Cts Corporation Value per Share on 8 - PDF

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					                                           Summary Information Report
DIVERSIFIED. PROFITABLE. GROWING.                                                                                   Third Quarter 2010

Contents:                             Company Overview
Page 1      Company Overview          CTS Corporation (NYSE: CTS) is a highly di-              medical and computer markets. EMS oper-
                                      versified, innovative designer and manu-                 ations provide specialty solutions to custom-
            Financial Highlights      facturer of sensors and actuators, elec-                 ers throughout the medical, defense and
            Vision Statement          tronic components, and a leading provider                aerospace, communications and industrial
                                      of value-added electronics manufacturing                 markets. We have manufacturing opera-
Page 2      Segment Overview          services (EMS). Our sensors and actuators,               tions located throughout North America,
            Components &              and electronic components serve OEMs in                  Europe and Asia.
            Sensors Segment           the automotive, communications, industrial,
            EMS Segment
                                      Financial Highlights:
                                      $ In Millions, except per share data
Page 3      Sales by Primary
            End-Market and                                                                                       Gross Margin Percentage
                                             $ US                       Sales
            Geographic Region
                                              140 140                                               25.0%
                                                                                                        25.0%
            Major Customers                                                  138.9    139.4
                                                                                                                          23.6%
                                                                                                    20.0%
                                                                                                        20.0%                      21.9%    21.5%
Page 4      Growth Initiatives                130 130                                                            20.7%
                                                                    129.4
            Key Business Wins                              126.6                                    15.0%
                                                                                                        15.0%

                                              120 120
Page 5      Business Summary                                                                        10.0%
                                                                                                        10.0%

            Positioned for Growth              110 110
                                                                                                     5.0%5.0%
Page 6      Technologies
                                               100 100                                               0.0%0.0%

Page 7      CTS History                                    Q3: 09   Q1: 10   Q2: 10   Q3: 10                     Q3: 09   Q1: 10   Q2: 10   Q3: 10


Page 8      Worldwide Manufacturing
            Locations                        $ US             Operating Earnings                     $ US                 Diluted EPS
                                              10.010.0                                               0.200.20
                                                                                                                                            0.20

                                               8.0   8.0
                                                                                                                                    0.17
                                                                                                     0.150.15
                                                                              7.7      7.8
                                               6.0 6.0                                                           0.13      0.13
                                                            6.3      6.3
                                                                                                     0.100.10
                                               4.0 4.0


Vision Statement . . .
                                                                                                     0.050.05
                                               2.0 2.0

                                               0.0 0.0                                                 0.00.00

CTS is a global, growth                                    Q3: 09   Q1: 10   Q2: 10   Q3: 10                     Q3: 09   Q1: 10   Q2: 10   Q3: 10


oriented sensors and
actuators, electronic                  What’s New
components, and                           • Incorporation in India providing growth opportunities
                                          • Key New Business Wins
services company,                             › Sensors and Actuators: New Engine Sensor
dedicated to delivering                       › Electronic Components: New Frequency Control Devices
                                              › Electronics Manufacturing Solutions: Global Homeland Security Devices
innovative solutions
for a better, safer and                        For more information, please visit the Investor Relations section at:
healthier world.                                                                                      www.ctscorp.com
r e p o r t i n g                                                                          Sales by Segment
     segments                                                                     Sensors &
                                                                               Actuators
                                                                                           31%                                  EMS
CTS Reports its Business in                                         Components
                                                                      & Sensors
                                                                                                                     49%        Segment

Two Segments:                                                          Segment
                                                                                                  20%
                                                                                Electronic
                                                                                 Components
Components and Sensors Segment
Sensor and Actuator Products:
CTS manufactures an extensive line of ve-         The macro trend driving growth in sensor
hicle sensors and actuators used in power-        and actuator products includes:
train, safety, fuel and emissions controls sys-    • Green initiatives requiring tougher                              1.
tems for both light vehicle and motorcycle           emissions standards, and                                                         2.
applications. CTS has also developed and
                                                   • The need for increased fuel economy
won business to supply components to the
commercial, diesel engine markets for on
and off-highway vehicle applications. This                                                                                                                 3.
represents approximately 31% of company
                                                                                                     4.
revenues. CTS expects double-digit sales            CTS expects double-digit sales
growth over the next 3-5 years in sensor and
                                                    growth over the next 3-5 years                 1. Non-contacting Rotary Position Sensor 2. Contacting Linear
actuator products.                                                                                 Position Sensor 3. Accelerator Pedal Module 4. Smart Actuator
                                                    in its Components and Sensors
                                                    Segment.
                                                                                                                                 1.
Electronic Component Products:
CTS Electronic Components designs and             The macro trend driving growth in elec-
manufactures ceramic and crystal based            tronic component products includes:
                                                                                                     2.
engineered electronic components used              • Strong communication growth in                                        3.
primarily in wireless communications infra-                                                                                                           4.
                                                     emerging markets
structure equipment; piezoelectric materi-                                                                8.
                                                    • Social Networking markets driving
als, heat management and resistive based                                                                                              7.
                                                  	 	 higher	data	traffic,	such	as	You	Tube,			
components used in the medical, defense                                                                                                                              5.
                                                      Facebook, Twitter and Smartphones
and aerospace, computer, consumer and
industrial equipment applications. This rep-       • Demographics for health and medical
resents approximately 20% of total com-              needs, defense and aerospace and                                                            6.

pany revenues.                                       consumer products
                                                                                                                      2. Heat Sinks 3. Potentiometers 4. Ceramic
                                                                                                    1. Actiplex ® Filter
                                                                                                    RF Filters 5. EMI/RFI Filters 6. Quartz Crystals 7. Miniature
                                                                                                    Switches 8. Frequency Modules



Electronics Manufacturing Services (EMS) Segment
Electronics Manufacturing Solutions:                                                                                                       1.

CTS is a Tier 2 global EMS provider special-      CTS EMS Strategy includes:
izing in value-added products and services         • Targeting customers with complex
for the medical, aerospace and defense,              needs
communications and computer markets.
                                                   • Targeting niche sectors – defense and
EMS focuses on customers with complex,
                                                     aerospace, medical and industrial                                                          2.
high mix, medium volume needs. CTS EMS
assembles electronic and mechanical com-           • Providing turnkey services, design to
ponents into finished sub-assemblies and fi-         direct ship
                                                                                                                                4.
nal products under contract manufacturing          • Global capabilities
agreements with OEMs. CTS holds specialty
FDA and medical approvals, along with
                                                                                                                                                                3.
aerospace and defense registrations. CTS
                                                                                                                                      1. Box Builds 2. Circuit Boards
EMS expects single-digit sales growth over                                                                                            3. Complete Assemblies
the next 3-5 years.                                                                                                                   4. Rack-mount Equipment

2 Third Quarter 2010                                                                                           DIVERSIFIED. PROFITABLE. GROWING.
                                                                   l u o
                                                            s ma j o r ec s s t&
                                                               a                                           m e r s

Sales by Primary End-Market and Geographic Region
   Diversified	 markets	 and	 a	 global,	 lower	 cost,	 manufacturing	 footprint	
   uniquely positions CTS for future growth opportunities and lower risk.


Diversified Markets                                                        Global Cost–Efficient Footprint


                  Computer                       Automotive                                                    North
                                                                                                                America
           Medical          4%                                                          10%
                                               31%                                                                   51%
                       7%


    Industrial   16%                                                      Asia
                                                                          36%


                      16%
                                               22%
                                     4%                                                          6%
         Defense &
          Aerospace                                  Communications
                                    Other                                                                     Europe
                                                                                                       13%
                                                                                      Low-cost Manufacturing - 52%

                            Sales by Market                                          Sales by Region


Major Customers
   CTS serves blue-chip customers including global OEMs and Tier	1	suppliers.	Supporting	our	diversification	strategy,	
   there are no CTS customers with over 10% of total company sales. Key selected customers are shown below.




DIVERSIFIED. PROFITABLE. GROWING.                                                                          Third Quarter 2010 3
growth
  initiatives
CTS’ Growth Initiatives Include:
                                                                                                                     Record Business Wins . . .
 • Penetrating new global customers              As a result, CTS has lowered its concentra-
 • Expanding into diesel engines,                tion of top 5 customers to 24% in Q3: 2010,                         Last year, CTS announced
   electric and hybrid cars                      from 37% in 2007 and 56% in 2004. The top                           a record number of NEW
                                                 15 customers represent 51% of total sales.
 • Expanding products and                                                                                            program wins, totaling
   technology                                    In the third quarter of 2010, CTS incorpo-                          more than $300 million in
 • Expanding EMS into defense/                   rated in India to pursue opportunities in a                         projected revenues, over
   aerospace, medical and                        rapidly growing market.                                             the upcoming years of their
   industrial markets                                                                                                program terms. Over 20
                                                                                                                     new production programs
                                                                                                                     were booked.
Key Business Wins
                                                                                                                     Wins from major
CTS continues to win new business across         below. For a complete list of business wins
its product portfolio, resulting from its R&D    and other services, please visit the Investor                       commercial and light-
initiatives to launch new products and           Relations Section of our website at:                                duty vehicle OEM’s, long-
its ability to penetrate new markets and                                                                             term EMS contracts and
customers. Key new business wins are listed      www.ctscorp.com.                                                    new Electronic Component
                                                                                                                     sales of highly engineered
Sensors and Actuator Products:                                                                                       products, indicate the
  • Second small engine throttle position sensor for India market                                                    success of CTS’ diversification	
  • New advanced engine sensors for Japanese OEM for global light vehicles                                           strategy.
  • Linear design sensor for twin-stage turbocharger for European vehicles
  • Small Engine throttle position sensor for India motorcycle market
  • Smart Actuator for industrial diesel engine application
  • Smart Actuator for light and medium-duty diesel engine application

                                                                                                                1.


Electronic Components Products:                       New
  • Piezo product for high-density disk drives                                                                                                                 2.
  • Piezo product for medical ultrasound application
  • OCXO for Chinese Telecomm provider
                                                                                          7.
  • ActiPlex® Filter for U.S. Telecomm provider
  • New vertical integration photolithography process                                                                                                      New


Electronics Manufacturing Services:                                                                                                       3.

Awarded manufacturing contracts from:
  • North American provider of managed                                                                                         5.
    human identity (Homeland Security)
  • Barron McCann (security)
                                                                            6.                                                                    4.
  • Coulomb (plug-in vehicles)
  • Thales (defense)
                                                          1. Smart Actuator for Industrial Engine Applications 2. Contacting Accelerator Pedal Module 3. Actiplex® Ceramic
  • BAE Systems (defense)                                 RF Filter for Multiband Base Stations 4. OCXO Frequency Module 5. Electric Vehicle Charging System 6. Electron-
                                                          ics for Military Applications 7. Piezoceramic Element for Medical Ultrasound


4 Third Quarter 2010                                                                                                   DIVERSIFIED. PROFITABLE. GROWING.
                                    B   u   s   i   n   e      s    s
                                                        summary
CTS focuses on exceeding customer
expectations through quality and                            Positioned for
innovative products. CTS’ diversified,                      Growth
global business model, combined with
a strong focus on operating excellence                  CTS is positioned for growth
and balance sheet management                            as it has managed through
                                                        the recent economic
is helping CTS reduce its risk profile
                                                        downturn by its proactive
and perform better in a challenging                     global cost control
economic environment.                                   actions, lowering the
                                                        Company’s revenue break
                                                        even point. CTS continues
  • Proudly Serving Customers Since 1896                to win new business and
  • Publicly Traded on NYSE Since 1962                  new customers. Its global
                                                        footprint provides a strong
  • 4,600 Employees - 70% Outside USA                   customer advantage.
  • Highly Engineered Products                          CTS’ conservative
                                                        balance sheet and
  •	Diversified—Global Technology Driven                positive cash flow,	along	
                                                        with opportunistic
                                                        acquisitions, provides
                                                        strong growth potential.




DIVERSIFIED. PROFITABLE. GROWING.                                        Third Quarter 2010 5
 c t s
      t e c h n o l o g i e s
CTS has a broad patent portfolio, with over 350 highly engineered and
diverse	product	and	process	patents	worldwide.	CTS	makes	significant	
investments in research and development activities in order to create
competitive advantages in the markets it serves. CTS’ strong intellectual
property portfolio is a critical asset in the competitive electronic compo-
nents market. Highlighted here are key technologies that CTS utilizes to Quartz Crystals:
manufacture reliable electronic components and systems.                     Quartz crystals have the natural property of
                                                                                                generating a small electrical charge when
                                                                                                bent and then allowed to straighten. This
                                               Thick Film:                                      slight bending and straightening is known
                                               Often	used	along	with	thin	films,	thick	films	   as oscillation. Depending on the fabrica-
                                               are paints or inks, applied to a substrate,      tion, crystals can be designed to oscillate
                                               by screen printing or spraying techniques.       at a resonate frequency, which makes
                                               Thick	film	inks	have	resistive,	conductive	or	   electronic	 devices	 such	 as	 filters,	 oscilla-
                                               insulating properties.                           tors, and precise timing devices possible.


                                               Electromagnetics:
                                               Electricity running through a conduc-
                                               tive	 wire	 produces	 a	 magnetic	 field	
                                               that	can	be	greatly	amplified	by	coil-
                                               ing the wire. Also, if a magnet is rapidly
Piezoelectronics:                              moved in and out of a coil of conduc-
Piezoelectric technology utilizes the natu-    tive wires, an electric current is pro-
ral properties of certain materials, usually   duced. Coupling this technology with
quartz and ceramics, to produce an elec-       advanced control circuitry, CTS is pro-
trical charge when squeezed or pressed.        ducing some of the most advanced
This	technology	finds	many	applications	in	    motor actuators available for com-
markets as varied as computing, telecom-       mercial and light-duty vehicles.
munications, medical diagnostics, printing
and sonic/sonar applications.




                                               Ceramics:
                                               Ceramic materials are extremely versatile        Magnetics:
                                               and can be used in many different ways in        The magnetic force that makes opposite
                                               the electronics industry. Conductive and         poles attract and like poles repel each
                                               resistive materials can be printed on a ce-      other also generates voltages in conduc-
                                               ramic base creating resistive and resistive/     tors. This magnetic property is used as a
                                               capacitive control circuits.                     detector of motion and is the basis for CTS’
                                                                                                extensive range of non-contacting accel-
                                                                                                erator pedal modules and position sensor
                                               Advanced Manufacturing:                          systems.
                                               Since its establishment over 100 years ago,
                                               CTS has continually pushed the envelope
                                               of manufacturing excellence. Our high vol-
                                               ume, high quality and low overhead man-
                                               ufacturing systems are not only utilized to
                                               produce world-class quality products at the
                                               most competitive pricing for our own com-
                                               ponents, but we also utilize our engineering
                                               and manufacturing skills for customers who
                                               look to CTS to manufacture their products.
                                               CTS’ Electronic Manufacturing Solutions
                                               (EMS) services customers world-wide with
                                               competitively priced and highly advanced
                                               manufacturing capabilities.
6 Third Quarter 2010                                                                                  DIVERSIFIED. PROFITABLE. GROWING.
   b r i e f
                                               history
The Early Years
CTS Corporation was founded in 1896 in Chicago, Illinois as the Chicago Telephone
Supply Company, building telephones and switchboards primarily for the rural tele-
phone market.

In 1902, the Company moved to Elkhart, Indiana to expand and lower its costs. With
the advent of radios in the 1920s, CTS began producing jacks, plugs, headphones and
variable resistors. By the 1940s CTS was supplying the U.S. Government with remote
telephone field sets for the military market. In the late 1940s and 1950s, CTS became a
leading supplier of variable resistors and switches for the new television market.

In 1960, the Company name was changed to CTS Corporation and on June 4, 1962, CTS
listed its common stock on the New York Stock Exchange.

CTS entered the data processing and computer markets in the late 1950s with new resistor
products and electronic components. From 1960 – 1980, through acquisitions and internal
development, CTS expanded its product portfolio to include crystal filters, quartz oscilla-
tors, selector switches, loudspeakers, and miniature hybrid microcircuits for applications as
varied as hearts pacemakers to missile guidance systems.

International Growth and New Markets
CTS established operations outside of the U.S. over 55 years ago with the 1953 acquisition
of its Canadian operation. During the 1960s CTS expanded its presence into Mexico and
opened	 its	 first	 Asian	 operation	 in	 Taiwan.	 The	 second	 Asian	 operation	 was	 opened	 in	
Singapore	in	the	late	1970s.	CTS	diversified	geographically	into	the	European	arena	with	
an operation in Scotland, which provided connector and backplane manufacturing for
military applications; the forerunner of its EMS operations today. CTS also entered the au-
tomotive industry with successful products such as throttle position sensors and exhaust gas
recirculation controls.

In 1997 CTS acquired Dynamics Corporation of America, broadening its engineered fre-
quency product portfolio. The 1999 acquisition of the Components Products Division of
Motorola allowed CTS to enter the wireless markets through the manufacture of ceramic
filters, duplexers and other components. During this time, CTS also established several op-
erations in China.

More Recent Events
SMTEK International was acquired by CTS in 2004 and Orion Manufacturing in 2008; busi-
nesses serving medical, industrial and defense and aerospace markets. CTS also acquired
Tusonix, Inc. in 2008, which added electromagnetic and radio frequency interference filter
components to CTS’ product family. Expanding its global footprint, CTS established opera-
tions in the Czech Republic (2006) and Zhongshan, China (2007). CTS recently announced
an expansion in its Thailand facility to be completed by mid 2011 and also announced
incorporation in India to allow the pursuit of opportunities in rapidly growing markets. These
recent acquisitions and expansions have strengthened CTS’ position as a diversified world
leader in electronic components, vehicle sensors and actuators and electronic manufac-
turing services.

The CTS Heritage Room, located at the Corporate Headquarters in Elkhart, Indiana, proudly celebrates over a century of innovation
and achievement. This exhibit features the rich heritage of CTS and the story of its high quality products and growth since 1896.




DIVERSIFIED. PROFITABLE. GROWING.                                                                                                   Third Quarter 2010 7
                                                                                                                                                                                                                                                                                         Global
                                                                                                                                                                                                                                              F                    o    o       t      p r i n t
Worldwide Manufacturing Locations                                                                                                                                                                                                                                                SENSoRS ANd ACTuAToRS

                                                                                                                                                                                                                                                                                          Elkhart, Indiana, USA

                                                                                                                                                                                                                                                                                    Toronto, Ontario, Canada

                                                                                                                                                                                                                                                                                          Matamoros, Mexico
                                                                                                       ••
  ••• •• • •
  ••
                                                                                                                                                                                                                                                                                       Glasgow, Scotland, UK
                                                                                                                                                                                                             •
     •                                                                                                                                                                                                    •  ••                                                                      Ostrava, Czech Republic

                                                                                                                                                                                                           •                                                            Kaohsiung, Taiwan, Republic of China

                                                                                                                                                                                                                                                                       Zhongshan, People’s Republic of China



                                                                                                                                                                                                                                                                                ELECTRoNIC CoMPoNENTS

                                                                                                                                                                                                                                                                                               Lisle, Illinois, USA

                                                                                                                                                                                                                                                                              Albuquerque, New Mexico, USA

                                                                                                                                                                                                                                                                                          Tucson, Arizona, USA
 The CTS 2009 Annual Report is available in the
 Investor Relations section of the CTS website.                                                                                                                                                                                                                                              Nogales, Mexico

                                                                                                                                                                                                                                                                            Tianjin, People’s Republic of China

                                                                                                                                                                                                                                                                            Singapore, Republic of Singapore



                                                                                                                                                                                                                                                                          ELECTRoCoMPoNENT PRoduCTS
     Diversified. Profitable. Growing.
                                                                                                                                                                                                                                                                        Kaohsiung, Taiwan, Republic of China

                                                                                                                                                                                                                                                                       Zhongshan, People’s Republic of China
                                                                                                       One World
               Leading the way                                                                                       Sensors and Ac
               We believe our
                              environment is
                                                to cleaner, more
                                                                       effic    ient vehicles                                                                             tuators
              products help                   worth protect
                             do just that. Improv             ing and our sensor
                                                  ing fuel econom                  and actuator
              are fundamental                                        y and reducing
                               benefits of our                                       harsh emissions                 Improved Qualit
              motorcycle and                   product portfol
                                                                 io serving global
                                                                                                                                     y
                              commercial diesel                                    light-vehicle,                   Quality remains
             investing in new                     applications. You                                                                   our numbe
                              technologies that                       can be assured                                We provide reliable         r one focus.
                                                  will drive even                     that we are                                       highly engineered
            solutions. Becaus                                      more efficient                                   sensors and actuato
                              e we all share                                      and eco-friendly                                      rs
                                             this one world,                                                        demanding require that exceed



                                                                                                                                                                                                                                                                   ELECTRoNICS MANuFACTuRING SoLuTIoNS
            committed to                                       CTS Automotive
                           making it a better                                    Products is                                           ments.
                                              place for all.




                             2009 Annual Report




                                                                                                                                                                                                                                                                                     Moorpark, California, USA
                                                                                                                                                                                                                                             Reduced Emissi



                                                                                                                                                                                                                                                                                     San Jose, California, USA
                                                                                                                                                                                                       Small Engine Throttle                               ons
                                                                                                                                                                                                                             Position Sensors
                                                                                                                                                                                                             improve perform                  reduce emissio
                                                                                                                                                                                                                              ance and increase              ns,
                                                                                                                                                                                                                                                 fuel economy.




                                                                                                                                                                                                                                                                            Londonderry, New Hampshire, USA
                                                                                                                                                                                         Increased Yield
                                                                                                                                                                                Smart Actuators
                                                                                                                                                                                                 are used in
                                                                                                                                                                                 commercial diesel
                                                                                                                                                                                                    engines
                                                                                                                                                                                  to improve reliabili
                                                                                                                                                                                                      ty and
                                                                                                                                                                                   reduce operati
                                                                                                                                                                                                  ng costs.




                                                   Diversified. Profita
                                                                                                                               Pedal Modules
                                                                                                                               For Global OEMs
                                                                                                                                                                                         Small Engine
                                                                                                                                                                                                      TPS
                                                                                                                                                                                         Now Serving the
                                                                                                                                                                                                         Markets   in India
                                                                                                                                                                                                                                                                                       Glasgow, Scotland, UK
                                                                        ble. Growing.

     4


                                                                                                                                                                                                                                                                            Tianjin, People’s Republic of China
         CTS Corporation
                           2009 Annual Report                                                                                                      Smart Actuato
                                                                                                                                                                 rs
                                                                                                                                                   For New Commer
                                                                                                                                                                   cial   Applications
                                                                                                                                                                                                                              Non Contacti
                                                                                                                                                                                                                                            ng
                                                                                                                                                                                                                              For Light & Heavy Position Sensor
                                                                                                                                                                                                                                                Duty Vehicles




                                                                                                                                                                                                               CTS Corporation
                                                                                                                                                                                                                                 2009 Annual Report
                                                                                                                                                                                                                                                            5



                                                                                                                                                                                                                                                                                 Bangkok, Ayutthya, Thailand

                                                                                                                                                                                                                                                                                          Matamoros, Mexico

                                                                                                                   905 West Boulevard North
                                                                                                                   Elkhart, IN 46514
                                                                                                                   574-523-3800                                                                                                                                                       www.ctscorp.com

				
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Description: Cts Corporation Value per Share on 8 document sample