Philip Morris
Philip Morris U.S.A. Materials Purchasing Direct Materials Buying Plans
Fields
- 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
Document Images
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
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
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
tiQ53487so8
r
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.
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Page 1 of 16
Class/Code 05-Fi er To+
Approval - _Date: h 1v 91
Prepared By B. B. Jo ison Date:
, 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.
!
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Page 2 of 16
Class Cede 05/Filter Tow
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
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.
,
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Page 4 of 16
Class Code 05-Filter Tow
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
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
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
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
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Page 8 of 16
Class/Code 05-Filter Tow
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
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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
~
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
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
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
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
!
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Page 14 of 16
Class/Code 05-Filter Tow
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
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
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:
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
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
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
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~
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
$1,032 million. MV649trusoz
2.17
I
1989
1.63
Page 6 of 10
Class/Code 05-800-A
I
FINANCIAL ANAL2SIS WORKSHEET
(MILLIONS OF DOLLARS; ALL DATA AS OF DECEMBER 31, 1991 UNLESS OTHERWISE INDICATED.)
SUPPLIER
CURRENT RATIO:
Eastman
I
1988
I
I
0
1. Enter Current Assets 8,684
2. Enter Current Liabilities 5,850
3. Current Ratio (Line 1/Line 2) 1.48
DEBT TO ASSETS RATIO:
1. Enter Total Debt 16,184
2. Enter Total Assets 22,964
3. Debt to Assets Ratio (Line 1/Line 2) .70
n
i
W PROFIT MARGIN ON SALES:
1. Enter Net Income 1,397
2. Enter Sales 17,034
3. Profit Margin On Sales (Line 1/Line 2) 8.2%
RETURN ON TOTAL ASSETS:
1. Enter Net Income 1,397
2. Enter Total Assets 22,964
3. Return on Total Assets (Line 1/Line 2) 6.1%
Earnings Per Share:
11
4.31
I
I
Page 7 of 10
1E6G8t?C$O2: Class/Code 05-800-A
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
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
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
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:
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
. 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
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 _
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
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
~ 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
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
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
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
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
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
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
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
~ 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
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
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
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
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
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
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
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
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
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~
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
OBJECTIVES/STRATIES/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
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
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
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
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
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
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
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
~ 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
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
Philip 1ris 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
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
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
. 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
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
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
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
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
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:
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
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
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
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
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.
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
...u.~~:e, ..__..._.....,..._.......,.
:..N:='~'-~......,_ .x.+....
2053487985
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: ~ ~
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
S
zioa si
ao
E
~POo/sUUID
- aaEa
2053487988
azavsaanovcm - a
arsvzaaoov - v
v
7
(t/-I =rS.V. ao
~TdeAOx)
xotzvmvna riv~no
v
v
v
v
v
n/v (
s (s)aova Kox~) ~nwoas o
(n/v)
sore~ss o
v v v (n/v) aZTtvnb TIe?IIeo
XZ8'66 X66'66 X£9'66 ZOxVdd~ow X
uizvnb g
v v v (n/v) ssoo rivsaeo
ON sax sax (ox/sax) aaamao asvsau
'fl7/hTZ'T$ aT/xszIS fl7/ssZ't$ '£ - EaiNSS RIO9
sVszriS s~/osZ z~ sz/osi'tS z ar/o£
ffI/i97"T$ '8T/i£S'i$ -I '97/6T Aon/ZSO~ Q72TdAT13Q
sson v
avo-u~z-ront aeo-Zez-xoru avo--inz-xont xoizvaa~ ~sn
saioxaaa 1-ras xaazoo xv~zv irarYaans
xorivmvna aariaaas
0
.
SECURITYEVALUATION
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
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
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
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
`
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
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
1993 PRODUCTIVITY INITIATIVES
INNERFRAME
RESOURCING VITEX BUSINESS TO UNIFOIL n t, 1 1 !P Y )IJ
:
sIGG49VEsoz
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
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
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
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'[j0$ `304llim oaEA4saj1 x."{]-"jaaos
xox2emeea xsriaans
~ ,
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
e
1993 DIRECT Rn'rFaTnT. BUYING PLAN
SUMl19RY PACE
Material Code/Super Class 1fiB Description Fliv Top Boxes - 20's. 14s. 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
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
=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
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
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
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 "As"; 1-4)
~
- 1
A = ACCEPTABLE
U = UNACCEPTABLE
Page 4 of
Class/Code
6
9009eVEsoz
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
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
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
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
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
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
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
/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
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
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
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
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
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_
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 -$370,000.00
l, Cambridge) to standard closure ' 2nd Qtr., '93
- No development costs
Page 2 of 11
Class Code 40-42
OZQ138VESM
OBJEGTIVES/STRATEGIES/ISSIISS fcont.l
ASSUMPTIONS
A. December forecast used to project 1993 volume is based on sales forecast not production forecast
in order
to meet financial goals of P.2S.
B. This buying plap assumes moving closures from Vitea to IPC_
iSSIIES
. How to develop a cost model.
Page 3 of 11
T?QRRVCSf1 ~Z Class Code 40-42
i
'92 - '93 Intiatives - Closures
OpTeam 111552
ti Brand pescri t~ PI ~vinas Status
~
'IPC Value Priced Convert to Standard Closure 372,627 Need Management Approval N
Generics 1
i
'. 0
~ ~
IPC Private Generics Reduce Graphics Tolerances 171,000 Need Art Revisions w
0
e
v
IPC
Various
Optimize Vitex
Need Project Approval .t U
~
N b1
m a
m ~
wo
t
0
Total PI Savings 543,627
B-37
a$ea
2053488023
~
M
m
S9t1ISViI . 7ZV 7iQd
~~isenwxasa
t
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
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
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
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
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
~
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
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
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
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
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
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
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
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
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
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
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 1000 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
. 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
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
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
' 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
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~
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.
~
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 $100,000 1
ft08stcSt)z
Page 2 of 17
Class/Code C,D,S,50 & 53
OBIECTI V ES/STRATEGIES/ISOS
CARTONS
1993 BUYING PLAN
OBIECTIVE: TO REDUCE MATERiAL COSTS WITH NO CORRESPONDING DECREASE IN QUALITY, SERVICE, ORSECURITY.
PROlEC1ED 1993 sAVWG$~~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
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
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
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
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
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 $40,63/M
REBATE OFFERED (YES/NO) '
NO .
NO . (GENERIC BRANDS REBATE
PROGRAM) YES
OVERALL COST (A/U) A A A
B. QUALITY
Z ACCEPTANCE 99.42 98.48 99.64
O9ERAid. QUAL'LTY (A/U) A A A
C. SERVICE
(A/U)
A
A
A
D. SECURITY (FRO3L PAGE(S) ) A/U
OVIItALL EVALUATIOft
(NUHBER OF "A's"; 1-4)
A = ACCF.PTABLE
U - UNACCEPTABLE
A
4
A
4
4
Page 8 af
v
17_
Class/Code C.D.S.50 & 53
zsoeWsoz
0
SUPPLIER EVALUATION
SUPPLIER A.C.I., INC. GRAVUR$ 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 'As'; 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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
CASING
Z05'348go ld
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
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
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
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
-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=
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
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
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
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
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
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
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
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
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
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
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
~ 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
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
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
.
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
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
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
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
~ 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
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
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
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
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
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.
~ 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
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
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
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
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
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
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
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
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
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
~ 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
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 $.5525/lb _
3
15 2. VOLUME INCENTIVES
4
4
4
15 3. COST SAVINGS PROVIDED
3
3
3
30 4. PRICE LEADERSHIP
1
3
4
TOTAL COST RATING 2.95 3.15 3.45
25 B. QUALITY FACTORS .
60 1. % REJECTS * 6.1%
(12 of 196) 3 22.6%
(12 of 53) 2 5.7%
(5 of 87) 3
40 2. QUALITY CONTROL
3
3
3
0 3. PROCESSABILITY/
MACHINABILITY
N/A
N/A
N/A
TOTAL QUALITY RATING 3.00 2.40 . 3.00
20 C. TOTAL SERVICE RATING 4.00 3.50 3.00
30 D. TOTAL SECURITY RATING '
(SEE PAGE(S) 4 )
3.88
3.38
3.46
100% OVERALL RATING 3.43 3.10 3.25
Page 4 . of 12
.ar C1ass/COde 03-070A
WEIGHT SUPPLIER Proctor & Gamble Unichema Henkel
15 D.
1. SECURITY
RAW MATERIALS
Tallow '
Vegetable oil
Crude Glycerine
4 _
Tallow .
Vegetable Oil
Crude Glycerine
4
Tallow
Vegetable oi1
Crude Glycerine 4
10 2. CAPACITY (220M lbs. Nameplate) 25 (U_.S.) 60 M
160 M lbs.
5
221 M lbs.(World)
3 _
300 M lbs. (World) 4
5 3. FLEXIBILITY 4 3 3
10 4. SUPPLIER INVENTORY 6 M lbs. 2.5 M lbs.
6 weeks 4 4 weeks 3 2-4 weeks 3
15 5. PLANTS & LOCATIONS Balt. Md.,Cincinnati,oH Hanavond, Ind. Cincinnati, OH -
4 3 3
10 6. LABOR
a. UNION
b. CONTRACT
EXPIRATION DATE
c. SITUATION
d. SCORE Independent Oil &
Chemical Workers
10/95 .
Stable
0
1
3
4 Teamsters Local
7336
11/95
Stable -
0
1
.3
4 Steelworkers 0
-
2/93 0
Stable 3
3
5 7. ENERGY #6 Oil/Coal 3 Nat.Gas/R6 Oil 3 Coal,Nat.Gas,Propane 3
5 8. EPA COMPLIANCE 3 3 3
10 9. FINANCIAL
STRENGTH (SEE PAGE(S) 5-7) 4 4 4
S 10. CORPORATE MANAGEMENT
STRENGTH ' 4 ' 4 4
10 11. CORPORATE MANAGEMENT
COMMITMENT 4 4 3
100% TOTAL SECURITY RATING 3.88 3.38 3.46
SECURITY UATION
E~~BB$~SOZ 12
Class/Code 3-070A
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
FINANCIAL ANALYMS WOp'RSHR'T'
(MILLIONS OF DOLLARS; ALL DATA AS OF JRAM0, 1991 UNLES9OTEMi1/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
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
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
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 $410 M already included in standard
costs.
2) We continue to grow the business between PME and Arco Europe. We are
currently taking steps to set up Arco as the primary supplier to PM
affiliates in all of Latin America.
3) Continue to encourage Arco to build a second PG unit in the US.
FUTURE SUPPLY OUTLOOK: Supplies will be adequate next year with capacity utilization to 85%. Demand
will increase with the economy. A severe winter could cause temporary
tightness in the de-icer market.
INVENTORY POLICY: 15 - 20 days.
Page 2 of 12
Class Code 03-lOOAA
Improve long term security.
Reduce costs while maintaining suppliers margin.
Strengthen the PM Companies/Arco Supplier Alliance worldwide.
Maintain a significant volume of minority purchases.
We entered into a 3 year agreement with Arco beginning 1992 with a volume
. ? ZZTB9bES0Z
Phi*Aorris U.S.A.
Materials Purdrasirtg
Material CadelSuperclams ai-1L10rOt
Unit of.IMeasure lbs
199:i Direct Material Buying.Phm:
Five-Year Buying Plan Projection
Desariptiart Pmpytene. Glyaok USP-
Faresast.llata
November 19M.
1993 1994 1995 1996 1997
Suppi1er Name iJnits % Uni:ts % lkuts % tki(s % Lkefs %
Arco 12,400,000 77.5 y 13,O0Q;0i00 78.3 y 13,W0,000 78.3 y 13,000,000 77.4 y 13,200,000 77.6 y
Olin 2.000.000 125 y 2;000,000 120 y 2,000,000 120 2,o0D,080 i1.9 Y 2,01D(J,000 11.8 y
Easlman
~~n 0
1,600,000 0.0
10.0 0
1,600,000 0.0
9.6 0
1,600,000 0.0
9.6 0
1,800,000 0.0
10.7 0
1,800,000 0.0
10.6
16,000,000 100.0 16,600,000 100.0 i6,6aO,00p 100.0 16,800,000 i0Q.0 i7,000,00Q 100.0
ISSUES:
1. Arco only has one PCs unit in the US. They have sufficient inventory in the pipetineto: cover
adisruptionwhile.awaitingproduct'rmpartedfronrFrance. Theyplam tabuildaseeonrkunit.
2. Olin's plant is located M m'rtea fronr L/V. They havara longterm contraetwith Arco for P.O. wittr
Dow asa backup.
3. PM's curtent contract with Arco ends 12194.
4. Texaco building a PO/MTBE plant.
5. Arco extends PM pricing to KGF.
[:ZTgg$C9QZ Page 3 of 12
6. R&D projects could drastically alter PM oonsumptiorr. ClasstCode: 03-100A
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
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
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.
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
VENDOR: Olin
CURRENT RATIO:
FINANCIAL ANALYSIS WORRSHEET
(MILLIONS OF DOTr.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
-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
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
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
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
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
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
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
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
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
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.)'
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. EnterNet 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
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.
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
!
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
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
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
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
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
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
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
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
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
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
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
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
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
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
0
Material CodelStrper Gtassi
PhiMorris 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
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
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
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
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
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
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
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
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
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
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
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
B9T38tCS0z
Class/Code 03-330A
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
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
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
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
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
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
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. Nixon-Zf'~Date:
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
~ 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
Philip W-s U.S.A_ ~
Materials Purohasing
1M3 Direct 1Fateial 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
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
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
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
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
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:
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
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
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
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
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
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
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
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
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
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
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
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
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
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
(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
(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
(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
(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
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
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
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
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
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-
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
FINANCIAL ANALYSIS WORKSHEET
(AIISIONS OF YEN; ALL DATA AS OF DECF.lID i1, 1991 DNfug-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
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
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
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 2,378000 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:
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
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
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
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
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
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
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
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
_
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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:
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
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
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.
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
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
~ 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
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
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
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
~ 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
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
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
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
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
2053488256
1993 Direct MateriBuying 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
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
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
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
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
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
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
. 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
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
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
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
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
e9z3avssaz
3. Other
Page 3 of 18
Class/Code: #4 Fuel Oil
Approval Date:
Prepared By: D. N. Kehhley Date: 12/01192
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
. 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
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
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=$.90
2. Volume Incentives NA NA
3. Cost SaVi 6 ProVlded NA NA
104 4. Price Leadershi 3 3
10 Total Cost Rating 3.9 10
B. Quality Factors
30 1. 46 Rejects
5
5
50 2. Quality Control 3 3
20 3. Prooessabiliry/
Machineahility
4
4
20 Total Quality Rating 3.8 3s
30 C. Total Service Rating 4 4
40 D. Total Security Rating
(Sea page 8 ) 3.70 3.65
1Q0 Overall Rating
- 3.83
T 3.72
Page 7 of 18
zGZ8t3vES0z Class/Code: Af21416 Fuel Oil
Security Eveation
Supplier Su ier
eight Holtli Bros. C.T.Johnson (#2 Fuel011
1. Raw Mateiial3 Reroa bfackaer / Purotwea Retail Mataxer IPnrcbaxe product &om
product from Heca Litlle Oil
20 3 3
20 2. CapaGty 3 3
15 3. Flexibiftty 3 3
Hem: Little Oil = 5.000,000 Oel.
231,000 bhls. Wilmington, N. C. C. T. Jobn+on = 7,500 Oel.
10 4. Supplier Inventory 3 3
Heee Cba$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
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
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
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
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
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
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
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
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
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
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
$4.626,373
Estimated Purchase Quantity
1,310,056
Annual Purchases
Est. 1992 ProJected 1993
Supplier Name
Units
96
Units
%
Commitment (') ovud~
taaos
1. City of Richmond 752.500 59 795,656 61 3- 3 Year 409
2. Public Service of N.C. 28,000 3 28,000 2 Evergreen 3.98
3. Louisville Gas & Electric 486,313 36 486,400 37 Evergreen 3.98
4.
5.
6.
7.
8.
9.
10.
Total 1,266,813 100% 1,310,056 1004'
1. Contract
Exotanation
2. Purchase Order
3. Other 3 year purchasing agreement
Page i of 11
Class/Code: Natural Gas
~BZBB~ ~'~~z Approval . I~ Date: ~ z 9 Z
Prepared y: . N. Kei(htey Date: 11127/92
objeeflvcs/strategieslrssues
Oblectives:
* Reduce natural gas costs with no corresponding decrease In quality, service, or security.
Strateaies:
" Reevaluate current three year contract with City of Richmond for possible areas of improvement.
" Investigate the following contract areas for possible improvement:
A. Gas vs. #4 oil at the Stemmery
B. Reduction in the non gas charge for firm gas
C. Attempt to reduce city margin and minimum voiume requirements to achieve discounts
(Interruptible accounts).
" Evaluate the feasibility of direct gas purchases for Richmond through PM natural gas synergies
council
" Continue to monitor current PM/City of Richmond gas contract.
" Monitor Gas vs. oil costs at Interruptible locations to achieve best possible savings.
" Continue 75% gas l25% oil burn policy at interruptibte locations.
Issues:
* Current PM/CIty of Richmond gas contract expires 6-30-93.
Pryn2of11
SS4SSYC.SOC. , - (,7arM.ode:N.roiBCee
Proieated Consumotion
Anticipated Natural Gas t~umptlon I Costs
1993 - Rich d
Firm Arxounts
Location Total BTU Reauirement$ 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
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
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
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
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
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
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
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
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
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.+
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
~ 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
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
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
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
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
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
