content_image/199183.jpg
<img src='content_image/199183.jpg'>

W made considerable progress integrating AMD... this intricate process was up and running for our production of center consoles on certain Ford models. We expect to have this vertical integration complete by the second quarter of Fiscal 2013. 

Operationally, we faced some challenges this past fiscal year. Vendor production and delivery issues relating to an intricate paint process for the production of automotive center consoles negatively impacted results. To resolve these issues and provide our customers with improved and more consistent quality, we acquired an injection molder and decorative painting business located in Monterrey, Mexico, which we operate as Advanced Molding and Decoration (AMD). We believe the vertical integration of this state-of-the-art facility will provide Methode with high-quality injection molding, painting and decorating capabilities of class A surfaces. The assets included 52 injection mold machines and three paint lines. Additionally, 230 employees transferred to Methode, bringing with them years of knowledge and experience. We believe this vertical integration will not only enhance quality, mitigate supply risk and improve our gross margins on the production of center consoles, but it will also support Methode’s continued growth as a world-class engineering and manufacturing company. During the year, we made considerable progress integrating AMD, and in June, this intricate process was up and running for our production of center consoles on certain Ford models. We expect to have this vertical integration complete by the second quarter of Fiscal 2013. 

Additionally, higher designing, developing and engineering costs to support the GM center console program and other major launches impacted our results in Fiscal 2012. These costs will remain with us through the launch of several major programs in the first three quarters of Fiscal 2013 and through the launch of the GM center console program in the Fiscal 2013 fourth quarter. 

Although we ended Fiscal 2012 with strong sequential sales and earnings performance in the fourth quarter, we anticipate the first quarter of Fiscal 2013 to bring lower sequential sales, as the first quarter is typically our weakest sales quarter. These lower sales, in conjunction with the costs associated with numerous new product launches, will contribute to our expectation of modestly above or below break-even earnings per share in the Fiscal 2013 first quarter. Meanwhile, we anticipate the launch of TouchSensor’s laundry platform, along with the launch of multiple automotive platforms in our Malta facility in the second and third quarters, 

