EXHIBIT 99.1
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January 2005 www.ctscorp.com |
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Safe Harbor Statement |
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Additional Information |
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CTS Corporation EMS Operations Global Operations Electronics Components Automotive Sensors |
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Segments Automotive Communications Mobile Computer Communications Infrastructure Other Segments and Markets Electronic Components and Sensors Electronics Manufacturing Services Markets 50% 50% 9% 38% 7% 25% 21% * Data based on YTD September 2004 25% 7% 6% 4% 8% 15% 34% 1% |
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Five-Year Business Growth Targets - - Automotive Sensors - - Electronics Components Electronics Manufacturing Services 14 - 21% 3 - 6% 6 - 12% 7 - 10% 3 - 6% 6 - 12% 7 - 13% Market Growth Sales Growth Overall Product/Market Area $700 - $750 million in sales 8 - 10 % Operating Earnings as % of Sales Gross Margins Flat Improving Flat Improving (2002 - 2007) Expect Higher Short-Term Growth Components & Sensors: |
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Automotive Sensors Growth Strategy Aggressively expand product base. Leverage product/market strength into Asian market. Broaden customer base. 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 - 21 % |
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Belt Tension Sensor Won 22 Platforms U.S. regulations require 100% of all new light vehicles to have enhanced occupancy sensing systems by 2006. 2003 2004 2005 2006 2007 2008 SAM 12.5 47 78 81 81 CTS Target Sales 1.9 9.3 29.9 28.3 23.7 23.3 Captured 1.9 9.3 25.5 23.3 19.8 20.3 30+% Market Share $12.5 $33.4 $79.5 $78.0 $69.1 $62.6 Served Available Market CTS' Belt Tension Sensor provides superior measurement accuracy |
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Accelerator Pedal Module 2003 2004 2005 2006 2007 2008 SAM 83.3 122.4 159.3 187.1 212.7 217.1 CTS Target Sales 8.9 13.5 21.6 40.2 72.5 100.8 Captured 8.9 13.5 21.3 30.5 37.7 38.7 Trend to "integrated pedals" $ in millions Won 22 Platforms. $150.0 $223.0 $266.0 $305.0 $326.0 $363.0 Served Available Market (Including Pedal Sensors) CTS Accelerator Pedal Modules Offer Performance, Quality and Cost Advantages |
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Electronics Components 2002 2007 Handsets 0.44 0.05 Infrastructure 0.13 0.44 Computer/Communications 0.43 0.51 Managing Mix Changes to Improve Margins Handsets Handsets Infrastructure Infrastructure Computing / Other Computing / Other |
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Electronics Components - Infrastructure Growth 2002 2003 2004 Forecast 15.6 17.9 24.8 2005 New Design Wins 7 New Module Design Wins Drive $7 Million Incremental Revenue Growth. Growing Share In Custom Frequency Products New Module Products Winning in the Market Solid Growth in Flat Market 39% Growth 15% Growth |
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Introduction of Resistor/Capacitor devices. In production for over 55 different platforms. Production pending on 70 more. 150 Design Wins ClearONE(tm) Terminators 2003 2004 2005 2006 2007 2008 ClearOne 4 7.6 8.9 10 12 14 $ in Millions CTS Target Sales Integrated termination and filtering offers performance, size and cost advantages. |
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CTS Electronics Manufacturing Services Global Capability Target high mix/low to medium volume customers. Offer full-service flexibility. Leverage geographic footprint. Global sourcing. Local NPI ? global completion. Strategy Industry-leading Turns and Cash Cycle |
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The Deal $14.26 per share plus assume SMTEK debt. Total Enterprise Value is expected around $60M. 75% / 25% cash / stock for SMTEK shares. Subject to SMTEK shareholder approval. Expected to close by February 2005. CTS to Acquire SMTEK |
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Who is SMTEK? EMS Company offering full turnkey solutions. Focused on customers with high-mix, complex product needs. Primary markets are medical, industrial, security, telecom, and aerospace and defense. Over 25 major customers. Top ten provide 73% of revenue. |
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SMTEK Facilities Bangkok 42K sq ft Santa Clara 45K sq ft Moorpark 115K sq ft Marlborough 70K sq ft Over 270,000 Sq. Ft. of Manufacturing Space |
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SMTEK Financials Sales EBITDA Q3 03 74 0 Q3 04 102 5.9 Operating Margin % Q3 03 -0.028 Q3 04 0.039 4 Quarters Ended Q3 2003 4 Quarters Ended Q3 2004 $ in Millions |
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Acquisition Strategy Strengthen CTS as a provider of high-mix EMS services. CTS' Strength In SMTEK's Strength In Brings An Expanded Set of Complementary Capabilities to Customers. PCBA design for manufacture and test Complex PCBA operations Flexible test capability Market-specific certifications Backplane and enclosure design High-mix box build operations Global sourcing Direct-to-end-customer logistics |
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Acquisition Strategy Accelerate expansion into new markets. Communications Industrial Other Computing East 24 2 2 65 Computing Communications Industrial & Security Other CTS Aero & Def Communications Indust & security Other Computing Medical Consumer East 9 14 38 5 3 24 7 Industrial & Security Other Computing Communications Aero & Defense Medical Consumer SMTEK Positions CTS well in multiple growth markets |
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Combined EMS Markets Med Comm Ind & Sec Aero & Def Other Computing East 6 27 11 2 5 49 Computing 49% Communications 27% Medical 6% Industrial and Security 11% Aerospace and Defense 2% Other 5% Combined sales mix based on estimated 2004 sales. |
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Acquisition Strategy Develop strong presence in West Coast market Significant market on West Coast. SMTEK brings strong West Coast operations. CTS has good market coverage on East Coast. |
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Shareholder Value Accretive $0.02 to $0.03 in first year Stronger top line sales growth Increased operational efficiencies Reduced market and customer concentration |
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Financial Summary Definitions and reconciliation of non-GAAP financial terms are included in the Appendix of this presentation and on CTS' Web site at www.ctscorp.com |
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Sales 2002 2003 2004 New Products Driving Year-Over-Year Quarterly Sales Growth 16+% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Sales 116 106 117 108 132 122 138 129 $ in Millions |
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Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -5.7 -0.11 -0.07 0 0.02 0.02 0.06 0.05 0.11 0.07 0.13 0.11 Adjusted EPS 2002 2003 Strong Year-Over-Year Quarterly Growth Driven by Revenue Growth, Product Mix Improvement and Cost Containment 2004 |
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Adjusted Operating Expenses (Percent of Sales) 2001 2002 2003 Q1 Q2 Q3 2004 Y-T-D OP Ex. As % of Sales 0.207 0.191 0.169 0.161 0.155 0.159 0.158 Continue to Improve Operating Leverage ?500 Basis Point Improvement Over Last 3 Years |
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Cost Structure Management 2003 Mfg. Cost 0.791 SG&A/R&D 0.169 0 Operating Earnings 0.04 2007- 2008 Target Mfg. Cost 0.77 SG&A/R&D 0.14 Operating Earnings 0.09 Mfg. Cost SG&A/R&D Op Earnings * Excluding Restructuring Charge ($4.6M) and Income Tax Credit of $7.9M Target Cost Structure 1.7%* 6.0% Net Earnings Expect Earnings > Sales Growth Improved product mix in Components and Sensors. Improved gross margin by leveraging manufacturing facilities and operations efficiencies. Operating expenses increase at half the rate of revenue growth (5% vs. 10%). Reduced interest expense. Higher revenues in lower tax- rate jurisdictions. |
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Balance Sheet Management 1999 2000 2001 2002 2003 2004F Adjusted Working Capital 0.049 0.138 0.134 0.028 0.02 0.03 Capital Expenditures Target Range 5% 3% Controllable Working Capital and Capital Expenditures Within Target Range '97 '98 '99 '00 '01 '02 '03 '04F Adjusted Working Capital 0.162 0.17 0.2 0.173 0.14 0.121 0.112 0.128 Controllable Working Capital* Target Range 13% 10% * Controllable Working Capital Defined as Accounts Receivable + Inventories - Accounts Payable. |
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Balance Sheet Management Strong Cash Position Leverage Ratio Within Target Range of 20% - 30% Majority of Bank Revolving Facility ($75 Million) Available Low Fixed Coupon and Balanced Maturities Conv. Sr. Sub. Debt Conv. Sub. Debt Equity Bank Credit Adjusted Working Capital 0.15 0.06 0.78 0.01 Capital Structure Total Debt to Capitalization (Year-End) 2000 2001 2002 2003 2004 Fcst. Cash 20.6 13.3 9.2 25.3 53 Debt 174.8 139.2 86.2 50.6 42 % 0.442 0.386 0.265 0.205 0.222 195.4 95.0 $ in Millions Total Debt Cash |
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1 2.8 0.6 0.8 2.9 1.32 ROA 0.04 0.052 0.029 0.125 0.055 0.091 = 2003 Actual Return on Assets by Segment 12% ROA Line (Op Earnings) Note: ROA is based on Adjusted Operating Earnings excluding all restructuring and one-time charges, asset impairments, and unusual gains. Assets are based on average assets, excluding cash. ROA is based on annualized quarterly earnings. Comp & Sensors: 2% EMS: 15% Comp & Sensors: 11% EMS: 16% CTS: 12% = 2007-8 Target Improved Earnings and Asset Management Result in Higher ROA CTS: 4% 2004 |
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Value Proposition Positioned in high-growth markets. Positive cash flow to fund growth. Leverageable capacity and operating structure allows EPS growth > sales growth. Strong balance sheet and conservative capital structure reduces risk. Positioned to Grow Profitably Growth Strategies are Working |
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APPENDIX |
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Business Model Profitability Growth Corporate Strategies Seek high-growth niche markets Focus on "design to purpose" products and services Leverage technology to create differentiated products Grow through product and market extensions Core Strengths Application engineering Materials technology Manufacturing execution Low-cost production Continuous product cost reduction Global footprint |
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New Products Driving Growth 2002 2003 2004 2005 2006 Q3 Q4 Q5 Actual 5.2 20.2 0 0 Forecast 38.7 77.9 118.9 Forecast Actual Belt Tension Sensors Integrated Accelerator Pedals Manifold Actuators Small Engine Throttle Position Sensors Turbocharger Sensors Frequency Modules ClearONE(tm) Terminators Pointing Stick Modules and Touchpads Expected to Contribute $120 Million in Additional Revenue by 2006 CTS Sales |
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Growing Sensor Content 2004 2005 2006 2007 North America & Europe 3.28 3.71 4.25 4.88 Six new product categories in development pipeline. Growing customer penetration. CTS Sales North America and Europe 15%+ Growth Rate |
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Automotive Business Expansion in Asia Started Throttle Position Sensor Production in Taiwan (2002) 2001 2002 2003 Units 0.8 1.4 2.3 China Light Vehicle Sales Started Accelerator Pedal and Fuel Sensor Assembly Production in China (2004) Light Vehicle Sales in China Expected to Grow To 5.6 Million Units By 2010 |
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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 |
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CTS EMS Growth 2003 2004 EMS Industry 0.08 0.12 CTS 0.12 0.26 Percent of Revenue Growth 2003 2004 2005 New Customers 3 15 45 $ in millions Target Sales From New Customers 18 new customers in last 12 months Global service model driving growth |
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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, NDK, Toyocom Murata, TDK, UBE BI Tech, Bourns, Vishay Benchmark, C-MAC, Plexus, Sanmina, Teradyne |
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Financial Summary Historically Strong Financial Performer |
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Other Financial Data - Income Statement |
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Other Financial Data - Balance Sheet Metrics |
CTS Corporation
Appendix 1
CTS Corporation
Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
2004 YTD | 2004 | 2003 | 2002 | Full Year | |||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | Q2 | Q3 | Q4 | Q3 | Q2 | Q1 | 2003 | 2002 | 2001 | |||||||||||||||||||||||||||||||||||
Earnings per share | $ | 0.37 | $ | 0.11 | $ | 0.19 | $ | 0.17 | $ | 0.01 | $ | (0.41 | ) | $ | (0.08 | ) | $ | (0.06 | ) | $ | 0.36 | $ | (0.54 | ) | $ | (1.61 | ) | ||||||||||||||||||
Tax affected charges (credits) to reported earnings per share: | |||||||||||||||||||||||||||||||||||||||||||||
Restructuring and asset impairment charges | 0.10 | 0.01 | 0.41 | 0.10 | 0.42 | 1.07 | |||||||||||||||||||||||||||||||||||||||
Restructuring-related, one-time charges | 0.01 | 0.02 | 0.03 | 0.28 | |||||||||||||||||||||||||||||||||||||||||
Customer reimbursement | (0.07 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of assets | (0.07 | ) | (0.00 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||
Total tax affected adjustments to reported earnings per share | (0.07 | ) | (0.00 | ) | (0.07 | ) | 0.10 | 0.01 | 0.41 | 0.01 | (0.05 | ) | 0.10 | 0.38 | 1.35 | ||||||||||||||||||||||||||||||
Reduction of tax reserve earnings per share adjustment | (0.22 | ) | (0.23 | ) | |||||||||||||||||||||||||||||||||||||||||
Adjusted earnings per share | $ | 0.30 | $ | 0.11 | $ | 0.13 | $ | 0.05 | $ | 0.02 | $ | (0.07 | ) | $ | (0.11 | ) | $ | 0.23 | $ | (0.16 | ) | $ | (0.26 | ) | |||||||||||||||||||||
Page 1
CTS Corporation
Reconciliation of Operating Expenses to Adjusted Operating Expenses
Full Year | ||||||||||||
2003 | 2002 | 2001 | ||||||||||
Selling, general and administrative expenses | $ | 56.9 | $ | 63.3 | $ | 87.0 | ||||||
Research and development expenses | 21.5 | 24.1 | 32.8 | |||||||||
Restructuring and impairment charges | 4.6 | 18.3 | 40.0 | |||||||||
Total reported operating expenses | 82.9 | 105.8 | 159.8 | |||||||||
Less restructuring and impairment charges | 4.6 | 18.3 | 40.0 | |||||||||
Adjusted operating expenses | $ | 78.3 | $ | 87.4 | $ | 119.7 | ||||||
Adjusted operating expenses as percent of sales | 16.9 | % | 19.1 | % | 20.7 | % | ||||||
Page 2
CTS Corporation
Reconciliation of Net Earnings to Adjusted Net Earnings
2004 YTD | 2004 | 2003 | 2002 | Full Year | |||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | Q2 | Q1 | Q3 | Q3 | Q2 | Q1 | 2003 | 2002 | 2001 | |||||||||||||||||||||||||||||||||||
Net earnings (loss) | $ | 13.3 | $ | 3.9 | $ | 6.9 | $ | 2.5 | $ | 6.1 | $ | (13.8 | ) | $ | (2.7 | ) | $ | (1.9 | ) | $ | 12.6 | $ | (17.9 | ) | $ | (45.4 | ) | ||||||||||||||||||
Charges (credits) to reported net earnings (loss): | |||||||||||||||||||||||||||||||||||||||||||||
Restructuring and asset impairment charges | (4.6 | ) | 18.3 | 4.6 | 18.3 | 40.0 | |||||||||||||||||||||||||||||||||||||||
Restructuring-related, one-time charges | 0.1 | 0.4 | 0.8 | 1.2 | 10.7 | ||||||||||||||||||||||||||||||||||||||||
Customer reimbursement | (3.1 | ) | (3.1 | ) | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of assets | (3.3 | ) | (0.3 | ) | (3.0 | ) | (0.0 | ) | |||||||||||||||||||||||||||||||||||||
Total adjustments to reported net earnings (loss) | (3.3 | ) | (0.3 | ) | (2.9 | ) | (0.0 | ) | (4.6 | ) | 18.4 | 0.4 | (2.3 | ) | 4.6 | 16.4 | 50.7 | ||||||||||||||||||||||||||||
Total adjustments, tax affected | (2.5 | ) | (0.2 | ) | (2.3 | ) | (0.0 | ) | (3.5 | ) | 13.8 | 0.3 | (1.7 | ) | 3.4 | 12.3 | 38.1 | ||||||||||||||||||||||||||||
Reversal of tax reserve | (1.0 | ) | (7.9 | ) | |||||||||||||||||||||||||||||||||||||||||
Adjusted net earnings (loss) | $ | 10.8 | $ | 3.7 | $ | 4.6 | $ | 2.5 | $ | 1.6 | $ | 0.0 | $ | (2.4 | ) | $ | (3.6 | ) | $ | 8.1 | $ | (5.5 | ) | $ | (7.3 | ) | |||||||||||||||||||
Adjusted net earnings (loss) as a percentage of total sales | 2.8 | % | 3.3 | % | 2.0 | % | 1.5 | % | 0.0 | % | -2.0 | % | -3.2 | % | 1.7 | % | |||||||||||||||||||||||||||||
Page 3
CTS Corporation
Definition of Financial Terms-“Controllable Working Capital as % of Sales”
December 31, | ||||
1999 | ||||
Net Accounts Receivables | $ | 124.7 | ||
Net Inventory | 78.9 | |||
Accounts Payables | 68.3 | |||
Controllable Working Capital | 135.3 | |||
Total Sales — Fiscal Year | 677.1 | |||
Controllable Working Capital % — Annual | 20.0 | % | ||
Page 4
CTS Corporation
Reconciliation of Operating Earnings to Adjusted Operating Earnings
2004 YTD | 2004 | 2003 | 2002 | Full Year | |||||||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | Q2 | Q1 | Q3 | Q3 | Q2 | Q1 | 2003 | 2002 | 2001 | 1999 | ||||||||||||||||||||||||||||||||||||||
Operating earnings (loss) | $ | 21.4 | $ | 5.9 | $ | 10.6 | $ | 4.9 | $ | (0.7 | ) | $ | (16.5 | ) | $ | (1.5 | ) | $ | 0.2 | $ | 13.8 | $ | (14.8 | ) | $ | (48.5 | ) | $ | 82.8 | ||||||||||||||||||||
Charges (credits) to reported operating earnings (loss): | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and asset impairment charges | 4.6 | 18.3 | 4.6 | 18.3 | 40.0 | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring-related, one-time charges | 0.1 | 0.4 | 0.8 | 1.3 | 10.7 | ||||||||||||||||||||||||||||||||||||||||||||
Customer reimbursement | (3.1 | ) | (3.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of assets | (3.3 | ) | (0.3 | ) | (3.0 | ) | (0.0 | ) | |||||||||||||||||||||||||||||||||||||||||
Acquired in-process research and development | 12.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total adjustments to reported operating earnings (loss) | (3.3 | ) | (0.3 | ) | (3.0 | ) | (0.0 | ) | 4.6 | 18.4 | 0.4 | (2.3 | ) | 4.6 | 16.5 | 50.7 | 12.9 | ||||||||||||||||||||||||||||||||
Adjusted operating earnings (loss) | $ | 18.1 | $ | 5.6 | $ | 7.6 | $ | 4.9 | $ | 3.9 | $ | 1.9 | $ | (1.1 | ) | $ | (2.1 | ) | $ | 18.4 | $ | 1.7 | $ | 2.2 | $ | 95.7 | |||||||||||||||||||||||
Adjusted operating earnings (loss) as a percentage of total sales | 4.6 | % | 4.3 | % | 5.5 | % | 4.0 | % | 3.6 | % | 1.8 | % | -0.9 | % | -1.9 | % | 4.0 | % | 0.4 | % | 0.4 | % | 14.1 | % | |||||||||||||||||||||||||
Page 5
CTS Corporation
Definition of Financial Terms-“Adjusted Working Capital as % of Sales”
2004 | 2004 | 2004 | 2003 | 2002 | Q4 | |||||||||||||||||||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | 2001 | |||||||||||||||||||||||||||||||||||||
Current assets | $ | 209.8 | $ | 212.0 | $ | 190.8 | $ | 164.7 | $ | 164.4 | $ | 153.8 | $ | 145.8 | $ | 152.3 | $ | 174.8 | $ | 189.2 | $ | 187.4 | $ | 200.7 | ||||||||||||||||||||||||
Current liabilities | 103.4 | 107.9 | 110.8 | 95.7 | 93.0 | 102.5 | 120.9 | 134.5 | 100.7 | 104.3 | 127.0 | 153.9 | ||||||||||||||||||||||||||||||||||||
Working capital | 106.4 | 104.1 | 80.0 | 69.0 | 71.4 | 51.3 | 24.9 | 17.8 | 74.1 | 84.9 | 60.4 | 46.8 | ||||||||||||||||||||||||||||||||||||
Adjustments to working capital: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash | (47.9 | ) | (48.2 | ) | (32.9 | ) | (25.3 | ) | (19.6 | ) | (6.7 | ) | (7.7 | ) | (9.2 | ) | (11.6 | ) | (15.0 | ) | (7.6 | ) | (13.2 | ) | ||||||||||||||||||||||||
Notes payable | 1.4 | |||||||||||||||||||||||||||||||||||||||||||||||
Current portion of long-term debt | 18.2 | 28.4 | 12.5 | 27.5 | ||||||||||||||||||||||||||||||||||||||||||||
Total adjustments to working capital | (47.9 | ) | (48.2 | ) | (32.9 | ) | (25.3 | ) | (19.6 | ) | (6.7 | ) | 10.5 | 19.2 | (11.6 | ) | (15.0 | ) | 6.3 | 14.3 | ||||||||||||||||||||||||||||
Adjusted working capital | $ | 58.5 | $ | 55.9 | $ | 47.1 | $ | 43.7 | $ | 51.8 | $ | 44.6 | $ | 35.4 | $ | 37.0 | $ | 62.5 | $ | 69.9 | $ | 66.7 | $ | 61.1 | ||||||||||||||||||||||||
Quarterly sales | 129.1 | 137.6 | 122.1 | $ | 132.0 | $ | 108.5 | $ | 116.7 | $ | 105.8 | $ | 116.5 | $ | 111.0 | $ | 117.7 | $ | 112.6 | $ | 125.8 | |||||||||||||||||||||||||||
Multiplied by 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | ||||||||||||||||||||||||||||||||||||
Annualized sales | $ | 516.4 | $ | 550.4 | $ | 488.4 | $ | 528.0 | $ | 434.0 | $ | 466.8 | $ | 423.2 | $ | 466.0 | $ | 444.0 | $ | 470.8 | $ | 450.4 | $ | 503.2 | ||||||||||||||||||||||||
Adjusted working capital as a percentage of annualized sales | 11.3 | % | 10.2 | % | 9.6 | % | 8.3 | % | 11.9 | % | 9.6 | % | 8.4 | % | 7.9 | % | 14.1 | % | 14.8 | % | 14.8 | % | 12.1 | % | ||||||||||||||||||||||||
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CTS Corporation
Definition of Financial Terms-“Total Debt to Capitalization”
2004 | 2003 | 2002 | 2001 | December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | 2000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.4 | $ | — | $ | 5.3 | $ | 12.0 | $ | 8.7 | $ | 7.4 | ||||||||||||||||||||||||||||||||
Current portion of long-term debt | — | — | — | — | — | — | 18.2 | 28.4 | — | — | 12.5 | 27.5 | 13.8 | 12.5 | 11.2 | 10.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 87.0 | 85.0 | 81.2 | 75.9 | 81.0 | 85.3 | 67.0 | 67.0 | 103.5 | 120.0 | 106.2 | 125.0 | 188.2 | 204.5 | 198.3 | 178.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total debt | 87.0 | 85.0 | 81.2 | 75.9 | 81.0 | 85.3 | 85.2 | 95.4 | 103.5 | 120.0 | 120.1 | 152.5 | 207.3 | 229.0 | 218.2 | 195.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 303.6 | 302.7 | 296.4 | 294.2 | 285.6 | 268.7 | 264.3 | 265.0 | 263.5 | 276.0 | 271.0 | 242.9 | 241.2 | 230.0 | 246.8 | 246.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total capitalization | $ | 390.6 | $ | 387.7 | $ | 377.6 | $ | 370.1 | $ | 366.6 | $ | 354.0 | $ | 349.5 | $ | 360.4 | $ | 367.0 | $ | 396.0 | $ | 391.1 | $ | 395.4 | $ | 448.5 | $ | 459.0 | $ | 465.0 | $ | 441.8 | ||||||||||||||||||||||||||||||||
Total debt to capitalization | 22.3 | % | 21.9 | % | 21.5 | % | 20.5 | % | 22.1 | % | 24.1 | % | 24.4 | % | 26.5 | % | 28.2 | % | 30.3 | % | 30.7 | % | 39 | % | 46.2 | % | 49.9 | % | 46.9 | % | 44.2 | % | ||||||||||||||||||||||||||||||||
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CTS Corporation
Reconciliation of Gross Margin Percentage to Adjusted Gross Margin
2002 | ||||||||||||
Q3 | Q2 | Q1 | ||||||||||
Gross margin percentage | 21.5 | % | 17.9 | % | 20.2 | % | ||||||
Charges (credits) to reported gross margin percentage: | ||||||||||||
Restructuring-related, one-time charges | 0.1 | % | 0.3 | % | 0.7 | % | ||||||
Customer reimbursement | 0.0 | % | 0.0 | % | -2.8 | % | ||||||
Total adjustments to reported gross margin percentage | 0.1 | % | 0.3 | % | -2.1 | % | ||||||
Adjusted gross margin percentage | 21.6 | % | 18.3 | % | 18.1 | % | ||||||
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CTS Corporation
Definition of Financial Terms-“Return on Assets by Segment”
($in Millions)
Components | Consolidated | |||||||||||
EMS | & Sensors | CTS | ||||||||||
For the year ending December 31, 2003: | ||||||||||||
Net sales to external customers | $ | 210.1 | $ | 252.9 | $ | 463.0 | ||||||
Consolidated operating earnings | 13.8 | |||||||||||
Plus: Impairment charges | 4.6 | |||||||||||
Segment operating earnings | $ | 11.0 | $ | 7.4 | $ | 18.4 | ||||||
Segment Operating earnings as a percentage of sales | 5.2 | % | 2.9 | % | 4.0 | % | ||||||
Total assets at December 31, 2003 | $ | 83.5 | $ | 398.8 | $ | 482.3 | ||||||
Cash at December 31, 2003 | 4.3 | 21.1 | 25.3 | |||||||||
Total assets excluding cash at December 31, 2003 | 79.2 | 377.7 | 456.9 | |||||||||
Total assets at December 31, 2002 | 70.4 | 419.6 | 490.0 | |||||||||
Cash at December 31, 2002 | 4.1 | 5.1 | 9.2 | |||||||||
Total assets excluding cash at December 31, 2002 | $ | 66.3 | $ | 414.5 | $ | 480.8 | ||||||
Average assets excluding cash | $ | 72.8 | $ | 396.1 | $ | 468.9 | ||||||
Asset turns | 2.9 | 0.6 | 1.0 | |||||||||
Return on assets by segment | 15 | % | 2 | % | 4 | % | ||||||
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CTS Corporation
ADJUSTED EBITDA
($ in millions)
2004 YTD | 2004 | 2003 | 2002 | Full Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net earnings (loss) | $ | 13.3 | $ | 3.9 | $ | 6.9 | $ | 2.5 | $ | 3.9 | $ | 6.1 | $ | 2.0 | $ | 0.6 | $ | 0.5 | $ | (13.8 | ) | $ | (2.7 | ) | $ | (1.9 | ) | $ | 12.6 | $ | (17.9 | ) | $ | (45.4 | ) | $ | 83.8 | |||||||||||||||||||||||||||
Depreciation and amortization expense | 19.6 | 5.7 | 6.7 | 7.3 | 8.1 | 8.2 | 8.5 | 8.8 | 10.0 | 10.6 | 11.6 | 11.2 | 33.6 | 43.4 | 51.7 | 44.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 4.2 | 1.1 | 1.6 | 1.5 | 1.7 | 2.1 | 1.9 | 1.9 | 2.5 | 2.2 | 2.9 | 2.6 | 7.6 | 10.2 | 12.8 | 13.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax expense (benefit) | 4.0 | 1.2 | 2.0 | 0.9 | 1.3 | (8.5 | ) | 0.7 | 0.2 | 0.2 | (4.6 | ) | (0.9 | ) | (0.6 | ) | (6.3 | ) | (5.9 | ) | (15.1 | ) | 32.4 | |||||||||||||||||||||||||||||||||||||||||
EBITDA | $ | 41.3 | $ | 11.9 | $ | 17.2 | $ | 12.2 | $ | 15.0 | $ | 7.9 | $ | 13.1 | $ | 11.5 | $ | 13.2 | $ | (5.6 | ) | $ | 10.9 | $ | 11.3 | $ | 47.5 | $ | 29.8 | $ | 4.0 | $ | 173.6 | |||||||||||||||||||||||||||||||
Charges (credits) to EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and asset impairment charges | 4.6 | 18.3 | 4.6 | 18.3 | 40.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring-related, one-time charges | 0.1 | 0.4 | 0.8 | 1.3 | 10.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of assets | (3.3 | ) | (0.3 | ) | (3.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total adjustments to reported EBITDA | (3.3 | ) | (0.3 | ) | (3.0 | ) | 4.6 | 18.4 | 0.4 | 0.8 | 4.6 | 19.6 | 50.7 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 38.0 | $ | 11.6 | $ | 14.2 | $ | 12.2 | $ | 15.0 | $ | 12.5 | $ | 13.1 | $ | 11.5 | $ | 13.2 | $ | 12.8 | $ | 11.3 | $ | 12.1 | $ | 52.1 | $ | 49.4 | $ | 54.7 | $ | 173.6 | ||||||||||||||||||||||||||||||||
Adjusted EBITDA % of Sales | 9.8 | % | 9.0 | % | 10.3 | % | 10.0 | % | 11.4 | % | 11.5 | % | 11.2 | % | 10.9 | % | 11.3 | % | 11.5 | % | 9.6 | % | 10.7 | % | 11.3 | % | 10.8 | % | 9.5 | % | 20.0 | % |
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CTS Corporation
Free Cash Flow
($ in millions)
2004 YTD | 2004 | 2003 | 2002 | Full Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash flows provided from (used by) operations | $ | 9.6 | $ | 4.9 | $ | 11.5 | $ | (6.8 | ) | $ | 9.6 | $ | 8.6 | $ | (1.3 | ) | $ | 8.2 | $ | 5.3 | $ | 14.4 | $ | 2.0 | $ | 0.7 | $ | 25.1 | $ | 22.4 | $ | 65.8 | $ | 110.8 | ||||||||||||||||||||||||||||||
Cash flows provided from (used by) investing activities | 9.2 | $ | (3.6 | ) | 2.9 | 9.9 | (2.8 | ) | (1.6 | ) | (2.3 | ) | 1.6 | (0.9 | ) | (2.9 | ) | (1.7 | ) | (4.5 | ) | (5.1 | ) | (10.0 | ) | (66.9 | ) | (126.3 | ) | |||||||||||||||||||||||||||||||||||
Free cash flow | $ | 18.8 | $ | 1.3 | $ | 14.4 | $ | 3.1 | $ | 6.8 | $ | 7.0 | $ | (3.6 | ) | $ | 9.8 | $ | 4.4 | $ | 11.5 | $ | 0.3 | $ | (3.8 | ) | $ | 20.0 | $ | 12.4 | $ | (1.1 | ) | $ | (15.5 | ) | ||||||||||||||||||||||||||||
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