CTS Considering Further Profit Improvement Actions; Severance charge and asset write-down possible in third quarter; Cash impact in 2002 expected to be positive

    ELKHART, Ind.--Aug. 13, 2002--CTS Corporation today stated that while CTS does not normally comment on market activity in CTS stock, in view of recent trading activity CTS wanted to make public the fact that it has been evaluating further restructuring actions to improve profitability. CTS does not normally announce these types of actions until approved for implementation.
    Actions under consideration include the possible "end-of-life" of certain older and low margin product lines within the Communications Components business. Under the plan being considered, CTS would continue production of those older and low margin products as long as required by current customers, but would no longer design custom variations of those product lines. CTS noted that this plan remains subject to Board approval before being implemented.
    Consistent with its previously announced intent to continue to aggressively reduce its cost structure, CTS expects to eliminate over 150 indirect and salaried positions during the third quarter. All of these positions are within the Communication Components business and include SG&A, R&D and manufacturing overhead reductions. Most of these reductions are made possible through a combination of process improvements and organizational consolidations.
    In conjunction with the above, CTS expects to take a charge for the impairment of certain assets within the Communications Components business to reflect the impact of the above described actions, as well as market conditions.
    Total restructuring charges associated with the above described actions are expected to be in the range of $14 to $16 million pretax, most of which is expected to be taken in the third quarter. Of this amount, $12 to $14 million is expected to be a non-cash charge. Annualized pretax savings from the above actions are estimated to be in the range of $10 to $12 million with $6 to $7 million of this being cash savings. Cash impact in 2002 is expected to be positive.
    "CTS continues to aggressively pursue steps to return to profitability," noted Donald Schwanz, CTS Chairman and Chief Executive Officer. "While it is unclear how quickly the communication markets will recover, we continue to re-size our operation to current market realities and to focus our resources on those product and market opportunities offering the best future growth and profit potential," added Schwanz.

    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 general market conditions 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 restructurings, 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. Worldwide sales coverage is accomplished through a network of direct sales personnel, independent manufacturers' representatives and electronic distributors. 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.