Slide 1: January 2004
January 2004 www.ctscorp.com
Slide 2: CTS Corporation Global Operations
CTS Corporation Automotive Sensors EMS Operations Electronic Components Global Operations
Slide 3: Business Model Profitability Growth Strategies
Business Model Profitability Growth Strategies Seek high growth niche markets Focus on "design to purpose" products and services Leverage technology to create differentiated products and processes Grow through product and market extensions Core Strengths Application engineering Materials technology
Slide 4: Segments and Markets
Segments Automotive Communications Mobile Computer Communications Infrastructure Other Segments and Markets Sensors and Electronic Components Electronics Manufacturing Services Markets 56% 44% 7% 39% 11% 27% 16% 2003 Projected
Slide 5: Near-Term Business Strategy
Near-Term Business Strategy Communications Electronics $96M - 37% Other * $7M - 2% Automotive 23% Resistor/Electro 11% North America 53% Aggressively Grow Grow Increase Profitability Electronic Components Automotive Sensors Electronic Manufacturing Services 0.29 0.27 0.44 Electronics Manufacturing S
Slide 6: Five-Year Business Growth Targets
Five-Year Business Growth Targets Automotive Sensors Electronic Components Electronics Manufacturing Services 15 - 20% 3 - 6% 5 - 10% 5 - 10% 3 - 6% 5 - 10% 7 - 10% Market Growth Sales Growth Overall Product/Market Area $650 - $750 million in sales 8 - 10 % Operating Earnings as % of Sales Gross Mar
Slide 7: Automotive Sensors Growth Strategy
Automotive Sensors Growth Strategy Aggressively expand product base. Leverage product/market strength into Asian market. 2002 2007 $116 M $240+ M Double sales in Five years! Sales Growth Unit growth ( N.A. & Eur.) 1 - 3 % Content growth ($/vehicle) 10 - 12 % Asian expansion 3 - 6 % Total (CAGR) 14 -
Slide 8: Growing Sensor Content
Growing Sensor Content 2001 2007 East 125 175 2001 2007 East 2.14 3.75 40% 75% Worldwide Market Sensor $ Content / Car Worldwide CTS Sensor $ Content / Car Eight new product categories in development pipeline. Growing customer penetration in Europe, Asia and with North American transplants.
Slide 9: Belt Tension Sensor Won Platforms
Belt Tension Sensor Won 14 Platforms U.S. regulations require 100% of all new light vehicles to have enhanced occupancy sensing systems by 2006. CTS' Belt Tension Sensor provides superior measurement accuracy 2003 2004 2005 2006 2007 SAM 12.5 47 78 81 81 CTS Target Sales 1.9 11.5 19.9 22.3 24.2 Capt
Slide 10: Accelerator Pedal Module
Accelerator Pedal Module Enable use of adaptive cruise control and traction control systems. Lower part count design provides quality and reliability advantages. Offer both contacting and non-contacting technology. CTS Accelerator Pedal Modules 2003 2004 2005 2006 2007 2008 SAM 83.3 122.4 159.3 187.
Slide 11: Manifold Actuator Winning Positions on New Engines
Manifold Actuator Winning Positions on New Engines Trend toward active manifolds driven by: Lower emissions requirements. Improved vehicle performance. 30% of North American vehicles will have active manifolds by 2007. 2003 2004 2005 2006 2007 2008 SAM 41 45 64 90 98 106 CTS Target Sales 3.6 3.6 5.4
Slide 12: Asia Business Development - Automotive
Asia Business Development - Automotive China Japan Taiwan Auto production projected to grow to 7M cars by 2008; >14% per year. Environmental regulations opening motorcycle market for electronic fuel injection controls; 14 million units per year. 2003 2004 2005 2006 2007 2008 Sales Growth 8.8 10.2 15
Slide 13: Communications Components - Infrastructure Growth
Communications Components - Infrastructure Growth Move up the Value Chain; Components to Modules Extend the Component Portfolio Exploit Weakened Competitive Field Leverage Low-Cost Manufacturing Capability in Asia CAGR 22% CTS Sales Strategy
Slide 14: Communications Components - Infrastructure Growth
Communications Components - Infrastructure Growth 2002 2003 15.6 17.9 60+% win rate. Replaced competitors at four OEM and three EMS customers. 2002 2003 New Design Wins 2 33 New Design Wins Value-Added Modules Won 80% of value-added modules design opportunities in 2003. Growing Share In Custom Frequ
Slide 15: EMS Geographic Expansion - Asia
EMS Geographic Expansion - Asia Market Drivers & Opportunities Expanding into Singapore. Broadening customer base. Added several new customers in the last six months. Developing new applications. 2000 2001 2002 2003 2004 2005 2006 2007 Asia 4.5 10.9 18 36 40.1 46.7 54.4 63.4 27.1 4.5 11.7 18.4 27.1
Slide 16: CTS Corporation Financial Summary
CTS Corporation Financial Summary
Slide 17: Net Sales
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4* East 126 113 118 111 116 106 117 108 130 Net Sales * Revised Estimate - Press Release, January, 2004. 2002 2003 $ millions Generally flat market demand has just begun to show some growth. Automotive Electronic Components EMS 2001 0.2 0.43 0.37 Automotive Electronic Compon
Slide 18: Improving Financial Performance
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ** -5.7 -3.6 -2.4 0 0.5 0.6 2 1.6 3.2 0.6 Improving Financial Performance 2002 Net Earnings/Loss (Adjusted*) 2003 (3.6) (2.4) 0.0 0.5 0.6 2.0 1.6 3.2 3.8 * Excludes all restructuring and related one-time charges, asset impairments, and unusual gains. ** Revised Estimate -
Slide 19: Cost Structure Overhaul
Cost Structure Overhaul Other 28% Interest 10% Salary/Fringes 50% Depreciation 12% East 28 10 50 12 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Fixed Costs Reduced by $95M Per Year Other 28% Depreciation 12% Interest 10% Salary/Fringes 50% Breakeven Revenue Point Reduced to $440M Per Year Q1 Q2
Slide 20: Balance Sheet Management
Balance Sheet Management '97 '98 '99 '00 '01 '02 '03 Adjusted Working Capital 0.162 0.17 0.2 0.173 0.14 0.121 '96 '97 '98 '99 '00 '01 '02 '03 Est. Maintenance 17.2 22.4 21.3 32.9 29.35 29.8 12.8 15 Capacity Increase 42.293 10.1 Building 47.6 37.8 % to Sales 0.054 0.057 0.058 0.049 0.138 0.134 0.028
Slide 21: Capital Structure
Capital Structure 1999 2000 2001 2002 Q1 2003 Q2 2003 Q3 2003 Sales 0.514 0.442 0.386 0.265 0.244 0.241 0.221 Debt to Capital Bank Debt IRB Convertible Sub Debt Equity 0.04 0.11 0.07 0.78 Debt Structure Convertible Sub Debt IRB Bank Credit Equity Leverage Ratio Within our Target Range of 20% - 30%.
Slide 22: Summary
Summary Improving economic outlook. Focusing on new products and market/customer expansion. Automotive products sales on track to double by 2007. Broadening EMS customer base. Growing share in communications infrastructure markets. Driving Growth and Margin Enhancement
Slide 23: Appendix
APPENDIX
Slide 24: Revenue Mix By Major Markets
Revenue Mix By Major Markets Automotive Comm. Comp. Computer Comp. (and other) Interconnect/EMS East 0.15 0.45 0.12 0.28 2000 Automotive Comm. Comp. Computer Comp. (and other) Interconnect/EMS East 0.25 0.25 0.09 0.41 2002
Slide 25: Financial Summary
Financial Summary * Excluding restructuring and related one-time charges, and customer reimbursement. ** Excludes a one-time, noncash write-off for acquired in-process research and development. Historically Strong Financial Performer
Slide 26: Other Financial Data - Income Statement
Other Financial Data* - Income Statement
Slide 27: Other Financial Data - Balance Sheet Metrics
Other Financial Data - Balance Sheet Metrics
Slide 28: Automotive Product Applications
Automotive Product Applications PPS Exhaust Gas Recirculation Actuators Seat Position Sensor Throttle Position Sensor & Electronic Throttle Control Pedal Assembly Pedal Position Sensor Belt Tension Sensor Fuel Sender
Slide 29: Contacting Sensor Products
More than 280 million shipped since 1995 Throttle Position Sensors EGR Sensor World's leading supplier of automotive position sensors - Over 25 million sensors per year Reliability leader in the industry Global manufacturing footprint 20 related patents Key customers: - Borg Warner - Delphi - Magnet
Slide 30: Non-Contacting Sensor Products
Throttle sensor (on engine) capability 20 related patents Proven semiconductor technology CTS designed and manufactured magnetic circuit Key customers: - Magneti Marelli - Pierburg - Visteon More than 5.5 million shipped since 1995 Throttle Position Sensor Non-Contacting Sensor Products Non-Contacti
Slide 31: Communications - Infrastructure Major Applications
Communications - Infrastructure CTS Major Applications Telecommunications Optical Switch Components Board Assembly Box Assembly Backplane Design & Assembly Supply Chain Management
Slide 32: EMS: Alliance Partnership
Customer Logistics Eagle Printed Circuit Boards PPC, WUS Cabling Amphenol Enclosures Pentair Backplane Connectors CTS Packaging TBD PCB Assemblies CTS System Integrator Partner Benefits - - Improved responsiveness and flexibility - - Cross sales opportunities - - Best in Class partners - - Avoids ri
Slide 33: Filter Products
155 related patents Highly vertically integrated mfg. Strategic competitive advantage Monoblock Ceramic Technology 3 Pole Crystal Filters Multilayer Ceramic Processing Key customers: Kyocera Wireless LGE Motorola Nokia Ceramic GPS Filters GSM Diplexers Cellular and PCS Duplexers More than 150 millio
Slide 34: Frequency Control Products & Applications
Frequency Control Products & Applications Wireless Base Station GSM, GPRS, CDMA, WCDMA Telecom Public Network Switching, Routing, Access Metro-Optics & WAN Equipment Double Oven OCXO Timing Reference for CDMA/WCDMA Low Noise OCXO E911 Location Module Timing VCXO Low Noise, High Frequency Base Statio
Slide 35: Computers - Electronic Components Major Applications
Growth Markets Data Communication Servers Data Storage Systems Storage Area Networking Network Attached Storage Professional Workstations Applications Data Bus Termination Frequency Control Switched Port Configuration Switched Processor Speed Selection Cursor Control CPU System Boards Crystals Dip S
Slide 36: Resistor Networks Products
Leaded Leadless Ball Grid Array 50 related patents Thick film technology Molded ceramic reliability Key customers: - Alcatel - Cisco - Compaq - Lucent - Teradyne Billions shipped in 30 years of production Resistor Networks Products
Slide 37: Major CTS Competitors
Major CTS Competitors PRODUCTS Automotive Sensors Frequency Products - Infrastructure Frequency Products - Mobile Ceramic Duplexer Filters Resistor Networks Electronics Manufacturing Services COMPETITION AEC, Alps, BEI, Bosch, Hella, Panasonic C-MAC, Oak, Raltron, SaRonix, Vectron KDS, KSS, Kyocera,