A Look Back At 1996

As we look back at last year, clearly the most significant event was the acquisition of the Data Capture Group of Spectra-Physics based in Eugene, Oregon. It was an action that will have long-term benefits for our shareholders, our business partners and the associates of the Company. The new PSC is stronger in virtually every area. The products and industry knowledge we gained were almost entirely complementary. We are now better able to serve business partners with laser based scanning devices to increase the efficiency and effectiveness of their operations. We enter 1997 a truly international, dynamic organization with the ability to fulfill customer needs at every stage of the retail supply chain—from manufacturing and transportation to warehousing, inventory management and point-of-sale—with both proven core products and innovative custom solutions.

Our greatest challenge as we move forward is to continue to streamline the operations of our larger organization to increase our efficiency and profitability. Our first priority in 1996 was to provide a seamless transition externally. And, we were successful. One of our top priorities this year is to provide that same level of efficiency to our internal activities. We are well on our way to achieving this goal as well.

One example of our integration strategy is our international sales organization. With a new international sales executive overseeing sales offices outside North America, we are already reaping the benefits of a more comprehensive product line and diverse sales force. International sales accounted for 38% of our business in 1996, compared to 22% in 1995.

Domestically and abroad, PSC now offers the broadest line of laser based scanning products in the world. Our traditional commercial and industrial products have long set the industry standard for quality and reliability in handheld and fixed position scanning and bar code verification. And with the addition of our Eugene, Oregon world-class manufacturing and engineering operations, we now have a complete line of proven products for the retail point-of-sale market. These include the industry standard Magellan® 360-degree checkout scanner and the new U-Scan Express™, a self-checkout point-of-sale system for supermarkets that is literally changing the way people shop.

A Look Forward At 1997 And Beyond

We believe the strong fourth quarter sales and earnings for the Company in 1996 will serve as a launching pad for future growth. We will continue to streamline our operations to help increase 1997's bottom line. We are already seeing significant synergies in the new PSC in terms of purchasing, sales and product development. Our immediate goals all address leveraging those economies of scale into sustained, profitable annual growth. Together we can make that happen. And it has already started.