Document gDvJjpRKMaVKv0ZpjJd8negka

: c uusphy ;>C9 P's<c*m--utnagef February 15, 1980 To Flintkote Flooring Distributors: The Flintkote Flooring Company made important announcements at the Chicago Heights and Los Angeles flooring plants on January 9, 1980. These announcements stated that the Flintkote Company was initiating separate independent studies to determine the economic feasibility of continued operation of both or either of the two plants. Despite some erroneous rumors about same, Flintkote's Toronto, Canada floor tile plant was not and is not involved in these studies. These studies have now been completed. The studies took into careful consideration the current profit levels, the return on assets employed, the future outlook for the floor tile industry, and the current and long range outlook of our distributors in the floor tile business. Most of you have discussed the need for improved profits on your warehouse sales, and especially the need for increased profits on direct contract tile shipments. It is unfortunate that competitors have prevented your earning a worthwhile profit on these sales. The final decision is that the Chicago Heights operation will continue to manufacture flooring products only through March 28, 1980. Until this date, incoming orders will be promptly serviced. After this date, inventories at Chicago Heights will continue to be available for shipment to fill out or balance your inventory, in accordance with our standard terms and conditions. Since the mix of products could be limited after March 28th, it is suggested that you order any specific requirements before manufac ture stops. The study and outlook on the Los Angeles Flooring plant proved to be more favorable. The Los Angeles plant, therefore, will continue to operate, but will be limited to servic ing customers now in the Western Region (geographically, west of the Rocky Mountains). The Flintkote Company sincerely regrets the upcoming shutdown of the Chicago Heights plant. In order to make the transition period for you as smooth and practicable as possible, Flintkote will do the following: ... An inventory of all products will be maintained and shipped as long as possible. This will allow you continued profits as you make your decisions to seek another tile line or to devote the present floor tile inventory investment, warehouse space and selling effort to other product lines. ... You can receive 100% full credit for your net expenditures with Flintkote for any and all displays, samples and literature purchased since January 1, 1979. Please send to your Flintkote Flooring Regional Manager's office a debit memo or letter listing the invoice numbers and dates, and the total charge on each invoice for any Flintkote Flooring sales aids. ... The Flintkote Company will continue to stand behind all its floor tile products exactly as it would if Flintkote continued in the floor tile business throughout the entire United States. This is an important point as it maintains the value of Flintkote flooring inventories as compared with the products of a manufacturer who has closed its doors with no available assets to settle legitimate quality claims. Flintkote is a going concern. In the meantime, Flintkote Flooring Company is still in business. You can continue to sell, make profits, and receive material for a number of months to come. You will continue to be kept advised on production and inventory status as in the past. Your support and understanding during the study period has been absolutely outstanding. It is because of your response that we regret so much this announcement. At the same time, you are astute business people and recognize the necessity for an organization to remain only in those operations which give a fair return on investment. It is regretted that continued operations of the Chicago Heights flooring plant did not measure up to these requirements. Sincerely, JCMslr J. C. Murphy