form8k.htm

newsrelease

CTS CORPORATION Elkhart, Indiana 46514h(574) 523-3800

July 29, 2008

FOR RELEASE: Immediately

CTS ANNOUNCES STRONG SECOND QUARTER 2008 RESULTS

Earnings Up 69% on Revenue Increase of 10% Year-Over-Year

Increases EPS Guidance for 2008

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced second quarter 2008 revenues of $186.1 million and net earnings of $10.0 million, or $0.27 per diluted share, compared to revenues of $169.6 million and net earnings of $5.9 million, or $0.15 per diluted share in the second quarter 2007.

The 80% increase in diluted earnings per share in second quarter 2008 was driven by higher sales, improved margins, a segment mix shift to higher Components and Sensors sales and continued expense control. The second quarter of 2007 included a $0.03 per diluted share charge for unusual audit and professional fees. Second quarter 2008 earnings per diluted share exceeded analyst consensus of $0.20 by $0.07 per share and benefited from some pull up of revenues and production from third quarter 2008 due to Olympics related restrictions in China.

Second quarter 2008 revenue increased 10% over the second quarter of 2007 as Components and Sensors segment sales increased 19%. Within this segment, sales of automotive sensor and actuator products increased 15% and sales of electronic components increased 9%, complemented by the positive impact of a recent acquisition. EMS segment sales in the second quarter of 2008 improved 3% over the second quarter of 2007 from higher sales into defense and aerospace markets driven by a recent acquisition.

“We were pleased to report a strong quarter, driven by improved financial results across both segments and reflecting success of our diversification strategies. New global customers, many in Asia, new technologies and successful penetration of targeted markets such as defense and aerospace, industrial and medical are allowing CTS to better perform in an uncertain economic environment. We continue to capture design wins at a robust pace in the wireless infrastructure space and remain committed to aggressively invest in research and development activities to rapidly expand our Components and Sensors business,” stated Vinod M. Khilnani, CTS President and Chief Executive Officer.

“Our recent bolt-on acquisitions are being successfully integrated and are growing faster than our expectations. Our organic and acquisition growth initiatives are providing further strategic diversification of products, technologies and customers,” commented Mr. Khilnani.

Based on the favorable first half results and recognizing the challenging economic conditions that will particularly be felt in third quarter with extended shutdowns of several key customers and some program push outs, the Company is reiterating its full-year 2008 guidance of 5% - 8% sales growth over 2007 and modestly raising its 2008 earnings per share guidance to $0.79 to $0.84 per diluted share, compared to previous earnings per share guidance of $0.78 to $0.83.

SEGMENT INFORMATION

(Dollars in millions)

	Second Quarter					Second Quarter				First Quarter
	2008					2007				2008
			Segment					Segment				Segment
	Net		Operating			Net		Operating		Net		Operating
	Sales		Earnings			Sales		Earnings		Sales		Earnings

Components & Sensors	$	84.1	$	10.2		$	70.8	$	5.5	$	77.8	$	6.8
Electronics Manufacturing Services (EMS)		102.0		3.7			98.8		2.4		95.0		2.0
Segment Operating Earnings				13.9					7.9				8.8
Expenses not allocated to business segments:
- Restructuring and related charges				(0.1	)								(0.4	)
Total	$	186.1	$	13.8		$	169.6	$	7.9	$	172.8	$	8.4

Components & Sensors: Components and Sensors second quarter 2008 sales increased by $13.3 million, or 19%, from the second quarter of 2007. The improvement results from increased sales of automotive sensor and actuator products and increased electronic component sales into infrastructure applications, combined with incremental sales from a recent acquisition. Segment operating earnings of $10.2 million improved $4.7 million over the second quarter of 2007 primarily from higher volume, improved product mix and pricing. Operating earnings, as a percent of sales, improved to 12% from 8% in the same period last year.

Segment sales increased by $6.3 million, or 8%, over the first quarter of 2008, primarily from increased sales of automotive sensor and actuator products and the positive impact of a recent acquisition. Segment operating earnings of $10.2 million increased $3.4 million from the first quarter of 2008 primarily from the impact of higher volume and improved product mix, partially offset by a planned increased investment in research and development activities and lower royalty income.

EMS: EMS second quarter 2008 sales increased by $3.2 million, or 3%, from the second quarter of 2007, reflecting higher sales into defense and aerospace markets, primarily acquisition related, and higher sales into the communication market, partially offset by expected declines in sales into the computer market.

Segment operating earnings of $3.7 million were $1.3 million higher than the second quarter of 2007 primarily from increased volume, improved product mix and operating efficiencies. Operating earnings, as a percent of sales, increased 50% to 3.6% in the second quarter of 2008 from 2.4% in the same period last year.

Second quarter 2008 EMS sales were $7.0 million higher than first quarter 2008, in communication, industrial and defense and aerospace markets, primarily due to incremental sales from a recent acquisition, partially offset by expected declines in sales into the computer market. Segment operating earnings of $3.7 million increased $1.7 million on higher volume, improved product mix and operating efficiencies.

Conference Call

As previously announced, the Company has scheduled a conference call on Wednesday, July 30, 2008 at 11:00 a.m. EDT. Those interested in participating may dial 800-288-8976 (612-332-0932, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 1:30 p.m. EDT on Wednesday, July 30, 2008, through 11:59 p.m. EDT on Wednesday, August 6, 2008. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 952939. 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, potential changes in the economy generally and in respect to the businesses in which CTS operates; rapid technological change 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; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC, available at http://www.ctscorp.com/investor_relations/investor.htm. 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: Donna L. Belusar, Senior Vice President and Chief Financial Officer, or

Mitchell J. Walorski, Director of Investor Relations

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

Telephone (574) 523-3800 FAX (574) 293-6146

CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands, except per share amounts)

			Three Months Ended						Six Months Ended
			June 29,			July 1,			June 29,			July 1,
			2008			2007			2008			2007

Net sales			$	186,091		$	169,624		$	358,846		$	332,882

Costs and expenses:
	Cost of goods sold			145,938			136,680			284,869			269,600
	Selling, general and administrative expenses			21,506			20,940			42,482			42,210
	Research and development expenses			4,750			4,102			9,067			8,222
	Restructuring charge			113			-			263			-

Operating earnings				13,784			7,902			22,165			12,850

Other (expenses) income:
	Interest expense			(1,058	)		(681	)		(2,117	)		(1,372	)
	Other			38			254			1,263			1,119
		Total other expenses		(1,020	)		(427	)		(854	)		(253	)

		Earnings before income taxes		12,764			7,475			21,311			12,597

Income tax expense				2,807			1,570			4,688			2,646


Net earnings			$	9,957		$	5,905		$	16,623		$	9,951

Net earnings per share:
Basic			$	0.30		$	0.16		$	0.49		$	0.28

Diluted			$	0.27		$	0.15		$	0.45		$	0.26

Cash dividends declared per share			$	0.03		$	0.03		$	0.06		$	0.06

Average common shares outstanding:
Basic				33,652			35,824			33,748			35,824

Diluted				38,090			40,302			38,209			40,355

CTS Corporation and Subsidiaries
Condensed Consolidated Balance Sheets - Unaudited
(In thousands of dollars)

	June 29,		December 31,
	2008			2007*

Cash and cash equivalents	$	45,370	$	52,868
Accounts receivable, net		110,521		100,655
Inventories, net		86,559		73,778
Other current assets		24,226		23,539
Total current assets		266,676		250,840

Property, plant & equipment, net		96,285		92,825
Other assets		212,768		200,027

Total Assets	$	575,729	$	543,692



Notes payable and current portion
of long-term debt	$	-	$	1,000
Accounts payable		85,658		84,217
Other accrued liabilities		46,599		43,702
Total current liabilities		132,257		128,919

Long-term debt		92,300		72,000
Other obligations		17,314		18,526
Shareholders' equity		333,858		324,247

Total Liabilities and
Shareholders' Equity	$	575,729	$	543,692


* The balance sheet at December 31, 2007 has been derived from the
audited financial statements at that date.

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)

Exhibit Number	Description
99.1	Press Release, dated July 29, 2008