8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  February 7, 2017

CTS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Indiana	1-4639	35-0225010
(State or other jurisdiction of incorporation)	(Commission File Number)	(1.R.S. Employer Identification No)

2375 Cabot Drive
Lisle, IL	60552
(Address of principal executive offices)	(Zip Code)

Registrant's Telephone Number, Including Area Code: (630) 577-8800

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act ( 17 CFR 240. l 4d2(b)) 

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4( c))

Item 2.02     Results of Operations and Financial Condition.

On February 7, 2017, CTS Corporation (the "Registrant") issued a press release providing certain results for the quarter and full year ended December 31, 2016 as more fully described in the press release. A copy of the press release is attached hereto as Exhibit 99.l and is incorporated by reference herein.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.l hereto, is being "furnished" to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act" ) or otherwise subject to the liabilities of that section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

ExhibitDescription                            

99.1    Press Release dated February 7, 2017

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 hereunto duly authorized.

Date: February 7, 2017CTS CORPORATION

By:	/s/ Luis F. Machado
	Luis F. Machado
	Vice President, General Counsel & Secretary

EX-99.1

	Press Release
February 7, 2017	FOR IMMEDIATE RELEASE

CTS Announces Fourth Quarter and Full Year 2016 Results

Continued growth in sales and earnings

Solid new business awards

Lisle, Ill. - CTS Corporation (NYSE: CTS) today announced fourth quarter and full year 2016 results.

Fourth Quarter 2016 Results

• Sales were $101.6 million, up 8.9% compared to 2015. Sales to automotive customers increased 5.5%, and sales of electronic components grew 16.0%.

• Net earnings were $8.3 million or $0.25 per diluted share.

• Adjusted diluted EPS was $0.29 compared to $0.20 in 2015.

• New business awards were $132 million.

Full Year 2016 Results

• Sales were $396.7 million, up 3.8% compared to 2015. Sales to automotive customers increased 2.0%, and sales of electronic components grew 7.3%.

• Net earnings were $34.4 million or $1.03 per diluted share.

• Adjusted diluted EPS was $1.08 compared to $0.93 in 2015.

• New business awards were $488 million.

“We achieved strong financial performance and solid new business awards,” said Kieran O’Sullivan, CEO of CTS Corporation. “Our teams continued to drive operational improvement. In 2016, we acquired and integrated the single crystal technology and improved adjusted earnings by 16%. We also delivered another quarter of sales growth in the fourth quarter. Our teams remain focused on driving profitable growth as we enter 2017.”

2017 Guidance

Management expects full year 2017 sales to be in the range of $405 to $420 million. Adjusted earnings per diluted share for 2017 are expected to be in the range of $1.12 to $1.22.

www.ctscorp.com

Conference Call

As previously announced, the Company has scheduled a conference call at 11:00 a.m. (EST) today to discuss the fourth quarter and full year financial results. The dial-in number is 888-542-1137 (719-325-2296, if calling from outside the U.S.). The conference I.D. number is 6367372. There will be a replay of the conference call from 2:00 p.m. (EST) today through 2:00 p.m. (EST) on Tuesday, February 21, 2017. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The access code is 6367372. A live audio webcast of the conference call will be available and can be accessed directly from the Investors section of the website of CTS Corporation at www.ctscorp.com.

About CTS

CTS (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and supplies these products to OEMs in the aerospace, communications, defense, industrial, information technology, medical and transportation markets.

For more information visit www.ctscorp.com.

Safe Harbor

This document 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. Forward-looking statements are based on management's expectations, certain assumptions and currently available information. 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. Many of these, and other, risks and uncertainties are

www.ctscorp.com

discussed in further detail in Item 1A. of CTS’ Annual Report on Form 10-K. We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact

Ashish Agrawal

Vice President and Chief Financial Officer

CTS Corporation

2375 Cabot Drive

Lisle, IL 60532

USA

Telephone: +1 (630) 577-8800

E-mail: Ashish.Agrawal@ctscorp.com

###

www.ctscorp.com

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – UNAUDITED

(In thousands, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Net sales	$	101,584		$	93,282		$	396,679		$	382,310
Cost of goods sold	65,723			63,128			256,251			255,201
Gross Margin	35,861			30,154			140,428			127,109
Selling, general and administrative expenses	15,165			15,917			61,624			59,586
Research and development expenses	5,626			6,083			24,040			22,461
Non-recurring environmental charge	—			—			—			14,541
Restructuring and impairment charges	873			9,335			3,048			14,564
Loss (gain) on sale of assets	51			(2,112		)	(11,450		)	(2,156		)
Operating earnings	14,146			931			63,166			18,113
Other (expense) income:
Interest expense	(956		)	(673		)	(3,702		)	(2,628		)
Interest income	223			719			1,305			3,073
Other expense	(2,042		)	(1,656		)	(3,524		)	(6,297		)
Total other expense	(2,775		)	(1,610		)	(5,921		)	(5,852		)
Earnings (loss) before income taxes	11,371			(679		)	57,245			12,261
Income tax expense	3,061			12,974			22,865			5,307
Net earnings (loss)	$	8,310		$	(13,653	)	$	34,380		$	6,954
Earnings (loss) per share:
Basic	$	0.25		$	(0.42	)	$	1.05		$	0.21
Diluted	$	0.25		$	(0.42	)	$	1.03		$	0.21
Cash dividends declared per share	$	0.04		$	0.04		$	0.16		$	0.16
Average common shares outstanding:
Basic	32,760			32,605			32,728			32,959
Diluted	33,342			32,605			33,251			33,484

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands of dollars)

	December 31, 2016		December 31, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	113,805	$	156,928
Accounts receivable, net	62,612		54,563
Inventories, net	28,652		24,600
Other current assets	10,638		9,863
Total current assets	215,707		245,954
Property, plant and equipment, net	82,111		69,872
Other Assets
Prepaid pension asset	46,183		33,779
Goodwill	61,744		33,865
Other intangible assets, net	64,370		34,758
Deferred income taxes	45,839		63,809
Other assets	1,743		1,336
Total other assets	219,879		167,547
Total Assets	$	517,697	$	483,373
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term notes payable	$	1,006	$	—
Accounts payable	40,046		40,299
Accrued payroll and benefits	11,369		7,147
Accrued expenses and other liabilities	45,708		47,174
Total current liabilities	98,129		94,620
Long-term debt	89,100		90,700
Long-term pension obligations	7,006		7,230
Other long-term obligations	5,580		9,169
Total Liabilities	199,815		201,719
Shareholders’ Equity
Common stock	302,832		300,909
Additional contributed capital	40,521		41,166
Retained earnings	410,979		381,840
Accumulated other comprehensive loss	(93,194)		(99,005)
Total shareholders’ equity before treasury stock	661,138		624,910
Treasury stock	(343,256)		(343,256)
Total shareholders’ equity	317,882		281,654
Total Liabilities and Shareholders’ Equity	$	517,697	$	483,373

CTS CORPORATION AND SUBSIDIARIES

OTHER SUPPLEMENTAL INFORMATION

Earnings Per Share

The following table reconciles GAAP diluted earnings per share to adjusted diluted earnings per share for the Company:

	Three Months Ended						Twelve Months Ended
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
GAAP diluted earnings per share	$	0.25		$	(0.42	)	$	1.03		$	0.21
Tax affected charges to reported diluted earnings per share:
Restructuring, restructuring-related, and asset impairment charges	0.02			0.28			0.06			0.40
Increase in valuation allowance and revaluation of deferred taxes as a result of restructuring activities	—			—			0.07			—
Non-recurring environmental charge	—			—			—			0.27
(Decrease) increase in the recognition of foreign valuation allowance	(0.01		)	0.07			0.03			0.10
Increase in the recognition of uncertain tax benefits	—			0.01			—			0.17
Change in treatment of certain foreign taxes	—			(0.01		)	—			(0.48		)
Gain on sale of facilities, net of expenses	—			—			(0.22		)	—
Lease termination charge	—			—			0.02			—
Foreign currency loss	0.05			—			0.09			—
Acquisition-related costs	—			—			0.02			—
Tax impact of non-recurring stock compensation change	(0.02		)	—			(0.02		)	—
Tax impact of cash repatriation	—			0.27			—			0.26
Adjusted diluted earnings per share	$	0.29		$	0.20		$	1.08		$	0.93

Additional Information

The following table includes other financial information not presented in the preceding financial statements.

	Three Months Ended				Twelve Months Ended
In thousands	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Depreciation and amortization expense	$	4,982	$	4,267	$	18,992	$	16,254
Equity-based compensation expense	$	979	$	540	$	2,738	$	3,195

Non-GAAP Financial Measures

Adjusted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted earnings per share.

CTS adjusts for 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 an adjusted earnings per share measure to evaluate overall performance, establish plans and perform strategic analysis. Using this measure avoids distortion in the evaluation of operating results by eliminating the impact of events which are not related to normal operating performance. Because this measure is based on the exclusion or inclusion 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 this measure is useful to its management, investors and stakeholders in that it:

• provides a meaningful measure of CTS' operating performance,

• reflects the results used by management in making decisions about the business, and

• helps review and project CTS' performance over time.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.