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The year 2008 was a mix of bad and good. Both the U.S. and Western European economies were in recession, some might say bordering on depression, and predictions of short term recovery are rare. Our two biggest markets, U.S. housing, and U.S. commercial and industrial construction, were off substantially. While our revenues did not decline to the same extent, they still were off enough so that we were forced to lay off a significant number of people—a first. It was not done until our sales revenues declined so much that it became a financial necessity.

On the plus side, we remain a long range company, determined to become more and more international, and we have made considerable progress in that direction, especially in China, which we see as becoming an extremely important part of our future. Our 175,000 sq.ft. plant in Zhangjiagang now is finished and starting to produce products for sale in China, other parts of Asia, and Australia. As our sales forces in Beijing, Shanghai, and Hong Kong become more familiar with their markets, we plan to manufacture an increasing variety of products designed to put structures together faster, easier, and safer. As has happened in the United States, we expect China, and some other Asian countries, to establish and enforce building codes designed to make structures able to resist the forces of nature such as earthquakes and high winds, and to cause our structural connectors to be specified. As occurred with our operations in Western Europe, we believe that a number of products made in our new Chinese plant will be different than any of our products made and sold in America.

Acquisitions are an important part of our geographical expansion, as well as adding products and markets. Five of our most recent ones are described in some detail later in this Annual Report. Two of them, Quik Drive® and Swan Secure, have been with us long enough to become integrated, and should be a significant part of our international future. We also feel most positive about Liebig, Ahorn, and ProTech, which are in the process of being integrated.

In January this year, we acquired DeckTools™, a Florida based company that develops and licenses deck design, and cost estimation software. This software provides professional deck builders, home centers, and lumber yards with an easy solution for designing decks, estimating labor and material costs, and specifying our products.

A question that comes up quite often has to do with the considerable amount of cash on our balance sheet. Why do we not use it to buy our stock? Quite simply, that is not a way to build a company when its people are focused on the long range future, not the short range. And acquisitions are a major way to expand geographically, as well as to add new products. Borrowing the necessary funds these days can be both difficult and costly. We continue to feel that acquisitions are a major source of expansion, and are looking harder than ever.

While we aren’t waiting for it to happen, whenever the U.S. economy turns around, we will be ready to continue increasing our market share. A major part of our budget, some of which is buried in other costs, continues to be the development of new products internally, some ten or fifteen every year. Among many recent developments are products for cracked concrete, along with Anchor Tiedown System, and the Strong Frame™ ordinary moment frame.

If anyone reading the above comments gets the impression that, regardless of current economic conditions, we at Simpson Manufacturing are doing everything possible to make our long range future a positive one, you are right!

Our quarterly dividend is ten cents per share.