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KraftMaid Freight Revenue and Cost Overview

KraftMaid Freight Revenue and Cost Overview. February 2011. Executive Overview. Review of freight and home d elivery of the KraftMaid brand requested to identify level of subsidy and competitive landscape Key findings

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KraftMaid Freight Revenue and Cost Overview

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  1. KraftMaid Freight Revenue and Cost Overview February 2011

  2. 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. Key Contributors • David Lahie • Ron Drenski • Tom Bolden • Christina Frush • Ken Williams • Shawn McNeil • Roland Minogue • Mark Oleskiewicz • Doug Bennett

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

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

  6. Masco Cabinetry Private Fleet Overview • Merillat and Quality • Tractor’s 13 • Straight Trucks 35 • Yard Tractor’s 2 • Trailer’s 54 • 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. Competitive Freight Overview

  8. Appendix

  9. Cardinal and 3PD Area Map

  10. 2010 Masco 3PD Retail Cabinet Deliveries by Location

  11. Cardinal Deliveries in 2010 97,300

  12. External Masco Numbers

  13. 1,913,230 - Produced (11,430) - Estimated FOB Impact (76,400) - Non- Revenue Cabinets ------------------- 1,825,430 - Prod Plan Fcst Revenue Cabinets 1,824,670 - 0 + 12 Revenue Cabinets 760 - Positive Variance from 0 + 12 1,913,230 - Produced (11,430) - Estimated FOB Impact (76,400) - Non- Revenue Cabinets ------------------- 1,825,430 - Prod Plan Fcst Revenue Cabinets 1,824,670 - 0 + 12 Revenue Cabinets 760 - Positive Variance from 0 + 12

  14. Lead-time Overview by Product Line

  15. KM Delivery Statistics • Dealer Cabinets 2010 • KM 487,228 • HMD 148,474 • LTL 1,212 • Home Depot Cabinets 2010 • KM 70,511 • HMD 412,567 • LTL 1,828 • Lowes Cabinets 2010 • KM 137,367 • HMD 501,038 • LTL 3,392 • Masterpiece Cabinets 2010 • KM 53,839 • HMD 441 • LTL 932

  16. Delivery Cost per Cabinet

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