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## DeAR FeLLOW sHAReHOLDeR, 

For UFp technologies, 2014 was a year of solid accomplishment. We made great progress on a number of strategic initiatives designed to strengthen our operating platform, accelerate sales growth, and position your Company for long-term success. 

As expected, these investments had a direct impact on our year-end results. After eight straight years of record earnings, our net income in 2014 was $7.6 million, compared to $11.3 million in 2013. However, going forward we believe these investments will improve UFp’s ability to compete in many important ways. 

A stronger fActory footprint several years ago, we made a strategic decision to create a more focused and efficient factory footprint. Rather than maintain multiple small plants in any one region, we resolved to create a tighter network of larger, strategically located, very well-equipped facilities. 

In each one, we wanted to assemble a critical mass of technical expertise, including engineering, quality, and manufacturing resources. By concentrating these problem- solving resources under one roof, we knew they could collaborate more easily, feed off each other’s ideas, and provide even better service to our customers. to execute this strategy, we began a series of factory moves in 2014. 

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plAnt consolidAtions in MichigAn And cAliforniA First, we consolidated our Illinois operation into our 250,000-square-foot Grand Rapids, Michigan facility. We then completed a similar project in California, bringing our Costa Mesa operation into our nearby Rancho Dominguez facility. In each case, we took advantage of an expiring lease to lower operating costs and improve manufacturing efficiency. Both consolidations were completed on time and on budget. Both will bring significant cost savings for many years to come. And both will help us deliver more value to customers in those regions. 

A new fAcility in texAs—And Another coMing soon in MAssAchusetts We also invested $3 million to purchase a 128,000-square-foot facility in el paso, texas. In this new plant, we improved the efficiency of our foam fabricating operation and added new state-of-the-art molded fiber production lines to meet the growing demand in the southwest for our environmentally-friendly packaging. previously, we had to ship products to local customers from our Iowa plant more than 1,000 miles away. this new facility expands our capacity and allows us to respond more efficiently to customer requests. 

