SEC Comment Letter 0000000000-23-011800 to CTS CORP (CTS) (CIK 0000026058) (CTS)
CTS CORP (CTS) (CIK 0000026058)
Date: Oct. 27, 2023 · CIK: 0000026058 · Accession: 0000000000-23-011800
AI Filing Summary & Sentiment
File numbers found in text: 001-04639
Letter
United States securities and exchange commission logo October 27, 2023 Ashish Agrawal Chief Financial Officer CTS CORP 492 Indiana Ave. Lisle, IL 60532 Re:CTS CORP Form 10-K for Fiscal Year Ended December 31, 2022 Filed February 24, 2023 Form 8-K Filed July 25, 2023 File No. 001-04639 Dear Ashish Agrawal: We have limited our review of your filing to the financial statements and related disclosures and have the following comments. Please respond to this letter within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to this letter, we may have additional comments. Form 10-K for Fiscal Year Ended December 31, 2022 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: Year Ended December 31, 2022 versus Year Ended December 31, 2021, page 22 1.Your disclosures indicate that you continue to experience significant inflation in material and freight costs as well as interruptions in the supply chain, particularly due to the global semiconductor chip shortages, and that the impact of supply chain disruptions and OEM shutdowns are expected to continue to have an adverse effect on your results but you are seeking to mitigate and minimize the impact. Please revise future annual and quarterly filings to quantify the impact these factors had on your operations during each period presented and more fully disclose and discuss the steps you are taking, if any, to mitigate them, including whether your mitigating efforts may introduce new material risks, including those related to product quality or reliability. In addition, revise future annual and quarterly filings to quantify the impact that changes in volume and average selling
FirstName LastNameAshish Agrawal Comapany NameCTS CORP October 27, 2023 Page 2 FirstName LastNameAshish Agrawal CTS CORP October 27, 2023 Page 2 prices had on net sales during each period presented and more fully disclose and discuss the factors that resulted in such changes. In addition, revise your disclosures related to changes in net sales in future quarterly filings to quantify the impact acquisitions had during each period presented. Financial Statements and Supplementary Data Notes to Consolidated Financial Statements Note 3 - Business Acquisitions, page 41 2.Please revise future filings to provide the disclosures required by ASC 805-10-502(h). Form 8-K filed July 25, 2023 Exhibit 99.1 3.Please provide a more detailed description of the environmental expenses you eliminate from your non-GAAP measures and explain to us how you determined these expenses are not normal, recurring, cash operating expenses such that eliminating from non-GAAP measures is not appropriate based on Regulation G and Question 100.01 of the Compliance and Disclosure Interpretations on Non-GAAP Financial Measures. In this regard, we note the expenses are incurred in each period presented and the related adjustments appear to represent all of the environmental expenses disclosed in the notes to your financial statements.
4.We note your description of discrete tax items includes non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items, etc.). When you record adjustments for discrete tax items, please revise future filings to specifically identify what the adjustments relate to, explain how they are calculated, and explain how you determined they are appropriate and comply with Question 102.11 of the Compliance and Disclosure Interpretations on Non-GAAP Financial Measures.
5.We note you present the non-GAAP adjustments you use to calculate your non- GAAP financial measure, Adjusted Diluted Earnings Per Share, net of tax, which is not consistent with our response to Question 102.11 in the updated Compliance and Disclosure Interpretations on Non-GAAP Financial Measures. Please revise your non- GAAP reconciliations related to this measure in future filings to separately present the impact of income taxes. In addition, revise your disclosures related to Adjusted Net Income and Adjusted Diluted Earnings Per Share in future filings to explain how the tax impact of non-GAAP adjustments is calculated, which should be based on statutory income tax rates.
FirstName LastNameAshish Agrawal Comapany NameCTS CORP October 27, 2023 Page 3 FirstName LastName Ashish Agrawal CTS CORP October 27, 2023 Page 3 In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Please contact Mindy Hooker at 202-551-3732 or Anne McConnell at 202-551-3709 with any questions. Sincerely, Division of Corporation Finance Office of Manufacturing
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United States securities and exchange commission logo
October 27, 2023
Ashish Agrawal
Chief Financial Officer
CTS CORP
492 Indiana Ave.
Lisle, IL 60532
Re:CTS CORP
Form 10-K for Fiscal Year Ended December 31, 2022
Filed February 24, 2023
Form 8-K Filed July 25, 2023
File No. 001-04639
Dear Ashish Agrawal:
We have limited our review of your filing to the financial statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to this letter, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2022
Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations: Year Ended December 31, 2022 versus Year Ended December 31, 2021,
page 22
1.Your disclosures indicate that you continue to experience significant inflation in material
and freight costs as well as interruptions in the supply chain, particularly due to the global
semiconductor chip shortages, and that the impact of supply chain disruptions and OEM
shutdowns are expected to continue to have an adverse effect on your results but you are
seeking to mitigate and minimize the impact. Please revise future annual and quarterly
filings to quantify the impact these factors had on your operations during each period
presented and more fully disclose and discuss the steps you are taking, if any, to mitigate
them, including whether your mitigating efforts may introduce new material risks,
including those related to product quality or reliability. In addition, revise future annual
and quarterly filings to quantify the impact that changes in volume and average selling
FirstName LastNameAshish Agrawal
Comapany NameCTS CORP
October 27, 2023 Page 2
FirstName LastNameAshish Agrawal
CTS CORP
October 27, 2023
Page 2
prices had on net sales during each period presented and more fully disclose and discuss
the factors that resulted in such changes. In addition, revise your disclosures related to
changes in net sales in future quarterly filings to quantify the impact acquisitions had
during each period presented.
Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
Note 3 - Business Acquisitions, page 41
2.Please revise future filings to provide the disclosures required by ASC 805-10-502(h).
Form 8-K filed July 25, 2023
Exhibit 99.1
3.Please provide a more detailed description of the environmental expenses you eliminate
from your non-GAAP measures and explain to us how you determined these expenses are
not normal, recurring, cash operating expenses such that eliminating from non-GAAP
measures is not appropriate based on Regulation G and Question 100.01 of the
Compliance and Disclosure Interpretations on Non-GAAP Financial Measures. In this
regard, we note the expenses are incurred in each period presented and the related
adjustments appear to represent all of the environmental expenses disclosed in the notes to
your financial statements.
4.We note your description of discrete tax items includes non-recurring, infrequent, or
unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes,
unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP
items, etc.). When you record adjustments for discrete tax items, please revise future
filings to specifically identify what the adjustments relate to, explain how they are
calculated, and explain how you determined they are appropriate and comply with
Question 102.11 of the Compliance and Disclosure Interpretations on Non-GAAP
Financial Measures.
5.We note you present the non-GAAP adjustments you use to calculate your non-
GAAP financial measure, Adjusted Diluted Earnings Per Share, net of tax, which is not
consistent with our response to Question 102.11 in the updated Compliance and
Disclosure Interpretations on Non-GAAP Financial Measures. Please revise your non-
GAAP reconciliations related to this measure in future filings to separately present the
impact of income taxes. In addition, revise your disclosures related to Adjusted Net
Income and Adjusted Diluted Earnings Per Share in future filings to explain how the
tax impact of non-GAAP adjustments is calculated, which should be based on statutory
income tax rates.
FirstName LastNameAshish Agrawal
Comapany NameCTS CORP
October 27, 2023 Page 3
FirstName LastName
Ashish Agrawal
CTS CORP
October 27, 2023
Page 3
In closing, we remind you that the company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.
Please contact Mindy Hooker at 202-551-3732 or Anne McConnell at 202-551-3709 with
any questions.
Sincerely,
Division of Corporation Finance
Office of Manufacturing