2012AnnualSummary

SimservPitkaEnterprises
January2013

CorporateOverview
Theconsumerproductsindustryhasseendramaticchangeinthelastdecade,duetoincreasingcostsinmanufacturing,need
forinnovativeproducts,anddecreaseinbrandloyalty.Thesechangeshavecreatedtheneedtomodifyprevioustacticsto
continueoperatinginthiscompetitiveindustry.

AcquisitionofPitkaIndustries
InNovember,SimservcompletedtheprocessforacquiringPitkaIndustriestoformSimservPikaEnterprises.The
combinedresourcesprovideastronger,moreversatileorganizationtocreateinnovativeproductsandcompeteduringthe
nextdecade.Hereisabreakdownofthecombinedorganizationsdivisions,theirlocations,andnumberofemployees:
SimservHeadquarters
Cleveland
1,355
PitkaDivision Seattle 1,235
ProductDevelopment
Cincinnati
350
WestCoastDistributionFresno
123

2011OperatingResults
DespitethePitkaacquisition,significantprogressinrestructuringtheCompany,andreducingdebtin2011,ourprogress
wasnotreflectedinour2011earningsperformance.Infact,whileouractionsareexpectedtoprovidesubstantialfuture
returnsthroughloweroperatinganddebtservicecosts,theupfrontcoststoimplementourplanreducedour2011earnings.

For2012,SimservPitkarecordedearningsfromcontinuingoperationsof$9.3millionascomparedto$15.5millionin
2011.Incomefromcontinuingoperationsavailabletocommonstockwasalossof$2.25million,or3centspercommon
share,ascomparedtoincomeof$7.5million,or7.5centspercommonsharein2011.

2012CapitalExpenditures
SimservPitkascapitalexpendituresfor2012totaled$173.7million,comparedto$148.6millionfromcontinuing
operationsin2011
.ExpendituresbyourResearchandDevelopmentgroupincreasedbyapproximately$30milliondueto
projectsaimedatincreasingourcompetitivenessandefficiencyinproduction
.TheexpansionintoTexascostanestimated
$95million.

2012ManagementChanges
OnJanuary1,2012,DeweyA.LarsonwasnamedChairmanoftheBoardandChiefExecutiveOfficerbytheCompany's
BoardofDirectors,replacingJeffK.Andrews,whoretiredthisyearafter25yearsofservice.Mr.Larsonfirstjoined
SimservinJanuary1992andoveraperiodofnineteenyears,hasheldavarietyofseniorexecutivepositions.
InMarch2012,JerriReedjoinedSimservasitsChiefFinancialOfficer.Ms.Reedhasanimpressiverecordintheindustry
overthepast20years,whichincludesapositionasCFOinaBritishcompanyworth$50,000,000.Sheaddsstrengthtoour
managementteam,particularlyastheCompanyfacestheimportantchallengeofimprovingthefinancialandoperating
performance.Ms.Reedhasstated:
In2013,wetakethebullbythehorns.EveryoneatSimservPitkamustpulltogetherandworktowardourmutualsuccess.
ImcountingoneveryemployeetofocusonourcommongoalstoimprovethefinancialstatusoftheCompany.

Goalsfor2013
Fullyimplementingourstrategicactionplanwilltakeseveralyearstocompleteand2013willbenolesscriticalthan2012.
Inpursuingthesecondyearofourplan,wehaveestablishedseveralkeygoalsfor2013:
Pursueinnovativemarketingtechniques.

Increaseusageofexistingcomputersystemsbyhiringinhousetrainingpersonnelandestablishingacontinuingscheduleof
trainingclasses.
Implementanelectronicprojectmanagementprograminallbusinessunitsandcorporateheadquarters.
ReducethetravelexpendituresfortheCompanybycloselyevaluatingeachrequestforviability.

WiththechangesoccurringintheCompany,weneedtomakesurethatwecontinuetoassesstheinteractionandactivities
amongthemergeddivisions.Therefore,itisimperativetocontinuallysetandreviewgoalsusingthefollowingsteps:
Assessthesituation.
Setmeasurablegoals.
Communicategoalstoallemployees.
Implementprogramstostrivetomeetgoals.
Evaluateprogramsinrelationtogoals.
Continueoradjustprogramsasneeded.