-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e8kUW20wD+ZjLJg7lqiD+5bccMz3zVhjISdfcejUeNJM6RQbANVunTzrAltcVaOV BFnn95bSJEIL35AzcDQvig== 0000026058-94-000017.txt : 19941116 0000026058-94-000017.hdr.sgml : 19941116 ACCESSION NUMBER: 0000026058-94-000017 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941002 FILED AS OF DATE: 19941115 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CTS CORP CENTRAL INDEX KEY: 0000026058 STANDARD INDUSTRIAL CLASSIFICATION: 3670 IRS NUMBER: 350225010 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04639 FILM NUMBER: 94560248 BUSINESS ADDRESS: STREET 1: 905 W BLVD N CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192937511 10-Q/A 1 1994 3RD Q 10 Q AMENDMENT #1 This 10-Q is being resubmitted to include the Financial Data Schedule. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _____________ to _________________ For Quarter Ended Commission File Number October 2, 1994 1-4639 CTS CORPORATION (Exact name of registrant as specified in its charter) Indiana 35-0225010 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 905 West Boulevard North Elkhart, IN 46514 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (219) 293-7511 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_______ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 8, 1994: 5,178,104 Page 1 of 12 CTS CORPORATION AND SUBSIDIARIES INDEX Page No. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Earnings - For the Nine Months Ended October 2, 1994, and October 3, 1993 3 Condensed Consolidated Balance Sheets - As of October 2, 1994, and December 31, 1993 4 Condensed Consolidated Statements of Cash Flows - For the Nine Months Ended October 2, 1994, and October 3, 1993 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 PART II -- OTHER INFORMATION Item 1. Legal Proceedings 11 Item 5. Other Events 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 Page 2 of 12 Part I. -- FINANCIAL INFORMATION Item 1. Financial Statements CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (In thousands of dollars, except per share amounts)
Three Months Ended Nine Months Ended Oct. 2, Oct. 3, Oct. 2, Oct. 3, 1994 1993 1994 1993 Net sales $65,950 $58,107 $200,925 $181,159 Cost of goods sold 52,283 47,822 157,498 145,543 Gross earnings 13,667 10,285 43,427 35,616 Selling, general and administrative expenses 9,299 8,096 29,974 27,805 Operating earnings 4,368 2,189 13,453 7,811 Other expenses (income): Interest expense 90 293 506 754 Other (447) 25 (891) (193) Total other expenses (income) (357) 318 (385) 561 Earnings before income taxes and cumulative effect of changes in accounting principles 4,725 1,871 13,838 7,250 Income taxes 1,694 808 4,428 2,610 Earnings before cumulative effect of changes in accounting principles 3,031 1,063 9,410 4,640 Cumulative effect of account- ing change - postretirement benefits -- -- -- (5,096) Cumulative effect of account- ing change - income taxes -- -- -- 482 -- -- -- (4,614) Net earnings $ 3,031 $ 1,063 $ 9,410 $ 26 Earnings (loss) per share: Before accounting changes .59 .21 1.82 .90 Cumulative effect on prior years of accounting changes -- -- -- (.89) Net earnings per share $ .59 $ .21 $ 1.82 $ .01 Cash dividends per share $ .10 $ .10 $ .30 $ .30 Average net shares outstanding 5,174,075 5,153,424 5,167,956 5,152,271 See notes to condensed consolidated financial statements.
Page 3 of 12 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars)
October 2, December 31, 1994 1993* ASSETS (Unaudited) Current Assets Cash $ 14,015 $ 23,534 Accounts receivable, less allowances (1994--$861; 1993--$710) 37,188 30,627 Inventories--Note B 40,288 36,059 Other current assets 3,320 1,929 Deferred income taxes 5,117 5,117 Total current assets 99,928 97,266 Property, Plant and Equipment, less accumulated depreciation (1994--$138,600; 1993--$134,566) 47,377 47,842 Other Assets Goodwill, less accumulated amortization (1994--$6,839; 1993--$6,330) 5,380 5,801 Prepaid pension 37,142 32,845 Other 786 1,310 Total other assets 43,308 39,956 $190,613 $185,064 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable $ 6,028 $ 12,822 Current maturities of long-term obligations 182 341 Accounts payable 15,892 11,611 Accrued liabilities 29,026 25,114 Total current liabilities 51,128 49,888 Long-term Obligations 906 4,995 Deferred Income Taxes 5,329 5,329 Postretirement Benefits 5,036 5,649 Stockholders' Equity: Common stock-authorized 8,000,000 shares without par value; issued 5,807,031 shares 33,846 34,130 Retained earnings 108,726 100,868 Cumulative foreign translation adjustment (148) (1,049) 142,424 133,949 Less cost of common stock held in treasury: 1994--629,827 shares; 1993--653,607 shares 14,210 14,746 Total stockholders' equity 128,214 119,203 $190,613 $185,064
*The balance sheet at December 31, 1993, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. Page 4 of 12 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In thousands of dollars)
Nine Months Ended October 2, October 3, 1994 1993 Cash flows from operating activities: Net earnings $ 9,410 $ 26 Adjustments to reconcile earnings to net cash provided by (used in) operating activities: Cumulative effect of change in accounting for: Postretirement benefits 5,096 Income taxes (482) Depreciation and amortization 8,845 9,302 (Increase) decrease in: Accounts receivable (6,561) (4,276) Inventories (4,229) (991) Other current assets (1,391) 1,028 Prepaid pension expense (4,297) (4,358) Other (126) 49 Increase in: Accounts payable and accrued liabilities 8,193 4,850 Total adjustments 434 10,218 Net cash provided by operating activities 9,844 10,244 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 317 591 Capital expenditures (7,682) (8,428) Net cash used in investing activities (7,365) (7,837) Cash flows from financing activities: Payments of long-term obligations (4,296) (5,591) Increase (decrease) in notes payable (6,853) 6,655 Other -- 93 Dividend payments (1,552) (1,545) Net cash used in financing activities (12,701) (388) Effect of exchange rate changes on cash 703 (168) Net (decrease) increase in cash (9,519) 1,851 Cash at beginning of year 23,534 18,455 Cash at end of period $14,015 $20,306 Supplemental disclosures of cash flow information Net cash paid during the period for: Interest $ 627 $ 848 Income Taxes $ 2,447 $ 992*
*Net of United Kingdom tax refund of $894. See notes to condensed consolidated financial statements. Page 5 of 12 Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) October 2, 1994 NOTE A--BASIS OF PRESENTATION The accompanying condensed interim consolidated financial data is unaudited; however, in the opinion of management, the interim data includes all adjustments considered necessary for a fair presentation of the results for the interim period. Operating results for the nine-month period ended October 2, 1994, are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's 1993 Annual Report on Form 10-K. NOTE B--INVENTORIES The components of inventory consist of the following:
(In thousands) October 2, December 31, 1994 1993 Finished goods $ 5,994 $ 5,064 Work-in-process 17,214 15,344 Raw material 17,080 15,651 $40,288 $36,059
NOTE C--LITIGATION and CONTINGENCIES Contested claims involving various matters, including environmental claims brought by government agencies, are being litigated by CTS, both in legal and administrative forums. In the opinion of management, based upon currently available information, adequate provision for potential costs has been made, or the costs which might ultimately result from such litigation or administrative proceedings will not materially affect the consolidated financial position of the Company or the results of operations. Page 6 of 12 Part I. -- FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Material Changes in Financial Condition: Comparison of October 2, 1994, to December 31, 1993 The following table highlights significant changes in balance sheet captions and ratios and other information related to liquidity and capital resources:
(Dollars in thousands) October 2, December 31, Increase 1994 1993 (Decrease) Cash $14,015 $23,534 $(9,519) Accounts receivable, net 37,188 30,627 6,561 Inventories, net 40,288 36,059 4,229 Current assets 99,928 97,266 2,662 Current liabilities 51,128 49,888 1,240 Working capital 48,800 47,378 1,422 Current ratio 1.95 1.95 -- Interest bearing debt 7,097 17,992 (10,895) Net tangible worth 122,834 113,402 9,432 Ratio of interest bearing debt to net tangible worth .06 .16 (0.10)
From December 31, 1993, to October 2, 1994, cash of CTS Corporation and its subsidiaries ("CTS" or "Company") decreased $9.5 million. The primary use of the cash was the $10.9 million decrease in interest bearing debt which resulted mainly from discretionary debt repayments. The net change in working capital, excluding cash and current debt, was a $4.0 million increase. This increase is primarily a reflection of the increase in sales and production levels during the third quarter of 1994, compared to the last quarter of 1993. Capital expenditures were $7.7 million for the first nine months of 1994, compared with $8.4 for the same period a year earlier. Capital expenditures continued to relate to new product, product variation and manufacturing improvement programs. On March 31, 1993, the Company replaced its previous $40 million long-term credit revolving agreement with a new $45 million long- term revolving credit agreement. The new agreement expires on April 1, 1997. The new agreement contains certain loan covenants with which the Company is in full compliance. The revolving agreement is the Company's primary credit vehicle, and with cash from operations, is expected to adequately fund the Company's anticipated cash needs. Additionally, on November 7, 1994, the Page 7 of 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Company reached agreement on a $15 million term loan at a fixed interest rate of 8.38%. The loan becomes available in December 1994, and requires annual payments of $2 million in 1996 through 1998, and $9 million in 1999. This credit arrangement is intended to finance potential acquisitions. A letter of intent to acquire the Light Emitting Diode (LED) based Fiber Optic Data Link (ODL) Products business of AT&T Microelectronics was signed during the third quarter of 1994. Financial details have not yet been finalized; however, the transaction will include all assets and backlog on sales contracts, together with rights in intellectual property, design manufacturing technology and trademarks of the AT&T Lightwave LED-based ODL business. The transaction is expected to be completed prior to December 31, 1994. The proposed transaction is not expected to have a material impact on the Company's 1994 results of operation or the Company's financial condition. Material Changes in Results of Operations: Comparison of Third Quarter 1994 to Third Quarter 1993 The following table highlights changes in significant components of the consolidated statements of earnings for the three-month periods ending October 2, 1994, and October 3, 1993:
(Dollars in thousands) October 2, October 3, (Decrease) 1994 1993 Increase Net sales $65,950 $58,107 $7,843 Gross earnings 13,667 10,285 3,382 Gross earnings as a percent of sales 20.72% 17.70% 3.02% Selling, general and administrative expenses 9,299 8,096 1,203 Selling, general and administrative expenses as a percent of sales 14.10% 13.93% .17% Operating earnings 4,368 2,189 2,179 Operating earnings as a percent of sales 6.62% 3.77% 2.85% Earnings before income taxes 4,725 1,871 2,854 Income taxes 1,694 808 886 Income tax rate 35.85% 43.19% 7.34%
Net sales increased by $7.8 million, or 13.5% from the third quarter of 1993. Sales increases occurred principally in automotive and connector related products as a result of the Page 8 of 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) overall improved automotive market, new products and applications, and additional market penetration. These increases more than offset reductions in our microelectronics and frequency controls businesses. Gross earnings improved primarily due to the sales and production volume increases which favorably affected operating efficiencies in all business units, excluding our microelectronics and frequency controls units. Selling, general and administrative expenses increased slightly as a result of the increased sales levels. As a percent of sales, these expenses remained basically flat reflecting the Company's continued cost control emphasis. The tax rate decreased from the 1993 tax rate for the same period. The 1994 annual effective rate is 32% compared to a 1993 effective rate of 36%. The rate decrease is primarily the result of additional expected net operating loss utilization. Material Changes in Results of Operations: Comparison of First Nine Months of 1994 to First Nine Months of 1993 The following table highlights changes in significant components of the consolidated statements of earnings for the nine-month periods ending October 2, 1994, and October 3, 1993:
(Dollars in thousands) October 2, October 3, (Decrease) 1994 1993 Increase Net sales $200,925 $181,159 $19,766 Gross earnings 43,427 35,616 7,811 Gross earnings as a percent of sales 21.61% 19.66% 1.95% Selling, general and administrative expenses 29,974 27,805 2,169 Selling, general and administrative expenses as a percent of sales 14.92% 15.35% (.43)% Operating earnings 13,453 7,811 5,642 Operating earnings as a percent of sales 6.70% 4.31% 2.39% Earnings before income taxes and cumulative effect of changes in accounting principles 13,838 7,250 6,588 Income taxes 4,428 2,610 1,818 Income tax rate 32.00% 36.00% (4.00)%
Page 9 of 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) For the first nine months of 1994, net sales increased $19.8 million, or 10.9% compared to the first nine months of 1993. Consistent with the third quarter of 1994, the significant 1994 year-to-date sales increases occurred in automotive and connector related products. These increases have more than offset the year- to-date sales decline experienced by our microelectronics and frequency controls business lines. Gross earnings have improved throughout 1994, primarily due to the sales and production volume increases which have favorably affected operating efficiencies in all business units, excluding the microelectronics and frequency controls units. Selling, general and administrative expenses in dollars have increased $2.2 million compared to the first nine months of 1993. The increase is primarily selling expenses associated with the increased sales volume. However, these expenses in total have decreased as a percent of sales, reflecting continuing efforts to control operating expenses. The tax rate decreased from the 1993 tax rate for the same period. The 1994 annual effective rate is 32% compared to a 1993 effective rate of 36%. The rate decrease is primarily the result of additional expected net operating loss utilization. Page 10 of 12 Part II -- OTHER INFORMATION Item 1. Legal Proceedings CTS is involved in litigation and in other administrative proceedings with government agencies regarding the protection of the environment, and other matters, the results of which are not yet determinable. In the opinion of management, based upon currently available information, adequate provision for anticipated costs has been made, or the ultimate costs resulting from such litigation or administrative proceedings will not materially affect the consolidated financial position of the Company or the results of operations. Item 5. Other Events A letter of intent to acquire the Light Emitting Diode (LED) based Fiber Optic Data Link (ODL) Products business of AT&T Microelectronics was signed during the third quarter of 1994. Financial details have not yet been finalized; however, the transaction will include all assets and backlog on sales contracts, together with rights in intellectual property, design manufacturing technology and trademarks of the AT&T Lightwave LED-based ODL business. The transaction is expected to be completed prior to December 31, 1994. The proposed transaction is not expected to have a material impact on the Company's 1994 results of operation or the Company's financial condition. Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Forms 8-K None Page 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CTS CORPORATION CTS CORPORATION /s/ Jeannine M. Davis /s/ Stanley J. Aris Jeannine M. Davis Stanley J. Aris Vice President, Secretary Vice President Finance and General Counsel and Chief Financial Officer Dated: November 10, 1994 Page 12 of 12 EX-27 2
5 This schedule contains summary financial information extracted from the third quarter 10-Q and is qualified in its entirety by reference to such 10-Q. 9-MOS DEC-31-1994 JAN-01-1994 OCT-02-1994 14,015 0 38,049 861 40,288 99,928 185,977 138,600 190,613 51,128 0 33,846 0 0 94,368 190,613 200,925 200,925 157,498 187,472 (891) 0 506 13,838 4,428 9,410 0 0 0 9,410 1.82 1.82
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