INTEROFFICE MEMO

To: Mathew, Mike K., Paul M., Michael R., Tony C., Henry, Jeff G., Greg/Lisa D.,
Tonya, Ramona, Sunshine, Beth, Paul S., Felix, Gigi,
Brenda, James, Linda S., Stacey, Renee
CC: SE, CS, BB, AR, JA
From: Susan White
Date: Friday, November 20, 2009
Subject: Physical Inventory – Saturday, January 2, 2010

Tallapoosa plant will complete 2009 year-end physical inventory on January 2, 2010. Ticket entry will be
performed on the same day.

Assignments

Susan White will be in charge of the physical inventory. The purpose of the physical inventory is to count
all materials on hand and to value these at current cost. Responsibilities are delegated to the department
managers, whose presence is mandatory, and then to other employees who perform the counting and
complete inventory tickets. The inventory process will be monitored by internal auditors, who will conduct
spot checks and provide support. External auditors from McGladrey & Pullen LLP will also be on-site.

Raw Materials to be inventoried

All inventory items must be counted. Raw materials are all items eventually used in production that have
been purchased and not yet been consumed in Great Plains. All back flushed RAW components in use
must be counted as RAW providing the MO receipt has NOT been entered. When in doubt, ask your
supervisor, an internal auditor, the Purchasing Manager or the Operations Analysis Manager. Purchased
materials should not be scheduled for delivery for week of Dec. 28th unless absolutely necessary for
manufacturing.

Manufacturing/Production

The Plastic Department (continuous operation) will be manufacturing during physical inventory. As of the
present time no other manufacturing is scheduled. All RAW components in use on semi-finished (SFG)
will be inventoried as raw materials. The MO receipt for the manufactured items will be entered in the
system on the next scheduled workday. The finished items will be kept at production equipment with a
note stating “DO NOT INVENTORY” to eliminate the possibility of the item being counted twice.

Basic Inventory Completion Method

All departments will be issued three-part Physical Inventory Tickets preprinted from Great Plains for items
where quantities exist in their departments (bins). The quantity must be filled in by the assigned
inventory crew. The tickets will be affixed to the items using the adhesive label “DEC 2009”. After all
items are counted the internal audit may take place in manufacturing. Associates must report the
quantity in the correct UOM as listed on the ticket. If any item is consumed or shipped after the ticket has
been created then the ticket will be counted as zero. If the item is relocated then the original ticket is
voided (or zeroed) and a handwritten PIT must be created. All semi finished goods (in process) items
that are configured as back flushed must be counted as RAW (i.e. MO receipt has not been entered). An
inventory list will be available from Great Plains, if needed.

WIP to be inventoried

WIP items are items defined as Work in Process. These items have an assigned item number and are
used as a component for a finished good item or part of the pull system. These items will have a
preprinted ticket providing a move ticket receipt has been entered into the system before cutoff time.

WIP  FIN received

All completed items must have the MO Receipt entered as soon as possible, but no later than January
the 2nd at 7:30 am. The database will be locked at 7:30am and the Historical Report and Snapshot will
be created immediately thereafter.

Auditors

All auditors will return a log sheet identifying all audited items as documentation. This sheet will specify
the number of items to audit. This will be 15% of the items per manufacturing area and 10% in the
warehouse area.

Auditors Greg Price or Lisa Day

Henry Bosshard
Jeff Glaze
James Westmoreland
Michael Roberson
Tony Collins

All auditors will audit approximately 35 tickets each. Departments will be

assigned by Michael Roberson.

The tentative audit count is listed below (as of 11/20/09):

Bin Export 11-20-

09
AREA JW MK MT PM GT
252 76 76
253 39 39
254 108 108
256 52 52
257 16 16
258 13 13
259 107 107
266 379 379
9111 19 19
9999 162 162
266-IDS 29 29
Offsite 4 4
Whse 630 630
Whse <= 100 46 46
GT 4 120 699 857 1680
104.
Audit 0.6 18 9 85.7 209
Percentage 15% 15% 15% 10%

Warehouse area will complete two complete cycle counts in December prior to physical inventory.

Note: All consumptions are reduced from manufacturing bins which are indicted in green highlight
above. The shipping bin is specified as 9999, stock items are located in bin 9111 until moved,
and all receiving and returns are posted to bin 58.

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 It is very important that an accurate physical inventory be achieved.
Product Part Number Identification

Special care must be given so that the correct part number is reported. When handwriting tickets, be
sure to include Inventory date, Location, Quantity, UOM, Description, Type, MO number if possible, Item
number and counted by. When inventorying items with the preprinted tickets, fill in the counted quantity
and counted by fields.

2009 Physical Inventory Timetable (all times are approximate)

Responsible Description Day Date Time
OA Plan Mgr. Inventory meeting to address any concerns and
Thursday 12/17/09 11:00:00 AM
Susan review inventory procedures
OA Plan Mgr. Raw mat. Projection for balance of year from OA
Friday 12/18/09 12:00:00 PM
Susan Plan & Mgrs to Purchasing
Purchasing Do not schedule deliveries of RAW items unless
Monday 12/28/09 12:00:00 AM
James/Stacey absolutely necessary
Create print ticket export for bin range
Michael R. Monday 12/28/09 3:00:00 PM
6000-8999
Systems/Felix *Print tickets for Whse bins 6000-8999 Monday 12/28/09 4:00:00 PM
All Mfg Cutoff for requisitions & mfg returns Tuesday 12/29/09 7:00:00 AM
Whse Paul Begin counting whse 8am-8pm Tuesday 12/29/09 8:00:00 AM
Whse Paul Continue counting whse 5pm-8pm Wednesday 12/30/09 5:00:00 PM
Whse Paul Customer Returns/Receiving COMPLETED Thursday 12/31/09 2:00:00 PM
Whse Paul Continue counting 5:00-8:00 pm if necessary Thursday 12/31/09 5:00:00 PM
Whse Paul Complete shipping. Send email to acctg. Thursday 12/31/09 6:00:00 PM
Invoices posted to occur on 12/31/09 or
Acctg NY Thursday 12/31/09 8:00:00 PM
01/01/10 if completed after 8pm
Purchasing JW Offsite inventory Thursday 12/31/09 5:00:00 PM
MR/OA Plan Mgr Create print ticket export for all remaining bins Friday 01/01/10 New Year's Day!
Print all remaining tickets (after invoices have
Systems/Felix Friday 01/01/10 New Year's Day!
been posted for 31st)
OA Planning &
Update PIT file with counts Saturday 01/02/10 Throughout day
selected others
Physical Inventory - target completion is 3pm for
All Saturday 01/02/10 6:00:00 PM
counting and 6pm for variances
Do not post any receipts after this time!
All Saturday 01/02/10 7:30:00 AM
DB will be locked at 7:30am
OA Plan Mgr./SW Create PIT and historical snapshot report Saturday 01/02/10 8:00:00 AM
OA Planning/ Review PIT & account for all Physical Inv.
Saturday 01/02/10 3:00:00 PM
OA Mgr SBW Tickets
Systems
Variance report created by Systems Saturday 01/02/10 4:00:00 PM
Gigi/Paul S.
Mgrs./MR ** Review and verify variances with Mgrs. Saturday 01/02/10 5:00:00 PM
OA Plan Mgr.
Provide file to systems for integration Saturday 01/02/10 8:00:00 PM
SBW
Systems Integration - estimated completion TBD by
Saturday 01/02/10 10:00:00 PM
Gigi/Paul S. Systems

* All physical inventory tickets must be printed with date of 01/02/10.

** After verification, a Variance Report will be emailed to systems for the integration. The integration will create
transactions to increase or decrease the inventory levels in GP based on counted quantities.

Focus Factory Managers to remain on-site until variance discrepancies have been researched and resolved.

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There will be a complete cross check on 01/01/10 for items transferred TO or FROM bins 6000-
8999. If new items are found, there will be a ticket created at that time or if item has been
consumed or shipped, the ticket will be counted as zero.

Inventory Teams

Responsible Bins/Inventory Teams - TBD

Mathew 252 Flexo

253 Paper II
254 Metal
256 K-Seal
257 Cattle back
266 Badge
266-IDS
Mike K. 259 Plastic
258 Turkey lifter

Ticket entry Brenda Williams/Linda S. /Renee - warehouse

Sunshine Goodman – Mathew areas, assist other planners, whse
Tonya Adams/Ramona – Mike K. areas, assist other planners, whse
Beth Owen – Badge, IDS, assist other planners, whse

All variances over $500.00 - counts must be verified for accuracy

Support + Advice Susan White, Michael Roberson

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