-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E+HaqOrk0Yh6XSPXenSkOjw0H9PZmA9579TWQmdlxue4xkEvEzdTrYgkU7GGrDdv J2JWpHdJBUzFoUHM3g4mgg== 0000026058-96-000002.txt : 19960619 0000026058-96-000002.hdr.sgml : 19960619 ACCESSION NUMBER: 0000026058-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 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: 96561663 BUSINESS ADDRESS: STREET 1: 905 W BLVD N CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 2192937511 10-Q 1 1996 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 March 31, 1996 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 March 31, 1996 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 9, 1996: 5,220,954 Page 1 of 10 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 March 31, 1996, and April 2, 1995 3 Condensed Consolidated Balance Sheets - As of March 31, 1996, and December 31, 1995 4 Condensed Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 1996, and April 2, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II -- OTHER INFORMATION Item 1. Legal Proceedings 9 Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 Page 2 of 10 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 March 31, April 2, 1996 1995 Net sales $80,186 $75,978 Costs and expenses: Cost of goods sold 60,387 58,705 Selling, general and administrative expenses 10,952 10,073 Research and development expenses 2,260 2,323 Operating earnings 6,587 4,877 Other expenses (income): Interest expense 436 487 Other (855) (469) Total other expenses (419) 18 Earnings before income taxes 7,006 4,859 Income taxes 2,592 1,603 Net earnings $ 4,414 $ 3,256 Net earnings per share $ .83 $ .63 Cash dividends per share $ .15 $ .15 Average common and common equivalent shares outstanding 5,294,933 5,186,963 See notes to condensed consolidated financial statements. Page 3 of 10 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) March 31, December 31, 1996 1995* ASSETS (Unaudited) Current Assets Cash $ 42,303 $ 37,271 Accounts receivable, less allowances (1996--$707; 1995--$774) 43,890 41,737 Inventories--Note C 38,101 38,885 Other current assets 3,658 2,544 Deferred income taxes 5,676 5,676 Total current assets 133,628 126,113 Property, Plant and Equipment, less accumulated depreciation (1996--$131,161; 1995--$131,445) 51,602 50,696 Other Assets Goodwill, less accumulated amortization (1996--$7,855; 1995-$7,687) 4,443 4,603 Prepaid pension 46,048 44,739 Other 954 976 Total other assets 51,445 50,318 $236,675 $227,127 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable $ 8,055 $ 6,685 Current maturities of long-term obligations 2,203 2,211 Accounts payable 21,006 15,605 Accrued liabilities 25,684 26,461 Total current liabilities 56,948 50,962 Long-term Obligations 13,712 13,714 Deferred Income Taxes 11,909 11,909 Postretirement Benefits 4,318 4,289 Shareholders' Equity: Common stock-authorized 8,000,000 shares without par value; issued 5,807,031 shares 33,409 33,355 Retained earnings 130,177 126,546 Cumulative foreign translation adjustment (854) (645) 162,732 159,256 Less cost of common stock held in treasury: 1996--587,777 shares; 1995--589,702 shares 12,944 13,003 Total shareholders' equity 149,788 146,253 $236,675 $227,127 *The balance sheet at December 31, 1995, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. Page 4 of 10 Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In thousands of dollars) Three Months Ended March 31, April 2, 1996 1995 Cash flows from operating activities: Net earnings $ 4,414 $ 3,256 Depreciation and amortization 3,250 3,151 (Increase) decrease in: Accounts receivable (2,153) (6,981) Inventories 784 (452) Other current assets (1,114) (998) Prepaid pension expense (1,309) (1,458) Other 8 (7) Increase in: Accounts payable & accrued liabilities 4,624 4,648 Total adjustments 4,090 (2,097) Net cash provided by operating activities 8,504 1,159 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 128 215 Capital expenditures (4,247) (2,746) Net cash used in investing activities (4,119) (2,531) Cash flows from financing activities: Payments of long-term obligations (1) (1) Increase (decrease) in notes payable 1,365 (1,433) Dividend payments (783) (776) Net cash provided by (used in)financing activities 581 (2,210) Effect of exchange rate changes on cash 66 341 Net increase (decrease) in cash 5,032 (3,241) Cash at beginning of year 37,271 24,922 Cash at end of period $42,303 $21,681 Supplemental disclosures of cash flow information Net cash paid during the period for: Interest $ 429 $ 680 Income Taxes $ 1,179 $ 805 See notes to condensed consolidated financial statements. Page 5 of 10 Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 1996 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 March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's 1995 Annual Report on Form 10-K. NOTE B--RECLASSIFICATIONS Certain reclassifications have been made to prior periods to conform to the classifications adopted in 1996. NOTE C--INVENTORIES The components of inventory consist of the following: (In thousands) March 31, December 31, 1996 1995 Finished goods $ 7,281 $ 7,445 Work-in-process 15,691 14,789 Raw material 15,129 16,651 $38,101 $38,885 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 could 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 10 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 March 31, 1996, to December 31, 1995 The following table highlights significant changes in balance sheet captions and ratios and other information related to liquidity and capital resources: (Dollars in thousands) March 31, December 31, Increase 1996 1995 (Decrease) Cash $ 42,303 $ 37,271 $5,032 Accounts receivable, net 43,890 41,737 2,153 Inventories, net 38,101 38,885 (784) Current assets 133,628 126,113 7,515 Accounts payable 21,006 15,605 5,401 Current liabilities 56,948 50,962 5,986 Working capital 76,680 75,151 1,529 Current ratio 2.3 2.5 (0.2) Interest bearing debt 23,628 22,267 1,361 Net tangible worth 145,345 141,650 3,695 Ratio of interest bearing debt to net tangible worth .16 .16 -- From December 31, 1995, to March 31, 1996, cash of CTS Corporation and its subsidiaries ("CTS" or "Company") increased $5.0 million. The increase in cash primarily reflects increases in net cash provided from operations. The current ratio decreased due to increased current liabilities, primarily accounts payable. Capital expenditures were $4.2 million during the first quarter, compared with $2.7 million for the same period a year earlier. These capital expenditures were primarily for increased manufacturing capacity, new products and manufacturing improvement programs. Page 7 of 10 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 1996 to First Quarter 1995 The following table highlights changes in significant components of the consolidated statements of earnings for the three-month periods ending March 31, 1996, and April 2, 1995: (Dollars in thousands) March 31, April 2, Increase 1996 1995 (Decrease) Net sales $80,186 $75,978 $4,208 Gross earnings 19,799 17,273 2,526 Gross earnings as a percent of sales 24.69% 22.73% 1.96% Selling, general and administrative expenses 10,952 10,073 879 Selling, general and administrative expenses as a percent of sales 13.66% 13.26% 0.40% Research and development expenses 2,260 2,323 (63) Operating earnings 6,587 4,877 1,710 Operating earnings as a percent of sales 8.21% 6.42% 1.79% Interest expense 436 487 (51) Earnings before income taxes 7,006 4,859 2,147 Income taxes 2,592 1,603 989 Income tax rate 37.00% 33.00% 4.00% Net sales increased by $4.2 million, or 5.5% from the first quarter of 1995. Sales increases occurred principally from increased shipments of backpanel and automotive products. Gross earnings improved primarily due to the sales and production volume increases, as well as continuing efforts to control manufacturing expenses. Selling, general and administrative expenses in dollars 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 estimated effective tax rate for 1996 of 37% is consistent with the actual 1995 tax rate of 38%. The rate has increased over prior quarterly reporting periods due to a smaller benefit from the utilization of net operating loss carryforwards and scheduled tax credits. Page 8 of 10 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 9 of 10 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 13, 1996 Page 10 of 10 EX-27 2
5 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 42,303 0 44,597 707 38,101 133,628 182,763 131,161 236,675 56,948 0 0 0 33,409 116,379 236,675 80,186 80,186 60,387 73,599 (855) 0 436 7,006 2,592 4,414 0 0 0 4,414 .83 .83
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