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gfjm g y a n a mio Request For Capital Expenditures/Retirements ON OR COMPANY Polymer Products LOCATION rhiragn Plant-. JOB TITLE 1.0. CONTROL POINT 097 Purchase and;' install a 10 inch Extructer. REPORTING CLASSIFICATION OATE APPROVED JOB ORDER NO. 1/18/S5 FP-1111 SUMMARY OF AMOUNTS DESCRIPTION LOCAL. CURRENCY ESTIMATED PROJECT COST DISMANTLEMENT EXPENSE U.S. DOLLARS $8?.,.6Q5 TRANSFER EQUIPMENT GROSS AMOUNT FOR APPROVAL LESS TRANSFER EQUIPMENT 587,605 LESS SALVAGE OR TRADE-IN ALLOWANCE NET CASH REQUIRED (S0F-S0E7) $a7ffin5 1 RETIREMENT DATA COST 0ISMAMTLSM INT LESS SALVAGE AMOUNT TOTAL - CHARGE RESERVE DESCRIPTION AND REASONS REQUIRED ECONOMICS . os celled for in Generali Procedure Memo#3 Attachment C (Attach calculations) RCV.# ECONOMICS PERIOD NET 1 ALES HAT 1PROF1T/.AVINC.I TOTAL INVESTMENT & Yj9\a fW<y V V I,S7 3i<: i,. ' 334 I:,. 3 247 < i, a % ROI (o n t o t a l in v e s t *} INTERNAL RATE OF RETURN PAYOUT OF NEW FIXED CAPITAL 131 3371. 5 $;; .-it* ye. ti 7 REVISION DETAIL (g r o s s a mo u n t s ) DATE , AMOUNT CUM. AUTHORIZATION Funds of.-----------------------------------------------------------------------------------------------.------------------------$87,605 are requested to purchase and install a 10 inch Bepex Extructer to wax encapsulate heat stabilizer. r ec eiv ed .. . jftN 071985 M.0DIAN CYANAMID Request For Capital Expenditures/Retirements olymer Products LOCATION rhiragn Plant JOB TITLE *" J.O. CONTROL POINT 097 Purchase and"install a 10 inch Extructer. REPORTING CLASSIFICATION D-l DATE APPROVED JOS ORDER NO. SUMMARY OF AMOUNTS DESCRIPTION LOCAL CURRENCY ESTIMATED PROJECT COST DISMANTLEMENT EXPENSE TRANSFER EQUIPMENT GROSS AMOUNT FOR APPROVAL LESS TRANSFER EQUIPMENT LESS SALVAGE OR TRADE-IN ALLOWANCE NET CASH REQUIRED (g o f -3027) U.S. DOLLARS $87,605 $87,605 . $87,6.0,5. RETIREMENT DATA COST DISMANTLEMENT LESS SALVAGE AMOUNT TOTAL - CHARGE RESERVE DESCRIPTION AND REASONS REQUIRED ECONOMICS os called for in General Procedure Memo#3 Attachment C> (Attach calculations) ECONOMICS PERIOD NET SALES NAT (PRO FIT/SAVINGS) TOTAL INVESTMENT % ROI (ON TOTAL INVEST.) INTERNAL RATE OF RETURN PAYOUT OF NEW FIXED CAPITAL REV.# ,1 ! 2: \ 3: V4 5` .6 7 REVISION: DETAIL (g r o s s a mo u n t s ) DATE AMOUNT CUM. AUTHO Rl Z ATION Funds of---------------------------------------------------------- -------------------------------------------------------$87,605 are requested to purchase and install a 10 inch Bepex Extructer to wax encapsulate heat stabilizer. NA 3006 REV. 5-77 7r.'* 5-77 CYWI 25-0007218 DESCRIPTION AND REASONS REQUIRED pp-1111 1/18/85 Page 2 of 10 PROPOSED WORK AND COST Funds of --------------------------------------------------------------------------------------------------------$87,605.00 are requested to purchase and install a 10 inch Bepex Extructer to wax encapsulate heat stabiLizer. PRESENT SITUATION Envirostrand, recently purchased by Associal^e^Iiead, Jhas captured 5-10% of the lead stabilizer market with their 1mm strandTproduct. Reports from our slaes people indicate a very strong customer interest in a stranded stabilizer which minimizes lead, dust generation. . Hammond Lead reportedly has samples of their extrudate at customers plants for evaluation. I Plant trials of the rental Bepex 6" Extructer have been successful on all types of stabilizers (lead phosphite is not being considered at this time) with production rates of 150 to 400 lbs./hr.. It is . estimated that the annual output of the RE-10 Bepex machine would ..o be 3.0-5.0M lbs./yr. depending upon product mix. We have already made a 12k pound shipment to one customer, with a 40k pound order scheduled for November.!, 1984. Technical data support our position that the Cyastab 1000 series stabilizers are equal to or better than our competition. JUSTIFICATION In order to meet customer demands and competition, we must supply lead heat stabilizers in 1mm diameter strands. The only machine that has been found that can produce the small strands, is a Bepex Extructer. If we are to meet competition arid stay in business, an extructer must be purchased. Since Cyanamid is the second entrant into the extrudate market, our ability to respond quickly and flexibly to customers' orders will be a key factor in establishing a strong number two.position and in achieving our longer run objective of 2.0-2.5M PPY extrudate volume (a 20-25% share of this market segment) . . With the 6" machine,; our capacity to make sulfo phthalate is only 24k pounds a week; we need nearly two weeks to prepare a single 40k pound truckload order. Bepex indicates that the capacity of the 10" machine is at least twice that of the 6" machine, reducing our response time to less N14579.01 CYWX 25--0007219 pp-1111 1/18/85 Pag 3 of 10 than a week -- a satisfactory interval for the vast majority of our orders. _ Based on our volume projections, the 10" machine would be able to handle our requirements for the foreseeable future. We will be capacity-limited in several years with the 6" machine, necessitating purchase of a second machine at higher capital cost.. Purchase of a second 6" machine at a later date is also less attractive because of the investment required to duplicate supporting machinery and equipment. The 10" machine will require only k$2-5 more in support investment than the 6" unit: Single 6" Unit (k$) Single 10" Unit 2 6" Units Extructor Support Equipment 34 34 68 51 68 .37 6J3 88 136 Spending the additional k$20 to install the 10" machine clearly seems worthwhile. Our marginal income (NAT basis) on a single truckload order is more than k$9. Three truckloads more than compensate for .the additional investment in. the 10" unit. The addition of the Cyastab 1000 series extrudates to our product line affords an excellent opportunity to revitalize our image-in the lead stabilizer market and forge ahead in market postition. DETAILS OF PROPOSAL A Rietz model RE-10-K5F431 Extructer will be purchased with a 20 H.P. motor, and controls. A packaging line for boxes or semi-bulk bags will.be installed. The existing.air pallet unloading stand, vibrator screen and take-off belt will be used. PRODUCTION FACTORS This proposal will not alter product quality or. production. CONTINGENT FUTURE COMMITMENTS An additional vibrating screen at a cost of k$5-10 may be required as the extructer output increases towards the maximum. ALTERNATIVES CONSIDERED / Purchase of a 6" extructer was reviewed and rejected as detailed above. CYWI 25-0007220 pp-1111 1/18/85 Page 4 of 10 RISKS No operating risks are involved. CONCISE SUMMARY Purchase a 10 inch Extructer to meet customer and competitive demands for a 1mm extrudate. i CYWI 25-0007221 T 1027 REV. 7/02'' '"'" 7/6i (k\L SHEET JOB ORDER NO. COMPANY ITEM OR CODE NO. American Cyanamid DESCRIPTION / Extructer Packaging system 3> Electric More A/P system <f Extructer enclosure L Instrumentation 1 Shipping % Tax A'ir chiller DATE PP-1111 1/18/85 Pagft-S-Qf in LOCATION October 22, 1984 Chicago Plant EQUIPMENT OR MATERIALS LABOR ENG. MECH. SVC. TOTAL 50,745 14,303 1.500 200 2.500 500 4,340 2,000 76,088 4,000 5,917 600 500 11.017 500 500 51,245 14,303 5.500 5,917 800 2.500 500 4,340 2,500 87,605 N14579.02 CYWI 25 TTTTy--p-rrrrf; r! 0m CYANAMID pp-1111 1/18/85 Page 6 of 10 To: B. Coopersmith Location: Wayne From: c. g. Neumann Location: Wayne Extension: Subject: BEPEX EXTRUCTER JOB ORDER -_ . SUPPORTING ECONOMICS Reference: -------------------- -------------------------------- Date: Copy to: January 16, 1985 Attached are supporting economics for the 10" Bepex extructer (k$88) to make stranded lead stabilizer at Chicago. Projected selling prices and volumes for both powdered and stranded material are the same as the ones in the 1985 Annual Business Plan and the Plastics Additives Comprehensive Plan. Installation of the Bepex equipment is clearly attractive. Comparing the "produce stranded material" case against "business as usual" shows that the incremental cash flows from the sale of stranded material have a present value of nearly k$800 (20% discount rate). CGN/mdb 9/8849j Attachment Charles G. Neumann N14579.03 CYWX 25-0007 223 -.f iKji : j; BASi BASE SALES UNIT SELLING PRICE SALES VOLUNE SALES UNIT VARIABLE COST VARIABLE COST KARGINAL INCOME STRANDED SALES UNIT SELLING PRICE SALES VOLUNE SALES UNIT VARIABLE COST VARIABLE COST MARGINAL INCOME TOTAL MARGINAL INCOME TOTAL PERIOD COST GROSS PROFIT BASE COMMERCIAL EXPENSES RID DIVISIONAL EXPENSES GOODWILL NBT TAXES NAT 1984 0.61 6875 4194 0.34 2338 1856 CYANAHID LEAD STABILIZER BUSINESS BUSINESS AS USUAL 1985 1986 1987 198B 1989 0.65 0.67 0.69 0.71 0.73 6000 5500 5000 5000 5000 3900 3685 3450 3550 3650 0.36 0.37 0.39 0.41 0.43 2160 2035 1950 2050 2150 1740 1650 1500 1500 1500 pp-1111 1/18/85 Page 7 of 10 1985-90 1990 AVERAGE 0.77 5000 3833 0.45 2258 1575 3678 1578 1856 1740 1650 1500 1500 1500 1575 1578 962 990 1080 1115 1200 1250 1378 B94 750 570 385 300 250 197 409 506 531 558 586 615 646 678 286 300 315 331 348 365 383 -30 -30 -30 -30 -30 -30 -30 72 -112 -333 -562 -693 -791 -894 -564 36 -56 -167 -281 -346 -395 -447 36 -56 -167 -2B1 -346 -395 -447 -2B2 1 ............................ N14579.04 CYWI 25-00072 24 ..............--T- .....................~-"T----- r 1983 1984 NBT +BOOK DEPRECIATION +GQODNILL -TAX DEPRECIATION 72 171 30 166 NBT (Tax Basis! INCOME TAI ITC NAT (Tax Basis) 107 54 17 71 TAX DEPRECIATION 166 OPERATING CASH FLON 237 CAPITAL SPENDING MAINTENANCE CAPITAL 170 KORKINS CAPITAL Receivables Inventories Payables 412 466 342 435 204 260 Total 550 641 CHANGE IN N0RKIN6 CAPITAL 550 91 REVALUATION 17 NET CASH FLON, BUSINESS AS USUAL -8 PRESENT VALUE, 1985-90 CASH FLQN (121): PRESENT VALUE, 1985-90 CASH FLQN (201): BUSINESS AS USUAL CASH FLON 1985 -112 163 30 169 -67 -34 18 -16 169 153 1986 -333 196 30 174 -281 -141 19 -122 174 53 19B7 -562 210 30 162 -503 -252 20 -232 182 -50 1988 -693 225 30 187 -625 -312 21 -292 187 -105 1989 -791 240 30 196 -717 -359 22 -33? 196 -141 179 187 197 207 217 433 402 240 595 -46 22 43 -777 -567 409 383 394 406 379 363 382 400 226 217 226 239 562 530 548 567 -33 -32 19 19 20 19 18 19 -81 -196 -312 -357 pp-1111 1/18/85 Page 8 of 10 1985-90 1990 AVERAGE -894 -564 256 30 206 -814 -407 23 -384 206 -178 -45 228 426 420 251 595 28 20 -415 566 -220 CYWX 25-0007225 16-Jin BAS2 BASE SALES UNIT SELLING PRICE SALES VOLUME SALES UNIT VARIABLE COST VARIABLE COST MARGINAL INCOME STRANDED SALES UNIT SELLING PRICE SALES VOLUME SALES UNIT VARIABLE COST VARIABLE COST HAR6INAL INCOME TOTAL MARGINAL INCOME TOTAL PERIOD COST START-UP EXPENSE GROSS PROFIT BASE COMMERCIAL EXPENSES INCREMENTAL DISTRIBUTION COSTS INCREMENTAL ADVERTISING COSTS RAD DIVISIONAL EXPENSES 6Q0DNILL NBT TAXES NAT 1984 0.61 6875 4194 0 34 2336 1656 CYANAHlD LEAD STABILIZER BUSINESS PRODUCE STRANDED MATERIAL 1985 0.65 6000 3900 0.36 2160 1740 1986 0.67 5500 3685 0.37 2035 1650 1987 0.69 5000 3450 0.39 1950 1500 198B 0.71 5000 3550 0.41 2050 1500 1989 0.73 5000 3650 0.43 2150 1500 PP-1111 1/18/85 Page 9 of 10 1985-90 1990 AVERAGE 0.77 5000 3833 0 45 2258 1575 3678 1578 0.94 500 470 0.51 255 215 0.97 1000 970 0.54 540 430 1.01 1500 1515 0.57 855 660 1.07 2000 2140 0.60 1200 940 1.12 2500 2800 0.63 1575 1225 1.18 2750 3245 0.66 1815 1430 1857 1856 1955 2080 2160 2440 2725 3005 2394 962 990 1080 1115 1200 1250 1378 12 894 953 1000 1045 1240 1475 1627 1223 506 531 558 586 615 646 67B 10 20 30 40 50 55 25 25 25 50 286 300 315 331 348 365 383 -30 -30 -30 -30 -30 -30 -30 22 56 52 43 207 384 536 213 11 26 26 22 104 192 268 11 28 26 22 104 192 268 107 CYWX 25--0007226 NBT +BOOK DEPRECIATION +GQQDNILL -TAX DEPRECIATION NBT (Tax Basis) INCOME TAX ITC NAT (Tax Basis) TAX DEPRECIATION OPERATING CASH FLOW PRODUCE STRANDED MATERIAL CASH FLOH pp-1111 1/18/85 Page 10 of 10 1983 .... 1984 -- 22 171 30 166 1985 .------- 56 189 30 181 1986 -- 52 202 30 191 1987 -- 43 216 30 198 1988 -- 207 230 30 203 1989 384 245 30 212 1985-90 1990 AVERAGE ------ -- 536 213 261 30 206 57 95 92 91 265 447 621 29 47 46 46 132 224 310 17 25 19 20 21 22 23 46 73 65 65 153 245 333 166 181 191 198 203 212 206 212 253 256 263 356 457 539 354 CAPITAL SPENDING MAINTENANCE CAPITAL 76 170 179 187 197 207 217 228 NORKING CAPITAL Receivables Inventories Payables 412 466 486 517 552 632 717 786 342 435 449 479 522 605 693 758 204 260 268 2B6 312 361 414 453 Total 550 641 667 710 762 876 996 1092 850 CHANGE IN NORKING CAPITAL 550 91 25 44 52 114 120 96 REVALUATION 17 22 22 24 26 30 35 NET CASH FLON HITH STRANDED NATERIAL -33 -5 48 38 61 151 250 91 PRESENT VALUE, 1985-90 CASH FLON (12Z): 312 PRESENT VALUE, 1985-90 CASH FLON (20X): 225 1984 1985 1986 1987 1988 1989 1990 NET CASH FLON N1TH STRANDED MATERIAL -33 -5 48 38 61 151 250 NET CASH FLON, BUSINESS AS USUAL -8 43 -81 -196 -312 -357 -415 INCREMENTAL CASH FLON -25 -48 129 234 373 508 665 PRESENT VALUE, 1985-90 INCR. CASH FLON (121): 10B9 PRESENT VALUE, 1985-90 INCR. CASH FLON (20X): 792 CYWI 25-0007227 ffUNTf. OF* 3027 KEV. 7/62 7/0* DETAIL SHEET SHEET NO. JOB ORDER NO. COMPANY ITEM OR CODE NO. American Cyanamid DESCRIPTION 0201 Extructer 0202 Packaging system 5321 Electric 0203 0204 5901 More A/P system Extructer enclosure Instrumentation 0205 Shipping 0980 Tax - Expense 0301 A'ir chiller DATE LOCATION October 22, 19 84 Chicago Plant EQUIPMENT OR MATERIALS ENS. MECM. svc. 50,745 14,303 1.500 200 2.500 500 4,340 2,000 76,088 4,000 5,917 600 500 11,017 500 500 51,245 14,303 5.500 5,917 800 2.500 500 4,340 2,500 87,605 N14579.05 CYWX 25-0007228