Dave Raby, President and CEO, STI Electronics Inc.

I wish I were smart enough to know what the economy and our industry were going to do but what I do know is STI Electronics is growing and we plan to continue that trend. 2008 was the best of our 26 years in business as we adapted to the changing world.

Some sectors (defense and medical) of our industry grew and we worked hard to increase our presence in those areas. Some areas (consumer and automotive) contracted and we worked hard to increase our market share and relationships with customers so that we are poised to grow when they do whether — it is in 2009 or beyond.

We’ve moved into a new facility that is more than three times the size of our old one to ensure we have room to grow.

STI is unique in being basically three companies in one. Our Training Services Department continues to add the highest quality of instructors to our staff. For 2009, we are enlarging our two fully equipped classrooms while also adding a third. We also will be teaching more classes away from our Madison facility. We’ll continue to supply all the materials to support customer’s internal training programs as well as the dummy components to train on and calibrate new production equipment.

Our Distribution Department continues to sell assembly products from more than 100 different manufacturers. In the 4^th quarter of 2008, we added a new segment to the department as we began offering industrial equipment and supplies. We look forward to the new markets these products put us in and hope to benefit from the new growth as well as the diversification.

Our Engineering Services Department has been our area of huge growth in 2008 and I look for the same in 2009. We’ve added a second full SMT line to greatly increase our capabilities for prototypes and small- and medium-volume production. We’ve greatly increased the size and capabilities of our analytical and failure analysis labs.

In 2008, our customers have led us into more counterfeit part detection and more reballing of lead-free BGAs. We expect to venture further in these subjects in 2009 as well as new ones. We plan to offer more manufacturing audits and gap analysis in the coming year as almost everyone is looking for areas where they can improve their processes.

Our patented IC/DT technology (imbedded bare die) continues to be praised as a major breakthrough in building smaller, lighter and more reliable assemblies that can handle very harsh environments. I hope to see some major projects using the technology in 2009. To facilitate building IC/DT, we have built a new cleanroom that allows us to work with bare die but also gives us capabilities to fulfill special customer needs for both prototype and production.

I know many smart people are predicting doom and gloom for 2009, and there are a lot of reasons to believe they may be correct. At STI, we are doing our best to position ourselves to gain market share regardless of the overall economy and we believe we will. Ask me in a year how we did.