CTS Corporation Comments On 2001 Outlook

    ELKHART, Ind.--June 13, 2001--CTS Corporation commented today on its outlook for 2001 in light of continued softness in its markets as evidenced by recent announcements of other market participants.
    "Last month, we announced a restructuring plan that we believe will permit us to operate much more efficiently in the current environment without sacrificing our ability to return to sustainable growth when our markets recover," said Joseph P. Walker, Chairman and CEO. "We indicated at that time that we expected our results for the second quarter to be slightly behind the first quarter. With most of the quarter complete, we now estimate second quarter revenue of about $150 million and a loss of $0.05 to $0.10 per share before restructuring and related one-time costs," Walker said.
    "Based on order rates, inputs from our customers, and our assessment of the general economy, we believed in May that we were close to the bottom in the current business cycle and that sales would improve through the second half reflecting elimination of excess customer inventory. However, automobile sales in the U.S. have remained soft, particularly for the Big Three where CTS participates most actively. Recently, Europe has shown increased softness leading to order cut backs from that region. Similarly, the computer and communications markets remain extremely weak with some new product introductions now being delayed. Recent discussions with customers have convinced us that inventory overhang may persist longer than we originally expected."
    "Due to the restructuring actions we are taking, we feel confident of base earnings in the range of $0.40 to $0.60 per share before restructuring and related one-time costs for the full year of 2001, without a substantial improvement in our markets during the second half of the year and, assuming of course, no further deterioration. Obviously, to the extent that our markets recover during the year, we would expect to benefit. Our current outlook envisions a slightly improved second half, with earnings improving as a result of the restructuring cost savings and the margin impact of incremental and new product sales. To achieve this we are counting on some seasonal improvements in overall consumer demand and modest capital spending increases," Walker further commented.
    "Since January 1, we have reduced headcount by 28% and put in place a restructuring program that will significantly improve operating margins in the future while also increasing our customer responsiveness. Though we must work through the current period, we know the markets will eventually recover, so it is critical that we be positioned for the future. Accordingly, we have been careful to protect new product development and have actually added sales people during this same period of cutbacks," said Donald K. Schwanz, Chief Operating Officer. "I remain convinced that we are doing the right things to return the Company to sustainable growth as our businesses recover," added Schwanz.