SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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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 1, 2002 (January 28,2002)
CTS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Indiana 1-4639 35-0225010
(State or Other Jurisdiction (Commission File Numbers) (I.R.S. Employer
of Incorporation) Identification Nos.)
905 West Boulevard North
Elkhart, Indiana 46514
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (574) 293-7511
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On January 28, 2002, CTS Corporation issued a press release
announcing its financial results and other data for the year
and quarter ended December 31, 2001 as more fully described
in the press release, a copy of which is filed as Exhibit 99.1
hereto and which information is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
The following exhibits are filed with this report:
Exhibit No. Exhibit Description
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99.1 Press Release dated January 28, 2002
SIGNATURES
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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
/ Richard G. Cutter
---------------------------------
By: Richard G. Cutter
Vice President, Secretary and
General Counsel
Date: February 1, 2002
EXHIBIT INDEX
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Exhibit No. Exhibit Description
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99.1 Press Release dated January 28, 2002
newsrelease
CTS CORPORATION Elkhart, Indiana 46514 (574) 293-7511
January 28, 2002
FOR RELEASE: Immediately
CTS ANNOUNCES FOURTH QUARTER AND YEAR-END 2001 RESULTS
------------------------------------------------------
IN LINE WITH EARLIER ESTIMATES
------------------------------
Elkhart, IN...CTS Corporation (NYSE:CTS) today announced results for the fourth
quarter and year-end 2001. Sales for the fourth quarter were $125.8 million with
a loss, excluding restructuring, impairment and related charges, of $5.7
million, or $0.20 per share. Full-year sales were $577.7 million, with a loss,
excluding restructuring, impairment and related charges, of $7.3 million, or
$0.26 per share, in line with the third quarter conference call estimates. The
reported net loss for the fourth quarter, including restructuring, impairment
and related charges, was $27.0 million, or $0.93 per share. For the full year of
2001, the reported net loss was $45.4 million, or $1.61 per share. In 2000, the
Company had net income of $0.79 per share for the fourth quarter, and $2.92 per
share for the full year.
The fourth quarter and full-year results, excluding restructuring, impairment
and related charges are summarized in the following table:
Summary of Financial Results
Excluding Restructuring, Impairment and Related Charges *
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(Dollars in millions, expect per share data)
Fourth Quarter Full Year
---------------- ----------------
2001 2000 2001 2000
---- ---- ---- ----
Sales $ 125.8 $ 233.4 $ 577.7 $ 866.5
Earnings (loss) $ (5.7) $ 22.8 $ (7.3) $ 83.8
EPS diluted $(0.20) $ 0.79 $ (0.26) $ 2.92
Free cash flow (from operating $ 31.6 $ (4.6) $ (1.1) $ (15.5)
and investing activities)
-----------------------
* For the fourth quarter of 2001, the above amounts exclude $26.0
million restructuring and asset impairment, and $2.4 million one-time
charges. For the full year of 2001, the above amounts exclude $50.7 million
for the same charges.
During the fourth quarter of 2001, the Company recorded a $22.9 million asset
impairment charge to write down excess and obsolete equipment taken out of
service and certain vacant facilities which are available for sale. The Company
also recorded $3.1 million for severance expense, covering approximately 250
employees. In addition, the Company incurred restructuring-related one-time
expenses of $2.4 million as part of the previously announced restructuring,
primarily for equipment move and retention-related expenses. Those expenses of
$2.4 million, which were originally announced last May, are recorded as
incurred.
"Our fourth quarter results were on target with our most recent estimates,
reflecting the ongoing softness in our served markets. Cash flow from operations
was positive for the quarter and year. During the quarter, we continued our
aggressive focus on balance sheet management and cost reduction. Going forward,
the restructuring actions taken in the fourth quarter will result in estimated
pretax savings of approximately $8 million for the year of 2002," said Donald K.
Schwanz, CTS' Chairman and Chief Executive Officer.
"For full-year 2002, we are looking for revenue growth in the range of 3%-8%,
though we are counting on little improvement during the first quarter. Margins
should improve through the year as restructuring benefits flow to the bottom
line, allowing for full-year earnings per share in the range of $0.20 to $0.30,"
added Schwanz.
General Comments:
|X| Receivables decreased by $9.4 million during the quarter. Inventories also
were reduced by $13.8 million during the fourth quarter, contributing to
the reduction of working capital, one of the Company's financial objectives
this year.
|X| Cash flow from operations was $28.9 million in the fourth quarter and $65.9
million for the full year of 2001. Free cash flow from operating and
investing activities was $31.6 million for the quarter vs. a cash drain of
$4.6 million in the fourth quarter of 2000.
|X| Total debt decreased by $54.8 million during the fourth quarter to $152.5
million. The debt to capitalization ratio improved to 39%, compared to 46%
at the end of the third quarter. For the full year of 2001, debt was
reduced by $42.9 million, and the debt to capitalization of 39% is well
under the 44% at the end of 2000.
|X| EBITDA, excluding restructuring, impairment and related charges, was
positive at $5.2 million in the fourth quarter (4% of sales), and $53.9
million (9% of sales) for the full year.
FOURTH QUARTER RESULTS - SEGMENT INFORMATION
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(Dollars in millions)
Fourth Quarter 2001 Fourth Quarter 2000
------------------------ -------------------
Net Operating Net Operating
Sales Earnings/(Loss)* Sales Earnings
----- ---------------- ----- --------
Electronic Components $62.9 $(9.1) $134.0 $24.8
Electronic Assemblies 62.9 3.9 99.4 10.6
---- --- ---- ----
Total $125.8 $(5.2) $233.4 $35.4
====== ===== ====== =====
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* Excluding restructuring and related charges
Electronic Components: The electronic components segment sales in the fourth
quarter of 2001 were down by $71.1 million, or 53% lower than the fourth quarter
of 2000, primarily resulting from the continued softness in demand for
components serving the wireless handset and infrastructure equipment markets.
Operating earnings (loss) were adversely affected by the lower sales.
Electronic Assemblies: The electronic assemblies segment sales decreased by
$36.5 million, or 37%, from the fourth quarter of 2000, resulting primarily from
the lower demand for integrated interconnect systems serving both the mass data
storage systems for the computer equipment market and the infrastructure
equipment for the wireless communications market. Operating earnings were lower
than last year as a result of the reduced revenue. However, improvement was
realized over the 2001 third quarter as sales increased $1.9 million and
operating earnings increased by $2.8 million, resulting from higher integrated
interconnect systems revenues and operating improvements in other areas of this
business segment.
# # # #
Statements about the Company's earnings outlook and its plans, estimates and
beliefs concerning the future are forward-looking statements, within the meaning
of the Private Securities Litigation Reform Act of 1995, based on the Company's
current expectations. Actual results may differ materially from those stated in
the forward-looking statements due to a variety of factors which could affect
the Company's operating results, liquidity and financial condition. We undertake
no obligations to publicly update or revise any forward-looking statements.
Factors that could impact future results include among others: the impact of the
September 11 terrorist attacks, the U.S. response to the attacks, and the
general slowdown in the communications, computer and automotive markets, and in
the overall economy; whether the Company is able to implement measures to
improve its financial condition and flexibility; the Company's successful
execution of its restructuring, consolidation and cost-reduction plans; pricing
pressures and demand for the Company's products, especially if economic
conditions worsen or do not recover in the key markets for the Company's
products; and risks associated with our international operations, including
trade and tariff barriers, exchange rates and political risks. Investors are
encouraged to examine the Company's SEC filings, which more fully describe the
risks and uncertainties associated with the Company's business.
# # # #
CTS Corporation is a leading designer and manufacturer of electronic components
and assemblies for the communications, computer and automotive markets. The
Company manufactures products in North America, Europe and Asia. The Company's
stock is traded on the NYSE under the ticker symbol "CTS." To find out more,
visit the Company's website at www.ctscorp.com.
Contact: Vinod M. Khilnani, Sr. Vice President and Chief Financial Officer, or
George T. Newhart, Vice President Investor Relations
CTS Corporation
905 West Boulevard North
Elkhart, In 46514
Telephone (574) 293-7511 FAX (574) 293-6146
www.ctscorp.com
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CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
(In thousands except per share amounts)
Three Months Ended Twelve Months Ended
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December 31, December 31,
------------ ------------
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 125,790 $ 233,394 $ 577,654 $866,523
Costs and expenses:
Cost of goods sold 106,544 162,568 466,363 605,598
Selling, general and administrative
expenses 17,831 25,493 80,214 94,501
Research and development expenses 7,376 8,524 32,762 32,583
Amortization of intangibles 1,694 1,408 6,675 5,211
Restructuring and impairment charge 26,028 - 40,039 -
------- ------- ------- -------
Operating earnings (loss) (33,683) 35,401 (48,489) 128,630
Other expenses (income):
Interest expense 3,503 3,623 12,775 13,050
Other (1,183) 141 (773) (1,547)
------- ------- ------- -------
Total other expenses 2,320 3,764 12,002 11,503
------- ------- ------- -------
Earnings (loss) before income taxes (36,003) 31,637 (60,491) 117,127
Income tax expense (benefit) (8,994) 8,858 (15,116) 32,796
------- ------- ------- -------
Earnings (loss) from continuing operations (27,009) 22,779 (45,375) 84,331
Discontinued operations:
Net loss from discontinued operations - - - (529)
------- ------- ------- -------
Net earnings (loss) $ (27,009) $ 22,779 $ (45,375) $ 83,802
========= ======== ========= ========
Earnings (loss) per share:
Basic:
Continuing operations $ (0.93) $ 0.83 $ (1.61) $ 3.05
Discontinued operations - - - (0.02)
------- ------- ------- -------
Net earnings (loss) $ (0.93) $ 0.83 $ ($1.61) $ 3.03
======== ======= ========= ========
Diluted:
Continuing operations $ (0.93) $ 0.79 $ (1.61) $ 2.94
Discontinued operations - - - (0.02)
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Net earnings (loss) $ (0.93) $ 0.79 $ (1.61) $ 2.92
======== ======= ======== =======
Cash dividends paid per share $ 0.03 $ 0.03 $ 0.12 $ 0.12
Average common shares outstanding:
Basic 28,976 27,621 28,231 27,623
Diluted 28,976 28,781 28,231 28,675
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (L0SS) - UNAUDITED
Excluding Restructuring and Related One-Time Charges
(In thousands except per share amounts)
Three Months Ended Twelve Months Ended
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December 31, December 31,
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 125,790 $ 233,394 $ 577,654 $ 866,523
Costs and expenses:
Cost of goods sold 104,134 162,568 455,687 605,598
Selling, general and administrative
expenses 17,831 25,493 80,214 94,501
Research and development expenses 7,376 8,524 32,762 32,583
Amortization of intangibles 1,694 1,408 6,765 5,211
Restructuring and impairment charge - - - -
------- ------- ------- -------
Operating earnings (loss) excluding
restructuring and related one-time charges (5,245) 35,401 2,226 128,630
Other expenses (income):
Interest expense 3,503 3,623 12,775 13,050
Other (1,183) 141 (773) (1,547)
------- ------- ------- -------
Total other expenses 2,320 3,764 12,002 11,503
------- ------- ------- -------
Earnings (loss) before income taxes excluding
restructuring and related one-time charges (7,565) 31,637 (9,776) 117,127
Income tax expense (benefit) (1,891) 8,858 (2,444) 32,796
------- ------- ------- -------
Earnings (loss) from continuing operations
excluding restructuring and related one-time charges (5,674) 22,779 (7,332) 84,331
Discontinued operations:
Net loss from discontinued operations - - - (529)
------- ------- ------- -------
Net earnings (loss) excluding
restructuring and related one-time charges $ (5,674) $22,779 $ (7,332) $83,802
======== ======= ======== =======
Earnings (loss) per share excluding restructuring
and related one-time charges
Basic:
Continuing operations ($0.20) $0.83 ($0.26) $3.05
Discontinued operations - - - (0.02)
------ ----- ------ -----
Net earnings (loss) ($0.20) $0.83 ($0.26) $3.03
====== ===== ====== =====
Diluted:
Continuing operations ($0.20) $0.79 ($0.26) $2.94
Discontinued operations - - - (0.02)
------ ----- ------ ------
Net earnings (loss) ($0.20) $0.79 ($0.26) $2.92
====== ===== ====== ======
Cash dividends paid per share $0.03 $0.03 $0.12 $0.12
Average common shares outstanding:
Basic 28,976 27,621 28,231 27,623
Diluted 28,976 28,781 28,231 28,675