Indiana
|
1-4639
|
35-0225010
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(State or Other Jurisdiction of Incorporation)
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(Commission File Numbers)
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(I.R.S. Employer Identification Nos.)
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905 West Boulevard North
|
||
Elkhart, Indiana
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46514
|
|
(Address of Principal Executive Offices)
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(Zip Code)
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q
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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q
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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q
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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q
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02
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Results of Operations and Financial Condition.
|
99.1
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Press Release dated July 23, 2012
|
–
|
CTS initiated a $5 million restructuring plan with expected annual savings of approximately $6 million. This plan will reduce approximately 260 positions, or 6% of CTS’ global headcount, throughout Asia, Europe and North America. CTS recognized $3.8 million, or $0.08 per share, of this $5 million plan in the second quarter; the remaining $1.2 million charge is expected to be recognized in the second half of 2012. The plan will further improve our cost structure and capacity utilization.
|
–
|
CTS’ EMS Thailand facility, which had been out of service since the October 2011 flood, is now fully operational with substantially all production having been transferred back to Thailand from the California EMS facilities. Second quarter 2012 earnings include insurance recoveries of $7.4 million and expenses and losses of approximately $5 million. Year-to-date, flood-related reimbursements have exceeded costs by $1.5 million, due to timing.
|
–
|
CTS has incurred approximately $0.6 million of Takata patent litigation costs year-to-date, of which $0.2 million was incurred in the second quarter. In July, the courts sided with CTS’ interpretation of the patent claim. The Company is proceeding with the next stage of litigation.
|
–
|
Non-cash pension expense was higher by approximately $1.2 million, or $0.02 per share, in the second quarter and $2.2 million, or $0.04 per share, year-to-date, compared to last year due to lower discount rates and asset returns.
|
–
|
CTS’ second quarter debt balance decreased $11.7 million from the first quarter driven by strong cash flow.
|
–
|
CTS’ new grill shutter actuator product was launched in May, one quarter earlier than originally planned.
|
–
|
Production on CTS’ major smart actuator program is expected to begin as scheduled in late fourth quarter. This program is slated for a North American medium-duty diesel engine application and is expected to add approximately $20 million in new revenues in 2013.
|
–
|
On June 4, CTS celebrated its 50th anniversary of trading on the New York Stock Exchange by visiting the NYSE trading floor and ringing the closing bell. This significant milestone honored CTS’ rich tradition.
|
($ in thousands)
|
Components and Sensors
|
EMS
|
Total
|
|||||||
Second Quarter of 2012
|
||||||||||
Net sales to external customers
|
$
|
76,823
|
$
|
77,471
|
$
|
154,294
|
||||
Segment operating earnings before corporate and shared services charges
|
$
|
8,398
|
$
|
6,086
|
$
|
14,484
|
||||
Corporate and shared services charges
|
(3,034
|
)
|
(1,906
|
)
|
(4,940
|
)
|
||||
Segment operating earnings
|
$
|
5,364
|
$
|
4,180
|
$
|
9,544
|
||||
Expenses not allocated to business segments:
|
||||||||||
- Restructuring and related charges
|
(3,831
|
)
|
||||||||
Total operating earnings
|
$
|
5,713
|
||||||||
First Quarter of 2012
|
||||||||||
Net sales to external customers
|
$
|
76,418
|
$
|
70,551
|
$
|
146,969
|
||||
Segment operating earnings before corporate and shared services charges (1)
|
$
|
7,344
|
$
|
455
|
$
|
7,799
|
||||
Corporate and shared services charges
|
(4,324
|
)
|
(1,543
|
)
|
(5,867
|
)
|
||||
Segment operating earnings/(loss) (1)
|
$
|
3,020
|
$
|
(1,088
|
)
|
$
|
1,932
|
|||
Second Quarter of 2011
|
||||||||||
Net sales to external customers
|
$
|
68,037
|
$
|
78,882
|
$
|
146,919
|
||||
Segment operating earnings before corporate and shared services charges
|
$
|
8,846
|
$
|
2,259
|
$
|
11,105
|
||||
Corporate and shared services charges
|
(3,995
|
)
|
(1,889
|
)
|
(5,884
|
)
|
||||
Segment operating earnings
|
$
|
4,851
|
$
|
370
|
$
|
5,221
|
||||
Expenses not allocated to business segments:
|
||||||||||
- Restructuring and related charges
|
(694
|
)
|
||||||||
Total operating earnings
|
$
|
4,527
|
||||||||
(1)
|
EMS includes $1,769 of insurance recovery for property damage related to the flood at CTS Thailand’s manufacturing facility.
|
CTS CORPORATION AND SUBSIDIARIES
|
||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
|
||||||||||||
(In thousands, except per share amounts)
|
||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||
July 1
|
July 3
|
July 1
|
July 3
|
|||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||
Net sales
|
$ 154,294
|
$ 146,919
|
$ 301,263
|
$ 298,437
|
||||||||
Costs and expenses:
|
||||||||||||
Cost of goods sold
|
128,356
|
119,051
|
253,276
|
241,409
|
||||||||
Insurance recovery for business interruption
|
(7,423)
|
-
|
(11,050)
|
-
|
||||||||
Selling, general and administrative expenses
|
19,378
|
18,057
|
38,782
|
36,429
|
||||||||
Research and development expenses
|
5,131
|
4,590
|
11,240
|
9,619
|
||||||||
Insurance recovery for property damage
|
-
|
-
|
(1,769)
|
-
|
||||||||
Restructuring charge
|
3,139
|
694
|
3,139
|
694
|
||||||||
Operating earnings
|
5,713
|
4,527
|
7,645
|
10,286
|
||||||||
Other (expense) / income:
|
||||||||||||
Interest expense, net
|
(159)
|
(235)
|
(369)
|
(531)
|
||||||||
Other (expense) / income
|
(1,041)
|
743
|
(466)
|
1,873
|
||||||||
Total other (expense) / income
|
(1,200)
|
508
|
(835)
|
1,342
|
||||||||
Earnings before income taxes
|
4,513
|
5,035
|
6,810
|
11,628
|
||||||||
Income tax expense
|
1,212
|
903
|
1,226
|
2,380
|
||||||||
Net earnings
|
$ 3,301
|
$ 4,132
|
$ 5,584
|
$ 9,248
|
||||||||
Net earnings per share:
|
||||||||||||
Basic
|
$ 0.10
|
$ 0.12
|
$ 0.16
|
$ 0.27
|
||||||||
Diluted
|
$ 0.10
|
$ 0.12
|
$ 0.16
|
$ 0.26
|
||||||||
Cash dividends declared per share
|
$ 0.035
|
$ 0.03
|
$ 0.070
|
$ 0.06
|
||||||||
Average common shares outstanding:
|
||||||||||||
Basic
|
34,022
|
34,375
|
34,064
|
34,334
|
||||||||
Diluted
|
34,574
|
35,025
|
34,647
|
35,050
|
CTS CORPORATION AND SUBSIDIARIES
|
||||||||
OTHER SUPPLEMENTAL INFORMATION
|
||||||||
Earnings per Share
|
||||||||
The following table reconciles GAAP diluted earnings per share to adjusted earnings per share for the Company:
|
||||||||
Three Months Ended
|
Six Months Ended
|
|||||||
July 1
|
July 3
|
July 1
|
July 3
|
|||||
2012
|
2011
|
2012
|
2011
|
|||||
GAAP diluted earnings per share
|
$ 0.10
|
$ 0.12
|
$ 0.16
|
$ 0.26
|
||||
Tax affected charges to reported diluted
|
||||||||
loss per share:
|
||||||||
Restructuring and related charges
|
0.08
|
0.01
|
0.08
|
0.01
|
||||
Additional legal costs
|
-
|
0.01
|
-
|
0.01
|
||||
Adjusted earnings per share
|
$ 0.18
|
$ 0.14
|
$ 0.24
|
$ 0.28
|
||||
Additional Information
|
||||||||
The following table includes other financial information not presented in the preceding financial statements.
|
||||||||
Three Months Ended
|
Six Months Ended
|
|||||||
$ In thousands
|
July 1
|
July 3
|
July 1
|
July 3
|
||||
Expense
|
2012
|
2011
|
2012
|
2011
|
||||
Depreciation and Amortization
|
$ 4,856
|
$ 4,365
|
$ 9,646
|
$ 8,766
|
||||
Equity Based Compensation
|
957
|
1,181
|
2,171
|
2,361
|
||||
Non-GAAP financial measures are discussed below.
|
||||||||
CTS Corporation and Subsidiaries
|
||||||||
Condensed Consolidated Balance Sheets - Unaudited
|
||||||||
(In thousands of dollars)
|
||||||||
July 1
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Cash and cash equivalents
|
$ 83,039
|
$ 76,412
|
||||||
Accounts receivable, net
|
90,604
|
88,345
|
||||||
Inventories
|
78,664
|
92,540
|
||||||
Other current assets
|
24,083
|
26,089
|
||||||
Total current assets
|
276,390
|
283,386
|
||||||
Property, plant & equipment, net
|
91,171
|
84,860
|
||||||
Other assets
|
122,528
|
112,569
|
||||||
Total Assets
|
$ 490,089
|
$ 480,815
|
||||||
Notes payable and current portion
|
||||||||
of long-term debt
|
$ -
|
$ -
|
||||||
Accounts payable
|
66,477
|
80,468
|
||||||
Other accrued liabilities
|
42,901
|
43,769
|
||||||
Total current liabilities
|
109,378
|
124,237
|
||||||
Long-term debt
|
97,000
|
74,400
|
||||||
Other obligations
|
18,241
|
18,881
|
||||||
Shareholders' equity
|
265,470
|
263,297
|
||||||
Total Liabilities and
|
||||||||
Shareholders' Equity
|
$ 490,089
|
$ 480,815
|
||||||