Even before we acquired Kaynar Technologies in the last quarter of fiscal 1999, we initiated the first steps toward its complete integration with our own Fasteners’ businesses. I am pleased to report that in fiscal 2000, we accomplished our goal.

We created synergistic savings by melding into one, Fairchild Fasteners and Kaynar Technologies. To do so, we merged six of our US based manufacturing facilities into four, and merged corporate offices and sales forces. We chose the best production methods from each of the product groups and moved complementary production lines into a single designated location, improving performance and eliminating duplicative personnel. We began the integration of computer systems into one platform which will permit us to work ever more efficiently.

We are no longer two separate companies; we have united into a single company, with one corporate identity and one culture. We have improved our performance while reducing production costs, through synergistic savings. Now, we are ready to reap the benefits of our efforts.

These synergistic savings helped us to overcome a disappointing year in our industry. Significant contractions of the cyclical aerospace market caused our largest customers to reevaluate and ultimately reduce their inventory levels. We met their challenge head on, by undertaking a concerted effort not only to preserve, but to grow our market share. We used the cost savings we had realized to maintain reasonable margins while increasing quality and improving delivery and service. Our customers responded in the way we had hoped: by markedly increasing our global leading market share.

A major factor in this success is our offering of “value added services” to our customers, who look to us for innovative solutions to their toughest inventory management challenges. These services, which began years ago in pilot programs, now include full service offerings, providing our product to our customers on an “as needed” basis through Trolley-Trays, Kits and VendFast. Integrated into a complete logistics solution, they allow us to provide actual point of use accessibility for our customers. The products and services we offer demonstrate our desire, as well as our ability, to lead our industry, and our commitment to meet and sincere concern for, the needs of our customers.

Sincerely,
Eric I. Steiner
President