Presentation1 Bio Fuels Business Plan Contact Page Smokeycharcoalshells
AGME Expansion Project Final 122104
1. ““AGME Perishable Expansion Project”AGME Perishable Expansion Project”
Executive Management TeamExecutive Management Team
December 21, 2004.December 21, 2004.
2. PERISHABLE EXPANSIONPERISHABLE EXPANSION
TIMELINETIMELINE
January 6, 1998January 6, 1998
Management begins review process forManagement begins review process for
warehouse expansionwarehouse expansion
July 21,1998July 21,1998
Board reviews expansion plansBoard reviews expansion plans
November 17,1998November 17,1998
Board reviews SORA design optionsBoard reviews SORA design options
3. PERISHABLE EXPANSIONPERISHABLE EXPANSION
TIMELINETIMELINE
March 30,1999March 30,1999
Capital expenditures for Y2K exceed budgetCapital expenditures for Y2K exceed budget
Conversion expenses climbConversion expenses climb
Board appoints building committeeBoard appoints building committee
December 6, 1999December 6, 1999
KOM presents final expansion planKOM presents final expansion plan
December 14, 1999December 14, 1999
Board approves motion to finalize expansionBoard approves motion to finalize expansion
plansplans
4. PERISHABLE EXPANSIONPERISHABLE EXPANSION
TIMELINETIMELINE
January , 2000January , 2000
Company loses Irving businessCompany loses Irving business
March 31,2000March 31,2000
Y2K Capital Budget exceeds $1.4MMY2K Capital Budget exceeds $1.4MM
Year has operating lossYear has operating loss
April 18, 2000April 18, 2000
Board of Directors reviews whse bidsBoard of Directors reviews whse bids
5. PERISHABLE EXPANSIONPERISHABLE EXPANSION
TIMELINETIMELINE
May 15, 2000May 15, 2000
Management postpones expansion projectManagement postpones expansion project
December 18, 2001December 18, 2001
Board of Directors revives expansionBoard of Directors revives expansion
May 15, 2002May 15, 2002
KOM presents re-sized recommendationKOM presents re-sized recommendation
December 17, 2002December 17, 2002
Board of Directors authorizes M&A activityBoard of Directors authorizes M&A activity
Ends expansion plansEnds expansion plans
8. Proposed ExpansionProposed Expansion
A total of 41,000 SQ. FT. of Perishable space would be added toA total of 41,000 SQ. FT. of Perishable space would be added to
the existing perishable center.the existing perishable center.
The frozen food would increase from 9,100 SQ. FT. to 18500 SQ.The frozen food would increase from 9,100 SQ. FT. to 18500 SQ.
FT., Meat from 6,400 SQ. FT. to 10,750 SQ. FT., Dairy/Deli fromFT., Meat from 6,400 SQ. FT. to 10,750 SQ. FT., Dairy/Deli from
4,800 SQ. FT. to 18,400 SQ. FT. and Produce from 9,500 SQ. FT.4,800 SQ. FT. to 18,400 SQ. FT. and Produce from 9,500 SQ. FT.
to 12,850 SQ. FT.to 12,850 SQ. FT.
The Dock area would increase from 4,600 SQ. FT. to 17,900 SQ.The Dock area would increase from 4,600 SQ. FT. to 17,900 SQ.
FT.FT.
Eight (8) new loading doors would be installed to allow for loadingEight (8) new loading doors would be installed to allow for loading
off from a temperature controlled dock.off from a temperature controlled dock.
The existing Freon refrigeration system would be replaced with anThe existing Freon refrigeration system would be replaced with an
ammonia system.ammonia system.
9. Growing Labor ExpensesGrowing Labor Expenses
For fiscal 2004 there were 1,643,186 cases received in meat,For fiscal 2004 there were 1,643,186 cases received in meat,
dairy and frozen or 59,198 pallets of merchandise.dairy and frozen or 59,198 pallets of merchandise.
Out of that number 423,228 cases we handled 4 times fromOut of that number 423,228 cases we handled 4 times from
receipt to the delivery truck. Twice more than necessary !receipt to the delivery truck. Twice more than necessary !
In addition 21,161 were handled 6 times due to going to outsideIn addition 21,161 were handled 6 times due to going to outside
storage. Outside storage causes the operation to receive thestorage. Outside storage causes the operation to receive the
product twice as well.product twice as well.
Due to space constraints buy quantities have forced theDue to space constraints buy quantities have forced the
operation to receive 821,593 cases 3 times more frequentlyoperation to receive 821,593 cases 3 times more frequently
than necessary.than necessary.
Industry average of cases per pallet for these 3 categories is 60Industry average of cases per pallet for these 3 categories is 60
cases. AGME average? 29 Cases.cases. AGME average? 29 Cases.
AGME will spent $39,933 in fuel and labor transporting to andAGME will spent $39,933 in fuel and labor transporting to and
from South Gardiner.from South Gardiner.
Net annual affect of additional handling, travel and employeeNet annual affect of additional handling, travel and employee
10. Electrical Utilities CostsElectrical Utilities Costs
Electrical Utility costs for fiscal 2005 will be $245,000Electrical Utility costs for fiscal 2005 will be $245,000
Half of the load is due to refrigeration!Half of the load is due to refrigeration!
Industry standards report a minimum of 25% savings inIndustry standards report a minimum of 25% savings in
utilities by converting to Ammonia refrigeration systems.utilities by converting to Ammonia refrigeration systems.
Net annual savings of $32,500Net annual savings of $32,500
In addition, the elimination of 5 electric storage unitsIn addition, the elimination of 5 electric storage units
would result in an additional annual savings of $44,000 inwould result in an additional annual savings of $44,000 in
utilities and storage trailer maintenance.utilities and storage trailer maintenance.
The elimination of the South Gardiner facility in year 3The elimination of the South Gardiner facility in year 3
would provide an additional annual savings of $42,000would provide an additional annual savings of $42,000
although this may be offset by the need for outsidealthough this may be offset by the need for outside
storage of Holiday Turkeys.storage of Holiday Turkeys.
11. Refrigeration MaintenanceRefrigeration Maintenance
Annual refrigeration maintenance costs for the 30 yearAnnual refrigeration maintenance costs for the 30 year
old South Gardiner facility & 19 year old AGME facilityold South Gardiner facility & 19 year old AGME facility
are projected to reach $75,000 for fiscal 2005.are projected to reach $75,000 for fiscal 2005.
Industry standards report that maintenance costs areIndustry standards report that maintenance costs are
reduced by as much as 75% by converting from areduced by as much as 75% by converting from a
mechanical Freon based system to an ammonia system.mechanical Freon based system to an ammonia system.
Eliminating the SG Facility in year 3 and converting toEliminating the SG Facility in year 3 and converting to
ammonia at AGME would reduce the annual refrigerationammonia at AGME would reduce the annual refrigeration
maintenance cost by as much as $56,250maintenance cost by as much as $56,250
12. Damages & ShrinkDamages & Shrink
There are a total of 2,148 pallets in reserve locations inThere are a total of 2,148 pallets in reserve locations in
Meat, Dairy and Frozen.Meat, Dairy and Frozen.
There are a total of 1,680 possible reserve bays in Meat,There are a total of 1,680 possible reserve bays in Meat,
Dairy and Frozen.Dairy and Frozen.
Currently 77% of the reserve locations in these threeCurrently 77% of the reserve locations in these three
coolers have more than 3 pallets in a single reserve.coolers have more than 3 pallets in a single reserve.
What does that mean?What does that mean?
Replenishment labor is doubled as a result of droppingReplenishment labor is doubled as a result of dropping
the stack, splitting the stack and returning the stack tothe stack, splitting the stack and returning the stack to
reserve.reserve.
In addition the warehouse incurred $8,700 in dairy,In addition the warehouse incurred $8,700 in dairy,
$1,500 in bakery, $2,500 in meat/deli, $3,000 in frozen$1,500 in bakery, $2,500 in meat/deli, $3,000 in frozen
food and $2,500 in produce as a result of warehousefood and $2,500 in produce as a result of warehouse
15. “Workers Comp Data”
2003
45 First reports filed for Workers
Compensation.
27 of these reports originated in the
Perishable Area
Total of 1142 restricted days 77% of these
days originated in the Perishable Area
Average cost shoulder strain $ 10,000
Med only
Average cost shoulder surgery $
30,000 Med only
Average cost of a back strain $ 10,000 Med
only
Average cost of a back surgery $
25,000 Med only
Average cost of a back fusion $
50,000 Med only
20. IMPACT ON INSURANCEIMPACT ON INSURANCE
Building PremiumBuilding Premium
Building and contents estimated at $5,000,000Building and contents estimated at $5,000,000
Premium increase $ 3,526Premium increase $ 3,526
Savings IncurredSavings Incurred
Deletion of 4 Storage trailers ( $ 936)Deletion of 4 Storage trailers ( $ 936)
Premium in workers compensation ($ 9,067)Premium in workers compensation ($ 9,067)
Net Effect: Saving of ($6,477)Net Effect: Saving of ($6,477)
23. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
FROZEN CASH DISCOUNTFROZEN CASH DISCOUNT
90% WILL REALIZE 2%90% WILL REALIZE 2%
10% WILL REALIZE 1%10% WILL REALIZE 1%
GAIN OF $43,700GAIN OF $43,700
24. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
$55,250 FIRST YEAR SLOTTING GAIN$55,250 FIRST YEAR SLOTTING GAIN
FROZEN FOODFROZEN FOOD $24,000$24,000
DAIRYDAIRY $12,250$12,250
BAKERYBAKERY $4,000$4,000
MEAT/DELIMEAT/DELI $15,000$15,000
ONGOING IN FROZENONGOING IN FROZEN $14,400$14,400
25. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
$64,000 PER YEAR IN FROZEN FOOD$64,000 PER YEAR IN FROZEN FOOD
AD INCOMEAD INCOME
RUN 8 FROZEN FOOD ITEMS PERRUN 8 FROZEN FOOD ITEMS PER
WEEKWEEK
$200 FLAT FEE PER ITEM$200 FLAT FEE PER ITEM
40 NATIONAL BRAND ITEMS PER YEAR40 NATIONAL BRAND ITEMS PER YEAR
27. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
$20,800 PER YEAR IN DEAL INCOME$20,800 PER YEAR IN DEAL INCOME
ABILITY TO PURCHASE EXTRAABILITY TO PURCHASE EXTRA
PRODUCTPRODUCT
MAKE SPECIAL BUYS & TRUCKLOADMAKE SPECIAL BUYS & TRUCKLOAD
PURCHASESPURCHASES
28. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
$112,770 ADDITIONAL PROFIT ON$112,770 ADDITIONAL PROFIT ON
SALES OF ADDITIONAL VARIETYSALES OF ADDITIONAL VARIETY
USED NUMBER OF NEW ITEMS PERUSED NUMBER OF NEW ITEMS PER
DEPARTMENTDEPARTMENT
AVERAGE WEEKLY MOVEMENT OF 7AVERAGE WEEKLY MOVEMENT OF 7
CASESCASES
AVERAGE DEPARTMENT CASE COSTAVERAGE DEPARTMENT CASE COST
USED CURRENT DEPARTMENT
30. PROCUREMENT &PROCUREMENT &
MARKETINGMARKETING
WILL REALIZE LOSS OF 2% IN MARGINWILL REALIZE LOSS OF 2% IN MARGIN
LACK OF ABILITY TO BUY INLACK OF ABILITY TO BUY IN
TRUCKLOAD AT THE BEGINNINGTRUCKLOAD AT THE BEGINNING
ENSURE KEEPING PRODUCT COSTSENSURE KEEPING PRODUCT COSTS
THE SAME TO OUR CUSTOMERSTHE SAME TO OUR CUSTOMERS
THE DIFFERENCE IN THIS LOSS ANDTHE DIFFERENCE IN THIS LOSS AND
THE ELIMINATION OF BOZZUTO’S FEETHE ELIMINATION OF BOZZUTO’S FEE
IS A LOSS OF .40% MARGINIS A LOSS OF .40% MARGIN
32. OTHER EXPENSESOTHER EXPENSES
DEPRECIATIONDEPRECIATION
EXPANSION COSTS OF $4.7 MIILIONEXPANSION COSTS OF $4.7 MIILION
PRE-COSTS OF $100,000PRE-COSTS OF $100,000
INTERIM INTEREST OF $76,000INTERIM INTEREST OF $76,000
DEPRECIATE OVER 39 YEARS FOR BOOKDEPRECIATE OVER 39 YEARS FOR BOOK
YEARLY NON-CASH EXPENSE OF $125KYEARLY NON-CASH EXPENSE OF $125K
33. OTHER EXPENSESOTHER EXPENSES
INTERESTINTEREST
6 MONTH CONSTRUCTION LOAN USING6 MONTH CONSTRUCTION LOAN USING
A 30 DAY LIBOR RATEA 30 DAY LIBOR RATE
CONVERT TO A MORTGAGE LOAN INCONVERT TO A MORTGAGE LOAN IN
OCTOBEROCTOBER
MORTGAGE LEVEL PAYMENT OF 15MORTGAGE LEVEL PAYMENT OF 15
YEARS WITH A 15 YEAR AMORTIZATIONYEARS WITH A 15 YEAR AMORTIZATION
AT 6.62% FIXED RATEAT 6.62% FIXED RATE
TOTAL MORTGAGE LOAN OF $4,815,000TOTAL MORTGAGE LOAN OF $4,815,000
34. OTHER EXPENSESOTHER EXPENSES
REAL ESTATE TAXESREAL ESTATE TAXES
ASSUMPTION TO HAVE A 5 YEAR TIFASSUMPTION TO HAVE A 5 YEAR TIF
CREDITCREDIT
THIS WOULD REDUCE OUR TAXES BYTHIS WOULD REDUCE OUR TAXES BY
50% FOR YEARS 1 THROUGH 550% FOR YEARS 1 THROUGH 5
35. ASSUMPTIONSASSUMPTIONS
USED 2% INFLATION FACTORUSED 2% INFLATION FACTOR
FOR:FOR:
ADDT’L GROSS ON SALES-VARIETYADDT’L GROSS ON SALES-VARIETY
DIRECT LABORDIRECT LABOR
REDUCTION IN REFRIDGERATIONREDUCTION IN REFRIDGERATION
COSTSCOSTS
ELECTRICAL UTILITIES SAVINGSELECTRICAL UTILITIES SAVINGS
OUTSIDE STORAGE COSTS-SO.OUTSIDE STORAGE COSTS-SO.
GARDINERGARDINER
OUTSIDE STORAGE COSTS-TURKEYSOUTSIDE STORAGE COSTS-TURKEYS
TRAILER STORAGE LABOR COSTTRAILER STORAGE LABOR COST
36. ASSUMPTIONSASSUMPTIONS
USED 39 YEARS TO DEPRECIATEUSED 39 YEARS TO DEPRECIATE
TIF CREDIT FOR 5 YRS AT 50%TIF CREDIT FOR 5 YRS AT 50%
SAVINGS FOR REAL ESTATE TAXESSAVINGS FOR REAL ESTATE TAXES
FOR THIS PROPOSAL A 10 YEARFOR THIS PROPOSAL A 10 YEAR
CASH FLOW ANALYSIS WAS USED.CASH FLOW ANALYSIS WAS USED.
ONLY 1 MILLION IN SALES GROWTHONLY 1 MILLION IN SALES GROWTH
WAS FACTORED (VARIETY) FORWAS FACTORED (VARIETY) FOR
THIS ANALYSIS.THIS ANALYSIS.
37. CASHFLOWCASHFLOW
POSITIVE CASHFLOW ALL 10POSITIVE CASHFLOW ALL 10
YEARSYEARS
CASHFLOW DEVELOPED BY:CASHFLOW DEVELOPED BY:
TAKING TOTAL INCOMETAKING TOTAL INCOME
PLUS DEPRECIATIONPLUS DEPRECIATION
PLUS INTERESTPLUS INTEREST
LESS LOAN PAYMENTLESS LOAN PAYMENT
38. RETAIL SALES ANDRETAIL SALES AND
DEVELOPMENTDEVELOPMENT
RAY JACQUESRAY JACQUES
V.P. SALESV.P. SALES
39. PERCEPTIONPERCEPTION
TEAM MOVING IN A POSITIVETEAM MOVING IN A POSITIVE
DIRECTIONDIRECTION
LACK OF VARIETY IN PERISHABLESLACK OF VARIETY IN PERISHABLES
SERVICE LARGER STORES NEEDSSERVICE LARGER STORES NEEDS
NEED LARGER ACCOUNTS FORNEED LARGER ACCOUNTS FOR
ROTATION AND TURNSROTATION AND TURNS
GROWTH IN PERISHABLESGROWTH IN PERISHABLES
FROZEN FOOD FASTEST GROWINGFROZEN FOOD FASTEST GROWING
CATEGORY
40. DIRECTIONDIRECTION
BECOME BEST INDEPENDENTBECOME BEST INDEPENDENT
DISTRIBUTORDISTRIBUTOR
SET AN EXAMPLE FOR CURRENTSET AN EXAMPLE FOR CURRENT
CUSTOMER BASECUSTOMER BASE
INSPIRE DEVELOPMENT ANDINSPIRE DEVELOPMENT AND
EXPANSIONEXPANSION
TOOLS TO GROW MEMBERSHIPTOOLS TO GROW MEMBERSHIP
41. DIRECTIONDIRECTION
WE MUST UPGRADE AND EXPANDWE MUST UPGRADE AND EXPAND
OUR PERISHABLE FACILITYOUR PERISHABLE FACILITY
““THIS IS OUR GREATESTTHIS IS OUR GREATEST
TOOL, OUR GREATESTTOOL, OUR GREATEST
ASSET”ASSET”
42. IMAGEIMAGE
CREATE A NEW PERCEPTION OFCREATE A NEW PERCEPTION OF
AGMEAGME
INSTILL EXCITEMENT AND PRIDEINSTILL EXCITEMENT AND PRIDE
INSPIRE GROWTH ANDINSPIRE GROWTH AND
DEVELOPMENTDEVELOPMENT
PART OF A WINNING TEAMPART OF A WINNING TEAM
NEW PERCEIVED IMAGENEW PERCEIVED IMAGE
43. AGME A WINNING TEAMAGME A WINNING TEAM
THETHE BESTBEST
INDEPENDENTINDEPENDENT
DISTRIBUTORDISTRIBUTOR
ININ
NEW ENGLANDNEW ENGLAND