NOTE 6 – Costs Associated with Exit and Restructuring Activities

Costs associated with exit and restructuring activities are recorded in the Condensed Consolidated Statement of Earnings (Loss) as follows: Restructuring related charges are recorded as a component of Cost of Goods Sold. Restructuring and impairment charges are reported on a separate line and included in Operating Earnings. Total restructuring, impairment and restructuring related charges were $2,064,000 for the three month period and $6,210,000 for the nine month period ended September 28, 2014.

Restructuring related charges were $494,000 for the three month period and $1,404,000 for the nine month period ended September 28, 2014. Restructuring and impairment charges were $1,570,000 for the three month period and $4,806,000 for the nine month period ended September 28, 2014.

During April of 2014, CTS announced plans to restructure its operations and consolidate its Canadian operations into other existing CTS facilities as part of CTS’ overall plan to simplify its business model and rationalize its global footprint.

These restructuring actions will result in the elimination of approximately 120 positions. These actions are expected to be completed in 2015. The following table displays the planned restructuring and restructuring-related charges associated with the April 2014 Plan, as well as a summary of the actual costs incurred through September 28, 2014:

April 2014 Plan


*($ in thousands)*	Planned Costs		Actual costs incurred through September 28, 2014
Inventory write-down	$	250	$	—
Equipment relocation		500		—
Other charges		350		—

Restructuring related charges, included in cost of goods sold	$	1,100	$	—

Workforce reduction	$	4,100	$	2,980
Asset impairment charge		—		—
Other charges, including pension termination costs		500		—

Restructuring and impairment charges	$	4,600	$	2,980

Total restructuring, impairment and restructuring related charges	$	5,700	$	2,980

Under the April 2014 Plan, restructuring and impairment charges were $575,000 in the three month period and $2,980,000 in the nine month period ended September 28, 2014.

During June of 2013, CTS announced a restructuring plan to simplify CTS’ global footprint by consolidating manufacturing facilities into existing locations. This plan includes the consolidation of operations from the U.K. manufacturing facility into the Czech Republic facility, the Carol Stream, Illinois manufacturing facility into the Juarez, Mexico facility and to discontinue manufacturing at its Singapore facility. Certain Corporate functions were consolidated or eliminated as a result of the above June 2013 plan and also as a result of the sale of CTS’ EMS business.

These restructuring actions will result in the elimination of approximately 350 positions. These actions are expected to be completed in 2014. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through September 28, 2014:

June 2013 Plan


*($ in thousands)*	Planned Costs		Actual costs incurred through September 28, 2014
Inventory write-down	$	800	$	1,143
Equipment relocation		900		1,288
Other charges		100		549

Restructuring-related charges, included in cost of goods sold	$	1,800	$	2,980

Workforce reduction	$	8,300	$	8,189
Asset impairment charge		3,000		4,464
Other charges, including pension termination costs		5,500		515

Restructuring and impairment charges	$	16,800	$	13,168

Total restructuring and restructuring-related charges	$	18,600	$	16,148

Under the June 2013 Plan, total restructuring, impairment and restructuring related charges incurred were $1,489,000 for the three month period and $3,230,000 for the nine month period ended September 28, 2014. For the three month period ended September 28, 2014, the restructuring related charges were $494,000 and the restructuring and impairment charges were $995,000. For the nine month period ended September 28, 2014, the restructuring related charges were $1,404,000 and the restructuring and impairment charges were $1,827,000.

The following table displays the restructuring reserve activity for the period ended September 28, 2014:

June 2013 Plan and April 2014 Plan


*($ in thousands)*
Restructuring liability at January 1, 2014	$	3,100
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		5,571
Cost paid		(5,622	)

Restructuring liability at September 28, 2014	$	3,049

During December of 2012, CTS realigned its operations to suit the business needs of the Company. These realignment actions resulted in the elimination of approximately 190 positions. These actions were completed as of March 31, 2013. Approximately $200,000 of the remaining restructuring and restructuring-related charges were incurred in the first quarter of 2013.

The following table displays the restructuring reserve activity related to the December 2012 Plan:

December 2012 Plan


*($ in thousands)*
Restructuring liability at January 1, 2013	$	1,600
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		800
Cost paid		(2,400	)

Restructuring liability at December 31, 2013	$	0