The Company is taking proactive actions to strategically respond to the weak economic environment by further reducing its cost structure. During the fourth quarter, the Company is announcing plans to close its EMS operation in Tianjin, China. CTS’ electronic components operation will remain in this facility and expects growth with increasing piezo component production to support HDD applications. This action, combined with earlier restructuring actions taken in 2012, will reduce headcount by approximately 10%, and the Company’s global footprint by approximately 17%. Total fourth quarter restructuring charges are expected to be approximately $3 million.
Singapore Operational Efficiencies and Sale Leaseback Gain
As a result of manufacturing efficiency improvement initiatives, the Company has been able to reduce its manufacturing floorspace requirement at its Singapore facility. Accordingly, CTS entered into an agreement to sell and lease back approximately one-third of its Singapore facility. The transaction is expected to close in the fourth quarter 2012 with net proceeds of approximately $17.5 million and an anticipated pretax gain of approximately $7.5 million.Other Items Third quarter pension expense, which is non-cash, and Takata litigation expenses were approximately $0.4 million, or $0.01 per share, higher in 2012 compared to the prior year. Year-to-date, these expenses were approximately $2.9 million, or $0.06 per share, higher than the prior year. During the third quarter, the Company authorized buying back of up to one million shares of stock, as the prior authorization of one million shares was completed. During the third quarter, the Company repurchased approximately 91,200 shares of common stock in open market transactions. Commenting on third quarter 2012 results, Vinod M. Khilnani, CTS Chairman and Chief Executive Officer, stated, “In response to the challenging and uncertain global economy, the Company has undertaken a number of strategic actions to further reduce our cost structure while driving our key growth programs. We believe that decisive actions during challenging economic times will allow CTS to emerge stronger when the markets rebound. New product launch activity in our Components and Sensors segment remains robust and we continue to win new business. We are generating strong free cash flow and our balance sheet remains strong.”