UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 29, 1997 CTS CORPORATION 905 West Boulevard North Elkhart, Indiana 46514 (219)293-7511 Indiana 1-4639 35-0225010 (State of (Commission File No.) (IRS Employer Incorporation) Identification No.) The Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the period that the Company was required to file such reports, and (2) has been subject to such filing requirements for the past 90 days. The number of shares of the Company's Common Stock outstanding at August 8, 1997, was 5,248,063.
CTS CORPORATION FORM 10-Q INDEX Page No. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Earnings - For the Three Months and Six Months ended June 29, 1997, and June 30, 1996 3 Condensed Consolidated Balance Sheets - As of June 29, 1997, and December 31, 1996 4 Condensed Consolidated Statements of Cash Flows - For the Six Months Ended June 29, 1997, and June 30, 1996 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-13 PART II -- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14-16 SIGNATURES 17 Page 2 of 17
Part I. -- FINANCIAL INFORMATION Item 1. Financial Statements CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED (In thousands of dollars, except per share amounts) Three Months Ended Six Months Ended June 29, July 30, June 29, June 30, 1997 1996 1997 1996 Net sales $107,482 $83,820 $198,751 $164,006 Costs and expenses: Cost of goods sold 78,645 61,946 144,623 122,333 Selling, general and administrative expenses 12,042 11,028 23,866 21,980 Research and development expenses 3,075 2,628 6,049 4,888 Operating earnings 13,720 8,218 24,213 14,805 Other expenses (income): Interest expense 410 351 673 787 Other (115) (610) (923) (1,465) Total other expense (income) 295 (259) (250) (678) Earnings before income taxes 13,425 8,477 24,463 15,483 Income taxes 4,967 3,137 9,051 5,729 Net earnings $ 8,458 $ 5,340 $ 15,412 $ 9,754 Net earnings per share $ 1.60 $ 1.03 $ 2.92 $ 1.86 Cash dividends declared per share $ .18 $ .18 $ .36 $ .33 Average common and common equivalent shares outstanding 5,290,345 5,257,468 5,282,201 5,254,122 See notes to condensed consolidated financial statements. Page 3 of 17
Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) June 29, December 31, 1997 1996* ASSETS (Unaudited) Current Assets Cash $30,656 $ 44,957 Accounts receivable, less allowances (1997--$692; 1996--$622) 67,555 43,984 Inventories--Note B 33,687 38,761 Other current assets 4,863 3,787 Deferred income taxes 6,712 6,712 Total current assets 143,473 138,201 Property, Plant and Equipment, less accumulated depreciation (1997--$135,223; 1996--$133,286) 59,028 56,103 Other Assets Investment in DCA--Note C 68,509 Goodwill, less accumulated amortization (1997--$8,700; 1996--$8,361) 3,717 4,039 Prepaid pension 53,570 50,152 Other 1,555 877 Total other assets 127,351 55,068 $329,852 $249,372 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current maturities of long-term obligations 3,923 2,427 Accounts payable 26,351 17,146 Accrued liabilities 40,287 31,818 Total current liabilities 70,561 51,391 Long-term Obligations--Note D 59,506 11,220 Deferred Income Taxes 16,146 16,146 Postretirement Benefits 4,313 4,383 Shareholders' Equity: Common stock-authorized 8,000,000 shares without par value; issued 5,807,031 shares 33,564 33,540 Retained earnings 157,642 144,112 Cumulative translation adjustment 812 1,373 192,018 179,025 Less cost of common stock held in treasury: 1997--576,843 shares; 1996--582,075 shares 12,692 12,793 Total shareholders' equity 179,326 166,232 $329,852 $249,372 *The balance sheet at December 31, 1996, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. Page 4 of 17
Part I. -- FINANCIAL INFORMATION CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In thousands of dollars) Six Months Ended June 29, June 30, 1997 1996 Cash flows from operating activities: Net earnings $15,412 $ 9,754 Depreciation and amortization 7,635 6,492 (Increase) decrease in: Accounts receivable (23,571) (7,734) Inventories 5,074 1,252 Other current assets (1,076) (1,175) Prepaid pension asset (3,418) (2,643) Other 349 (21) Increase in: Accounts payable and accrued liabilities 17,674 6,639 Total adjustments 2,667 2,810 Net cash provided by operating activities 18,079 12,564 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 134 213 Capital expenditures (10,553) (9,298) Investment in DCA--Note C (68,509) Net cash used in investing activities (78,928) (9,085) Cash flows from financing activities: Term loan borrowings--Note D 50,000 Credit agreement arrangement fee (937) Payments of long-term obligations (214) (197) Decrease in notes payable (6,657) Dividend payments (1,881) (1,565) Other (31) 246 Net cash provided by (used in) financing activities 46,937 (8,173) Effect of exchange rate changes on cash (389) 170 Net decrease in cash (14,301) (4,524) Cash at beginning of year 44,957 37,271 Cash at end of period $30,656 $32,747 Supplemental cash flow information Cash paid during the period for: Interest $ 558 $ 799 Income Taxes--Net $ 4,201 $ 2,664 See notes to condensed consolidated financial statements. Page 5 of 17
Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands of dollars except per share data) June 29, 1997 NOTE A--BASIS OF PRESENTATION The accompanying condensed consolidated interim financial statements have been prepared by CTS Corporation ("CTS" or "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The consolidated interim financial statements should be read in conjunction with the financial statements, notes thereto and other information included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The accompanying unaudited consolidated interim financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair presentation, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. NOTE B--INVENTORIES The components of inventory consist of the following: June 29, December 31, 1997 1996 Finished goods $ 6,836 $ 8,504 Work-in-process 14,108 17,138 Raw material 12,743 13,119 $33,687 $38,761 Page 6 of 17
Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE C-- PROPOSED MERGER The Company, on May 9, 1997, entered into an Agreement and Plan of Merger with Dynamics Corporation of America ("DCA") providing for the acquisition of DCA by the Company pursuant to a merger of DCA and a subsidiary of the Company (the "Merger") in accordance with the Merger agreement. In the Merger, each DCA common share not owned by CTS will, at the election of the shareholders, be converted into either $58.00 in cash (the "Cash Election") or 0.88 CTS common shares. The Cash Election is limited to 49.9% of DCA's common shares less the DCA common shares owned by CTS prior to the Merger. This Merger is subject to the approval of the shareholders of DCA and of the Company, and other customary conditions. The Company, on June 13, 1997, pursuant to a tender offer, purchased 30.3% of the outstanding DCA common shares for $65,439. Subsequently, the Company purchased additional shares of DCA common stock for $3,070. The Company expects to complete the Merger during the third quarter of 1997. The investment in DCA is being stated at cost until completion of the Merger. Following the effective time of the Merger, the total purchase price (including acquisition costs) will be determined and CTS will be required to allocate the purchase price to the fair value of DCA's assets, including 2,303,100 CTS common shares presently owned by DCA, and liabilities. Such allocation will be based on various factors, including appraisals of the operating assets and liabilities of DCA, the identification and valuation of intangible assets (which CTS presently believes are not material) and the finally determined purchase price for purposes of accounting for the Merger. Depending upon the circumstances, CTS may be required to charge the difference between the purchase price and the value of the CTS common shares reacquired as a result of the Merger to net earnings currently to reflect the amount of such difference, net of changes in the other components of the purchase price allocation described above. Any such charge will, however, be a non-cash item which CTS does not believe will have any material adverse effect on its prospective financial position or results of operations. On May 9, 1997, 450,000 shares of stock options were granted to certain key Company officers at $62.50 per share, subject to shareholder approval and the consummation of the Merger. Based on recent CTS stock prices, these options will immediately vest upon shareholder approval and consummation of the Merger resulting in a one-time, non-cash charge against net earnings. Assuming a price of $85.00 per share, at the consummation of the Merger, the charge against net earnings will be $6,075 (net of income tax benefit of $4,050). NOTE D-- LONG-TERM OBLIGATIONS The Company, on June 16, 1997, entered into a Credit Agreement with a group of banks which provides financing of up to $125,000. This six-year, unsecured credit facility consists of a $50,000 term loan commitment and a $75,000 revolving credit facility. On June 16, 1997, the Company borrowed $50,000 under the term loan commitment to purchase DCA common stock (See Note C--Proposed Merger). Page 7 of 17
Part I. -- FINANCIAL INFORMATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) The borrowing rate through March 31, 1998, is LIBOR plus 0.50% with adjustments thereafter. At June 29, 1997, the rate on the term loan was 6.03%. The Company paid an arrangement fee of $937 for this credit facility. There is a commitment fee on the unused portion of the revolving credit facility of 0.175% per annum. The term loan matures on a quarterly basis. These maturities, on an annual basis, are $3,000 in 1998, $5,000 in 1999, $10,000 in 2000, 2001, and 2002, respectively, and $12,000 in 2003. The Credit Agreement contains customary limitations and restrictive financial covenants. The covenants include financial maintenance tests consisting of a leverage ratio, a minimum tangible net worth test and a fixed charge coverage ratio which is the most restrictive of these covenants. The term loan has prepayment provisions if certain events occur. The Company terminated the previously existing $45,000 unsecured revolving credit agreement. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Material Changes in Financial Condition: Comparison of June 29, 1997, to December 31, 1996 CTS Corporation ("CTS" or the "Company"), on May 9, 1997, entered into an Agreement and Plan of Merger with Dynamics Corporation of America ("DCA") providing for the acquisition of DCA by the Company pursuant to a merger of DCA and a subsidiary of the Company (the "Merger") in accordance with the Merger agreement. In the Merger, each DCA common share not owned by CTS will, at the election of the shareholders, be converted into either $58.00 in cash (the Cash Election") or 0.88 CTS common shares. The Cash Election is limited to 49.9% of DCA's common shares less the DCA common shares owned by CTS prior to the Merger. This Merger is subject to the approval of the shareholders of DCA and of the Company, and other customary conditions. The Company, on June 13, 1997, pursuant to a tender offer, purchased 30.3% of the outstanding DCA common shares for $65,439. Subsequently, the Company purchased additional shares of DCA common stock for $3,070. DCA owns 44.0% of the outstanding CTS common stock. DCA operates in six business units manufacturing electronic components, mobile vans and transportable shelters for specialized electronic and medical diagnostic equipment, portable electric housewares and Page 8 of 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Financial Condition: Comparison of June 29, 1997, to December 31, 1996 (Continued) commercial appliances, air distribution equipment, specialized air- conditioning equipment and generator sets. Following the merger, it is anticipated that DCA's frequency control and heat dissipating businesses will be integrated into complementary CTS operations. The Company intends to seek to improve the results of operations of DCA's other business units. It also intends to evaluate and review DCA's operations and the potential opportunities for synergies with the Company's operations, and to consider what, if any, changes would be desirable in light of the results of such evaluations and reviews. After such review, it is possible that the Company will seek to dispose of certain businesses or assets of DCA. Following the effective time of the Merger, the total purchase price (including acquisition costs) will be determined and CTS will be required to allocate the purchase price to the fair value of DCA's assets, including 2,303,100 CTS common shares presently owned by DCA, and liabilities. Such allocation will be based on various factors, including appraisals of the operating assets and liabilities of DCA, the identification and valuation of intangible assets (which CTS presently believes are not material) and the finally determined purchase price for purposes of accounting for the Merger. Depending upon the circumstances, CTS may be required to charge the difference between the purchase price and the value of the CTS common shares reacquired as a result of the Merger to net earnings currently to reflect the amount of such difference, net of changes in the other components of the purchase price allocation described above. Any such charge will, however, be a non-cash item which CTS does not believe will have any material adverse effect on its prospective financial position or results of operations. On May 9, 1997, 450,000 shares of stock options were granted to certain key Company officers at $62.50 per share, subject to shareholder approval and the consummation of the Merger. Based on recent CTS stock prices, these options will immediately vest upon shareholder approval and consummation of the Merger resulting in a one-time, non-cash charge against net earnings. Assuming a price of $85.00 per share, at the consummation of the Merger, the charge against net earnings will be $6,075 (net of income tax benefit of $4,050). To finance this acquisition, the Company entered into a credit agreement with a group of banks which provides financing of up to $125,000. The Company, on June 16, 1997, borrowed $50,000 on a six-year term loan. This credit facility is available for general business purposes. Page 9 of 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Financial Condition: Comparison of June 29, 1997, to December 31, 1996 (Continued) The following table highlights significant changes in balance sheet items and ratios and other information related to liquidity and capital resources: (Dollars in thousands) June 29, December 31, Increase 1997 1996 (Decrease) Cash $30,656 $ 44,957 (14,301) Accounts receivable, net 67,555 43,984 23,571 Inventories, net 33,687 38,761 (5,074) Current assets 143,473 138,201 5,272 Accounts payable 26,351 17,146 9,205 Current liabilities 70,561 51,391 19,170 Working capital 72,912 86,810 (13,898) Current ratio 2.03 2.69 (.66) Long-term obligations 63,429 13,647 49,782 Tangible net worth 175,609 162,193 13,416 Ratio of long-term obligations to tangible net worth .36 .08 .28 Working capital and the current ratio decreased primarily due to a $14.3 million decrease in cash, as the Company utilized some of its excess cash combined with its $50,000 term loan to purchase DCA common stock. Within the working capital accounts, accounts receivable increased $23.6 million resulting from increased sales. This was partially offset by a decrease in inventories of $5.1 million and increases in accounts payable of $9.2 million and accrued liabilities of $8.5 million. These changes are primarily due to the increase in sales and production levels. Current maturities of long-term obligations increased $1.5 million, representing the two initial installment payments on the $50.0 million term loan. Capital expenditures were $10.6 million during the first six months of 1997, compared with $9.3 million for the same period a year earlier. These capital expenditures were primarily for increased manufacturing capacity, new products and manufacturing improvement programs. Page 10 of 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Financial Condition: Comparison of June 29, 1997, to December 31, 1996 (Continued) The Merger, when combined with a stock split in the form of a 1:1 stock dividend expected to be effected in connection therewith, is expected substantially to increase the liquidity in the market for CTS shares and to decrease the concentration of ownership of CTS shares. The Company believes that cash on hand, cash from operations and other capital resources available to the Company, including borrowings under the Credit Agreement, will be sufficient to fund the Company's capital requirements. The Company may, depending upon conditions in the capital markets and other factors, consider other capital transactions further to increase the Company's financial flexibility, to reduce its overall cost of capital or for other purposes. Debt increased due to the $50.0 million term loan borrowing. Material Changes in Results of Operations: Comparison of Second Quarter 1997 to Second Quarter 1996 The following table highlights changes in significant components of the consolidated statements of earnings for the three-month periods ending June 29, 1997, and June 30, 1996: (Dollars in thousands) June 29, June 30, Increase 1997 1996 (Decrease) Net sales $107,482 $83,820 $23,662 Gross earnings 28,837 21,874 6,963 Gross earnings as a percent of sales 26.83% 26.10% .73% Selling, general and administrative expenses 12,042 11,028 1,014 Selling, general and administrative expenses as a percent of sales 11.20% 13.16% (1.96%) Research and development expenses 3,075 2,628 447 Operating earnings 13,720 8,218 5,502 Operating earnings as a percent of sales 12.76% 9.80% 2.96% Interest expense 410 351 59 Earnings before income taxes 13,425 8,477 4,948 Income taxes 4,967 3,137 1,830 Net earnings 8,458 5,340 3,118 Income tax rate 37.00% 37.00% -- Page 11 of 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Results of Operations: Comparison of Second Quarter 1997 to Second Quarter 1996 (Continued) Net sales increased by $23.7 million, or 28.2% compared to the second quarter of 1996. The improvement in sales reflects increasing demand for electronic components, particularly the automotive, microelectronics and commercial interconnect products serving the automotive, computer equipment and communications equipment markets in North America and Europe. Gross earnings improved primarily due to the sales and production volume increases, as well as to continuing efforts to control manufacturing expenses. Selling, general and administrative expenses increased $1.0 million, but decreased as a percentage of sales. The increased expenses are primarily due to increased variable expenses associated with the higher level of sales. Research and development expenses increased by $0.4 million, primarily due to the continuation of new product development programs, particularly for automotive products. Material Changes in Results of Operations: Comparison of First Half of 1997 to First Half of 1996 The following table highlights changes in significant components of the consolidated statements of earnings for the six-month periods ending June 29, 1997, and June 30, 1996: (Dollars in thousands) June 29, June 30, Increase 1997 1996 (Decrease) Net sales $198,751 $164,006 $34,745 Gross earnings 54,128 41,673 12,455 Gross earnings as a percent of sales 27.23% 25.41% 1.82% Selling, general and administrative expenses 23,866 21,980 1,886 Selling, general and administrative expenses as a percent of sales 12.01% 13.40% (1.39%) Research and development expenses 6,049 4,888 1,161 Operating earnings 24,213 14,805 9,408 Operating earnings as a percent of sales 12.18% 9.03% 3.15% Interest expense 673 787 (114) Earnings before income taxes 24,463 15,483 8,980 Income taxes 9,051 5,729 3,322 Net earnings 15,412 9,754 5,658 Income tax rate 37.00% 37.00% -- Page 12 of 17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Changes in Results of Operations: Comparison of First Half of 1997 to First Half of 1996 (Continued) For the first half of 1997, net sales increased $34.7 million, a 21.2% increase compared to the first half of 1996. Consistent with the second quarter of 1997, improvement was realized as a result of the continuing higher demand for automotive, microelectronic and commercial interconnect products serving the automotive, computer equipment and communications equipment markets. Gross earnings have improved over the first half of 1996, primarily as a result of the higher sales volume. Sales and production volume increases have favorably affected operating efficiencies. Selling, general and administrative expenses have increased $1.9 million, but decreased as a percent of sales. The increased expenses are primarily due to higher variable expenses associated with the higher level of sales. Research and development expenses have increased by $1.2 million, or 23.8%, during the first half of 1997, primarily due to the new product development programs, particularly for automotive products. Page 13 of 17
Part II -- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders of CTS Corporation was convened on April 25, 1997, and concluded on June 24, 1997. Each of the five director-nominees identified below was re-elected to a one-year term as director of the Corporation with the following votes reported of the 3,794,041 eligible to vote and represented at the meeting: Votes Votes Cast Director-Nominee Cast For Against Abstentions Lawrence J. Ciancia 3,769,678 5,178 19,185 Patrick J. Dorme 3,766,822 8,034 19,185 Gerald H. Frieling, Jr. 3,767,938 6,918 19,185 Andrew Lozyniak 3,766,696 8,160 19,185 Joseph P. Walker 3,769,529 5,327 19,185 Item 6. Exhibits and Reports on Form 8-K a. Exhibits (3)(a) Articles of Incorporation, as amended April 16, 1973, (incorporated by reference to Exhibit (3)(a) to the Company's Annual Report on Form 10-K for 1987.) (3)(b) Bylaws, effective December 31, 1992, (incorporated by reference to Exhibit (3)(b) to the Company's Annual Report on Form 10-K/A for 1992, filed April 8, 1997). (10)(a) Employment Agreement, dated as of May 9, 1997, between the Company and Joseph P. Walker (incorporated by reference to Exhibit (c)(2) to the Schedule 14D-1 filed by the Company on May 16, 1997). (10)(b) Prototype indemnification agreement, with Lawrence J. Ciancia, Patrick J. Dorme, Gerald H. Frieling, Jr., Andrew Lozyniak, Joseph P. Walker, Philip T. Christ, Jeannine M. Davis, George T. Newhart and Gary N. Hoipkemier (incorporated by reference to Exhibit (10)(b) to the Company's Annual Report on Form 10-K for 1991). Page 14 of 17
Part II -- OTHER INFORMATION (Continued) Item 6. Exhibits and Reports on Form 8-K (Continued) a. Exhibits (Continued) (10)(c) CTS Corporation 1982 Stock Option Plan, as amended February 24, 1989, (incorporated by reference to Exhibit (10)(d) to the Company's Annual Report on Form 10-K for 1989). (10)(d) CTS Corporation 1986 Stock Option Plan, approved by the shareholders on May 30, 1986, as amended and restated on May 9, 1997, filed herewith. (10)(e) CTS Corporation 1988 Restricted Stock and Cash Bonus Plan approved by the shareholders on April 28, 1989, as amended and restated on May 9, 1997, filed herewith. (10)(f) CTS Corporation 1996 Stock Option Plan, approved by the shareholders on April 26, 1996, as amended and restated on May 9, 1997, filed herewith. (10)(g) Prototype indemnification agreement, with Stanley J. Aris, James L. Cummins, James N. Hufford and Donald R. Schroeder (incorporated by reference to Exhibit (10)(g) to the Company's Annual Report on Form 10-K for 1995). (10)(h) Amended and Restated Agreement and Plan of Merger, dated as of May 9, 1997, and amended and restated on July 17, 1997, among the Company, CTS First Acquisition Corp., a wholly owned subsidiary of the Company ("Sub"), and DCA (incorporated by reference to Exhibit (c)(6) to Amendment No. 3 to the Schedule 13D filed by the Company in respect of DCA on July 18, 1997, (the "Schedule 13-D"). (10)(i) Shareholders Agreement, dated as of July 17, 1997, among the Company, Sub, WHX Corporation ("WHX") and SB Acquisition Corp., a subsidiary of WHX (incorporated by reference to Exhibit (c)(7) to the Schedule 13-D). (10)(j) Employment Agreement, dated as of May 9, 1997, between the Company and Andrew Lozyniak (incorporated by reference to Exhibit 10.5 of DCA's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, (the "DCA 10-Q"). (10)(k) Employment Agreement, dated as of May 9, 1997, between the Company and Patrick J. Dorme (incorporated by reference to the DCA 10-Q). Page 15 of 17
Part II -- OTHER INFORMATION (Continued) Item 6. Exhibits and Reports on Form 8-K (Continued) a. Exhibits (Continued) (10)(l) Employment Agreement, dated as of May 9, 1996, between the Company and Henry V. Kensing (incorporated by reference to the DCA 10-Q). (10)(m) The Form of Severance Agreement, dated April 11, 1997, between the Company and certain officers of the Company (incorporated by reference to Exhibit (a)(99) of the Company's Quarterly Report on Form 10-Q for the quarter ended March 30, 1997) and amendment thereto, dated May 9, 1997, filed herewith. (21) Subsidiaries as of June 29, 1997, filed herewith. (27) Financial Data Schedule (filed only electronically with the SEC). b. Reports on Forms 8-K Press release of May 12, 1997, announcing CTS and Dynamics Corporation of America agreement to merge; filed May 12, 1997. Public notice that Annual Meeting of Shareholders of April 25, 1997, was adjourned until June 16, 1997; filed April 25, 1997. Page 16 of 17
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CTS CORPORATION CTS CORPORATION /s/ Jeannine M. Davis /s/ Stanley J. Aris Jeannine M. Davis Stanley J. Aris Vice President, Secretary Vice President Finance and General Counsel and Chief Financial Officer Dated: August 12, 1997 Page 17 of 17