TULSA, OKLAHOMA DISTRIBUTION CENTER

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FACILITY STATUS MEETINGNOVEMBER 11, 2009

SERGE PEPIN, SVP TECHNICAL DIRECTION/MSL – PPD

ROGER CARROLL, VP CORPORATE ENGINEERING

MIKE SCHEWENE, VP SUPPLY CHAIN NA PPD

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Welcome to the Tulsa Oklahoma SalonCentric Distribution Center, we are glad to have you as guests today and hope we can make your visit

informative!

Please let us know if we can assist you in any way possible during your visit!!

SalonCentric Mgmt!

• Requirements while visiting the Oklahoma SC Distribution Center– You must sign in and out at reception desk– You must be accompanied by site personnel at all times– Safety shoes are required while out in warehouse– High visibility vests are required while out in warehouse– Be aware of site evacuation and egress maps located throughout facility– Evacuation area located at Southwest corner of facility parking lot– Smoking in designated areas only.– Dial 911 in case of emergency– First responders are in high visibility YELLOW vests

Safety Orientation

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9:00 - 9:15 Meet and Greet Jim McCrary

9:15 - 9:30 Facility Summary and Structure Jim McCrary

9:30 - 10:00 Market Overview/Customer Service Gregg Wilkinson

10:00 - 10:45 Order Process/Profile/Inventory/Headcount Gregg Wilkinson

10:45 - 12:00 Site Tour Jim McCrary

12:00 - 12:30 Lunch (Open Discussion)

12:30 – 1:15 SH&E Overview Heather Peters

1:15 - 2:00 Cost Review/ Capitol Investments Gregg Wilkinson

2:00- 3:00 Site Challenges and Opportunities Jim McCrary, Russ

3:00 - 4:00 Questions and Wrap Up!

Agenda

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Facility Summary

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165,000 Total SQF 12,000 SQF Office153,000 SQF Warehouse

ManCom and Distribution Organization Structure

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Jim McCraryOperations Director

James CarterFacility Coordinator

Denise JonesPicking

Renee StopplePicking

Charles IngrahamShipping

Heather PetersSH&E Coordinator

Ray Trimble Production Coordinator

Steve Jones Replenishment

Angie Fuller Receiving

6 Full Time2 Temp

16 Full Time 3 Temp

6 Full Time5 Temp

11 Full Time6 Temp

11 Full Time6 Temp

2 Full Time1 Temp

Maint/Janitorial

3 Full Time Inventory

Control

Sales, Human Resource and Administrative Management Structure

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Rex Blair (VP of Sales- Sub Distribution)

Kristen Eckert (Accounting Controller)

Susan Massie (Sales Manager)

Erin Vierthaler (HR Manager)

Cynthia Bartos (Education Manager)

Lora Hakel (Customer Service

Manager)

Market Overview

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Customers Serviced RDA and State Sub-Distributors

• 114 Independent Owners – Typically husband and wife team or other family group

• 249 store locations• 526 sales consultants

• Small geographic territories• Contractual relationship based upon sub-distribution agreement

(non-exclusive), not franchisee agreement• Order and shipped weekly on defined schedule• Selling price is salon less 1/3rd or 30% off salon for store only

lines with a 4% 30 prompt pay discount

SalonCentric Stores• Currently 16 store locations replenished weekly

Market Overview

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Market Overview

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Market Overview

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Actual SalesAnnualized Actual

SalesAnnualized Salon

Equivalent

St Louis MO 7,119,275 9,492,366 14,238,550

Greater KC KS 2,873,417 3,831,223 5,746,834

Joplin MO 2,534,689 3,379,585 5,069,377

Denver NW CO 2,510,997 3,347,996 5,021,995

Lexington KY 2,460,571 3,280,761 4,921,142

Tulsa OK 2,161,689 2,882,252 4,323,378

Beaches MT 2,125,336 2,833,781 4,250,672

Louisville KY 1,977,022 2,636,029 3,954,043

Granite City IL 1,964,244 2,618,992 3,928,488

Austin TX 1,936,234 2,581,645 3,872,468

Total Top 10 27,663,473 36,884,631 55,326,946 24.7%

Total Sub-Distribution 112,041,598 149,388,797 224,083,196

Organization

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Customer Service Territories

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Order Process

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• 217 order locations • Orders are processed weekly based upon an assigned

order/shipping day• Customers transmit an electronic order on their assigned order

day • The orders are processed through an import routine and any

exceptions are resolved• CS reps follow up on any orders that are missing • Backorders are maintained for anything that can not be shipped.

Current orders and backorders are batched to produce one picking pass for the order.

• Orders have an assigned shipping method – orders are not rate shopped on a weekly basis. We influence the customer, but since they pay freight, they determine the carrier

Order Profile

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$ Lines Units Units/Line

Largest

123,786

1,858

25,061

13.49

Average

12,558

348

2,502

7.18

Mean

9,553

316

1,930

6.11

Average Weekly order dimensions• 214 orders• 618,000 units• 95,000 lines• 24,000 cases and 7,200 totes• 800 Pallets• 522,000 lbs

Picking Profile

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Total Units Loose Picks Group Picks Case PicksTotal

Reaches

Monthly Avg

2,593,848

1,243,036 96,629

88,488

1,428,153

Annual

31,126,174

14,916,434

1,159,544

1,061,852 17,137,831

48% 19% 33%

* Case inner packs that get picked to a tote/box. Example: 6 pack of Shades EQ color vs a 36 unit case of Shades EQ

Product Overview

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Total Sku’s 11,294

PPD InventoryMatrix 560Logics 172L'Oreal 576Redken 685Pureology 138Mizani 90

Total PPD 2,221

Other Hair CareFarouk 842Tigi 722Joico 409Framesi 335Nioxin 236Sexy Hair 224ISO 192Pravana 179Rusk 167Alterna 130Crew 107Kenra 101Bosley 12

Other Hair Care 3,656

NailsOPI 1,157Creative 480Backscratchers 128Sparitual 179

Nails 1,944

Misc 3,474

Inventory Performance

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Service LevelsInventory E&O Inventory Cogs - Last 12 Turns DOS % E&O Lines $

Redken 4,209,933 332,483 35,707,425 8.5 42 8% 98.4% 98.4%

Pureology 826,268 38,919 6,936,463 8.4 43 5% 90.5% 93.3%

Matrix 1,676,904 550,282 16,659,298 9.9 36 33% 94.9% 91.5%

Logics 201,403 113,525 1,247,872 6.2 58 56% 97.1% 95.9%

LP 476,187 76,507 5,533,788 11.6 31 16% 91.1% 89.8%

Mizani 70,766 14,595 433,920 6.1 59 21% 99.1% 98.7%

7,461,461 1,126,311 66,518,766 8.9 40 15% 96.1% 95.3%

Other 7,274,272 1,367,441 50,401,471 6.9 52 19% 92.3% 91.0%

14,735,733 2,493,752 116,920,237 7.9 45 17% 94.0% 93.2%

Headcount

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Corp Ok IL CO AL Fl NC Total

Warehouse Employees 2 63 19 7 37 68 47 243

Customer Service 7 9 2 6 18 8 50

Credit & Collection 2 3 2 9 6 22

Information & Control 8 1 1 3 6 3 22

IT 6 2 3 11

Purchasing 11 4 15

Diversion

Sub-Total 27 75 32 9 48 101 71 363

Temp

Warehouse 23 43 0 9 76

Other 5 4 9

Planned Temp Conversions 5 13

Site Tour

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Safety shoes and high visibility vests must be worn while on the tour.

Slip-on safety shoes and vests are provided if needed at the warehouse entrance!

Welcome! You matter to me!

Incident Summary

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Frequency Rate Summary

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• YTD– Total Energy Consumption- (121,360 kWh)– Atmospheric Discharge CO2- (912 Kg)– Transportable Waste- (39.6 Cubic Tons) – Landfill- (4.7 Cubic Tons)– Water Consumption- ( )– Recycling- (36.3 Cubic Tons)

• Plastic, Pallets, Paper and Cardboard

All solid waste has been going to Covanta Waste to energy facility since August 2009.

Waste to energy since August of 2009 is 3.3 cubic tons, waste is turned into steam which provides electricity.

2009 is a benchmark year for Tulsa facility; the goal for 2010 will be to reduce Energy, Discharge, Waste and Landfill by 5% while increasing Recycling by 5%

Waste minimization/reduction plans are initiated for the site with the goal of decreasing waste and energy by 5% and increasing recycling by 5%

Environmental Summary

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• 476 days without a lost time incident !

• SH&E Goals will be met by the end of 09; Sites emergency response plan developed ORS 001 A: 85% compliance achieved

Main focus 2009: PIT separation Pallet and racking safety auditing program High visibility clothing program Improved PIT driver training program Initiated PIT driver medical clearance program

General SHAP conducted (50% of employee involved) 37 SOP created and training conducted Salon Centric safety web site: www.saloncentricsafety.com Ergonomics program implemented SH&E training hours in 2009 have doubled from Jan to Sept, (avg- 196.5 hrs per month)

Main focus 2009: Weekly trainings conducted by management and supervisors New hire employee safety orientation program

Visual Communication Campaign launched SH&E fundamentals training followed by 3 managers

Safety Overview - 2009

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• Zero lost time accidents while reducing incidents! Actions to achieve goal:

Detailed SHAP SH&E Basic Roadmap for Distribution ORS 002 :Safety suggestion/hazard reporting award program MESUR behavioral based safety in conjunction

implementation Reduce waste and energy by 5% Increase recycling by 5% SH&E Fundamentals training (for supervisors) Compliance audit 2010

Safety Overview - Goals 2010

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Cost Review

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Physical Distribution Tulsa Tul-CPU Labor 1,948,645 0.084 Total Facilities 566,205 0.024 Subtotal DC 3,356,060 0.144 Total Distribution 3,638,485 0.156

 Freight to Salons 46,045 0.002

 Total Distribution + Freight 3,684,530 0.158

 Total I&C 50,566 0.002

 Customer Service Tulsa  Labor 218,481 0.009 Total Facilities 14,182 0.001 Total Customer Service 265,937 0.011

 Credit Tulsa  Labor 50,671 0.002 Total Facilities - - Total Credit 50,671 0.002

 Bad Debt 162,545 0.007

 Total Logistics Cost 4,214,249 0.181

 Units 23,276,883

 CPU $ 0.181  

Note Reference Handout – 9/30/09 Logistics Cost by Facility prepared by J. Witherite

• Trailer Restraint Systems (ERM)• Replacement of LPG Trucks (ORS-001A)• Alarm System Upgrades (ERM/NFPA 72)• Pedestrian Barrier Project (ORS-001A)

2009 Capital Improvements

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Estimated Installation- Mid Dec 09

• Reducing the Frequency Rates! • No flammable or level 2 and 3 aerosol containment per RIO 17C (ERM/Zurich)• Inadequate sprinkler system; system needs to be upgraded to ESFR per NFPA 72

(Zurich)• Racking systems need to be inspected by an engineer for structural integrity and

floor ratings. 29 CFR 1910.22 (d)(1) (ERM)• Pallet supports and netting need to be added to selective pallet racking to meet RIO-

16 and LOG-96, RIS-32 (ERM)• Mechanical equipment and racking is aging• Exposed loading and unloading dock• Improving order/reception efficiency from Streetsboro• 2015 Reduction Environmental Goal

Site Challenges and Improvement Opportunities

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Thank you for visiting the Tulsa, OK Salon Centric Beauty Alliance Distribution Facility!!

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