 36.2 42.0 39.0 39.0 39.0 40.0 Page 10 of 10 Class/Code 03-360A zsTQaVCsaz
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1993 DIRECP MATEI6 BUYING PLAN SUMMARY PAGE - Material Code/SuperClass 03-490A Description Candy Unit of Measure lb. Std. Cost $ .2647 Est. $ Purchase 4,446,960 Est. Usage 16,800,000 Est. Parch. Quantity 16,800,000 ® Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units ~ Units ~ Cosmitment (*) Overall Rating 1. Domino 8,150,000 50 8,400,000 50 1 - Annual (Toll) 2. Savannah 8,150,000 50 8,400,000 50 1- Annual (Toll) 3. 4. 5. 6. 7. 8. 9. 10. Total 16,300,000 100.0 16,800,000 100.0 * 1. Contract 2. Purchase Order 3. Other ERPLANATION P.M. U.S.A. in included in the Tolling contracts Page 1 of 10 held by KGF. Class/Code 03-490A Approval . Y-sC_...~ Date:/ Prepared y G. L. Nixon Date: 11/16/92 esTGaVUsaz
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• OHJECTIVES/STRATEGI* ISSUES . OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUAiSTY, SSRFICE, OR SECURITY. PRO78G'PSD 1993 SAVINGS: $ UndeteCmined STRATEGIES- TIMSTABLE o Purchase 100% of PMUSA's reqairement through the purchasing cooncil benefiting fre@ low raw 1994 sugar cost, and toll rates. Continue to assist the council in the selection of Sagar SSE's. The annual synergy savings on the toll rate alone are $321M; already inaarpornted into standard. o Continue to work with engineering and the M/C and C/C to insta7.l a bnik sugar hand3;.+e syatem. 1993 Cost saving potential of $150M/year on raw material, and reduced handling and e.o++onm+++pl waste savings are significant. M/C installation should be eomplete by 2Q93 and yield 19943 savings of $50M for 2nd half. OTHER ISSUES: o R&D is looking at isosweet aa a replacement for sagct. Potential cost savings: f2.25H o The purchasing council has a new chai~, Cleveland Marsh, former Director of the USDlA sugar program. o Market Outlook - Domestic and World should continue to be very soft, with sappliea plentiful and demand flat. Page 2 of 10 Class Code 03-490A PsTeeVCs0z
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O Philip~ s U.S A. • Material~l'urchasing Material CodelSuper (7ass 03-490A. Unit of Measure 1b. 1Mi Direct Material Buying Plan Five Year Buying Plan Projection Description Candy Forecast Date Norember, 1892 1993 1994 1995 1996 1997 SupplfertJame Units % Urrts % Ukits % LkNts % Units 96 Domno 8,400,000 50.0 y 8,650,000 50.0 y 8,750,000 50_0 y 8,900,000 50.0 y 9,000,000 50.0 y Savarnah 8,400,000 50.0 y 8,650,000 50.0 y 8,750,000 50.0 y 8,900,000 50.0 y 9,000.000 50.0 y 16,800,000 100.0 17,300,000 100.0 17,500,000 100.0 ' 17,800,000 100.0 18,000.000 10U.0 ISSUES: o Continue purchases of domestic and world sugar through the joint purchasing council. 0 Assist engineering in developing bulk handling systems at MlC, C/C and possibly Louisville. o Observe the development of beet sugar refineries. o Both of PM's sugar suppliers will most likely be selected by the council of SSA's. Page 3 oF i0 SG19BS7~`'Oati.. Class/Coda; 03-490.4
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0 SUPPLIER EVALUATION 0 SUPPLIER Domino Savannah/Colonial PiSIGHT USING LOCATION Richmond Rich, Lv1, Cab 30 A. COST FACTORS Toll Rate Only Toll Rate Only 60 1. DELIVERED COST/k 5.59/cwt 4 4.85/cwt 5 10 2. VOLUME INCENTIVES 3 3 10 3. COST SAVINGS PAOYID'SD 4 4 j 20 4. PRICE LEADERSHIP 4 4 TOTAL COST RATING 3.90 4.50 30 B. QUALITY FACTORS 1. % REJECTS 33 4 3 33 2. QUALITY CONTROL 3 3 33 3. PBOCSSSABII.ITf/ HACBINABII,ITY 3 3 TOTAL QUALITY RATING 3.33 3.33 10 C. TOTAL SERVICE RATING 4.00 4.00 30 D. TOTAL SECURITY RATING ' (SEE PAGE(S) 5 ) 3.80 3.70 100% OVERALL RATING 3.70 3.90 Page 4 of 10 q6TgeVcS0Z C1ass/Code 03-490A
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WEIGHT SUPP7,IER Domino • Savannah D. SECURITY Raw Sugar Raw Sugar . 10 1. RAW NATHEtTAr.a 25% import 40% Import 75% Domestic 60% Domestic Varies widely 3 Varies Widely 3 10 2. CAPACITY 6.Ommlbs/day(Baltimore) S.Smmlbs/day(Savannah) 16.Ommlbs/day total 4 11.7aelbs/day total 4 NA 3. FLSXIBIISTY --- --- 10 4. SUPPLIER INVENTORY 120-150 mmlbs/raw 200-250 m]bs raw 4 days refined 3 4 days refined 3 20 5. PLANTS & LOCATIONS Baltimore 6.Ommlbs Savannah 5.5 mmlbs 6ramercy, IA 3.6mm1.bs Brooklyn 4.2amlbs 3 Chalmette 5.8®lbs 4 10 6. LABOR - a. UNION Refinery workere 0 Non Union 1 b. CONTRACT EXPIRATION DATE . 12/2/94 1 1 c. SITUATION Good 3 3 d. SCORE 4 5 10 7. ENERGY Natural Gas, #6 oil 3 Coal,Gas or #6 oil 3 NA 8. EPA COAPLIANCE --- --- 10 9. FINANCIAL , 4 4 STRxw[;TR (SEE PAGE(S) 6-9 ) 10 10. CORPORATE MANAGERKiT STRENGTH 4 4 10 11. CORPORATE NANAGEMENT COMMITMENT 5 5 100% SOTAL SECURITY RATING 3.80 3.70 Page 5 of 10 Class/Code 03-490A 4sT9etcsoz
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(MILLIONS OF POUNDS; ALL DATA AS OF DECEl4BM 31, 1991 UNLESS OTHERWISE INDICATED.) CURRENT RATIO: 1. Enter Current Assets 954 880 892 2. Enter Current Liabilities 755 699 882 3. Current Ratio (Line 1/Line 2) 1.26 1.26 1.0 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1378 1233 1470 2. Enter Total Assets 2113 1817 1953 3. Debt To Assets Ratio (Line 1/Line 2) .65 .68 .75 PROFIT MARGIN ON SALES: 1. Enter Net Inaame 146 177 113 2. Enter Sales . 3263 3432 3360 3. Profit Margin On Sales (Line 1/Line 2) 4:5% , 5.2% 3.4% RETURN ON TOTAL ASSETS: 1. Enter Net Inaome 146 177 113 2. Enter Total Assets 2113 1817 1953 3. Return On Total Assets (Liae 1/Line 2) 6.9% 9.7% 5.86 EARNINGS PER 9ffiIRH: L .33 .30 CONFIDENTIAL..Not to be remaved from Philip Norris Materials Purchasing Department. .27 Pege 6 of 10 Class Code 03-490A BGT@BVLSaz
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(MILLIONS OF POUNDS; ALLrDATA AS OF DE 31, 1991 DNLESS OTHERwISE INDICATED.) ' V~DOR: Tate & Lyle/Amstar * 1988 * CURRENT RATIO: 1. Enter Current Assets • S61 2. Enter Current Liabilities 593 3. Current Ratio (Line 1/Line 2) 1.5 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1254 2. Enter Total Assets 1750 3. Debt To Assets Ratio (Line 1/Line 2) .72 PROFIT MARGIN ON SALES: 1. Enter Net Incrome 70 2. Enter Sales 2088 3. Profit Margin On Sales (Line 1/Line 2) 3.4% RETURN ON TOTAL ASSETS: 1. Enter Net Inaome 70 2. Enter Total Assets 1750 3. Return On Total Assets (Line 1/Line 2) 4.0% EARNINGS PER SBARE: .22 I I I CONFIDFNTIAL..Not to be removed from Philip Morri's Materials Purchasing Department. Page 7 of 10 Class Code 03-490A *Tate & Lyle acquired Amstar GGTeetFF;Soz
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(HILLIONS OF DOLiARS; ALL AATA AS OF 31, 1991 UNLESS OTSBEFISE IPDICATE6.) Amk + VEr^ N:R Savannah 1991 1990 1989 'CIIRRENt' RATIO: 1. Enter Current Assets 357 310 319 2. Enter Current Liabilities 223 179 201 3. Current Ratio (Line I/Line 2) 1.60 1.73 1.59 . DEBT TO ASSETS RATIO: 1. Enter Total Debt 358 _ 295 312 2. Enter Total Assets 582 496 482 3. Debt To Assets Ratio (Line, 1/Line 2) .62 .59 .65 PROFIT MARGIN ON SALES: 1. Enter Net Income 38 49 41 • 2. Enter Sales 1200 1214 1097 3. Profit Margin On Sales (Line 1/Li.ne 2) 3.2% 4.0% 3.7% RETURN ON TOTAL ASSETS: 1. Enter Net Income 38 49 41 2. Enter Total Assets 582 496 482 3. Return On Total Assets (Line 1/Line 2) 6.5% 9.9% 8.54 EARNINGS PER SHARE: 1.43 I 1.80 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. I 1.53 Page a of 10 Class Code 03-490A I QOz9gtcsaz
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(MILLIONS OF DOLLARS; ALL DATA AS OF DECEW 31, 1991 UNLESS OTHE[FMISE INDICATED.) Ahk VENDOR: Savannah CURRENT RATIO: 1988 1. Enter Current Assets 260 2. Enter Current Liabilities - 166 3. Current Ratio (Line 1/Line 2) 1.57 DEBT TO ASSETS RATIO: 1. Enter Total Debt 261 2. Enter Total Assets 395 3. Debt To Assets Ratio (Linel/Li.ne 2) .66 PROFIT MARGIN ON SALES: 1. Enter Net Incame 20 2. Enter Sales 917 3. Profit Margin On Sales (Line 1/Line 2) 2.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income 20 2. Enter Total Assets 395 , 3. Return On Total Assets (Line 1/Li.ne 2) 8.5% 1 EARNINGB PER SHARE: .75 I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 9 of 10 Class Code 03-490 I T©Z88vLsoz
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w N 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 15.9 H 15.6 H 16.3 H 16.1 M 16.3.H 16.8 FI SUPPLIER % D®ino 45.0 45.1 48.0 50.0 50.0 50.0 savannah 55.0 54.9 52.0 50.0 50.0 50.0 Page 10 of 10 Class/Code 03-490A zozesVcSoz
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• 1993 DIRSCT MATIC BUXING BIdSN • , SUMMARY PAGE - Material Code/Super Class 03-S10A Description Lass Unit of Measure kg Std. Cost $ 33.00 Est. $ Purchase 462,000 Est. Usage 14,000 Est. Purch. Quantity 14,000 Annual Purchases Est. 1992 Proj. 1993 Supplier Name Units ~ Units & Commitment (*) Overall Evaluation 1. Ajinomoto 10,000 71.4 4,000 28.5 2 - Annual 2.86 2. Degussa 2,000 14.3 0 0 3. Monsanto 2,000 14.3 6,000 43.0 2 - Annual 3.71 4. Unassigned * 4,000 28.5 5. 6. 7. 8. 9. 10. I Total 14,OD0 100.0 14,000 100.0 * 1. Contract ' Unassigned volume will most likely go to Monsanto, but we are currently qualifying their process. 2. Purchase Order 3. other Page 1 of 0 Class/Code 03-510A Approval Q, y,~ . 6 v Date: t6 Preparedlny~ G. L. Nixon Date: 11/6/92 sozsgvESOz
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0 PURCHASING OBJECTIVES: o Strenthen long-term supply security o Reduce costs o Reduce inventory oBJECTI9EPTRATEGSES s STRATEGIES TO ML+L+TOHJECTIVES• o Develop and qualify Nutrasweet as_a sole source supplier with a second back-up manufacturing facility. o Develop a cost formula with Nutrasweet to assure long-term cost control. Initial contract should be $30-32/kg. depending on ultimate yields. - FUTURE SUPPLY OATIAOK- w a o Excellent if Nutrasweet manufacturing process qualification is successful. They are basic in aspartic acid, the precursor for this product and aspartame. They have just signed long-term contracts with KGF, Coke, and Pepsi for aspartame (Nutrasweet). Ajinomoto and Degussa will continue supplying Lass to the pharmaceutical industry. If qualification is unsuccessful, then supply will be adequate only at higher prices. INVENTORY POLICY: . o Currently it's 3-4 months due to long lead time of imported product. o Proposed: 1-2 months at Philip Morris and 6-8 months at Nutrasweet. Page 2 of 8 Class Code 03-510A ~ozea~ESOz
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Philip 41kris USA. Materials Purehasing 1993 Direct Material Buying.Ptan Five-Year Buying Plan Projection Material Cade/Supsr Ctass: 03-510A. Descriptiort Lass. Unit of Mersure. lbs. Forecast.Datte fdovember 198`2_ • 1993 1994 1995 1996 1997 Supplier Name tJnits % Units % tlniis % Units % Units Ajinomoto 4,000 25.6 0 0.O 0 0 .0 0 O.0 0 0.0 Monsanto 6,000 42.9 15,000 100.0 y 15,000 100.0 y 15,000 100A y 15,000 100.0 y Unassigned 4,000 28.6 0 0.0 0 0.0 0 0.0 0 0.0 14,000 100.0 15,000 100.0 15,000 100.0 15,000 100.0 15,000 100.0 ISSUES: o Monsanto's manufacturing process qualification is nearly complate. o Ajinomoto and Degussa are off-shore sources, and questionable in termsof long-term security_ o Monsanto offers a cost, service, and securityaduantrge. SOZBg~>'SOz Page 3 of B Class/Code; 03-510A
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0 • SUPPLIER EVALUATION 0 SUPPLIER Ajinomoto Monsanto YIEIGHT USING LOCATION Park 500 Park 500 20 A_ COST FACTORS 50 1. DELIVERED COST/* 3 (36.00) 4 (34.50) ' 20 2. VOLUME INCENTIVES 3 4 n/a 3. COST SAVINGS PROVIDHD 30 4. PRICE LEADERSHIP 2 - 3 TOTAL COST RATING 2.70 3.70 20 S. QUALITY FACTORS - 33 1. % RSJECTS 4 * 3 * 33 2. QUALITY CONTROL 3 4 33 3. PROCESSASILITY/ MACHINAUILITY 4 4 TOTAL QUALITY RATING 3.60 3.60 10 C. TOTAL SERVICE RATING 2.50 * 3.00 • 50 D. TOTAL SECURITY RATING - (SEE PAGE(S) ) 2.70 3.90 100~ OVERALL RATING 2.86 3.71 a * No information yet. Page 4 of 8 Class/Code 03-510A 9QZ98fi£SUz-
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SECORITY EVALUATION WEIGBT SUPPLIER Ajinomoto Monsanto 10 D. SECURITY 1. RAW MATERIALS L-aspartic acid captive N8 - purchased L-Aspartic from Aspartic Acid used Enaymatic microbiologi- for Nutrasweet cal reaction 3 4 10 2. CAPACITY 30,000 kgs/year 50,000 kgs/year 3 4 NA 3. FLffi{IDILITY N.A. Contingent Manufacturing 10 4. SUPPLIER INVENTORY Inv.1,000 kgs in Raleigh x 6000 kgs . NC when reg.by agrmt 2 4 20 5. PLANTS & LOCATIONS Tokyo, Japan Georgia 2 4 10 6. LAHOA - a. UNION Company Union 0 b. CONTRACT EXPIRATION DATE 1 c. SITUATION _ 3 d. SCORE 4 4 10 7. ENERGY Electricity/Some Steam 3 Electricity/Oil 3 NA 8. EPA COMPLIANCE N.A. N.A. 10 9. FINANCIAL STRENGTN (SEE PAGE(S) 3 4 10 10. CORPORATE MANAGEMENT STRENGTH 3 4 10 11. CORPORATE MANAGEMENT - COMMITMENT 2 4 100% TOTAL SECURITY RATIN& 2.70 3.90 Page - 5 of . 8 Class/Code 03-510A ~,oza~~ssoz
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FINANCIAL ANALYSIS WORKSHEET (AIISIONS OF YEN; ALL DATA AS OF DECF.lID i1, 1991 DNf•ug-4 n'mmuwTSE INDIQSRBD. ) VSNDOR: Ajinomoto CURRENT RATIO: 1992 I 1991 I 1990 1. Enter Current Assets 326,315 356,489 2. Enter Current Liabilities 197,458 213,290 3. Current Ratio (Line 1/Line 2) 1.65 ' 1.67 DEBT TO ASSETS RATIO: 1. Enter Total Debt 377,965 378,734 2..Enter Total Assets 731,563 726,275 3. Debt To Assets Ratio (Line 1/Line 2) .52 .52 PROFIT MARGIN ON SALES: 1. Enter Net Income 12,164 14,002 2. Enter Sales 593,964 541,854 3. Profit Nargin On Sales (Line 1/Line 2) 2.0% 2.696 RETURN ON TOTAL ASSETS: 1. Enter Net Income 12,164 14,002 2. Enter Total Assets ` 731,563 726,275 3. Return On Total Assets (Line 1/Line 2) 1.7% 1.9 EARNINGS PER SfIARH: [ I 545.4 yen CONFIDRrm'TnT•..Not to be removed from Philip Morris Materials Purchasing Department. 536.9 yen Page 6 of 8 Class Code 03-510A I BozeaDESOz
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rVENDOR: Monsanto CURRENT RATIO: 1991 1990 I 1989 -0 1. Enter,Current Assets 3,711 3,513 3,248 2. Enter Current Liabilities 2,175 2,190 1,922 3. Current Ratio (Line 1/Line 2) 1.71 1.60 ' 1.69 DEBT TO ASSETS RATIO: 1. Enter Total Debt 5,573 5,147 4,663 2. Enter Total Assets _ 9,227 9,236 8,604 3. Debt To Assets Ratio (Line 1/Line 2) .60 .56 .54 PROFIT MARGIN ON SALES: 1. Enter Net Income 296 546 679 2. Enter Sa1es 8,864 8,995 8,681 3. Profit Margin On Sales (Line 1/Line 2) 3.3% 6.1% 7.8 RETURN ON TOTAL ASSETS: 1. Enter Net Incane 296 546 679 2. Enter Total Assets 9,227 9,236 8,604 3. Return On Total Assets (Line 1/Line 2) 3.2% 5.9% 7.9% EARNINGS PER SAARE: I 2.33 I 4.23 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF D8 31, 1991 UNLESS OTHERWISE I!II}rCATED.) 5.01 Page 7 of 8 Class Code 03-360A I sozeaVCsQz
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HOTS-£0 8 30 eeoD/98RT;:) 8 abua 2053488210 5'8Z pau6Tssaun 0'£4 £'6T 0 . 0 0 0 o:tuesuox 0 £'6T 9'8Z 0'SZ 0'E6 S'~S Bssnf)aU S'8Z VTL V'iL 0'SL 0'L5 S'S4 o;omou,rCy $ $• $ $ $ $ HSIZddf1S 000'VT 000'4i D00'6T 899'£T 05E'TT 000'TT asls~enrna zEryos (8) £66T (H) Z661 1661 0661 6961 886T NFI'Id DNI7Sn8 £66T QNii E2TOZSIH JNI7.n8 Z6 - 8861 •
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• 1993 DIRECT MATESlInL BUYING PLAN • SUMMARY PAGE Material Code/Super Class 03-782A Description Urea Unit of Measure lb. Std. Cost $ .1250 Est. $ Purchase 297,250 Est. Usage 2,378,000 Est. Purch. Quantity 2,378,000 . Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units % Units % Coimnitment (*j Overall Rating 1. BP Chemical 1,814,400 80 1,784,000 75 2- Quarterly 3.38 2. Arcadian 432,000 20 594,000 25 2 - Quarterly 3.24 3. 4. 5. 6. 7. 8. 9. 10. Total 2,246,400 100.0 2,378„000 100.0 * 1. Contract 2. Purchase Order Other EXPLANATION zizesvESOz Page 1 of 8 Class/Code 03-782A - / Approval ~ 7. ~,~ D,~.j Date: /2'l - Prepared y G. L. Nixon /.~ Date:
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• OHJECTIVES/STRATEGI* ISSUES • OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 30,000 STRATEGIES TIPSETABLE o During 1993, investigate the feasibility of a multiyear agreement at a lower 1994 delivered price. Included in this agreement might be a discount on CO2. o Continue to evaluate the use of supersacs at Park 500. This packaging is available from both suppliers. Savings of approximately $45 M/yr. can be achieved in just the delivered cost of the product. There should also be internal operations savings and reduced environmental waste. OTHER ISSUES: o Liquid urea is not economically feasible. o Consolidating to a sole source to achieve a lower cost would increase PM's security risk. PM must have nrea free of formaldehyde and there are only two plants in the U.S. who can meet that requirement. Page 2 of 8 Class Code 03-782A zTzesvesoz
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Phi4kdorris U.S.A. iWaterials Purchasing 1993 Direct Material Buying. Plarr Five-Year Buying Plan Projection Materiat.Code/SuperClass O;i-782A Description Urea November 1832 ~ 1993 1994 1995 1996 1997 supWferMame. Unils 96 unrts % w,ils %. Units 96 Units 96 & P. Chemitat 1,900,000 79.9 y 2,040,000 80,0 y 1,992,000 800.0 y 1,976,000 8Q0 y 2,010,400 80.0 y Arcadiaarr 478.000 20.1 510,000 20A 498,000 20.0 494;000 20:0 502,600 20.0 2,378,000 100.0 2,550,000 100.0 2,490,000 100.0 2,470,000 100.0 2,513,000 100.0 ISSUES_ o Continua to pursue semi-bulk handling systemsi anda semi-fast flow operatiarr with Park 500. o lnvestigatee the feasibility of negotiating lower C02 ooskthru BP or Arcadiam who are major supptiers to Liquid, and Airco. + o Continue-to strengthenthe partnership with BP, while keeping/kreadiarrasabackupsource. E~?:5~~~.'Sdz Page 3 of 8 Class/Code: 03-782A
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0 SUPPLIER EVALUATION 0 SUPPLIER BP Chemical Arcadian WEIGHT USING LOCATION Park 500 Park 500 20 A. COST FACTORS 50 1. DELIVERED COST/# $.120 4 $.120 4 ' 0 2. VOLUME INCENTIVES N/A N/A 10 3. COST SAVINGS PROVIDED 3 50 lbs bags only 1 40 4. PRICE LEADERSHIP 3 3 TOTAL COST RATING 3.00 3.30 20 B. QUALITY FACTORS 40 1. % REJECTS 0% 3 0% 3 Urea is not tested 40 2. QUALITY CONTROL 3 (No Facilities) 2 20 3. PROCESSABILITY/ MACHINABILITY 3 3 TOTAL QUALITY RATING 3.40 3.40 20 C. TOTAL SERVICE RATING 4.00 4.00 40 D. TOTAL SECURITY RATING . (SEE PAGE(S) ) 3.25 2.75 100% OVERALL RATING 3.38 3.24 Page 4 of 8 Class/Code 03-782A vTzsevesoz
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SECURITY EVALUATION WEIGHT SUPPLIER BP Chemical Arcadian 10 D. SECURITY 1. RAW MATERIALS Natural Gas NH3 C02 3 Natural Gas NH3 CO2 3 5 2. CAPACITY 450 TPD 4 300 TPD 3 5 3. FLEXIBILITY 2 2 10 4. SUPPLIER INVENTORY 30-60 days 15-30 days 14M lbs. 5 3 15 5. PLANTS & LOCATIONS Lima, OH Augusta, Ga. 3 2 15 6. LABOR a. UNION b. CONTRACT EXPIRATION DATE c. SITUATION d. SCORE OCAW 0 2/17/93 0 Very Good 3 3 Non-Union 1 ---- 1 Fair 2 4 10 7. ENERGY Nat Gas/Elec. 3 Nat.Gas/Elec. 3 10 8. EPA COMPLIANCE 3 3 10 9. FINANCIAL STRENGTH (SEE PAGE(S) 5&6) 3 2 5 10. CORPORATE MANAGEMENT STRENGTH 3 2 5 11. CORPORATE MANAGEMENT COMMITMENT 3 2 100% TOTAL SECURITY RATING 3.25 2.75 Page 5 of 8 Class/Code 03-782A sTzegvESOz
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0 FINANCIAL ANALYSIS WORKSFIHBT (MILLIONS OF POUNDS; ALL DATA AS OF DE 31, 1991 UNLESS OTfffiZRISE IHI)ICATIM.) VENDOR: BP Chemicals CURRENT RATIO: 1992 1991 I 1990 0 1. Enter Current Assets 9,948 10,356 2. Enter Current Liabilities 9,504 9,610 3. Current Ratio (Line 1/Line 2) 1.05 1.08 DEBT TO ASSETS RATIO: 1. Enter Total Debt . 20,458 19,456 2. Enter Total Assets 31,792 30,697 3. Debt To Assets Ratio (Line 1/Line 2) .64 .63 PROFIT MARGIN ON SALES: 1. Enter Net Income 415 1,688 2. Enter Sales 32,613 33,039 3. Profit Margin On Sales (Line 1/Line 2) 1.3% 5.1% RETURN ON TOTAL ASSETS: 1. Enter Net Income 415 1,688 2. Enter Total Assets 32,613 30,697 3. Return On Total Assets (Line 1/Line 2) 1.3% 5.5% EARNINGS PER SHARE: .08 CONFIDENTTAL..Not to be removed from Philip Morris Materials Purchasing Department. .31 Page 6 of 8 . Class Code 03-782A 9Tze&VESOz
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FINANCIAL ANALYSIS WORRSFIEET (MILLIONS OF POUNDS; ALL DATA AS OF DE 31, 1991 UNLESS OTFISRNIS6 INDIQITHD.) VENDOR: BP Chemicals 1989 1988 1987 CURRENT RATIO: 1. Enter Current Assets 9,161 7,086 8,398 2. Enter Current Liabilities 9,568 7,978 8,233 3. Current Ratio (Line 1/Line 2) .96 .89 ' 1.02 DEBT TO ASSETS RATIO: 1. Enter Total Debt 20,174 .. 17,191 15,605 2. Enter Total Assets 31,615 29,323 26,874 3. Debt To Assets Ratio (Line 1/Line 2) .64 .59 .58 n, PROFIT MARGIN ON SALES: 1. Enter Net Income 2,134 1,210 1,391 2. Enter Sales • 29,641 25,922 28,328 3. Profit Margin On Sales (Line 1/Line 2) 7.2% 4.7% 4.9% RETURN ON TOTAL ASSETS: 1. Enter Net Income 2,134 1,210 1,391 2. Enter Total Assets 31,615 - 29,323 26,874 3. Return On Total Assets (Line 1/Line 2) . 6.7% 4.1% 5.4% EARNINGS PER SHARE: .32 .20 .25 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 8 Class Code 03-782A I 4TzSeVesoz
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0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 0 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY - 2.07 M 1.90 M 2.30 M 2.40 M 2.25 M 2.38 M SUPPLIER % e o % .% % B P Chemical 98 86 80 80 80 80 Arcadian 2 14. 20 20 20 20 Page 8 of 8 Class/Code 03-782A ezzssvESOz
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1993 AIRECT MA • BUY.IIiG PLAN SUMMARY PAGE Material Code/Super Class 04-029A Description Isosweet Unit of Measure lb. Std. Cost j.125347 Est. $ Purchase $1,941,506 Est. Usage 15,489,051 Eat. Purah. Quantity 15,489,051 Annual Purchases Est. 1992 Proj. 1993 Supplier Name Units $ Units % Commitment (') Overall Evaluation 1. A. B. Staley 4,880,369 31.2 5,000,000 31 1 - Annual 3.0 2. Corn Products 7,877,880 50.4 6,000,000 38 1 - Annual 3.3 3. AUM 191,977 1.2 0 0 ---- gg 4. American Maize 176,619 1.1 0 0 ----- Ng 5. Cargill 2,497,244 16.1 5,000,000 31 1 - Annual 3.3 6. 7. 8. 9. 10. Total 15,624,089 100.0 * 16,000,000 100.0 • 1. Contract * Notes: 2. Purchase Order 3. Other 1) Based on forecast of 331B cigt. 2) Projected requirements for 1993 includes substitution Page 1 of 11 of isosweet for sugar in Brica Blend (-500,000 lbs) Class/Code 04-029A Approval 2 `-, . a , Date: Rl~~f4'z GTzgRVCSaZ Prepared `y~ C, M. Come late: 11/10/92 _
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• OHJ'ECTIVES/STRATEGISS/ISSUES 0 OBSECTIVS: TO REDUCE MATERIAL.COST$ WITH NO CORHESPO2IDIMG OECBEASE IN QIIALITY, SEAPICE, OR SHCOAITY. PROJECTED ANNQAL SAIIIMGS: $ See BeloN , STRATEGIES TIMETABLE 1) Evaluate isosc.eet as an alternate humectant replacement for propylene glycol and glycerine in sheet material. a) Internal evaluation of 1:1 replacement b) Management decision based on results c) Initiate implementation Annual estimated savings if approved and implemented = $2.6 MH 2) Evaluate the replacement of sucrose with isosueet Ongoing 3rd qtr 1993 4th qtr 1993/ 1st qtr 1994 a) Internal subjective eval++at,amx/reconamadattnna 2nd qtr 1993 b) Conduct POL tests, if needed. 3rd qtr 1993 c) initiate snbstitation in Brica blend 2nd qtr 1993 Estimated savings if approved and implemented: A - Brica Blend = $89,000 B - 100% replacement = $2.3 MH OTHER ISSUES: If the above projects were approved, the annoalI requirements for isosMeet would Inc*ease to 38.3 MM lbs. 3) Synergy - Continue to participate in the Joint Purchasing Council for Corn Sweetners. Projecteddsaviags for PMOSA for 1993 above 1992 should exceed $100,000. Page 2 of 11 07Z8qf$ES02 Class Code 04-029A
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• OHJECTIVES/STRATEGIES • Pt7HC9ASIItG OBJECT24ES: To control cost of material without jeopardizing supply security or ualit q y. STRATEGIES TO i+tEET OHJECTIVES: 1. Continue to participate in synergy efforts with RGF and Miller . 2. Identify 2-3 suppliers capable of forming longer term Strategic Supplier Alliance Partnerships. 3. Strengthen the relationships with these suppliers to ensure long-term competitive positions within the industries that PM Cos. c®pete. 4 tili li * . U ze supp ers closest to the mannfAct+r ng facilities to optimize freight costs. 5. Continue to expand Cargill's territory to include a more significant percentage of Pli's overall reqaizemests. ISSUES: izzeeVESOz Inventory Capabilities - Monitor status of R&D projects and work with plant management to ensare adeqsate storage space eusts or has been plasned fcr the prapased additionsl requirements. Pricing/Supply outlook - Corn prices should stay stable due to higher than originally forecasted production. Page 3 of 11 Class Code 04-029A
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• Philip AA!!;tfris U.SA. ~ Materials Purohaaing 911afesial Code1^.wper Class 0q-QZ<JI>r Unit of ANeeaore Ib. 7Wi Direct RAaberial Buying Pfarr Five-Year Buying Plan Projectiorr Desoription Isasweet Foraca.t Q.ta 10f22/92. .__ 1993 1994 1995 1996 1997 StPdler Name tkxts % Lhwts % Units % Units % Units % A. E. Staley 5,000,000 31.8 8,368,859 50.0 y 8,402,373 50R0 y 8,502,188 50.0 Y 8,615,288 50.0 y CPL 6,000,000 37.5 0 0.0 " Q 0.0 O 0.0 0 0.0 ~'911 5,000,000 31.3 8,368,859 50.0 y 8,402,373 50.0 y 8.502,188 50.0 y 8,615,288 SO.Q y 16,000,000 100.0 16,737,718 100.0 16,804,746 1c0.0 17,004,376 100.0 17,290.576 100.0 ISSUES: 1) Volumes shown do notneflectincreasedrequirementsthat mayoecurduetoongoing R&D projects, alternate humectant program and isosweet replacement for sugar. 2) During 19Si, the joint sweetner council will assessthe three mairr suppliers'capabi{ities- and identify two long-ternr strategic parhrers 3) Increased volume with Staley based on resolving quality issues. z~g8~lESdT Page 4 of 11 Class/Code: 04-029A
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0 0 • SUPPLIER EVALUATION. SUPPLIER Staley CPC Cargill . WEIGHT USING LOCATION Richmond, Cabarras Richmond, Cabarrus Richmond, Louisville 30 A. COST FACTORS 1. DELIVERED COST/# 60 3 (.1240) . 4 (.1165) 4 (.1079) 10 2. VOLUME INCENTIVES 2 2 3 10 3. COST SAVINGS PROVIDED 3 3 3 20 4. PRICE LEADERSHIP 2 2 3 TOTAL COST RATING 2.7 3.3 3.5 30 B. QUALITY FACTORS 33 1. % RSJECTS 2.5 (7.8%) 4 ( 0%) 4 ) ( 0% 33 2. QUALITY CONTROL 3 3 3 33 3. PROCESSABILITY/ NACHINABILITY 3 3 3 TOTAL QUALITY RATING 2.8 - 3.3 3.3 10 C. TOTAL SERVICE RATING 3.0 3.0 3.0 30 D. TOTAL SECURITY RATING (SEE PAGE(S) 6 ) 3.4 3.5 3.3 100$ OVERALL RATING 3.0 3.3 3.3 Page 5 of 11 szzaeVssaz Class/Code 04-029
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YTEIG6T SUPPLIER Staley Corn Products Cargill D. SECURITY D®estic Corn Domestic Corn Domestic Corn 10 1. RAW MA'ERIarc Spot/Contract 3 Spot/Contract 3 Spot/Contract 3 10 2. CAPACITY 867 mmlbs Loadon 407 mmlbs Winston Salem 1,189 mmlbs Dayton, OH 4300 amlbs Total 4 166Bmmlbs Total 4 3,500 mmlbs Total 4 NA 3. FLHXIBILITY ---°- '--- ---- 10 4. SUPPLIER INVENTORY 20-30 days off peak Average 2 weeks Ninimal Inventory 10-15 days during peak 3 weeks off peak 3 1 week during peak 3 Loudon, TN (N.A.) Winston-Salem, NC Dayton, OH 20 5. PLANTS & LOCATIONS Lafayette, IN (N.A.) Acgo,IL (Atamic & Chem) Eddyville, OH (noaunion) Decatur, IL (9/30/92) 4 Fovr Other Plants 4 4 10 6. LABOR - a. 'ONION 1(none) 1(none) Amalgamated Grain Millers b. CONTRACT EXPIRATION DATE 1 1 1 (1993) c. SITUATION 3 3 3 d. SCORE- 4 5 • 3 10 7. ENERGY Cnal/Oil 3 Coal/Noad/ChiPs/Gas 3 Coal/Oil/Gas = 4 -NA 8. EPA COMPLIANC6 -- -'-'~ ----- 10 9. FINANCIAL ' - STRENGTH (SEE PAGE(S)7-10) . 3 3 . 10 10. CORPORATE NATIAGEMENl' STRENGTH 3 3 3 10 11. CORPORATE NANAG6!ffiiT - COMMITMENT 3 3 4 100~ TOTAL SECURITY RATING 3.4 3.5 3.3 SECURITY UATION ' tzzeeVESOz Page 6 of 11 Class/Code 04-029A
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0 FINANCIAL ANAIMS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEMM 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER: Tate & Lyle/Staley CURRENT RATIO: I 1991 I 1990 I 0 ] l.,Enter Current Assets 954 880 892 2. Enter Current Liabilities 755 699 882 3. Current Ratio (Line 1/Line 2) 1.26 1.26 1.0 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,378 1,233 1,470 2. Enter Total Assets 2,113 1,817 1,953 3. Debt To Assets Ratio (Line 1/Line 2) .65 .68 .75 ~ PROFIT MARGIN ON SALESt 1. Enter Net Income 146 177 113 2. Enter Sales 3,263 3,432 3,360 3. Profit Margin On Sales (Line 1/Line 2) 4.5% 5.2% 3.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 146 177 113 2. Enter Total Assets 2,113 1,817 1,953 3. Return On Total Assets (Line 1/Line 2) 6.9% 9.7% - 5.8% EARNINGS PER SHARE: .33 I .30 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 'Tate & Lyle acquire Amstar SZZSStFF:SU2' I 1989 .27 Page 7 of 11 Class Code 04-029A I
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O FINANCIAL ANALISS WORKSHSET (MILLIONS OF DOLLARS; ALL DATA AS OF DEC@M 31, 1991 ONLESS OTB'HRifr38 IImICAT$D FS I7PPLIER: Tate & Lyle/Staley CURRENT RATIO: I * 1988 * •). I 1987 I I 1. Enter Current Assets 861 548 2. Enter Current Liabilities 593 328 3. Current Ratio (Line 1/Line 2) 1.5 1.7 DEBT TO ASSETS RATIO: 1. Enter Total Debt 1,254 482 2. Enter Total Assets 1,750 874 3. Debt To Assets Ratio (Line 1/Line 2) .72 .55 S' PROFIT MARGIN ON SALES: 1. Enter Net Inocme 70 70 2. Enter Sales 2,088 1,701 3. Profit Margin On Sales (Line 1/Line 2) 3.4% 4.1% RETURN ON TOTAL ASSETS: 1. Enter Net Inaome 70 70 2. Enter Total Assets 1,750 874 3. Return On Total Assets (Line 1/Line 2) 4.0% 8.0% EARNINGS PER SHARE: .22 I . .18 I I CONFIDEN7?AL..Not to be removed from Philip Morri.s Materials Purchasing Department. Page 8 of 11 Class 'Tate & Lyle acquire Amstar Cade 04-029A szzestY1:saz
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FINANCIAL ANAIMS WORRSEiEET (MILLIONS OF DOLLARS; ALL DATA AS OF DECEFffn 31, 1991 UNLESS OTHERWISE INDICATED.) SUPPLIER: CPC International CURRENT RATIO: I 1991 I 1990 I 1989 1. Enter Current Assets 1,792 1,714 1,427 2. Enter Current Liabilities 1,360 1,554 1,197 3. Current Ratio (Line 1/Line 2) 1.317 1.103 1.1927 DEBT TO ASSETS RATIO: 1. Enter Total Debt 2,376 3,037 2,487 2. Enter Total Assets 4,510 4,490 3,705 3. Debt To Assets Ratio (Line 1/Line 2) .527 .6764 0.6713 `i PROFIT MARGIN ON SALES: ~. v 1. Enter Net Income 373 374 328 2. Enter Sales 6,189 5,781 5,103 3. Profit Margin On Sales (Line 1/Line 2) 6.0% 6.5% 6.4% RETURN ON TOTAL ASSETS: 1. Enter Net Income 373 374 328 2. Enter Total Assets 4,510 4,490 3,705 3. Return On Total Assets (Line 1/Line 2) 8.3% 8.3% 8.8% B.ARNINGS PER SHARE: 4.80 4.83 I 4.22 ~ CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 9 of 11 Z2,2,88tT50z Class Code 03-029A
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FINANCIAL ANAL WORKSHEET • (14ILLIONS OF DOLLPIBS; ALL DATA AS OF DE 31, 1991 UNLESS OTEER9{ISE INpICATED.) ~ 30PPLIHR: CPC International I 1988 I 1987 CURRENT RATIO: 1. Enter Current Assets . 1,262 1,320 2. Enter Current Liabilities - 1,164 . 1,554 3. Current Ratio (Line 1/Line 2) 1.0845 1.103 DEBT TO ASSETS RATIO: 1. Enter Total Debt 2,148 2,174 2. Enter Total Assets 3,342 - 3,261 3. Debt To Assets Ratio (Line 1/Line 2) 0.6426 0.6668 ml PROFIT MARGIN ON SALES: 1. Enter Net Incc®e 289 355 2. Enter Sales 4,700 4,903 3. Profit Margin On Sales (Line 1/Line 2) 6.2% .0724 RETURN ON TOTAL ASSETS: 1. Enter Net Incc®e 289 355 2. Enter Total Assets 3,342 3,261 3. Return On Total Assets (Line 1/L3ne 2) 8.7% 0.1088 EARNIZIGS PER BfOfRE: [ 3.68 I 4.83 ..CONFIDENTIAL..Not to be reaaved fram Philip Morris Materials Purchasing Department. ~ ezzssVeSaz I Page 10 of 11 Class Code 04-029A
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0 1988 - 92 BUYING HISTORY ALII) 1993 BUYING PLAN 9 1988 1989 1990 1991 1992 (B) 1993 (P) TOTAL QUAflTITY 14,414 tt 14,331 H 15,523 b! 15,364 H 15,624 H 16,000 M SOPPLIBR 9t ~ % $ $ $ Staley 21.6 30.0 29.3 28.3 31.2 31 CPC 37.9 40.0 42.7 48.3 50.4 38 ADM 31.2 20.0 11.8 8.0 1.2 0 American Maize 9.3 10.0 8.6 8.1 1.1 0 Cargill 0 0 7.6 7.3 16.1 31 szzeatrESOz Page 11 of 11 Class/Code 04-029A
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• 1993 DIBECT MA7.'ERRAL BUYING PLAN ~ SUMMARY PAGE Material Code/Super Class 04-035A Description P.M. Flavor S-600 Unit of Measure Gal. Std. Cost $ 58.9050 Est. $ Purchase $ 823,845 Est. Usage 13,986 gals Est. Purch. Quantity 13,986 Annual Purchases Est. 1992 Proj. 1993 , Vendor Name Units % Units % Commitment (*) Overall Rating 1. C.F. Sauer 11,988 100 13,986 100 2 (Quarterly) A 2. 3. 4. 5. 6. 7. 8. 9. 10. Total 11,988 100.0 13,986 100.0 * 1. Contract EXPLANATION 1992 Projected use 13,854 gals 1993 usage based on forecast of 331B cigarettes . MzSeVESOz 2. Purchase Order 3. Other Page 1 of 9 Class/Code 04-035A Approval _„. Date: i 410 y Prepared S`y"'~C`.~'M.~Oomes ate:/ o4 S~SL
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• GBUECTIVEul,TEGIES o PURCHASING OBJECTIVES: 1) To reduce cost of 04-035A without im actin u lit p g q a y or security. 2) To optimize supplier base to consolidate volumes and expenditures with committed suppliers. PURCHASING STRATEGIES: 1) Meet with C. F. Sauer's management to evaluate their longterm business objectives. FUTURE SUPPLY OUTLOOK: iszsaMoz 2) Evaluate capabilitiesof "Preferred Suppliers" to supply vanilla extract. 3) Determine if opportunity exists with KGF business units to combine vanilla extract requirements. The availability of Indonesian beans should continue to exert pressure on Bourbon bean pricing. However, until quality variability is improved, Indonesian beans willnot be able to be substituted for Bourbon in PM's I application. Page 2 of 9 Class Code 04-035A
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O PhioAorris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material Code/Super Class. 04-035A Description PM Flavor 5-= Unit of Measure gal Forecast Date October 15,1992, 1993 1994 1995 1996 1997 Supplier Name Chvts % Units % Uruts % Units % lhv[s % C. F. Sauer 13,986 100.0 n 14,985 100.0 15,318 100.0 - 15,651 100.0 15,651 100.0 ~ f 3, 986 100.0 14, 9°v5 100.0 15, 318 100.0 15, 651 100.0 15, 6s 1 100.0 iSSUES: EOp = 333 gats. ZEZS~~~.'S~Z Page 3 of 9 ClassfCode: 04-035A
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0 0 O SUPPLIER EVALUATION SUPPLIER C. F. Sauer USING LOCATION Richmond (F/C) A. COST DELIVERED COST/UOM 1. 58-.905/gaI 2. REBATE OFFERED (YES/NO) N OVERALL COST (A/U) A - B. QUALITY ~ ACCEPTANCE 100% OVERALL QUALITY (A/U) A C. SERVICE (A/U) A D. SECURITY (FROM PAGE(S) ) A/U A OVERALL EVALUATION (NUMBER OF "A's"; 1-4) A A = ACCEPTABLE EE7.~C~~TCSa7 .Page 4 of 9 U = UNACCEPTABLE Class/Code 04-035A
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e SECURITY WUATIQN © SUPPLIER C. F. Sauer SECURITY Madagascar Vanilla Beans 6-9 months inventory; 1. RAW MATERIALS 1 year contract 2. PLANTS & LOCATIONS Richmond, VA 3. LABOR a. UNION Bakery, Confectionary, & Tobacco Workers b. CONTRACT EXPIRATION DATE May 1, 1995 c. SITUATION Good 4. ENERGY SOURCES Natural Gas/#6 Oil . - 5. CAPACITY (A/U) 38,000 gals/year 6. FLEXIBILITY (A/U) A 7. EPA COMPLIANCE (A/U) --- 8. FINANCIAL RATING (A/U) A 9. CORPORATE MANAGEMENT STRENGTH (A/U) A , - 10. CORPORATE MANAGE4fENT COMMITMENT (A/U) . U OVERALL SECURITY (A/U) A A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL Page 5 of 9 . Class/Code 04-035A VEZ88MS0z
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• F.XPLAIdATICai c 8 ) . • (REQUIRED FOR ALL °II" RATING&) Financial Rating - C. F. Sauer is a privately owned company and only provides 13mited financial information. Corporate Management Conanittment - C. F. Sauer's business objectives may be shifting away from vanilla extract production to spice and vegetable oil production. During 1993, need to evaluate how and where Philip Morris fits into their longterm strategic plan. Page 6 of 9 Class/Code 04-035A sezsCATsoz
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• FINANCIAL ANALYSIS WORKSNSET (MILLIONS OF DOLLJARS; ALL DATA AS OF DECEW 31, 1991 UNLESS OTHERWISE INDICATED.) VENDOR: C. F. Sauer CURRENT RATIO: 1993 1992 I 1. Enter Current Assets 80,822 82,042 2. Enter Current Liabilities 14,305 19,938 3. Current Ratio (Line 1/Line 2) 5.65 " 4.11 DEBT TO ASSETS RATIO: 1. Enter Total Debt 3,285 3,692 2. Enter Total Assets 132,974 132,905 3. Debt To Assets Ratio (Line 1/Line 2) .02 .03 PROFIT MARGIN ON SALES: 1. Enter Net Income 2. Enter Sales 3. Profit Margin On Sales (Line 1/Line 2) Not Available Not Available RETURN ON TOTAL ASSETS: 1. Enter Net Income 2. Enter Total Assets - 3. Return On Total Assets (Line 1/Line 2) Not Available Not Available EARNINGS PER SNARE: Not Available CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Financial Data as of March 31 for each year reported. ssz~e~ESaz 1991 Not Available Page 7 of 9 Class Code 04-035A
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FINANCIAL ANALYSIS WOR'RSuEUT (MILLIONS OF DOLLARS; ATd, DATA AS OF DE 31, 1991 UNLESS OTHERWISE INDICATEID.) Cow VENDOR: C. F. Sauer 1990 1989 CURRENT RATIO: 1988 A I 1. Enter Current Assets 83,358 79,941 2. Enter Current Liabilities 18,216 19,664 3. Current'Ratio (Line 1/Line 2) 4.58 4.07 ' DEBT TO ASSETS RATIO: 1. Enter Total Debt 3,248 3,066 2. Enter Total Assets 124,252 112,665 3. Debt To Assets Ratio (Line 1/Line 2) .0,3 .03 PROFIT MARGIN ON SALES: 1. Enter Net Income 2. Enter Sales 3. Profit Margin On Sales (Line 1/Line 2) Not Available RETURN ON TOTAL ASSETS: 1. Enter Net Income 2. Enter Total Assets ~ 3. Return On Total Assets (Line 1/Line 2) Not Available EARNINGS PER SNARE: Not Available CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Departtaent. Page 8 of 9 Class Code 04-035A 4ezesVesoz
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0 1988 - 92 BUYING HISTORY AIiD 1993 BUYING PLAN • 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 12,987 13,986 14,988 13,986 11,988 13,986 SUPPLIER % % % C. F. Sauer 100 100 100 100 100 100 Page 9 of 9 Class/Code 04-035A sezestMoz
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O 1993 DIRECT MATEA0 BUYING PLAN • SUMIIAlARY PAGE Material Code/Super Class 04-288A Description Dispersant - 100-PG Unit of Measure lb. Std. Cost $ 1.2580 Est. $ Purchase 2,080,418 Est. Usage 1,653,960 Est. Purch. Quantity . 1,653,750 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units $ Units % Commitment (*) Overall Rating 1. Ajax 1,458,730 100 1,289,890 78 2 (Quarterly) A 2. Unassigned 0 0 364,070 22 2 (Quarterly) TBD 3. 4. 5. 6. 7. 8. 9. 10. Total 1,458,730 100.0 1,653,750 100.0 * 1. Contract EXPLANATION Note: 6EZ89ve50z 2. Purchase Order 3_ Other Page 1 of 8 Class/Code 04-288A Approval Date: / 2 Prepared $~ C. M. Comes / Date: 10/15/92
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0 0 OBJECTIVP:S/STRATEGIES/ISSUES Timetable PURCHASING OBJECTIVES: 1) To reduce material costs with no corresponding reduction in quality, service or security. PURCNASING STRATEGIES: 1) continue to pursue alternative manufacturers of this product: a. Review economic and enviromental lst QTR 1993 feasibility with new management at the Flavor Center. b. Pursue alternate manufacturer to 2nd QTR 1993 compete with Ajax. 2) Complete evaluation of financial and ist QTR 1993 environmental impact of this project. 3) Determine any special shelf-life Initiate 4th requirements with R&D and Technical QTR 1992 _ Services. 4) Initiate implementation. 3rd QTR-1993 ISSUES Shelf-Life Currently, this material has a shelf life of 7-14 days. Ajax manufactures product weekly and does.not maintain any finished goods inventory. In order to facilitate production of this material at the Flavor Center or another manufacturer and to provide adequate inventory protection, the shelf-life needs to be verified for this material. Savings Annual Direct Material Savings excluding capital/labor costs, would be approximately $700,000 if PM manufactured this product at the Flavor Center. Page 2 of 8 - Class Code 04-288A
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0 Phil&atris u.S.A. Mafierials Purchasing 1993 Direct [tlaterial Buying Plan Five-Year Buying Plan Projection Material CadelSuper Class: 04-208A Deseription Dispersant. tOQ .PCi! Unit of Measure lbs Fosecast Date Oatnher22,19®2 . 1993 1994 . 1995 1996 1997 SupplierName Uniis % Units % Units % tJnits % Units % Ajax 1,289,890 78.0 888,850 50.0 0 0.0 0 RO 0 0.0 Unassic-pxd 864,070 220 888,850 50L0 1,734,425 100.0 1,728,450 100.0 1,759,895 100-0 1,653,960 100.0 1,777,700 100.0 1,734,425 100.0 1,728, 450 100.0 1,759,895 100.0 ISSUES: Page 3 of 8 Class/Code:
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0 SUPPLIER LVALUATION • SUPPLIER Ajax USING LOCATION Park SOO/BL A. COST DELIVERED COST/UOM 1. 1.235221/lb 2. 3. REBATE OFFERED (YES/NO) No - OVERALL COST (A/U) A B. QUALITY (0.5%) A • % ACCEPTANCE A OVERALL QUALITY (A/U) A C. SERVICE (A/U) A I __ D. SECURITY (FROM PAGE(S) ) A/U A I ~I OVERALL EVALUATION (NUMBER OF "A's"; 1-4) A = ACCEPTABLE U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL A Page 4 of 8 Class/Code 04-288A ztz9svcsoz
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• SECURITY `1LUATION • SUPPLIER Ajax - SECURITY PG - Arco Propyl Paraben - Ralama 1. RAW MATERIALS 2 weeks each Philadelphia, PA ' 2. PLANTS & LOCATIONS Chicago, IL 3. LABOR a. UNION Teamster Warehousing b. CONTRACT EXPIRATION DATE March 31, 1993 c. SITUATION 3 4. ENERGY SOURCES #4 Fuel Oi1/Electric 5. CAPACITY (A/U) (3.4 M lbs) A 6. FLEXIBILITY (A/U) A 7. EPA COMPLIANCE (A/U) A - 8. FINANCIAL RATING (A/U) A 9. CORPORATE MANAGEMENT STRENGTH (A/U) A 10. CORPORATE MANAGEMENT . COMMITMENT (A/U) A - OVERALL SECURITY (A/U) A Page 5 of 8 A = ACCEPTABLE Class/Code 04-288A . U = UNACCEPTABLE OR NUMERICAL RATING DEPENDING UPON MATERIAL
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FINANCIAL ANALYSIS WORKSHEET 0 (MILLIONS OF DOLT.ARS; ALL DATA AS OF DE 31, 1991 UNLESS OTFIERY}ISE INDICATED.) VENDOR: Ajax Adhesives CURRENT RATIO: 1992 I 1991 I 1990 1. Enter Current Assets n/a n/a 2. Enter Current Liabilities n/a n/a 3. Current Ratio (Line 1/Line 2). 1.63 1.53 DEBT TO ASSETS RATIO: 1. Enter Total Debt n/a n/a 2. Enter Total Assets n/a n/a 3. Debt To Assets Ratio (Line 1/Line 2) .75 .75 PROFIT"MARGIN ON SALES: 1. Enter Net Income n/a n/a 2- Enter Sales n/a n/a 3. Profit Margin On Sales (Line 1/Line 2) 4.5% 4.0% RETURN ON TOTAL ASSETS: 1_ Enter Net Income n/a n/a 2. Enter Total Assets ' n/a n/a 3. Return On Total Assets (Line 1/Line 2) 8.8% 8.4% EARNINGS PER SNARE: n/a n/a CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 6 of 8 Class Code 04-288A Note: Ajax only provided ratios listed. Supporting numbers were not provided.
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FINANCIAL ANALYSIS WORKSHEET (MILLIONS OF DOLLARS; ALL DATA AS OF DH 1 31, 1991 DNLESSOTHE[t54ISE Iffi)ICATED.) VENDOR: Ajax Adhesives CURRENT RATIO: 1987 0 1_ Enter Current Assets 4,208,084 4,053,273 3,782,515 2. Enter Current Liabilities 2,896,668 3,724,144 3,326,729 3. Current Ratio (Line 1/Line 2) 1.45-1 1.09-1 1.53 DEBT TO ASSETS RATIO: 1. Enter Total Debt 4,900,000 4,695,000 3,500,000 2. Enter Total Assets 6,607,000 6,315,000 4,828,504 3. Debt To Assets Ratio (Line 1/Line 2) .74 .74 .75 PROFIT-MARGIN ON SALES: 1. Enter Net Income 345,000 286,914 525,178 2. Enter Sales _ 17,100,000 16,770,000 14,900,000 3. Profit Margin On Sales (Line 1/Line 2) 2.0% 1.7% 3.5% RETURN ON TOTAL ASSETS: 1. Enter Net Income 345,000 286,914 525,178 2. Enter Total Assets 6,607,000 - '6,315,000 4,828,504 3. Return On Total Assets (Line 1/Line 2) 5.2% 4.5% 10.8% EARNINGS PER SHARE: 1989 1988 I CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 8 I Class Code 04-288A sMeMSOz
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0 0 1988 - 92 BUYING HISTORY AN17 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY 1,318,938 1,397,312 1,531,004 1,609,650 1,458,730 1,653,750 SUPPLIER ~ & % % .% $ Ajax 100 100 100 100 100 78 Unassigned 0 0 0 0 0 22 Page 8 of 8 Class/Code 04-288A sMeevesoz
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~ 1993 DIRECT MATER211I, BUYING PLAN • SUMMARY PAGE Material Code/Super Class 04-402A Description P.M. Flavor 122742 Unit of Measure lb. Std. Cost $ 5.9586 Est. $ Purchase 1,015,941 Est. Usage 170,500 Est. Purch. Quantity _ 170,500 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units % Units ~ * Commitment ( ) Overall Rating 1. Givaudan 164,000 100 170,500 100 Annual A 2. 3. 4. 5. 6. 7. S. 9. 10. ` Total - 164,000 100.0 170,500 100.0 * 1. Contract 2. Purchase Order 3. other EXPLANATION Based on forecast of 331B cigarettes. ~,~zeg~~saz Page 1 of 9 Class/Code 04-402A 04-321A Approval ~ Date:/z&g Prepared y C. M. Comes Date: 10/15/92
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• 1993 DIRECT a4STE1'tlAh BUYING PT,AN SUMFIARY PAGE Material Code/Super Class 04-321A Description PM Flavor F-20,843 Unit of Measure Gals. Std. Cost $ 43.6524 Est. $ Purchase 397,237 Est. Usage 9,100 Est. Purch. Quantity 9,100 Annual Purchases Est. 1992 Proj. 1993 O ll Vendor Name Units % Units % Conunitment(*) vera Rating 1. Givaudan 8,900 100 . 9,100 100 Annual A 2. 3. 4. 5. 6. 7. 8. 9. 10. Total - 8,900 100..0 9,100 100.0 * 1. Contract 2. Purchase Order 3. Other EXPLANATION Based on-forecast of 331B cigarettes- WBsY4So(i Page 2 of 9 Class/Code 04-402A/04-321A Approval ~dDate: /o Prepared y"' C. M. Comes Date: 10/15/92
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OBJECTIVES/STRATEGIES/ISSOES PURCHASING ISSUES: • To ensure quality, service and security and to pursue opportunities to reduce total cost of these sole sourced materials. PURCHASING OBJECTIVES: 1) 2) 3) 4) 5) PURCHASING ISSUES: 1) - 2) Meet with Givaudan's management to discuss shorE and longterm goals of PM's supplier assessment program. Evaluate feasibility of synergy opportunities in the Flavors area with KGF. Continue to work with supplier to refine inventory policies at PM and Givaudan to maximize supply security. Determine optimum batch size at Givaudan to coordinate with single lot testing by QA. Evaluate economic feasibility of shipping these materials in totes. Givaudan plans to consolidate compound flavor production in their automated flavor manufacturing facility in East Hanover. Purchasing needs to ensure that product from the new facility is qualified and approved by Flavor Technology prior to ordering. Givaudan is our largest flavors and chemicals supplier. These two flavors 04-402A and 04-321A accounted for approximately 70% of the total annual expenditures with Givaudan. Page 3 of 9 Class Code 04-402A/04-321A
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0 Phi&orris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Material CodelSuper Class: 04-402A Description PM Flavor 122742 Unit of Measure lbs Forecast Date October 22,1992 1993 1994 1995 1996 1997 S~ierName Units %. Units % lktits % Umts % Uruts % Givaudan 170,500 100.0 . 184,400 100.0 y 186,500 100.0 y 189,450 100.0 y 191,700 iORO y 170,500 100.0 184.400 100.0 186,500 100.0 189.450 100.0 191,700 100.0 ISSUES: As part of the Supplier Assessment program, Givaudarr has been identifie.d: aaa preferred supplier. During 1993, an indepth evaluation of Givaudan's capabilitieswill be performed to ensurrrGivaudarrcan fulfill Philip Morris' longterm business re.quirements. osze~~~soz Page 4 of 9 Class/Code: 04-402A
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~ Phi!a4orris U.S.A. . 9 Materials Purchasing 1993 Direct Material Bulling. Plan Five-Year Buying Plan Projection Material Code/Super Class 04-321A Description PM Flavor F20,643. Unit of Measure gal Forecast Date October 22, 1992. _ 1993 1994 1995 1996 1997 Supplier Name Units % Units % Units % Units % Units % Givaudan 9,100 100.0 n 9,785 100.0 y 9,899 100.0 y 10,055 100.0 y 10,175 100.0 y 9,100 100.0 9,785 100.0 9,899 100.0 10,055 }00.0 10,175 100.0 ISSUES: As part of the. Supplier Assessment program, Givaudarr has been identifiedasa.preferred supplier. Du rin g 1993, an i ndepth evaluation of Givaudan's capabilities will be: performed to ensure-Givaudan can fulfill Philip Morris' longterm businessrequireinents_ Page 5 of 9 Class/Code; 04-321A
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• SUPPLIER E9ALUATION • SUPPLIER Givaudan - USING LOCATION Flavor Center A. COST DELIVERED COST/UOM 04-402A 1. 5.78/lb • 04-321A 2. 41.44/gal 3. REBATE OFFERED (YES/NO) No OVERALL COST (A/U) A B. QUALITY & ACCEPTANCE 100% OVERALL QUALITY (A/U) A C. SERVICE (A/U) A D. SECURITY (FROM PAGE(S) ) A/U OVERALL EVALUATION (NUMBER OF "A's"; 1-4) A A A= ACCEPTABLE Page 6 of 9 U = UNACCEPTABLE Class/Code 04-402A/04-321A OR NUMERICAL RATING DEPENDING UPON MATERIAL zszestTESOz
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9 SECURITYOILUATION • SUPPLIER Givaudan 04-402A 04-321A SECURITY Cocoa Powder Alcohol ' Proprietary 1. RAW MATERIALS Essential Oils Aroma Chemicals E. Hanover, NJ • 2. PLANTS & LOCATIONS Clifton, NJ 3. LABOR a. UNION Non-union at East Hanover b. CONTRACT EXPIRATION DATE c. SITUATION 4. ENERGY SOURCES Gas/#6 5. CAPACITY (A/U) A 6. FLEXIBILITY (A/U) A 7. EPA COMPLIANCE (A/U) A - 8. FINANCIAL RATING (A/U) A 9. CORPORATE MANAGEMENT STRENGTH (A/U) A 10. CORPORATE MANAGEMENT COMMITMENT (A/U) A OVERALL SECURITY (A/U) A A = ACCEPTABLE Page 7 of 9 U = UNACCEPTABLE Class/Code 04-402A/04-321A OR NUMERICAL RATING DEPENDING UPON MATERIAL sszeevssoz
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0 0 0 1988 - 92 BUYING HISTORY AND 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY (04-402A) 180,600 184,000 211,200 185,600 164,000 170,500 SUPPLIER Givaudan 100 100 100 100 100 100 Page 8 of 9 Class/Code 04-402A/04-321A vszgevesoz
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0 .e 1988 - 92 BUYING HISTORY AND 1993 BUIIAG PLAN • 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QUANTITY (04-321A) 8,900 9,705 11,7D0 8,878 8,900 9,100 SUPPLIER % % s, . g .% e Givaudan 100 100 100 100 100 100 Page 9 of 9 Class/Code 04-402A/04-321A sszseMsaz
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2053488256
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1993 Direct Materi•Buying Plan Summary Page Material Code/Super Class Unit Of Measure Estimated Usage 0 Energy Description Coal Ton Std. Cost $45.68 Estimated i Purchase $4,793,620 (Coal)/ $3,101,868 (Freight) 179,000 Estimated Purchase Quantity 179,000 Annual Purchases Est. 1992 Projected 1993 Supplier Name Units 46 Units 4b Commitment `) ovaea Raft 1. A.T. Massey 10,492 6 0 0 None 2. Z'iegler Coal (Shell) 66,000 40 72,000 40 2-1 Year 3.96 3. WestmorelandCoal 62,000 38 72,000 40 2-1 Year 3.96 4. Yancy Mlnerals 26,000 16 25,000 14 2-1 Year 3.26 5. Unassigned 0 0 10,000 B 3-Spot 6. 7. 8. 9. 10. Total 164,492 100 179,000 10oo/n 1. Contract 2. Purchase Order 3. Other Spot Purchase Explanation Page 1 of 9 ClasslCode: Coal Approval ~ Date y a Prepared By:`D. N. Kefthley O Date 11/27192
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i Objecflves/5ttategieslIssues va : * Monitor coal costs and assure price stability. Monitor quality, service, and security. " Maintain compliance with PM specifications ` Continue to support minority purchases program Vt ie: ' Continue participation in PM coal synergies council ' Continue coal analysis program with Standard Labs. Monitor and report results to using locations and suppliers. ` Maintain competitive pricing through coal council bidding activities. " Continue to purchase coal from Yancy Minerals or another qualified minority. " Meet with management from Ziegler to determine their ability, management strength and committment to PM. " Investigate long-term contract opportunities. " Reevaluate current coal inventory policies Issues: " Monitor UMW Labor situation (current contract expires 1-31-93) " Monitor financial conditions for Yancy Minerals and Westmoreland. Inventory Polic}C Winter(fons) Summer (Tons) Max. Min. Max. Min. Richmond 4,536 3,402 3,402 2,835 Park 500 16,720 15,200 16,720 13,680 Cabarrus 3,000 2,500 2,500 1,800 Peak Bum Winter ons Summer ons Richmond 135.6 123.4 Park 500 449.0 340.0 Cabarrus 55.0 45.0 inventory Levels Da s Duration Winter (Days) Summer (Days) Max. Min. Max. Min. ,33 25 28 23 37 34 49 40 55 45 56 40 Pegs 2 nf9 cb.:icodo: Ccat i 8szseVssoz
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0 Supplier Evoation Su plier Ziegler Coal (Shell) Wes[moreland Yan Minerals Weight Using t ucation Rich. PC/Cabarrus Park 500 Park 500 A. Cost Factors 90 1. Delivered Cost 325.75 FOB INiue $44.39 Dclivered Rich. • $39.87 Dellverod Ce6aaun ~ * 3 $25.65 FO13 MWe $44.34 Ddivesd • 3 $75.75 FOB M3no $44.39 Ddivered Rich. • 2 2. Volume Incentives NA NA NA 3. Cost Savings Provided NA NA NA 10 4. Price Leadership 3 3 4 10 Total Cost Rating 3 3 2.2 B. Quality Factors 30 1. 46 Rejects 5 5 5 50 2. Quali Control 3 3 3 20 3. Processabilityl Machineability 4 4 4 20 Total Quality Ratin 3.8 3.8 3.8 30 C. Total Service Rating 4 4 3 40 D. Total Security Rating (See page 4 ) 4.25 4.2s 3.5 100 Overall Rating 3.96 3.96 3.28 * CSX Transportation, Richmond l Park 500 "• Norfolk Southern, Cabarrus Page3of9 Class/Code: Coal SS~`,g8'b>r'S0~'i
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Security Evq&ation Supplier Su iier S ier eight Ziegler Coal (Sheli Wesnnoreiand -Yan Minerals D. SeqJrlty Varioue owned & btoketed Various owned & brokorod Brokerod.ourcw only 1. Raw Materials . wurxa. Appmx. 80% company wuroa. 60% company mioea, 20% contrnd miaed. - mincd,4056 eonttact mined. 30 4 4 3 Totnl Co. =26M toan/yt. Total Co. = 19-20M tone/yr. Totel Co. Cepacity = SM tone/yr.. Actual cepw@y = 20 2. Capacity 4 4 2.SM tooa/yr. 3 15 3. Flexibility 3 3 3 N/A 4. Supplier Inventory NA NA NA 5. Plants & Locations Wolf Creek Mine Lovely, Ky Ky. Criterion Deane, Ky. Road Creek Complex & Sidewinder Tipple Cedar Crk., Ramblin Coal,Cllfton - 100% company owncd & Pfko County Ky. (Bmnbem & Beker) Pike County Coal, Pike County, Ky. opcretcd 5 3 3 3 6. Labor a. Union Nan-Uetoa 5 Na¢-Unlm 5 Nou-Un1w 5 b. Contract Expiration date Noo-Uww 5 Neo-Uniou 5 Nea-Udon 5 c. Situation - Glm S Glm 5 Calm 5 5 d. Score 15 15 15 N/A 7. Energy NA NA NA NIA 8. EPA Compliance NA NA_ NA 9. Fnanciai Strength 10 (See page(s) 6-9 ) 3 3 2 10. Corporate Management 5 Strength 4 4 3 11. Corporate Management 10 Commitment 4 4 3 100 Total Security Rating 4.25 4.25 3.50 V Page 4 of 9 Class/Code: Coal o9ze3MOZ
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0 Philip Morris U.S.A. Materials Purchasing 1993 Dlrect Material Buying Plan Material Code/Super Class Unit of Measure Supplier Name Shell (Ziegler) Westmoreland Minority Supplier Unassigned 1993 Five-Year Buying Plan Projection Energy Ton 1994 Description Forecast Date 1995 Coal 11/27192 1996 Units % Units % Units % Units % Unlts % 72,000 4 72,720 40% 72,720 4 72,720 72,720 72,000 4 72,720 4 72,720 4 72,720 40% 72,720 25,000 14% 26,000 14 25,000 14 25,000 14 25,000 14 10,000 6 10,000 6 10,000 6 10,000 10,000 6 179,000 1 180,440 10DOA 180,440 1 180,440 1 180,440 1 ISSUES: " Continue involvement in Philip Morris Coal Synergies Council. • Commodity item, partnership not anticipated. Page 5 of 9 ClassJCode: Coal iszseVesoz 0 1997
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0 1988 - 1992 Buying Histor*d 1993 Buying Plan 1988 1989 1990 1991 1992 P 1993(P) Total Quant 158,948 157,866 145,859 144,578 164,492 179,000 Su lier % % % % % % A. T. Massey 0% 6% 15% 15% 6% 0% Shell Mining 37% 33% 39% 34% 40% 40% Westmoreland 47% 45% 34% 31% 38% 40% Yancy Minerals 16% 16% 12% 20% 16% 14% Unassigned 0% 6% Total 100% 100% 100% 100% 100% 100% m Page 6 of 9 ClasslCode: Coal z9zeSvcsoz
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• • s Vendor: Westmoreland Coal Sales Current Ratio: Financial Analysis workshed (Miillons of Dollars; all data as of December 31, 1991 unless otherwise Indkmted.) ~ 1991 1990 1 1989 1. Enter Current Assets 117.9 127.6 126.8 2. Enter Current Liabilities 75.7 66.8 67.3 3. Current Ratio (Line 1/LIne2) 1.56 1.91 1.88 Debt To Assets Ratio: 1. Enter Total Debt 38.3 47.0 55.7 2. Enter Total Assets 320.7 338.0 345.3 3. Debt To Assets Ratio (Line 1/Line 2) 0.12 0.14 0.16 Profit Margin On Sales: 1. Enter Net Income -13.4 12.5 . 11.4 2. Enter Sales 568.4 551.3 600 3. Profit Margin On Sales (Line 1/Line 2 (0.02 0.02 0.02 Return On Total Assets: 1. Enter Net Income -13.4 12.5 11.4 2. Enter Total Assets 320.7 338.0 345.3 3. Return On Total Assets (Line 1lLine 2) 0.04) 0.04 0.03 Earnings Per Share: f ($1.62) CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. Page 7 of 9 Class/Code: Coal $1.39 C9zssvCsoz
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. Financial Analysis worksheet (Millions of Dollars; all data as of December 31,1991 unless otherwise Indicated. Vendor: Westmoretand Coal Sales 1988 1987 Current Ratio: 1986 1 1. Enter Current Assets 132.2 105.5 124.7 2. Enter Current Liabilities 1 69.1 e9.4 69.2 13. Current Ratio (Line 1lLine2) 1.91 1.181 1 80 Debt To Assets Ratio: 1. Enter Total Debt 106.4 78.4 66.7 2. En[er Total Assets 386.4 369.8 401.8 3. Debt To Assets Ratio (Line 11Line 2) 0.28 0.21 0.17 Profit Margin On Sales: 1. Enter Net Income 1.5 43.0) 13.0 2. Enter Saies 593.4 616.7 598.6 3. Profit Margin On Sales (Line 1lLine 2 0.00 (0.07) 0 02 Return On Total Assets: 1. Enter Net Income 1.5 43.0) 13.0 2. Enter Total Assets 386.4 369.8 401.8 3. Return On Total Assets (Line 11Line 2 0.00 (0.12) 0.03 Earnings Per Share: I $0.18 CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. $5.22) 51.59 Page Sof9 ~szee~~saz ~'~~'~: Coal
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Vendor. Shell Coal Marketing Currant Ratio: Financiat Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 unless otherwise fndtcated~ F 1991 1990 1989 1 1. Enter Current Assets 171.0 175.0 162.0 2. Enter Current Liabilities 82.0 84.0 66.0 3. Current Ratio (Line 11LIne2) 2.09 2.08 2.45 Debt To Assets Ratio: 1. Enter Total Debt 106.0 105.0 87.0 2. EnterTotat Assets 1,378.0 1,358.0 1,326.0 3. Debt To Assets Ratio (Line 1/Line 2 0.08 0.08 0.07 Profit Margin On Safes: 1. Enter Net Income 44.0 46.0 104.0 2. Enter Sales 695.0 667.0 677.0 3. Profit Margin On Sales (Line 1lLine 2) 0.06 0.07 0.15 Return On Total Assets: 1. Enter Net Income 44.0 46.0 104.0 2. Enter Total Assets 1,378.0 1,358.0 1,326.0 3. Return On Total Assets (L e 1/Line 2 0.03 0.03 0.08 Earnings Per Share: f NA I CONFIDENTIAL...Not to be removed from Phifip Morris Materials Purchasing Department. NA I NA I Page 9 of 9 Class/Code: Coal ssze~~esaz
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• 1993 Direct Materi~uying Plan • Summary e Material Code/Super Class Energy Unit Of Measure Estimated Usage Gallon Std. Cost 1,078,000 $0.41 Estimated Purchase Quantity 1,502,000 Annual Purchases Est. 1992 Projected 1993 Supplier Name Units 96 Units 45 Commitment ' ova"R ita&9 1. Amerada Hess 600,000 48 0 0 3- As Needed 4.09 2. Fuel Oils, Inc. 260,417 20 384,000 26 2-1 Year 4.23 3. Koch Fuels 413,347 32 0 0 3- As Needed 4.09 4.Holding6ros. 30,000 2 40,000 3 2-1Year 3.83 S.Unassigned 1,078,000 72 3-AsNeeded 6. 7. 8. 9. 10. Total 1,303,764 10001( 1,502,000 100~Ao 1. Contract 2 Purchase Order Explanation Spot purchase was from Koch Fuels in May sszegVssoz 3. Other Spot Purchase Descrip0on #6 Fuel ON Estimated $ Purchase $614,389.62 Page 1 of 18 Class/Code: #6 Fuel O il Approval yn~ Date: z ePrepared Egy D. N.~Keithfey Date: 12102/92
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Material Code/Super Class Energy Unit Of Measure Gallon Std. Cost $0.662 Estimated Usage 120,000 1993 Direct Materi4puying Plan Summary Page Description #2 Fuel Otl ! Estimated $ Purchase $80,810.48 Estimated Purchase Quantity 122,000 Annual Purchases Est.1992 Projected 1993 Su ier Name Units % Units % Commitment (') ovenll wrms 1. C. T. Johnson 5,000 4 10,000 8 2-1 Year 3.72 2. Fuel Oils, Inc. 80,000 59 52,000 43 2-1 Year 4.23 3. Holding Bros. 50,000 37 60,000 49 2-1 Year 3.83 4. 5. 6. 7. 8. 9. 10. Total 135,000 1000 122,000 100 1. Contract 2. Purchase Order 3. Other Explanation 49zBeVCsoz Page 2 of 18 ClasslCode: #2 Fuel Oil Approval Date: Prepared By: D. N. Keithley Date: 12/01192
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0 1993 Direct Materiuying Plan Summary age Material CodelSuper Class Energy Unit Ot Measure Estimated Usage Gallon Std. Cost $0.553 800,000 Descxiptlon #4 Fuel Oil Estimated $ Purchase $185,900.00 Estimated Purchase Ouanfity 300,000 Est. 1992 Projected 1993 Su ier Name Units % Units 96 Commitment " O.m.n twIng 1. Fuel Oils, Inc. 252,000 100 300,000 100 2-1 Year 4.23 2. 3. 4. 5. 6. 7. 8. 9. 10. Total 252,000 100% 300,000 1004' 1. Contract Exolanation 2. Purchase Order e9z€3avssaz 3. Other Page 3 of 18 Class/Code: #4 Fuel Oil Approval Date: Prepared By: D. N. Kehhley Date: 12/01192
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0 Objectives/Strategies/7ssues ives' " Reduce oil costs with no corresponding decrease in quaiity, service, or security. " Maintain compliance with PM specifications • Evaluate the possibility of minority participation in #6 OII purchases • Continue to support minority participation Shatecies• " Continue 75% gas /25% oil burn policy at interruptible focations. ' Monitor #6 oil and natural gas prices to determine best purchase (Interruptible locations). " Continue oil analysis program with Robb and MoodyICHEM-BAC Labs. Monitor and report results to using locations and suppliers. ' Investigate cost saving opportunities available through transferring oil from Koch Fuel Oil tanks to PM/PC tank (Richmond). ' Seek competitive quotes for barge purchases. ' Investigate the feasibility of purchasing #6 oIl Park 500 requirements from TEX-PAR Energy (Minority firm with tank space available at Regional Enterprises). " Maintain C. T. Johnson as a supplier for #2 fuel oil (Minority) " Purchase from local sources where possible issues: " Monitor UMW Labor situation (current contract expires 1-31-93) This situation could impact Oil consumption Page 4 of 18 69Ze8bESaz Class/Code: #2/4r6 Fuel Oil
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. Supplier Eveation . Suppiier Arnerada Hess Fuel Oils, Inc. Koch Fuels Weight Using Location Park 500/Rich PClCabarrus Stoclcton/20th Park 500/Rich PC A. Cost Factors 90 1. Delivered Cost 4 10/15/92 (B6 Oll = $.403) 4 l0/15/92 (#6 011= $.415) 9n/92 (94 0n = $.608) 4 10l15/92 (86 Oll = $.405) - m 2. Volume Incentives NA NA NA 3. Cost Savings Provided NA NA NA 10 4. Price Leadership 3 3 3 10 Total Cost Rating 3.9 3.9 3.9 B. Quality Factors 30 1. Wo Rejects 5 5 . 5 50 2. Quality Control 4 4 4 20 3. Prooessability! Machineability 4 4 4 20 Total Quality Rating 4.3 4.3 4.3 30 C. Total Service Rating 3 4 3 40 D. Total Security Rating (See page 6 ) 4.85 4.45 4.95 100 Overall Rating 4.09 4.23 4.09 Page 5 of 18 O!~zQB~ESOZ Class/Code: #214/6 Fuel Oil
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0 Security Ev4jation Supplier Supplier Supplier eight Amerada Hess Fuel Oils, Inc. Koch Fuels D. Securiry 1. Raw Matedals PraducedRennerlMarkcur Purcbaeesrenaedproduct Praducer/Reaner/Markcterr Wholeeele & RUni1 from mnJor producers Whokeelo & Refsil ((.e. Fmmn/Kueb) 20 5 4 ' 5 160,000 bble./day (St. Croix) Uanmhtod through-put agreement 300,000 bbls./day 20 2. Capatity 5 4 5 15 3. FlexiWl' 4 4 4 800,000 bb1a. Chesapeake, Va. Supply guaranteed by fu exce,se of 4 miWeo bbls. an East Coast 231,000 bblr. Wilmington, N. C. Koch 300,000 b61s. in Vs. (Newpoxt News / 10 4. Su ier Inventory 4 4 Richmond) 4 Numerous terminals on East Koch Fuels Richmond, Va. Numerous terminnl, on Eeet Coaet Coeet 5 5. Plants & Locations 4 4 4 6. Labor a. Union xaa-umw s xos-vmoa s Nm-umoa 5 b. Contract Expiratian date Noa-umoo 5 Naa-uaba 5 Noo-vmaa 5 c. Situation Calm 5 Gim 5 GIm S 5 d. Score 15 15 15 NIA 7. Energy NA NA NA N/A 8. EPA Compliance NA 17A NA 9. Financial Strength 10 (See page(s) 15-18 ) 4 3 4 10. Corporate Management 5 Strength 4 4 4 11. Corporate Management 10 Commitment 2 4 2 100 Total Security Ratin 4.85 4.45 4.85 Page 6 of 18 Class/Code: d`•PJ4/8 Fuel Oil ~~,zea~ssoz
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• Supplier Eveation • Supplier Holding Bros. C. T. Johnson Weight Using Location Cabarrus StemmerylStocktonlJRC/OCl Jeff DavislPClMau St. A Cost Factors 90 1. Dellvered Cost 4 8`6oll=$0.421A2on=$.67 3 NEon=$.90 2. Volume Incentives NA NA 3. Cost SaVi 6 ProVlded NA NA 104 4. Price Leadershi 3 3 10 Total Cost Rating 3.9 10 B. Quality Factors 30 1. 46 Rejects 5 5 50 2. Quality Control 3 3 20 3. Prooessabiliry/ Machineahility 4 4 20 Total Quality Rating 3.8 3•s 30 C. Total Service Rating 4 4 40 D. Total Security Rating (Sea page 8 ) 3.70 3.65 1Q0 Overall Rating - 3.83 T 3.72 Page 7 of 18 zGZ8t3vES0z Class/Code: Af21416 Fuel Oil
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• Security Eveation • Supplier Su ier eight Holtli Bros. C.T.Johnson (#2 Fuel011 1. Raw Mateiial3 Reroa bfackaer / Purotwea Retail Mataxer IPnrcbaxe product &om product from Heca Litlle Oil 20 3 3 20 2. CapaGty 3 3 15 3. Flexibiftty 3 3 Hem: Little Oil = 5.000,000 Oel. 231,000 bhls. Wilmington, N. C. C. T. Jobn+on = 7,500 Oel. 10 4. Supplier Inventory 3 3 Heee Cba$otte, N. C. Johnwn- Richmond, Va, - Cancord N. C. Little Oil - Richmond, Va, 5 5. Plants & Locations 4 3 r a. Union Non-Union 5 Non-Union 5 b. Contract Expiration date Non-Union 5 Non-Union 5 c. Situation calm 5 Cnlm 5 5 d. Score 15 15 N/A 7. Ener NA NA N/A B. EPA Com liance NA NA . 9. Financial Strength 10 (See Page(s)15-18 ) 3 3 10. Corporate Management 5 Strength 4 2 11. Corporate Management 10 Commitment 3 4 100 Totai Security Rating • 3.70 3.65 Uzesvssaz Page 8 of 18 ClasslCode: #6 Fuel Oil
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0 • Philip Morris U.S.A. Materials Purchasing 1993 Dlrect Material Buying Plan Material Code/Super Class Unit of Measure Suppller Name Amerada Hess Fuel Oils, Inc. Koch Holding Bros. Unassigned 1993 Five-Year Buying Plan Projection Energy Gallon 1994 Description #6 Fuel Oil Forecast Date 1995 11127/92 1996 1997 Units 96 Un6s % Units % UnRs 16 I II Untta % 0 0 0 0 0 384,000 384,000 25 384,000 34 384,000 25 384,000 34 0 ODA 0 ODA 0 0 0 40,000 3 45,000 ~5,000 4 45,000 3 15,000 4 1,078,000 7 1,116,000 7 ~ 698,000 62 1,116,000 7 696,000 6 1,502,000 1 1,545,000 1 1,125,000 1 1,545,000 1 1,125,000 1 ISSUES: " Investigate the feasibility of purchasing Park 500 requirements from TEX-PAR Energy. " TEX-PAR Energy Is in the process of leasing tanks at Regional Enterprises. " Volumes based on 75% natural gas/25% fuel oil - " Commodity item, partnership not anticipated. Page 9 of 18 Class/Code: #6 Fuel Oil tLzei3VESOz
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• Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Material Code/8uper Class Unit of Measure Supplier Name C.T.Johnson Fuel Oils, Inc. Holding Bros. 1993 Five-Year Buying Plan Projection Energy. Gallon 1994 Description Forecast Date 1995 #2 Fuel Oil 11127/92 1996 1997 Units % Untts % Units % Units % Uniuc % 10,000 8 10,000 H 10,000 4 10,000 10,000 52,000 43 60,000 60,600 26 61,206 15 61,818 15 60,000 4 60,000 163,000 7 350,000 83 350,000 B3 122,000 1 130,000 1 233,600 1 421,206 1 421,818 1 ISSUES: * Commodity Item, partnership not anticipated. * 1995 volume based on installation of Incinerators in Cabarrus. Page 10 oF 18 ClasslCode: #2 Fuel Oil sLzaetrEsaz
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0 0 Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Material Code/Super Class Unit of Measure Five-Year Buying Plan Projection Energy Gallon Description _ #4 Fuel Oil Forecast Date 11/27/92 . 1993 1994 1995 1996 1997 Suppllar Name Units % Un[ts % Units % Units % Units % Fuel Oils, Inc. 300,000 1 OOOA 300,eW 1 300,000 1 30e,D00 1 300,000 t 300,000 1 300,000 1 300,000 1 300,000 1 300,000 1 ISSUES: * Volumes based on 75% natural gas/25°Po fuel oil * Commodity item, partnership not anticipated. s>°,zeevESOz Page 11 of 18 Class/Code: #4 Fuel Oil I
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0 1988 - 1992 Buying Historod 1993 Buying Plan Total Quanti 1,474,652 2,226,529 1,079,881 1,932,635 1,303,764 1,502,000 Su ier % % % % % % Amerada Hess 56% 78% 63% 74% 46% 0% Fuel OIIB, Inc. 44% 22% 33% 24% 20% 26% Koch 0% 0% 0% 0% 32% 0% Unassigned 0% 0% 0% 0% 0% 72% Holding Bros. NA NA 4% 1% 2% 3% Total 100% 100% 10D% 100% 100% 100% Comment: 1988/1989 data for Halding Bros. is not available. 4>rZBL~VES0Z Page 12 of 18 Class/Codet #6 Fuel Oil
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0 1988 - 1992 Buying Historygid 1993 Buying Plan 1988 1989 1990 1991 1992(P 1993 P) TotalQuen 263,885 358,235 238,765 172,476 135,000 122,000 Su ler % % % % % % Amerada Hess 17% 10% 6% 0% 0% 0% C. T. Johnson 9% 8% 10% 5% 4% 8% Fuel Oils 26% 24% 18% 63% 59% 43% Holding Bros. 48% 58% 66% 32% 37% 49% Total 100% 100% 100% 100% 100% 100% Page 13 of 18 Class/Code: #2 Fuel Oil 0 eLzeeV>~soz
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0 1988 - 1992 Buying Historygnd 1993 Buying Plan 1988 1989 1990 1991 1992 P 1993 P Total Quantify 946,761 903,957 562,040 589,611 262,000 300,000 Su ier ~Yo % % % % % Amerada Hess 100% 96% 57Wo 0% 0% 0% Fuel Oils, Inc. 0% 4% 43% 100% 100% 100% Total 100% 100% 100% 100% 100% 100% s4zegvvsoz Page 14 of 18 ClassJCode: #4 Fuel Oil 0
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0 Vendor: Amerada Hess Current Ratio- 0 Fmancial Analysis Worksheet Millions of Dollars; all data as of December 31, 1991 unless otherwise indicated. 1991 1990 1989 1 1. Enter Current Assets 2,476.1 3,279.8 1,951.0 2. EnterCurrentLlabilities 1,850.7 2,676.6 1,457.8 3. Current Ratio Une 1/LIne2 1.34 1.23 1.34 Debt To Assets Ratio: 1. Enter Total Debt 3,022.6 2,531.9 2,348.4 2. Enter Total Assets 8,841.4 9,056.6 6,867.4 3. Debt To Assets Ratio (Line 1/Line 2) 0.34 0.28 0.34 Profit Margin On Sales: 1. Enter Net Income 84.3 482.7 476.3 2. Enter Sales 6,416.3 7,081.0 7,081.0 3. Profit Margin On Sales (Line 1/line 2 0.01 0.07 0.07 Return On Total Assets: 1. Enter Net Income 84.3 482.7 476.3 2. Enter Total Assets 8,841.4 9,056.6 6,867.4 3. Return On Total Assets Line 1/Line 2 0.01 0.05 0.07 Earnings Per Share: I $1.04 $5.96 CONFIDENTIAL...Not to be removed from f pilip Morris Materials Purchasing Department $5.87 Page 15 of 18 O4zB8tCSOZ ClassJCode: N2I6 Fuel Oil I
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lVendor Amerada Hess Current Ratio: Financial Analysis Worlmheet MlAions of Dollars; all data as of December 31,1991 unless otherwise tndioated. 1988 1987 1986 1 1. Enter Current Assets 1,5702 1,635.5 2. EnterCurrent Liabilitles 1,285.1 1,473.7 3. Current Ratio (Line 1/Line2) 1.22 1.11 Debt To Assets Ratio: 1. EnterTotalDebt 1,313.9 1,064.2 2. Enter Total Assets 5,371.9 5,304.8 3. Debt To Assets Ratio (Line 1/tane 2) 0.24 0.20 Profit M in On Sales: 1. Enter Net Income 124.2 229.8 2. Enter Safes 4,263.5 4,784.5 3. Profit Margin On Sales (Line 1/Line 2) 0.03 0.05 Return On Total Assets: 1. Enter Net Income 124.2 229.8 2. Enter Total Assets 1 5,371.9 5,304.8 3. Return On Total Assets (Line 1/Llne 2) 0.02 0.04 Earnings Per Share: [ CONFIDENTIAL..Not to be removed from Fhilip Morris Materials Purchasing Department. $2.73 I Page 16 of 18 TgZgg$CS0Z CiasslCode:#216 Fuel Oil
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0 0 0 Financial Analysis Worksheet (Millions of Dogars; aN data as of December 31, 1991 unless otherwise indic ated. Vendor: Petroleum Marketera (Fuel Oils 1991 (6-30-92 1990 (6-30-89) 1989 (6-30-88) Current Ratio: I 1. Enter Current Assets 7.6 7.3 2. Enter Current Liabilities 6.3 6.9 8 8 3. Current Ratio (Line 1/Line2) 1.21 1.06 0.77 Debt To Assets Ratio: 1. Enter Total Debt 16.7 17.1 16.7 2. Enter Total Assets 22.4 22.5 21.2 3. Debt To Assets Ratio (Line 1lLine 2) 0.75 0.76 0.74 Profit Margin On Sales: 1. Enter Net Income 0.28 0.033 0.476 2. Enter Sales 137.1 149.3 126.8 3. Profit Margin On Sales (Line 1lLine 2) 0.002 0.000 0.004 Return On Total Assets: 1 1. Enter Net Income I 0.280 0.033 0.476 2. Enter Total Assets 22.40 22.50 21.2 3. Return On Total Assets (Line 11Line 2 0.013 0.001 0.02 Earnings Per Share: [ CONFIDENTIAL...Not to be removed from Philip Morris Materials Purchasing Department. $0.12 Page 17 of 18 ZBZBRVESOZ CiassrCoae:,rV4i6 Fuel Oil
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S 1993 Direct Materiopuying Plan • Summary Page Material Code/Super Class Unit Of Measure Estimated Usage Energy Description Natural Gas Mef Std. Cost $4.62 Estimated $ Purchase 1,310,056 $4.626,373 Estimated Purchase Quantity 1,310,056 Annual Purchases Est. 1992 ProJected 1993 Supplier Name Units 96 Units % Commitment (') ovud~ taaos 1. City of Richmond 752.500 59 795,656 61 3- 3 Year 4•09 2. Public Service of N.C. 28,000 3 28,000 2 Evergreen 3.98 3. Louisville Gas & Electric 486,313 36 486,400 37 Evergreen 3.98 4. 5. 6. 7. 8. 9. 10. Total 1,266,813 100% 1,310,056 1004' 1. Contract Exotanation 2. Purchase Order 3. Other 3 year purchasing agreement Page i of 11 Class/Code: Natural Gas ~BZBB~ ~'~~z Approval . I~ Date: ~ z 9 Z Prepared y: . N. Kei(htey Date: 11127/92
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ob•jeeflvcs/strategieslrssues Oblectives: * Reduce natural gas costs with no corresponding decrease In quality, service, or security. Strateaies: " Reevaluate current three year contract with City of Richmond for possible areas of improvement. " Investigate the following contract areas for possible improvement: A. Gas vs. #4 oil at the Stemmery B. Reduction in the non gas charge for firm gas C. Attempt to reduce city margin and minimum voiume requirements to achieve discounts (Interruptible accounts). " Evaluate the feasibility of direct gas purchases for Richmond through PM natural gas synergies council " Continue to monitor current PM/City of Richmond gas contract. " Monitor Gas vs. oil costs at Interruptible locations to achieve best possible savings. " Continue 75% gas l25% oil burn policy at interruptibte locations. Issues: * Current PM/CIty of Richmond gas contract expires 6-30-93. Pryn2of11 SS4SSYC.SOC. , - (,7arM.ode:N.roiBCee
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Proieated Consumotion Anticipated Natural Gas t~umptlon I Costs 1993 - Rich d Firm Arxounts Location Total BTU Reauirement$ Naturai Gas Reaulrements BI. Plant 435,822 426,822 MC/ET 37,572 36,834 473,394 463,656 Interruptible Accounts L tion Total BTU Requirements (000,00t1) Natural Gas Requirements (Gas @ 75% / O9 @ 25%) 20th Street 79,000 58,000 Stockton Street 152,000 112,000 Stemmery 155,000 114 000 0 , " MC 48,960 48,000 386,000 332,000 Projected Cost Firm Accounts Gas Cost = $3.42 Demand = $0.388 Non Gas Cost = $0.816 Cost Per Mcf F $4.62 Total Cost For 1993 Firm Volume - $2,143,853 Interruptible Accounts Gas Cost w $2.10 Maximum Margin = $1.50 Cost Per Mcf = $3.60 Total Cost For 1993 Interruptible Volume = $1,195,200 • I Page 4 of 11 4@ZgBv~.'SrOZ ClasslCode: Natural Gas
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• Supplier EvOlation • Su ier City of Richmond Public Service of N. C. Louisville Gas & Electric Weight Using Location Richmond Facilities Cabarrus LouisWlle A. Cost Factors 60 1. Delivered Cost 3 ]ntersuptible = 52.65lMef (July 1992) Ficm= 54.52fMcf (July 1992) 3 Firm=S3.89/Mcf (July 1992) 3 IatevuptWle = 52.73/Mcf (July 1992) F1tm=S3.31RwIcf (July 1992) 2. Volume Incentives NA NA NA 10 3. Cost Savings Provided 4 3 3 10 4. Price Leadership Interruptlbleve. N6 Oil 3 3 3 10 Total Cost Rating 3.1 3 3 B. Quality Factors O 1. 96 Rejects NA - NA NA 0 2. Quality Control NA NA NA 100 3. Processabilityl Machineability 4 4 4 20 Total Quali Rating 4 4 4 30 C. Total Service Rating 4 4 4 40 D. Total Security Rating (See Page B ) 4.45 4.20 4.20 1 00 Overall Rating 4.09 3.98 3.98 Page 5 of 11 Class/Code: Natural Gas
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0 Security Evoation S uppier u er u er elght City of Richmond Public Service of N. C. Louisville Gas & Electric D. Security 1. Raw Materials . City has long-term contracts with major Short term mmract., long term Short term contraet., long term contraU., producer. (i.e. Natural Gas Clearing contracb. Spot purcLexs Spot purchue. HouselCoastal) 30 4 4 4 156,500 Mcf maximum penkday wInter 352,941 Mef maximum peek day 945,000 Mef maximum pcaicday winter 20 2. Capa ' 4 W;rtcr 4 4 10 3. Flexibil' 4 4 4 10 4. SU Cler Invent0fy Prop®ne 300,00 Oetlou I Bcf LNG (Netoigh N.C.) 12 mlllioa Mef (t.ouisullIo) NA 5. Plants A Locafions 3 3 3 6. Labor a. Union Nw-Udan 5 IuC1.CL,mtcdWmton 3 Im,i.Htawhwdof2lcchic.lwe&e 3 b. Contract Expiration date Non-Uuloo 5 12-12-93 3 11-01-94 3 C. Situation cam 5 Glm 4 Guo 4 5 d. Score IS 10 10 N/A 7. Energy NA NA NA N/A 8. EPA Compliance NA NA NA . 9. Financial Strength 10 (See pa s 8-11 4 4 4 10. Corporate Management 5 Strength 4 4 - 4 11. Corporate Management 10 Commitment 4 4 4 100 Overall Security Rating 4.45 4.20 4,20 a w W Page 6 of 11 Ctass/Code: Natural Gas Gszesvesoz
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1988 - 1992 Buying Histoq&d 1993 Buying Plan 1988 1989 1990 1991 1992(P 1993 P Toat Querttm.y 562,321 927,817 1,074,788 1,215,157 1,266,813 1,310,056 supPlbr % % % % % % C1ty ofRlchmund 96% 56% 64% 60% 59% 61% Publlc Service of N.C. 4% 2% 2% 2% 3% 2% LauLviRodes And IIcctric NA 42% 34% 38% 38% 37% Tazl 300% 100% 100% 100% 100% 100% Comment: 1988 Louisville data is not available Page 7 of 11 ClasslCode: Natural Gas
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0 Vendor: City of Richmond Department of Public Utilities Current Ratio: 1991 1990 [ 1. Enter Current Assets 86.7 50.6 40.3 2. Enter Curron[ Liabilities $5.7 26.3 23.7 3. Current Ratio (Line 1/Line2) 2.43 1.92 1.70 Debt To Assets Ratio: 1. Enter Total Debt 302.2 192.3 199.5 2. Enter Total Assets 585.5 445.6 417.7 3. Debt To Assets Ratio (Line 11Line 2) 0.52 0.43 0,48 ° Profit Margin On Sales: 1. Enter Net Income 18.0 12.8 11.0 2. Enter Sales 150.1 144.1 143.7 3. Profit Ma in On Sates (Line 1/Line 2) 0.120 0.089 0.077 w w Return On Total Assets: 1. Enter Net Income 18.000 12.800 11.000 2. Enter Total Assets 585.5 445.6 417.7 3. Return On Total Assets (Line 1/Line 2 0.03 0.03 0.03 Earnings Per Share: I NA I CONFIDENTIAL...Not to be removed from~P,hilip Morris Materials Purchasing Department. TGZ986CSOZ Financial Analysis Worksheet (Millions of Doilars; all data as of December 31, 1991 unless otherwise Indicated.) NA 1989 NA Page 8 of 10 Class/Code: Natural Gas I
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i Financial Analysis Worksheet (Millions of Dollars; all data as of December 31, 1991 untess otherrvise Indicated.) Vendor: City of Richmond Department of Public Utllities Current Ratio: 1988 1987 1986 1. Enter Current Assets 31.0 26.2 36.3 2. Enter Current Liabilities 23.4 17.8 16.3 3. Current Ratio (Line 1/Line2) 1.32 1.47 2.23 Debt To Assets Ratio: 1. Enter Total Debt 203.0 126.1 127.8 2, En[er To[al Asse[s 406.0 291.5 286.6 3. Debt To Assets Ratio (Line 11Line 2 0.50 0.43 0.45 Profit Margin On Sales: 1. Enter Net Income 8.61 6.0 6.6 2. Enter Sales 125.6 124.1 129.7 3. Profit Margin On Saies (Line 1lLine 2) 0.068 0.0.48 0.051 Return On Total Assets: 1. Enter Net Income 8.6 6.0 6.6 2. Enter Total Assets 406.0 291.5 286.6 3. Return On Total Assets (Line 1lLine 2 0.02 0.02 0.02 Earnings Per Share: [ NA I CONFIDENTIAL...Not to be removed from}Philip Morris Materials Purchasing Department. NA I NA Page 9 of 10 Class/Code: Natural Gas zszss~CSOz
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9 s 0 Financial Analysis worksheet (Millions of Dollars; all data as of December 31,1991 unless otherwise indu;ated. Vendor. Public Service of North Carolina 1991 1990 Current Ratio: 1989 I 1. Enter Current Assets 44.0 37.5 2. Enter Current Liabilities 94.7 62.3 3. Current Ratio ne 1/Line2) 0.46 0.60 Debt To Assets Ratio: 1. Enter Total Debt 210.2 211.1 2. Entar Total Assets 352.1 317.8 3. Debt To Assets Ratio (Line 1/Line 2) 0.60 0.66 Profit Margin On Sales: 1. Enter Net Income 10.6 12.3 2. Enter Sales 193.2 201.9 3. Profit Margin On Sales (Line 1/Line 2) 0.055 0.061 Return On Total Assets: 1. Enter Net Income 10.6 12.3 2 . Ent1E er Total Assets 1 352,1 317.8 3. Return On Total Assets (Line 1/Line 2) 0.03 0.04 Earnings Per Share: I CONFIDENTIAL...Notto be removed from ' Philip Morris Materials Purohasing Department. y $1.26 Page 10 af 10 ClasslCode: Natural Gas 1 UsZeeVCsoz
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0 Vendor: Louisville Gas & Electric Current Ratio: 0 Financial Analysis Worksheet (Millions of Dollars; all data as of December 31,1991 uniess otherwise Indicated.) I 1991 I 1990 1 1989 1 1. Enter Current Assets 261.8 188.2 2. Enter Current Liabilifies j 169.7 151.0 3. Current Ratio (Line 1/Line2) 0.31 0.22 Debt To Assets Ratio: 1. Enter Total Debt 856.2 838.4 2. Enter Total Assets 2,054.1 2,001.3 3. Debt To Assets Ratio (Line 1/Line 2) 0.42 0.42 Profit Margin On Sales: 1. Enter Net Income 82.9 91.4 2. Enter Sales 714.9 698.9 3. Profit Mar in On Sales (Line 1/Line 2 0.116 0.131 Return On Total Assets: 1. Enter Net Income 82.9 91,4 2. Enter Total Assets 2,054.1 2,001.3 3. Return On Total Assets (Line 1/Line 2) 0.04 0.05 Earnings Per Share: [ $2.86 CONFIDENTIAL...Not to be removed from, Philip Morris Materials Purchasing Department. 83.45 Page 11 of 11 Class/Code: Natural Gas tFszeeVEsoz
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1988 - 92 BUYING NISTORY A[iU 1993 BUYING PLAN 1988 1989 1990 1991 1992 (E) 1993 (P) TOTAL QNANTITY 11,571 13,416 15,240 14,973 16,760 14,913 SUPPLIER Z Z z z- z Z (Plain) WESTVACO 45 48 51 50 51 50 (Plain) urNro--e,BELL 22 22 24 34 35 36 (Printed) VI-TEX 12 14 10 10 8 7 (Printed & Laminated) UNIFOIL 13 9 8 6 _ 6 7 DNION CAMP 8 8 7 0 0 0 o~~s8~~smz Page 6 of 6 C1ass/Code InnerPrame
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• OBJECTIVES/STRATEA/ISSVES OBJECTIVE: TO REDUCE MATERIAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, OR SECURITY. PROJECTED 1993 SAVINGS: $ 135,000 STRATEGIES TIMETABLE Allocate larger percentage of business to Fertilizers and Chemicals (F&C) to take advantage 1st QTR 1993 of competitive price. Calculations assume 6% increase from F&C 1st QTR 1993 and an additional 6% increase forecasted for MAFCO 3rd QTR 1993. New standard under above scenario and proposed volume allocations equals 4.1516/lb. ~ ~ OTHER ISSUES: 1) Savings calculated are based'on forecasted requirements. Due to uncertainty in export requirements, savings shown will vary depending on actual requirements. Page 2 of 8 Class Code 02-lOlA 6404S3 MOif.+
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VENDOR: Unilever CURRENT RATIO: 1989 1988 I • 1987 1. Enter Current Assets 11,539 11,951 11,060 2. Enter Current Liabilities 9,388 8,381 7,142 3. Current Ratio (Line 1/Line 2) 1.23 1.43 1.55 DEBT TO ASSETS RATIO: 1. Enter Total Debt 16,217 14,092 13,002 2. Enter Total Assets 20,618 19,909 18,699 3. Debt To Assets Ratio (Line 1/Line 2) .79 .71 .70 n PROFIT MARGIN ON SALES: 1. Enter Net Income 1,722 1,584 1,483 2. Enter Sales 33,444 30,980 30,948 3. Profit Margin On Sales (Line 1/Line 2) 5.1% 5.1% 4.8% V RETURN ON TOTAL ASSETS: 1. Enter Net Income 1,782 1,584 1,483 2- Enter Total Assets 20,618 19,909 18,699 3. Return On Total Assets (Line i/Line 2) 8.6% 8.0% 7.9% EARNINGS PER SE7ARE: I 5.81 I 5.39 ~ CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. 4TTSgVCsoZ FINANCIAL ANALY&S WORRSxttttrT (M7Sd,IONS OF DoLT.ARC; ALL DATA AS. OF DECEIIM 31, 1991 UNLESS OTtffi21fIgg INDICaTffi3. ) 5.04 Page 9 of 12 Class Code 03-070A
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~ FINANCIAT, ANALMS WORRSNEEZ< (HILLIONS OF DOLLARS; ALL DATA AS OF DgCMER 31, 1991 NN4B8s OTHH[bfISg INDI®T84.) • VENDOR: Henkel 1992 I 1991 1990 CURRENT RATIO: 1. Enter Current Assets _ 5,078 4,634 2. Enter Current Liabilities 4,022 3,622 3. Current Ratio (Line 1/Line 2) 1.26 1.28 DEBT TO ASSETS RATIO: 1. Enter Total-Debt 6,056 5,401 2. Enter Total Assets 9,914 9,163 3. Debt To Assets Ratio (Line 1/Line 2) .61 .59 n PROFIT MARGIN ON SALES: 1. Enter Net Income 445 429 2. Enter Sales 12,905 12,017 3. Profit Margin On Sales (Line 1/Line 2) 3.4% 3.6% RETURN ON TOTAL ASSETS: 1. Enter Net Income ' 445 429 2. Enter Total Assets 9,914 9,163 3. Return On Total Assets (Line 1/Line 2) 4,5?s 4 7% EARNINGS PER SHARE: n/a n/a ? CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. syl88f7uSa2'i Page 10 of 12 Class Code 03-070A
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0 VENDOR: Henkel CURRENT RATIO: 1989 1988 1987 1. Enter Current Assets 4,294 4,097 3,665 2. Enter Current Liabilities 3,662 2,962 2,573 3. Current Ratio (Line 1/Line 2) 1.17 1.38 1.42 DEBT TO ASSETS RATIO: 1. Enter Total Debt 5,320 4,712 4,232 2. Enter Total Assets 8,540 7,442 6,779 3. Debt To Assets Ratio (Line 1/Line 2) .62 .63 .62 PROFIT MARGIN ON SALES: 1. Enter Net Income 404 352 292 2. Enter Sales 11,639 10,252 9,256 3. Profit Margin On Sales (Line 1/Line 2) 3.5% 3.4% 3.2% RETURN ON TOTAL ASSETS: 1. Enter Net Income 404 352 292 2. Enter Total Assets 8,540 7,442 6,779 3. Return On Total Assets (Line 1/Line 2) 4.7% 4.7% 4.3% EARNINGS PER SHARE: n/a I n/a CONFIDENTIAL..Not to be removed from Philip Morris Materials Purchasing Department. FTNAN'CIAL ANALYS WORASMES (MILLIONS OF DOLLARS; ALL DATA AS OF DECErMt 31, 1991 DlII88S OTHP.INF.ffi6 Ilm2(alTED. ) n/a Page 11 of 12 Class Code 03-070A sTtgsvCsoz
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1993 DII2ECT MATIISfAL BUYING PLAN SUHI9ARY PAGE Material Code/Super Class 03-100A Description Casing 70 Unit of Measure lb. Std. Cost $ .48 Est. $ Purchase 7,680,000 Est. Usage 16,000,000 Est. Purch. Quantity _ 16,000,000 Annual Purchases- Est. 1992 Proj. 1993 Vendor Name Units ~ Units ~ Commitment (*) Overall Rating 1. Arco 11,480,000 70.0 12,400,000 77.5 1 - 3 Year 4.22 2. Olin 1,902,400 11.6 2,000,000 12.5 1 - Annual 3.26 3. Eastman 1,607,200 7.0 0 0 1 - Annual 3.14 4. Burden 1,410,400 6.6 1,600,000 10.0 1 - 3 Year n/a 5. 6. 7. 8. 9. 10. Total 16,400,000 100.0 16,000,000 100.0 * 1. Contract 2. Purchase order 3. Other EXPLANATION TzieeMaz Page 1 of 12 C1ass/Code 03-100A ~ Approval ~ ~y Date: i, Prepared B~ G. L. Nixon ~-Date: 10/15/92
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• Material Code/Super Class 03-300A Description Potassium Sorbate Unit of Measure lb. Std. Cost $ 3.10 Est. $ Purchase 803,520 Est. Usage 259,200 Est. Purch. Quantity 259,200 Annual Purchases Est. 1992 Proj. 1993 Vendor Name Units , ~ Units % Cotmnitment ("') Overall Rating 1. Eastman 172,800 67 172,800 67 2 - Quarterly 3.43 2. Hoechst Celanese' 86,400 33 86,400 33 2 - Quarterly 3.36 3. 4. 5. 6. 7. S. 9. 10. Total 259,200 100.0 259,200 100.0 I * 1. Contract 2. Purchase Order • EXPLANATION 1993 DIRECT MAT#LT. BUYING PLAN SUMMARY PAGE 3. Other Page 1 of 10 Class/Code 03-300A SsTeeVCsoz Approval , ' Date: /Z / 15 Z- ~ Prepared G. L. Nixon Date: 10/15/92
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Financial Analysis Worksheet (Millions of Dollars; all data as of Deoember31,1991 unless ottrerwise Indfcated. Vendor. Petroleum Marketers (Fuel Oils) 1988 6-30-87) 1987 (6-30-86) 1966 (8-30-85) Current Ratio: 1 1. Enter Current Assets 7,0 6.g 7.4 2. Enter Current Liabilities 6.0 5.5 5.8 3. Current Ratio (Line 11Line2) 1,17 1,25 1.28 Debt To Assets Ratio: 1. Enter Total Debt 13.1 12.2 13.6 2. Enter Total Assets 19.1 17.9 17.1 3. Debt To Assets Ratio (Line 1/Line 2) 0.69 0.68 0.80 Profit Margin On Sales: 1. Enter Net Income 0.275 0.874 0.420 2. Enter Sales 112.2 95.0 86.5 3. Profit Margin On Sales (Line 1/LIne 2) 0.002 0.009 0.005 Return On Total Assets: 1. Enter Net Income 0.275 0.874 0.420 2. Enter Total Assets 19.1 17,9 17.1 3. Return On Total Assets (Line 1/Line 2) 0.01 0.05 0.02 Earnings Per Share: I $0.97 $1.31 CONFIDENTIAL...Not to be removed from Philip Morris Materiels Purchasing Department. Page 18 of 18 esZgBteS4z Class/Code: #21416 Fuel Oll
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9 Philip Morris U.S.A. Materials Purchasing 1993 Direct Material Buying Plan Five-Year Buying Plan Projection Supplier Name Cltyof Richmond Public Service of N.C. Louisville Gas & Eleo. ISSUES: Material CodelSuper Class Unit of Measure 1993 Energy Mcf 1994 Description Forecast Date 1995 1996 0 1997 Units % Units % Units % Units 96 Units 96 795,656 61 796,656 53 795,656 47 795,656 4 795,656 47 28,000 212,000 14 395,000 24 395,000 24 395,000 24 486,400 37 486,400 33 486,400 486,400 29* 486,400 1,310,056 1 1,494,056 1 1,677,056 1 1,677,056 1 1,677,056 1 * Based on successful negotiations with the city of Richmond for a new three year contract * 1994-1997 volumes based on completion of Cabarrus expansion ' Additional gas fired boiler for Cabarrus operational mid 1995 * Incinerator requirements for Cabarrus are undetermined " Based on 75% natural gas, 25% fuel oil Page 3 of 11 Class/Codo: Natural Gas Natural Gas 11127192 sezgeKSOz

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