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Operations Reconfiguration Culpeper Opportunity Sep 20, 2011

Operations Reconfiguration Culpeper Opportunity Sep 20, 2011. Key Assumptions. Move Culpeper volume to Mt. Sterling Jan 2012 Culpeper Volume based on current 2011 run rate and flat forecast (2012 to 2016): 1,650 per day Direct labor rates / fringe %

andrew-mcdowell
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Operations Reconfiguration Culpeper Opportunity Sep 20, 2011

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  1. Operations ReconfigurationCulpeper OpportunitySep 20, 2011

  2. Key Assumptions • Move Culpeper volume to Mt. Sterling Jan 2012 • Culpeper Volume based on current 2011 run rate and flat forecast (2012 to 2016): 1,650 per day • Direct labor rates / fringe % Mt. Sterling $13.02 45% $18.89 Culpeper $15.43 39% $21.45 • Move 2 KAAT lines to increase Mt Sterling capacity (4,300 to 5,900): $180k • 3 month production ramp start-up inefficiency • Logistics and transportation • Eliminate Mt Sterling Mill shipments: $(0.35) per unit • Increased inbound freight costs: $0.93 per unit • Increased outbound freight costs: $4.79 per unit • Benefits of closing include both fixed costs and semi-variable costs • Engineering resource constraints and costs not included in analysis

  3. Culpeper to Mt. Sterling (Idling) – Financial Assumptions • Severance • 192 hourly employees receive 1 week pay per year of service • 17 salary employees receive 2 weeks pay per year of service • Minimum of 2 weeks and maximum of 52 weeks for hourly and salary • COBRA • All employees that are presently using BCG Health Insurance will receive COBRA coverage consistent with their weeks of severance • Estimated @ 30% of severance (no government subsidy) • Inventory write-off (over current E&O reserve): $1.0m • $1.4m total disposal (including current E&O reserve) • Reviewed parts with less than 0.2 average daily usage and days on hand over 150 • Fixed Asset • Assumed idling of facility – depreciation continues ($1.2 million annually) • Culpeper has $10.6 million Land and Building NBV; $5.1 million Equipment NBV • Assumed restart in 2016 • Other • No capital required • Miscellaneous on-time costs: $250k • On-going upkeep expenses: $100k

  4. Culpeper to Mt. Sterling – Financials (No Growth)($ thousands)

  5. Culpeper to Mt. Sterling – Financials (LRP Growth)($ thousands)

  6. Culpeper to Mt. Sterling – Financials (Adjusted LRP Growth)($ thousands)

  7. Key Assumptions – Volume No Growth Not changed from Los Lunas presentation…Model assumes 1,650 per day for Culpeper

  8. Key Assumptions – Volume LRP Growth Not changed from Los Lunas presentation

  9. Key Assumptions – Volume Adjusted LRP Growth Not changed from Los Lunas presentation (Maintained consistent 2011 baseline)

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