Kane Is Able to Deliver Results for Its Valued Customers

Scranton, Pennsylvania USA

September 13, 2006

By

Evan Armstrong

Key Personnel:

Eugene Kane – Chairman

Richard Kane – President & CEO

Harry Drajpuch – COO

Chris Kane – VP Sales & Marketing

Jerry McMyne, Jr. – Director of Operations

Mike Marlowe – Director of Operations

Curt McKay – Industrial Engineer

Alex Stark – Marketing & Business Development

Overview

Kane Is Able, Inc. has grown from humble origins. Edward Kane founded Kane Freight Lines in 1930 during the Great Depression. He traded in his car for a used truck to provide local cartage to shippers in the valley regions of Northeast Pennsylvania. Edward’s son, Eugene Kane, took over the family business in 1955. In 1956, Eugene established Kane Warehousing in a 2,000 square foot facility in Scranton, PA to compliment its trucking business.

Kane has grown organically realizing 2005 revenues of $108 million from a workforce of 1,000 associates. Additionally, it has recently expanded operations into California.

Kane Is Able is a growing, mid-tier third-party logistics company whose customers include big brand consumer product companies E&J Gallo Wines, Kraft, PepsiCo, Procter & Gamble and Playtex. Kane’s quality focus and owner-driven culture make them a good choice for shippers seeking a logistics partner that combines the flexibility and personalized service of a smaller provider with the information systems and capabilities of larger logistics firms.

Transportation Management Operations

Kane Traffic Services oversees both asset-based trucking and non-asset based transportation management operations. Kane manages a fleet of approximately 200 tractors and 800 trailers. Its trucking operation is primarily engaged in providing dedicated outbound transportation for customers from its warehousing operations.

In addition to its trucking operations, Kane has a central transportation management center (TMC). The TMC develops load plans and meets daily transportation needs of customers utilizing outside carriers. This operation is supported by Kane’s proprietary transportation planning and execution system “LoadCon”. LoadCon optimizes mode and carrier selection and consolidates multiple small shipment orders into truckloads. It was developed to handle straight and mixed loads of commodities requiring dry van or refrigerated trailers. Customers utilizing Kane’s TMC have seen significant cost savings and service improvements.

Distribution Operations Overview

The company’s Scranton, PA headquarters houses seven distribution centers (DCs) totaling over 2.5 million square feet along with a 36,000 square foot corporate office building. An additional network of another 3.2 million square feet include two distribution centers in Pittston, PA, a distribution center in Mechanicsburg, PA, a distribution center in Hazleton, PA, two distribution centers in the Tunkhannock, PA area, a cross-dock facility in Hagerstown, MD and an in-plant operation for one of its customers in California. Kane’s Northeastern U.S. facilities are positioned along major interstate arteries and coupled with its integrated capabilities to deliver overnight from Boston to Washington D.C., make them ideal inventory locations.

Kane is equipped with redundant IBM AS/400 mainframes, which are supported by a fully-staffed Management Information Systems (MIS) department with 24/7 coverage. Kane’s MIS staff utilizes its in-house warehouse management system (LogiMax/LogiMation) to custom-tailor solutions for some of its customers. In addition, Kane has extensive experience operating systems such as RedPrairie, SAP and SwissLog for customers who choose to maintain a universal platform across an entire logistics network.

Being ISO 9001:2000 certified, Kane is dedicated to driving continuous improvement throughout its operations. This is achieved by having a third-party perform multiple monthly audits across all departments and facilities. Using the results gathered from these monthly audits, Kane conducts quarterly senior management ISO reviews.

Corporate culture is a major ingredient contained in all the operations at Kane. After seventy-six years in the business, the Kane family values/philosophies are woven into the fabric of the company. Safety and being an employer of choice are strategic goals. A few years ago Kane built out office space which now houses Kane College, a department at Kane dedicated to the on-going safety training, education and orientation of its associates.

Scranton Campus—Distribution Center #3

Kane runs a secure 125,000 square foot dedicated temperature controlled warehouse for the Pennsylvania Liquor Control Board (PLCB). Approximately 8-10,000 stock keeping units (SKU’s) are maintained in inventory. Orders are received nightly for fulfillment the next day. The fastest turning wines and spirits items are stored closest to the outbound loading doors. Most items are case picked in waves directed from radio frequency devices (RF) integrated with a warehouse management system.

Once picked, orders are loaded onto Kane’s outbound refrigerated trailers. Deliveries are made as full or multi-stop truckloads to approximately 260 stores in northeastern and central PA.

Scranton Campus—Distribution Center #5

The majority of 700,000 square foot DC5 serves two main accounts, Ascendia Brands and E&J Gallo Winery. Ascendia is best known for its products: Baby Magic, Binaca breath spray, Lander Essentials, Ogilvie and Mr. Bubble.

Gallo maintains fast turning wine inventory at DC5. Kane receives inbound rail boxcars of wine; each boxcar contains approximately 4,000 cases of wine. To ensure that the wine does not get too hot and ages well, Kane maintains a 40,000 square foot cool room where the temperature is maintained at 70 degrees or lower. Item picking is RF directed. Items are layer picked and flow racks are utilized for less than layer amounts. Outbound orders are shipped in truckloads.

In addition to these two accounts, Kane has built out office space to hold safety and orientation classes.

Scranton Campus—Distribution Center #6

820,000 square foot DC6 is a 24/7 operation housing PepsiCo beverage and Playtex consumer goods products.

Approximately 470,000 square feet of items are stored for PepsiCo. In one operation, Kane picks cases of PepsiCo sports drink Gatorade to feed a repacking production line. Single flavors of Gatorade are repacked into mixed flavor packs primarily for distribution to club retailers. In addition to the repack operation, Kane maintains a 45,000 square foot cooler

room to store Tropicana Orange Juice and yogurt. Kane coordinates the high-volume movement of these different products for the customer in outbound truckloads from the DC.

Scranton Campus & Hagerstown, MD Cross-docks

Kane started running the Scranton cross-dock in 1991. Kane’s outstanding service levels have won it seven out of eleven annual best DC contests from the customer. Because of its exemplary results, Kane has been provided with growth opportunities and now operates an additional cross-dock in Hagerstown, MD.

Both cross-docks service a number of club stores seven days a week. Inbound shipments are received at the facilities then cross-docked into outbound truckloads which deliver direct to the stores. All work preparation is handled at the DC level thereby taking all the effort out of the delivery process. The stores can move the “no-touch” product right onto the sales-floor.

To improve efficiency and better manage items, Kane is using a cross-docking system with fully integrated Volcollect voice encoding systems with fingertip scanners. The Volcollect hardware provides a user interface to the cross-docking system for inbound and outbound scanning, identifying staging locations, and managing workflow.

Tunkhannock, PA Distribution Center

Kane’s 265,000 square foot Tunkhannock, PA distribution center supports its shoe fulfillment operation for Rocky Brands, whose brands include EJ Footwear, Georgia Boot, Lehigh, Durango, and the licensed brand Dickies.

Annual orders for over 3 million pairs of shoes are fulfilled in Kane’s highly automated Rocky Brands operation. Most of the shoes arrive on inbound containers from China with approximately 3,300 shoes per container. Inbound shoes are checked against purchase orders and put away. There are approximately 4,500 SKU’s of finished goods inventory on hand. The operation fills approximately 1,600 sales orders per day. It incorporates six large carrousel picking lines for each picks and has bulk storage for case picking. As requested, specialty labeling is also performed to customer specifications.

Meshoppen, PA Distribution Center

Kane runs a 1.7 million square foot dedicated warehouse for P&G in Meshoppen, PA. To put the size of the facility into perspective, it could hold the Statue of Liberty on its side and it uses enough power to light 1,000 homes.

The facility houses a multitude of SKU’s of diapers and paper products. An estimated 300 to 500 inbound and outbound truckloads of product are received from P&G’s manufacturing plant and shipped from the DC each day.

Summary

In a very competitive marketplace, Kane is a leading U.S. 3PL. Its focus on quality operations along with leveraging integrated services from transportation management to distribution to custom packaging makes Kane a reliable choice for shippers with significant supply chain needs.

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