financial report

D&J Plastics is a 10-year old plastics manufacturing company located in the Midwest. They specialize in developing parts for industrial use using injection molding and extrusion technologies. Their specific specialty lies in the area of developing made-to-order parts for the automotive after-market, although their product catalog includes products used within many industries, both marketed directly to consumers and those sold to manufacturers and retailers. D&J Plastics is a privately owned company with projected revenues for FY2003-2004 of $15 million. In recent years, the company has begun to broaden its capabilities by developing design and engineering expertise in-house. This approach has allowed the company to expand its business opportunities by developing products for other firms that lack specific knowledge of plastics engineering and/or manufacturing. The impetus to expand in-house engineering capabilities at D&J has been identified by upper management as a necessary means for continuing to enhance business opportunities and revenue generation in this highly competitive marketplace. The goal of D&J is to continue to develop in-house engineering and new product development to a level that will provide a sustainable competitive advantage for the firm over competitors in both the local and national markets. Recognizing the value of project management procedures, D&J has committed to improving their new product development through project management in the past three years. The company's objective is to re-engineer existing products and develop new products in a cost-effective manner while meeting customer needs. D&J seeks to use exclusivity agreements and patents to protect its revenue generation for these products. This project is the first one that they are undertaking under this "project management" philosophy.

D & J Plastics Financial Information

In addition to the commitment of labor costs of $380,000, expected capital equipment and related charges will be $500,000. The selling price of the newly developed plastic insert for the center console in a model line for a US auto manufacturer, in the first year is $1.00 per unit with a plan to reduce cost so that the selling price will be reduced 0.5% each year over the 5 year life of this product, e.g. $0.995 in year 2 etc. Expected units to be sold in the first year are projected to be 300,000. Sales growth is estimated to be 10% per year, e.g. 330,000 units in year 2 etc. Cost of goods sold will remain constant at 30% of sales. D & J Plastics requires a rate of return of at least 10% on all new projects. Projections are only valid for the first 5 years of sales, before a replacement product will take its place.

Exhibit 13.1 Monthly Status Report