2002 business plan

Attatchments: Rig and Driver Summary Pages '00 & '01

Custom Application Price Sheet '02

Multiple Year Sales, Margins, and Expense Trends

Please refer to the yearly sales, margins,a and expense graphs to obtain overall trend of facility. Gross and net revenues

in '01 grew markedly well. We broke the $1 million dollar mark in net revenues and beat the goal of 28% G.M. by two points

thru November. We have been following a multi-year plan at Allentown and moved ahead as planned with the addition of a

solid Crop Consulatant in Tony Estes. Tony came on in Feb. of this year and already is responsible for $1.2 million in sales.

Sales to these accounts have grown by 68% this year. Our emphasis will now start to take a more balanced approach

of increased sales with an increased G.M. %. We must and will spend our time targeting and calling on accounts that will

give us the greatest amount of volume AND margins. We are starting the process of scoring our accounts and will drop

those who do not meet our criteria. Custom application will continue to be the platform that we use to demonstate value

to the customer and show that we are a quality supplier of valuable products and services.

Fertilizers

2001 dollar sales slightly exceeded '02 budget. However, we will see substantial drop in unit prices in '02. Consequently,

we will target new sales in the field crops market. We have already secured 700 tons of new 30% UAN business for '02.

G.M. % is usually not as hard to maintain in a dropping market. We will use the customer application platform as a way to

preserve margins.

Chemicals & Rebates

2001 is a great year for Chemicals at Allentown CPS. Yes, sales were off due almost in total to one large bid that was lost

of $150M. The great thing was that the combination of rebates and margins was over 23%. Our profits increased $31M. We

plan to continue this trend. We have chosen our suppliers for '02 and feel that our budget is obtainable despite shrinking

rebates and increased Round Up Ready seed. We will agressively target key vegetable growers as well as several

grain farmers. Once again, the custom application platform will be what we stand on to preserve our margins.

Seeds

Seed in '01 grew 30% over '00. We have budgeted a hefty $90M increase. We feel that this is obtainable. Our goal is clear:

SELL SEED! We will agressively target key growers in the market. We will become as aggressive as other reputable sources

in selling seed to the grower. We will utilize the help of seed partners to help obtain this goal. Our greatest challenge will be

in preserving gross margins. Our custom application service is not a platform for margin preservation in seed sales…yet.

Currently we have booked new customer sales in excess of $46M for '02.

Application

Please refer to the Custom Application Rate Sheet 2002 for next season prices. Please also review the Rig and Driver

Summary Pages for '00 & '01. We have dedicated ourselves to the goal of making the custom application business for

several reasons: Frist, it was always meant to be a platform to preserve margins. Secondly, it is a way to demonstrate

quality services and employees to the surrounding customer market. Customers see the quality and then decide they want

the service. This leads to increased sales. These sales tend to be the BEST type…custom applied with higher margins.

Don't forget the added application revenues to boot. We have already matched the '02 budget in '01. I see were we may

increase another $24M in '02.

Expenses

Expenses did increase in '01. Hourly and overtime expenses were right on budget. Salaries were over budget due to the hiring

of Tony Estes. At the current trend, Tony will offset the added expense with the appropriate increased sales in '02. Rolling

stock expense in '01 was nothing short of terrible. Our old equipment suffered major breakdowns. Until leases expire we will

continue to increased repairs. However, many of the repairs done in '01 were major long term repairs on the 'Gator and the

one nurse truck. These units should be alright in '02. However, we may have a surprise or two with the Patriot. You will notice

that the per acre rolling stock expenses in '01 increased $.40/A or 16% in '01 vs. '00. Rolling stock expenses will be reduced

in '02. Otherwise, expenses be close to this year. Expenses as a percent of sales will be reduced by increased revenues.

Lead Dogs

Lead Dogs have been targeted. We could have never planned for success without the addition of a skilled Crop Consultant. We

have already seen were Lead Dogs like to have their own "personal" consultant. Tony is developing these relationships. I have

put togather a call log and sales log report for Tony to measure his success. We review this every quarter. We will do so again

in December by reviewing 2001 and planning 2002 for his most productive time management.

Catagories

Overview

ALLENTOWN 2002 BUSINESS PLAN

SALES % SALES PER ACRE

FERTILIZER 425,095.00$ 39.2% 13.27$

CHEMICALS 440,923.00$ 40.7% 13.76$

APPLICATION REVENUE 217,434.00$ 20.1% 6.79$

TOTAL SALES 1,083,452.00$ 100.0% 33.82$

MARGINS AND REVENUES

FERTILIZER MARGINS 113,190.00$ 26.6% 3.53$

CHEMICAL MARGINS 82,452.00$ 18.7% 2.57$


TOTAL MARGINS 413,076.00$ 38.1% 12.89$

EXPENSES

PAYROLL

APPLICATOR 100,872.00$ 9.3% 3.15$

NURSEMEN 17,600.00$ 1.6% 0.55$

TOTAL 118,472.00$ 10.9% 3.70$

APP. AND NURSE

DEPRECIATION 53,788.00$ 5.0% #REF!

MOBILE EXP. 79,000.00$ 7.3% #REF!

TOTAL EXPENSES 251,260.00$ 23.2% #REF!

TOTAL PROFIT/LOSS 161,816.00$ 14.9% #REF!

SUMMARY SHEET 2000

SALES % SALES PER ACRE

FERTILIZER 599,231.00$ 44.8% 2.83$

CHEMICALS 471,899.00$ 35.3% 2.70$


TOTAL SALES 1,337,888.00$ 100.0% 12.24$

MARGINS AND REVENUES

FERTILIZER MARGINS 112,630.00$ 18.8% 2.83$

CHEMICAL MARGINS 107,151.00$ 22.7% 2.70$


TOTAL MARGINS 486,539.00$ 36.4% 12.24$

EXPENSES

PAYROLL

APPLICATOR 100,872.00$ 7.5% 2.54$

NURSEMEN 17,600.00$ 1.3% 0.44$

TOTAL 118,472.00$ 8.9% 2.98$

APP. AND NURSE

DEPRECIATION 55,700.00$ 4.2% 1.41$

MOBILE EXP. 113,923.00$ 8.5% 2.87$

TOTAL EXPENSES 288,095.00$ 21.5% 7.25$

TOTAL PROFIT/LOSS 198,444.00$ 14.8% 4.99$

SUMMARY SHEET 2001

Prepared by Stacey Kinney

0

500

1000

1500

2000

2500

3000

3500

4000

January February March April May June July August September October November December

(US

$1,0

00

) Eastern Division

Allentown Farm Center YTD Sales Comparison by Year

2001

2000

1999

1998

Prepared by Stacey Kinney

0

200

400

600

800

1000

1200

January February March April May June July August September October November December

(US

$1,0

00

) Eastern Division

Allentown Farm Center YTD GP Comparison by Year

2001

2000

1999

1998

$8.50

LARGE ORDER DISCOUNT FOR 100A+ (1.00)

LARGE FIELD DISCOUNT FOR 40A+ (0.50)

$25.00

-$2.00

-$3.00

-$4.00

$9.75

-$0.50

-$0.50

-$0.50

-$0.25

$12.50

-$0.50

$15.00

-$1.00

HYDROSEEDING APPLICATION BASE RATE IS

$100 MINIMUM CHARGE

LARGE ORDER DISCOUNT FOR 40+A

$175 MINIMUM CHARGE

LARGE FIELD DISCOUNT FOR 40+A

CPS CHEMICAL DISCOUNT

CPS FERTILIZER DISCOUNT

WE HAVE QUALITY STAFF AND EQUIPMENT-NONE BETTER-ANY EXCEPTIONS MUST BE APPROVED

DRY FERTILIZER BASE RATE PER ACRE IS

PASTURE SPRAYING BASE RATE IS $150 MINIMUM CHARGE


LARGE ORDER DISCOUNT FOR 100A+

IF FARMER HAS LOADER

DEDUCT ANOTHER $1.00

100-150 TONS

150-250 TONS

250 TONS OR MORE

QUANTITY DISCOUNT PROGRAM

CUSTOM APPLICATION CHARGES

2001

NOTES

LIQUID APPLICATION BASE RATE PER ACRE IS

HI CAL OR HI MAGDAMP LIME SPREADING BASE RATE PER TON

$8.00

LARGE ORDER DISCOUNT FOR 100A+ (0.50)

LARGE FIELD DISCOUNT FOR 40A+ (0.50)

$25.00

-$2.00

-$3.00

-$4.00

$9.50

-$0.50

-$0.50

-$0.50

-$0.25

$12.50

-$0.50

$16.00

-$1.00

150-250 TONS

250 TONS OR MORE

HI CAL OR HI MAGDAMP LIME SPREADING BASE RATE PER TON

QUANTITY DISCOUNT PROGRAM

CUSTOM APPLICATION CHARGES

2001


CPS CHEMICAL DISCOUNT

CPS FERTILIZER DISCOUNT

NOTES

LIQUID APPLICATION BASE RATE PER ACRE IS

LARGE ORDER DISCOUNT FOR 100A+

IF FARMER HAS LOADER

DEDUCT ANOTHER $1.00

100-150 TONS

WE HAVE QUALITY STAFF AND EQUIPMENT-NONE BETTER-ANY EXCEPTIONS MUST BE APPROVED

DRY FERTILIZER BASE RATE PER ACRE IS

PASTURE SPRAYING BASE RATE IS $150 MINIMUM CHARGE


HYDROSEEDING APPLICATION BASE RATE IS

$100 MINIMUM CHARGE

LARGE ORDER DISCOUNT FOR 40+A

$175 MINIMUM CHARGE

The situation at CGA has not changed much. The manager of the facility feels

that he will be able handle both the crop supplies business as well as the

lawn and garden and greenhouse business. I believe that the Board members

will be willing to set down and start talking again during the 2002 year. I did

have a long talk with CGA Board Chairman Tony Russo on Thursday, Dec. 6.

He was quite willing to take time and talk to me. However, the board is not

yet ready to talk to us again. They are not completely satisfied with Milford

Fertilizer. Milford has been having a difficult time of producing fertilizer that

meets guaranteed analysis. I think that we should let them have another

season with Milford and then approach them. The NJ Dept. of Ag is watching

Milford very closely and testing their product frequently. This will work to our

advantage if we just wait another eight months before we start formal talks.

I would suggest that we approach it from as a lease, such as Ron has suggested.

We should emphasize custom application services--something that CGA does not

offer. We would also have liquip fertilizer and seed storage. These, too, are items

that CGA does not offer it's membership. By approaching it in this manner we

would be offering items that would not interfere with the current products/services

being offered. The Board may look positively on such an arrangement.

Footnote: I received a phone call this morning from a customer in the Tabernacle

area. He investigated the possibility of buying a piece of ground on Route 206 just

North of Tabernacle. He has made arrangements for the land owner and myself to

meet to discuss the situation with this ground.

Cooperative Growers Association

As has been discussed in several engagements, Allentown is experiencing a space shortage.

We have been looking at several items:

1. Building a new office.

2. Building more warehouse space and liquid storage.

3. Renting warehouse space.

4. Setting up a satelite and thereby removing some of the congestion.

Currently warehousing has been secured in two place. One building costs us $800/month and

provides about 4,000 bags of seed storage. We rented this building in 2001.

We have just secured an agreement for an additional 6,000 sq. ft. of clear span storage. It will

adequately provide storage for the new business we have booked for 2002 along with extra room

for packaged chemical storage. I have noticed were we may not be able to keep the Meherrin/Tencoz

agreement. If this is the case added storage will be needed so we can do more direct purchasing.

The cost for this building is $1,500/month.

Allentown Building and Warehousing

2002 business plan

Business