BALDWIN COMPANY

ANNUAL REPORT
FY 2021
Providing the world with a variety of premium, customer-focused sensors
that keep pace with trending technology and withstand the test of time
TABLE OF CONTENTS

Historical Timeline __________________________________________________________ 1

Visual Summary_____________________________________________________________ 2
Executive Summary __________________________________________________________ 3
Total Quality Management (TQM)/Sustainability __________________________________ 4
Research and Development (R&D) ______________________________________________ 5
Marketing _________________________________________________________________ 8
Production Overview _______________________________________________________ 10
Human Resources (HR) Management __________________________________________ 12
Financial Information _______________________________________________________ 13
Financial Statements ________________________________________________________ 15
Corporate Stock Information _________________________________________________ 17
Looking Ahead _____________________________________________________________ 20
Executive Staff Reflections ___________________________________________________ 22
Contact Information ________________________________________________________ 24
8 years of creating excitement and value among our
customers with innovative, reliable sensors

2013
• Baldwin Company successfully completes our first year in business
with a positive net profit of $4.19 million!
• Four million in dividends paid to shareholders.

2014 • Dominated overall market share.

• Maintained a 2.2 leverage ratio.

2015 • Production began seeking ways to produce a high-quality product

with a new, lower-priced alloy.

2016 • Adopted a new chemical compound to wash raw materials used in

making sensors, thereby successfully reducing overall electricity
usage.

2017
• Implemented Process Management and Total Quality
Management (TQM) initiatives within the organization.
• Repurchased $3 million in common stock.

2018 • Launched new product "Bliss" in Performance segment.

• Achieved AAA Bond Rating for the first time in company history!

2019
• Maintained overall controlling market share.
• Began investing in Benchmarking, Six Sigma Training and Quality
Initiative Training.

2020
• Invested $5 million in recruiting and maintained 80 hours of annual
training per employee.
• Bead achieved prime age for the second time in company history.

2021
• Increased market share by 5.24% over prior year.
• Gained controlling market share in all segments.
• Posted largest net profit to-date of $99.24 million.

1
 Earnings Since 2013, Baldwin
returned

2013 $199.2 million

$4.19 million to shareholders
through dividends
2021 and share
$99.24 million repurchases

Net Sales 2021

$522 million

2019
$344.1 million

2017
$285.5 million

2015
$174.3 million

2013
$101.1 million

2
To Our Customers, Stockholders, Management and Employees
Baldwin Company is very proud to announce that we had another excellent year of solid performance.
Baldwin products lead every segment in sales, and we saw an overall increase in market share by 5.24%
over prior year. We controlled an impressive 35.12% of the market share, capturing nearly 10% more
market share than our closest competitors! We paid our stockholders a dividend of $16.05 per share,
and we achieved our target leverage goal of 1.5. We posted record-breaking profits, and increased our
productivity index by 2.1%.

We achieved these remarkable goals by closely following the tactics of our broad differentiation
strategy. Every department set internal goals and objectives, and solidly achieved them across the
board.

Our Research and Development team, lead by Amber Burton, kept our products fresh and exciting to
increase our market appeal. Our Marketing team, lead by Andrea DiLenge, achieved 100% awareness
in all market segments, to ensure that our customers know about our superb designs. Our Production
team, lead by Joy Klushkan, ran efficient factory capacity levels to ensure that we minimized variable
costs. Our Finance team, lead by Teresa Jensen, posted our highest stock price yet.

As CEO of this company, I am so pleased with the progress and commitment we commonly share in an
effort to maximize our company’s potential and profits. We are committed to you, and with your
continued loyalty and support, Baldwin Company will continue to grow and prosper.

Sincerely,

Andrea DiLenge
Chief Executive Officer (CEO)
January 31, 2022

3
TOTAL QUALITY MANAGEMENT & SUSTAINABILITY
The Baldwin Company began implementing the following Process Management and Total Quality
Management (TQM) Initiatives in 2017 to improve business procedures, maximize efficiencies,
minimize environmental risks, and promote a variety of green initiatives within the organization:

 CPI (Continuous Process Improvement) Systems

 Vendor/JIT (Just in Time [Inventory])
 Quality Initiative Training
 Channel Support Systems
 CCE (Concurrent Engineering)
 UNEP Green Programs
 Benchmarking
 Quality Function Deployment Effort
 Six Sigma Training
 GEMI TQEM (Global Environmental Management Initiative Total Quality Environmental
Management) Sustainability

The impacts of these initiatives has improved the overall quality of our products while reducing the
time and resources required to design, manufacture, warehouse and ship goods.

Innovative input from customers, employees and shareholders will help continually invigorate our
perspectives and engage our creativity on further TQM and sustainability implementation. Ultimately,
by producing fewer toxic by-products, promoting recycling and other material use efficiencies, and
lessening our impact on the environment, we are able to provide our customers, our organization, and
our planet with a more sustainable company for years to come.

4
RESEARCH AND DEVELOPMENT (R&D)

Traditional
Products in the traditional segment are geared towards customers who prefer proven products at a
modest price. Baldwin’s traditional product, Baker, maintained a positioning of 10.6 and a size of 9.4
throughout the year. Additionally, Baker was able to achieve a product age of 1.8 years, which falls
within 0.2 years of its prime age.
Baker 2021
Positioning

Low
Low segment sensors offer the lowest priced and most reliable products on the market. Baldwin
Company's most popular product, Bead, was strategically positioned at 5.0 and sized at 15.0 in 2018 to
allow it to hit a prime age of 7 years in 2020. Allowing Bead to drift for 2021 allowed the product to
maintain its tenured age while still remaining within customers’ fine-cut positioning circle.

Bead 2021
Positioning

5
High
Consumers seeking cutting-edge size and performance technology in their sensors tend to prefer the
high segment products. Through avid research and development, Baldwin Company's high segment
sensor, Bid, was able to provide ideal positioning of 16.1 and ideal size of 3.9 at a young product age of
1.5 years by December 31, 2021.
Bid 2021
Positioning

Performance
Products in the performance segment are tailored to customers requiring highly reliable, innovative
technology in their sensors. Baldwin maintains two performance products, Bold and Bliss. Both
products are revised annually to maintain the highest level of performance available in the
marketplace. During 2021 Bold maintained positioning of 17.2 and size of 10.6, while Bliss was
positioned at 17.4 and sized at 10.4; both products upheld an MTBF of 27000, thereby maximizing
each product’s performance length.
Bold 2021 Bliss 2021
Positioning Positioning

6
Size
The size segment offers advanced technology products with increasingly efficient size characteristics.
Buddy, Baldwin's size sensor, was positioned at 9.6 and sized at 2.6, meeting ideal customer
preferences within the segment for the year. Additionally, Buddy achieved prime age of 1.5 years
during 2021.
Buddy 2021
Positioning

Future Development Plans

The following table outlines the planned positioning and sizing for each product during the 2022 fiscal
year. No changes in MTBF are anticipated being made at this time.

Product Name Primary Segment Performance Size

Baker Traditional 11.3 8.7

Bead Low 6.2 13.8

Bid High 17.0 3.0

Bold Performance 18.2 9.9

Buddy Size 10.3 1.6

Bliss Performance 18.4 9.7

7
MARKETING

For fiscal year ending 2021, Marketing focused our strategy solely on increasing current market share.
We concentrated our efforts on identifying competitive weaknesses through competitive intelligence
reporting, forecasting accurately to meet excess demand, achieving high customer survey scores to
increase product appeal, and maintaining 100 percent awareness and accessibility through our sales
and promo budgets.

Overall, Baldwin Company increased market share by 5.24% over prior year, and ranked as one of our
best years of performance thus far.

Competitive Intelligence Factors

Year-in and year-out, Baldwin Company products lead most segments and have traditionally captured
a strong majority of competitors’ lost or missed sales opportunities. In 2021, Baldwin Marketing
Department identified that the Low-End segment had a significant opportunity to increase market
share within this particular segment. Andrews Company was underperforming by roughly 5%, and
Ferris Company was picking up the majority of those lost sales. Bead, our Low-End product, was
scheduled to hit the ideal age, was competitively priced, had a modest reliability, and the overall
appeal for Bead in the coming year was high. This was the year to produce double our normal capacity,
in hopes of capturing Andrews Company’s lost sales.

We are pleased to report that this strategy paid off, and Bead saw a 9.8% increase in demand over
prior year; 7.0% of that increase was picked up from competitors’ missed sales.

Accurate Forecasting

Marketing continued to forecast a best case scenario for Production and a worst case forecast for
Finance. Employing this forecasting technique has successfully allowed Baldwin to capitalize on picking
up lost sales from our competitors, while financing for the possibility of carrying bloated inventories.
Marketing has routinely met at least 95% of demand annually with this forecasting technique.

Pricing & Customer Survey Scores

Baldwin continued to maintain its premium pricing structure in the High-End, Performance, and Size
segments. However, Marketing has noticed that customer survey scores are showing a somewhat
decreasing trend. To address this, Marketing reduced product prices by $0.50 - 1.00 in each segment.
Although our customer survey scores continue to trend slightly downward, our customer survey scores
still maintain a satisfactory, respectable range.

8
Sales and Promotion Budgets

Baldwin Marketing Department was also successful in achieving 100% awareness and accessibility in all
product lines with the exception of Bliss. Nevertheless, even though Bliss is our newest product, it was
still able to achieve 99% awareness this year.

Results Driven

As shown in the graph below, Baldwin has successfully captured sales in excess of potential in all
segments except Traditional. Due to our ability to effectively monitor competitors’ weaknesses,
forecast aggressively and accurately, meet and exceed customer expectations, and aggressively invest
in our sales and promo budgets, Baldwin has acquired a competitive advantage, which has ultimately
lead to a strong market share increase this year.

Baldwin Company Potential Actual Market Total Market Share

Market Share by Segment Market Share in Share in Units Captured in Excess of
Units Potential Demand
Traditional 21.1% 21.1% No Change
Low 27.5% 34.5% 7.0%
High 21.6% 25.2% 3.6%
Performance 50.8% 54.4% 3.6%
Size 41.8% 50.4% 8.6%
*F/Y Ending December 31, 2021.

Marketing Strategies for 2022

Marketing has identified that each of our competitor companies continue to be plagued with
underperforming in one or more segments, which gives Baldwin Company significant market
opportunities to continue to capitalize on competitors’ missed sales, and to further increase our
market share.

With the departure of Andrews, Chester, and Digby from the Size segment, Marketing highly
recommends that we develop a new product to be released in this segment in the near future to
further expand our current market potential.

Marketing will continue to work towards increasing customer survey scores through price reductions.
Our contribution margins are strong enough to withstand small price decreases utilized to increase
product appeal.

Marketing will continue to invest in our sales and promo budgets to maintain 100% awareness and
accessibility in each segment.

9
PRODUCTION OVERVIEW

Throughout fiscal year ending December 31, 2021, Production focused on many of the same concepts
that have remained priorities over the past eight years. Our primary objective was to reduce variable
costs; through continued collaboration with R&D, TQM and HR, material and labor costs were
consistently reduced. The following chart shows the steady downward trend in combined costs over
the last eight years:

Another main focus for the Production department during FY2021 was to work closely with Marketing
in order to tightly align capacity with the annual sales forecast. Baldwin’s goal is to consistently remain
in the 120-160 percent overall plant utilization target range.

10
Production strategies for 2022 are to continue working closely with R & D, Marketing, and Finance to
ensure that production is prepared for changes in capacity and new product offerings. Technological
advances and associated benefits will be considered annually, and implemented to segments if they
provide the greatest return on investment. Our diversification strategy necessitates development of
new products and constant improvement to existing products. Baldwin will continue to invest heavily in
plant capacity to keep our product fresh and unique. Plant expansions will be aligned with Finance’s
projections for growth and stability.

11
HUMAN RESOURCES (HR) MANAGEMENT

HR decisions played a vital role in reducing labor costs, thus making Baldwin more financially
successful. HR effectively hired qualified individuals and provided them with comprehensive, ongoing
training. These strategies have cultivated Baldwin’s employees into a more productive workforce,
while simultaneously reducing labor costs. Additionally, because employees were satisfied with their
jobs, we experienced declining employee turnover, thereby reducing the need to hire and train
additional employees.

Future HR objectives will include ongoing recruitment of highly skilled, productive workers.
Furthermore, Baldwin will continue to provide 80 hours of annual training per employee, thus
increasing productivity, employee satisfaction, and turnover reduction. When automation is
considered we will thoroughly analyze the impact of proposed decisions on employee turnover and
return on investment (ROI) in order to assure no negative tradeoff exists between workforce reduction
and unnecessary automation.

12
FINANCIAL INFORMATION

For fiscal year ending 2021, Finance’s strategy was to increase leverage and free cash flow all while
maintaining a healthy market capitalization, profit and share price. By focusing more on increasing
leverage and free cash flows, it showed that a few of finance’s other ratios would decrease. This didn’t
seem to stop the Baldwin Company from succeeded overall and still become ahead of the rest of the
competition.

Overall, the Baldwin Company succeeded in maintaining a healthy market capitalization even though it
dropped in the last few years. This decrease was due to the large dividend payouts and stock
repurchases made in an effort to reduce shareholder risk and creating more current and long term
debt. Shareholder information is shown in more detail on page 18.

Financial Performance Measures

The finance department’s performance measures consisted of emergency loans, the type of debt
issued, positive cash flow, leverage and healthy stock prices and market capitalization.

Emergency Loan

The Baldwin Company’s main finance objective was to never have an emergency loan and we have
succeeded with this performance measure through fiscal year ending 2021. Throughout the years we
are in business, it is our determination and standard to never have an emergency loan and continue on
our path of growth.
Debt Issued – Current/Long Term Debt

Our measure is to keep our current debt to a minimum and issue long term debt when needed.

13
Free Cash Flow

Free cash flow is determined by adding net cash from operations and investing activities. After fiscal
year 2021, Baldwin Company achieved a substantial amount on positive cash flow.

Leverage

Leverage is a very important measure for the Baldwin Company because it ensures stockholders do not
take full risk for financing company, and the company issues enough long-term debt to maintain a
healthy ratio between liabilities and equity. Our goal is to have our leverage a healthy ratio of 1.5 – 2.0.
Baldwin Company finally achieved this success during fiscal year 2021.

14
FINANCIAL STATEMENTS

15
16
CORPORATE STOCK INFORMATION
Corporate Information
Headquarters:
Baldwin Company
5364 Sensor Avenue
Seattle, WA 98060

Listing
New York Stock Exchange
Stock Symbol: TBC

Annual Meeting
Our Annual Meeting of Shareholders will be held on Friday, August 1, 2013, at 8:00 a.m. (PST) in
Seattle, Washington on the University of Washington campus.

Communication with Shareholders

The Baldwin Company attempts to communicate with their shareholders on a quarterly basis with
letters and other means. We do hold an annual shareholders meeting every year to discuss major
concerns and other matters directly related to shareholders.

Market Price of Common Stock

The annual stock price of common stock continued to grow through the years including 2021 and our
company is determined to continue the growth for many years to come.

17
Market Capitalization

Since the startup of Baldwin Company, market capitalization has been used as a performance measure
and is determined by multiplying shares outstanding by stock price. After fiscal year 2021, Baldwin
Company is determined to watch our market capitalization grow by our stock price increasing.

2013 - 2,000,000 2016 - 3,455,915 2019 - 4,774,273

2014 - 2,399,957 2017 - 4,147,098 2020 - 4,536,783
2015 - 2,879,929 2018 - 4,774,273 2021 - 4,536,783

Dividends Payable per Share

The dividend policy of Baldwin Company is to distribute to its shareholders all funds surplus to the
operating needs of the organization as determined by the executive staff of Baldwin Company with a
target dividend payout in respect of each financial year according to the residual payout method, but
subject always to:
1. Any banking or other funding covenants by which the Baldwin Company is bound from time to
time;
2. The operating requirements referred to in this clause; and
3. The necessity to utilize the funds to reinvest in capital to further expand and develop the
organization.

18
Dividends Paid Per Share
The Baldwin Company will continue to pay dividends to shareholders if it is in the best interest of the
company. In future years, we anticipate being able to distribute dividends on an annually increasing
basis.

Shareholders

As of December 31, 2021, there are 4,536,783 shareholders of The Baldwin Company’s common stock.

19
LOOKING AHEAD

Baldwin Company made many achievements during the fiscal year ending December 31, 2021 by
closely following our broad differentiation strategy. Our diverse product selections lead every segment
in sales, we experienced an overall increase in market share of 5.24% over prior year, and we posted
record-breaking profits. Additionally, we paid our stockholders a dividend of $16.05 per share,
achieved our target leverage goal of 1.5, and increased our productivity index by 2.1%.
Looking ahead, Total Quality Management will welcome and encourage innovative input from
customers, employees and shareholders in order to continually revitalize our sustainability
perspectives. Baldwin Company will strive to continue reducing production of toxic by-products and
promoting recycling and other material use efficiencies within the organization. By lessening our
impact on the environment, we can better sustain our company for years to come.

The Research and Development Department will continue to keep products fresh and exciting with
ideal product specifications unique to each segment’s consumers. Our Marketing team will work
closely with R&D to introduce a new product in the Size segment in order to take advantage of the lack
of competition currently in that sector.

The summation of Marketing’s specific, measurable future goals are to:

 Increase market share.
 Capitalize on competitor weaknesses to gain market share in segments where competitors are
currently underperforming:
o Traditional: All companies performing to potential. Additional market share grab
currently unavailable in this segment.
o Low – End: Target Andrews and Chester Companies.
o High – End: Target Chester Company.
o Performance: Target Digby and Erie Companies.
o Size: Target Erie Company.
 Increase customer survey scores by reducing prices by $0.50 - $1.00 in all segments.
 Maintain current investment in sales and promo budgets to maintain 100% awareness and
accessibility in all segments.

Production’s measurable objectives for the future are:

 Carefully position production capacity, so that first round capacity is never below 100%.
 Maintain an overall plant utilization of 130-160%.
 Increase sales/employee to above minimum threshold

Human Resource’s measurable objectives for the future are:

 Reduce employee turn-over to less than 5%.
 Increase employee productivity to over 125%.

20
Lastly, the Finance Department set forth the following performance measures to ensure benchmarking
of our success and the continuous improvement needed for long-term prosperity:
 Ensure stockholders do not take full risk for financing company by issuing enough long-term
debt to maintain a healthy ratio between liabilities and equity.
 Consistently increase leverage to a healthy ratio of 1.5 – 2.0.
 Ensure minimum amount of current debt is issued.
 Ensure an emergency loan is never needed by maintaining a closing cash position between
three and eight percent.
 Maintain an annually increasing, positive cash flow.
 Ensure growth in stock prices and market cap.

With an ongoing commitment to our customers and staff, Baldwin Company will continue to maximize
our potential and profits. We look forward to your continued loyalty and support, as we continue to
grow and prosper into the future.

21
 EXECUTIVE STAFF REFLECTIONS

ANDREA DILENGE
CHIEF EXECUTIVE OFFICER/
COMPETITIVE INTELLIGENCE
OFFICER/CHIEF MARKETING OFFICER

It was my pleasure to work with the ladies of Baldwin Company over the
last 11 years. Each team member worked incredibly hard to make
Baldwin Company the outstanding and prosperous company we are
today. We learned that all business decisions have tradeoffs, but we
learned to balance risk and reward. Most importantly though, we had a
plan and we worked the plan. Our team, as a whole, was committed to
achieving one primary goal: To make Baldwin Company the one to beat! I
couldn’t have chosen a better team to walk beside me on this journey,
and I would like each of you to know that I appreciate everything you’ve
done. The sleepless nights, the diligent research, and the commitment to
achieving our primary objective really paid off. I couldn’t have done this
without you. Cheers to you all.

TERESA JENSEN
CHIEF FINANCIAL OFFICER/TOTAL
QUALITY MANAGMENT
What an amazing adventure this simulation was. It was the most
educational, exhilarating, and at times, frustrating simulation I have ever
played. The business world is not cut and dry and I think the simulation
did an excellent job of proving that. The simulation as a whole made me
consider the impact of my decisions on other departments; the Total
Quality Management (TQM) module in particular, was what made the
impact of my decisions most apparent. The simulation also taught me
that no matter what decision you made this round (year), you have a
chance to offset the negative affects if you are part of group that really
pays attention to all internal and competitor moves. Lucky for me, my
team was amazing and worked very well together. Of course we had our
disagreements, arguments and at times probably didn’t like each other
much but that never affected the mutual respect given to each team
member throughout the game.

22
JOY KLUSHKAN
CHIEF OPERATIONS OFFICER/
HUMAN RESOURCES
Essential to the success of any accomplished business is a first-rate
management team, which is made up individuals that are
knowledge seekers, who have STRONG core values and work ethic.
These traits are what made Baldwin the team to beat; therefore
the first thing I learned is pick your partners carefully. The second
thing that I learned is share, share, share; because of this desire to
share what we knew, or in some cases what we didn’t know, we all
grew, making our team even stronger. I also learned that
challenging circumstances help you grow and sticking to your
strategy and never losing sight of your goal will make your team or
business unbeatable.

AMBER BURTON
CHIEF RESEARCH & DEVELOPMENT
OFFICER/WEB SITE
COORDINATOR/EDITOR IN CHIEF
Nothing could have prepared me for how incredibly amazing and
enriching this simulation was for me. The Capsim simulation
successfully emulated the entire business process from beginning to
end and truly helped me understand how the right staff can make a
business prosper by pulling together and effectively balancing
common tradeoffs that exist in business. Learning to work
collaboratively with three other teammates for several weeks was
quite the unique experience. I feel extremely lucky to have spent my
last semester running a successful, thriving business with such an
intelligent, hard-working group of women. Constructive criticism was
always given and it helped us come together as a team and
continuously make improvements along the way. By the end of the
competition, we ran like a well-oiled machine and problem-solving
seemed much more streamlined. I couldn’t have asked for a better
group of executives to run Baldwin Company with and appreciate
what a wonderful opportunity it was to work with them.

23
CONTACT INFORMATION

aldwin Company
5364 Sensor Avenue
Seattle, WA 98060
http://www.baldwincompany.com

Tel: 1-800-BALDWIN

EXECUTIVE STAFF MEMBER PHONE EXTENSION E-MAIL ADDRESS

Andrea DiLenge 1420 adilenge@baldwin.com
Teresa Jensen 1520 tjensen@baldwin.com
Joy Klushkan 1320 Jklushkan@baldwin.com
Amber Burton 1220 aburton@baldwin.com

24