2 METHODE ELECTRONICS, INC. ANNUAL REPORT 2012 Although we ended Fiscal 2012 with strong sequential sales and earnings  performance in the fourth quarter, we anticipate the first quarter of Fiscal  2013 to bring lower sequential sales, as the first quarter is typically our  weakest sales quarter. These lower sales, in conjunction with the costs  associated with numerous new product launches, will contribute to our  expectation of modestly above or below break-even earnings per share  in the Fiscal 2013 first quarter. Meanwhile, we anticipate the launch  of TouchSensor’s laundry platform, along with the launch of multiple  automotive platforms in our Malta facility in the second and third quarters,  Additionally, higher designing, developing and engineering costs to  support the GM center console program and other major launches  impacted our results in Fiscal 2012. These costs will remain with us through  the launch of several major programs in the first three quarters of Fiscal  2013 and through the launch of the GM center console program in the  Fiscal 2013 fourth quarter. Operationally, we faced some challenges this past fiscal year. Vendor  production and delivery issues relating to an intricate paint process for the  production of automotive center consoles negatively impacted results. To  resolve these issues and provide our customers with improved and more  consistent quality, we acquired an injection molder and decorative painting  business located in Monterrey, Mexico, which we operate as Advanced  Molding and Decoration (AMD). We believe the vertical integration of this  state-of-the-art facility will provide Methode with high-quality injection  molding, painting and decorating capabilities of class A surfaces. The assets  included 52 injection mold machines and three paint lines. Additionally,  230 employees transferred to Methode, bringing with them years of  knowledge and experience. We believe this vertical integration will not only  enhance quality, mitigate supply risk and improve our gross margins on the  production of center consoles, but it will also support Methode’s continued  growth as a world-class engineering and manufacturing company. During  the year, we made considerable progress integrating AMD, and in June,  this intricate process was up and running for our production of center  consoles on certain Ford models. We expect to have this vertical integration  complete by the second quarter of Fiscal 2013. W made considerable  progress integrating AMD... this intricate  process was up  and running for our  production of center  consoles on certain Ford models. We  expect to have this  vertical integration complete by the second quarter of  Fiscal 2013. DEAR FELLOW SHAREHOLDERS ( Continued)