Slide 1: CTS Corporation forward-looking statements
CTS Corporation Statements about the Company’s earnings outlook and its plans, estimates and beliefs concerning the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations. Actua
Slide 2: Financial Results 2002
97 98 99 00 01 02 East 390.6 370.4 677.1 866.5 577.7 457.8 Financial Results 2002 Key Accomplishments: Returned to profitability (Q4). Pruned non-strategic operations and products. Significantly reduced Working Capital; Inventory turns improved to record levels. Reduced Total Debt/Capitalization Rat
Slide 3: Improved Cost Structure
Improved Cost Structure Facilities and Operations Rationalization ‘% employees in low cost areas 61% 51% Jan ot Deco2z Restructuring Drove Over $50 " Million Annuai Savings crs.
Slide 4: 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 0.34 0.25 0.41 Electronics Manufacturing S
Slide 5: Automotive Sensors Growth Strategy
Automotive Sensors Growth Strategy Aggressively expand product base. Leverage product/market strength into Asian market. 2002 2007 $116 M $240+ M Double sales in 5 years! Sales Growth Unit growth ( N.A. & Eur.) 1 - 3 % Content growth ($/vehicle) 10 - 12 % Asian expansion 3 - 6 % Total (CAGR) 14 - 21
Slide 6: Automotive Sensors - New Products
Automotive Sensors - New Products New Products have $1 Billion Market by 2007 Strategy Focus on next generation technologies and new sensor applications. Move up value chain - complete solution. Develop products in close working relationship with customer. Body of Chassis Powertrain (Engine) Powertr
Slide 7: Belt Tension Sensor Won Platforms
Belt Tension Sensor Won 14 Platforms U.S. regulations require 100% of all new light vehicles to have enhanced occupancy sensing systems by 2006. CTS' Belt Tension Sensor provides superior measurement accuracy Served Available Market 2003 2004 2005 2006 2007 Sales 30 80 130 156 160 CTS Target Sales ?
Slide 8: Automotive Pedal Sensors
Automotive Pedal Sensors Lower part count design provides quality and reliability advantages. Offer both contacting and non-contacting technology. CTS Pedal Trend to "integrated pedals" Won positions on 15 programs. 2003 2004 2005 2006 2007 Available 109 138 162 178 195 Target 25 35 62 83 100 North
Slide 9: Communications Components - Infrastructure Growth
Communications Components - Infrastructure Growth Move up the Value Chain; Components to Modules Extend the Component Portfolio Exploit Weakened Competitive Field Leverage Low-Cost Manufacturing Capability in Asia CAGR 22% CTS Sales Strategy
Slide 10: Market Drivers & Opportunities: ClearONE terminators
Growing demand for data storage Increasing data transmission speeds Increasing component density Market Drivers & Opportunities CTS Position 90 major OEM design wins Production beginning to ramp up Next generation under development ClearONE(tm) Terminators ClearONE(tm) Applications SCSI terminators
Slide 11: EMS Geographic Expansion - Asia
EMS Geographic Expansion - Asia Market Drivers & Opportunities China infrastructure expansion Shift of electronic manufacturing to Asia 2000 2001 2002 2003 2004 2005 2006 Asia 4.5 11.7 18.4 27.1 32.3 38.4 45.7 27.1 4.5 11.7 18.4 27.1 32.3 38.4 45.7 CTS Sales in China Leverage complex backplane capab
Slide 12: Income Statement Summary
Income Statement Summary ($ in millions) Net Sales 2001 2002 578 458 01 2001 2002 Q1** Q2 Q3 Q4 2002 Adjusted Net Earnings/Loss* ** * Excl. restructuring and one-time charges of $38.1M (2001) and $13.7M (2002). **Excl. customers reimbursement ($2.3M) 2001 Q4 7.3 5.5 3.6 2.4 0.5 5.7 0.0 Q4 Q1 Q2 Q3 Q
Slide 13: Income Statement Trends
Income Statement Trends 2001 Q4 Q1:02 Q2:02 Q3:02 Q4:02 Q1:03 Adjusted Operating Expenses 26.9 22.5 22.6 22 20.4 18.5 Adjusted Gross Margins % 0.172 0.181 0.183 0.216 0.2 0.199 * 2001 Q4 Q1:02* Q2:02 Q3:02 Q4:02 Q1:03 Operating Income -5.3 -2.1 -1.1 1.9 3 2.6 * Excludes Customer Reimbursement Note:
Slide 14: 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 $80M Per Year Other 28% Depreciation 12% Interest 10% Salary/Fringes 50% Breakeven Revenue Point Reduced to $460M Per Year Q1 Q2
Slide 15: Product Portfolio Repositioning
Product Portfolio Repositioning Comp & Sensors EMS East 0.59 0.41 $ In Millions EMS *Based upon annualizing Q4 Operating Earnings. A. Sensors B. Low Vol. Freq. C. Duplexer & Filters D. Computer Components E. High Vol. Freq. Q4:02 Target Q4:02 Target 16.5% 16 - 20% 0.1% 17 - 21% Margin Drivers Fixed
Slide 16: 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 17: Other Financial Data
Other Financial Data APPENDIX 1 CTS Corporation Sales ($ in millions) 2003 2002 2001 Full Year Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2002 2001 2000 1999 Sales $ 105.8 $ 116.5 $ 111.0 $ 117.7 $ 112.6 $ 125.8 $ 131.2 $ 143.7 $ 177.0 $ 457.8 $ 577.7 $ 866.5 $ 677.1 CTS Corporation Reconciliation of Gross Margin t