Segments

9 Months Ended

Oct. 02, 2011

Segments [Abstract]

Segments

NOTE G – Segments

CTS reportable segments are grouped by entities that exhibit similar economic characteristics. The segments’ reporting results are regularly reviewed by CTS’ chief operating decision maker to make decisions about resources to be allocated to these segments and to evaluate the segments’ performance. CTS has two reportable segments: 1) Electronics Manufacturing Services (“EMS”) and 2) Components and Sensors.

EMS includes the higher level assembly of electronic and mechanical components into a finished subassembly or assembly performed under a contract manufacturing agreement with an OEM or other contract manufacturer. Additionally, for some customers, CTS provides full turnkey manufacturing and completion including design, bill-of-material management, logistics, and repair.

Components and sensors are products which perform specific electronic functions for a given product family and are intended for use in customer assemblies. Components and sensors consist principally of automotive sensors and actuators used in commercial or consumer vehicles; electronic components used in communications infrastructure and computer markets; terminators, including ClearONE™ terminators, used in computer and other high speed applications, switches, resistor networks and potentiometers used to serve multiple markets; and fabricated piezo-electric materials and substrates used primarily in medical and industrial markets.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. Management evaluates performance based upon segment operating earnings before interest expense, interest income, non-operating income/(expense), and income tax expense.

In the third quarter of 2011, CTS expanded the presentation of segment operating earnings to currently include both segment operating earnings before corporate and shared services charges and segment operating earnings after corporate and shared services charges as shown in the table below. These charges primarily include Company headquarters’ support services such as information technology, accounting, treasury, legal and other support services which are not part of any business segment. Prior to this change, these charges were included within these operating segments. This presentation reflects the current fact that CTS’ chief operating decision-maker excludes these charges from the review of the results of the operating segments for purposes of measuring segment profitability and allocating resources. Results from prior periods here are presented on the same basis.

Summarized financial information concerning CTS’ reportable segments is shown in the following table:

($ in thousands)	EMS			Components and Sensors			Total
Third Quarter of 2011
Net sales to external customers	$	76,981		$	69,089		$	146,070
Segment operating earnings before corporate and shared services charges	$	5,870		$	7,738		$	13,608
Corporate and shared services charges		(2,297	)		(3,557	)		(5,854	)
Segment operating earnings (1)	$	3,573		$	4,181		$	7,754
Total assets	$	149,088		$	367,387		$	516,475
Third Quarter of 2010
Net sales to external customers	$	67,592		$	71,770		$	139,362
Segment operating earnings before corporate and shared services charges	$	1,503		$	11,396		$	12,899
Corporate and shared services charges		(1,431	)		(3,697	)		(5,128	)
Segment operating earnings	$	72		$	7,699		$	7,771
Total assets at 12-31-2010	$	146,865		$	335,719		$	482,584
First Nine Months of 2011
Net sales to external customers	$	235,349		$	209,158		$	444,507
Segment operating earnings before corporate and shared services charges	$	9,960		$	26,388		$	36,348
Corporate and shared services charges		(6,013	)		(11,601	)		(17,614	)
Segment operating earnings (2)	$	3,947		$	14,787		$	18,734
Total assets	$	149,088		$	367,387		$	516,475
First Nine Months of 2010
Net sales to external customers	$	190,175		$	217,441		$	407,616
Segment operating earnings before corporate and shared services charges	$	3,533		$	38,247		$	41,780
Corporate and shared services charges		(6,340	)		(13,581	)		(19,921	)
Segment operating earnings	$	(2,807	)	$	24,666		$	21,859
Total assets at 12-31-2010	$	146,865		$	335,719		$	482,584

⁽¹⁾ EMS segment’s operating earnings of $3,573 include $2,687 of insurance recovery for property damage related to the fire at CTS Scotland’s manufacturing facility.

⁽²⁾ EMS segment’s operating earnings of $3,947 include $2,687 of insurance recovery for property damage related to the fire at CTS Scotland’s manufacturing facility.

Reconciling information between reportable segments’ operating earnings and CTS’ consolidated earnings before income taxes is shown in the following table for the three and nine-month periods then ended:

	Three Months Ended						Nine Months Ended
($ in thousands)	October 2, 2011			October 3, 2010			October 2, 2011			October 3, 2010
Total segment operating earnings	$	7,754		$	7,771		$	18,734		$	21,859
Restructuring charges		—			—			(694	)		—
Interest expense		(549	)		(254	)		(1,552	)		(717	)
Interest income		359			105			831			239
Other (expense)/income		(65	)		1,738			1,808			917
Earnings before income taxes	$	7,499		$	9,360		$	19,127		$	22,298