Document 7Mo2YnwM4mGamZB4wdVj7ywkB

/ Qi St. Louis, Missouri June 11, 1963 VCM/AFD ?OLY!-fER BUSINESS Messrs. J. M. Chamberlin R. H. Kittaer 25~>R. E. Lenz R. C. Tallman Mr. F Attached for your information and files is a. copy of a report which was recently sent to Messrs. Christian, Gillis, and Kochwalt in response to their request for a review of Monsanto's vinyl chloride monomer and polymer business. J H. H. Bible Attachment .. Note; C. L. Knowles transmitted copies of this report to F. E. Reese, R. T. Clark, and R. W. Kienker. ) CBY L023646 RSV0031863 THE MONSANTO VINYL CHLORIDE MONOMER AND _________ POLYMER BUSINESS CONTENTS I II III IV V VI VII VIII Tables 1 II III III A III B IV VA Our Stake in Vinyl Chloride Recent Performance Outlook How We Compare With Our Competitors The Effect of Monomer Cost on our Polymer Economics The Effect of Withdrawing from the Business What Could Happen to Make the Picture Worse/Better Than Presented? Conclusions Detailed Capital Schedule for Vinyl Products as of March 1963 #3D Statement - Vinyl Product Group (1962 Actual) #3D Statement - Vinyl Polymers - 1963 Budget Pro Forma #3D Statement - Vinyl Polymers (1963 Budget) 'With VCM at Market Price Pro Forma #3D Statement for 1963 - Vinyl Product Group - No Manufacture or Sale #3D Statement - Vinyl Polymers (let Quarter - 1963) SARE Expense - Vinyl Product Group (1963 Budget) CBY 1023647 N RSV0031864 &o CONTENTS (continued) Tables VB VI VII A VII B VIII A VIII B VIII C IX Breakdown of Vinyl SARE Expense into Fixed and Variable Portions (based on 1963 Budget) Composition of Polyvinyl Chloride Polymer Cost of Goods Vinyl Chloride Monomer Manufacturers Vinyl Chloride Polymer Manufacturers Cash Flow if Business Continues - Five-Year Period Cash Flow if Withdraw - Five-Year Period Cash Flow if Withdraw from Polymer Business Only Five-Year Period Pro Forma #3D Statement - Vinyl Polymers (1966 Under Favorable Conditions) CBY 1023648 RSV0031865 I Our Stake in Vinyl Chloride Monsanto domestic investment committed to vinyl chloride monomer and polymer in 1963 is $43 million. Of this amount, $36 million is fixed manufacturing, utility and service facilities and $7 million is working capital. The depreciated value (net investment) of the fixed investment is $15 million. In 1963, a larger share of ethylene and vinyl acetate capital is assigned to vinyl products than will be the case when these facilities are operating at capacity. In 1964, vinyl acetate will be at capacity, reducing capital assign ment by $860,000. In 1966, when the ethylene plant is at capacity, the ethylene capital assignment will be $1, 150,000 lower. Monsanto also has complete or partial ownership of overseas facilities for PVC, YCM, and related products with a gross invest ment value of $43 million. (Excluding SICE). Allowing for partial ownership of MMK and the Spanish affiliates, Monsanto's portion is about $27 million. Of this amount, $18 million is completely dependent upon our USA research and engineering technology for advancement. Building Products Department1 holds $1.2 million of fixed and working capital in Ryko and other facilities for production of finished products from vinyl raw materials. While Plax Company has no significant investment yet committed to fabrication of vinyl containers, the decision to do so is close at hand. Although Plastics Division buys about $2. 7 million worth of plasti cizers yearly from Organic Division, it is assumed that these materials could flow into the market in any case, and the Organic Division interest will not be considered in detail herein. A detailed schedule of vinyl fixed capital is given in Table I, II Recent Performance Vinyl chloride polymer and monomer returned $8.1 million after tax, from the first sale in 1949 through 1959. In I960 it lost $0.4 million; in 1961, $1.5 million; and in 1962, $0.7 million. The 1963 budget predicts $0.18 million lost and, although the line was about $180,000 below its budget at the end of the first quarter, improved VCM and Chocolate Bayou operations and better polymer prices are expected to limit further decline. The 1963 loss is now estimated to be about $470,000, The depreciation reserve will have increased to $21 million by the end of' 1963. C8Y 1023649 RSV0031866 6 & Vinyl Sales and Profit VCM, M Lb. Polymer, M Lb. Sales, M $ Net Profit, A.T., M$ 1957 43 72 ` 25 1.07 1958 28 75 22 0.77 1959 1960 24 86 25 0.21 19 87 22 .40* 1961 21 . 92 22 1.50* 1962 1963 (Budget) 32 18 112 127 24 26 . 76* .18* Excluding the recently added Chocolate Bayou ethylene facility, the line has so far produced about 25 million dollars of after-tax profit and depreciation for its $33 million of fixed inyestment. During the next five years, about 6 million dollars of additional profit and depreciation will be produced (net of incremental invest ment required). See Table II - 1962 #3D Statement Table III - 1963 Budget Table IV - 1963 1st Quarter #3 D Statement Table VA - 1963 SARE Detail III Outlook Polyvinyl chloride is certain to hold an important position as a prime plastics material of construction and will continue to grow, at least as fast as the national economy. The national and international competitive picture does not encourage much hope of attractive profits for the average producer in the foreseeable future, however. Producers with favorable raw material positions, such as Dow, Diamond and Ethyl, and those with a line of premium-priced specialty polymers may find the business rea sonably attractive. Though we are striving for the latter on a meager budget, Monsanto does not now fall into either category. Vinyl chloride polymer sales now exceed one billion pounds per year, with no evidence of serious interference from other materials. The 1958 and 1962 consumption was divided approximately as shown in the following: 1958 1962 (M lbs.) Film & Sheet 148 249 Fabric treatment 55 77 Paper treatment 9 14 Floor covering 116 233 Molding St Extrusion 224 378 Protective coating Other 27 CBY 1023650 70 142 U , Total 649 1138 RSV0031867 o o 3) In 1962 the molding and extrusion segment was consumed approxi mately as shown. _ (M Lbs.) Phonograph Records 63 Slush Molding 27 Other Molding 20 Wire Coating 160 Garden Hose 12 Rigid Pipe it Shapes 41 Other Extrusions 55 Total 378 We expect the factors of lowest resin price, toughness, corrosionresistance, fire-resistance, and versatility to ensure continued growth of at least 5 per cent per year, leading to a'1967 Industry Sales of 1.43 billion pounds." (Projections of 1.60 billion pounds' and higher have been made by some sources. February 1963 tariff commission reports indicated an annualized sales rate of 1.3 billion for the first two months). Our major outlets for resins and compound have been wire coating, flooring, and phonograph records. Our major outlets for film and sheet have been wall coverings, swimming pools, furniture, and industrial items. Those applications which are related to the building industry will probably grow fastest. Vinyl for wire coating and for flooring is still displacing other materials. Rigid vinyl for pipe, corrugated sheet, and building siding is the newest and probably fastest-growing vinyl product. The volume potential from displacement of copper pipe, transite and other sheet materials, and aluminum siding is rated in the hundreds of million pounds. Projecting to the year 1966, assuming a competitive price atmosphere worsened by lower tariffs, and assuming an increased rate of SAKE expenditure, an operating profit of $1,300,000 from monomer and polymer may still be possible. (At no increase in SARE over the 1963 expenditure, the operating profit would be $1,800,000). (See Table IX). To achieve this income, we need 1) to sell 20 million pounds more monomer than fore cast at forecast price (for a total of 30 million pounds,at $0.068/lb. .net); 2) to use the_entire capacity of the Springfield compound plant (29 M lbs/year) for a high margin product ($.05/lb.) such as Vyram rigid extrusion and bottle blowing materials', 6 CBY 1023651 RSV0031868 3) to devote 40 per cent of the film capacity to higher margin products (a possibility is rigid sheet for building products applications); and 4) to sell 44 per cent of the homopolymer sales quantity as new products, such as Opalon 740 graft resin and-Opalon paste resin diluent. Each of the above assumptions is based upon technical and sales programs now under way. A healthier price picture would alter this projection, as discussed in Section VII. If the 20-million pounds of incremental monomer in 1), above, were converted to polymer and could be sold at the forecast price, $138,000 of additional gross profit would be realized. If the monomer could be converted and sold as a specialty pro duct, such as Opalon 740, the additional profit would be $636,000. The homopolymer could be sold through continuation of our present market share and could be manufactured with technology now avail able, after an incremental investment of about $600, 000 capital and $190,000 expense. It is not clear how this amount of additional specialties could be sold except through capture of a commanding technological position. This would imply increased SARE expendi tures not included above. Unless a distinctly improved price situation prevails, however, we incline toward the specialty pro ducts . IV How We Compare With Our Competitors Monomer The manufacture of vinyl chloride monomer is not known to be subject to any exclusive or especially advantageous technology. Whether based on 1) reacting acetylene with HC1, or ^cetylene + HC1 VCMjf 2) reacting ethylene with Cl^, followed by cracking, or fetthhyi lene + Cl^'----- -* EDC r thermal. cracking VCM + HCl/ 3) a combination of 1) and 2), or C8Y 1023652 RSV0031869 o s) 4} a combination of 1), 2) and oxidative chlorination. I ethylene + CI2 j the rmal I EDC cr^chang | acetylene + HC1 /ethylene + HC1 the economics will usually depend much more upon the price of the raw materials than upon the technology. A list of VCM producers and the routes used by each is given in Table VII A. A good deal of attention has been given to reports that certain acetylene manufacturing processes are markedly cheaper than our own. Studies of these processes by our engineers and information from private sources leads us to seriously doubt that our competi tors enjoy costs lower than our own plant is capable of producing. Two new VCM producers, Tenneco and Monochem, have completed their plants within the past few months and should have the most modern facilities with lowest acetylene costs. Diamond has recently added its Montecatini-design acetylene plant. Although Monochem is successfully on stream reportedly with good costs, Tenneco and Diamond have experienced great difficulty with acetylene manufacture and costs. The strongest raw material cost position presumably is held by those producers with captive ethylene and chlorine sources or those who can use by-product HC1. The choice of value assigned to the HC1 then influences VCM cost markedly. From the standpoint of raw material position, _ Dow and Ethyl are the best situated of the fourteen manufacturers. As the largest chlorine producer in the world, and a low-cost ethylene producer as well, Dow probably has the soundest raw material position. In Plaquemine, Dow produces EDC from chlorine and ethylene, cracks the EDC to VCM and HC1 and is thought to consume the HCl in oxidative chlorination of ethylene to produce more EDC. In Freeport, Dow's process is similar, except that the HCl produced is sold (some to Tenneco for VCM) rather than used in oxidative chlorination. Ethyl purchased its VCM process from Monsanto. Its special position derives from its ability to consume the by-product HCl from cracking EDC in the manufacture of tetraethyl lead. If Ethyl's ethylene and chlorine costs are, similar to ours, and if full chlorine value credit for the HCl is allowed, it may be able to calculate its cost at 5.0/lb., or below. Dow may also be in this range. CBY 1023653 1 RSV0031870 o o 6) but of course, we do not know that either of them is this low, nor do we know how their accounting affects their costs. Monsanto produces VCM by cracking EDC and using most of the by-product HC1 in two ways - for reaction with acetylene to pro duce VCM and by oxidative reaction with ethylene to produce more EDC. Some HC1 is also used in the Styrene plant and the new Lactic Acid unit will be a consumer. The EDC production, cracking, and purification is probably as efficient and up-to-date as any competitive operation. Monsanto's standard manufacturing cost for VCM at capacity is 5.98^/lb., which reflects the higher cost of disposing of HC1 through reaction with ethylene. The 1963 budgeted cost is 6.47^/lb. Monsanto's ethylene and chlorine positions are probably as good or better than Ethyl's, but not so favorable as Dow. Our use of by product HC1 to make more VCM through reaction with acetylene and by oxidative chlorination of ethylene is more costly than sale at full chlorine value - but we don't know that Ethyl uses this valuation alternative. Further improvement in our costs can come from greater throughput and from perfection of- the new oxidative chlorina tion process. Polymer There probably are significant differences in manufacturing cost for vinyl polymers among the various producers. Capacities for polymerization vary from 5 to 260 million pounds per year, which in itself must produce a significant range of conversion costs. In addition, it is known that the cost of the vinyl monomer varies among`the producers, and it is probable that there are significant variations in yield and in throughput per dollar of investment. A list of PVC producers is given in Table VII B'. We have little useful information on which to base a judgment of the costs of specific producers as compared with our own, but the information which is available leads us to class ourselves as performing better than the average, in terms of conversion cost and yield. Attempts to negotiate a contract conversion arrangement with other PVC producers yielded our most-recent information. Concentrated effort to reduce manufacturing costs for vinyl polymers in recent months have yielded good results, e.g., our former process for manufacturing an Opalon copolymer was replaced last year with a new process (X24), which produces at twice the former rate, with the same equipment. As a second example, the yield of vinyl polymer has been improved from 100 pounds of polymer. C&Y 1023654 RSV0031871 o O' 7) per 111# of monomer in 1959 to 100# of polymer per 108# of ) monomer in 1963. In spite of this continuously improving conver sion cost and yield performance in polymer manufacture, we believe we have been a medium high-cost polymer producer because of the high delivered cost of our monomer. One big element of cost is freight. As can be seen from the Table VT, PVC Cost-of-Goods Composition, the annual freight bill for delivering vinyl to Springfield is about $1 M. Obviously those few producers who do not have to pay this bill can demonstrate significantly lower unit cost at their plants. (This advantage could be quickly lost by shipping polymer long distances.) We can also estimate that. Monsanto, Borden, Cary, Escambia and Goodrich produce at approximately the same cost. Smaller producers, such as Great American, pro duce at costs that may be l/2 or more higher than Monsanto. The potential exists for significant further polymer cost reduction, but it is based principally upon much greater throughput. Between 1/2 and 3/4 per pound could be removed in this fashion. It may be possible also to reduce further the cost of transporting monomer from Texas City to Springfield, although this cost, at 0.86^/lb., is already a bargain rate. For comparison, the cost of transporting Styrene by water from Texas City to Springfield is 0.55/lb. A study is now under way within`Hydrocarbons Division which could result in significant savings through water transportation of vinyl y monomer. The quality of Monsanto vinyl chloride monomer and vinyl chloride polymer is excellent and has not recently been a deterrent to sales. Polymer quality has been outstanding. Maintaining quality leader ship is expensive, however. Customer requirements are continually changing and competitors are coming forward with improvements at a steady rate. Our present manufacturing capacity is not large enough to support research on the full range of vinyl product appli cations and we must therefore concentrate our effort, in certain areas and let others go untended. v Effect of Monomer Cost on Polymer Economics Although the posted market price of vinyl chloride monomer is 8^/lb. with freight equalized from the nearest producing point, most purchasers probably buy for less. We believe that Escambia Chemical buys from Ethyl Corporation for 7.35^/lb. delivered, and it is believed that Thompson receives monomer from Dow for 6.85/lb. delivered to Massachusetts. Because of a much shorter shipping distance, Thompson may receive monomer from Dow at its new Aberdeen, .Mississippi plant for as little as 6.5^/lb. / Monsanto*s budgeted monomer cost, delivered to Springfield, is 7.34^/lb. This number could conceivably be reduced to about CBY 1023655 RSV0031872 Q o 8) 6.65^/lb. by bringing Bayou and Texas City costs down to the 1 objective levels and by increasing monomer consumption. Table III A illustrates how the 1963 polymer budget would look if the plant were using monomer purchased at a market price of 6.85^/lb. delivered. Table III A, which is free from Hydro carbons Division SARE and investment, offers $785, 000 more operating profit than Table III, which shows the 1963 budget. This comparison allows further insight into the position of some of our competition. VI Effect of Withdrawing From the Business Our vinyl chloride business has a great many dependents and inter actions within the Corporation. For example, the ethylene consump tion in 1963 is budgeted to be 50 million pounds. In' order to gain a better picture of the -whole load carried by vinyl chloride, we have depicted two cases representing two stages of withdrawal from the business. Such a move must be examined over a several-year period in order to account for the gradual absorption of the fixed portions of services, utilities and SARE facilities. We have chosen a five-year period in -which to show the cash flow in three cases. y Tables VIII A, VIII B, AND VIII C show the five-year cash flow if the business continues as presently planned; if the company ' withdraws from monomer and polymer manufacturing; and if the company withdraws from the polymer business only. The direct economic effect of withdrawal is adverse. Whereas continuing the business yields a cash flow of $6.4 million in five years, complete withdrawal results in a loss of $3.96 million, for a total difference of $10.36 million. In the event it were possible for us to withdraw from the polymer business only and to sell the monomer at 6.8^/lb. net, then the cash flow resulting in five years would be $4.43 mil lion. In preparing the Tables VIII A, B and C, we have used the Hydro carbons Division and Plastics Division long range plans, sales and profits where applicable. We have assumed that in the case of withdrawal, the VCM, EDC and oxidative chlorination units, as well as the Springfield polymer facilities, except buildings, would be dismantled and retired. For simplification, we have assumed that it would be possible to recover as a retirement loss the entire amount of the present net investment in these facilities. It is assumed that the fixed portion of ethylene, acetylene, and various service and utility units vould be chargeable to the vinyl business until normal expansion, as projected in the five-year plans, required new raw materials and utilities investment. The fairly rapid yearly decline of depreciation charges, which will be noticed in Table VIIIA, results partly from the SYD depreciation and partly from the relief CBY 1023656 RSV0031873 9) from heavy`ethylene depreciation that occurs as ethylene usage by other products grows. Table III B shows a 1963 3D Statement as it might appear if there were no manufacture or sale of vinyl products in 1963. It is clear that between $3 and $4 million worth of expenses would somehow have to be paid if the sale of vinyl products were to be discontinued. Table V B lists the fixed and variable portions of Hydrocarbons, Overseas, and Plastics Division's SAKE as assumed for the cases presented in TablesVHI B and C. In addition to the direct economic effect of withdrawal, there are a number of contingent effects which would result. An obvious one is the need to arrange for sale elsewhere of about $2.7 million worth of Organic Division plasticizer products. A second is the need to arrange for the technical support of $18 million worth of overseas vinyl investment in Spain, Argentina, Mexico and Canada. A third example is the effect upon the Building Products Department, Plax Company and Gering Plastics Company, each of which is dependent upon the Plastics Division to some extent for special products or services. Building Products and Plax are utilizing recently developed unique Vyram rigid vinyl compounds which would have to be produced elsewhere - perhaps at sorm loss of efficiency and profit. Though we have assumed no loss therefrom, it is not clear how Pittsburgh Plate Glass Company would react to our terminating the present chlorine/caustic purchase agreement. Our trade relations with them would be further unbalanced in their direction because of Saflex and Styrene purchases on their part. VII What could happen to make the picture worse or better than presented. A) Polymer prices could stabilize or rise, - During the past month, the Plastics Division led the way in an attempt to reverse the long downward trend in PVC prices. Increases have been announced in homopolymer and in copolymer. Though it is not yet certain that these increases will stick, there has been almost'unanimous support from the other producers. Only 3/4-per-pound price increase is needed on 85 M pounds of suspension products to gain $320, 000 of new after-tax profit. ' This amount of increase would have placed the 1963 budget in the,black. We believe such a change is entirely1 possible. , B) We could gain a distinct technological lead. CBY 1023657 Research under way in several areas could place Monsanto in the forefront and allow the sale of premium-price vinyl RSV0031874 t> t> 10) products without damaging competition. For example, if Monsanto is first in the market with a truly high performance fast-fusion paste resin, we could very easily gain several million pounds of paste resin business, on which our incre mental margin would be about 10/lb. Continued good results with the Vyram rigid compound in bottle blowing at Plax will result in from 5 to 10 million pounds of unforecast business at a margin of about 10/lb. C) Some competition could withdraw. Productive capacity of competitors who find the business too distasteful to continue would presumably remain available to compete in the total vinyl market. However, withdrawal of some competitors as corporate units might very well contri bute to an improved price stability. D) We might succeed in selling more monomer than forecast. Sale of vinyl monomer has been projected at a modest level by Hydrocarbons Division, while setting for itself an objective of disposing of 30 M pounds beyond this level in the early years. Sale of tli s amount of monomer at an incremental margin of 2/lb. would yield $300,000 of after-tax net profit. E) The royalties from overseas* use of domestic processes could increase. The 1963 budget includes royalties on VCM and PVC amounting to $540,000 gross. Sale of the oxidative chlorination process to interested parties overseas could yield as much as $300,000 additional gross royalty per year. Interest has been displayed by some sources abroad in our process for manufacture of rigid vinyl compounds. Other process developments not yet commercialized here could bring us new income from abroad as well as domestically. Royalty income credited to vinyl products during the last few years is shown below; 1957 33 1958 Net Overseas Royalty Income (KI Dollars - Before Tax) I960 1961 1962 *'52 139 134 190 329 1963(Buda;et) 298 CBY 1023650 RSV0031875 11) VIII Conclusions In spite of the forecast growth of vinyl sales, it is difficult to predict future achievement of "bogey" return on investment. Nevertheless, there clearly is opportunity for improved performance through technical achievement and a distinct possibility of improved prices. Our investment in vinyl chloride at home and abroad will continue to contribute to the corporate cash flow far more than would be recovered by withdrawal from the business. In view of these considerations, we feel that we must remain in the vinyl chloride business. Our strategy is to fill monomer and polymer plants to capacity by expanding sale of both polymer products and monomer and to extract the maximum incremental throughput from the facilities by process improvements. No major new investment is contemplated but certain moderate additions will probably be needed to maintain competitive quality and gain the incremental throughput. (A signi ficant investment for upgrading Chocolate Bayou resin PR is becoming attractive. As mentioned below, a portion of this may be assignable to PVC). Technical effort will be directed primarily toward protecting the excellent quality reputation of Opalon, Ultron and Vyram branded products, and to bring along a very few carefully screened new products. While we cannot entirely drop them, because of our integrated film and compound position, we will de-emphasize the very low margin homopolymer products and gradually replace them with higher margin suspension-polymerized materials. The entire Vyram rigid PVC program is based upon this approach. No new investment has been required to start commercial production of rigid resin or rigid compound because they have displaced lower profit level products. Basic plans, from the long range plans of the two divisions, are: 1) Continue pressure for improved price stability. 2) Trim costs through incremental expansions of paste resin and homopolymer capacity, based upon process improvements. 3) Supplant low-margin elastomeric compounds with higher margin rigid compounds, and increase throughput with machinery changes. CBV 10Z3659 RSV0031876 0 o 1Z) 4) Continue as a major quality factor in the paste resin business by introducing a faster fusing resin and a paste diluent. 5) Replace lower margin homopolymer resin sales with other products made in the same equipment. (Constituents for the rigid compounds, paste resin diluent, and special low molecular weight homopolymers are the first candidates.) 6) Develop a transparent bottle blowing compound by the end of 1964 for introduction through Plax Company. 7) Choose one other major new product idea and develop during this period. A possibility, still in the conceptual stage, involves the use of very low-cost combinations of Chocolate Bayou resins PR and PVC to produce fabricated products for new markets. 8) Obtain 20 to 40 million pounds per year of additional VCM sales or use through conversion, trade relations, or joint sales proposals with other divisions. CLK/ih 6/5/63 1023660 RSV0031877 T O Hydrocarbons Division Chocolate Bayou Ethylene Texas City Acetyle ne EDC Vinyl Chloride Oxidative Chlorination Vinyl Acetate Total Hydrocarbons Division Allocated to VCM Sales Allocated to Plastics Sales V o; TABLE I - DETAILED CAPITAL SCHEDULE FOR V\\ as of March, 1963_________ | (Hydrocarbons Division Allocations Based on 1963 5UC' Direct ASSET VALUE Service it Utility T otal $ 3, 992,000 1,058,667 6,439,372 839,437 1,813,183 6, 045,881 10, 150, 359 1, 394, 000 21, 582, 240 2, 732, 000 18, 850,240 Plastics Division ringfield Opal on Susp. Polymerization Bldg. 88 Bldg. 92 Opalon Paste Resin Opalon Compound Ultron Film Farrel Unit Adamson Unit Ultron Lab. Total Operating Serv. & Util. Pack. Ship &t SARE Total Springfield H 2,183,139 1,962,606 1, 214, 085 635,169 1, 637,890 983,513 185,423 8,801, 825 , Santa Clara Allocation Central Office - Exec. Div. Total Plastics Div., except Monomer Allocation Monomer Allocation to Plastics y>A Sales Capital Total Vinyl Fixed Capital 598,467 606,165 423,177 291,018 350, 321 144, 651 4, 054 2,417,853 - 2, 781, 606 2,568, 771 1,637, 262 926, 187 1,988,211 1, 128, 164 189,477 11,219,678 2, 147,742 13,367,420 34, 000 845,000 14, 246, 420 18,850, 2-:C 2,732,000 $35,828, 660 cbY X023661 RSV0031878 PRODUCTS 1 - lr olume) Direct BOOK VALUE Service &t Utility Total $ 2,935,000 228,563 1. 887,293 423, 750 870,827 1,784,487 3,410,433 1,165,000 9,294,920 1, 100,081 8,194,839 O ) 556,302 952, 288 601,509 243, 620 196.784 198, 126 135,476 92,370 763,086 1, 150, 414 736,985 335,990 557,258 340, 049 68,118 . 116,866 50,372 1, 176 674,124 390,421 69,294 329, 144 ' - 791, 170 4, 120,314 1,041,318 5, 161,632 21,000 600,000 5, 782, 632 8, 194,839 1, 100,081 $15,077, 552 CBY 1Q23&6Z RSV0031879 ....--___ _____ -- *, t TABLE II - #3D STATEMENT - \. 1962 ACTU:[ (In Thousand1 Homopoly. Copolymer Paste Comnoun d Net Sales-Quantity- Domestic Overseas Total Dollars- Domestic Overseas Total Average Unit Price Cost of Sales - Domestic Overseas Total Average Unit Cost Gross Profit - Domestic Overseas Total Gross Profit as % of Sales S.A.R.E. - Domestic Overseas Total S.A.R.E. as % of Sales 29,259 813 30,072 3, 942 190 4, 132 13.7 3,980 173 4, 153 13.8 38* 17 21* 0.5* 387 Sales 27 Invest. 14 428 .10.4 28, 163 1 28. 164 4,227 0 4,22715.0 4,271 0 4, 271 15.2 44* 0 44* 1.0* 419 - 419 9.9 12,410 98 12,508 2,717 18 2, 735 21.9 2,258 18 2, 276 18.2 459 0 459 16.8 396 - 396 14.5 25, 807 1,349 27, 156 5,366 273 5,639 20.8 5, 128 275 5, 403 19.9 238 2* 236 4.2 513 47 24 584 10.4 ; ! ; Net Profit from Operations Domestic 425* Overseas - Sales 10* Royalties - Net 88 Total Overseas 78 Other Income Domestic 2 Total Net Profit from Oper. 345* Oper. Profit as % of Sales 10. 1* Corporate Central Office 74 Income Charges - Net 44 Income Before Taxes 463* MOSA Income - Taxable 50 Taxable Income - Other 513* Income Tax 233* \ Income After Tax Income After Tax as % of Sales 230* 5. 6* 463* 0 0 0 3 460* 12.7* 78 79 617* 0 617* 311* 306* 7.2* 63 0 0 0 2 65 0.3* 74 47 56* 0 56* 28* 28* 1.0* 1 27o* l 49* I 180 | 131 3: 141* ; 4.2* i 98 55 [ 294* 95 ! 389* ! 148* | 146* , 2.6* > Income After Tax Annualized Gross Division Investment 9,530 % Return on Gross Invest.-AT 2.4* Net Division Investment 5, 078 I % Return on Net Invest.-AT J 4.5* 8,440 3.6* 4,497 6. 8* 5,400 0.5* 2,897 1.0* ! 7,312 j 2.0* ; 3,748 3.9y 1 i CBY 1023663 RSV0031880 .L POLYMER GROUP ''tron 14,444 13 14,457 4, 970 6 4,976 34.4 4,654 5 4,659 32.2 316 i1 ; 317 6. 4 394 !s 402 ; 8. i l| 78# 7# 16 :9 69*** 3.3* 94 54 217# 4 221# 100# 117# 2.4# 7,644 1.5# 3,915 3.0# Total Polymer Group 110,083 2,274 112,357 21,222 487 21,709 19.3 20,291 471 20, 762 18.5 931 16 947 4.4 2, 109 82 38 2,229 10.3 1,178# 66# 284 218 ' 10 950# 6.3# 418 279 1,647* 149 1,796* 820* 827* 3.8* 58,326 2.2# 20,135 4. 1* Monomer 27,239 4,780 32, 019 2, 158 382 2,540 7.9 1,929 318 2, 247 7.0 229 64 293 11.5 112 20 132 5.2 117 44 45 89 5 211 8.3 57 29 125 0 0 60 65 2.6 5,396 1.2 2,250 2'. 9 Total Monorr.c r it Polyrr.e r . 137,322 7,054 144,376 23,380 869 24,249 22,220 789 23,009 1, 160 80 1, 240 2, 221 102 38 2, 361 1,061* 22s 329 307 15 3.0 475 308 1,522# 149 1,796# 760# 762# 3. 1* 43,722 r.7#: 22,385 3.4# J t CBY 1023664 RSV0031881 TABLE^1 - #3D STATEMENT - \ ___________ ;__________ 1963 BUDGET (In Thousands) Homopoly. Copolymer Net Sales-Quantity- Domestic Overseas 24.000 47 Total 24,047 Dollars- Domestic 3, 010 Overseas 52 Total 3,062 Average Unit Price 12.7 Cost of Sales - Domestic 3,040 Overseas 51 Total 3, 091 Average Unit Cost 12.9 Gross Profit - Domestic 30# Overseas 1 Total 29# Gross Profit as % of Sales 0.9# S.A. R.E, Domestic 388 Overseas Sales 15 Invest. 17 Total 420 S.A, R.E. as % of Sales 14.0 NetProfit from Operations Domestic 418# Overseas - Sales 14# Royalties - Net Total Overseas 86 72 Other Income Domestic Total Net Profit from Oper. 1 345# Oper. Profit as % of Sales 11.6# Corporate Central Office 58 Income Charges - Net 37 Income Before Taxes 440# MOSA Income Taxable Income Income Tax 223# Income After Tax 217# Income after Tax as % of Sales 7. 1# Income After Tax Annualized 217# Gross Division Investment 7,283 % Return on Gross Invest.- AT 3.0# Net Division Investment 3,093 % Return on Net Invest. -AT 7.0# )' 37,000 0 37, 000 5,326 ' 0 5,326 14.4 5, 110 0 5. no 13. 8 216 0 216 4. 1 412 0 0 412 8. 1 196# - - 2 194# 4.0# 106 66 366# 185# 181# 3.4# 181# 11,399 1.6# 5, 428 3.3# Paste 18,000 0 18,000 4,000 0 4,000 22.2 2,969 0 2,969 16.5 1,031 0 1,031 25.8 390 0 0 390 10.2 641 - 1 642 15.6 103 39 500 253 247 6.2 247 6,568 3. 8 3,235 7.6 Comoound 28,500 500 29.000 6, 368 95 6, 463 22.3 5,869 97 5,966 20.6 499 2# 497 7.7 509 26 31 566 9.0 10# 28# 163 135 2 127 1. 7 107 46 26# - | [ | i 1 | 1 1 t 13# 13# 0. 2# 13* 7,373 0.2# 3,707 0. 4* | CBY 1023665 RSV0031882 1 i'.<YL POLYMERS Ultron 18,800 0 18,800 6,113 0 6,113 ' 32.5 5,777 0 30.7 336 u 336 5. 5 382 0 0 . 382 J 6. 5 46# ! 20 20 2 24# 0.7# 103 42 169# 87# 82# 1.3# 82# 7,644 i1 1.1# i 3,490 2.3# Total Polymer Group 126,300 547 126, 847 24, 817 147 24, 964 . 19.7 22,765 148 22,913 18. 1 2, 052 1* 2,051 8.2 2, 031 41 48 2, 170 9.0 29# 42# 269 227 8 206 0.5 477 230 501# 255# 246# 1.0# 246# 40,267 0.6# 18, 953 1.3# M onome r 13,000 5,000 18, 000 1,018 400 1, 418 7.9 848 313 1, 161 6.5 170 87 257 18. 1 76 25 0 101 ` 7.1 94 62 29 91 -- 185 13.0 41 16 128 Total Monomer Polymer 139,300 5.547 144,847 25,835 547 26,382 23,613 461 24,074 2,222 86 2,308 2,157 66 48 2,271 65 20 298 318 8 391 1.5 518 246 373* 66 62 4.4 62 2,940 2. 1 1, 142 5.4 189# : 184* 184* 43, 207 0.4* 20,095 0.9* i 1 { CBY 1023666 RSV0031883 o TABLE IIIA - PRO FORMA . ________________ 1963 Budget with VC: 1 Homopoly, Net Sales-Quantity- Domestic Overseas Total Dollars- Domestic Overseas Total Average,Unit Price Cost of Sales - Domestic Overseas Total Average Unit Cost Gross Profit - Domestic Overseas Total Gross Profit as % of Sales S.A. R.E. - Domestic Overseas Sale s Investment Total S.A. R.E. as % of Sales Net Profit from Operations Domestic Overseas - Sales Royalties - Net Total Overseas Other Domestic Income Total Net Profit from Oper. Oper. Profit as % of Sales Corporate Central Office > Income Charges - Net Income Before Taxes MOSA Income Taxable Income Income Tax Income After Tax Income A. T. as % of Sales 24,000 47 24, 047 3, 010 52 3,062 12. 7 2,913 51 2,964 12.3 97 1 98 3.2 327 15 17 359 12.0 230# 31# 6 55 1 174# 6.0# 58 37 269* 136# 133# 4. 3# Copolymer 37, 000 37, 000 5, 326 - 5,326 14.4 4, 932 - 4,932 13. 3 394 - 394 7.4 326 - - 326 6.4 68 - - - 2 70 1.0 106 66 102* 52* 50# r t E 1 l > [ l 1 -* o> o Gross Division Investment % Return on Gross Invest. - A. T. Net Division Investment ) % Return on Net Invest.-A. T. 3, 476 3.8# 1, 702 7.8# 6,077 0. 8# 3, 483 1.4# *#Based on VCM delivered price of 6.85^/lb. as compared to budget cost of 7.1 No Hydrocarbon SARE or investment assigned to Vinyl Group. ! CBY 1023667 j RSV0031884 T - VINYL POLYMERS - Price *# 1----------------------------- - a> ooo Paste 18, 000 4,000 - 4, 000 22. 2 2,870 - 2,870 15. 9 1, 130 - t, 130 28. 2 342 _ _ % 342 9.0 Compound 28,500 500 29,000 6. 368 95 6, 463 22; 3 5, 769 95 5, 864 20.2 599 0 599 9.3 460 26 31 517 8. 3 788 - - - 1 789 : 19.3 ! 103 1 39 1 647 ! i i 327 320 8. 0 139 57* 163 106 2 247 3.6 107 46 94 48 46 0.7 1 A 588 ! 8. 9 j 2 146 ! J 14.9 4, 341 1.0 2,599 1.8 i7 UU ror. lS.t-OO 18,600 6, 113 6, 113 32.5 5,708 - 5, 708 30.4 405 - 405 6.6 348 - - 348 6.0 57 - - - 2 59 0.7 103 42 86* y:v*c r Gro.-'J 126,3C0 5-;: 1--0, >*1 7 2'i. 1-5 7 2m. c;o*1 19 7 22, 292 \ 22,33S 17 6 2.625 1 2, 626 10.5 1, 803 41 48 1,892 7. 9 822 88* 249 161 8 991 3. 6 477 230 284 43* 43* 0. 7* 5, 560 0.8*- 2, 728 1.6* 144 "l40 0. 6 23,042 0.6' 12.658 1. 1 i ! 1 CBY 1023668 RSV0031885 a & TABLE III B - PRO FORMA #3D STATEMENT FOR 1963 ) Vinyl Product Group - No Manufacture or Sale (Thousands of Dollars) Facilities Idle Facilities Dispersed reused or sold Net Sales -- Cost of Sales - Springfield $ 2,937 (includes about $1, 670 depreciation) $ 1, 749 (includes about $415 depreciation) - Texas 3,873 (includes $lr070 de- ciation) 3, 450 (includes $650 depre ciation) Gross Profit 6,810* 5,i99* SARE Domestic, Hydro. Domestic Plastics Overseas Total 70 779 89 938 70 779 89 938 Net Profit from Operations Royalties - Net 7, 748* 249 6,137* *249 Other Income Domestic 88 Total Net- Profit from Operations 7, 491* 5,880* Corporate Central Office 477 477 Income Charges - Net 230 230 Income Before Tax 8,198* 6, 587* Income Tax . . 4, 158 3, 337 Income After Tax $ 4,040* $ 3, 250* ) CBt 1023669 RSV0031886 TABLE IV - *3D STATEMENT - VINYL PO _ - 1st Quarter - 1963 o (in thousands) 1 Homopoly. Net Salcs-Quar.tity- Domestic Overseas - Total Dollars -Domestic Overseas Total Average Unit Price Cost of Sales - Domestic Overseas 9,535 5# 9,530 1,226 1* 1,225 12.9 1,287 12 Total Average Unit Cost Gross Profit - Domestic Overseas 1.299 13.6 61* 13*- Total 74* Gross Profit as % of Sales S.A. R.E. Domestic Overseas Sales Invest. 6.0* 115 * Total 115 S.A. R.E. as % of Sales 9.4 Net Profit from Operations Domestic 176* Overseas - Sales 13* Royalties - Net Total Overseas - 13* Other Income Domestic - Total Net Profit from Oper. Oper. Profit as % of Sales Corporate Central Office Income Charges - Net 189* 15.4* 32 14 Income Before Taxes 235* MOSA Income Taxable Income Income Tax Income After Tax Income after Tax as % of Sales Income after Tax Annualized 114* 121* 9.9* 484* Gross Division Investment 9,805 % Return on Gross Invest.-A. T. 4.9* Net Division Investment 4,697 % Return on Net Invest, A.T, ) 10.3* Copolymer 7,765 7,765 1, 116 1, 116 14.4 1, 284 1, 284 16.5 168* 168* 15. 1* 88 - - 88 7.9 256* - - - - 256* 22.9* 28 13 297* 144* 153* 13.7* 612* 8, 356 7. 3* 4,595 13.3* Paste 3,334 226 3,570 .. 715 43 758 . 21.2 648 44 692 19.4 67 1* 66 8.7 73 3 7 83 10.9 6# 4* 19 15 9 1.2 19 9 19* Compound 5,222 ' 410 5,632 . 1, 076 89 ' 1,165 j 20.7 ' 1,079 85 1, 164 20.7 3* 4 1 0. 1 117 6 14 ' 137 11.8 , 120*: 2# 38 36 3 81* 7.0* 28 13 122* 9* 10* 1.3* 40* 5,960 0.7* 3, 123 1.3* 59* 63* 5. 4* 252* 8, 300 3.0* 4, 513 5.6* Cfiy 1023670 RSV0031887 YMERS' Citron 4,399 3 4, 402 1, 390 2 1, 392 3-1.6 1,343 2 1,345 30.6 47 - 47 3.4 92 1 - 93 3 67 45# 1# - 1# - 46# 3.3# 30 11 87# 42* 45* 3. 2* 180* 7, 587 2.4* 3, 739 4.8# ) Total Polymer Group 30,265 634 30,899 5,523 133 5,656 18. 3 5, 641 143 5, 784 18. 7 118# 10# 128* 2.3# 485 10 21 516 9,1 603# 20# 57 37 3 563* 10. 0# 137 60 760# Monomer Total Monomer it Polyme r 3,523 1, 261 4, 784 282 101 383 8.0 297 98 395 8.3 15* 3 12* 3. 1# 16 4 - 20 5,2 33,788 1.895 35,683 5,805 234 6,039 5, 938 241 6. 179 133* 7* 140# 501 14 21 536 31* 1* 2 1 - 30# 7.8* 14 5 49* 634* 21* 59 38 3 593* 9.8* 151 65 809# 0 368* 392# 6.9* 1, 568* 40,008 3.9* 20, 667 7.6* 26* 23* 6.0# 92* 3. 781 2.4* 1, 780 5.2* -ff 394# 415* 6.9* 1, 660# 43,789 3.8# 22, 447 " 7.4* CBY 102367 L RSV0031888 o TABLE V A - SARE EXPENSE - VINYL POLYMER GROUP 1963 BUDGET (In Thousands of Dollars) Homopoly. Copolymer Pa ste Compound Total Polymer Ultr on Group % of Sales S.A. R.E. Expense Domestic ~ Selling $ 127 Administrative 25 Research 212 Engineering 18 Div. Development 2 Patent 4 Total. Dome Stic $ 388 Overseas - Selling - Administrative 15 17 Total Overseas Total S.A, R.E. Expense 32 $ 420 226 169 174 262 958 46 45 47 45 208 3.86 . .84 100 143 238 22 715 . 2.88 31 24 38 36 147 .59 2 2 4 10 20 . 08 7 7 8 7 33 . 13 412 390 509 382 2081 8.38 - 26 - 41 27.85 - - 31 - 48 32.60 - 57 - 89. 60.45 412 390 566 382 2170 8.70 CBY 1023672 |F RSV0031889 1 TABLE V B - BREAKDOWN OF VINYL SARE EXPENSE INTO FIXED AND VARIABLE PORTIONS (Based on 1963 Budget) (Thousands of $) SARE Expense Fixed Variable Total Domestic - Sales Administrative Research (Springfield (Texas City Engineering (Springfield (Texas City Development Patent Total Domestic 208 168 240 36 15 12 5 15 699 750 40 269) 170) 60) 60) 15 18 1382 958 208 715 147 20 __ 33 2081 Overseas - Sales Investment Total Overseas Total SARE 41 41 48 __ 48 89 - 89 788 1382 2170 } ; CBY 1023673 RSV0031890 TABLE VI COMPOSITION OF POLYVINYL CHLORIDE POLYMER COST OF GOODS 1963 Budget Avg. Unit Cost $/lb. Wages & Salarie s 17.0% Wages & Salaries $ 3,900,000 *f $ .0308 Fuel & Utilities Purchases 7.4% Gas & Coal Electricity Water , Total 1,267,000 405.000 33,000' $ 1, 705,000 .0099 .0032 .0003 .0134 Raw Materials St Supplies 48.7% Raw Materials except Mon. PI. Monsanto Plasti $ 6,400,000 .0504 cizer 2, 697, 000 .0213 Catalyst 173.000 .0014 5 Factory Supplies 360.000 .0028 Containers 530.000 .0042 Monomer Freight 998.000 .0078 Total $11,158,000 ** .0879 CBY 1023674 1963 Budget Sales: $34,964, 000 SARE: $ 2, 170,000 C.O. $ 477,000 Income Chg. y 230,000 Factory Indirect 7.5% Repairs li.5% Depreciation. 7.9% Factory Indirect Repairs Depreciation Total 1963 Budget $ 1,710,000 $ 2,640,000 $ 1,800,000 $22,913,000 .0135 . 0208 .0142 . 1806 RSV0031891 1. Goodrich 2. Carbide 3. Dow 4. Ethyl 5. Tenneco 6. Monochem 7. Monsanto 8. Allied 9. Diamond 10. Goodyear 11. Cumberland 12. General Tire 13. American ) 14. U. S. Rubber TABLE VII A Q VINYL CHLORIDE MONOMER MANUFACTURERS Location Capacity Process Niagara Falls, N.Y. Louisville, Ky. 40 Carbide Acetylene 120 Balanced Calvert City, Ky. 120 Balanced Texas City, Texas 150 Balance d^BASE^V Acetylene \ South Charleston, W.Va. 120 Balanced Carbide Acetylene Freeport, Texas Plaquemine, La. 100 .Ethylene + Oxidative ? 100 Ethylene + Oxidative Baton Rouge, La. Houston, Texas 150 EDC HC1 to T.E.L. 50 EDC Houston, Texas 200 Acetylene Based (SBA-Kellogg) Scientific Design VCM Geismar, La. 150 BASF Acetylene Texas City, Texas 138 Balanced BASF Acetylene + EDC + Oxidative Moundsville, W.Va. 100 Acetylene Based Deer Park, Texas 100 Montecatini Acetylene Scientific Design VCM Niagara Falls, N. Y. 70 Acetylene Calvert City, Ky. 60 Acetylene {Ca C ) Ashtabula, Ohio 30 Watson, Calif. Painesville, Ohio 25 EDC Ethyl Chloride - Takes HC1 - Shut down Oct. 1962 CBY 1023675 / RSV0031892 1 TABLE VII B VINYL CHLORIDE POLYMER MANUFACTURERS American Chemical Atlantic Refining Atlantic Tube Borden Carbide Cary Cumberland Diamond Dow Escambia Firestone General Tire Goodrich Goodyear Great American Insular Keysor MMM Monsanto Pantasote Thompson U. S. Rubber Total Location Long Beach, Calif, Brooklyn, N. Y. Cranston, R.I. Illiopolis, 111. N. Andover, Mass. Texas City So. Charleston Burlington, N.J. ) Flemington, N.J.) Calvert City, Ky. Deer Park, Texas Midland, Michigan Pensacola, Fla. Pottstown, Pa. Ashtabula, Ohio Niagara Falls ) Louisville ) Avon Lake ) Watson, Calif.) Niagara FaLls Fitchburg, Mass. Hicksville, N. Y. Saugus, Calif. St. Paul, Minn. Springfield, Mass. Passaic, N.J. Hebronville, Mass. ` Aberdeen, Miss. Painesville, Ohio *' Capacity (Million #/Yr.) Probable Monomer Supplier ` 12 30 25 40 ` 40 130 130 100 Integrated Allied Allied Monochem If Integrated II Tenneco 30 75 Integrated 40 Integrated 40 Ethyl 95 Integrated 45 Dow 260 Integrated ' 60 10 15 6 10 115 50 120 20 65 1,563 Monsanto Allied Allied American Integrated Allied Carbide Dow Monochem CBY 1023676 RSV0031893 TABLE VIII A - (M DOLLAI OR POUNDS) CASH FLOW IF BUSINESS CONTINUES - FIVE-YEAR PERIOD 1964 1965 1966 1967 Sales Lbs. - Plastics VCM 133 15 134 139 10 10 144 10 Sales $ - Plastics VCM Total 25.00 1.02- 26.02 26.00 .68 26.68 26.50 .68 27. 18 26.70 .68 27. 38 o COGS - Plastics VCM Total 22. 20 .93 23. 13 22.80 .61 23.41 22.95 .60 23.55 22.63 .59 23.22 Gross Profit Plastics VCM Total 2.80 09 2.89 3.20 .07 3.27 3.55 .08 3.63 4.07 .09 4. 16 SARE - Plastics VCM Total 2.50 .08 2.58 2.60 .06 2.66 2.65 .06 2.71 2.67 .06 2.73 Net Profit Plastics VCM Total 0.30 .01 .31 0.60 .01 .61 0.90 .02 .92 1. 40 .03 1.43 Net Profit, A.T. .15 . 30 .46 .71 Depreciation Plastics VCM Tnvc stment Cash Flow Total 1964 through 1968 1.51 .07 .60 1. 13 1.38 .07 .70 1.05 1. 12 .05 .40 1.23 1.06 .05 .30 1.52 CBY 1023677 - J1968 147 10 27. 70 .68 28. 38 23.33 .59 23.92 4.37 .09 .4.46 2.77 .06 2.83 1.60 .03 1.63 .81 .91 .05 . 30 1.47 $6.40 '`N RSV0031894 TABLE VIII B (M . LLARS) CASH FLOW IF WITHDRAW - FIVE-YEAR PERIOD Fixod COGS Texas Springfield Total 1964 $ 3.450 1.749 5. i99 1965 $ 3.280 1.550 4.830 1966 $ 3.110 1.325 4.435 Fixed SARE /*\ Domestic Hydrocarbons Domestic Plastics Overseas Total .070 .779 .089 .938 .060 .503 .060 . 623 .050 .246 .030 .326 tiremonts VCM - Texas 2.200 . ... - -r - PVC - Springfield 3.300 .... ... Total Loss Before Tax 11.637 5.453 4.761 Total Loss After Tax 5.818 2.726 2.380 Dcpro elation Hydro Plastics Total .650 .415 1.065 .510 .368 .878 .450 ,315 .765 Retirements 5.500 00 00 Cash Flow $ .747 $ $ 1.615* Total 1964 thru 1968 Note: Upon discontinuation, $7 M of working capital would be recoverable. This recovered investment is not shown above. 1967 $ 1.640 1. 100 2. 740 . .040 .077 --- . 117 ... 2.857 1.428 .230 .262 .492 1968 $ . 170 .874 1.044 .030 -- -- .030 __ --- 1.074 .537 .020 .208 .228 $ .936* $ .309* $ 3.961* CB1f 1Q23676 r RSV0031895 TABLE VIII C-(M DOLLA"S OR POUNDS) CASH FLOW IF WITHDRAW FROM POLYMER BUSINESS ONLY - FIVE-YEAR PERtO (Assume can sell same monomer rate at 6.8f/lb, net price) 1964 1965 1966 1967 Sales - Lb. VCM Sales - Plastics VCM 140 9.52 145 '_ 9.87 150 0. 20 160 10. 90 COGS - Plastics (Springfield) /"V VCM V-' Total 1.75 8.70 10.45 1.55 8.80 10.35 1.33 9.00 0.33 1. 10 9.40 10.50 ' Retirement - Plastics Gross Profit Plastics VCM Total 3.30 5. 05* .82 4.23* - 1.55* 1.07 .48* - 1.33* 1.20 . 13* - 1. 10* 1.50' .40 SARE - Plastics (fixed) Overseas (fixed) VCM Total .78 .09 .30 1.17 .50 .25 .06 .03 .30 .30 .86 ,."58 .08 . .30 .38 Profit Net Profit, A.T. Depreciation Plastics VCM Retirement Invc stment Cash Flow Total 1964 thru 1968 r-" 5.40* 2.70* .42 1.00 3.30 .20 1.82 1.34* .67* .37 1.00 _ .50 .20 .71* .35* .32 .80- - .20 .57 .02 .01 .26 .80 - . 10 .97 1023679 1968 j 160 10.90 .87 9.40 10.27 t87* 7 1.50 .63 .30 30 .33 . 16 ! 1 1 j j i '| [ L .. .21 .70 - . 20 .87 $4,43 ; | RSV0031896 i TABLE IX - PRO FORMA #3D ST A?:1966 Under FavoraV i 1 (In Thousands] Homopoly. Copolymer Net Salcs-Quantity- Domestic Overseas 22,700 - 42,000 - Total 22,700 42, 000 Dollars- Domestic 2,890 5, 250 Overseas -- T otal 2, 890 5, 250 Average Unit Price 12.75 12.5 Cost ox Sales - Domestic 2, 585 5, 200 Overseas -- Total 2, 585 5,200 Average Unit Cost 11. 4 12.4 Gross Profit - Domestic 305 50 Overseas -- Total 305 50 Gross Profit as % of Sales 10.6 1.0 S.A, R.E, - Domestic 250 250 Overseas Sales Invest. 17 - Total 267 250 S.A, R.E. as % of Sales 9.2 4.8 Net Profit from Operations Dome stic 38 200* Overseas - Sales -- Royalties - Net 115 35 Total Overseas 115 35 I Other Income Domestic 13 Total Net Profit from Oper. 154 162* Oper, Profit as % of Sales 5.3 - Corporate Central Office 58 106 Income Charges - Net 37 66 Income Before Taxes 59 334* Income Tax 30 169* Income After Tax 29 * 165* Income A. T. as % of Sales 1.0 - Paste i 21,000 - 21,000 3, 820 . 820 18. 2 3,230 i 1_J 3, 230 15.4 590 - 590 15.5 400 - 400 10. 5 190 : . *i 20 ! 20 2j 212 i 5.5 . 103 : 39 ! 70 35 : 35 ! l 0.9 | CBY 1023680 RSV0031897 :::N7 - vinyl POLYMERS C.-*-*^;tions Rigid Compound 29, 000 29, 000 7,520 7,520 26. 6,090 6.090 21. 1,430 1,430 19.0 1,040 3 31 1,071 14. 3 359 190 190. 2 551 7. 3 107 46 398 202 196 ; 2.6 Ultron 24, 000 24, 000 6, 720 6,720 ' 28. 5, 740 5,740 23.9 980 980 14.6 670 670 10.0 310 40 40 2 352 5.2 103 42 207 105 102 ' 1.5 Tot;ii Polymer Grouts 138.700 138.700 26,200 26, 200 - 22. 845 22, 845 16,5 3, 355 3, 355 12. 8 2, 610 48 2, 658 10. 2 697 400 400 10 1, 107 4. 2 477 230 400 203 197 0. 8 Monorr.e r 30.COO 30,000 2, 040 2. 040 6. 8 1,770 1, 770 5. 9 270 . 270 13.2 165 3 139 6.8 131 26 26 5 162 7.9 21 30 111 55 56 2.7 i .V. . u i c ft.",; It*?, i i. 2a, 26.240 24,615 24,615 3, 625 3,625 12.8 2,775 51 2,797 9.9 828 426 426 15 1,269 4.5 498 260 511 258 253 0.9 CBY 1023681 RSV0031898