-----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, fv4Mo54kqzOsjmIUBNc2MHC73LKPO2suECgA4ejkb9aoQEQcU8EeMSPvZu4CQGh9 2nAep0uMQNge0sizanmbPQ== 0000026058-95-000006.txt : 19950517 0000026058-95-000006.hdr.sgml : 19950517 ACCESSION NUMBER: 0000026058-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950402 FILED AS OF DATE: 19950512 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 SEC ACT: 1934 Act SEC FILE NUMBER: 001-04639 FILM NUMBER: 95537711 BUSINESS ADDRESS: STREET 1: 905 W BLVD N CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192937511 10-Q 1 1995 1ST Q 10 Q 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 April 2, 1995 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 April 2, 1995 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 May 11, 1995: 5,203,754 Page 1 of 11 CTS CORPORATION AND SUBSIDIARIES INDEX Page No. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Earnings - For the Three Months Ended April 2, 1995, and April 3, 1994 3 Condensed Consolidated Balance Sheets - As of April 2, 1995, and December 31, 1994 4 Condensed Consolidated Statements of Cash Flows - For the Three Months Ended April 2, 1995, and April 3, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II -- OTHER INFORMATION Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 Page 2 of 11 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 April 2, April 3, 1995 1994 Net sales $75,978 $64,357 Costs and expenses: Cost of goods sold 58,705 48,760 Selling, general and administrative expenses 10,073 10,567 Research and development expenses 2,323 1,470 Operating earnings 4,877 3,560 Other expenses (income): Interest expense 487 227 Other (469) (224) Total other expenses 18 3 Earnings before income taxes 4,859 3,557 Income taxes 1,603 1,067 Net earnings $ 3,256 $ 2,490 Net Earnings per share $ .63 $ .48 Cash dividends per share $ .15 $ .10 Average net shares outstanding 5,186,963 5,159,998 See notes to condensed consolidated financial statements. Page 3 of 11 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) April 2,December 31, 1995 1994* ASSETS (Unaudited) Current Assets Cash $ 21,681 $24,922 Accounts receivable, less allowances (1995--$976; 1994--$869) 42,010 35,029 Inventories--Note C 41,908 41,456 Other current assets 4,030 3,032 Deferred income taxes 6,228 6,228 Total current assets 115,857 110,667 Property, Plant and Equipment, less accumulated depreciation (1995--$132,866; 1994--$139,649) 50,625 50,777 Other Assets Goodwill, less accumulated amortization (1995--$7,180; 1994--$7,010) 5,086 5,221 Prepaid pension 40,866 39,408 Other 719 753 Total other assets 46,671 45,382 $213,153 $206,826 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable $ 6,003 $ 7,436 Current maturities of long-term obligations 311 304 Accounts payable 16,887 12,768 Accrued liabilities 24,817 24,284 Total current liabilities 48,018 44,792 Long-term Obligations 15,616 15,595 Deferred Income Taxes 9,222 9,222 Postretirement Benefits 5,182 5,362 Stockholders' Equity: Common stock-authorized 8,000,000 shares without par value; issued 5,807,031 shares 33,536 33,870 Retained earnings 114,982 112,506 Cumulative foreign translation adjustment 179 (354) 148,697 146,022 Less cost of common stock held in treasury: 1995--608,377 shares; 1994--628,427 shares 13,582 14,167 Total stockholders' equity 135,115 131,855 $213,153 $206,826 *The balance sheet at December 31, 1994, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. Page 4 of 11 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In thousands of dollars) Three Months Ended April 2, April 3, 1995 1994 Cash flows from operating activities: Net earnings $ 3,256 $ 2,490 Depreciation and amortization 3,151 2,929 (Increase) decrease in: Accounts receivable (6,981) (4,238) Inventories (452) (1,713) Other current assets (998) (333) Prepaid pension expense (1,458) (1,431) Other (7) 158 Increase in: Accounts payable & accrued liabilities 4,648 4,028 Total adjustments (2,097) (600) Net cash provided by operating activities 1,159 1,890 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 215 101 Capital expenditures (2,746) (2,942) Net cash used in investing activities (2,531) (2,841) Cash flows from financing activities: Payments of long-term obligations (1) (2,138) Decrease in notes payable (1,433) (1,461) Dividend payments (776) (517) Net cash used in financing activities (2,210) (4,116) Effect of exchange rate changes on cash 341 (32) Net decrease in cash (3,241) (5,099) Cash at beginning of year 24,922 23,534 Cash at end of period $21,681 $18,435 Supplemental disclosures of cash flow information Net cash paid during the period for: Interest $ 680 $ 237 Income Taxes $ 805 $ 892 See notes to condensed consolidated financial statements. Page 5 of 11 Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) April 2, 1995 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 three-month period ended April 2, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's 1994 Annual Report on Form 10-K. NOTE B--RECLASSIFICATIONS Certain reclassifications have been made for all years presented in the financial statements to conform to the classifications adopted in 1995. NOTE C--INVENTORIES The components of inventory consist of the following: (In thousands) April 2, December 31, 1995 1994 Finished goods $ 5,981 $ 5,725 Work-in-process 17,088 16,531 Raw material 18,839 19,200 $41,908 $41,456 NOTE D--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 11 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 April 2, 1995, to December 31, 1994 The following table highlights significant changes in balance sheet captions and ratios and other information related to liquidity and capital resources: (Dollars in thousands) April 2, December 31, Increase 1995 1994 (Decrease) Cash $21,681 $24,922 $(3,241) Accounts receivable, net 42,010 35,029 6,981 Inventories, net 41,908 41,456 452 Current assets 115,857 110,667 5,190 Accounts payable 16,887 12,768 4,119 Current liabilities 48,018 44,792 3,226 Working capital 67,839 65,875 1,964 Current ratio 2.4 2.5 (.1) Interest bearing debt 21,914 23,318 (1,404) Net tangible worth 130,029 126,634 3,395 Ratio of interest bearing debt to net tangible worth .17 .18 (.01) From December 31, 1994, to April 2, 1995, cash of CTS Corporation and its subsidiaries ("CTS" or "Company") decreased $3.2 million. The decrease in cash primarily reflects increased working capital and a reduction in interest bearing debt. The net increase in working capital of $2.0 million primarily reflects an increase in receivables of $7.0 million, offset by an increase in payables of $4.1 million. The increases in receivables and payables were principally a result of the increased sales volume in the first quarter of 1995, compared to the last quarter of 1994. Capital expenditures were $2.7 million during the first quarter, compared with $2.9 million for the same period a year earlier. These capital expenditures were primarily for new products and cost reduction programs. The $1.4 million decrease in interest bearing debt resulted primarily from discretionary debt repayments. Page 7 of 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Results of Operations: Comparison of First Quarter 1995 to First Quarter 1994 The following table highlights changes in significant components of the consolidated statements of earnings for the three-month periods ending April 2, 1995, and April 3, 1994: (Dollars in thousands) April 2, April 3, Increase 1995 1994 (Decrease) Net sales $75,978 $64,357 $11,621 Gross earnings 17,273 15,597 1,676 Gross earnings as a percent of sales 22.73% 24.24% (1.51)% Selling, general and administrative expenses 10,073 10,567 (494) Selling, general and administrative expenses as a percent of sales 13.26% 16.42% (3.16)% Research and development expenses 2,323 1,470 853 Operating earnings 4,877 3,560 1,317 Operating earnings as a percent of sales 6.42% 5.53% .89% Interest expense 487 227 260 Earnings before income taxes 4,859 3,557 1,302 Income taxes 1,603 1,067 536 Income tax rate 33.00% 30.00% 3.00% Net sales increased by $11.6 million, or 18.1% from the first quarter of 1994. Sales increases occurred principally in the microelectronics and automotive related products. The microelectronics increase was a result of the 1994 acquisition of the Light Emitting Diode (LED) based Fiber Optic Data Link (ODL) products business of AT&T Microelectronics. In terms of the automotive sales increase, the major contributing factors were increased sales of existing and new products. Primarily as a result of the higher sales, gross earnings dollars increased by 10.7%. Unfavorably impacting gross earnings was a lower of cost or market inventory reserve in the amount of $1.9 million, established for our military business relative to a fixed price contract on a major program where the Company's cost to meet its obligations and fulfill the contract will significantly exceed the revenues and recoveries from the program. Page 8 of 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selling, general and administrative expenses remained essentially flat compared to the first quarter of 1994, but were a significantly lower percent of net sales as the Company continues to emphasize cost control over all operating expenses. Research and development expenses increased by $0.9 million over the first quarter of 1994, primarily due to the major new product development program, the non-contacting or Hall-effect, gallium arsenide magnetic based sensing technology, within our Automotive business unit. The increase in interest expense is related to the Company reaching an agreement on a $15 million term loan to finance acquisitions at a fixed interest rate of approximately 8.4% in December 1994. The tax rate for 1995 is three percentage points higher than the first quarter 1994 tax rate. The increased rate is primarily the result of larger losses in some non-U.S. jurisdictions with no tax benefit. Page 9 of 11 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 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Forms 8-K None Page 10 of 11 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: May 11, 1995 Page 11 of 11 EX-27 2
5 3-MOS DEC-31-1995 JAN-01-1995 APR-02-1995 21,681 0 42,986 976 41,908 115,857 183,491 132,866 213,153 48,018 0 33,536 0 0 115,161 213,153 75,978 75,978 58,705 71,101 (469) 0 487 4,859 1,603 3,256 0 0 0 3,256 .63 .63
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