8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Filing (Date of Report and Earliest Event Reported):  May 24, 2007 (May 23, 2007)

CTS CORPORATION

(Exact Name of Company as Specified in Its Charter)

Indiana	1-4639	35-0225010
(State or Other Jurisdiction of Incorporation)	(Commission File Numbers)	(I.R.S. Employer Identification Nos.)
905 West Boulevard North
Elkhart, Indiana		46514
(Address of Principal Executive Offices)		(Zip Code)

Registrants' Telephone Number, Including Area Code: (574) 293-7511

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:

q   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

q   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

q   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

q   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Condition.

On May 23, 2007, CTS Corporation issued a press release announcing financial results for the first quarter of 2007 as more fully described in the press release, a copy of which is attached as Exhibit 99.1 hereto and which information is incorporated herein by reference.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished to the Securities and Exchange Commission and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.

Item 9.01Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

  Not applicable.

(b) Pro Forma Financial Information.

  Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d)Exhibits.

    The following exhibits are filed with this report:

Exhibit No.Exhibit Description

    99.1 Press Release dated  May 23, 2007 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CTS CORPORATION

/s/ Richard G. Cutter  

By:Richard G. Cutter

Vice President, Secretary

and General Counsel

Date: May 24, 2007

EX-99.1

EXHIBIT 99.1

  newsrelease

CTS CORPORATION   Elkhart, Indiana 46514   (574) 293-7511

May 23, 2007

FOR RELEASE: Immediately

CTS ANNOUNCES FIRST QUARTER 2007 RESULTS

Revenues Increase 8% Year-over-Year

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced first quarter 2007 revenues of $163.3 million and net earnings of $4.0 million, or $0.11 per diluted share.

First quarter 2007 revenue increased 8% over the first quarter of 2006 driven by the EMS segment where sales climbed 13%. Components and Sensors segment sales increased 3%, primarily from strong automotive new product demand, offset by weakness in electronic component demand.

First quarter 2007 earnings of $4.0 million, or $0.11 per diluted share, were less than net earnings of $5.0 million, or $0.13 per diluted share, in the first quarter of 2006. First quarter 2007 net earnings were adversely impacted by $0.8 million, or approximately $0.02 per share, of costs associated with the internal investigation and account reconciliations at CTS’ California EMS locations. First quarter 2006 diluted earnings per share included restructuring and related costs of $0.04 per share for the consolidation of the Berne, Indiana operation and reflected a favorable insurance claim settlement of $0.03 per diluted share.

Commenting on first quarter results, Donald Schwanz, CTS Chairman and Chief Executive Officer, stated, “Our automotive products performed well during the first quarter. Sales were up 18% over the first quarter of 2006 and have averaged 14% growth over the last five quarters.”

Based on current expectations for the rest of the year, we are reducing our full-year 2007 guidance for sales growth to 5% - 8% over 2006. This is down from the range of 7% - 10% previously anticipated and reflects expectations for softer demand for automotive products, certain electronic components and EMS services. Full-year diluted earnings per share are now expected to be in a range of $0.71 to $0.75, down from the previously projected $0.76 to $0.80, reflecting the impact of lower sales, operational inefficiencies due to the start-up of our Czech Republic facility and somewhat higher costs associated with the internal investigation.

Capital expenditures of $2.7 million were 1.6% of sales in the first quarter 2007. Free cash flow in the first quarter was $1.4 million compared to essentially breakeven in the first quarter of 2006.

SEGMENT INFORMATION

(Dollars in millions)

	First Quarter 2007		First Quarter 2006 (As restated)		Fourth Quarter 2006
		Segment		Segment		Segment
	Net	Operating	Net	Operating	Net	Operating
	Sales	Earnings	Sales	Earnings	Sales	Earnings
Components & Sensors	$ 69.6	$ 4.9	$ 67.6	$ 10.5	$ 65.7	$ 6.4
Electronics Manufacturing Services (EMS)	93.7	--	82.9	(0.8)	107.8	2.7
Segment Operating Earnings		4.9		9.7		9.1
Expenses not allocated to business segments:
- Restructuring and related charges				(2.1)
Total	$163.3	$4.9	$150.5	$ 7.6	$173.5	$9.1

Components & Sensors: Components and sensors sales increased $1.9 million, or 3%, over the first quarter of 2006 primarily on higher automotive component demand, partially offset by declines in electronic component sales. Despite the favorable impact of higher sales, segment operating earnings decreased $5.6 million from first quarter 2006 earnings. Approximately $2.7 million of the earnings decrease resulted from several unusual items which occurred in the first quarter of 2006, including higher than normal royalty payments, a gain on sale of assets and a favorable settlement of an insurance claim. The remaining unfavorable year-over-year change resulted from less favorable product mix and higher operating expenses, including incremental legal and accounting fees.

Components and sensors sales increased $3.8 million, or 6%, from the fourth quarter of 2006 reflecting strong automotive product demand. Despite the favorable impact of higher sales, segment operating earnings decreased $1.4 million from the fourth quarter primarily from lower royalty income and increased operating expenses including incremental legal and accounting fees.

EMS: EMS sales increased $10.9 million, or 13%, from the first quarter of 2006 driven primarily by higher sales into the defense and aerospace, industrial and communications markets, partially offset by lower demand in the computer market. The segment operating earnings, which were at breakeven, improved $0.8 million from first quarter 2006 operating loss of $0.8 million primarily due to higher volumes and more favorable product mix, partially offset by incremental legal and accounting fees.

Compared to the fourth quarter of 2006, EMS segment sales decreased $14.1 million, or 13%. Total segment operating earnings decreased $2.8 million primarily from lower volumes and incremental legal and accounting fees.

Conference Call

As previously announced, the Company has scheduled a conference call on Thursday, May 24, 2007 at 11:00 a.m. Eastern Daylight Time. Those interested in participating may dial 800-230-1085 (612-332-0637, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 4:15 p.m. EDT on May 24, 2007, through 11:59 p.m. EDT on May 31, 2007. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 873723. There will also be a live audio webcast of the conference call,which can be accessed directly from the Web sites of CTS Corporation (www.ctscorp.com), StreetEvents (www.StreetEvents.com), Netscape (www.netscape.com), Compuserve (www.compuserve.com) and others. AOL subscribers will have access through the Personal Finance section of AOL.

About CTS

CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, computer, communications, medical, defense and aerospace and industrial markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS.” To find out more, visit the CTS Web site at www.ctscorp.com.

Safe Harbor Statement

This press release contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements, including, without limitation, rapid technological change and general market conditions in the automotive, communications and computer industries; reliance on key customers; CTS’ ability to protect its intellectual property; pricing pressures and demand for CTS’ products; risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks; and the impact of the accounting misstatements at its California EMS locations. For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC. CTS undertakes no obligation to publicly update its forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact:     Vinod M. Khilnani, Senior Vice President and Chief Financial Officer, or

   Mitchell J. Walorski, Director Planning and Investor Relations

   CTS Corporation, 905 West Boulevard North, Elkhart, IN 46514

   Telephone (574) 293-7511FAX (574) 293-6146

CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands, except per share amounts)
	Three Months Ended
	April 1,			April 2,
	2007			2006 (as restated)*
Net sales	$	163,258		$	150,493
Costs and expenses:
Cost of goods sold		132,920			120,452
Selling, general and administrative expenses		21,241			16,886
Research and development expenses		4,120			4,092
(Gain)/Loss on sale of assets		29			(496	)
Restructuring charge		-			1,962
Operating earnings		4,948			7,597
Other expenses (income):
Interest expense		691			1,111
Other		(865	)		(128	)
Total other expenses		(174	)		983
Earnings before income taxes		5,122			6,614
Income tax expense		1,076			1,574
Net earnings	$	4,046		$	5,040
Net earnings per share:
Basic	$	0.11		$	0.14
Diluted	$	0.11		$	0.13
Cash dividends declared per share	$	0.03		$	0.03
Average common shares outstanding:
Basic		35,824			35,821
Diluted		40,410			40,234
* As referenced in CTS' 2006 Form 10-K filed May 15, 2007, the financial statements were restated for each of the first three quarters of 2006 due to accounting misstatements
at CTS' California EMS locations.

CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets- Unaudited
(In thousands of dollars)
	April 1,		December 31,
	2007		2006 *
Cash and cash equivalents	$	36,364	$	38,630
Accounts receivable, net		101,671		106,012
Inventories, net		71,763		60,543
Other current assets		25,605		22,435
Total current assets		235,403		227,620
Property, plant & equipment, net		94,082		96,468
Other assets		198,961		203,745
Total Assets	$	528,446	$	527,833
Notes payable and current portion
of long-term debt	$	3,513	$	5,611
Accounts payable		76,168		78,205
Other accrued liabilities		42,501		41,865
Total current liabilities		122,182		125,681
Long-term debt		60,000		60,635
Other obligations		22,668		22,494
Shareholders' equity		323,596		319,023
Total Liabilities and
Shareholders' Equity	$	528,446	$	527,833
* The balance sheet at December 31, 2006 has been derived from the audited financial statements at that date.

CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION
Segment Operating Earnings
Segment operating earnings is a non-GAAP financial measure outside the context of the FAS 131 required reconciliation in the notes to the company's financial statements. The most comparable GAAP term is operating earnings. Segment operating earnings always excludes the effects of charges for restructuring and related or similar expenses when they are incurred by the Company. Segment operating earnings exclude interest expense, and other non-operating income and income taxes according to how a particular segment is measured. CTS' management provides the segment operating earnings measure to provide consistency between segment information in its earnings release and the business segment discussion in the notes to its financial statements.
Free Cash Flow
The following table summarizes free cash flow for the Company:
	Quarter Ended
	April 1,			April 2,
	2007			2006
Net cash provided by operations	$	4,118		$	2,629
Capital expenditures		(2,687	)		(2,479	)
Free cash flow	$	1,431		$	150
Free cash flow is a non-GAAP financial measure which CTS defines as net cash provided by operations less capital expenditures. The most directly comparable GAAP measure is net cash provided by operations. CTS' management uses free cash flow to evaluate financial performance and in strategic planning, specifically, for investing and financing decisions. CTS' management believes free cash flow is a useful measure because it reflects the performance of its overall operations more accurately than net cash provided by operations and because it provides investors with the same results that management used as the basis for making decisions about the business. Free cash flow is not an indicator of residual cash available for discretionary spending, because it does not take into account mandatory debt service or other non-discretionary spending requirements which are not deducted in the calculation of free cash flow. CTS' management takes these limitations into account when using free cash flow to make investing and financing decisions.