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To Our Customers, Shareholders and Employees:

ENSCO’s goal is to make the world a safer place by offering our customers innovative products and services—enhancing their ability to protect people and assets. We provide technology solutions to both the government and commercial sectors of the air and rail transportation, aerospace and national security industries. Through the intelligence, imagination and dedication of our employees and through our commitment to the highest level of professionalism and integrity, we supply our customers with effective solutions to their most challenging needs.

This year, we increased our revenues to $108.4 million and delivered a profit of $5.8 million. We created growth in most sectors of our business, including railroad safety, avionics, weather technology and most of our national security business. However, this growth was tempered by ongoing cutbacks at one of our major customers and a budget cut at another. While some fluctuation is to be expected in a highly diversified corporation like ENSCO, our task is to compensate for possible downturns with even stronger growth in other areas of the business. With that in mind, in FY08 we took a fresh look at our markets, business strategies, business development processes, and internal investment plans to better align our efforts for future growth. We are restructuring our marketing and business development functions, realigning our internal technology and marketing investments, and developing business and growth plans to place a stronger emphasis on identifying and capturing new opportunities to generate a strong and consistent stream of opportunities. We have also added a general counsel to our staff to assist in contracting, risk and legal matters as we enter and expand into new markets. These changes will continue and accelerate in FY09 with the addition of a new vice president of corporate business development.

Successes and Accomplishments in FY08

The determination and innovative spirit of our employees and ENSCO’s commitment to providing exciting work and challenging opportunities was affirmed in 2008, when we were named one of the 50 Best Places to Work in the Washington, D.C., area by the Washington Business Journal. The same determination and commitment was reflected in our new product launches and contract wins.

This fiscal year we:

Launched our Automated Joint Bar Inspection System (JBIS), a vision-based rail inspection service. We built and placed systems on three hi-rail trucks. The systems have already operated over 4,570 miles and led to the replacement of more than 4,525 defective joint bars. Expanded our track inspection service business to transit and international markets. Our contract with Brazil’s SuperVia Railway marked ENSCO’s entry into the growing track inspection marketplace in South America. Provided accurate weather forecasting and meteorological data that directly contributed to United Airlines’ revenues. ENSCO’s forecasting improved United’s flight planning, reduced flight delays, ground delays and diversions—resulting in minimizing fuel and down line costs. Captured a Federal Aviation Administration (FAA) contract to better predict convective weather for the New York Terminal Radar Approach Control (TRACON). Improved prediction is critical to relieving chronic weather-related airline delays in the congested Northeast corridor. Captured the System Performance Evaluation and Verification (SPEV) delivery order under the University of Dayton Research Institute’s DEST II contract with the Air Force Space and Missile Systems Center (SMC). This contract furnishes independent system assessments and independent verification and validation on safety-critical systems for both the Eastern Range at Cape Canaveral Air Force Station, Fla., and the Western Range at Vandenberg Air Force Base, Calif. Introduced our Simulation, Test and Recording System (STARS), a state-of-the-art, modular data simulator. The initial STARS-based simulator was delivered to the Florida Air National Guard in early 2008. STARS will also form the basis of the range data simulator scheduled for delivery to the South Korean Agency for Defense Development. Expanded our avionics software solutions business through our roles on the Boeing 787 Dreamliner and the Joint Strike Fighter program. In FY08, we celebrated the opening of a new West Coast office in Riverside, Calif., as well as the expansion of our office in Rockford, Ill. Grew our managed engineering services at BAE Systems in Johnson City, N.Y., to an all-time high. Doubled our sales of MicroSearch®, our human presence detection system, through sales to customs and immigration authorities in the European Union and prison systems in the United Kingdom, Germany, Australia and the United States. In 2008, we initiated a major product upgrade for MicroSearch to enhance the system’s performance and capability in border control environments. Initiated a major internal research and development program to develop GPS-denied geolocation and navigation solutions to track and aid first responders, soldiers and special operations forces. Expanded our SENTRY™ installation base to seven facilities in the United States. ENSCO’s chemical, biological, radiological and nuclear (CBRN) early warning detection and response system has been in operation in a major government facility since 2002. Through the years, we have developed SENTRY interfaces for nearly every existing CBRN sensor.

The Road Ahead – 2009 and Beyond

In addition to the changes in the business development and investment strategies made in 2008, we launched our internal Innovation Forum to nurture innovative concepts from initial ideas to fruition. In its first year, this program fostered eight seedling efforts, and five of these efforts graduated to new business opportunities. This program will continue to play a key role in helping us develop innovative solutions for the major opportunities that we envision for the future. Many of these opportunities will evolve from existing capabilities and customers, with a focus on exciting new market areas and challenges, including energy, healthcare, the global war on terror, national infrastructure renewal, and climate change. Each of these areas looms large in our country’s and our company’s future. We look forward with enthusiasm to tackling these challenges as we translate our vision to tomorrow’s innovative technology solutions.
 

Alan G.R. Bell President and COO

Paul W. Broome CEO and Chairman of the Board

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