<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1999
REGISTRATION NO. 333-90697
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CTS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
INDIANA 3670 35-0225010
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
</TABLE>
905 WEST BOULEVARD NORTH
ELKHART, INDIANA 46514
(219) 293-7511
(Principal Executive Offices)
JEANNINE M. DAVIS, ESQ.
EXECUTIVE VICE PRESIDENT--ADMINISTRATION,
GENERAL COUNSEL AND SECRETARY
CTS CORPORATION
905 WEST BOULEVARD NORTH
ELKHART, INDIANA 46514
TELEPHONE: (219) 293-7511
(Agent for Service)
------------------------------
COPIES TO:
MARILYN W. SONNIE, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
32ND FLOOR
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 326-3939
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement, as determined by
market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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 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. /X/
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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 WILL 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
CTS CORPORATION
905 WEST BOULEVARD NORTH
ELKHART, INDIANA 46514
(219) 293-7511
$500,000,000
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
------------------
We will provide specific terms of the securities offered to the public in
supplements to this prospectus.
This prospectus may be used to offer and sell securities only if accompanied
by a prospectus supplement. The prospectus supplement is more specific than this
prospectus and to the extent information differs from this prospectus, you
should rely on the information in the prospectus supplement. You should read
this prospectus and any supplement very carefully before you invest.
------------------------
Our common stock is listed on the New York Stock Exchange under the trading
symbol "CTS." Any common stock we sell pursuant to a prospectus supplement will
be listed on the New York Stock Exchange, subject to official notice of
issuance.
------------------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3 OF THIS
PROSPECTUS.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
This prospectus is dated December 10, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Company................................................. 3
A Warning about Forward-looking Statements.................. 3
Risks Related to Our Business............................... 3
Use of Proceeds............................................. 6
Ratio of Earnings to Fixed Charges.......................... 7
Description of Debt Securities.............................. 7
Description of Stock........................................ 12
Indiana Business Corporation Law and the Articles of
Incorporation and Bylaws.................................. 13
Description of Warrants..................................... 17
About this Prospectus....................................... 17
Where You Can Find More Information......................... 18
Plan of Distribution........................................ 18
Legal Matters............................................... 19
Experts..................................................... 19
</TABLE>
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THE COMPANY
CTS is headquartered in Elkhart, Indiana. We design, manufacture, assemble
and sell a broad line of passive electronic components and electronic
assemblies. Our main customers are worldwide original equipment manufacturers in
the computer equipment, automotive and communications equipment businesses.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
"Forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Exchange Act are contained in, or
incorporated by reference into, this prospectus. Forward-looking statements are
typically identified by the words "anticipate," "believe," "estimate," "expect,"
"project," "imply," "intend" and similar expressions. Forward-looking statements
are subject to a number of risks and uncertainties, many of which are beyond our
control. Our actual operating results, liquidity and financial condition could
be materially different from those contemplated by these forward-looking
statements for various reasons, including risks associated with our integration
of acquired operations, competitive factors and pricing pressures, shifts in
market demand and general economic conditions, risks associated with our foreign
operations and developments and other factors discussed below.
We can not 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.
RISKS RELATED TO OUR BUSINESS
WE MAY BE UNABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGES WHICH COULD MAKE
SOME OF OUR PRODUCTS OR PROCESSES OBSOLETE BEFORE WE REALIZE ON OUR INVESTMENT.
The field of technology relating to our research and development activities
has undergone rapid and significant technological development. Specifically, the
market for products in the telecommunications 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 cannot assure you
that we will be successful in developing and marketing new products or product
enhancements that respond to technological changes or evolving industry
standards. Nor can we assure you that we will not experience difficulties that
could delay or prevent the successful development, introduction and 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, financial condition and results of
operations could be materially adversely affected.
IF WE ARE UNABLE TO BROADEN AND DEEPEN OUR SENIOR MANAGEMENT TEAM OUR BUSINESS
COULD SUFFER
With the Motorola components acquisition in early 1999, CTS substantially
increased in size, diversified its product offerings and added substantial
intellectual property assets and research and development functions to its
business. The Motorola acquisition followed another substantial acquisition
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completed by CTS in 1997. CTS recently realigned senior management group and is
in the process of recruiting other senior managers to respond to these
developments and as a part of it ordinary succession planning process. We can
not guarantee that we will be successful in our efforts to broaden and deepen
our senior management team and our failure to do so could have a material
adverse effect on our business, financial condition and results of operations.
IF WE ARE UNABLE TO MAINTAIN OUR EXISTING CUSTOMER BASE, OUR BUSINESS COULD
SUFFER.
A portion of our net sales are made directly to original equipment
manufacturers. Our customer base is highly concentrated and, over the past three
years, our top ten customers have accounted for a significant percent of our
sales. The termination by one or more of these customers of its relationship
with us could have a material adverse effect upon our revenues and our financial
condition.
WE FACE RISKS AS AN INTERNATIONAL COMPANY WITH NON-U.S. REVENUES.
We are an international company and approximately a fourth of our assets are
non-U.S. A substantial portion of these assets, other than cash and cash
equivalents, cannot be readily liquidated and are exposed to the normal risks of
international operations, including:
- political and economic instability;
- expropriation;
- currency controls;
- fluctuations in exchange rates;
- changes in government regulation; and
- exposure to different legal standards and exchange rates.
In addition, these same factors may also place us at a competitive
disadvantage to some of our non-U.S. competitors.
WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR ACQUISITION STRATEGY DUE TO THE
LACK OF AVAILABLE SUITABLE CANDIDATES, DIVERSION OF MANAGEMENT TIME, THE RISK OF
UNDISCLOSED LIABILITIES AND LACK OF AVAILABLE CAPITAL.
Our growth has been achieved, in part, by acquisitions. As part of our
overall business plan, we may from time to time consider strategic acquisitions
of other companies or investments in joint ventures that we believe can benefit
from our operations, management and access to capital or enhance our
relationships with existing or potential new customers. Our ability to grow by
acquisition is dependent upon, and may be limited by, the availability of
suitable acquisition candidates and capital. In addition, growth by acquisition
involves risks that could adversely affect our operating results, such as:
- the substantial amount of management time that may be diverted from
operations in order to pursue and complete acquisitions;
- difficulties in managing the additional operations and personnel of
acquired companies; and
- the potential loss of key employees of acquired companies.
Although we perform a due diligence investigation of each business that we
acquire, there may nevertheless be liabilities of the acquired companies that we
fail or are unable to discover during our due diligence investigation and for
which we, as a successor owner, may be responsible. In connection with our
acquisitions, we generally seek to minimize the impact of these liabilities by
obtaining indemnities and warranties from the seller, if practicable. However,
these indemnities and warranties may not fully cover
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the liabilities due to their limited scope, amount, or duration, the financial
limitations of the indemnitor or warrantor or other reasons and may not be
obtainable in mergers and other transactions.
We recently acquired the Components Products Division of Motorola, Inc. and
are still in the process of integrating its operations. This business has
represented 39% of our sales over the first nine months of 1999. Our business
and financial results may be adversely affected by the need to divert management
time away from normal day to day business activities to attend to operating
difficulties related to the integration of this division and other businesses we
may acquire in the future. In addition, there can be no assurance that any
acquired business, including the former Motorola divisions, will contribute to
our financial results in the manner anticipated at the time of acquisition.
Further, future acquisitions may require us to seek additional debt or
equity financing, which could potentially result in diluted earnings per share
or increased leverage, taxes, and amortization of goodwill, among others. In
addition, substantial time and expense may be required to reconcile the
accounting policies and practices of the acquired companies with our policies
and practices. These factors could adversely affect our future operating
results, financial position and cash flows.
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. Such protection
may not preclude competitors from developing products with features similar to
our products.
We believe that patents will play an increasingly important role in our
commercial business. However, we cannot assure that any issued patent will
provide us with any competitive advantages nor can we assure 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.
WE MAY BE UNABLE TO COMPETE EFFECTIVELY AGAINST LARGER COMPETITORS.
We operate in a highly fragmented and competitive industry. Although no
single competitor competes with us along all product lines, we compete with a
variety of suppliers with 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, in an extreme case, 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. We
cannot assure you that our products will continue to compete successfully with
our competitors' products, including original equipment manufacturers
themselves, many of which are significantly larger and have greater financial
and other resources.
DISRUPTIONS IN THE AUTOMOTIVE INDUSTRY COULD CAUSE THE LOSS OF ONE OR MORE OF
OUR CUSTOMERS WHICH COULD HARM OUR BUSINESS.
A significant market for our products is the automotive industry. The
automotive industry is generally highly unionized and some of our customers
have, in the past, experienced labor disruptions. The automotive industry is
also cyclical in nature and subject to changes in general economic conditions.
General economic and specific industry downturns, as well as a prolonged
disruption in one more of our customers' production could have a negative impact
on the market for our products and therefore could have a material adverse
effect on our business and financial results.
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ANTI-TAKEOVER PROVISIONS WOULD DETER OR PREVENT A CHANGE OF 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. Also, there are provisions in our
articles of incorporation, bylaws, and other agreements to which we are a party,
which could delay, defer or prevent a change in control of CTS, even if a change
in control would be beneficial to shareholders. We have also 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. In addition, we have
entered into a rights agreement which provides for a dividend of one right for
each share of our common stock outstanding on September 10, 1998. The rights
become exercisable upon the occurrence of specified events. The existence of the
rights could also deter a takeover attempt.
In addition, our articles of incorporation allow us to issue up to
75,000,000 shares of common stock and 25,000,000 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.
USE OF PROCEEDS
The net proceeds from the sale of the offered securities will be used for
general corporate purposes, including repayment of debt, acquisitions, research
and development, plant expansions and further investments in technology. Any
additional uses of net proceeds will be discussed in the accompanying prospectus
supplement.
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RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
NINE
MONTHS FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
OCTOBER 3, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1994
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of
earnings to fixed
charges
(unaudited)......... 6.4x 18.6x* 13.3x 19.3x 13.7x 19.3x
</TABLE>
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* On a pro forma basis after giving effect to the acquisition of the
components products division of Motorola, our consolidated ratio of
earnings to fixed changes (unaudited) for the fiscal year ended
December 31, 1998 would have been 4.4x.
For these ratios, "earnings" consist of income before income taxes and
extraordinary items plus fixed charges (excluding capitalized interest). "Fixed
charges" consist of interest incurred on indebtedness, amortization of debt
expense, and that portion of rental expense on operating leases deemed to be the
equivalent of interest. These computations are made on a consolidated basis with
our subsidiaries.
DESCRIPTION OF DEBT SECURITIES
GENERAL
We may offer unsecured general obligations of our company in the form of
either senior or subordinated debt, referred to generally as debt securities.
Senior debt includes our notes, debt, and guarantees, which are for money
borrowed and not subordinated. Subordinated debt, designated at the time it is
issued, is entitled to interest and principal payments after the senior debt
payments.
The senior and subordinated debt will be issued under one or more indentures
between CTS and a U.S. banking institution. The form of indenture for senior
debt has been filed as an exhibit to the registration statement of which this
prospectus forms a part and, if we decide to issue any subordinated debt, the
form of indenture for the subordinated debt will be filed as an exhibit to such
registration statement by means of a post-effective amendment. You should read
the indenture for provisions that may be important to you.
We have summarized select provisions of the senior debt indenture below. Any
subordinated indenture will contain substantially similar terms, plus additional
terms relating to subordination. This summary is not complete. References to
section numbers of the indenture have been included so that you can easily
locate these provisions. Capitalized terms used in the summary have the meanings
specified in the indenture.
The indenture does not limit the aggregate amount of debt securities that
may be issued. The debt securities may be issued from time to time in more than
one series and may be issued at a discount from their stated principal amount
and in any currency designated by us.
A prospectus supplement and a supplemental indenture relating to any series
of debt securities being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
- The title and type of the debt securities;
- The total principal amount of the debt securities;
- The interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
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- Any optional redemption periods;
- Any mandatory or optional sinking fund or other provisions that would
obligate us to repurchase or otherwise redeem the debt securities;
- Any provision granting special rights to holders when a specified event
occurs;
- The denomination in which any debt securities will be issuable;
- The currency in which payment of principal, premiums and interest will be
payable, if it is not the currency of the United States of America;
- The formula used to determine the amounts of payments of principal,
premium and interest;
- If the debt securities are issued in the form of global securities, the
identity of the depositary;
- Any subordination provisions;
- Any special tax implication of the debt securities, including provisions
for "original issue discount securities," if offered; and
- Any other terms of the debt securities.
The prospectus supplement for each issuance of debt securities will state
whether the securities will be issued in the registered form and in what minimum
amounts. The payment of principal premium, if any, and interest on the debt
securities will be payable at an office or agency maintained by CTS. This office
will also register the exchange, conversion or transfer of debt securities.
GLOBAL SECURITIES
The debt securities issued may be in the form of global certificates that
will be deposited with a depositary identified in the applicable prospectus
supplement. The global securities issued will be equal to the aggregate
principal amount of debt securities of the series. Unless it is exchanged in
whole or in part for debt securities in registered form, a global certificate
may generally be transferred only as a whole unless it is being transferred to
nominees or the depositary.
The terms of any portion of debt securities to be represented by a global
security will be described in an applicable prospectus supplement.
The following provisions will apply to depositary arrangements. A global
security to be deposited with or on behalf of a depositary will be registered in
its name. The depositary will, upon deposit of the global security, credit the
accounts of the institutions that have accounts with the depositary. If the
securities are sold directly by CTS, the accounts to be credited will be
designated by the underwriters, agents or CTS.
Beneficial interest in such global securities will be limited to
participants or persons that hold interests through them. Ownership and transfer
of beneficial interest will be recorded in the books maintained by the
depositary or its nominee. The laws of some jurisdictions require physical
delivery of securities that might impair transfers of beneficial interest in a
global security.
The depositary registered as owner of such global security will be the sole
owner for all purposes of the applicable indenture. Unless the prospectus
supplement provides otherwise, each owner of beneficial interest must rely on
the procedures of the depositary and participants in the depositary, if
applicable, to exercise its rights as a holder of a global security.
The prospectus supplement will describe the method of payment of principal,
interest and premium, if any, and interest on a global security. Payments of
principal, premium and interest on debt securities will be made to the
registered depositary or its nominee.
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CTS, the Trustee, any paying agent or the registrar of debt securities have
no responsibility or liability to record payments made on account of beneficial
ownership interests.
Unless otherwise stated, The Depository Trust Company will act as depositary
for each series of global securities. Beneficial interests in global securities
will be shown on, and transfers of global securities will be effected only
through, records maintained by The Depository Trust Company and its
participants.
SUBORDINATION
If we decide to issue any or all of the debt securities as subordinated
debt, the prospectus supplement relating to such subordinated debt will set
forth the terms of any indenture that may apply and the right of the holders of
the subordinated debt to the extent such terms differ from those described
herein with respect to the senior debt. In general, under the indenture, payment
of the principal, interest and any premium on the subordinated debt securities
will be subordinated and junior in right of payment to the prior payment in full
of all senior debt. Such indenture will also provide that no payment of
principal, interest and any premium on the subordinated debt securities may be
made in the event:
- of any insolvency, bankruptcy or similar proceeding involving CTS or our
property, or
- we fail to pay the principal, interest and premium or any other amounts on
any senior debt when due.
Such indenture will not limit the amount of senior debt that we may incur.
Senior debt will be defined to include all notes or other unsecured
evidences of indebtedness including guarantees of CTS for money borrowed by CTS,
not expressly stated to be subordinate or junior in right of payment to any
other indebtedness of CTS.
CERTAIN COVENANTS
Under the indenture, we will:
- maintain an office or agency as a place of payment;
- deposit sufficient funds with any paying agent or trust, on and before the
due date for any principal, interest or premium;
- pay all taxes and other assessments imposed on us or our subsidiaries or
their properties;
- maintain all business properties in working order;
- preserve our existence, charter and statutory rights, and franchises, and
cause our subsidiaries to do the same; and
- comply with all applicable laws.
Any restrictive covenants applicable to any series of debt securities will
be described in a prospectus supplement.
EVENTS OF DEFAULT
"Event of Default" when used in the indenture, will mean any of the
following:
(1) failure to pay the principal or any premium on any debt security when
due;
(2) failure to pay interest on any debt security for 30 days;
(3) failure to deposit any sinking fund payment when due;
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(4) failure to perform any other covenant in the indenture that continues
for 60 days after being given written notice;
(5) failure to pay any other indebtedness at maturity or when due in
excess of $100 million and which results in the indebtedness becoming
due prior to its stated maturity;
(6) particular events of bankruptcy, insolvency or reorganization of our
company; and
(7) any other Event of Default included in any indenture or supplemental
indenture.
Once a default occurs the Trustee will give notice to all holders within
time periods prescribed by the Trust Indenture Act of 1939, except that, in the
case of a breach of particular covenants, the Trustee will be prohibited from
giving such notice for at least 30 days after such breach occurs.
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the holders of at least 25% in the aggregate principal
amount of the debt securities of that series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If
this happens subject to the conditions contained in the indenture, the holders
of an aggregate principal amount of the debt securities of that series could
void the declaration.
Other than duties in case of default, the Trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the Trustee reasonable
indemnity. We will be required to furnish the Trustee with notice of any
incurred event of default within 10 days of our becoming aware of its
occurrence. If they provide this reasonable indemnification, the holders of
majority in principal amount of any series of debt securities may direct the
time, method and place of conducting any proceeding or any remedy available to
the Trustee or exercising any power conferred upon the Trustee, for any series
of debt securities.
CTS will provide the Trustee a statement of its performance under the
indenture and any default on a yearly basis.
MODIFICATION AND WAIVER
Under the indenture, our rights and obligations and the rights of the
holders may be modified with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification.
The following modifications are not effective against any holder without its
consent:
- change in the principal or interest payment terms of any debt security;
- reduction in the principal amount, the rate of interest, or premium, if
any, payable upon redemption of any debt security;
- reduction of the principal amount payable upon acceleration of an original
issue discount security; and
- changes in the place or currency of payment of principal, interest or
premium, if any.
Holders of a majority in the aggregate principal amount of any series of
debt securities, may waive CTS' compliance with certain covenants of the
indenture, on behalf of all holders. They may also waive any past defaults under
the indenture unless any such default relates to the payment of principal,
interest or any premium.
DEFEASANCE
We will be discharged from our obligations on the debt securities of any
series at any time if we deposit with the Trustee sufficient cash or government
securities to pay the principal, interest, any
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premium and any other sums due to the stated maturity date or a redemption date
of the debt securities of the series if:
- no Event of Default has occurred or would occur as a result of this
deposit or, in the case of an Event of Default relating to our bankruptcy,
insolvency or reorganization, within 90 days of the deposit; and
- we deliver an opinion of counsel that the tax matters described below are
not applicable.
If this happens, the holders of the debt securities of the series will not be
entitled to the benefits of the indenture and we will be released from our
obligations to comply with the covenants described above under COVENANTS, except
for our obligations relating to registration of transfer and exchange of debt
securities and the replacement of lost, stolen or mutilated debt securities and
our obligations to maintain an office or agency in respect of the debt
securities and hold moneys for payment in trust. In addition, the Events of
Default relating to covenants from which we are released and those described in
clauses (3), (5) and (7) above under EVENTS OF DEFAULT will no longer be Events
of Default.
Under federal income tax law as of the date of this prospectus, a discharge
may be treated as an exchange of the related debt securities. Each holder may be
required to recognize gain or loss equal to the difference between the holder's
cost or other tax basis for the debt securities and the value of the holder's
interest in the trust. Holders may be required to include as income a different
amount than would be includable without the discharge. Prospective investors are
urged to consult their own tax advisers as to the consequences of a discharge,
including the applicability and effect of tax laws other than the federal income
tax law.
SATISFACTION AND DISCHARGE
We will be discharged from our obligations under the indenture when:
- we deliver all debt securities previously authenticated and delivered to
the Trustee for cancellation; or
- all debt securities have become payable or will be payable within one
year; or
- all debt securities will be redeemable within one year and we deposit with
the Trustee sufficient cash to pay the principal, interest and any premium
due on such debt securities.
REGARDING THE TRUSTEE
The indenture limits the right of the Trustee, should it become a creditor
of CTS within three months of, or subsequent to, a default by CTS to make
payment in full of principal of or interest on any series of debt securities
when due and payable, to obtain payment of claims, or to realize for its own
account on property received in respect of any such claim as security or
otherwise, unless and until such default is cured. However, the Trustee's rights
as a creditor of CTS will not be limited if the creditor relationship arises
from, among other things:
- the ownership or acquisition of securities issued under the indenture or
having a maturity of one year or more at the time of acquisition by the
Trustee;
- advances authorized by a receivership or bankruptcy court of competent
jurisdiction or by the indenture;
- disbursements made in the ordinary course of business in its capacity as
indenture Trustee, transfer agent, registrar, custodian, or paying agent
or in any other similar capacity;
- indebtedness created as a result of goods or securities sold in a cash
transaction or services rendered or premises rented; or
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- the acquisition, ownership, acceptance, or negotiation of drafts, bills of
exchange, acceptances, or other obligations.
The indenture does not prohibit the Trustee from serving as trustee under any
other indenture to which we may be a party from time to time or from engaging in
other transactions with us. If the Trustee acquires any conflicting interest and
there is an Event of Default with respect to any series of debt securities, it
must eliminate such conflict or resign.
LIMITATIONS ON MERGER AND OTHER COVENANTS
A merger or consolidation between CTS and another corporation is generally
permitted. We can also sell all or substantially all of our assets and property.
This can happen if we are the surviving person or the other person assumes all
responsibilities and liabilities under the indenture and no Event of Default
would occur. The surviving company must also be a corporation organized under
the United States laws and a foreign corporation would not qualify.
The remaining or acquiring corporation will be substituted for us in the
indenture with the same effect as if it had been an original party to the
indenture. Thereafter, the successor corporation may exercise our rights and
powers under the indenture, in our name or in its own name. Any act or
proceeding required or permitted to be done by our board of directors or any of
our officers may be done by the board or officers of the successor corporation.
If we sell all or substantially all of our assets, we shall be released from all
our liabilities and obligations under the indenture and under the debt
securities.
GOVERNING LAW
The indenture and the debt securities will be governed by the laws of the
State of New York.
DESCRIPTION OF STOCK
Our authorized capital stock is comprised of 100 million shares, consisting
of 75 million shares of common stock and 25 million shares of preferred stock.
COMMON STOCK
Our outstanding shares of common stock are traded on the New York Stock
Exchange under the symbol "CTS." The registrar is State Street Bank and Trust
Company and the transfer agent is CTS with State Street Bank and Trust Company
as co-transfer agent. The holders of our common stock are entitled to one vote
for each share of common stock held of record on all matters submitted to a vote
of our shareholders. Common shareholders are not entitled to preemptive rights
and have no rights to convert their common stock shares into other securities of
CTS or to have their shares redeemed by CTS.
Upon satisfaction of our obligations to preferred shareholders, the common
shareholders may receive dividends when declared by the board of directors. If
we liquidate, dissolve or wind-up our business, holders of our common stock will
share equally in the assets remaining after we pay all of our creditors and
satisfy all our obligations to preferred shareholders.
PREFERRED STOCK
The following description of the terms of our preferred stock sets forth the
general terms and provisions of our authorized preferred stock. If we offer
preferred stock, the specific designations and rights will be described in the
prospectus supplement which will be filed with the Securities and Exchange
Commission.
Our board of directors can, without approval of shareholders, issue one or
more series of preferred stock. The board can determine the number of shares of
each series and the rights, preferences and
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limitations of each series including dividend rights, voting rights, conversion
rights, redemption rights and any liquidation preferences and the terms and
conditions of issue. In some cases, the issuance of preferred stock could delay,
defer or prevent a change in control of CTS and make it harder to remove present
management, without further action by our shareholders. Under certain
circumstances, preferred stock could also decrease the amount of earnings and
assets available for distribution to holders of our common stock if we liquidate
or dissolve and could also restrict or limit dividend payments to holders of our
common stock.
Our board of directors has not issued any series of preferred stock to date.
The transfer agent, registrar and dividend disbursement agent for a series of
preferred stock will be named in a prospectus supplement.
INDIANA BUSINESS CORPORATION LAW AND THE ARTICLES OF
INCORPORATION AND BYLAWS
GENERAL
In general, our articles of incorporation and bylaws provide the following:
- That the board of directors fix the number of directors within a specified
range. At present we have six directors;
- The existing directors will fill any vacancy or newly created directorship
with any new director; and
- Only the chairman of the board, the board of directors or the president
can call a board of directors meetings.
We are an Indiana corporation and we are subject to the Indiana Business
Corporation Law. Under the laws of Indiana, the articles of incorporation can be
amended only with the approval of our board of directors and our shareholders.
Our bylaws provide that they cannot be amended without the approval of a
majority of our board of directors.
Provisions of the Indiana Business Combination Law, of our articles of
incorporation and bylaws and of the Rights Agreement dated as of August 28, 1998
between CTS and State Street Bank and Trust Company, as Rights Agent, may
discourage or make more difficult the acquisition of control of CTS through a
tender offer, open market purchase, proxy contest or otherwise. These provisions
are intended to discourage or may have the effect of discouraging certain types
of coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of CTS first to negotiate with us. Our
management believes that the foregoing measures, many of which are substantially
similar to the takeover-related measures in effect for many other publicly-held
companies, provide benefits by enhancing our ability to negotiate with a person
making an unfriendly or unsolicited proposal to take over or restructure CTS. We
believe that these benefits outweigh the disadvantages of discouraging such
proposals because, among other things, negotiation of such proposals could
result in an improvement of their terms.
Provisions of the Indiana Business Combination Law, in addition to
provisions of our articles of Incorporation and bylaws, address corporate
governance issues, including the rights of shareholders. Some of these
provisions could hinder management changes while others could have anti-takeover
effect. We have summarized the key provisions below. The descriptions are not
complete. You should read the actual provisions of our Articles and bylaws and
the Indiana Business Combination Law that relate to your individual investment
decision.
RIGHTS AGREEMENT
On August 28, 1998, our board of directors declared a dividend distribution
of one "Right" for each share of our common stock outstanding on September 10,
1998. Each Right entitles the registered holder
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to purchase from us one one-hundredth of a share of Series A Junior
Participating Preferred Stock, subject to adjustment. The description and terms
of the Rights are set forth in the Rights Agreement. A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as
Exhibit 1 to our Form 8-K filed on September 1, 1998. Capitalized terms have
been used in this section for your convenience and have the same meaning as
specified in the Rights Agreement.
The Rights are non-exercisable, non-transferable and non-separable from our
common stock until the "distribution date" which occurs on the earlier of:
- the public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of our then outstanding
common stock (the date of such public announcement being the "Share
Acquisition Date") or
- ten business days following the commencement of a tender offer or exchange
offer by a person or group of associated or affiliated persons which would
result in beneficial ownership by such person or group of 15% or more of
our then outstanding common stock.
In general, at any time prior to their expiration on August 27, 2008 or
until the Share Acquisition Date, our board of directors may, in its discretion,
redeem the Rights in whole, but not in part, at a price of $.01 per Right. Under
certain circumstances, the decision to redeem requires the concurrence of a
majority of the directors that were members of our board of directors prior to
August 28, 1998 or were recommended for or approved as a director by a majority
of such directors and who is not an Acquiring Person or an associate, affiliate,
representative or nominee of an Acquiring Person.
Each share of Series A Junior Participating Preferred Stock, when issued,
will be non-redeemable and entitled to cumulative dividends and will rank junior
to any series of preferred stock senior to it. In connection with the
declaration of a dividend on our common stock, a preferential dividend will be
payable on the Series A Junior Participating Preferred Stock in an amount equal
to the greater of:
- $1.00 per share; and
- an amount equal to 100 times the dividend declared on the common stock.
Subject to customary anti-dilution provisions, in the event of liquidation,
the holders of the Series A Junior Participating Preferred Stock will be
entitled to a preferential liquidation payment equal to the greater of (a) 100
times the then applicable Purchase Price for the Rights and (b) an amount equal
to 100 times the liquidation payment made on the common stock, if any.
In the event, such an event is defined in the Rights Agreement as a "Flip-In
Event," that
- any person or group becomes an Acquiring Person,
- any Acquiring Person or its affiliate or associate, directly or
indirectly,
(1) merges into or combines with us and we are the continuing or
surviving corporation,
(2) merges into or combines with any of our subsidiaries,
(3) in one or more transactions, transfers cash, securities or other
property to us in exchange for, or the right to acquire, our capital
stock or that of any of our subsidiaries,
(4) engages in certain transactions with us which are not at arm's
length,
(5) receives any compensation from us other than as a director or
full-time employee, or
(6) receives any financial assistance or tax credits or advantages from
us or any of our subsidiaries, or
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(7) during such time as there is an Acquiring Person, there is a
reclassification of our securities or we consummate a
recapitalization or any other transaction,
which in each case has the effect of increasing by more than 1% the
proportionate share of any Acquiring Person or any affiliate or associate
thereof with respect to any class of our outstanding securities, each holder of
a Right will have the right to receive, upon exercise, that number of shares of
our common stock as equals the result obtained by
- multiplying the Purchase Price by the number of one-hundredths of a share
of Series A Junior Participating Preferred Stock for which a Right was
exercisable prior to the triggering event, and
- dividing that product by 50% of the market price per share of our common
stock on the date the triggering event occurs.
In the event such an event is defined in the Rights Agreement as a "Flip-Over
Event" that at any time after any person or group becomes an Acquiring Person,
- we consolidate with or merge with or into any person and we are not the
continuing or surviving corporation,
- any person consolidates with or merges with or into us and we are the
continuing or surviving corporation, but all or part of our common stock
is changed or exchanged for stock or securities of any other person or
cash or any other property, or
- we sell or transfer, in one or more transactions, 50% or more of our
assets or earning power to any person,
each holder of a Right will have the right to receive, upon exercise, that
number of shares of common stock as equals the result obtained by
- multiplying the Purchase Price by the number of one-hundredths of a share
of Series A Junior Participating Preferred Stock for which a Right was
exercisable prior to the Share Acquisition Date, and
- dividing that product by 50% of the market price per share of our common
stock on the date the triggering event occurs.
Each Right, when exercisable, currently entitles the registered holder to
purchase one one-hundredth of a share of Series A Junior Participating Preferred
Stock at a purchase price of $125.00 per share. Upon the occurrence of a
"Flip-In Event" or a "Flip-Over Event," all Rights held by any Acquiring Person
or any of its affiliates or associates, or any transferee of any of them, will
become null and void.
In addition, at any time after the Distribution Date but prior to the
acquisition by any person or group of affiliated or associated persons of 50% or
more of our then outstanding shares of common stock, we may exchange all or a
portion of the Rights other than any Rights that have become void at an exchange
ratio of one share of common stock per Right.
The Rights may have certain anti-takeover effects, including deterring
someone from acquiring control of CTS in a manner or on terms not approved by
our board of directors. The Rights would not interfere with any merger or other
business combination approved by our board of directors, because the Rights may
generally be redeemed by us as described above or the Rights Agreement may be
amended.
BYLAW PROVISIONS
Article XXI of our bylaws incorporates certain provisions of Chapter 23 of
the Indiana Business Combination Law, which provide that a corporation may adopt
rights, options or warrants relating to any transaction or proposed transaction
that would result in a change of control if consummated. Under the Indiana
Business Combination Law and our by-laws, our board of directors may, in such
circumstances,
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include provisions requiring the approval of the "continuing directors" of the
corporation for the redemption or exchange of the rights, options or warrants or
the amendment of the corresponding contracts, warrants or instruments. The
period requiring such approval may not exceed three years after the later of
- the time that the "continuing directors" no longer constitute the majority
of the directors of the corporation; or
- there is an "interested shareholder."
The Indiana Business Combination Law permits a corporation to define a
"continuing director" and an "interested shareholder." Under our bylaws, a
"continuing director" is defined as a director who:
- is not an "interested shareholder" or any affiliate, associate,
representative or nominee of an "interested shareholder" or any affiliate
thereof; and
- is either a member of our board of directors as of the date of issuance of
the rights, options or warrants or subsequently becomes a member of our
board of directors if his or her election or nomination was approved or
recommended by a majority of our board of directors (including a majority
of continuing directors then on our board and excluding any member whose
election resulted from any actual or threatened proxy or other election
contest).
BUSINESS COMBINATIONS
Chapter 43 of the Indiana Business Combination Law prohibits certain
"Business Combinations," including mergers, sale of assets, recapitalization and
reverse stock splits with interested shareholders. Interested shareholders are
holders of more than 10% of any class of a voting stock of a corporation.
Transactions between a corporation and an interested shareholder requires
approval in advance by a corporation's board of directors. In the absence of the
board's approval, the disinterested shareholders must approve the transaction or
the consideration received by disinterested shareholders in the transaction must
at least equal the highest price paid for shares by the interested shareholder
or the highest market value since the date on which the interested shareholders
acquired his or her shares. In addition, the consideration must be in cash or
the same form as the interested shareholder used to acquire the largest number
of his or her shares.
Chapter 42 of the Indiana Business Combination Law also contains certain
provisions regulating "control share acquisitions" which are transactions
causing the voting strength of any person acquiring beneficial ownership of
shares of a public corporation in Indiana to meet or exceed certain threshold
voting percentages (20%, 33% or 50%). Shares acquired in a control share
acquisition have no voting rights unless the voting rights are granted by a
majority vote of all outstanding shares other than those held by the acquiring
person or any officers or employee-directors of the corporation. As permitted
under the Indiana Business Combination Law our bylaws opt out of Section 42 for
all control share acquisitions after March 3, 1987. A majority of our board of
directors may amend the bylaws so that Section 42 would apply, if consistent
with the board's fiduciary responsibilities. The Indiana Business Combination
Law specifically authorizes directors, in considering whether an action is for
the best interest of a corporation, to consider the effects of any corporate
action on shareholders, employees, suppliers and customers of the corporation,
communities in which offices or other facilities of the corporation are located
and any other factors the directors consider pertinent. Under the Indiana
Business Combination Law, directors may be held liable for breaches of their
duties as directors only if their actions constitute willful misconduct or if
they recklessly disregard such duties.
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DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, common stock,
preferred stock or any combination thereof. Warrants may be issued independently
or together with debt securities, preferred stock or common stock and may be
attached to or separate from such securities. In order to issue the warrants, we
may enter into warrant agreements with an agent, who will be named in the
applicable prospectus supplement. The warrant agent will act solely as our agent
for the warrants and will not assume any obligation or relationship of agency or
trust for or with you. This summary of certain provisions of the warrants is not
complete and is subject to, and qualified by reference to the provisions of the
warrant agreement to be filed with the Securities and Exchange Commission as
part of the offering of such warrants. Additional terms of the warrants and the
applicable warrant agreement will be described in a prospectus supplement
including, where applicable, the following:
- the title of such warrants;
- the total number of such warrants;
- the price or prices at which such warrants will be issued;
- the designation, number and terms of the debt securities, common stock,
preferred stock or any combination thereof purchasable upon exercise of
such warrants;
- the designation and terms of the other securities issued with the warrants
and the number of such warrants issued with each such security;
- the date, if any, on and after which such warrants and the related
underlying securities will be separately transferable;
- the price at which each underlying security purchasable upon exercise of
such warrants may be purchased;
- the date the warrants become exercisable, as well as the expiration date;
- the minimum amount of warrants which may be exercised at any one time;
- information with respect to book-entry procedures;
- a discussion of any applicable federal income tax considerations; and
- any other terms of such warrants, including terms, procedures and
limitations relating to the transferability, exchange and exercise of such
warrants.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may, over the next two years, sell any combination
of the securities described in this prospectus in one or more offerings up to a
total dollar amount of $500,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading WHERE YOU CAN FIND MORE INFORMATION.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our filings are
available to the public over the Internet at the Commission's web site at
http://www.sec.gov. You may also read and copy any document we file at the
Commission's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. The New York Stock Exchange also
allows you to inspect and copy reports and information about CTS.
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the Commission will automatically update and supersede this information. We
incorporate by reference CTS' documents listed below and any future filings made
with the Commission under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange of 1934 until we sell all of the securities.
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Reports on Form 10-Q for the quarters ended July 4, 1999, and
October 3, 1999 and
- Current Reports on Form 8-K, filed on March 11, 1999, as amended on Forms
8-K/A, filed on March 12, 1999, and May 12, 1999.
You may request a copy of these documents at no cost by writing or telephoning
us at the following address:
CTS Corporation
905 West Boulevard North
Elkhart, Indiana 46514
Attention: Investor Relations
(219) 293-7511
We will not include exhibits to such documents, unless you specifically request
them or such exhibits were specifically incorporated by reference.
You should rely only on the information incorporated by reference or
contained in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in the prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of the
documents.
PLAN OF DISTRIBUTION
We may sell the offered securities through agents, underwriters or dealers,
or directly to one or more purchasers.
BY AGENTS
Offered securities may be sold through agents designated by us. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
BY UNDERWRITERS
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to various conditions. The
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underwriters will be obligated to purchase all the securities of the series
offered if any of the securities are purchased. Any initial public offering
price and any discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time.
DIRECT SALES
Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved.
GENERALLY
Underwriters, dealers and agents that participate in the distribution of the
offered securities may be underwriters as defined in the Securities Act, and any
discounts or commissions received by them from us and any profit on the resale
of the offered securities by them may be treated as underwriting discounts and
commissions under the Securities Act. Any underwriters or agents will be
identified and their compensation described in a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or our subsidiaries in the ordinary course of their businesses.
All of the securities offered by this prospectus will be a new issue of
securities with no established trading market, other than the common stock,
which is listed on the New York Stock Exchange. Any common stock sold pursuant
to a prospectus supplement will be listed on the New York Stock Exchange,
subject to official notice of issuance. Underwriters that participate in the
distribution of the offered securities may make a market in the securities sold
to them by us, but they are not required to and may stop any market making
activities without prior notice. We can not guarantee a liquid market for any of
these securities.
LEGAL MATTERS
Unless we indicate otherwise in any accompanying prospectus supplement,
Jeannine M. Davis, Esq., our Executive Vice President Administration, General
Counsel and Secretary, or another of our attorneys, will deliver an opinion
about the validity of the securities offered by us.
EXPERTS
PricewaterhouseCoopers LLP, independent certified public accountants,
audited our financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement. These documents have
been incorporated by reference herein in reliance upon the authority of
PricewaterhouseCoopers LLP as experts in accounting and auditing in giving the
report.
The combined financial statements of the Component Products Division of
Motorola, Inc. as of December 31, 1997 and 1998, and for each of the years in
the three-year period ended December 31, 1998, have been incorporated by
reference herein in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
Our financial statements incorporated herein by reference to reports and
documents which are filed with the Securities and Exchange Commission after the
date of this prospectus but prior to the filing by us of post-effective
amendment indicating that all securities offered hereby have been sold or
deregistering all remaining unsold securities will be incorporated by reference
in reliance upon the authority of PricewaterhouseCoopers LLP, or any other
independent public accountants, as experts in accounting and auditing in giving
the report to the extent that such accounting firm has audited the relevant
financial statements and consented to the use of their report(s) with respect to
such financial statements.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions,
which will be described in an applicable prospectus supplement, are estimated as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $139,000
Legal fees and expenses..................................... 75,000
Accounting fees and expenses................................ 25,000
Printing and engraving expenses............................. 25,000
Trustee's fees and expenses................................. 20,000
Miscellaneous expenses(1)................................... 150,000
--------
Total................................................... $434,000
========
</TABLE>
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(1) Includes estimate of stock exchange listing fees, blue sky fees and
expenses, NASD filing fees, and rating agency fees.
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
Combination 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 Combination 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.
The 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 Combination 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. 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,
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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
<TABLE>
<C> <S>
1.1 Underwriting Agreement (to be filed, as applicable to a
particular offering of securities, as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference thereto)
4.1 Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 5 to CTS' Current Report on Form 8-K
filed with the Commission on September 1, 1998)
4.2 Bylaws (incorporated by reference to Exhibit 4 to CTS'
Current Report on Form 8-K filed with the Commission on
September 1, 1998)
4.3 Form of Senior Indenture
4.4 Supplemental Indenture (to be filed, as applicable to a
particular offering of debt securities, as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference thereto)
4.5 The form or forms of securities with respect to each
particular series of securities registered hereunder (to be
filed as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference thereto)
5.1 Opinion of Jeannine M. Davis, Esq., Executive Vice
President-Administration, General Counsel and Secretary of
CTS
12.1* Statement re: Computation of Ratios
23.1* Consent of PricewaterhouseCoopers LLP
23.2* Consent of KPMG LLP
23.3 Consent of Jeannine M. Davis, Esq. (included in Exhibit 5.1)
24.1 Powers of Attorney
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of the Trustee to act as
such under the Senior Indenture (to be filed, as applicable
to a particular offering of debt securities, as an exhibit
to a Current Report on Form 8-K and incorporated herein by
reference thereto)
</TABLE>
- ------------------------
* Filed herewith. All other exhibits are previously filed.
ITEM 17. UNDERTAKINGS
CTS hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after
the effective date of this 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
this 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
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maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (a) and
(b) above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by CTS pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time will 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.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of CTS' Annual Report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this registration
statement will be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
will be deemed to be the initial bona fide offering thereof.
(5) That, (a) for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by CTS pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective and (b) for
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus 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.
CTS hereby undertakes to file an application for the purpose of determining
the eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act of 1939 in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act
of 1939.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of CTS
pursuant to the foregoing provisions, or otherwise, CTS has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by CTS of expenses incurred or paid by a
director, officer, or controlling person of CTS 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, CTS will,
unless in the opinion of counsel for CTS 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 Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
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 of 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 Berne, Indiana on December 10, 1999.
<TABLE>
<S> <C> <C>
CTS CORPORATION
By: /s/ JOSEPH P. WALKER
-----------------------------------------
Joseph P. Walker
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on December 10, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman, President and Chief Executive
------------------------------------------- Officer (principal executive officer) and
Joseph P. Walker Director
* Vice President--Finance and Chief Financial
------------------------------------------- Officer (principal financial officer and
Timothy J. Cunningham principal accounting officer)
*
------------------------------------------- Director
Lawrence J. Ciancia
*
------------------------------------------- Director
Thomas G. Cody
*
------------------------------------------- Director
Gerald H. Frieling, Jr.
*
------------------------------------------- Director
Robert A. Profusek
*
------------------------------------------- Director
Randall J. Weisenburger
</TABLE>
* The undersigned, by signing her name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed by the
above-named persons.
<TABLE>
<S> <C> <C>
/s/ JEANNINE M. DAVIS
-----------------------------------------
Jeannine M. Davis,
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
1.1 Underwriting Agreement (to be filed, as applicable to a
particular offering of Securities, as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference thereto)
4.1 Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 5 to CTS' Current Report on Form 8-K
filed with the Commission on September 1, 1998)
4.2 Bylaws (incorporated by reference to Exhibit 5 to CTS'
Current Report on Form 8-K filed with the Commission on
September 1, 1998)
4.3 Form of Senior Indenture
4.4 Supplemental indenture (to be filed, as applicable to a
particular offering of debt securities, as an exhibit to a
Current Report on Form 8-K and incorporated herein by
reference thereto)
4.5 The form or forms of Securities with respect to each
particular series of Securities registered hereunder (to be
filed as an exhibit to a Current Report on Form 8-K and
incorporated herein by reference thereto)
5.1 Opinion of Jeannine M. Davis, Esq., Executive Vice
President-Administration, General Counsel and Secretary of
CTS
12.1* Statement re: Computation of Ratios
23.1* Consent of PricewaterhouseCoopers LLP
23.2* Consent of KPMG LLP
23.3 Consent of Jeannine M. Davis, Esq. (included in Exhibit 5.1)
24.1 Powers of Attorney
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of the trustee to act as
trustee under the Senior Indenture (to be filed, as
applicable to a particular offering of debt securities, as
an exhibit to a Current Report on Form 8-K and incorporated
herein by reference thereto)
</TABLE>
- ------------------------
* Filed herewith. All other exhibits are previously filed.
<PAGE>
Exhibit 12.1
($ in thousands)
<TABLE>
<CAPTION>
9 months Proforma
10/3/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/98
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pretax earnings $46,909 $49,441 $35,730 $33,602 $27,684 $21,487 $41,341
Fixed Charges:
Interest expense including
amortization of debt expense 7,077 2,389 2,573 1,449 1,790 714 9,853
"Rental" interest expense 1,664 418 343 389 390 457 2,195
------------------------------------------------------------------- -------
Total fixed charges 8,741 2,807 2,916 1,838 2,180 1,171 12,048
Pretax earnings plus Total fixed
charges (EBIT) $55,650 $52,248 $38,646 $35,440 $29,864 $22,658 $53,389
EBIT divided by Total fixed charges 6.4 18.6 13.3 19.3 13.7 19.3 4.4
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 28, 1999 relating to the
financial statements and financial statement schedules, which appears in CTS
Corporation's Annual Report on Form 10-K for the year ended December 31, 1998.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1998 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.
/S/PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
December 9, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF KPMG LLP
The Board of Directors
Motorola, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of CTS Corporation of our report dated February 24, 1999, with
respect to the combined balance sheets of the Component Products Division of
Motorola, Inc. as of December 31, 1997 and 1998, and the related combined
statements of operations and division equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, which report is included
in the Form 8-K/A of CTS Corporation dated May 12, 1999, and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/KPMG LLP
Chicago, Illinois
December 9, 1999
