CTS Announces Third Quarter Results
ELKHART, Ind.--Oct. 18, 2001--CTS Corporation today announced results for the third quarter of 2001.Third quarter sales were $131.2 million compared to $222.1 million for the third quarter of 2000. Sales for the first nine months of 2001 were $451.9 million compared to the $633.1 million for the first nine months of 2000. Reported results for the third quarter of 2001, including restructuring-related one-time charges, were a net loss of $2.9 million ($0.10 per share) compared to net income of $21.3 million ($0.76 per share) for the third quarter of 2000. For the first nine months of 2001, including restructuring and related one-time charges, a net loss of $18.4 million ($0.66 per share) was recorded compared to net income of $61.0 million ($2.13 per share) for the first nine months of 2000. Restructuring and related one-time charges were $0.6 million after-tax, or $0.02 per share in the third quarter of 2001, and $16.7 million after-tax, or $0.60 per share, for the first nine months.
"Third quarter revenues were softer than anticipated as a result of weaker than expected European automotive markets and the continuing, though moderating, erosion in the telecommunication infrastructure and computing areas of our business. In contrast, we saw a gradual pickup in orders for manufactured components for handsets, primarily we believe, as a result of inventory burn-off," said Donald K. Schwanz, CTS' President and Chief Executive Officer.
"As a result of increasing softness in the world economy, coupled with the impact of the September 11 terrorist attack, we now expect fourth quarter sales to more closely approximate the third quarter, and a full-year loss in the range of $0.20 to $0.30 per share, excluding restructuring and related one-time charges. In this challenging business climate, we remain focused on reducing our cost of operations while developing new sources of revenue. Our previously announced restructuring actions to reduce breakeven and improve efficiency remain on track and are expected to provide significant benefits in 2002," added Schwanz.
General Comments:
| -- | Total debt at $207 million decreased by $22 million from the second quarter. |
| -- | Cash flow from operations was $12.9 million in the third quarter and $37.0 million for the first nine months. |
| -- | EBITDA, excluding restructuring and related one-time charges, was $15.1 million in the third quarter (12% of sales), and $48.7 million (11% of sales) for the first nine months. |
THIRD QUARTER RESULTS - SEGMENT DISCUSSION
(Dollars in millions)
Third Quarter 2001 Third Quarter 2000
Net Operating(a) Net Operating
Sales Earnings/ Sales Earnings
(Loss)
Electronic Components $ 70.2 $ (1.2) $ 127.8 $ 22.2
Electronic Assemblies 61.0 1.1 94.3 9.1
Total $ 131.2 $ (0.1) $ 222.1 $ 31.3
(a) Excluding restructuring-related one-time charges
Electronic Components: The electronic components segment sales in the third quarter of 2001 decreased $57.6 million, or 45%, from the third quarter of 2000, primarily as a result of the softness in the demand for handset and communication infrastructure components. Segment operating earnings were adversely affected by the sales declines.
Electronic Assemblies: The electronic assemblies segment sales decreased $33.3 million, or 35%, from the third quarter of 2000, primarily as a result of a decline in the integrated interconnect systems used in mass data storage systems for the computer equipment market. Operating earnings were unfavorably impacted by the lower sales volume.
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 attack, the U.S. response to the attack, and the general slowdown in the overall economy; 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.
Released by: CTS Corporation Telephone (219) 293-7511
905 West Boulevard North FAX (219) 293-6146
Elkhart, IN 46514 www.ctscorp.com
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
-------------------- -------------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
----------- ---------- ------------- ----------
Net sales $ 131,153 $ 222,052 $ 451,864 $ 633,129
Costs and expenses:
Cost of goods sold 102,551 159,294 359,819 443,030
Selling, general and
administrative
expenses 19,669 21,716 62,383 69,008
Research and
development expenses 8,118 8,237 25,386 24,059
Amortization of
intangibles 1,701 1,513 5,071 3,803
Restructuring and
impairment charge - - 14,011 -
----------- ---------- ------------- ----------
Operating earnings(loss) (886) 31,292 (14,806) 93,229
Other expenses (income):
Interest expense 2,673 3,160 9,272 9,427
Other 294 (1,473) 410 (1,688)
----------- ---------- ------------- ----------
Total other expenses 2,967 1,687 9,682 7,739
----------- ---------- ------------- ----------
Earnings(loss) before
income taxes (3,853) 29,605 (24,488) 85,490
Income tax expense
(benefit) (963) 8,290 (6,122) 23,938
----------- ---------- ------------- ----------
Earnings (loss) from
continuing operations (2,890) 21,315 (18,366) 61,552
Discontinued operations:
Net loss from
discontinued operations - - - (529)
----------- ---------- ------------- ----------
Net earnings(loss) $ (2,890) $ 21,315 $ (18,366) $ 61,023
----------- ---------- ------------- ----------
----------- ---------- ------------- ----------
Earnings(loss) per share:
Basic:
Continuing operations $ (0.10) $ 0.77 $ (0.66) $ 2.22
Discontinued operations - - - (0.02)
----------- ---------- ------------- ----------
Net earnings(loss) $ (0.10) $ 0.77 $ (0.66) $ 2.20
----------- ---------- ------------- ----------
----------- ---------- ------------- ----------
Diluted:
Continuing operations $ (0.10) $ 0.76 $ (0.66) $ 2.15
Discontinued operations - - - (0.02)
----------- ---------- ------------- ----------
Net earnings(loss) ($0.10) $ 0.76 ($0.66) $ 2.13
----------- ---------- ------------- ----------
----------- ---------- ------------- ----------
Cash dividends paid
per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Average common shares
outstanding:
Basic 28,495 27,748 27,955 27,764
Diluted 28,495 28,140 27,955 28,639
CTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
Excluding Restructuring and Related One-Time Charges
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
-------------------- -------------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
----------- ---------- ------------- ----------
Net sales $ 131,153 $ 222,052 $ 451,864 $ 633,129
Costs and expenses:
Cost of goods sold 101,788 159,294 351,553 443,030
Selling, general and
administrative
expenses 19,669 21,716 62,383 69,008
Research and
development expenses 8,118 8,237 25,386 24,059
Amortization of
intangibles 1,701 1,513 5,071 3,803
Restructuring and
impairment charge - - - -
----------- ---------- ------------- ----------
Operating earnings
(loss) excluding
restructuring and
related one-time
charges (123) 31,292 7,471 93,229
Other expenses(income):
Interest expense 2,673 3,160 9,272 9,427
Other 294 (1,473) 410 (1,688)
----------- ---------- ------------- ----------
Total other expenses 2,967 1,687 9,682 7,739
----------- ---------- ------------- ----------
Earnings (loss) before
income taxes
excluding
restructuring and
related one-time
charges (3,090) 29,605 (2,211) 85,490
Income tax expense
(benefit) (772) 8,290 (553) 23,938
----------- ---------- ------------- ----------
Earnings (loss) from
continuing operations
excluding restructuring
and related one-time
charges (2,318) 21,315 (1,658) 61,552
Discontinued operations:
Net loss from
discontinued operations - - - (529)
----------- ---------- ------------- ----------
Net earnings(loss)
excluding restructuring
and related one-time
charges $ (2,318) $ 21,315 $ (1,658) $ 61,023
----------- ---------- ------------- ----------
----------- ---------- ------------- ----------
Earnings (loss) per
share excluding
restructuring and
related one-time
charges
Basic:
Continuing operations ($0.08) $ 0.77 ($0.06) $ 2.22
Discontinued operations - - - (0.02)
Net earnings(loss) ($0.08) $ 0.77 ($0.06) $ 2.20
----------- ---------- ------------- ----------
Diluted:
Continuing operations ($0.08) $ 0.76 ($0.06) $ 2.15
Discontinued operations - - - (0.02)
----------- ---------- ------------- ----------
Net earnings (loss) ($0.08) $ 0.76 ($0.06) $ 2.13
----------- ---------- ------------- ----------
----------- ---------- ------------- ----------
Cash dividends paid
per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Average common shares
outstanding:
Basic 28,495 27,748 27,955 27,764
Diluted 28,495 28,140 27,955 28,639
CTS Corporation
Condensed Consolidated Balance Sheets
Sept. 30, Dec. 31 Oct. 1,
2001 2000(a) 2000
-------- -------- --------
(Unaudited) (Unaudited)
Current Assets $198,771 $305,696 $281,586
Property, Plant & Equipment, net 246,636 224,861 194,679
Other Assets 150,407 142,372 131,586
-------- -------- --------
Total Assets $595,814 $672,929 $607,851
======== ======== ========
Current Liabilities $126,429 $202,891 $178,341
Long-term Obligations 191,226 184,689 175,411
Deferred Income Taxes 32,553 34,612 27,263
Postretirement Benefits 4,429 4,380 4,364
Shareholders' Equity 241,177 246,357 222,472
-------- -------- --------
Total Liabilities and
Shareholders' Equity $595,814 $672,929 $607,851
======== ======== ========
(a) The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date.