Connector Breif View of 2011

Historically, the connector industry goes through business cycles that result in consecutive years of growth

before experiencing a downturn. Since 1980, we have had five growth business cycles, including 2010,

when a new business cycle started.

Connector Industry Business Cycles

These cycles are clearly visible in the following graph.

Bishop and Associates, Inc. Copyright © 2011 3

This data provides some interesting findings:

 Since 1980, the average growth cycle for the connector industry is six years.

 Three of the four cycles produced compound annual growth rates of 9.5% to 10%.

 The highs and lows have been more pronounced in the past 10 years - more volatility.

The strength of the 2010 recovery (sales growth of +28.4%), combined with the strong YTD growth of 9.8%

through April 2011, suggests that we may be at the beginning of another up business cycle.

There are some troublesome HEADWINDS:

 High unemployment in the U.S. and Europe

 Heavy government debt, with the potential for defaults in some European countries

 High deficit spending in the U.S. and a stalled budget process in Congress

 Japan's natural disasters and nuclear reactor problems

 Unrest in the Middle East and Northern Africa

 Housing market mired in recession-like condition

There are some promising TAILWINDS:

 Historically low interest rates

 Modestly improving worldwide GDPs

 Automotive industry recovery

 Stock market recoveries worldwide

 Double digit GDP growth in China and India

 Explosive growth in smartphones and tablets

 Increasing demand for bandwidth and speed in our communication systems

2011 Outlook

Based on current demand for electronics, we are raising our 2011 forecast from a growth of +6.7% to

+8.5%. The following table forecasts connector demand by geographic region.