CTS Cuts 2006 Profit Outlook

ELKHART, Ind. (AP) -- Shares of CTS Corp. dropped Friday after the electronic parts maker lowered its 2006 adjusted earnings forecast on lower margins at one business and the effect of incorrect accounting entries.

The stock fell $1.99, or 12.5 percent, to $13.88 in morning trading on the New York Stock Exchange.

CTS said it expects a 2006 profit of 58 cents to 62 cents per share. Excluding an 8-cent per share charge related to the consolidation of its Berne, Ind. operation, the company said it now expects to post an adjusted profit of 66 cents to 70 cents per share, down from its previous estimate of 74 cents to 77 cents per share.

The company also backed its fourth-quarter and full-year revenue predictions, saying it still expects to post revenue of $173.6 million for the quarter and $655.7 million for the year.

Analysts, on average, expect revenue of $173.1 million for the fourth quarter and $655.3 million for the year, according to a poll by Thomson Financial.

In January, CTS said it would delay its fourth-quarter earnings release to finish the reconciliation of accounts related to payables and inventory at one of its manufacturing locations.

The company said Friday that it is still investigating the accounting issues, but it added that the incorrect accounting may affect multiple quarters in 2006, so its financial statements for the first three quarters of 2006 should not be relied upon.

CTS said it expects full-year 2007 sales to increase 7 percent to 10 percent over 2006 and projected a 2007 profit of 76 cents to 80 cents per share. Analysts, on average, expect a 2007 profit of 91 cents per share.

The company said expects to announce its 2006 results "as soon as practicable" after the completion of the investigation.