Fabricator Announces Fuel Surcharge Increase

Oldcastle Glass recently sent a letter to customers informing them of an increased fuel surcharge price, contingent on the three-month average of natural gas on the New York Mercantile Exchange (NYMEX). The fabricator explained to customers that the cost of natural gas had increased nearly 75 percent and consequently was increasing the cost of manufacturing and fabricating glass.

Below is the text of the Oldcastle letter.

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December 21, 2005

To Our Valued Customers,

We have received notice from our major flat glass manufacturers that they have increased their current natural gas fuel surcharge from $1,200 to $2,100 per truckload of raw glass. The additional diesel fuel surcharge implemented last quarter will rise from $275 to $375 per truckload, brining the total fuel surcharge to us by our flat glass vendors to $2,475 per truckload (effective 68% increase) for the first quarter of 2006.

As in the past, the natural gas surcharge is based on the NYMEX three-month average of the natural gas futures price. The latest three-month average has increased to $12.847 per MMBTU, compared to the previous three-month average of $8.249 per MMBTU.

The new diesel fuel component of the fuel surcharge is indexed to the United States Department of Energy's Diesel Fuel Index (Retail On-Highway Diesel Prices), and is based on the prior twelve week average. The latest three-month average has increased to $2.85 per gallon, compared to the previous three-month average of $2.41 per gallon.

To reflect the increase in our costs, effective January 9, 2006, we will be increasing our fuel surcharge from 9% to 15% of invoice.

We will be notified of an increase or decrease in the $2,475 surcharge at the end of March 2006, which would then take effect the second quarter of 2006. Please note the two enclosures [CLICK HERE] as references to the scale for natural gas and diesel fuel surcharges going forward.

We appreciate your business and thank you for your continued support.

Sincerely,

Thomas K. Beese
Vice President - General Manager
Oldcastle Glass Wausau