ELKHART, Ind.--(BUSINESS WIRE)--CTS Corporation (NYSE: CTS) today announced the following:
Global Footprint Optimization and Restructuring
To
improve capacity utilization and operating profit on a go-forward basis,
CTS will simplify its global footprint by consolidating manufacturing
facilities into existing locations. With fewer manufacturing facilities,
this plan still allows the Company sufficient capacity to grow. This
process has already started in Singapore and the Company has entered
into a period of consultation with employees at its operation located in
Glasgow, Scotland. Additional optimizations are being evaluated along
with the implementation of a leaner corporate cost structure.
The costs associated with these actions are expected to be included in a restructuring beginning this quarter. The Company estimates that the pre-tax restructuring charge, assuming all the plans proceed, will total approximately $16 - $20 million, including $10 to $15 million during 2013 and the balance in 2014. Approximately one-third of the total cost is expected to be non-cash. The anticipated annualized go-forward cost savings from the steps announced today are expected to be in the range of $8 - $10 million once fully implemented in 2014, a portion of which will be realized beginning in the second half of this year.
Kieran O’Sullivan, CEO, commented, “The measures announced today are part of a larger strategic evaluation initiated by the management team earlier this year. These initial actions will improve our manufacturing utilization, increase overall efficiency and better position the Company for more profitable future growth. We understand that these are very difficult actions for affected employees and their families and we are committed to assisting all impacted individuals.”
Cash Repatriation and Stock Buyback Authorization
The
Company will repatriate approximately $30 million to the U.S. from
Singapore. The funds will be used to pay down debt and buyback shares.
While this transfer of funds will have a book tax cost of approximately
$0.33 per diluted share, such cost is essentially cash-free due to the
availability of net operating loss carryforward. The Board of Directors
has authorized the repurchase of up to an additional one million of the
Company’s outstanding common shares to supplement the Company’s current
stock buyback program. Shares will be purchased from time to time in
open-market transactions or otherwise.
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
This document 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. Forward-looking
statements are based on management’s expectations, certain assumptions
and currently available information. 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
certain 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. Examples of factors
that may affect future operating results and financial condition
include, but are not limited to: 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
disasters or other events; 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 geopolitical risks. Many of
these, and other, risks and uncertainties are discussed in further
detail in Item 1.A of the Annual Report on Form 10-K. We undertake no
obligation to publicly update our forward-looking statements to reflect
new information or events or circumstances that arise after the date
hereof, including market or industry changes.