EX-99.1 2 ex99_1.htm EXHIBIT 99.1 10-28-09 ex99_1.htm
 
 
 

                                                                      newsrelease     
CTS CORPORATION  Elkhart, Indiana 46514  (574) 523-3800       

 
October 27, 2009          
FOR RELEASE:  Immediately


CTS ANNOUNCES THIRD QUARTER 2009 FINANCIAL RESULTS

Reports Strong Cash Flow and Sequential Improvement in Sales and Earnings

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced third quarter 2009 revenues of $126.6 million, 5% higher than second quarter 2009 revenues of $120.4 million.  Third quarter 2009 net income of $4.5 million, or $0.13 per diluted share, compares favorably to the second quarter 2009 net loss of $7.0 million, or $0.21 per diluted share. The second quarter 2009 included an international cash repatriation related tax charge, primarily non-cash, of $9.1 million, or $0.27 per diluted share.  Excluding this charge, second quarter adjusted net earnings were $2.1 million, or $0.06 per diluted share. Third quarter 2009 net earnings compare favorably to adjusted second quarter net earnings, primarily due to higher gross margins driven by improved cost structure, favorable segment mix and higher volumes.

Cash flow from operations was $18.4 million in the third quarter 2009, increasing $10.6 million over the same period last year. September year-to-date cash flow from operations was $34.1 million, significantly improved from the $20.1 million in the same period last year, primarily due to improved working capital management and lower capital expenditures.  Total debt, as a percentage of total capitalization, was 17.0% at the end of the third quarter of 2009, compared to 22.5% at the end of the third quarter 2008.

Commenting on third quarter 2009 results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “We are pleased to report sequential improvements in both revenues and earnings, again in the third quarter.  In addition, our strategy for future growth through diversification continues to be successful, as evidenced by a growing pipeline of design wins and significant new business awards.  We have now booked the strongest level of business awards on a year-to-date basis, approximating $220 million over a five to six year program life, primarily starting 2011-2012 timeframe.”

Third quarter 2009 Components and Sensors segment revenues increased 13% from the second quarter 2009, driven by a 15% improvement in automotive product shipments, as global markets began to modestly recover and improved market share. Sales of electronic component products increased 8% from the second quarter 2009 from higher demand of piezoceramic and resistor products.  Total EMS segment sales were flat from the second quarter 2009 as improved demand in medical, communications and defense and aerospace markets were offset by lower industrial sales and previously announced planned end-of-life sales reductions to Hewlett-Packard (HP).

Third quarter 2009 revenues declined 26% from the same period last year.  Components and Sensors segment sales decreased 23% and EMS segment sales decreased 27% due to the impact of the global recession on all of the markets CTS serves.  Gross margins improved year-over-year from cost management actions combined with favorable product mix, despite the drop in volumes.  Third quarter 2009 diluted earnings per share of $0.13 compares to $0.21 in the same period last year, primarily reflecting lower revenues from the impact of the global recession, partially offset by cost management actions. Third quarter 2008 results included a net benefit of $0.05 per share from a tax credit offset by restructuring and related charges. Excluding these two items, third quarter 2008 adjusted diluted earnings were $0.16 per share.

CTS’ new business wins continued at a strong pace during the third quarter 2009. Revenues from these wins are expected to exceed $60 million over their four to six year program lives, primarily beginning in 2012. Within the Components and Sensors segment, new business awards include a smart actuator for a turbocharger system on medium-duty diesel engines and new piezoceramic business for industrial applications. In the EMS segment, new business was won with Thales, one of the world’s largest defense and aerospace companies.

Based on the year-to-date performance and expecting gradual improvements, primarily driven by automotive volumes, management anticipates full-year 2009 adjusted diluted earnings per share in the range of $0.27-$0.31.  The consensus for the full-year 2009 adjusted diluted earnings per share is $0.22.
 
 
 
 

SEGMENT INFORMATION

(Dollars in millions)

 
                       
 
Third Quarter
  
Third Quarter
  
      Second Quarter
 
2009
  
2008
  
2009
     
Segment
      
Segment
      
Segment
 
Net
  
Operating
  
Net
  
Operating
  
Net
  
Operating
 
Sales
  
Earnings
  
Sales
  
Earnings
  
Sales
  
Earnings
Components and Sensors
$55.8
  
$4.1
  
$72.5
  
$5.7
  
$49.6
  
$2.1
Electronics Manufacturing Services (EMS)
70.8
  
            2.2
  
97.5
  
            2.7
  
70.8
  
            1.1
     Segment Operating Earnings
    
            6.3
      
            8.4
      
            3.2
Expenses not allocated to business segments:
                      
     - Restructuring and related charges
            
          (3.5)
        
Total
$126.6
  
$6.3
  
$170.0
  
$4.9
  
$120.4
  
$3.2
                       

Components & Sensors: Components and Sensors third quarter 2009 sales increased $6.2 million, or 13%, from the second quarter of 2009 reflecting improved global automotive sensor product demand. Electronic component product demand increased 8% primarily in piezoceramic and resistor products. Segment operating earnings increased $2.0 million from the second quarter, driven by improved gross margins and higher sales volume.

Components and Sensors third quarter 2009 sales decreased $16.7 million, or 23%, from the third quarter of 2008, reflecting the impact of the global recession.  Electronic component product sales declined $9.0 million, or 31%, and automotive sensor and actuator products declined $7.7 million, or 18%.  Segment operating earnings of $4.1 million were unfavorable to the third quarter of 2008 due to lower volumes, partially offset by reduced operating expenses.

EMS: EMS third quarter 2009 sales were unchanged from second quarter 2009 levels, reflecting both improved demand in medical, communications and defense and aerospace markets offset by lower demand in industrial and HP sales.  Segment operating earnings of $2.2 million increased $1.1 million from the second quarter 2009, primarily due to improved gross margins driven by favorable product mix.

EMS third quarter 2009 sales decreased $26.7 million, or 27%, from the third quarter of 2008 reflecting lower sales in the computer, industrial and communications markets, partially offset by increased sales in the defense and aerospace markets.  Segment operating earnings decreased $0.4 million from the third quarter of 2008 on lower volumes, partially offset by reduced operating expenses.

 
 
 

Conference Call
As previously announced, the Company has scheduled a conference call on Wednesday, October 28, 2009 at 11:00 a.m. EDT. Those interested in participating may dial 800-288-8961 (612-234-9960, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 1:30 p.m. EDT on Wednesday, October 28, 2009, through 11:59 p.m. EST on Wednesday, November 4, 2009. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 118484. There will also be a live audio webcast of the conference call which can be accessed directly from the Web sites of CTS Corporation (www.ctscorp.com), StreetEvents (www.StreetEvents.com), Netscape (www.netscape.com), Compuserve (www.compuserve.com) and others. AOL subscribers will have access through the Personal Finance section of AOL.

About CTS
CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, computer, communications, medical, defense and aerospace and industrial markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS.”  To find out more, visit the CTS Web site at www.ctscorp.com.

Safe Harbor Statement
This press release contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events and any other statements that are not based solely on historical fact. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements, including, without limitation: changes in the economy generally and in respect to the businesses in which CTS operates, including those resulting from the current global financial and credit crisis; pricing pressures and reduction in demand for CTS’ products, especially if economic conditions do not recover or continue to worsen in CTS’ served markets, including but not limited to: the automotive, computer equipment or communications markets; disruption, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged by CTS and the availability and cost of credit in the future; the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability or ongoing viability; risks associated with CTS’ international operations, including trade and tariff barriers; currency fluctuations and their effects on our results of operations and financial position; changes in performance of equity and debt markets that could affect the valuation of the assets in CTS’ pension plans and the accounting for pension assets, liabilities and expenses; political and geopolitical risks; rapid technological change in the automotive, communications and computer industries; reliance on key customers; and CTS’ ability to protect its intellectual property. For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC, available at http://www.ctscorp.com/investor_relations/investor.htm. CTS undertakes no obligation to publicly update its forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact:                Donna L. Belusar, Senior Vice President and Chief Financial Officer, or
Mitchell J. Walorski, Director Planning and Investor Relations
CTS Corporation, 905 West Boulevard North, Elkhart, IN 46514
Telephone (574) 523-3800  FAX (574) 293-6146

 
 
 

                         
 
CTS CORPORATION AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
 
(In thousands, except per share amounts)
                         
                         
           
Three Months Ended
  
Nine Months Ended
         
Sept 27
  
Sept 28
  
Sept 27
  
Sept 28
           
2009
  
2008*
  
2009
  
2008*
                         
 
Net sales
    
 $        126,565
  
 $        170,034
  
 $    365,094
  
 $   528,880
                         
 
Costs and expenses:
                
   
Cost of goods sold
  
           100,380
  
           136,684
  
       297,202
  
      421,553
   
Selling, general and administrative expenses
             16,494
  
             20,754
  
         48,357
  
         63,236
   
Research and development expenses
               3,408
  
               4,509
  
         10,227
  
         13,576
   
Restructuring and impairment charges
                        -
  
               3,202
  
            2,243
  
           3,465
   
Goodwill impairment
  
                        -
  
                        -
  
         33,153
  
                    -
                         
 
Operating earnings / (loss)
  
6,283
  
4,885
  
(26,088)
  
27,050
                         
 
Other (expense) / income:
                
   
Interest expense
    
                 (239)
  
              (1,275)
  
          (1,497)
  
         (3,802)
   
Other
    
                 (390)
  
                 (307)
  
             (736)
  
                98
     
Total other expense
  
(629)
  
(1,582)
  
(2,233)
  
(3,704)
                         
     
Earnings / (loss) before income taxes
5,654
  
3,303
  
(28,321)
  
23,346
                         
 
Income tax expense / (benefit)
  
               1,173
  
              (3,912)
  
            9,872
  
              266
                         
                         
 
Net earnings / (loss)
    
 $            4,481
  
 $            7,215
  
 $     (38,193)
  
 $     23,080
                         
 
Net earnings / (loss) per share:
                
 
   Basic
      
 $              0.13
  
 $              0.21
  
 $         (1.13)
  
 $          0.68
                         
 
   Diluted
      
 $              0.13
  
 $              0.21
  
 $         (1.13)
  
 $          0.65
                         
 
Cash dividends declared per share
 $              0.03
  
 $              0.03
  
 $           0.09
  
 $          0.09
                         
 
Average common shares outstanding:
              
 
   Basic
      
33,873
  
33,708
  
33,799
  
33,735
                         
 
   Diluted
      
34,513
  
38,199
  
33,799
  
38,206
                         
                         
                         
*The Statement of Earnings for the three and nine months ended September 28, 2008 was adjusted from the previously filed 2008 10-Q to comply with the provisions of Accounting Standards Codification ("ASC") 470-20, "Debt with Conversion and Other Options."
                         


 
 
 

CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
(In thousands of dollars)
                 
                 
         
September 27,
  
December 31,
  
         
2009
  
2008 *
  
                 
Cash and cash equivalents
  
 $        40,329
  
 $      44,628
  
Accounts receivable, net
  
           75,942
  
         94,175
  
Inventories, net
  
           60,452
  
         70,867
  
Other current assets
  
           14,969
  
         16,172
  
 
Total current assets
  
         191,692
  
       225,842
  
                 
Property, plant & equipment, net
  
           83,395
  
         90,756
  
Other assets
  
         131,593
  
       171,844
  
                 
     
Total Assets
  
 $      406,680
  
 $     488,442
  
                 
                 
                 
Notes payable and current portion
          
  of long-term debt
  
 $               -
  
 $             -
  
Accounts payable
  
           62,211
  
         71,285
  
Other accrued liabilities
  
           36,254
  
         41,956
  
 
Total current liabilities
  
           98,465
  
       113,241
  
                 
Long-term debt
  
           49,500
  
         79,988
  
Other obligations
  
           16,820
  
         17,740
  
Shareholders' equity
  
         241,895
  
       277,473
  
                 
     
Total Liabilities and
          
     
 Shareholders' Equity
  
 $      406,680
  
 $     488,442
  
                 
                 
                 
*The Balance Sheet at December 31, 2008 was adjusted from the previously filed 10-K to comply with the provisions of ASC 470-20, "Debt with Conversion and Other Options."
                 
                 


 
 
 

                         
 
CTS CORPORATION AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
 
(In thousands, except per share amounts)
                         
                         
           
Three Months Ended
  
Nine Months Ended
           
Sept 27
  
Sept 28
  
Sept 27
  
Sept 28
           
2009
  
2008*
  
2009
  
2008*
           
GAAP
  
Adjusted
  
Adjusted
  
Adjusted
                         
 
Net sales
      
 $      126,565
  
 $      170,034
  
 $  365,094
  
 $    528,880
                         
 
Costs and expenses:
                  
   
Cost of goods sold
  
         100,380
  
         136,407
  
     297,202
  
       421,002
   
Selling, general and administrative expenses
           16,494
  
           20,754
  
       48,357
  
         63,236
   
Research and development expenses
             3,408
  
             4,509
  
       10,227
  
         13,576
                         
 
Adjusted operating earnings
  
6,283
  
8,364
  
9,308
  
31,066
                         
 
Other (expense) / income:
                
   
Interest expense
    
              (239)
  
           (1,275)
  
       (1,497)
  
         (3,802)
   
Other
    
              (390)
  
              (307)
  
          (736)
  
                98
     
Total other expense
  
(629)
  
(1,582)
  
(2,233)
  
(3,704)
                         
     
Adjusted earnings before income taxes
5,654
  
6,782
  
7,075
  
27,362
                         
 
Adjusted income tax expense
  
             1,173
  
             1,228
  
         1,673
  
           5,600
                         
                         
 
Adjusted net earnings
    
 $          4,481
  
 $          5,554
  
 $      5,402
  
 $      21,762
                         
 
Adjusted net earnings per share:
                
           
                 
      
             
    
 
   Diluted
      
 $            0.13
  
 $            0.16
  
 $        0.16
  
 $          0.61
                         
 
Cash dividends declared per share
  
 $            0.03
  
 $            0.03
  
 $        0.09
  
 $          0.09
                         
 
Average common shares outstanding:
              
                         
 
   Diluted
      
34,513
  
38,199
  
33,799
  
38,206
                         
                         
                         
*The Statement of Earnings for the three and nine months ended September 28, 2008 was adjusted from the previously filed 2008 10-Q to comply with the provisions of Accounting Standards Codification 470-20, "Debt with Conversion and Other Options."
                         
                         
                         
See reconciliation and explanation of net earnings / (loss) to adjusted net earnings attached.
            


 
 
 

                 
 
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
 
(In thousands, except per share amounts)
             
           
Three Months Ended
           
September 27
  
June 28
           
2009
  
2009
           
GAAP
  
Adjusted
                 
 
Net sales
      
 $          126,565
  
 $                 120,398
                 
 
Costs and expenses:
          
   
Cost of goods sold
    
             100,380
  
                      98,520
   
Selling, general and administrative expenses
               16,494
  
                      15,243
   
Research and development expenses
  
                 3,408
  
                        3,466
                 
 
Adjusted operating earnings
    
6,283
  
3,169
                 
 
Other (expense) / income:
          
   
Interest expense
    
                  (239)
  
                         (440)
   
Other
      
                  (390)
  
                           (25)
     
Total other expense
  
(629)
  
(465)
                 
     
Adjusted earnings before income taxes
5,654
  
2,704
                 
 
Adjusted income tax expense
    
                 1,173
  
                           652
                 
                 
 
Adjusted net earnings
    
 $              4,481
  
 $                     2,052
                 
 
Adjusted net earnings per share:
        
           
                      -
    
 
   Diluted
      
 $                0.13
  
 $                       0.06
                 
 
Cash dividends declared per share
  
 $                0.03
  
 $                       0.03
                 
 
Average common shares outstanding:
        
                 
 
   Diluted
      
34,513
  
33,779
                 
                 
                 
                 
See reconciliation and explanation of net earnings to adjusted net earnings attached.
      

 
 
 
 
CTS CORPORATION AND SUBSIDIARIES
  
OTHER SUPPLEMENTAL INFORMATION
  
               
Projected Full Year Earnings per Share
              
               
The following table reconciles projected GAAP earnings / (loss) per share to adjusted projected earnings per share for the Company:
  
               
       
Year Ended
      
       
December 31,
      
       
2009
      
Projected GAAP (loss) per share
      
($1.02) - ($0.98)
      
Tax affected charges to reported diluted
              
  loss per share:
              
      Tax expense due to cash repatriation
      
                         0.27
      
     Restructuring charge
      
                         0.05
      
     Goodwill impairment
      
                         0.97
      
Adjusted projected earnings per share
      
$0.27 - $0.31
      
               
               
Adjusted earnings per share is a non-GAAP financial measure.  The most directly comparable GAAP financial measure
    
is diluted earnings / (loss) per share.  CTS calculates adjusted earnings per share to exclude the per share impact
      
of tax expense associated with our cash repatriation and restructuring and goodwill impairment charges.  We exclude the impact
  
of these items because they are discrete events which have a significant impact on comparable GAAP financial measures
    
and could distort an evaluation of our normal operating performance.  CTS uses adjusted earnings per share
      
measures to evaluate overall performance, establish plans and perform strategic analysis.  Using adjusted earnings
    
per share measures avoid distortion in the evaluation of operating results by eliminating the impact of events which are
    
not related to normal operating performance.  Because adjusted earnings per share measures are based on the
      
exclusion of specific items, they may not be comparable to measures used by other companies which have similar titles.
    
CTS' management compensates for this limitation when performing peer comparisons by evaluating both GAAP and
    
non-GAAP financial measures reported by peer companies.  CTS believes that adjusted earnings per share measures
    
are useful to its management, investors and stakeholders in that they:
          
               
- provide a truer measure of CTS' operating performance,
              
- reflect the results used by management in making decisions about the business, and
        
- help review and project CTS' performance over time.
              
               
We recommend that investors consider both actual and adjusted earnings per share measures in evaluating the
      
performance of CTS with peer companies.
              
               
Debt/Capitalization
              
               
The following table represents the calculation of total debt to shareholder's equity:
          
               
(in thousands)
  
September 27
  
September 28
      
   
2009
  
2008*
      
Notes payable
  
 $                                             -
  
 $                                                     -
      
Current portion of long-term debt
  
                         -
  
                            -
      
Long-term debt
  
                  49,500
  
                     98,448
      
               
Total debt
  
                  49,500
  
                     98,448
      
Total shareholders' equity
  
                241,895
  
                    339,027
      
               
Total capitalization
  
 $                                 291,395
  
 $                                        437,475
      
Total debt to capitalization
  
17.0%
  
22.5%
      
               
* Adjustments have been made from previous filings to comply with the provisions of ASC 470-20, "Debt with Conversion and Other Options".
  
               
               
Segment Operating Earnings
              
               
Segment operating earnings is a non-GAAP financial measure outside the context of the Accounting Standards Codification ("ASC") 280 required reconciliation in the notes to the Company's financial statements.  The most comparable GAAP term is operating earnings.  Segment operating earnings always exclude the effects of charges for restructuring and goodwill impairment when they are incurred by the Company.  Segment operating earnings exclude interest expense, and other non-operating income and income taxes according to how a particular segment is measured.  CTS' management provides the segment operating earnings measure to provide consistency between segment information in its earnings release and the business segment discussion in the notes to its financial statements.

 
 
 

                             
CTS CORPORATION AND SUBSIDIARIES
  RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED TO CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
  (In thousands, except per share amounts)
                             
                             
           
Three Months Ended
  
Three Months
Ended
  
Nine  Months Ended
    
Nine  Months
Ended
           
September 27
    
September 27
  
September 27
    
September 27
           
2009
Adjustments
Note
2009
  
2009
Adjustments
Note
2009
           
(GAAP)
    
Adjusted
  
(GAAP)
    
Adjusted
 
Net sales
    
 $   126,565
    
 $     126,565
  
 $      365,094
    
 $                     365,094
                             
 
Costs and expenses:
                      
   
Cost of goods sold
  
        100,380
    
          100,380
  
           297,202
    
                          297,202
   
Selling, general and administrative expenses
  
            16,494
    
              16,494
  
               48,357
    
                              48,357
   
Research and development expenses
  
               3,408
    
                 3,408
  
                10,227
    
                               10,227
   
Restructuring and impairment charges
  
                              -
    
                                -
  
                   2,243
              (2,243)
 A
                                                 -
   
Goodwill Impairment
  
                              -
    
                                -
  
                33,153
           (33,153)
 B
                                                 -
                             
 
Operating earnings / (loss)
  
6,283
                              -
  
6,283
  
(26,088)
35,396
  
9,308
                             
 
Other expense:
                      
   
Interest expense
  
                (239)
    
                  (239)
  
               (1,497)
    
                              (1,497)
   
Other
      
                (390)
    
                  (390)
  
                    (736)
    
                                   (736)
     
Total other expense
  
(629)
    
(629)
  
(2,233)
    
(2,233)
                             
     
Earnings / (loss) before income taxes
  
5,654
                              -
  
5,654
  
(28,321)
35,396
  
7,075
                             
 
Income tax expense / (benefit)
  
                 1,173
    
                   1,173
  
                   9,872
               (8,199)
 C
                                   1,673
                             
                             
 
Net (loss) / earnings
  
 $           4,481
 $                           -
  
 $             4,481
  
 $      (38,193)
 $          43,595
  
 $                             5,402
                             
 
Net (loss) / earnings per share:
                    
 
   Basic
      
 $               0.13
    
 $                 0.13
  
 $               (1.13)
 $                   1.29
  
 $                                  0.16
                 
                              -
        
                                               -
 
   Diluted
      
 $               0.13
    
 $                 0.13
  
 $               (1.13)
 $                   1.29
  
 $                                  0.16
                             
 
Cash dividends declared per share
  
 $              0.03
    
 $                0.03
  
 $                  0.09
    
 $                                 0.09
                             
 
Average common shares outstanding:
                    
 
   Basic
        
33,873
    
33,873
  
33,799
    
33,799
                             
 
   Diluted
        
34,513
    
34,513
  
33,799
    
33,799
                             
 
Notes:
                          
 
A.
This adjustment pertains to restructuring charges that occurred in the first quarter of 2009 as a result of a company-wide restructuring plan.
                             
 
B.
This adjustment pertains to the impairment of the carrying value of goodwill.
  
                             
 
C.
The following table presents the tax components related to Notes A, B and C above:
    
                             
      Tax benefit related to first quarter restructuring charges  
 $                  673
          
      Tax benefit related to first quarter goodwill impairment charges  
                       205
          
      Tax expense related to one-time cash repatriation event  
            (9,077)
          
                 
 $        (8,199)
          


 
 
 

                             
 
CTS CORPORATION AND SUBSIDIARIES
 
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED TO CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
 
(In thousands, except per share amounts)
                             
                             
           
Three Months Ended
  
Three Months
Ended
  
Nine  Months Ended
    
Nine  Months Ended
           
September 28
    
September 28
  
September 28
    
September 28
           
2008
Adjustments
Note
2008
  
2008
Adjustments
Note
2008
           
(GAAP)
    
Adjusted
  
(GAAP)
    
Adjusted
 
Net sales
      
 $          170,034
    
 $          170,034
  
 $      528,880
    
 $               528,880
                             
 
Costs and expenses:
                      
   
Cost of goods sold
              136,684
                    (277)
  
              136,407
  
           421,553
                  (551)
  
                    421,002
   
Selling, general and administrative expenses
                20,754
    
                20,754
  
             63,236
    
                      63,236
   
Research and development expenses
                  4,509
    
                  4,509
  
              13,576
    
                       13,576
   
Restructuring and impairment charges
                  3,202
                 (3,202)
 A
                            -
  
               3,465
             (3,465)
 B
                                  -
 
Operating earnings
    
4,885
                   3,479
  
8,364
  
27,050
                4,016
  
31,066
                             
 
Other (expense) / income:
                  
   
Interest expense
                 (1,275)
    
                 (1,275)
  
             (3,802)
    
                      (3,802)
   
Other
      
                    (307)
    
                    (307)
  
                     98
    
                              98
     
Total other expense
  
(1,582)
    
(1,582)
  
(3,704)
    
(3,704)
                             
     
Earnings before income taxes
3,303
                   3,479
  
6,782
  
23,346
    
27,362
                             
 
Income tax (benefit) / expense
                 (3,912)
                    5,140
 C
                   1,228
  
                   266
               5,334
 D
                        5,600
                             
                             
 
Net earnings
  
 $               7,215
 $               (1,661)
  
 $              5,554
  
 $         23,080
 $           (1,318)
  
 $                   21,762
                             
 
Net earnings per share:
                  
 
   Basic
        
 $                  0.21
 $               (0.05)
  
 $                  0.16
  
 $              0.68
 $            (0.04)
  
 $                       0.64
                 
                          -
        
                                -
 
   Diluted
      
 $                  0.21
 $               (0.05)
  
 $                  0.16
  
 $              0.65
 $            (0.04)
  
 $                        0.61
                             
 
Cash dividends declared per share
 $                 0.03
    
 $                 0.03
  
 $              0.09
    
 $                       0.09
                             
 
Average common shares outstanding:
                    
 
   Basic
        
33,708
    
33,708
  
33,735
    
33,735
                             
 
   Diluted
      
38,199
    
38,199
  
38,206
    
38,206
                             
 
Notes:
                        
 
A.
This adjustment pertains to restructuring charges that occurred in the third quarter of 2008 as a result of a company-wide restructuring plan.
          
                             
 
B.
This adjustment pertains to restructuring charges that occurred in the third quarter of 2008 and carryovers from the fourth quarter of 2007 as a result of company-wide restructuring plans.
      
                             
                             
 
C.
This adjustment pertains to a net operating loss benefit realized due to the release of a valuation allowance in a non-US jurisdiction.
          
                             
 
D.
The following table presents the tax components related to Notes A, B and C above:
                
                 
Three months
  
Nine months
      
                 
ended
  
ended
      
                 
Sept 28, 2008
  
Sept 28, 2008
      
     
Tax benefit related to restructuring charges
  
 $               1,252
  
 $            1,446
      
     
Tax benefit related to release of valuation allowance
  
                  3,888
  
               3,888
      
                 
 $               5,140
  
 $           5,334
      
                             


 
 
 

                   
 
CTS CORPORATION AND SUBSIDIARIES
 
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED TO CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
 
(In thousands, except per share amounts)
                   
                   
           
Three Months Ended
Three Months Ended
           
June 28
    
June 28
           
2009
Adjustments
Note
2009
           
(GAAP)
    
Adjusted
 
Net sales
      
 $          120,398
    
 $        120,398
                   
 
Costs and expenses:
            
   
Cost of goods sold
    
               98,520
    
             98,520
   
Selling, general and administrative expenses
               15,243
    
             15,243
   
Research and development expenses
                3,466
    
               3,466
                   
 
Operating earnings
    
3,169
                  -
  
3,169
                   
 
Other (expense) / income:
          
   
Interest expense
    
                  (440)
    
                (440)
   
Other
      
                    (25)
    
                  (25)
     
Total other expense
  
(465)
    
(465)
                   
     
Earnings before income taxes
2,704
                  -
  
2,704
                   
 
Income tax expense / (benefit)
  
                9,729
            (9,077)
 A
                 652
                   
                   
 
Net (loss) / earnings
    
 $             (7,025)
 $           9,077
  
 $            2,052
                   
 
Net (loss) / earnings per share:
          
 
   Basic
      
 $              (0.21)
 $            0.27
  
 $              0.06
                 
                    -
 
   Diluted
      
 $              (0.21)
 $            0.27
  
 $              0.06
                   
 
Cash dividends declared per share
  
 $               0.03
    
 $              0.03
                   
 
Average common shares outstanding:
          
 
   Basic
      
33,779
    
33,779
                   
 
   Diluted
      
33,779
    
33,779
                   
 
Notes:
              
 
A.
This adjustment pertains to the tax expense related to a one-time cash repatriation event.