CONSISTENT DOUBLE-DIGIT EPS GROWTH (Annual EPS % change) 90 91 92 93 94 95 96 97 98 99 00 01 0 10% Goal 35 15 10 10 16 24 15 19 15 15 15 10 three smaller facilities nearby, while doubling manufacturing capacity. Our new gas turbine plant in Monterrey, Mexico, will bring a portion  of the now-subcontracted work back inside our walls. We target producing about two-thirds of our gas turbine work internally, and this allows us to move back toward that standard. We are also build- ing a new clean room in China for disk drive filter production and a new filter plant in Eastern Europe. In sum, we will continue to pare those facilities that don’t work for us from a cost standpoint, while adding plants that will. Looking into the next fiscal year, we will continue to invest in plant rationaliza- tion, but cost levels aren’t expected to approach the levels of fiscal 2001. At this juncture, we can’t speak with much  assurance about the business outlook. Prior to September 11, our expectation was for business levels to be generally consistent with our fourth quarter. While we didn’t see a meaningful upturn coming, the harsh conditions of fiscal 2001 were to provide easier comparisons going forward. Growth was again projected for gas turbines and disk drives. The big negatives from 2001, such as foreign currency, the truck market collapse and contracting capital spending, appeared unlikely  to repeat in 2002. Completion of the DCE acquisi- tion integration and last year’s plant rationalization moves will produce benefits. The sum was to be an easier year than the one just past. But now  the picture is less clear. While we might see a  lift from defense and construction spending, the unknowns around the economy as a whole erase any sense of comfort. Yet despite the circumstances, our focus remains on delivering superior return on investment, while striving to bring in our 13th consecutive year of double-digit earnings growth. Our 8,200 capable, tough-minded people and a sound, vital strategy are a powerful combination. We know that we are in control of most of the work that will determine our success. DCI’s demonstrated ability to repeat- edly deliver, even while on a sharp economic downslope, reassures us of our ability to manage successfully through another tough year, if that’s what comes. Sincerely, WILLIAM G. VAN DYKE Chairman, President and Chief Executive Officer 4