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Final - Confidential KraftMaid Freight Revenue and Cost Overview February 2011.

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Presentation on theme: "Final - Confidential KraftMaid Freight Revenue and Cost Overview February 2011."— Presentation transcript:

1 Final - Confidential KraftMaid Freight Revenue and Cost Overview February 2011

2 Final - Confidential Executive Overview Review of freight and home delivery of the KraftMaid brand requested to identify level of subsidy and competitive landscape Key findings Overall KraftMaid freight costs are approximately $54 million (2010) and include a subsidy of around $3.1 million Net program costs have increased the past 2 years but are projected to improve in 2011 Our competitors have similar logistics strategies for Home Centers All prices are “landed” with approximately 7% of total price allocated to freight Home Delivery is most prevalent in home center channel Home Delivery pricing was last adjusted in 2008

3 Final - Confidential Key Contributors David Lahie Ron Drenski Tom Bolden Christina Frush Ken Williams Shawn McNeil Roland Minogue Mark Oleskiewicz Doug Bennett 6/2/20103

4 Final - Confidential Cost Summary by Year Net Cost of KraftMaid delivery program has increased over the past 2 years

5 Final - Confidential 2010 Cost Summary $3 million of subsidies in 2010 driven primarily by the dealer channel

6 Final - Confidential Masco Cabinetry Private Fleet Overview Merillat and Quality –Tractor’s13 –Straight Trucks35 –Yard Tractor’s 2 –Trailer’s54 KraftMaid –Ottawa's 4 –Straight Trucks 3 –Tractor’s 2 –Interplant Trailer’s 37 –Trailer’s 530 (subleased) Most of the Present Masco Cabinetry fleet lease cost is transferred to freight providers and included in their rates to us. Volume is “guaranteed”, and excess leases of around $200k were billed back to us in 2010.

7 Final - Confidential MCMBAWCComment 3 rd Party OutsourceYes Primary for All Own TrailersPartial – trailer leases funded by suppliers Partial MB and AWC in Midwest only Delivery TimePre- scheduled date 1 week from product arrival 2 Person CrewsYes Home Delivery Any Location Yes Everywhere New York Only Mid-West and New York Only MB and AWC Lowes – 1 st dry, secure location Add On Charge$175 $175 except West where $100 non-1 st floor fee Competitive Freight Overview

8 Final - Confidential Appendix

9 Final - Confidential Cardinal and 3PD Area Map

10 Final - Confidential 2010 Masco 3PD Retail Cabinet Deliveries by Location

11 Final - Confidential Cardinal Deliveries in ,359 19,008 13,073 9,061 9,132 9,712 10,403 15,689 3,854 97,300

12 Final - Confidential External Masco Numbers

13 Final - Confidential 1,913,230 - Produced (11,430) - Estimated FOB Impact (76,400) - Non- Revenue Cabinets ,825,430 - Prod Plan Fcst Revenue Cabinets 1,824, Revenue Cabinets Positive Variance from ,913,230 - Produced (11,430) - Estimated FOB Impact (76,400) - Non- Revenue Cabinets ,825,430 - Prod Plan Fcst Revenue Cabinets 1,824, Revenue Cabinets Positive Variance from

14 Final - Confidential Lead-time Overview by Product Line

15 Final - Confidential KM Delivery Statistics  Dealer Cabinets 2010 –KM487,228 –HMD148,474 –LTL 1,212  Home Depot Cabinets 2010 –KM 70,511 –HMD412,567 –LTL 1,828  Lowes Cabinets 2010 –KM137,367 –HMD501,038 –LTL 3,392  Masterpiece Cabinets 2010 –KM 53,839 –HMD 441 –LTL 932

16 Final - Confidential Delivery Cost per Cabinet


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