Keithley Instruments experienced a significant decline in sales in all regions of the world during fiscal 2009 as a result of the severe economic downturn. Orders from the Company’s semiconductor customers decreased approximately 50 percent, orders from wireless communication customers decreased approximately 75 percent, orders from precision electronics customers decreased approximately 30 percent, and orders from research and education customers decreased approximately 10 percent compared to fiscal 2008. Orders from the top 25 customers in any given year have historically accounted for approximately 20 to 30 percent of our total orders.

During fiscal 2009, we reported net sales of $102.5 million, a 33 percent decrease from $152.5 million in the prior year. Net loss for the year was $50.5 million, or $3.23 per share, which includes $39.5 million for a non- cash charge to reserve for the Company’s U. S. deferred tax assets, severance charges, and the costs associated with the exit of a product line.

The Company used $5.4 million in cash from operations during fiscal 2009. Cash and short-term investments were $25.4 million at September 30, 2009, and we reported no outstanding debt. Our accounts receivable days sales outstanding were 47 at both September 30, 2009, and a year ago. Inventory turns improved to 4.5 at September 30, 2009, from 2.7 a year ago.

We took decisive actions this year to respond as credit markets froze and customers dramatically curtailed their spending in every geographic region that we serve. Our cost-saving measures were designed to increase our efficiency and refine our competitive focus. We took steps to manage our short-term financial position without losing focus on long-term objectives for market position and technology roadmaps.

We reduced product development and selling, general and administrative costs in fiscal 2009 by approximately $24 million with a variety of actions that were significant to the Company and to our employees. During the fiscal year, we implemented a hiring freeze and a 20 percent workforce reduction, along with reducing compensation through temporary salary reductions. We are grateful to our employees for the confidence they have shown in the Company and their dedication to achieving our long-term goals together. Beyond these moves, we reduced our dividend, lowered capital expenditures, and ended our share repurchase program.

During the year, we announced that we would discontinue investing in and marketing our Series S600 product line. The decision to phase out the S600 product line allowed us to sharpen our focus in product development spending by allocating dollars to those product lines and applications that align more tightly with the Company’s strategy for long-term growth.

Most recently, we completed the sale of substantially all of our RF measurement products for $9 million. The impact of the economic downturn pushed out the expected timing of the returns that we were anticipating. Because we have placed a high emphasis on profitability in fiscal 2010 and beyond, we concluded that we could no longer continue to support our significant investment in this product category and should instead focus on growing our core business. We anticipate recognizing a gain of $2.0 to $3.0 million in the first quarter of fiscal 2010 as a result of this transaction.

During 2009, we initiated a variety of cost-reduction programs that reached deep within our operations and manufacturing organization. Our approach is to minimize extraneous cost in process, buildings, and fixed assets so we can direct cash to investments that make a tangible difference in improving product performance and at the same time minimize the amount of cash used. As a lean organization, we continue to create ways to reduce non-value-added processes in our Company.

We realigned our outsourcing relationships to fit current demand levels, and brought in house our outsourced production. Outsourcing remains an important part of our strategy as a flexible, variable cost to complement our fixed assets. As our revenues increase, we will likely outsource again.

Our design, manufacturing, and service teams collaborated closely during the product development process in order to eliminate costs from product designs at the earliest stages possible. Those teams drew upon the skills of our sourcing team, who continued their efforts to direct component purchases to new suppliers, particularly in low-cost regions. The impact of these teams in eliminating costs from our design and production process has been a success story for Keithley during the past few years.

We are planning for an uncertain 2010. Even with very conservative growth plans, the cost reductions we have made should enable us to be profitable in 2010.

While macroeconomic signs at the close of calendar 2009 are encouraging, the financial shock experienced by governments, institutions, and companies around the world are both significant and serious. The effects of 2009’s lack of consumer confidence will continue to be felt during the coming year, so we will continue to manage the Company with confidence balanced with caution. Although many of our customers are now beginning to show signs of increased spending on production test and measurement equipment, we will continue to maintain our tight control of expenses in ways that do not jeopardize our ability to expand our market position.

The reductions in our workforce and changes in our product portfolio were painful decisions. Yet, our actions significantly reduced our break-even level and allowed us to continue to invest in our future. The investments made in revitalizing our core business’s product offering during the last several years have built a platform of solutions that are compelling to our customers and competitive in the marketplace.

Keithley Instruments remains committed to serving the challenging materials, device, and process measurement requirements that enable innovation within the electronics industry and to supporting our thousands of customers in the semiconductor, wireless, precision electronics, and research and education industry groups, serving applications in research, development, and production. The divestiture of our RF product line enables us to increase our focus on our core customers who need high performance source-measure units, semiconductor characterization, and sensitive instrumentation, complemented by our capabilities in switching, power supplies, DMMs, and software. We intend to expand our efforts to leverage our core strengths in support of new growth opportunities, such as advanced materials research, nanotechnology-enabled electronic devices, high brightness LEDs, a wide range of new solid-state memory technologies, including SONOS and PRAM, thin film technology for solar cells, lower-power-consuming microprocessors, and other energy-efficiency-related devices and materials. Today, our Company is focused on these opportunities with a leaner infrastructure, a lower breakeven point, and a selling model to effectively serve our large and small accounts.

Two of our long-time Board members retired this year: James T. Bartlett and R. Elton White. We are grateful to them for the years of insight and stewardship they have given the Company.

This has been a year in which we have been tested in many respects. Our product portfolio, selling strategy, financial models, and leadership were all submitted to the most intense review by the market, our customers, our employees, and you, our shareholders. We thank our employees for their sacrifices, passion, teamwork, and commitment to our customers. We are grateful to both our shareholders and employees for the support and commitment each has shown our Company during 2009. We are eager to carry our plans into 2010 and return to profitability.