Corporate Financial Overview

In 2016, Chester Inc. delivered its eighth year of increased profits, sixth year of record revenues, and second year of income from operations. We delivered these results as we continue to invest in the future growth of our Company.
As we review what we have accomplished in 2016, we are pleased with our achievements. Some of these achievements include:

· Growing Sales by 84%
· Increasing Net Profit by 24%
· Increased Cash from Operations by 48%
· Reduced Inventory Carry Over

2016, Chester Inc took a broad strategic approach and focused on five major technology segments: (High End, Performance, Size, Traditional and Low End). Our products have been growing in unit rates of 20%. To take advantage of this opportunity, we plan to redefine total available market and reassess which market segments bring Chester larger returns. We plan to continue to gain a competitive advantage by distinguishing our products with excellent design, high awareness, easy accessibility, cost and product extenders. We will develop an R&D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size, performance, reliability, and cost. We will price competitively and expand capacity as we generate higher demand.

Our vision is to be an even stronger company than we were in 2016. Our strategic position is solid and diversified, and we continue to pride ourselves on our ability to provide substantial returns on our investments. We envision Chester Inc to be the leader in premium products for the industry: our brands withstand the tests of time, define the cutting edge and have value beyond what our competitors offer. In short, our vision and execution are in sync with the interest of our primary stakeholders, customers, stockholders, management, and employees.

Our goal is to drive industry-leading performance now, while investing strongly in our future for the growth and success of Chester Inc. Our vision remains the same: to be the number-one worldwide provider of products, services and solutions, that connect technology with customers and to deliver premium investment results for our shareholders.

The priorities that guided us in 2015 and will also guide us in the years to come, include targeting profitable growth areas where we see opportunity and continuing the transformation and expansion of our business, while building shareholder value.

As we look forward, we see significant opportunities to grow across markets, geographies and products, particularly with small- and medium-sized customers that comprise approximately 80 percent of sales in our components business.

Finance: We will Finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0.

Looking ahead, we are confident in our ability to perform in any marketplace given our leading position, our broad base of approximately 140,000 customers and 700 suppliers, and our global network of more than 300 locations in 50 countries and territories. Entering new geographies and markets, expanding our product offerings and operating more efficiently will increase our ability to serve our customers.
Our disciplined operations and financial focus coupled with our market-leading position enable us to manage the company for consistent performance.

We are transforming our systems to operate with standardized global processes through our ongoing enterprise resource planning (ERP) platform initiative. By moving to one global system, we will draw on best practices across the entire organization as we drive the company to higher levels of efficiency and productivity, allowing us to enhance business agility and customer service. This program is on track and on schedule, and we believe its benefits, when fully implemented, will in fact be even greater than when the program was first announced over a year ago.

In 2014, 2015, and now 2016, Chester Inc. was once again named to Fortune magazine’s list of America’s Most Admired Companies. In addition, Chester Inc was selected as one of Forbes magazine’s 400 Best Big Companies in America. These and other awards and acknowledgements from customers, suppliers and the media reflect the importance we place on listening to the distinct needs of our customers.

Continuing to create value for our business partners and shareholders while investing in future growth and profitability is our priority. As our 2016 results demonstrate, we are generating solid results while investing in our vision for the future. We have made substantial progress on our journey in the last eight years – we remain excited about and committed to what we believe is a strong, vibrant future for Chester Inc.