The Company’s products are manufactured on a job order basis to customers’
specifications. Customers submit requests for quotations on each job, and the Company
prepares bids based on its own cost estimates. The Company attempts to reflect the
impact of changing costs when establishing prices. However, during the past several
years, the market conditions for flexible circuits and the resulting price sensitivity haven’t
always allowed this to transpire. Although still not satisfactory, the Company was able to
reduce the cost of products sold as a percentage of sales to 85% this year versus 87%
that was experienced in the two immediately preceding years. Management continues to
focus on improving operational efficiency and further reducing costs