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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CTS Corporation
(Exact name of registrant as specified in its charter)
Indiana 35-0225010
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
905 West Boulevard North
Elkhart, Indiana 46514
(574) 293-7511
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Richard G. Cutter, Esq.
Vice President, General Counsel and Secretary
905 West Boulevard North
Elkhart, Indiana 46514
(574) 293-7511
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Christopher M. Kelly, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216)586-3939
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Approximate date of commencement of proposed sale to the public: From time
to time following the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of registration fee
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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Be Amount to Be Offering Price Aggregate Offering Amount of
Registered Registered per Unit (1) Price Registration Fee
--------------------------- ----------------- ------------------------- ------------------------ ---------------------
--------------------------- ----------------- ------------------------- ------------------------ ---------------------
Common Stock, without par 1,246,697
value, and associated shares (3) $16.02 (3) $19,972,085 (3) $1,838
rights (2)
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=========================== ================= ========================= ======================== =====================
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933.
(2) The associated rights to purchase additional shares of common stock or
preferred stock, which are attached to the shares of common stock being
registered, will be issued for no additional consideration; no additional
registration fee is required.
(3) The shares of common stock are issuable upon conversion of the registrant's
outstanding 6 1/2% Convertible Subordinated Debentures. The number of
shares of common stock to be issued upon conversion of the debentures is
based on an initial conversion price of $20.053 per share. In addition, the
amount to be registered includes an indeterminate number of shares issuable
upon conversion of the debentures, as such amount may be adjusted due to
stock splits, stock dividends and anti-dilution provisions, and otherwise
in accordance with the terms of the debentures.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to Completion. Dated May ___, 2002
PROSPECTUS
CTS Corporation
1,246,697 Shares
of
Common Stock
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This prospectus relates to the offering of the shares of our common stock
issuable upon conversion of our outstanding 6 1/2% Convertible Subordinated
Debentures. Selling stockholders may offer common stock at fixed prices, at
prevailing market prices at the time of sale, at varying prices or at negotiated
prices. CTS will not receive any cash proceeds from the selling stockholders'
sales of these shares of common stock.
The Common Stock
o Our common stock is listed on the New York Stock Exchange under the symbol
"CTS."
o On _______________, 2002, the last reported sale price of our common stock
was $__________.
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As a prospective purchaser of these securities, you should carefully
consider the discussion of "Risk Factors" that begins on page 3 of this
prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved the common stock to be distributed under this
prospectus, nor has any of these organizations determined that this prospectus
is accurate or complete. Any representation to the contrary is a criminal
offense.
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The date of this prospectus is , 2002
REFERENCES TO ADDITIONAL INFORMATION
In this prospectus, unless otherwise indicated or the context otherwise
requires, "CTS", "we", "us" and "our" refer to CTS Corporation and its
consolidated subsidiaries. This prospectus incorporates by reference important
business and financial information about us that is not included in or delivered
with this prospectus. You may obtain documents that we filed with the Securities
and Exchange Commission and incorporated by reference into this prospectus by
requesting the documents, in writing or by telephone, from the Securities and
Exchange Commission or from:
CTS Corporation
905 West Boulevard North
Elkhart, Indiana 46514
Attn: Vice President Investor Relations
Telephone: (574) 293-7511
See "VIII. Where You Can Get More Information."
TABLE OF CONTENTS
I. SUMMARY 1
A. CTS 1
B. Use of Proceeds 2
C. The Common Stock 2
II. RISK FACTORS 3
A. Risk Factors Relating to CTS 3
B. A Warning About Forward-Looking Statements 8
III. USE OF PROCEEDS 8
IV. SELLING STOCKHOLDERS 8
V. PLAN OF DISTRIBUTION 10
VI. LEGAL MATTERS 11
VII. EXPERTS 11
VIII. WHERE YOU CAN GET MORE INFORMATION 11
A. Available Information 11
B. Incorporation of Documents by Reference 11
I. SUMMARY
This summary highlights basic information about CTS and the common stock
being offered by the selling stockholders, but does not contain all information
that may be important to you. You should carefully read the more detailed
information and consolidated financial statements and the related notes
appearing elsewhere and incorporated by reference in this prospectus.
A. CTS
We are a global electronic components and electronic assemblies
manufacturer. We were established in 1896 as a provider of high-quality
telephone products and were incorporated as an Indiana corporation in February
1929. Our principal executive offices are located at 905 West Boulevard North,
Elkhart, Indiana 46514, telephone (574) 293-7511. We maintain a website at
http://www.ctscorp.com. The information on our website is not incorporated into,
and is not a part of, this prospectus.
We design, manufacture, assemble and sell a broad line of electronic
components and custom electronic assemblies primarily for the communications,
computer and automotive markets. We operate manufacturing facilities located
throughout North America, Asia and Europe. Our product lines serve major markets
globally, focused primarily on the needs of original equipment manufacturers. We
sell and market our products through our sales engineers, independent
manufacturers' representatives and distributors.
We have two reportable business segments: electronic components and
electronic assemblies. Electronic components are products that perform the basic
level electronic function for a given product family for use in customer
assemblies.
Electronic components consist principally of:
o quartz crystals and oscillators and ceramic filters used in cellular
handsets, and public infrastructure and networking for the communications
market;
o automotive sensors and actuators used in the automotive market;
o ClearONE(TM)terminators used in the computer market; and
o potentiometers, resistor networks and switches used to serve multiple
markets.
Electronic assemblies are combinations of electronic components or
electronic and mechanical components that, apart from the assembly, may
themselves be marketed as separate, stand-alone products. These assemblies
represent completed, higher-level functional products to be used in customer end
products or assemblies. These products consist principally of:
o interconnect products such as integrated interconnect systems and
backpanels used in mass data storage systems, internet access systems and
network servers used in the computer market, and base station
infrastructure equipment used in the communications market;
o radio frequency integrated modules used in cellular handsets;
o pointing sticks/cursor controls for personal computers for the computer
market; and
o low temperature cofired ceramics for applications such as global
positioning system devices and Bluetooth communications products for the
communications market.
Products within each business segment are principally sold into three major
original equipment manufacturer markets: 1) communications, 2) computer and 3)
automotive. Other smaller original equipment manufacturer markets include 1)
consumer electronics, 2) instruments and controls and (3) defense/aerospace.
B. Use of Proceeds
We will not receive any cash proceeds from the sale of the shares of common
stock being offered by the selling stockholders.
C. The Common Stock
Securities Offered.................... 1,246,697 shares of CTS common stock, subject to adjustment. These shares
will be issued upon conversion of our outstanding 6 1/2% Convertible
Subordinated Debentures, which were issued by us in a private placement
transaction in April 2002.
New York Stock Exchange
Symbol for Common Stock............... CTS.
Risk Factors.......................... You should carefully read the "Risk Factors" section beginning on page 3
of this prospectus as well as the other cautionary statements throughout the
entire prospectus, to ensure that you understand the risks associated with
an investment in the common stock.
II. RISK FACTORS
Investing in our common stock involves significant risks. Before making an
investment, you should read and carefully consider the risks and uncertainties
described below. The risks and uncertainties we describe are not the only ones
we face. Additional risks and uncertainties not currently known to us or that we
currently consider immaterial may also affect our business operations. If any of
the following risks actually occur, our business, results of operations and
financial condition could be materially adversely affected, and you could lose
all or part of your investment.
A. Risk Factors Relating to CTS
1. We may be unable to keep up with rapid technological changes which
could make some of our products or processes obsolete before we realize a
return on our investment.
The technologies relating to our research and development activities have
undergone rapid and significant technological development. Specifically, the
market for products in the communications industry is characterized by
technological change, frequent new product introductions and enhancements,
changes in customer requirements and emerging industry standards. The
introduction of products embodying new technologies and the emergence of new
industry standards could render our existing products obsolete and unmarketable
before we can recover any or all of our research, development and
commercialization expenses. The life cycles of our products are difficult to
estimate.
Our future success will depend upon our ability to develop and introduce new
products and product enhancements on a timely basis that keep pace with
technological developments and emerging industry standards and address
increasingly sophisticated requirements of our customers. We may be unsuccessful
in developing and marketing new products or product enhancements that respond to
technological changes or evolving industry standards. We also cannot assure you
that we will not experience difficulties that could delay or prevent the
successful development, introduction or marketing of these new products or
product enhancements, or that our new products or product enhancements will
adequately meet the requirements of the marketplace and achieve market
acceptance. If we are unable, for technological or other reasons, to develop and
market new products or product enhancements in a timely and cost-effective
manner, our business, results of operations and financial condition could be
materially adversely affected.
2. Because a substantial portion of our sales comes from customers in
the communications, computer and automotive industries, we are susceptible
to trends and factors affecting those industries.
Net sales to the communications, computer and automotive industries
represent a substantial portion of our revenues. Factors negatively affecting
these industries and the demand for their products, also negatively affect our
business, results of operations and stock price. Any adverse occurrence,
including industry slowdown, recession, political instability,
armed hostilities, terrorism, excessive inflation, prolonged disruptions in
one or more of our customers' production, or labor disturbances, that results in
a significant decline in the volume of sales in these industries, or in an
overall downturn in the business and operations of our customers in these
industries, could have a material adverse effect on our business, results of
operations and financial condition. For example, the trend toward consolidation
in the communications and computer industries could result in a lower level of
acceptance of our products, reduced product requirements, purchasing delays by
the combined entity or the loss of a customer. Also, the automotive industry is
generally highly unionized and some of our customers have, in the past,
experienced labor disruptions. Furthermore, the automotive industry is highly
cyclical in nature and sensitive to changes in general economic conditions.
3. Because a significant portion of our sales currently comes from a
small number of customers, any decrease in sales from these customers could
adversely affect our operating results.
We depend on a small number of customers for a large portion of our
business, and changes in the level of our customers' orders have, in the past,
had a significant impact on our operating results. If a major customer reduces
the amount of business it does with us, there would be an adverse impact on our
operating results. Our 15 largest customers represent a substantial portion of
our sales. Our two largest customers in recent periods were Compaq Computer
Corporation and Motorola, Inc.
We expect to continue to depend on sales to our major customers. Some of our
customers are increasingly outsourcing their purchasing activities, placing a
greater emphasis on cost while maintaining an emphasis on quality. Since it is
difficult to replace lost business on a timely basis, it is likely that our
operating results would be adversely affected if one or more of our major
customers were to cancel, delay or reduce a large amount of business with us in
the future. If one or more of our customers were to become insolvent or
otherwise unable to pay for our services, our business, results of operations
and financial condition could be adversely affected.
4. We face risks resulting from the global economic slowdown.
The global economic downturn has slowed demand in the CTS-served
communications, computer and automotive markets. These markets for our
electronic components and assemblies have softened and may continue to soften.
As a result, our revenues and earnings have been negatively affected and this
softening demand may create pricing pressures which could further negatively
affect our revenues and earnings.
Further deterioration of revenues and earnings, beyond current levels,
could have a negative effect on our business, results of operations and
financial condition. This could also have a negative effect on the price of our
common stock and could also make it difficult for us to service our debt and to
comply with the covenants in our credit facility. Violation of the covenants in
our credit facility could require us to pay substantial fees to our banks until
the violation is corrected or result in an event of default under our credit
facility and our other indebtedness, including any debentures that have not been
converted to common stock. In the event the violation cannot be corrected, we
could be required to negotiate a new credit facility with a new bank group or
raise equity or additional debt in public or private transactions.
5. We face risks relating to the success of our restructuring,
consolidation and cost reduction plan.
During 2001, we recorded $40 million of pre-tax restructuring and
impairment charges relating to a plan to realign our operations, $14 million of
which we recorded in the second quarter and $26 million of which we recorded in
the fourth quarter. We began to implement the plan during the second quarter of
2001. The plan was designed to permit us to operate more efficiently in the
then-prevailing environment and, at the same time, to allow us to be well
positioned as the economy improves.
The restructuring plan is proceeding on schedule. However, anticipated
savings were based on revenue volumes and mix experienced during the fourth
quarter of 2000 instead of revenue volumes expected at the time the plan was
implemented. If the expected revenue volumes are not met during the next two
fiscal years, some of the expected savings may be delayed or not achieved.
Additional restructuring activities and related charges may be required in
the event that the business environment deteriorates further, estimated proceeds
from expected asset sales are reduced, or we identify other areas for cost
savings.
6. Because we have significant non-U.S. operations, our financial
condition and operating results could be adversely affected by economic,
political, regulatory and other factors existing in non-U.S. countries in which
we operate.
We have substantial international operations. Our international operations
are subject to inherent risks, including:
o political and economic instability in countries in which we have
manufacturing facilities;
o expropriation;
o currency controls;
o changes in government regulation;
o high levels of inflation;
o changes in labor conditions and difficulties in staffing and managing our
non-U.S. operations;
o greater difficulty in collecting our accounts receivable and longer
payment cycles;
o less favorable intellectual property laws;
o increases in the duties and taxes we pay;
o exposure to different legal standards; and
o fluctuations in exchange rates.
In addition, these same factors may also place us at a competitive
disadvantage to some of our non-U.S. competitors. All of these risks have
affected and may continue to affect our business, results of operations and
financial condition.
7. We face risks relating to the protection of our intellectual property.
The success of our business depends, in part, upon our ability to protect
trade secrets, copyrights and patents, obtain or license patents and operate
without infringing on the rights of others. We rely on a combination of trade
secrets, copyrights, patents, nondisclosure agreements and technical measures to
protect our proprietary rights in our products and technology. The steps taken
by us in this regard may not be adequate to prevent misappropriation of our
technology, and our competitors may independently develop technologies that are
substantially equivalent or superior to our technology. In addition, the laws of
some non-U.S. countries do not protect our proprietary rights to the same extent
as do the laws of the United States. Although we continue to evaluate and
implement protective measures, we cannot assure you that these efforts will be
successful.
We believe that patents will play an increasingly important role in our
commercial business. However, we cannot assure you that any issued patent will
provide us with any competitive advantages, that the patents will not be
challenged by third parties or that the patents of others will not adversely
affect our ability to do business.
There is also a risk that infringement claims may be brought against us or
our customers in the future. If someone does successfully assert an infringement
claim, we may be required to spend significant time and money to develop a
product or process that does not infringe upon the rights of that other person
or to obtain licenses for the technology, process or information from the owner.
We may not be successful in the development, or licenses may not be available on
commercially acceptable terms, if at all.
8. We may be unable to compete effectively against larger companies.
We operate in a highly fragmented and competitive industry. We compete
against many domestic and non-U.S. companies, some of which have substantially
greater manufacturing, financial, research and development and marketing
resources than we do. Although no single competitor competes with us along all
product lines, we compete with a variety of suppliers with respect to different
subsets of our products. Additionally, many of our customers are seeking to
consolidate their business among one or more preferred or qualified suppliers.
If any customer becomes dissatisfied with our prices, quality or timeliness of
delivery, among other things, it could award future business or move existing
business to our competitors. Moreover, some of our customers could choose to
manufacture and develop particular components themselves rather than purchase
them from us. Increased competition could result in price reductions, reduced
profit margins and loss of market share, each of which could adversely affect
our business, results of operations and financial condition. In addition, some
of our competitors have engaged in merger and acquisition transactions.
Consolidations by competitors are likely to create entities with increased
market share, customer bases, proprietary technology and marketing expertise and
expanded sales force size. These developments may adversely affect our ability
to compete against these competitors, many of which are significantly larger and
have greater financial and other resources. We cannot assure you that our
products will continue to compete successfully with our competitors' products.
9. Customer pressure to reduce prices may cause reductions in sales or
profit margins.
Many of our customers are under pressure to reduce the price of their
products or services, and, therefore, we expect to continue to experience
pressure from our customers to reduce the prices of our products. In many of our
markets, average sales prices of established products have declined in the past.
We anticipate that prices will continue to decline, which could negatively
impact our sales and/or gross profit margins. Accordingly, to remain
competitive, we believe that we must continue to develop product enhancements
and new technologies, and improve manufacturing efficiencies, that will slow the
price declines of our products or reduce the cost of producing and delivering
our products. If we fail to do so, our business, results of operations and
financial condition would be adversely affected.
10. We are subject to a variety of environmental laws that expose us to
potential financial liability.
Our operations are regulated under a number of federal, state and non-U.S.
environmental and safety laws and regulations that govern, among other things,
the discharge of hazardous materials into the air and water as well as the
handling, storage and disposal of these materials. These laws and regulations
include the Clean Air Act, the Clean Water Act, the Resource, Conservation and
Recovery Act and the Comprehensive Environmental Response, Compensation and
Liability Act, as well as analogous state and foreign laws. Compliance with
these environmental laws is a major consideration for us because we use
hazardous materials in our manufacturing process. In addition, because we are a
generator of hazardous wastes, we, along with any other person who arranges for
the disposal of our wastes, may be subject to financial exposure for costs
associated with an investigation and any remediation of our former and existing
manufacturing sites, as well as sites at which we have arranged for the disposal
of hazardous wastes, even if we fully comply with applicable environmental laws.
If we violate environmental laws, we could be liable for fines, damages and
costs of remedial actions and could also be subject to revocation of our
environmental permits. Any revocation could require us to cease or limit
production at one or more of our facilities, thereby negatively impacting our
revenues and potentially causing our common stock price to decline.
Environmental laws, including environmental laws in the European Union and other
non-U.S. countries, could also become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with any
violation, which also could negatively impact our business, results of
operations and financial condition.
11. The price of our common stock has been volatile and may continue to
fluctuate significantly.
The market price for our common stock has been and may continue to be
volatile. From January 3, 2000 to May 15, 2002 the last sale price of our common
stock ranged from a low of $13.30 per share to a high of $80.50 per share. We
expect our stock to continue to be subject to fluctuations as a result of a
variety of factors, including factors beyond our control. These include:
o changes in financial estimates by securities analysts;
o changes in market valuations of related companies;
o announcements by us or our competitors of new products or technological
innovations or of significant acquisitions, strategic partnerships or
joint ventures;
o general and industry stock market conditions, particularly in the
communications industry;
o general U.S. and worldwide economic conditions;
o conditions in our industries such as competition, demand for services and
technological advances;
o changes in our revenues and earnings;
o changes in our customer base, including any loss of a major customer, and
our contracts with customers;
o introduction and market acceptance of our customers' new products and
changes in demand for our customers' existing products;
o effectiveness in managing our manufacturing processes and related assets,
including our inventory and fixed assets;
o adverse or unfavorable publicity regarding us or our products;
o additions or departures of key personnel;
o any deviations in net revenues or in losses from levels expected by
securities analysts; and
o future sales of common stock.
We may fail to meet expectations of our shareholders or of analysts at some
time in the future, and our stock price could decline as a result.
In addition, sales of a substantial number of shares of our common stock in
the public market, or the appearance that such shares are available for sale,
could adversely affect the market price for our common stock.
12. Our credit facility contains provisions that could materially restrict our
business.
Our credit facility contains a number of significant covenants that, among other
things, restrict our ability to:
o dispose of assets;
o incur additional debt;
o guarantee third-party obligations;
o repay other debt or amend other debt instruments;
o create liens on assets;
o enter into capital leases;
o make investments, loans or advances;
o make acquisitions or engage in mergers or consolidations;
o make capital expenditures; and
o engage in specified transactions with our subsidiaries and affiliates.
In addition, under our credit facility, we are required to meet a number of
financial ratios and tests. Our ability to comply with these covenants may be
affected by events beyond our control. If we breach any of these covenants or
restrictions, it could result in an event of default under our credit facility.
Any breach might permit our lenders to declare all amounts owing thereunder to
be due and payable, and our senior lenders could terminate their commitments to
make further extensions of credit under our credit facility. Additionally, if we
were unable to repay debt to our secured lenders, they could proceed against the
collateral securing the debt.
13. Anti-takeover provisions could delay, deter or prevent a change in
control.
We are an Indiana corporation subject to Indiana state law. Some of these
state laws could interfere with or restrict takeover bids or other
change-in-control events affecting us. One statutory provision prohibits us,
except under specified circumstances, from engaging in specified business
combinations, including any merger, sale of assets or recapitalization with any
shareholder who owns 10% or more of our common stock or any affiliate of that
shareholder.
We have opted out of Indiana's "control share acquisition" provisions, which
restrict the voting rights of shares acquired in transactions which cause the
beneficial owner of the shares to exceed specified ownership thresholds. We
could, however, by action of the board of directors, elect to have those
provisions apply in the future.
In addition, our articles of incorporation allow us to issue up to an
additional 26.5 million shares of common stock (including the shares issuable
upon conversion of the debentures) and 25 million shares of preferred stock
without shareholder approval. The board of directors has the authority to
determine the price and terms under which the additional common or preferred
stock may be issued. Issuance of this common and preferred stock could make it
more difficult for a third party to acquire control of CTS.
Also, provisions in our articles of incorporation, bylaws, and other
agreements to which we are a party could delay, deter or prevent a change in
control of CTS. These provisions, alone or in combination with each other and
with the rights agreement described below, may discourage transactions involving
actual or potential changes in control, including transactions that otherwise
could involve payment of a premium over the prevailing market price to
shareholders for their common stock.
On August 28, 1998, our board of directors adopted a shareholder rights
agreement, pursuant to which uncertificated stock purchase rights were
distributed to our shareholders at a rate of one right for each share of common
stock held of record as of September 10, 1998, and each share issued
thereafter.The rights agreement is designed to enhance the board's ability to
prevent an acquirer from depriving shareholders of the long-term value of their
investment and to protect shareholders against attempts to acquire CTS by means
of unfair or abusive takeover tactics. However, the existence of the rights
agreement may impede a takeover of CTS not supported by the board, including a
takeover that may be desired by a majority of our shareholders or involving a
premium over the prevailing market price for our common stock.
B. Our Forward-Looking Statements Are Subject to a Variety of Factors
That Could Cause Actual Results to Differ Materially from Current Beliefs.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: This prospectus contains "forward-looking statements" within the
meaning of the securities laws. These forward-looking statements are subject to
a number of risks and uncertainties, many of which are beyond our control. All
statements other than statements of historical facts included or incorporated by
reference in this prospectus regarding our strategy, future operations,
financial position, estimated revenues, projected costs, prospects, plans and
objectives of management are forward-looking statements. When used or
incorporated by reference in this prospectus, the words "will," "believe,"
"anticipate," "plan," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. Although we
believe that our plans, intentions and expectations reflected in or suggested by
any forward-looking statements are reasonable, we can give no assurance that
these plans, intentions or expectations will be achieved. Actual results may
differ materially from those stated in these forwarded-looking statements due to
a variety of factors, including those described above under "A. Risk Factors
Relating to CTS" and other risks and uncertainties described from time to time
in our reports filed with the Securities and Exchange Commission, including our
annual report on Form 10-K for the year ended December 31, 2001 and our
subsequent quarterly report on Form 10-Q.
We cannot guarantee that the results and events contemplated by
forward-looking information will in fact occur, and you should not rely unduly
on these forward-looking statements. We do not undertake any obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
III. USE OF PROCEEDS
All sales of the common stock issuable upon conversion of our outstanding 6
1/2% Convertible Subordinated Debentures will be by or for the account of the
selling stockholders listed in the following section of this prospectus. We will
not receive any cash proceeds from these sales of common stock.
IV. SELLING STOCKHOLDERS
All of the shares of common stock issuable upon conversion of our
outstanding 6 1/2% Convertible Subordinated Debentures are being offered by the
selling stockholders listed in the table below. Only those shares of common
stock issued upon conversion of the debentures may be offered by the selling
stockholders. We issued the debentures in April 2002 in a private placement
transaction exempt from registration under the Securities Act of 1933.
No offer or sale under this prospectus may be made by a holder of the shares
of common stock unless that holder is listed in the table below or until that
holder has notified us and a supplement to this prospectus has been filed or an
amendment to the registration statement has become effective. We will supplement
or amend this prospectus to include additional selling stockholders upon request
and upon provision of all required information to us.
The selling stockholders may offer and sell, from time to time, any or all
of their common stock issued upon conversion of the debentures. Because the
selling stockholders may offer all or only some portion of the shares of common
stock listed in the table, no estimate can be given as to the amount or
percentage of the shares of common stock that will be held by the selling
stockholders upon termination of the offering.
The following table lists:
o the name of each selling stockholder;
o the number of shares of CTS common stock owned by that holder before the
offering; and
o the amount of common stock being offered for sale by that selling
stockholder.
The information in the table reflects the most recent information furnished
to us by the identified selling stockholder. Unless otherwise indicated, no
selling stockholder has indicated that it has held any position, office or other
material relationship with us or our affiliates during the past three years.
Common Stock
------------
Number of Number of
Shares Shares
Name of Selling Stockholder Owned Offered
--------------------------- --------- ---------
On April 15, 2002, we and the initial purchasers of the debentures entered
into a registration rights agreement. That agreement requires that we make this
prospectus available to the selling stockholders, subject to the exceptions
described below, until the earlier of:
o the date when all of the securities have been publicly sold
under this prospectus or Rule 144 under the Securities Act of 1933; and
o the date when all the securities remaining to be sold under the
prospectus may be resold under Rule 144(k) of the Securities Act of
1933.
This time period is referred to as the registration period.
We may require the selling stockholders to suspend the sales of the common
stock offered by this prospectus upon the occurrence of any event that makes any
statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in these documents
in order to make statements in these documents not misleading. We will be
permitted to suspend the use of this prospectus:
o in connection with pending corporate developments, public
filings with the Securities and Exchange Commission and similar events,
for a period not to exceed 15 consecutive business days or an aggregate
of 45 days in any twelve-month period; or
o in connection with any proposed or pending mergers,
acquisitions, financings or similar transactions, for a period not to
exceed 30 consecutive business days in any twelve-month period.
In the event that:
o the registration statement of which this prospectus is a part is not
declared effective by August 14, 2002; or
o before the end of the registration period, this prospectus is
unavailable for periods in excess of those set forth in the
preceding paragraph;
(each of these is deemed to be a registration default) then we will pay
liquidated damages to the holders of the debentures or holders of common stock
entitled to be sold under this prospectus that are affected by the registration
default, as applicable. These liquidated damages will accrue:
o for the first 30-day period in which a registration default
occurs (prorated for any period less than 30 days), at the rate of 0.5%
of the principal amount of the debentures then held by the holder; and
o for each 30-day period in which a registration default exists
thereafter (prorated for any period less than 30 days), at the rate of
1% of the principal amount of the debentures then held by the holder.
V. PLAN OF DISTRIBUTION
The common stock being offered by this prospectus may be sold from time to
time to purchasers directly by the selling stockholders listed in the table set
forth in "IV. Selling Stockholders" or, alternatively, through underwriters,
broker-dealers or agents. The selling stockholders may offer the common stock at
fixed prices, at prevailing market prices at the time of sale, at varying prices
or at negotiated prices. These sales may be effected in transactions, including
cross or block transactions:
o on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale;
o in the over-the-counter market;
o in transactions other than transactions on an exchange or over-the-counter
market; and
o through the writing of options or other derivative contracts.
In connection with sales of the common stock, the selling stockholders may
enter into hedging transactions with broker-dealers, who may in turn engage in
short sales of the common stock and deliver them to close out the short
positions, or loan or pledge the common stock to broker-dealers that in turn may
sell them pursuant to this prospectus.
The selling stockholders and any of their brokers, dealers or agents who
participate in the distribution of the common stock may be deemed to be
"underwriters," and any profits on the sale of the common stock by them and any
discounts, commissions, or concessions received by any brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.
To the best of our knowledge, there are currently no plans, arrangements or
understandings between any selling stockholder and any broker, dealer, agent or
underwriter regarding the sale of the common stock by that selling stockholder.
At any time a particular offer of common stock is made, a revised prospectus
or supplement, if required, will be distributed that will set forth the
aggregate amount of common stock being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from the
selling stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Any supplement and, if necessary, a
post-effective amendment to the registration statement, of which this prospectus
is a part, will be filed with the Securities and Exchange Commission to reflect
the disclosure of additional information with respect to the distribution of
common stock. In addition, the common stock covered by this prospectus may be
sold in private transactions or under Rule 144 rather than by this prospectus.
We have agreed to indemnify the selling stockholders against specified
liabilities under the Securities Act of 1933 and to pay substantially all of the
expenses incidental to the registration, offering and sale of the common stock
to the public other than commissions, fees and discounts of underwriters,
brokers, dealers and agents.
VI. LEGAL MATTERS
Richard G. Cutter, Esq., our Vice President, General Counsel and
Secretary, will pass upon the validity of the common stock offered by this
prospectus.
VII. EXPERTS
The financial statements of CTS incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 2001, have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
VIII. WHERE YOU CAN GET MORE INFORMATION
A. Available Information
We file reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy this information at the public
reference facilities maintained by the Commission at the Commission's Public
Reference Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. You may obtain information on the operation of the public reference room
by calling the Commission at 1-800-SEC-0330. Our filings are also available on
the Commission's web site on the Internet at http://www.sec.gov. The New York
Stock Exchange also allows you to inspect and copy reports and information about
CTS.
Statements in this prospectus concerning the contents of any contract,
agreement or other document are not necessarily complete. If we filed as an
exhibit to any of our public filings any of the contracts, agreements or other
documents referred to in this prospectus, you should read the exhibit for a more
complete understanding of the document or matter involved. You should rely only
on the information incorporated by reference or contained in this prospectus. We
have not authorized anyone to provide you with different information. We are not
making an offer of the common stock in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date set forth on the cover.
B. Incorporation of Documents by Reference
The Securities and Exchange Commission allows us to incorporate by reference
into this prospectus information that we have filed with the Commission. This
means:
o incorporated documents are considered part of this prospectus;
o we can disclose important information to you by referring you to those
documents; and
o information that we file with the Commission will automatically update and
supersede the information in or incorporated by reference into this
prospectus, as described below.
We will make documents incorporated by reference available to you without
charge upon your oral or written request. Requests for those documents should be
directed to CTS Corporation, 905 West Boulevard North, Elkhart, Indiana 46514,
Attention: Vice President Investor Relations, telephone (574) 293-7511. We will
not include exhibits to these documents, unless you specifically request them or
the exhibits were specifically incorporated by reference.
This prospectus incorporates by reference the following documents:
o Annual report on Form 10-K for the year ended December 31, 2001, dated and
filed with the Commission on March 18, 2002;
o Quarterly report on Form 10-Q for the quarter ended March 31, 2002, dated
and filed with the Commission on April 30, 2002;
o Current reports on Form 8-K:
o dated and filed with the Commission on February 1, 2002;
o dated and filed with the Commission on February 5, 2002;
o dated and filed with the Commission on February 7, 2002;
o dated and filed with the Commission on March 1, 2002;
o dated and filed with the Commission on April 18, 2002; and
o dated April 19, 2002 and filed with the Commission on April 22, 2002;
o dated April 22, 2002 and filed with the Commission on April 30, 2002
o Proxy statement, dated and filed with the Commission in
definitive form on April 18, 2002, with respect to the information
required by Items 401 (management), 402 (executive compensation), 403
(securities ownership) and 404 (certain relationships and related
transactions) of Regulation S-K promulgated under the Securities Act of
1933 and the Securities Exchange Act of 1934;
o The description of our common stock as set forth in Exhibit
(99)(a) to the annual report on Form 10-K for the year ended December
31, 2001, dated and filed with the Commission on March 18, 2002; and
o The description of the rights to purchase common stock or
preferred stock contained in the registration statement on Form 8-A,
dated and filed with the Commission on September 1, 1998, as amended on
April 22, 2002.
We are also incorporating by reference additional documents we may file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus and before the termination of the
offering. This additional information is a part of this prospectus from the date
of filing of those documents.
Any statements made in this prospectus or in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed to be
modified or superseded to the extent that a subsequently filed document which is
also incorporated or deemed to be incorporated by reference in this prospectus
modifies or supersedes the statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The table below sets forth the various expenses and costs to be incurred by
CTS Corporation in connection with the sale and distribution of the securities
offered hereby, other than underwriting discounts and commissions which will be
borne by the selling stockholders. All the amounts shown are estimated except
the Securities and Exchange Commission registration fee.
Securities and Exchange Commission filing
fee...................................... $ 1,838
--------
Printing expenses........................ 100
--------
Legal fees and expenses.................. 5,000
--------
Accounting fees and expenses............. 2,500
--------
Trustee fees and expenses................
--------
Miscellaneous expenses................... 562
--------
Total.......................... $10,000
========
ITEM 15. Indemnification of Directors and Officers
The following summary of the material provisions of CTS' bylaws relating to
indemnification of directors and officers, CTS' articles of incorporation, CTS'
indemnification agreements with officers and directors and the Indiana Business
Corporation Law is not intended to be exclusive and is qualified in its entirety
by such bylaws, articles of incorporation, indemnification agreements and
statutes.
CTS' bylaws provide that CTS shall indemnify its officers and directors to
the fullest extent permitted by applicable law. Chapter 37 of the Indiana
Business Corporation law provides, in general, that each director and officer of
a corporation may be indemnified against liabilities (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceedings in which he or she is involved by reason of the
fact that he or she is or was a director or officer, if he or she acted in good
faith and in a manner that he or she reasonably believed to be in or not opposed
to the best interest of the corporation, and, with respect to any criminal
action or proceeding, if he or she had no reasonable cause to believe that his
or her conduct was unlawful. If the legal proceeding, however, is by or in the
right of the corporation, the director or officer may not be indemnified in
respect of any claim, issue or matter as to which he or she has been adjudged to
be liable for negligence or misconduct in the performance of his or her duty to
CTS unless a court determines otherwise.
CTS' articles of incorporation provide that the personal liability of the
directors of CTS will be eliminated to the fullest extent permitted by
applicable law. The bylaws provide that no director of CTS will be personally
liable to the corporation or its shareholders for monetary damages for any
breach of his fiduciary duty as a director provided, however, that such
provision does not apply to any liability of a director (a) for breach of
fiduciary duty if such breach constitutes willful misconduct or recklessness or
(b) for the payment of distributions to shareholders in violation of Section
23-1-28-3 of the Indiana Business Corporation Law.
Pursuant to separate indemnification agreements with CTS, each officer and
director of CTS is indemnified from all liabilities arising out of the
activities reasonably taken in the performance of their respective duties as
officers and directors of CTS.
CTS also maintains insurance for officers and directors against certain
liabilities, including liabilities under the Securities Act of 1933. The effect
of this insurance is to indemnify any officer or director of CTS against
expenses, including, without limitation, attorneys' fees, judgments, fines and
amounts paid in settlement, incurred by an officer or director upon a
determination that such person acted in good faith. The premiums for such
insurance are paid by CTS.
ITEM 16. Exhibits
All references to documents filed pursuant to the Securities Exchange Act of
1934, including Forms 10-K, 10-Q and 8-K, were filed by CTS Corporation, file
no. 1-4639.
Exhibit
Number Description of Exhibits
------ -----------------------
4.1 -- Amended and Restated Articles of Incorporation,
(incorporated by reference to Exhibit 5 to the Current
Report on Form 8-K, filed with the Commission on
September 1, 1998).
4.2 -- Registration Rights Agreement, dated April 15,
2002, among CTS Corporation, Halifax Fund, L.P., DeAm
Convertible Arbitrage Fund, Ltd., Palladin Overseas
Fund, Ltd., Lancer Securities (Cayman) Ltd., Palladin
Partners I, L.P., Steelhead Investments, Ltd. and Ram
Trading, Ltd.(incorporated by reference to Exhibit 99.3
to the Current Report on Form 8-K, filed with the
Commission on April 22, 2002).
* 5 -- Opinion of Richard G. Cutter, Esq., Vice President,
General Counsel and Secretary of CTS, regarding
validity.
23.1 -- Consent of Richard G. Cutter, Esq. (included in
Exhibit 5).
*23.2 -- Consent of PricewaterhouseCoopers LLP.
*24 -- Powers of Attorney.
----------
* Filed herewith
ITEM 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Elkhart, in the State of Indiana, on the 16th day of
May 2002.
CTS CORPORATION
By: /s/ RICHARD G. CUTTER
---------------------
Richard G. Cutter
Vice President, General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
*
---------------------------------- Director, President and Chief
Donald K. Schwanz Executive Officer (principal
executive officer)
*
--------------------------------- Senior Vice President and
Vinod M. Khilnani Chief Financial Officer
(principal financial officer)
*
--------------------------------- Controller, Group Accounting
Thomas A. Kroll (principal accounting
officer)
*
---------------------------------- Director
Walter S. Catlow
*
---------------------------------- Director
Lawrence J. Ciancia
*
---------------------------------- Director
Thomas G. Cody
*
---------------------------------- Director
Gerald H. Frieling
*
---------------------------------- Director
Roger R. Hemminghaus
*
---------------------------------- Director
Michael A. Henning
*
---------------------------------- Director
Robert A. Profusek
*
---------------------------------- Director
Randall J. Weisenburger
/s/ RICHARD G. CUTTER *Attorney-in-fact May 16, 2002
-----------------------------------------
Richard G. Cutter
EXHIBITS
--------
Exhibit
Number Description of Exhibits
------ -----------------------
* 5 -- Opinion of Richard G. Cutter, Esq. regarding
validity.
23.1 -- Consent of Richard G. Cutter, Esq. (included in
Exhibit 5).
*23.2 -- Consent of PricewaterhouseCoopers LLP.
*24 -- Powers of Attorney.
----------
* Filed herewith