EX-99.1 2 ex99_1.htm EXHIBIT 99.1 1-28-10 ex99_1.htm


newsrelease   
CTS CORPORATION  Elkhart, Indiana 46514h(574) 523-3800   
 
 
January 27, 2010   
 
 
FOR RELEASE:  Immediately

CTS ANNOUNCES FOURTH QUARTER AND FULL-YEAR
2009 FINANCIAL RESULTS

Reports Strong Cash Flow and Sequential Improvement in Sales and Operating Earnings
Adjusted Earnings Exceed Analyst Estimate


Elkhart, IN…CTS Corporation (NYSE: CTS) today announced fourth quarter 2009 revenues of $133.9 million, 6% higher than third quarter 2009 revenues of $126.6 million. Fourth quarter 2009 net earnings were $4.1 million, or $0.12 per diluted share, including a discrete tax valuation allowance charge of $2.5 million (or $0.07 per diluted share). Excluding this charge, fourth quarter non-GAAP adjusted net earnings were $6.6 million, or $0.19 per diluted share, compared to third quarter 2009 net earnings of $4.5 million, or $0.13 per diluted share.

Components and Sensors segment revenues increased 17% from the third quarter of 2009, driven by a 24% improvement in automotive product shipments with improved market share, as the global markets began to recover.  Sales of electronic component products increased 5% over the third quarter of 2009 primarily from higher demand for wireless infrastructure applications. EMS segment sales decreased 3% from the third quarter of 2009 primarily due to lower sales in the defense and aerospace market.  Components and Sensors segment sales were 49% of total CTS sales in the fourth quarter, compared to 44% in the third quarter, contributing to the sequential earnings improvement.

Although total sales in the fourth quarter 2009 decreased 18% from the same period last year, sales in automotive sensors and actuators increased 44%, reflecting the global market recovery for light vehicles. Adjusted fourth quarter 2009 diluted earnings per share of $0.19 increased 36% over the fourth quarter 2008.

Full-year 2009 revenue was $499.0 million, a 28% decrease from 2008 full-year revenue, reflecting the impact of the global recession. The Company implemented a number of cost saving actions in late 2008 and 2009 to manage through the negative economic environment, finishing the year with three consecutive sequential quarter-to-quarter improvements in both sales and operating earnings.  Fourth quarter 2009 cash flow from operations was $12.5 million driving full-year cash flow from operations to $46.6 million, which is significantly improved from $34.1 million for full-year 2008.  Full-year capital expenditures were $6.5 million, compared to $17.6 million in 2008.  Total debt, as a percentage of total capitalization, was 17.0% at year-end 2009, compared to 22.4% at year-end 2008.

Commenting on fourth quarter 2009 results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “We are pleased to continue the momentum established earlier this year through our growth and cost structure initiatives. The Company continued generating strong cash flow and improving operating profitability. CTS ended the year further diversifying its geographic customer base by winning strategic new business in key Asian markets. CTS achieved a record of winning over $300 million of new business across all our key product lines and continued to capture design wins for electronic component products.”

The full-year 2009 net loss of $34.1 million, or $1.01 per share, included four non-operating discrete items: a non-cash charge for goodwill impairment of $33.2 million, or $0.98 per diluted share, restructuring charges of $2.2 million, or $0.05, an international cash repatriation-related tax charge, primarily non-cash, of $9.1 million, or $0.27 per diluted share, and a discrete tax valuation charge of $2.5 million, or $0.07 per diluted share. Full-year net earnings in 2008 was $28.1 million, or $0.81 per diluted share. Included in 2008 results were two non-operating discrete items: a favorable net tax credit of $0.14 per share and a negative $0.10 per share impact from restructuring and related costs.  Excluding these non-operating items, adjusted earnings per share in 2009 were $0.36, compared to adjusted earnings per share in 2008 of $0.77.

Based on an easing of the current recession, yet taking a cautious view of the economic indicators in 2010, management anticipates full-year 2010 sales to increase in the range of 10% to 15% over 2009 and diluted earnings per share to be in the range of $0.45 to $0.53. This estimate includes reinstatement of certain temporary salary and benefit reductions in 2009, and increase in the research and development activities to support new product introductions, including the launch of sensor and actuator products for diesel and commercial market applications. First quarter results are expected to show normal seasonality with gradual improvements during the year.


 
 
 

SEGMENT INFORMATION

(Dollars in millions)

                       
 
Fourth Quarter
  
Fourth Quarter
  
Third Quarter
 
2009
  
2008
  
2009
     
Segment
      
Segment
      
Segment
 
Net
  
Operating
  
Net
  
Operating
  
Net
  
Operating
 
Sales
  
Earnings
  
Sales
  
Earnings
  
Sales
  
Earnings
Components and Sensors
$65.5
  
$7.6
  
$58.0
  
$1.9
  
$55.8
  
$4.1
Electronics Manufacturing Services (EMS)
68.4
  
0.7
  
104.8
  
4.0
  
70.8
  
2.2
     Segment Operating Earnings
    
8.3
      
5.9
      
6.3
Expenses not allocated to business segments:
                      
     - Restructuring and related charges
            
(2.1)
        
Total
$133.9
  
$8.3
  
$162.8
  
$3.8
  
$126.6
  
$6.3


Components & Sensors: Components and Sensors fourth quarter 2009 sales increased $9.6 million, or 17%, from the third quarter of 2009 reflecting a 24% increase in global automotive sensor product demand. Electronic component product demand increased 5% primarily in sales of infrastructure applications. Segment operating earnings increased $3.5 million from the third quarter, driven primarily by higher sales volume and improved margins.

Components and Sensors fourth quarter 2009 sales increased $7.5 million, or 13%, from the fourth quarter of 2008.  Automotive sensor and actuator product sales improved by $13.6 million, or 44%, partially offset by 23% lower sales of electronic component products.  Segment operating earnings of $7.6 million were favorable by $5.7 million to the fourth quarter of 2008 due to higher sales volumes and cost control initiatives.

EMS: EMS fourth quarter 2009 sales declined $2.3 million, or 3%, from third quarter 2009 levels, primarily reflecting lower demand in the defense and aerospace market.  Segment operating earnings of $0.7 million decreased $1.5 million from the third quarter 2009, primarily due to unfavorable product mix and lower sales.

EMS fourth quarter 2009 sales decreased $36.4 million, or 35%, from the fourth quarter of 2008 reflecting lower sales across all markets from the global recession. Segment operating earnings decreased $3.3 million from the fourth quarter of 2008 on lower volumes, partially offset by reduced operating expenses.


 
 
 

Conference Call
As previously announced, the Company has scheduled a conference call on Thursday, January 28, 2010 at 11:00 a.m. EST. Those interested in participating may dial 800-288-8960 (612-332-0107, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 1:30 p.m. EST on Thursday, January 28, 2010, through 11:59 p.m. EST on Thursday, February 4, 2010. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 142812. There will also be a live audio webcast of the conference call which can be accessed directly from the Web sites of CTS Corporation (www.ctscorp.com), StreetEvents (www.StreetEvents.com), Netscape (www.netscape.com), Compuserve (www.compuserve.com) and others. AOL subscribers will have access through the Personal Finance section of AOL.

About CTS
CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS.”  To find out more, visit the CTS Web site at www.ctscorp.com.

Safe Harbor Statement
This press release contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events and any other statements that are not based solely on historical fact. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements, including, without limitation: changes in the economy generally and in respect to the businesses in which CTS operates, including those resulting from the current global financial and credit crisis; pricing pressures and reduction in demand for CTS’ products, especially if economic conditions do not recover or continue to worsen in CTS’ served markets, including but not limited to: the automotive, computer equipment or communications markets; disruption, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged by CTS and the availability and cost of credit in the future; the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability or ongoing viability; risks associated with CTS’ international operations, including trade and tariff barriers; currency fluctuations and their effects on our results of operations and financial position; changes in performance of equity and debt markets that could affect the valuation of the assets in CTS’ pension plans and the accounting for pension assets, liabilities and expenses; political and geopolitical risks; rapid technological change in the automotive, communications and computer industries; reliance on key customers; and CTS’ ability to protect its intellectual property. For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC, available at http://www.ctscorp.com/investor_relations/investor.htm.  CTS undertakes no obligation to publicly update its forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.


Contact:                Donna L. Belusar, Senior Vice President and Chief Financial Officer, or
Mitchell J. Walorski, Director Planning and Investor Relations
CTS Corporation, 905 West Boulevard North, Elkhart, IN 46514
Telephone (574) 523-3800  FAX (574) 293-6146
 
 
 
 
 

                         
CTS CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED
  
(In thousands, except per share amounts)
  
             
   
Three Months Ended
    
Twelve Months Ended
  
   
Dec 31
    
Dec 31
    
Dec 31
    
Dec 31
  
   
2009
       2008*       2009       2008*  
                               
Net sales
   $ 133,888     $ 162,827     $ 498,982     $ 691,707  
                                 
Costs and expenses:
                                
 Cost of goods sold
     102,941       133,081       400,142       554,634  
Selling, general and administrative expenses
     18,761       19,134       67,119       82,370  
Research and development expenses
     3,927       4,730       14,154       18,306  
Restructuring and impairment charges
     -       2,102       2,243       5,567  
 Goodwill impairment
     -       -       33,153       -  
                                 
Operating earnings / (loss)
     8,259       3,780       (17,829 )     30,830  
                                 
Other (expense) / income:
                                
Interest expense
     (226 )     (1,216 )     (1,722 )     (6,193 )
Other
     (126 )     347       (863 )     1,618  
  Total other expense
     (352 )     (869 )     (2,585 )     (4,575 )
                                 
    Earnings / (loss) before income taxes
     7,907       2,911       (20,414 )     26,255  
                                 
Income tax expense / (benefit)
     3,764       (2,072 )     13,636       (1,807 )
                                 
                                 
Net earnings / (loss)
   $ 4,143     $ 4,983     $ (34,050 )   $ 28,062  
                                 
Net earnings / (loss) per share:
                                
   Basic
   $ 0.12     $ 0.15     $ (1.01 )   $ 0.83  
                                 
   Diluted
   $ 0.12     $ 0.15     $ (1.01 )   $ 0.81  
                                 
Cash dividends declared per share
   $ 0.03     $ 0.03     $ 0.12     $ 0.12  
                                 
Average common shares outstanding:
                                
   Basic
     33,892       33,711       33,823       33,728  
                                 
   Diluted
     34,621       36,840       33,823       37,864  
                                 
                                 
                                 
*The Statement of Earnings for the three and twelve months ended December 31, 2008 was adjusted from the previously filed 2008 10-K to comply with the provisions of Accounting Standards Codification ("ASC") 470-20, "Debt with Conversion and Other Options."
  
                                 

 
 
 
CTS Corporation and Subsidiaries
  
Condensed Consolidated Balance Sheets - Unaudited
  
(In thousands of dollars)
  
             
   
December 31,
    
December 31,
  
   
2009
       2008*  
               
Cash and cash equivalents
   $ 51,167     $ 44,628  
Accounts receivable, net
     71,718       94,175  
Inventories, net
     54,348       70,867  
Other current assets
     16,502       16,172  
Total current assets
     193,735       225,842  
                 
Property, plant & equipment, net
     81,120       90,756  
Other assets
     132,802       171,844  
                 
Total Assets
   $ 407,657     $ 488,442  
                 
                 
                 
Notes payable and current portion
                
  of long-term debt
   $ -     $ -  
Accounts payable
     52,344       71,285  
Other accrued liabilities
     38,172       41,956  
Total current liabilities
     90,516       113,241  
                 
Long-term debt
     50,400       79,988  
Other obligations
     19,287       17,740  
                 
Shareholders' equity
     247,454       277,473  
                 
Total Liabilities and
                
 Shareholders' Equity
   $ 407,657     $ 488,442  
                 
                 
                 
*The Balance Sheet at December 31, 2008 was adjusted from the previously filed 10-K to comply with the provisions of ASC 470-20, "Debt with Conversion and Other Options."
  
                 
                 

 
 
 

                         
CTS CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
  
(In thousands, except per share amounts)
  
                         
   
Three Months Ended
    
Twelve Months Ended
  
   
Dec 31
    
Dec 31
    
Dec 31
    
Dec 31
  
   
2009
       2008*       2009       2008*  
   
Adjusted
    
Adjusted
    
Adjusted
    
Adjusted
  
                               
Net sales
   $ 133,888     $ 162,827     $ 498,982     $ 691,707  
                                 
Costs and expenses:
                                      
Cost of goods sold
     102,941       133,114       400,142       554,116  
Selling, general and administrative expenses
     18,761       19,134       67,119       82,370  
Research and development expenses
     3,927       4,730       14,154       18,306  
                                 
Adjusted operating earnings
     8,259       5,849       17,567       36,915  
                                 
Other (expense) / income:
                                
Interest expense
     (226 )     (1,216 )     (1,722 )     (6,193 )
Other
     (126 )     347       (863 )     1,618  
  Total other expense
     (352 )     (869 )     (2,585 )     (4,575 )
                                 
    Adjusted earnings before income taxes
     7,907       4,980       14,982       32,340  
                                 
Adjusted income tax expense
     1,264       210       2,937       5,886  
                                 
                                 
Adjusted net earnings
   $ 6,643     $ 4,770     $ 12,045     $ 26,454  
                                 
Adjusted net earnings per share:
                                
      -               -          
   Diluted
   $ 0.19     $ 0.14     $ 0.36     $ 0.77  
                                 
Cash dividends declared per share
   $ 0.03     $ 0.03     $ 0.12     $ 0.12  
                                 
Average common shares outstanding:
                                
                                 
   Diluted
     34,621       36,840       33,823       37,864  
                                 
                                 
                                 
*The Statement of Earnings for the three and twelve months ended December 31, 2008 was adjusted from the previously filed 2008 10-Q to comply with the provisions of Accounting Standards Codification 470-20, "Debt with Conversion and Other Options."
  
                                 
                                 
                                 
See reconciliation and explanation of net earnings / (loss) to adjusted net earnings attached.
                  


 
 
 

             
CTS CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
  
(In thousands, except per share amounts)
 
  
   
Three Months Ended
  
   
December 31
    
September 27
  
   
2009
    
2009
  
   
Adjusted
    
GAAP**
  
             
Net sales
   $ 133,888     $ 126,565  
                 
   Costs and expenses:
                
    Cost of goods sold
     102,941       100,380  
     Selling, general and administrative expenses
     18,761       16,494  
  Research and development expenses
     3,927       3,408  
                 
Adjusted operating earnings
     8,259       6,283  
                 
Other (expense) / income:
                
 Interest expense
     (226 )     (239 )
Other
     (126 )     (390 )
Total other expense
     (352 )     (629 )
                 
    Adjusted earnings before income taxes
     7,907       5,654  
                 
Adjusted income tax expense
     1,264       1,173  
                 
                 
Adjusted net earnings
   $ 6,643     $ 4,481  
                 
Adjusted net earnings per share:
                
      -          
   Diluted
   $ 0.19     $ 0.13  
                 
Cash dividends declared per share
   $ 0.03     $ 0.03  
                 
Average common shares outstanding:
                
                 
   Diluted
     34,621       34,513  
                 
                 
** There were no one-time events that required adjustments to the Statement of Earnings for the three months ended September 27, 2009.
  
                 
See reconciliation and explanation of net earnings to adjusted net earnings attached.
                

 
 
 
 
                   
CTS CORPORATION AND SUBSIDIARIES
  
OTHER SUPPLEMENTAL INFORMATION
  
                   
                   
Full Year Earnings per Share
                  
                   
The following table reconciles projected GAAP earnings / (loss) per share to adjusted projected earnings per share for the Company:
  
                   
   
Three Months Ended
  
Twelve Months Ended
  
   
Dec 31
  
Dec 31
  
Dec 31
  
Dec 31
  
   
2009
  
2008
  
2009
  
2008
  
                   
GAAP net earnings/(loss) per share
  
 $            0.12
  
 $            0.15
  
 $           (1.01)
  
 $            0.81
  
Tax affected charges to reported diluted
                  
  loss per share:
                  
      Tax expense due to cash repatriation
  
                  -
  
                  -
  
              0.27
  
                  -
  
      NOL valuation allowance related to Asian unit
  
              0.07
  
             (0.05)
  
              0.07
  
             (0.14)
  
     Restructuring charge
  
                  -
  
              0.04
  
              0.05
  
              0.10
  
     Goodwill impairment
  
                  -
  
                  -
  
              0.98
  
                  -
  
Adjusted earnings per share
  
 $            0.19
  
 $            0.14
  
 $            0.36
  
 $            0.77
  
                   
                   
Adjusted earnings per share is a non-GAAP financial measure.  The most directly comparable GAAP financial measure
  
is diluted earnings / (loss) per share.  CTS calculates adjusted earnings per share to exclude the per share impact
      
of tax expense associated with our cash repatriation and restructuring and goodwill impairment charges and an additional tax
valuation allowance related to one of our foreign units.  We exclude the impact of these items
because they are discrete events which have a significant impact on comparable GAAP financial measures
      
and could distort an evaluation of our normal operating performance.  CTS uses adjusted earnings per share
      
measures to evaluate overall performance, establish plans and perform strategic analysis.  Using adjusted earnings
      
per share measures avoids distortion in the evaluation of operating results by eliminating the impact of events which are
      
not related to normal operating performance.  Because adjusted earnings per share measures are based on the
      
exclusion of specific items, they may not be comparable to measures used by other companies which have similar titles.
      
CTS' management compensates for this limitation when performing peer comparisons by evaluating both GAAP and
      
non-GAAP financial measures reported by peer companies.  CTS believes that adjusted earnings per share measures
      
are useful to its management, investors and stakeholders in that they:
              
                   
- provide a truer measure of CTS' operating performance,
                  
- reflect the results used by management in making decisions about the business, and
          
- help review and project CTS' performance over time.
                  
                   
We recommend that investors consider both actual and adjusted earnings per share measures in evaluating the
      
performance of CTS with peer companies.
                  
                   
                   
Debt / Capitalization
                  
                   
The following table represents the calculation of total debt to shareholder's equity:
            
                   
                   
(in thousands)
  
December 31
  
December 31
          
   
2009
  
2008*
          
                   
Notes payable
  
 $               -
  
 $               -
          
Current portion of long-term debt
  
                  -
  
                  -
          
Long-term debt
  
           50,400
  
           79,988
          
                   
Total debt
  
           50,400
  
           79,988
          
Total shareholders' equity
  
         247,454
  
         277,473
          
                   
Total capitalization
  
 $      297,854
  
 $      357,461
          
                   
Total debt to capitalization
  
16.9%
  
22.4%
          
                   
* Adjustments have been made from previous filings to comply with the provisions of ASC 470-20, "Debt with Conversion and Other Options."
  
                   
Segment Operating Earnings
                  
                   
Segment operating earnings is a non-GAAP financial measure outside the context of the Accounting Standards Codification ("ASC") 280 required reconciliation in the notes to the Company's financial statements.  The most comparable GAAP term is operating earnings.  Segment operating earnings always exclude the effects of charges for restructuring and goodwill impairment when they are incurred by the Company.  Segment operating earnings exclude interest expense, and other non-operating income and income taxes according to how a particular segment is measured.  CTS' management provides the segment operating earnings measure to provide consistency between segment information in its earnings release and the business segment discussion in the notes to its financial statements.

 
 
 
                             
 
CTS CORPORATION AND SUBSIDIARIES
 
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED TO CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
                             
 
(In thousands, except per share amounts)
 
           
Three Months
Ended
Three Months
Ended
  
Twelve  Months
Ended
  
Twelve  Months Ended
           
December 31
    
December 31
  
December 31
    
December 31
           
2009
Adjustments
Note
2009
  
2009
Adjustments
Note
2009
           
(GAAP)
    
Adjusted
  
(GAAP)
    
Adjusted
 
Net sales
      
 $          133,888
    
 $        133,888
  
 $          498,982
    
 $                  498,982
                             
 
Costs and expenses:
                    
   
Cost of goods sold
  
             102,941
    
           102,941
  
            400,142
    
                     400,142
   
Selling, general and administrative expenses
               18,761
    
             18,761
  
              67,119
    
                       67,119
   
Research and development expenses
                3,927
    
               3,927
  
              14,154
    
                       14,154
   
Restructuring and impairment charges
                       -
    
                      -
  
                2,243
          (2,243)
 A
                               -
   
Goodwill Impairment
  
                       -
    
                      -
  
              33,153
        (33,153)
 B
                               -
                             
 
Operating earnings / (loss)
  
8,259
                  -
  
8,259
  
(17,829)
35,396
  
17,567
                             
 
Other expense:
                      
   
Interest expense
  
                  (226)
    
                (226)
  
               (1,722)
    
                       (1,722)
   
Other
      
                  (126)
    
                (126)
  
                  (863)
    
                          (863)
     
Total other expense
  
(352)
    
(352)
  
(2,585)
    
(2,585)
                             
     
Earnings / (loss) before income taxes
7,907
                  -
  
7,907
  
(20,414)
35,396
  
14,982
                             
 
Income tax expense / (benefit)
  
                3,764
            (2,500)
 C
               1,264
  
              13,636
        (10,699)
 C
                        2,937
                             
                             
 
Net (loss) / earnings
    
 $              4,143
 $           2,500
  
 $            6,643
  
 $          (34,050)
 $      46,095
  
 $                    12,045
                             
 
Net (loss) / earnings per share:
                    
 
   Basic
      
 $               0.12
 $            0.07
  
 $              0.19
  
 $              (1.01)
 $          1.37
  
 $                       0.36
                 
                    -
        
                             -
 
   Diluted
      
 $               0.12
 $            0.07
  
 $              0.19
  
 $              (1.01)
 $          1.37
  
 $                       0.36
                             
 
Cash dividends declared per share
  
 $               0.03
    
 $              0.03
  
 $               0.12
    
 $                       0.12
                             
 
Average common shares outstanding:
                    
 
   Basic
      
33,892
    
33,892
  
33,823
    
33,823
                             
 
   Diluted
      
34,621
    
34,621
  
33,823
    
33,823
                             
 
Notes:
                        
 
A.
This adjustment pertains to restructuring charges that occurred in the first quarter of 2009 as a result of a company-wide restructuring plan.
    
                             
 
B.
This adjustment pertains to the impairment of the carrying value of goodwill.
              
                             
 
C.
The following table presents the tax components related to Notes A, B and C above:
              
                 
YTD 2009
  
4th QTR 2009
      
     
Tax benefit related to first quarter restructuring charges
    
 $               673
  
 $                  -
      
     
Tax benefit related to first quarter goodwill impairment charges
  
                 205
  
                     -
      
     
Tax expense related to additional NOL valuation allowance
    
              (2,500)
  
               (2,500)
      
     
Tax expense related to one-time cash repatriation event
    
              (9,077)
  
                     -
      
                 
 $         (10,699)
  
 $            (2,500)
      
                             

 
 
 
                             
  CTS CORPORATION AND SUBSIDIARIES
 
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED TO CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - AS ADJUSTED (UNAUDITED)
                             
 
(In thousands, except per share amounts)
                  
                             
           
Three Months
Ended
Three Months
Ended
  
Twelve  Months
Ended
  
Twelve  Months Ended
           
December 31
    
December 31
  
December 31
    
December 31
           
2008
Adjustments
Note
2008
  
2008
Adjustments
Note
2008
           
(GAAP)
    
Adjusted
  
(GAAP)
    
Adjusted
 
Net sales
      
 $          162,827
    
 $        162,827
  
 $          691,707
    
 $                       691,707
                             
 
Costs and expenses:
                    
   
Cost of goods sold
  
             133,081
                  33
 B
           133,114
  
            554,634
            (518)
 A
                         554,116
   
Selling, general and administrative expenses
               19,134
    
             19,134
  
              82,370
    
                           82,370
   
Research and development expenses
                4,730
    
               4,730
  
              18,306
    
                           18,306
   
Restructuring and impairment charges
                2,102
            (2,102)
 A
                      -
  
                5,567
          (5,567)
 A
                                    -
                             
 
Operating earnings
    
3,780
             2,069
  
5,849
  
30,830
           6,085
  
36,915
                             
 
Other (expense) / income:
                    
   
Interest expense
  
               (1,216)
    
              (1,216)
  
               (6,193)
    
                            (6,193)
   
Other
      
                   347
    
                 347
  
                1,618
    
                             1,618
     
Total other expense
  
(869)
    
(869)
  
(4,575)
    
(4,575)
                             
     
Earnings before income taxes
2,911
             2,069
  
4,980
  
26,255
    
32,340
                             
 
Income tax (benefit) / expense
  
               (2,072)
            (2,282)
 C
                 210
  
               (1,807)
           7,693
 C
                             5,886
                             
                             
 
Net earnings
    
 $              4,983
 $            (213)
  
 $            4,770
  
 $           28,062
 $       (1,608)
  
 $                        26,454
                             
 
Net earnings per share:
                      
 
   Basic
      
 $               0.15
 $           (0.01)
  
 $              0.14
  
 $               0.83
 $         (0.04)
  
 $                            0.79
                 
                    -
        
                                  -
 
   Diluted
      
 $               0.15
 $           (0.01)
  
 $              0.14
  
 $               0.81
 $         (0.04)
  
 $                            0.77
                             
 
Cash dividends declared per share
  
 $               0.03
    
 $              0.03
  
 $               0.12
    
 $                            0.12
                             
 
Average common shares outstanding:
                    
 
   Basic
      
33,711
    
33,711
  
33,728
    
33,728
                             
 
   Diluted
      
36,840
    
36,840
  
37,864
    
37,864
                             
 
Notes:
                        
 
A.
This adjustment pertains to restructuring (including related) and impairment charges that occurred in the third and fourth quarters of 2008 as a result of a company-wide restructuring plan.
                             
 
B.
This represents a reversal of an accrued cost related to restructuring that was charged to cost of goods sold in the third quarter of 2008.
      
                             
 
C.
The following table presents the tax components related to Notes A, B and C above:
              
                 
Three months
  
Twelve months
      
                 
ended
  
ended
      
                 
Dec 31, 2008
  
Dec 31, 2008
      
     
Tax benefit related to restructuring charges
      
 $               743
  
 $             2,190
      
     
Tax benefit due to change in Canada tax law
    
               1,355
  
                1,355
      
     
Tax benefit related to release of valuation allowance
    
                 184
  
                4,148
      
                 
 $            2,282
  
 $             7,693