The evolution of our business in fiscal 2004 warrants continued confidence in our direction and prospects. The long-term trend to outsource the design, assembly, delivery and support of electronic products gained breadth and depth across industry sectors as we expanded the services and products we provide to our customers.

Revenue increased 32% in fiscal 2004. Growth was predominantly organic, representing market share and service expansion of existing relationships as well as the addition of new customers. Our diversification efforts are also yielding positive results. For example, we expect the instrumentation and medical sector to expand to approximately 16% of our total revenue in fiscal 2005. Eighty percent of the customers in this sector are Original Equipment Manufacturers (OEMs) early in the process of transitioning from a vertical to virtual manufacturing model. As this virtualization continues and services are added to these new relationships, Jabil’s organic growth momentum should continue in the years ahead.

As our scale and diversification have evolved, so has our ability to more efficiently utilize capital, leverage operating expenses and expand profitability. In fiscal 2004, we added $1.5 billion in revenue on $25 million less in invested capital, reduced SG&A expenses nearly a full percentage point to 4.2% of revenue and expanded year-over-year operating margins. While news from the industry at large may have been mixed, the overall market grew in absolute size and our ability to run a successful business in an evolving market was clearly demonstrated.

Our objectives for fiscal 2004 were to continue growing the company while improving return on invested capital, operating margins and further tuning our fundamental operational execution. Our final results in fiscal 2004 exceeded initial expectations significantly. Our guidance as we began fiscal 2004 was for core earnings per diluted share (EPS) of $0.90 to $0.96 on core operating income of $240 million. We delivered $1.02 EPS and $261 million in core operating income, representing year-over-year growth of 44% in both cases. (Please refer to the Financial Highlights section for a reconciliation of our core results to our results prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). We report core earnings per diluted share and core operating income to provide investors with an alternative method for assessing our earnings from what we believe to be our core manufacturing operations.)

During the year, we did not engage in any sizable acquisitions, affording us the opportunity to concentrate more fully on our operational performance and improving the satisfaction levels of customers. Jabil’s management team believes that long-term shareholder value is created in direct relation to our operational execution and fully satisfying the needs of our customers. In short, through striving to be the best complete solution for the best customers in the market, we become a better company.

We have accomplished much and yet there is room for improvement in a number of areas. For example, we worked hard but did not meet our inventory turnover objectives. We will devote increased attention to this area in fiscal 2005. Increased asset velocity will contribute to improved returns on invested capital while our customers will benefit from faster access to lower costs and additional flexibility in global product configuration. We are focused on making this happen and believe we are tracking in the right direction.

The overall market for electronics outsourcing is growing significantly. We have a broad view of the market and consider it to be inclusive of ODMs (Original Design and Manufacturing), as well as EMS (Electronics Manufacturing Services) providers. Although these markets have historically been regarded as distinct, the evolutionary direction suggests a convergence of these markets and our business model will capitalize on this trend. We believe that the EMS and ODM business models are simply alternative methods of delivering an outsourced solution to the customer.

We continue to expand our design capabilities to support a growing customer base around the world. The demand for product realization excellence combined with a powerful global manufacturing and supply chain management infrastructure is extremely strong. We are expanding our product realization infrastructure as rapidly as we can in order to meet this growing demand. While collaborative design is the staple of our business, we are steadily improving our ability to provide complete product solutions to targeted market sectors.

Our design headquarters moved to Shanghai in 2004 as we believe that China and India will become even more important centers for electronic product design and manufacturing in the years ahead. However, we also believe the diversity of experience and know-how resident in our Europe and North America design locations is a competitive advantage and a critical part of our overall solution. All of our design locations contributed significantly to large scale design projects for customers in the consumer, computing & storage and communications sectors during the year.

The success of our business hinges on our people, our processes and our culture. We have a unique business model, the foundation for which is our Customer-centric Business Unit (CBU) model. In the CBU model, Jabil forms autonomous, scalable and focused business units around each customer. The CBU’s sole purpose is delivery of a comprehensive virtual solution to their customer. The CBU model gives us the ability to marshal a uniquely satisfying solution for customers in diverse sectors while leveraging the resources common to all. The operational and financial systems required and the know-how imbedded in this model is a key competitive advantage. In order to bring this same level of focus to geographic regions and operations, we established regional Presidents in the Americas, Europe and Asia. We believe this enhanced regional focus will complement the CBU model and will be a key driver to continued improvement of our operational performance.

We expect fiscal 2005 to be another memorable year as we evolve our company into a bigger and better business. Once again, our revenue growth is anticipated to significantly exceed end market growth. In fiscal 2005, we expect to grow core operating income and core EPS while expanding operating margins and return on invested capital. Over the past ten years, only nine other Fortune 500 companies have grown revenue, operating income and EPS at a compound annual growth rate of over 25%. Our objective is to continue exceeding end market growth rates and to improve our return on invested capital to a level which will place us in the top 10 percent of S&P 500 companies. Our evolution has been in this direction and we intend to keep it that way.