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2012 AND BEYOND

2012 AND BEYOND. Investing for Long Term Growth January 2012. Planning for Growth. Amway Markets Forecast – through 2020 November2011 – constant 2011 Exchange Rates. Directional Investment. Capital Planning and Implementation. Annual Sales (in Billions). LRBP Window.

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2012 AND BEYOND

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  1. 2012 AND BEYOND Investing for Long Term GrowthJanuary 2012

  2. Planning for Growth Amway Markets Forecast – through 2020 November2011 – constant 2011 Exchange Rates Directional Investment Capital Planning and Implementation Annual Sales (in Billions) LRBP Window Long term forecasts have the Amway business growing to over $16 billion by the Year 2020

  3. Analyzing Opportunities Strategic Tactical End-to-End Supply Chain Analysis Inventory Modeling & Optimization Dist. Center Design, Install & Support Manufacturing Capacity & Cost Evaluations Total operating cost minimization Location and sizing site selection (manufacturing & distribution) Transportation modeling (mode selection, routing analysis, etc.) Supply/demand and lead time variability analysis Inventory service level maximization and working capital minimization Financial trade-off between service level and holding costs Determine optimal size and location Material handling optimization Project management for design, construction and equipment installation Long-term sales growth / capacity requirements Product manufacturing cost and operating costs Work center routing, staffing requirements and resource scheduling

  4. Partnering and Investing for Growth Worldwide Manufacturing Capacity Expansion

  5. Amway Manufacturing Centers Ada Buena Park China India Vietnam Current Amway Manufacturing Facility Key 3rd Party Manufacturing Facilities Future Amway Manufacturing Facility

  6. China Manufacturing Investments

  7. ACCL Sales Forecast Sales Forecast Capacity Constraints

  8. China Manufacturing Capacity Issues for the Guangzhou site • Current site is reaching maximum utilization – the last two building sites are approved and under construction. • Some equipment and facilities are getting to the age and use where replacement capital needs to be integrated into the overall capital plan. • Search is underway for a second manufacturing site

  9. China Manufacturing Facility General Facts: Land Area: 35 acres Building Area: Over 1.2 million square feet (all floors) Future Current

  10. China Manufacturing Investment Summary • Site #1: A total capital spend of $50 - $70 million at the existing facility to expand production and to move selected work centers to new locations to support the anticipated 2020 local and regional sales volumes. • Site #2: A total capital spend of $70 - $100 million to purchase and construct new nutrition and support facilities (including data center and administration) at a new site in the Guangzhou area to support the anticipated 2020 local sales volumes.

  11. Vietnam Manufacturing Investments

  12. AVN Sales Forecast Sales Forecast Capacity Constraints

  13. VietnamManufacturing Capacity Issues for the Vietnam • Current site to reach capacity around 2015 • Administrative and QA space significantly constrained • On site warehousing for raw materials and components at maximum capacity • Search is underway for a second manufacturing site • A total capital spend of $1 to 1.5 million at the existing facility and a potential spend of an additional $14 to $20 million for a second site to support enhanced manufacturing capabilities.

  14. India Manufacturing Investments

  15. AIE Sales Forecast Sales Forecast Capacity Constraints

  16. India Manufacturing Capacity Issues for India • Sales are forecasted to exceed contract manufactures’ capacity between 2013 to 2014 • Project has been approvedto construct and operate an Amway owned manufacturing facility for nutrition, beauty and Glister • Site acquisition underway along with concept design • New manufacturing facility to commence production Q1 2014

  17. India Manufacturing Investment Summary • The current plan calls for the purchase of 45 acres of property to provide flexibility for future expansion and capabilities as the market continues to expand. • A total capital spend between $81.0 to $95.0 million for self manufacturing for our high GMP products. We are required to spend approximately $67 million on the initial phases of the project in order to qualify for significant tax incentives (within three years of signing an MOU). • Additional capital in future years may be required for new capabilities such as Home Tech.

  18. Nutrition North America Manufacturing Investments

  19. Nutrition North AmericaManufacturing Capacity Issues for Buena Park • Site is reaching maximum capacity from a production and people standpoint; forecasted to hit maximum capacity by 2016 • No additional area is available for expansion • Facility is land locked by residential development • Business risk with single nutrition site servicing 8 of the top 10 Affiliates • Search and analysis is underway for a second manufacturing site in North America considering: taxes, incentives, business environment, labor, land, and operating costs

  20. Nutrition North America Manufacturing –Second Site 11 potential states analyzed; reduced to 5 potential states for further investigation

  21. Nutrition North America Manufacturing Investment Summary • Total capital spend of $35-$40 million at the existing facility to enhance R&D, provide sufficient office space and to provide sufficient space for the anticipated Distributor tours through the facility. • Total capital investment of $85-$100 million is anticipated to start and equip a new nutrition facility. This facility will include soft gels, compressed tablets, two piece hard shells and packaging capabilities.

  22. Investing for Growth - Summary

  23. WorldwideManufacturing Investment Summary • Significant investment is being made globally to support the anticipated growth of the business. • A vast majority of the capital investment will be spent to support Nutrition in all locations. • Projected capital spend of $85 - $110 million will be spent at existing facilities to support the forecasted growth of the business. • Projected capital spend of an additional $250 to $300 million to internalize manufacturing in India and to expand nutrition capabilities in China, Vietnam and the USA.

  24. Global Distribution Support

  25. Americas Distribution Network Network capacity analysis Metagenics integration opportunities • Multiple sites: • Americas distribution network analysis • Service center optimization

  26. Greater China Distribution Network • ACCL projects: • Distribution network analysis • Home delivery pick systems

  27. Asia Distribution Network • Busan Regional Service Center • Regional Replenishment • Postponement in Busan • Direct-shipping analysis Ada capacity analysis • Amway Japan: • Distribution network analysis • Amway Thailand: • Home delivery pick & pack system • Amway Malaysia: • WTS assembly • Home delivery pick & pack system

  28. Europe/India/South Africa Distribution Network • Amway Russia: • Distribution network analysis • Warehousing improvement Venlo Postponement • Amway Poland: • Warehousing improvement • Amway Hungary: • Warehousing improvement • Amway India: • Finished good sourcing

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