Other Comprehensive Income

6 Months Ended

Jun. 28, 2015

Other Comprehensive Income

Other Comprehensive Income

NOTE 11 – Other Comprehensive Income

Shareholders’ equity includes certain items classified as Accumulated other comprehensive (loss) income (“AOCI”) in the Consolidated Balance Sheets, including:

· Unrealized gains (losses) on hedges relate to interest rate swaps to convert the line of credit’s variable rate of interest into a fixed rate. These hedges are designated as cash flow hedges, and CTS has deferred income statement recognition of gains and losses until the hedged transaction occurs.  Amounts reclassified to income from AOCI for hedges are included in interest expense.  Further information related to CTS’ interest rate swaps is included in NOTE 10 – Debt and NOTE 14 – Fair Value Measurement.

· Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized.  Amounts reclassified to income from AOCI are included in net periodic pension expense.  Further information related to CTS’ pension obligations is included in NOTE 5 – Retirement Plans.

· Cumulative translation adjustment relates to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. CTS is required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income.  Changes in exchange rates between the functional currency and the currency in which a transaction is denominated is a foreign exchange transaction gain or loss. Transaction loss for the six month period ended June 28, 2015 was $1,563,000 which is included in Other in the Condensed Consolidated Statement of Earnings.

The components of other comprehensive loss for the three months ended June 28, 2015 are as follows:

					Gain (Loss)
	As of		Gain (Loss)		reclassified		As of
	March 29,		Recognized		from AOCI		June 28,
($ in thousands)	2015		in OCI		to income		2015
Changes in fair market value of hedges:
Gross	$	(1,157)	$	(82)	$	192	$	(1,047)
Income tax (benefit)		(435)		(31)		72		(394)
Net		(722)		(51)		120		(653)
Changes in unrealized pension cost:
Gross		(167,361)		1,199		—		(166,162)
Income tax (benefit)		(64,451)		494		—		(63,957)
Net		(102,910)		705		—		(102,205)
Cumulative translation adjustment:
Gross		(491)		1,064		—		573
Income tax (benefit)		42		(427)		—		(385)
Net		(533)		1,491		—		958
Total accumulated other comprehensive (loss) income	$	(104,165)	$	2,145	$	120	$	(101,900)

The components of other comprehensive loss for the three months ended June 29, 2014 are as follows:

					Gain (Loss)
	As of		Gain (Loss)		reclassified		As of
	March 30,		Recognized		from AOCI		June 29,
($ in thousands)	2014		in OCI		to income		2014
Changes in fair market value of hedges:
Gross	$	(934)	$	(358)	$	122	$	(1,170)
Income tax (benefit)		(378)		(136)		47		(467)
Net		(556)		(222)		75		(703)
Changes in unrealized pension cost:
Gross		(136,683)		1,251		172		(135,260)
Income tax (benefit)		(54,492)		470		66		(53,956)
Net		(82,191)		781		106		(81,304)
Cumulative translation adjustment:
Gross		1,082		388		—		1,470
Income tax (benefit)		(926)		(229)		—		(1,155)
Net		2,008		617		—		2,625
Total accumulated other comprehensive (loss) income	$	(80,739)	$	1,176	$	181	$	(79,382)

The components of other comprehensive loss for the six months ended June 28, 2015 are as follows:

					Gain (Loss)
	As of		Gain (Loss)		reclassified		As of
	December 31,		Recognized		from AOCI		June 28,
($ in thousands)	2014		in OCI		to income		2015
Changes in fair market value of hedges:
Gross	$	(1,020)	$	(409)	$	382	$	(1,047)
Income tax (benefit)		(384)		(154)		144		(394)
Net		(636)		(255)		238		(653)
Changes in unrealized pension cost:
Gross		(169,291)		3,129		—		(166,162)
Income tax (benefit)		(65,124)		1,167		—		(63,957)
Net		(104,167)		1,962		—		(102,205)
Cumulative translation adjustment:
Gross		245		328		—		573
Income tax (benefit)		(325)		(60)		—		(385)
Net		570		388		—		958
Total accumulated other comprehensive (loss) income	$	(104,233)	$	2,095	$	238	$	(101,900)

The components of other comprehensive loss for the six months ended June 29, 2014 are as follows:

					Gain (Loss)
	As of		Gain (Loss)		reclassified		As of
	December 31,		Recognized		from AOCI		June 29,
($ in thousands)	2013		in OCI		to income		2014
Changes in fair market value of hedges:
Gross	$	(998)	$	(412)	$	240	$	(1,170)
Income tax (benefit)		(402)		(157)		92		(467)
Net		(596)		(255)		148		(703)
Changes in unrealized pension cost:
Gross		(138,133)		2,701		172		(135,260)
Income tax (benefit)		(55,028)		1,006		66		(53,956)
Net		(83,105)		1,695		106		(81,304)
Cumulative translation adjustment:
Gross		949		521		—		1,470
Income tax (benefit)		(855)		(300)		—		(1,155)
Net		1,804		821		—		2,625
Total accumulated other comprehensive (loss) income	$	(81,897)	$	2,261	$	254	$	(79,382)