Presidents Message

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Eye on the Future…April 2015 Newsletter DelphonNews Presidents Message

All eyes are on the Future at Delphon. We are looking toward new processes, materials, employees and customers. As part of our focus on the future, we have developed a strategic plan to concentrate on materials for the electronics and medical industries.

As we refined our roadmap, it became clear that the Quik-Pak division would grow faster if it was combined with another company. The semiconductor assembly market is currently going through a consolidation and Quik-Pak would be able to take advantage of better opportunities if it joined forces with a company that had a similar focus. On March 31st we completed the sale of Quik-Pak to Promex. Based in Santa Clara, they are a strong player in the IC assembly and packaging market with a substantial presence in medical device packaging. The combination of the two companies will bring new capabilities to their customer base and position them to gain market share.

Delphon has a lot of experience acquiring new companies, but selling one was harder than I expected. I will miss working with the Quik-Pak staff on a regular basis, but I know that we will continue to support them in any way we can. We know they will enjoy the focus of the new management team and the opportunities it offers them.

Delphon’s focus for 2015 is truly Strategic! That means that we will continue to expand our markets, broaden our product and service offerings, and actively pursue strategic acquisitions and partnerships.

The Thematic goal for this year is Eye on the Future and accordingly we have invested in equipment, facilities and people. The Q1 winner of the Thematic Goal is Gel-Pak with an increase of 9 employees in manufacturing and material support, 2 in Sales, and the investment in materials and equipment to drive new product launches. Congratulations to the dedicated team.

2015 will continue to bring exciting new opportunities for growth as we strive to double Delphon in size and market share by focusing on strategic materials in the Semiconductor and Medical markets. I can safely say that we won’t be bored and we continue to laugh a lot …… 22222222 Eye on the Future… Gel-Pak Update

FEEL THE MOMENTUM! …Raymund Abiera

Momentum has to be one of the most fascinating phenomena in life. We can feel the frustration when it is working against us but can be extremely exhilarating when it's rolling in our favor. If you are a basketball fan and had seen the Warrior’s Klay Thompson score 37 points in the third quarter of the game against Sacramento, then you know what I am talking about. I am sure he felt UNSTOPPABLE! We can feel momentum in almost every aspect of life, including business and sales here at Gel-Pak. We had a fantastic 2014 and a great start in 2015. Below are some Q1 2015 highlights:  Sales 6% above budget  Up 13% vs. Q1 2014  46 New Customers  Received a $643K order ($750K gross) for VR trays from China (CETC 13), expecting to receive another $220K in October  Received $106K Membrane Box order from Harry Winston (new Jewelry application)

One key component to momentum is having one success lead to another just as Klay Thompson made shot, after shot, after shot! We have some interesting sales opportunities; in the hopes of sustaining this momentum, we have all been hearing about Intel, of course. We are also working on a special vacuum release tray for Finisar, as well as applications with Google and Entegris. Momentum goes with your flow, follows your lead and enhances your trajectory. Let us feel the momentum and allow it to carry us to an even greater 2015!

Gel-Pak KPI On-Time Delivery 94% Scrap % Sales 1% Rev/Hr. Worked % Goal 110% RMA # 4% MRB # 13% 33333333 Eye on the Future…UltraTape Update

A Winning Start to 2015…Lance Ochs

For UltraTape 2015 started out with a bang!!! Right out of the gate the orders were strong and we exceeded our revenue goal in each of the first three months of the year and our budget was exceeded by 11% in the 1st quarter. Everyone at UltraTape has put in a lot of hard work and the future for 2015 is looking bright.

Some of the major wins for UltraTape in Q1 were on the cleanroom label side of the business. It is our largest growing product line for 2015, being up 29% YTY. Here are some of the wins:

 Patheon Pharmaceuticals - Is the world’s leading provider of contract drug development and manufacturing services o 15 printers / 240,000 cleanroom labels  Kodak – Technology company focus on imaging science o This was the 1st order into Kodak for cleanroom labels but now that we are an approved vendor many more doors have opened for us within Kodak.  Knowles Electronics – The world’s largest manufacturer of microphones for handheld devices (Smartphones) o 2 Printers and cleanroom labels

Some of the major projects we are working on and hope to close in Q2:  Edwards Life Science o Tamper Evident Non-residue cleanroom labels – Soon to be a new product for UltraTape – UTL231  Analog Davies o PC Board masking label  Seagate o UT1226 packing tape – Customer is in the final stage of testing

As we move forward through the rest of 2015 and into the future, the UltraTape team is always looking at building a strong strategic path to make sure we are meeting or exceeding our customer expectations.

UltraTape KPI On-Time Delivery 94% Scrap % Sales 1% Rev/Hr. Worked % Goal 110% RMA # 4% MRB # 13% 44444444 Eye on the TouchMark Update Future…

TouchMark Update … Eric Purviance

TouchMark is coming off a year (2014) that was marked (no pun intended) by increases of 7% YOY and 6% above Plan. Q1-15 Medical Sales finished 25% above Plan, with Gel-Pak Sales at 5% above Plan. Top 5 customers averaged 14% above Plan. One example, Delta Pacific, leads our Top 5 at 204% above Plan!

Noteworthy product launches include:

 Heraeus, guidewire we’ve been working on for over a year.  Medtronic Biological, drill bit for medical applications  Shockwave, 5 unique devices

TouchMark processed 25 new part numbers (1st time runners), all with 100% on-time delivery, versus a total of 40 new part numbers for all of 2014!

MICL, TouchMark’s (Delphon) Israeli Distributor, has a renewed focus for the region; seeking medical printing opportunities for us.

We will be exhibiting at a new upcoming show, Design-2-Part. This will be the first time TouchMark has exhibited at the show, having walked it a few times. This is a new market for us, with a focus on local molders and machinists of all sizes. Manufacturers nationwide rely on Design-2-Part shows as the most efficient place to meet high-quality, reliable American job shops and contract manufacturers.

TouchMark2015 KPI Delphon & TouchMark On-Time Delivery 95% % of Income Goal Scrap % Sales 0% 100% Rev/Hr. 90%Worked % Goal 95% RMA # 80% 2%

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TouchMark % of Goal Delphon % of Goal 55555555 Eye on the The Lean Scene Future…

Strategic Growth (a.k.a. “It Could Be Huge”)… Philip Haseltine

As I write this article about Strategic Growth for Delphon in 2015, I cannot do so without looking at where we are coming from and what was accomplished in 2014. Delphon is coming off its most successful, and I would say eventful, year in history and much of this success can be attributed to Strategic Growth.

At Gel-Pak we made strategic decisions to invest in a new gel chemistry platform and infrastructure which has given birth to the Vertec and AMM product lines, as well as expanding our offerings to ESD products within our current chemistry. All of these products contributed significantly to Gel-Pak’s growth in 2014 with nothing but increased potential for 2015 and beyond.

At TouchMark we made a strategic decision to bring in house the previously outsourced process of plasma treating of customer product. After much qualification and coordination with the customers to get the change approved, we are now reaping the reward of this decision by taking control of the process ourselves and saving 75% of the cost at the same time. Other equipment investment like the three color machine with rotation has helped to reduce set-ups and labor, as well as the simplification and restructuring of the quality system, are other strategic initiatives which have significantly contributed to TouchMark exceeding its financial targets by a large amount on only a small increase in sales.

At UltraTape we made a strategic decision to acquire a label production business which was moved at the end of 2013, but did not really get up and running until 2014. While we still struggle with trying to make money in this product line, we are making headway on it all the time and will turn this around into a success story in 2015. Additionally, we made a strategic decision to review all production processes having to do with the tape product lines and running experiment to see where we can make efficiency improvements and determine where additional equipment would be valuable. As a result, we have been able to reduce labor and cycle times which will begin to pay dividends immediately.

Often times strategic growth initiatives are considered to be large investments with lengthy processes to get them off the ground. Well, we certainly have our share of those at Delphon. But as you can see from some of the strategic decisions which I have detailed above, sometimes the small things can pay off big as well, and for long periods of time.

Delphon on whole thrived in 2014 by each of its divisions leveraging their capabilities derived from strategic decisions made in 2014 and before, and all of you played a critical part in this success. I would be remiss if I did not make note of one group who went far above and beyond in Q4 to help Delphon to close out the year in great style. This group is the Gel-Pak Manufacturing Department. Under a tremendous amount of adversity resulting from material issues, huge increases in customer demand, and staffing shortages, the entire team came together to focus on the common goals of producing defect free product, shipped on time. All this while producing the two highest shipping months in the history of the division (October and December), crushing the old monthly record (March 2001) by 17% and 19% respectively. This performance helped lead to the best quarter ever in terms of shipping for Gel-Pak and caps off best shipping year in the history of Gel-Pak. Overall, I am proud to say that every person in the Gel-Pak Manufacturing Department worked their butts off to make the customers happy and satisfy their needs! Thank you for your dedication to the success of our customers, the company, and your colleagues. 66666666 Eye on the Future…More Delphon News…

Upcoming Tradeshows:

Gel-Pak: CS Mantech, May 18-21, Scottsdale, AZ Semicon West, July 14-16, San Francisco, CA

TouchMark: Design-2-Part, May 20-21, Santa Clara, CA

UltraTape: Semicon West, July 14-16, San Francisco, CA

New Hires:

Gel-Pak: Tom Olen – Technical Sales Associate Rober Brusca – Buyer Suhana Nisar – Production Trainee Mira Patel – Production Trainee Darwin Carrera – Production Trainee Connie De Guia – Production Trainee Anastasia Payton – Receptionist Herman Lopez, Jr. – Production Trainee Elizabeth Cornell – Production Trainee Ann Cabusao – Production Trainee Julia Chan – Production Trainee Anicia Dela Pena – Production Trainee Judith Baca – Customer Service Rep Alfredo Guirin – Facilities Custodian Moses Sullivan – Accounts Receivable Specialist

TouchMark: Princess Chan - QC Inspector Dorothy Bala – Pad Printer Trainee Arnel Cruz – Pad Printer Trainee Mario Galvan – Pad Printer Trainee

C.I.P Contributors: Sheryl Barber, UltraTape, Q1 Contributor Winner Belinda Philips, UltraTape, Q1 Impact Winner

Valentine Apale, TouchMark Leo Alindog, Gel-Pak Nadine Bard, UltraTape Robert Munoz, UltraTape Robert Munoz, UltraTape Armiyas Ashenafi, UltraTape

Benefit Reminder: Health Club Reimbursement Community Service PTO Day Delphon Foundation Education Reimbursement