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CTS Announces Fourth Quarter And Full-Year 2011 Financial Results

EMS: EMS fourth quarter 2011 sales decreased $6.3 million, or 8%, from the fourth quarter of 2010, due primarily to the impact from the Thailand floods. Sales decreased in communications, computer and medical markets, partially offset by increases in industrial and defense and aerospace markets. Segment operating earnings of $3.1 million increased $2.1 million from the fourth quarter 2010 primarily from the $3.4 million insurance recovery for fire-related property damage, partially offset by the impact of lower sales related to the disruptions of the Thailand floods.

EMS fourth quarter 2011 sales decreased $3.7 million, or 5%, from the third quarter of 2011 reflecting the impact of the flooding in Thailand. Segment operating earnings decreased $0.5 million primarily on lower sales and the disruptions from the Thailand floods, partially offset by a higher insurance recovery for fire-related property damage.

Conference Call

As previously announced, the Company has scheduled a conference call on Thursday, January 26, 2012 at 11:00 a.m. EST. Those interested in participating may dial 800-288-8967 (612-332-0228, 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 26, 2012 through 11:59 p.m. EST on Thursday, February 2, 2012. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 231985. Also, please note that a live audio webcast of the conference call will be available and can be accessed directly from the Web sites of CTS Corporation www.ctscorp.com, StreetEvents www.streetevents.com, Netscape netscape.aol.com, Compuserve www.compuserve.com and others.

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 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; unanticipated issues in integrating acquisitions; rapid technological change; general market conditions in the automotive, communications and computer industries, as well as conditions in the industrial, defense and aerospace and medical markets; reliance on key customers; unanticipated natural or other events such as the Japan earthquake and floods in Thailand; the ability to protect our intellectual property; pricing pressures and demand for our products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geographical risks. For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the Securities and Exchange Commission 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.

CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands, except per share amounts)
             
Three Months Ended Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2011 2010 2011 2010
 
Net sales $ 143,999 $ 145,025 $ 588,506 $ 552,641
 
Costs and expenses:
Cost of goods sold 118,161 115,903 478,657 432,731
Insurance recovery for business interruption (2,190 ) - (4,082 ) -
Selling, general and administrative expenses 16,816 17,366 71,890 72,310
Research and development expenses 5,208 4,328 19,990 18,313
Insurance recovery for property damage (3,380 ) - (6,067 ) -
Restructuring and impairment charges   2,184     1,444     2,878     1,444  
 
Operating earnings 7,200 5,984 25,240 27,843
 
Other (expense) / income:
Interest expense (141 ) (211 ) (862 ) (689 )
Other   151     (45 )   1,959     872  
Total other expense   10     (256 )   1,097     183  
 
Earnings before income taxes 7,210 5,728 26,337 28,026
 
Income tax expense   1,354     928     5,370     5,988  
 
 
Net earnings $ 5,856   $ 4,800   $ 20,967   $ 22,038  
 
Net earnings per share:
Basic $ 0.17   $ 0.14   $ 0.61   $ 0.65  
-
Diluted $ 0.17   $ 0.14   $ 0.60   $ 0.63  
 
Cash dividends declared per share $ 0.035   $ 0.03   $ 0.125   $ 0.12  
 
Average common shares outstanding:
Basic 34,241 34,184 34,321 34,090
 
Diluted 34,945 34,952 35,006 34,849
 
CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
(In thousands of dollars)
         
December 31, December 31,
2011 2010
 
Cash and cash equivalents $ 76,412 $ 73,315
Accounts receivable, net 88,345 95,930
Inventories, net 92,540 76,885
Other current assets   26,089   20,525
Total current assets   283,386   266,655
 
Property, plant & equipment, net 84,860 78,213
Other assets 112,569 137,716
   
Total Assets $ 480,815 $ 482,584
 
 
 

Notes payable and current portion of long-term debt

$ - $ -
Accounts payable 80,468 75,384
Other accrued liabilities   43,769   44,716
Total current liabilities   124,237   120,100
 
Long-term debt 74,400 70,000
Other obligations 18,881 18,234
 
Shareholders' equity 263,297 274,250
   

Total Liabilities and Shareholders' Equity

$ 480,815 $ 482,584
 
CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION
       
 
 

Gross Margin

The following table reconciles GAAP gross margin to adjusted gross margin and gross margin as a percentage of sales to adjusted gross margin as a percentage of sales.

 
$ in thousands Three Months Ended Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2011 2010 2011 2010
GAAP gross margin $ 25,838 $ 29,122 $ 109,849 $ 119,910
GAAP gross margin as a percentage of sales 17.9% 20.1% 18.7% 21.7%
 
Restructuring related charge 260 253 260 253
 
Insurance recovery for business interruption 2,190 - 4,082 -
       
Adjusted gross margin $ 28,288 $ 29,375 $ 114,191 $ 120,163
Adjusted gross margin as a percentage of sales 19.6% 20.3% 19.4% 21.7%
 
 
 

Earnings per Share

The following table reconciles GAAP earnings per share to adjusted earnings per share for the Company:
 
Three Months Ended Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2011 2010 2011 2010
GAAP net earnings per share $ 0.17 $ 0.14 $ 0.60 $ 0.63
Tax affected charges to reported diluted loss per share:
Restructuring charge 0.05 0.03 0.06 0.03
Additional legal costs   -   -   0.01   -
Adjusted earnings per share $ 0.22 $ 0.17 $ 0.67 $ 0.66
 

Non-GAAP financial measures are discussed below.

 
 

Additional Information

Management estimates that the full-year net impact of the lost earnings related to the Japan earthquake and the Thailand floods, net of all insurance recoveries related to the Japan earthquake, the Thailand floods and the Scotland fire, is approximately a negative $0.02 per share.

 
 
The following table includes other financial information not presented in the preceding financial statements.
 
          Fourth           Full
$ In thousands Quarter Year

Other Expense Information

2011 2011
Depreciation and Amortization $ 4,372 $ 17,548
Equity Based Compensation 382 3,745
 

Non-GAAP Financial Measures

Adjusted gross margin and adjusted gross margin as a percentage of sales are non-GAAP financial measures. The most directly comparable GAAP financial measures are gross margin and gross margin as a percentage of sales. CTS calculates adjusted gross margin and adjusted gross margin as a percentage of sales by excluding the impact of restructuring related charges and including the impact of insurance recovery for business interruption.

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