e10vq

0000950123-11-068241.txt : 20110726 0000950123-11-068241.hdr.sgml : 20110726 20110726134638 ACCESSION NUMBER: 0000950123-11-068241 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20110703 FILED AS OF DATE: 20110726 DATE AS OF CHANGE: 20110726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CTS CORP CENTRAL INDEX KEY: 0000026058 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 350225010 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04639 FILM NUMBER: 11986886 BUSINESS ADDRESS: STREET 1: 905 WEST BOULEVARD NORTH CITY: ELKHART STATE: IN ZIP: 46514 BUSINESS PHONE: 5742937511 MAIL ADDRESS: STREET 1: 905 W BLVD NORTH CITY: ELKHART STATE: IN ZIP: 46514 10-Q 1 c65291e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 3, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-4639

CTS CORPORATION

(Exact name of registrant as specified in its charter)


Indiana		35-0225010

(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification Number)


905 West Boulevard North, Elkhart, IN		46514

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 574-523-3800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 22, 2011: 34,420,834.

CTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION		3

Item 1. Financial Statements		3

Unaudited Condensed Consolidated Statements of Earnings - For the Three and Six Months Ended July 3, 2011 and July 4, 2010		3

Unaudited Condensed Consolidated Balance Sheets - As of July 3, 2011 and December 31, 2010		4

Unaudited Condensed Consolidated Statements of Cash Flows - For the Six Months Ended July 3, 2011 and July 4, 2010		5

Unaudited Condensed Consolidated Statements of Comprehensive Earnings - For the Three and Six Months Ended July 3, 2011 and July 4, 2010		6

Notes to Unaudited Condensed Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures about Market Risk		25

Item 4. Controls and Procedures		25

PART II. OTHER INFORMATION		25

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		26

Item 3 Defaults Upon Senior Securities		26

Item 4 Removed and Reserved		26

Item 5 Other Information		26

Item 6. Exhibits		26

SIGNATURES		27

PART I — FINANCIAL INFORMATION


Item 1.		Financial Statements

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — UNAUDITED
(In thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	July 3,			July 4,			July 3,			July 4,
	2011			2010			2011			2010
Net sales	$	146,919		$	138,851		$	298,437		$	268,254
Costs and expenses:
Cost of goods sold		119,051			108,511			241,409			207,435
Selling, general and administrative expenses		18,057			18,283			36,429			37,832
Research and development expenses		4,590			4,316			9,619			8,899
Restructuring charge — Note M		694			—			694			—

Operating earnings		4,527			7,741			10,286			14,088
Other (expense)/income:
Interest expense		(511	)		(228	)		(1,003	)		(463	)
Interest income		276			81			472			134
Other		743			(337	)		1,873			(821	)

Total other income/(expense)		508			(484	)		1,342			(1,150	)


Earnings before income taxes		5,035			7,257			11,628			12,938
Income tax expense		903			1,365			2,380			2,615

Net earnings	$	4,132		$	5,892		$	9,248		$	10,323

Net earnings per share — Note J
Basic	$	0.12		$	0.17		$	0.27		$	0.30

Diluted	$	0.12		$	0.17		$	0.26		$	0.30


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

Average common shares outstanding:
Basic		34,375			34,048			34,334			34,001
Diluted		35,025			34,874			35,050			34,811

See notes to unaudited condensed consolidated financial statements.

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
(In thousands of dollars)


	July 3,			December 31,
	2011			2010
ASSETS
Current Assets
Cash and cash equivalents	$	75,056		$	73,315
Accounts receivable, less allowances (2011 - $1,253; 2010- $1,269)		87,792			95,930
Inventories, net — Note D		88,602			76,885
Other current assets		23,903			20,525

Total current assets		275,353			266,655
Property, plant and equipment, less accumulated depreciation (2011 - $242,471; 2010 - $244,662)		79,211			78,213
Other Assets
Prepaid pension asset		48,377			44,075
Goodwill — Note L		500			500
Other intangible assets, net — Note L		31,227			31,432
Deferred income taxes		59,050			59,956
Other		1,705			1,753

Total other assets		140,859			137,716

Total Assets	$	495,423		$	482,584


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable	$	246		$	—
Accounts payable		77,087			75,384
Accrued liabilities		40,718			44,716

Total current liabilities		118,051			120,100
Long-term debt — Note E		74,500			70,000
Other long-term obligations		17,129			18,234
Shareholders’ Equity
Preferred stock — authorized 25,000,000 shares without par value; none issued		—			—
Common stock — authorized 75,000,000 shares without par value; 54,788,197 shares issued at July 3, 2011 and 54,517,560 shares issued at December 31, 2010		287,635			285,515
Additional contributed capital		37,808			37,775
Retained earnings		342,709			335,524
Accumulated other comprehensive loss		(85,074	)		(87,555	)

		583,078			571,259
Cost of common stock held in treasury — Note K (2011 — 20,356,259 and 2010 — 20,320,759 shares)		(297,335	)		(297,009	)

Total shareholders’ equity		285,743			274,250

Total Liabilities and Shareholders’ Equity	$	495,423		$	482,584

See notes to unaudited condensed consolidated financial statements.

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(In thousands of dollars)


	Six Months Ended
	July 3,			July 4,
	2011			2010
Cash flows from operating activities:
Net earnings	$	9,248			10,323
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		8,766			8,832
Prepaid pension asset		(4,302	)		(3,905	)
Equity-based compensation — Note B		2,361			2,167
Restructuring charge — Note M		694			—
Amortization of retirement benefit adjustments — Note F		2,542			2,500
Other		(1,481	)		(538	)
Changes in assets and liabilities, net of acquisitions
Accounts receivable		10,188			(13,770	)
Inventories		(10,633	)		(14,675	)
Other current assets		(1,369	)		(1,683	)
Accounts payable and accrued liabilities		(7,174	)		17,095

Total adjustments		(408	)		(3,977	)

Net cash provided by operating activities		8,840			6,346

Cash flows from investing activities:
Payment for acquisition, net of cash acquired		(2,930	)		—
Earnout payment related to a 2008 acquisition		—			(500	)
Capital expenditures		(6,526	)		(6,207	)
Proceeds from sales of assets		—			960

Net cash used in investing activities		(9,456	)		(5,747	)

Cash flows from financing activities:
Payments of long-term debt — Note E		(1,989,500	)		(1,565,150	)
Proceeds from borrowings of long-term debt — Note E		1,994,000			1,580,650
Payments of short-term notes payable		(2,203	)		(1,631	)
Proceeds from borrowings of short-term notes payable		2,449			1,631
Purchase of treasury stock		(326	)		—
Dividends paid		(2,056	)		(2,038	)
Exercise of stock options		472			92
Other		204			(24	)

Net cash provided by financing activities		3,040			13,530

Effect of exchange rate on cash and cash equivalents		(683	)		(62	)

Net increase in cash and cash equivalents		1,741			14,067

Cash and cash equivalents at beginning of year		73,315			51,167

Cash and cash equivalents at end of period	$	75,056		$	65,234


Supplemental cash flow information
Cash paid during the period for:
Interest	$	885		$	398
Income taxes—net	$	2,060		$	2,303

See notes to unaudited condensed consolidated financial statements.

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS — UNAUDITED
(In thousands of dollars)


	Three Months Ended					Six Months Ended
	July 3,		July 4,			July 3,		July 4,
	2011		2010			2011		2010
Net earnings	$	4,132	$	5,892		$	9,248	$	10,323
Other comprehensive earnings/(loss):
Cumulative translation adjustment		7		(203	)		995		(1,636	)
Amortization of retirement benefit adjustments (net of tax)		750		687			1,486		1,416

Comprehensive earnings	$	4,889	$	6,376		$	11,729	$	10,103

See notes to unaudited condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED
July 3, 2011

NOTE A — Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

NOTE B — Equity-Based Compensation

At July 3, 2011, CTS had five equity-based compensation plans: the 1996 Stock Option Plan (“1996 Plan”), the 2001 Stock Option Plan (“2001 Plan”), the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), and the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”). All of these plans, except the Directors’ Plan, were approved by shareholders. As of December 31, 2009, additional grants can only be made under the 2004 and 2009 Plans. CTS believes that equity-based awards align the interest of employees with those of its shareholders.

The 2009 Plan, and previously the 1996 Plan, 2001 Plan and 2004 Plan, provides for grants of incentive stock options or nonqualified stock options to officers, key employees, and nonemployee members of CTS’ board of directors. In addition, the 2009 Plan and the 2004 Plan allows for grants of stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock awards.

The following table summarizes the compensation expense included in the Unaudited Condensed Consolidated Statements of Earnings for the three and six months ended July 3, 2011 and July 4, 2010 relating to these plans:


	Three Months Ended				Six Months Ended
	July 3,		July 4,		July 3,		July 4,
($ in thousands)	2011		2010		2011		2010
Stock options	$	—	$	1	$	—	$	3
Restricted stock units		1,181		905		2,361		2,164

Total	$	1,181	$	906	$	2,361	$	2,167

The following table summarizes the status of these plans as of July 3, 2011:


	2009 Plan		2004 Plan		2001 Plan		1996 Plan
Awards originally available		3,400,000		6,500,000		2,000,000		1,200,000
Stock options outstanding		—		257,200		505,500		75,350
Restricted stock units outstanding		543,459		146,195		—		—
Options exercisable		—		257,200		505,500		75,350
Awards available for grant		2,512,140		268,500		—		—

Stock Options

Stock options are exercisable in cumulative annual installments over a maximum 10-year period, commencing at least one year from the date of grant. Stock options are generally granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The stock options generally vest over four years and have a 10-year contractual life. The awards generally contain provisions to either accelerate vesting or allow vesting to continue on schedule upon retirement if certain service and age requirements are met. The awards also provide for accelerated vesting if there is a change in control event.

The Company estimated the fair value of the stock option on the grant date using the Black-Scholes option-pricing model and assumptions for expected price volatility, option term, risk-free interest rate, and dividend yield. Expected price volatilities were based on historical volatilities of the Company’s stock. The expected option term is derived from historical data on exercise behavior. The dividend yield was based on historical dividend payments. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant.

A summary of the status of stock options as of July 3, 2011 and July 4, 2010, and changes during the six-month periods then ended, is presented below:


	July 3, 2011					July 4, 2010
				Weighted-Average					Weighted-Average
	Options			Exercise Price		Options			Exercise Price
Outstanding at beginning of year		1,093,063		$	12.61		1,179,088		$	13.72
Exercised		(59,263	)	$	7.91		(17,000	)	$	7.70
Expired		(195,750	)	$	21.99		(43,375	)	$	44.79

Outstanding at end of period		838,050		$	10.75		1,118,713		$	12.61

Exercisable at end of period		838,050		$	10.75		1,118,713		$	12.61

The total intrinsic value of share options exercised during the six-month periods ended July 3, 2011 and July 4, 2010 were $209,000 and $30,000, respectively. The weighted average remaining contractual life of options outstanding and options exercisable at July 3, 2011 and July 4, 2010 were 2.2 years and 2.8 years, respectively. The aggregate intrinsic value of options outstanding and options exercisable at July 3, 2011 and July 4, 2010 were approximately $378,000 and $341,000, respectively. There were no unvested stock options at July 3, 2011.

The following table summarizes information about stock options outstanding at July 3, 2011:


	Options Outstanding						Options Exercisable
			Weighted Average
Range of	Number		Remaining		Weighted Average		Number		Weighted Average
Exercise	Outstanding		Contractual		Exercise		Exercisable		Exercise
Prices	at 7/3/11		Life (Years)		Price		at 7/3/11		Price
$7.70 — 11.11		616,250		2.22	$	9.53		616,250	$	9.53
$13.68 — 16.24		221,800		2.16	$	14.13		221,800	$	14.13

Service-Based Restricted Stock Units

Service-based restricted stock units (“RSUs”) entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers and key employees as compensation. Generally, the RSUs vest over a three to five-year period. A summary of the status of RSUs as of July 3, 2011 and July 4, 2010, and changes during the six-month periods then ended is presented below:


	July 3, 2011					July 4, 2010
				Weighted-average					Weighted-average
				Grant-Date					Grant-Date
	RSUs			Fair Value		RSUs			Fair Value
Outstanding at beginning of year		807,601		$	8.39		854,745		$	8.47
Granted		219,100		$	11.89		271,500		$	7.52
Converted		(297,104	)	$	8.52		(280,495	)	$	8.97
Forfeited		(39,943	)	$	8.89		(13,920	)	$	6.62

Outstanding at end of period		689,654		$	9.42		831,830		$	8.34

Weighted-average remaining contractual life	6.7 years					5.32 years

CTS recorded compensation expense of approximately $691,000 and $1,412,000 related to service-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $657,000 and $1,544,000 related to service-based restricted stock units during the three and six month periods ended July 4, 2010, respectively.

As of July 3, 2011, there was $2.6 million of unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted-average period of 1.2 years. CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

Performance-Based Restricted Stock Units

On February 6, 2007, CTS granted performance-based restricted stock unit awards for certain executives. Executives received a total of 17,100 units based on achievement of year-over-year sales growth and free cash flow performance goals for fiscal year 2007. These units cliff vested and converted one-for-one to CTS common stock on December 31, 2010.

On February 2, 2010, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 78,000 units in 2012 subject to certification of the 2011 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets.

On February 3, 2011, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 53,200 units in 2013 subject to certification of the 2012 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets.

CTS recorded compensation expense of approximately $177,000 and $343,000 related to performance-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $74,000 and $177,000 related to performance-based restricted stock units during the three and six month periods ended July 4, 2010, respectively. As of July 3, 2011 there was approximately $748,000 of unrecognized compensation cost related to performance-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.0 year.

Market-Based Restricted Stock Units

On July 2, 2007, CTS granted a market-based restricted stock unit award for an executive officer. An aggregate of 25,000 units may be earned in performance years ending in the following three consecutive years on the anniversary of the award date. Vesting may occur in the range from zero percent to 150% of the target award on the end date of each performance period and is tied exclusively to CTS total stockholder return relative to 32 enumerated peer group companies’ total stockholder return rates. The vesting rate will be determined using a matrix based on a percentile ranking of CTS total stockholder return with peer group total shareholder return over a three-year period. During the year ended December 31, 2010, 12,500 units were earned and awarded to the executive officer.

On February 4, 2009, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 128,000 units in 2011. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates. No awards were vested as the vesting criterion was not met.

On February 2, 2010, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 117,000 units in 2012. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates.

On February 3, 2011, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 79,800 units in 2013. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates.

CTS recorded compensation expense of approximately $313,000 and $606,000 related to market-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $173,000 and $441,000 related to market-based restricted stock units during the three and six month periods ended July 4, 2010, respectively. As of July 3, 2011, there was approximately $1.3 million of unrecognized compensation cost related to market-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.0 year.

Stock Retirement Plan

The Directors’ Plan provides for a portion of the total compensation payable to nonemployee directors to be deferred and paid in CTS stock. The Directors’ Plan was frozen effective December 1, 2004. All future grants will be from the 2009 Plan.

NOTE C — Acquisition

In January 2011, CTS acquired certain assets and assumed certain liabilities of Fordahl SA, a privately held company located in Brugg, Switzerland. This business was acquired for approximately $2.9 million, net of cash acquired. The assets acquired include inventory, accounts receivables, leasehold improvements, machinery and equipment, and certain intangible assets.

The Fordahl SA product line includes high-performance temperature compensated crystal oscillators and voltage controlled crystal oscillators. This product line is expected to expand CTS’ frequency product portfolio from clock and crystals to highly-engineered precision ovenized oscillators. This acquisition is expected to add new customers and to open up new market opportunities for CTS.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition:


	Estimated Fair
	Values
	At January 24,
*($ in thousands)*	2011
Current assets	$	2,293
Property, plant and equipment		2,141
Amortizable intangible assets		1,084

Fair value of assets acquired, including $59 cash acquired		5,518
Less fair value of liabilities acquired		2,529

Net assets acquired		2,989
Cash acquired		59

Net cash paid	$	2,930

Under the terms of the purchase agreement, CTS may pay a contingent earn out of up to $0.9 million in cash, based on the achievement of certain financial targets in 2011 through 2013. The fair value of this earn out contingency approximates $370,000, and was recorded as a liability at the acquisition date.

This acquisition is accounted for using the acquisition method of accounting whereby the total purchase price will be allocated to tangible and intangible assets based on the fair market values on the date of acquisition. CTS determined the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired and liabilities assumed. These estimates were arrived at using recognized valuation techniques. The Company is still finalizing the purchase price allocation. The land and building, machinery and equipment and intangible assets are classified as Level 3 under the fair value hierarchy. The pro forma effect of this acquisition is not material to CTS’ results of operations or financial position.

NOTE D — Inventories, net

Inventories consist of the following:


	July 3,		December 31,
*($ in thousands)*	2011		2010
Finished goods	$	11,606	$	8,594
Work-in-process		19,009		16,394
Raw materials		57,987		51,897

Total inventories, net	$	88,602	$	76,885

NOTE E — Debt

Long-term debt was comprised of the following:


	July 3,		December 31,
($ in thousands)	2011		2010
Revolving credit agreement, weighted-average interest rate of 1.8% (2011), and 1.1% (2010) due in 2015	$	74,500	$	70,000

On November 18, 2010, CTS entered into a $150 million, unsecured revolving credit agreement. Under the terms of the revolving credit agreement, CTS can expand the credit facility to $200 million, subject to participating banks’ approval. There was $74.5 million and $70.0 million outstanding under the revolving credit agreement at July 3, 2011 and December 31, 2010, respectively. At July 3, 2011 and December 31, 2010, CTS had $72.7 million and $77.2 million, respectively, available under this agreement, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon the London Interbank Offered Rate and the Company’s quarterly total leverage ratio. CTS pays a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.375 percent per annum at July 3, 2011. The revolving credit agreement requires, among other things, that CTS comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure of CTS to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. CTS was in compliance with all debt covenants at July 3, 2011. The revolving credit agreement requires CTS to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting CTS’ ability to: dispose of assets, incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with CTS’ subsidiaries and affiliates; and make stock repurchases and dividend payments. The revolving credit agreement expires in November 2015.

NOTE F — Retirement Plans

Net pension income and postretirement expense for the three and six-months ended July 3, 2011 and July 4, 2010 include the following components:


	Three Months Ended						Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
PENSION PLANS
Service cost	$	722		$	744		$	1,444		$	1,491
Interest cost		3,230			3,310			6,457			6,642
Expected return on plan assets ⁽¹⁾		(6,062	)		(6,079	)		(12,121	)		(12,162	)
Settlement cost		—			—			—			234
Amortization of prior service cost		153			153			306			510
Amortization of loss		1,120			991			2,239			1,990

Net pension income	$	(837	)	$	(881	)	$	(1,675	)	$	(1,295	)


⁽¹⁾		Expected return on plan assets is net of expected investment expenses and certain administrative expenses.


	Three Months Ended					Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
OTHER POSTRETIREMENT BENEFIT PLAN
Service cost	$	4		$	3	$	8		$	6
Interest cost		72			75		144			150
Amortization of gain		(1	)		—		(3	)		—

Postretirement expense	$	75		$	78	$	149		$	156

NOTE G — Segments

CTS reportable segments are grouped by entities that exhibit similar economic characteristics. The segments’ reporting results are regularly reviewed by CTS’ chief operating decision maker to make decisions about resources to be allocated to these segments and to evaluate the segments’ performance. CTS has two reportable segments: 1) Electronics Manufacturing Services (“EMS”) and 2) Components and Sensors.

EMS includes the higher level assembly of electronic and mechanical components into a finished subassembly or assembly performed under a contract manufacturing agreement with an OEM or other contract manufacturer. Additionally, for some customers, CTS provides full turnkey manufacturing and completion including design, bill-of-material management, logistics, and repair.

Components and sensors are products which perform specific electronic functions for a given product family and are intended for use in customer assemblies. Components and sensors consist principally of automotive sensors and actuators used in commercial or consumer vehicles; electronic components used in communications infrastructure and computer markets; terminators, including ClearONE™ terminators, used in computer and other high speed applications, switches, resistor networks and potentiometers used to serve multiple markets; and fabricated piezo-electric materials and substrates used primarily in medical and industrial markets.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in the Company’s annual report on Form 10-K. Management evaluates performance based upon segment operating earnings before interest expense, interest income, non-operating income/(expense), and income tax expense.

Summarized financial information concerning CTS’ reportable segments is shown in the following table:


				Components and
*($ in thousands)*	EMS			Sensors		Total
Second Quarter of 2011
Net sales to external customers	$	78,882		$	68,037	$	146,919
Segment operating earnings	$	370		$	4,851	$	5,221
Total assets	$	139,582		$	355,841	$	495,423

Second Quarter of 2010
Net sales to external customers	$	66,624		$	72,227	$	138,851
Segment operating (loss)/earnings	$	(201	)	$	7,942	$	7,741
Total assets	$	128,248		$	319,199	$	447,447

First Six Months of 2011
Net sales to external customers	$	158,369		$	140,068	$	298,437
Segment operating earnings	$	373		$	10,607	$	10,980
Total assets	$	139,582		$	355,841	$	495,423

First Six Months of 2010
Net sales to external customers	$	122,583		$	145,671	$	268,254
Segment operating (loss)/earnings	$	(2,879	)	$	16,967	$	14,088
Total assets	$	128,248		$	319,199	$	447,447

Reconciling information between reportable segments’ operating earnings and CTS’ consolidated earnings before income taxes is shown in the following table for the three and six-month periods then ended:


	Three Months Ended						Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Total segment operating earnings	$	5,221		$	7,741		$	10,980		$	14,088
Restructuring charges		(694	)		—			(694	)		—
Interest expense		(511	)		(228	)		(1,003	)		(463	)
Interest income		276			81			472			134
Other income/(expense)		743			(337	)		1,873			(821	)

Earnings before income taxes	$	5,035		$	7,257		$	11,628		$	12,938

NOTE H — Contingencies

Certain processes in the manufacture of CTS’ current and past products create hazardous waste by-products as currently defined by federal and state laws and regulations. CTS has been notified by the U.S. Environmental Protection Agency, state environmental agencies and, in some cases, generator groups, that it is or may be a potentially responsible party regarding hazardous waste remediation at several non-CTS sites. In addition to these non-CTS sites, CTS has an ongoing practice of providing reserves for probable remediation activities at certain of its manufacturing locations and for claims and proceedings against CTS with respect to other environmental matters. In the opinion of management, based upon presently available information relating to all such matters, either adequate provision for probable costs has been made, or the ultimate costs resulting will not materially affect the consolidated financial position, results of operations, or cash flows of CTS.

CTS manufactures accelerator pedals for a number of automobile manufacturers, including subsidiaries of Toyota Motor Corporation (“Toyota”). In January 2010, Toyota initiated a recall of approximately 2.3 million vehicles in North America containing pedals manufactured by CTS. The pedal recall and associated events have led to the Company being named as a co-defendant with Toyota in certain litigation. In February 2010, CTS entered into an agreement with Toyota whereby Toyota agreed that it will indemnify, defend, and hold the Company harmless from, and the parties will cooperate in the defense of, third-party civil claims and actions that are filed or asserted in the United States or Canada and that arise from or relate to alleged incidents of unintended acceleration of Toyota and Lexus vehicles. The limited exceptions to indemnification restrict CTS’ share of any liability to amounts collectable from its insurers.

Certain other claims are pending against CTS with respect to matters arising out of the ordinary conduct of the Company’s business. For all other claims, in the opinion of management, based upon presently available information, either adequate provision for anticipated costs has been accrued or the ultimate anticipated costs will not materially affect CTS’ consolidated financial position, results of operations, or cash flows.

During the second quarter of 2011, a fire occurred at the Company’s Scotland EMS manufacturing facility. The fire damaged approximately $1.4 million of inventory and $0.3 million of machinery and equipment. CTS has property insurance coverage with a $100,000 deductible that is expected to cover the costs of repairing and/or replacing the damaged inventory and machinery and equipment. CTS also has business interruption insurance that is expected to cover the lost sales impact and fixed costs. Consequently, as of July 3, 2011, CTS wrote-off approximately $0.3 million of net book value of machinery and equipment, $1.4 million of inventory, deferred $0.8 million of recoverable fixed costs and $0.3 million of recoverable building restoration costs to other receivable. The total fire-related other receivable was $2.8 million as of July 3, 2011 and was included in Other Current Assets in CTS’ Unaudited Condensed Consolidated Balance Sheets.

NOTE I — Fair Value Measurement

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of July 3, 2011:

Quoted Prices in

Active Markets for

Significant Other

Significant

Carrying Value at

Identical

Observable Inputs

Unobservable Inputs

Loss for Quarter

($ in thousands)

July 3, 2011

(Level 1)

(Level 2)

(Level 3)

Ended July 3, 2011

Long-term debt

74,500

—

74,500

—

CTS’ long-term debt consists of a revolving debt agreement. There is a readily determinable market for CTS’ revolving credit debt and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt was measured using a market approach which uses current industry information.

NOTE J —Earnings Per Share

The table below provides a reconciliation of the numerator and denominator of the basic and diluted earnings per share (“EPS”) computations. Basic earnings per share is calculated using the weighted average number of common shares outstanding as the denominator and net earnings as the numerator. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the numerator. All anti-dilutive shares are excluded from the computation of diluted earnings per share. The calculations below provide net earnings, average common shares outstanding, and the resultant earnings per share for both basic and diluted EPS for the three and six-month periods ended July 3, 2011 and July 4, 2010.


			Shares
	Net Earnings		(in thousands)
*($ in thousands, except per share amounts)*	(Numerator)		(Denominator)		Per Share Amount
Second Quarter 2011
Basic EPS	$	4,132		34,375	$	0.12

Effect of dilutive securities:
Equity-based compensation plans		—		650

Diluted EPS	$	4,132		35,025	$	0.12


Second Quarter 2010
Basic EPS	$	5,892		34,048	$	0.17

Effect of dilutive securities:
Equity-based compensation plans		—		826

Diluted EPS	$	5,892		34,874	$	0.17


First Six Months of 2011
Basic EPS	$	9,248		34,334	$	0.27

Effect of dilutive securities:
Equity-based compensation plans		—		716

Diluted EPS	$	9,248		35,050	$	0.26


First Six Months of 2010
Basic EPS	$	10,323		34,001	$	0.30

Effect of dilutive securities:
Equity-based compensation plans		—		810

Diluted EPS	$	10,323		34,811	$	0.30

The following table shows the potentially dilutive securities which have been excluded from the three and six-month periods 2011 and 2010 dilutive earnings per share calculation because they are either anti-dilutive, or the exercise price exceeds the average market price.

Three Months Ended

Six Months Ended

(Number of Shares in Thousands)

July 3, 2011

July 4, 2010

July 3, 2011

July 4, 2010

Stock options where the assumed proceeds exceed the average market price

402

602

402

602

NOTE K — Treasury Stock

Common stock held in treasury totaled 20,356,259 shares with a cost of $297.3 million at July 3, 2011 and 20,320,759 with a cost of $297.0 million at December 31, 2010. Approximately 6.5 million shares are available for future issuances.

In May 2008, CTS’ Board of Directors authorized a program to repurchase up to one million shares of its common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the second quarter of 2011, 35,500 shares were repurchased at a cost of approximately $326,000 or $9.19 per share, under this program. No shares were repurchased under this program in 2010.

NOTE L — Goodwill and Other Intangible Assets

CTS has the following other intangible assets and goodwill as of:


	July 3, 2011					December 31, 2010
	Gross Carrying		Accumulated			Gross Carrying		Accumulated
*($ in thousands)*	Amount		Amortization			Amount		Amortization
Amortized intangible assets:
Customer lists/relationships	$	51,477	$	(21,189	)	$	51,084	$	(19,999	)
Patents		10,319		(10,319	)		10,319		(10,319	)
Other intangibles		1,190		(251	)		500		(153	)

Total		62,986		(31,759	)		61,903		(30,471	)
Goodwill		500		—			500		—

Total other intangible assets and goodwill	$	63,486	$	(31,759	)	$	62,403	$	(30,471	)

Of the net intangible assets at July 3, 2011, $6.8 million relates to the EMS segment and $24.9 million relates to the Components and Sensors segment. CTS recorded amortization expense of $0.7 million and $1.3 million during the three and six-month periods ended July 3, 2011, respectively. CTS recorded amortization expense of $0.6 million and $1.3 million during the three and six-month periods ended July 4, 2010, respectively. CTS estimates remaining amortization expense of $1.3 million in 2011, $2.5 million in 2012 through 2013, $2.4 million in years 2014 through 2015 and $20.1 million thereafter.

NOTE M — Restructuring Charge

During April 2011, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions resulted in the elimination of approximately 30 positions. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 3, 2011:


			Actual incurred
	Planned		through
($ in millions) April 2011 Plan	Costs		July 3, 2011
Workforce reduction	$	0.8	$	0.7

Total restructuring charge	$	0.8	$	0.7

Of the restructuring charges incurred, $0.5 million relates to the Components and Sensors segment and $0.2 million relates to the EMS segment. Restructuring charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings.

The following table displays the restructuring reserve activity related to the realignment for the period ended July 3, 2011:


($ in millions) April 2011 Plan
Restructuring liability at January 1, 2011	$	—
Restructuring charge		0.7
Cost paid		(0.4	)

Restructuring liability at July 3, 2011	$	0.3

NOTE N — Recent Accounting Pronouncements

ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”

perspective of a market participant that holds the identical item as an asset; and (5) expanding the qualitative and quantitative fair value disclosure requirements. The expanded disclosures include, for Level 3 items, a description of the valuation process and a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. ASU 2011-4 also requires disclosures about the highest-and-best-use of a non-financial asset when this use differs from the asset’s current use and the reasons for such a difference. In addition, this ASU amends Accounting Standards Codification 820, “Fair Value Measurements,” to require disclosures to include any transfers between Level 1 and Level 2 of the fair value hierarchy. These amendments are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The amendments of ASU 2011-04, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements.

ASU 2011-05, “Presentation of Comprehensive Income”

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, and the second statement would include components of other comprehensive income. This ASU does not change the items that must be reported in other comprehensive income. These provisions are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The provisions of ASU 2011-05, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Forward-Looking Statements

This document 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. Forward-looking statements are based on management’s expectations, certain assumptions and currently available information. 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. Examples of factors that may affect future operating results and financial condition include, but are not limited to: rapid technological change; general market conditions in the automotive, communications, and computer industries, as well as conditions in the industrial, defense and aerospace, and medical markets; reliance on key customers; unanticipated natural or other events such as the Japan earthquake; the ability to protect our intellectual property; pricing pressures and demand for our products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1.A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Overview

CTS Corporation (“we”, “our”, “us”) is a global manufacturer of components and sensors used primarily in the automotive, communications, and defense and aerospace markets. We also provide electronic manufacturing solutions, including design and supply chain management functions, primarily serving the defense and aerospace, communications, industrial and medical markets under contract arrangements with original equipment manufacturers.

As discussed in more detail throughout the MD&A:

•

Total company net sales in the second quarter of 2011 of $146.9 million were reported through two segments, Components and Sensors and EMS. Net sales increased by $8.1 million, or 5.8%, in the second quarter of 2011 from the second quarter of 2010. Net sales in the Components and Sensors segment decreased by $4.2 million, or 5.8% versus the second quarter of 2010, while net sales in the EMS segment increased by $12.3 million, or 18.4%. The decrease in net sales in our Components and Sensor segment was primarily driven by lower sales in our automotive market of approximately $6.3 million as a result of production disruptions caused by the March 2011 earthquake in Japan, partially offset by an increase of $2.0 million in other areas of our automotive market.

•

Gross margin as a percent of net sales was 19.0% in the second quarter of 2011 compared to 21.9% in the second quarter of 2010 due to a shift in segment mix as the Components and Sensors segment percent of total company net sales declined to 46.3% from 52.0% in the same period 2010. The reduction in gross margin also resulted from higher commodity and precious metal prices as well as program launch costs in preparation for new product introductions.

•

Selling, general and administrative (“SG&A”) expenses were $18.1 million, or 12.3% of net sales, in the second quarter of 2011 versus $18.3 million, or 13.2% of net sales, in the second quarter of 2010.

•

Research and development (“R&D”) expenses were $4.6 million, or 3.1% of net sales, in the second quarter of 2011 compared to $4.3 million, or 3.1% of net sales, in the second quarter of 2010. The increase was primarily to continue to develop and launch new growth initiatives.

•

During the quarter we restructured certain operations to further improve our cost structure. The cost of these actions was $0.7 million.

•

Interest and other income was $0.5 million in the second quarter of 2011 compared to $0.5 million expense in the same quarter of 2010. The year-over-year improvement resulted primarily from foreign exchange gains.

•

Income tax expense and the effective tax rate of the second quarter of 2011 were $0.9 million and 17.9%, respectively, versus $1.4 million and 18.8% in the same quarter of 2010.

•

Net earnings were $4.1 million, or $0.12 per diluted share, in the second quarter of 2011 compared with $5.9 million, or $0.17 per diluted share, in the second quarter of 2010.

Critical Accounting Policies

MD&A discusses our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management believes that judgments and estimates related to the following critical accounting policies could materially affect our consolidated financial statements:

•

Inventory valuation, the allowance for doubtful accounts, and other accrued liabilities

•

Long-lived and intangible assets valuation, and depreciation/amortization periods

•

Income taxes

•

Retirement plans

•

Equity-based compensation

In the second quarter of 2011, there were no changes in the above critical accounting policies.

Results of Operations

Comparison of Second Quarter 2011 and Second Quarter 2010

Segment Discussion

Refer to Note G, “Segments,” for a description of our segments.

The following table highlights the segment results for the quarters ended July 3, 2011 and July 4, 2010:


							Consolidated
*($ in thousands)*	Components & Sensors			EMS			Total
Second Quarter 2011
Net sales	$	68,037		$	78,882		$	146,919
Segment operating earnings	$	4,851		$	370		$	5,221
% of Net sales		7.1	%		0.5	%		3.6	%

Second Quarter 2010
Net sales	$	72,227		$	66,624		$	138,851
Segment operating earnings/(loss)	$	7,942		$	(201	)	$	7,741
% of Net sales		11.0	%		(0.3	)%		5.6	%

Net sales in the Components and Sensors segment decreased $4.2 million, or 5.8%, from the second quarter of 2010. The decrease in net sales was primarily driven by lower sales in our automotive market of approximately $6.3 million as a result of production disruptions caused by the March 2011 earthquake in Japan, partially offset by an increase of $2.0 million in other areas of our automotive market. These earthquake-related sales are expected to be partially recovered in the second half of 2011.

The Components and Sensors segment operating earnings were $4.9 million in the second quarter of 2011 compared to $7.9 million in the second quarter of 2010. The unfavorable earnings change resulted primarily from lower net sales, higher commodity prices, and higher research and development costs.

Net sales in the EMS segment increased $12.3 million, or 18.4%, in the second quarter of 2011 from the second quarter of 2010. The increase in net sales was due to higher net sales of $6.5 million in the industrial market, $2.6 million in the computer market, $2.1 million in the defense and aerospace market, $0.5 million in the medical market, and $0.5 million in the communications market.

EMS segment operating earnings were $0.4 million in the second quarter of 2011 versus an operating loss of $0.2 million in the second quarter of 2010 primarily due to higher net sales.

Total Company Discussion

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the quarters ended July 3, 2011 and July 4, 2010:


	Quarter ended
	July 3,			July 4,			Increase
*($ in thousands, except net earnings per share)*	2011			2010			(Decrease)
Net sales	$	146,919		$	138,851		$	8,068

Gross margin	$	27,868		$	30,340		$	(2,472	)
% of net sales		19.0	%		21.9	%		(2.9)	%

Selling, general and administrative expenses	$	18,057		$	18,283		$	(226	)
% of net sales		12.3	%		13.2	%		(0.9)	%

Research and development expenses	$	4,590		$	4,316		$	274
% of net sales		3.1	%		3.1	%		—	%

Restructuring charge	$	694		$	—		$	694

Operating earnings	$	4,527		$	7,741		$	(3,214	)
% of net sales		3.1	%		5.6	%		(2.5)	%

Interest and other income/(expense)	$	508		$	(484	)	$	992
% of net sales		0.3	%		(0.3	)%		0.6	%

Income tax expense	$	903		$	1,365		$	(462	)

Net earnings	$	4,132		$	5,892		$	(1,760	)
% of net sales		2.8	%		4.2	%		(1.4)	%

Net earnings per diluted share	$	0.12		$	0.17		$	(0.05	)

Net sales of $146.9 million in the second quarter of 2011 increased $8.1 million, or 5.8%, from the second quarter of 2010 attributable to higher EMS net sales of $12.3 million, offset by lower Components and Sensors net sales of $4.2 million. The decrease in net sales in our Components and Sensor segment was primarily driven by lower sales in our automotive market of approximately $6.3 million as a result of production disruptions caused by the March 2011 earthquake in Japan, partially offset by an increase of $2.0 million in other areas of our automotive market.

Gross margin as a percent of net sales was 19.0% in the second quarter of 2011 compared to 21.9% in the second quarter of 2010. Approximately half of the reduction was due to a shift in segment mix as the Components and Sensors segment percent of total company net sales declined to 46.3% from 52.0% in the same period 2010. The reduction in gross margin also resulted from higher commodity and precious metal prices as well as program launch costs in preparation for new product introductions.

SG&A expenses were $18.1 million, or 12.3% of net sales, in the second quarter of 2011 versus $18.3 million, or 13.2% of net sales, in the second quarter of 2010. SG&A expenses as a percentage of net sales improved, reflecting disciplined spending on higher net sales.

R&D expenses were $4.6 million, or 3.1% of net sales, in the second quarter of 2011 compared to $4.3 million, or 3.1% of net sales, in the second quarter of 2010. The increase was primarily driven by spending to continue to develop and launch new products and growth initiatives. R&D expenses are incurred by the Components and Sensors segment and are primarily focused on expanded applications of existing products and new product development, as well as current product and process enhancements.

Operating earnings were $4.5 million in the second quarter of 2011 compared to $7.7 million in the second quarter of 2010. The decrease was primarily due to the reasons discussed above. Operating earnings in the second quarter of 2011 also include a restructuring charge of $0.7 million.

Interest and other income was $0.5 million in the second quarter of 2011 versus an expense of $0.5 million in the same quarter of 2010 primarily due to foreign exchange gains.

The effective tax rate for second quarter 2011 was 17.9% compared to 18.8% in the second quarter of 2010. The decrease in the effective tax rate was primarily due to changes in the mix of earnings by jurisdiction and discrete items.

Net earnings were $4.1 million, or $0.12 per diluted share, in the second quarter of 2011 compared with $5.9 million, or $0.17 per diluted share, in the second quarter of 2010.

Comparison of First Six Months 2011 and First Six Months 2010

Segment Discussion

The following table highlights the segment results for the six-month periods ended July 3, 2011 and July 4, 2010:


							Consolidated
*($ in thousands)*	Components & Sensors			EMS			Total
First Six Months 2011
Net sales	$	140,068		$	158,369		$	298,437
Segment operating earnings	$	10,607		$	373		$	10,980
% of Net sales		7.6	%		0.2	%		3.7	%

First Six Months 2010
Net sales	$	145,671		$	122,583		$	268,254
Segment operating earnings/(loss)	$	16,967		$	(2,879	)	$	14,088
% of Net sales		11.6	%		(2.3	)%		5.3	%

Net sales in the Components and Sensors segment decreased $5.6 million, or 3.9% from the first six months of 2010. The decrease in net sales was primarily driven by lower net sales in our automotive market of approximately $6.3 million as a result of production disruptions caused by the March 2011 earthquake in Japan and lower service parts sales, partially offset by higher net sales in electronic components of $1.4 million primarily driven by higher distribution sales.

The Components and Sensors segment operating earnings were $10.6 million in the first six months of 2011 versus $17.0 million in the first six months of 2010. The unfavorable earnings change resulted primarily from lower net sales, higher commodity prices, and higher research and development costs.

Net sales in the EMS segment increased $35.8 million, or 29.2%, in the first six months of 2011 versus the first six months of 2010. The increase in net sales was due to higher net sales of $11.0 million in the industrial market, $10.5 million in the defense and aerospace market, $6.7 million in the communications market, $6.0 million in the computer market, and $1.5 million in the medical market.

EMS segment operating earnings were $0.4 million in the first six months of 2011 versus an operating loss of $2.9 million in the first six months of 2010. The favorable earnings change was primarily due to higher sales volume.

Total Company Discussion

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the six-month periods ended July 3, 2011 and July 4, 2010:


	Six months ended
							Increase
*($ in thousands, except net earnings per share)*	July 3, 2011			July 4, 2010			(Decrease)
Net sales	$	298,437		$	268,254		$	30,183

Gross margin	$	57,028		$	60,819		$	(3,791	)
% of net sales		19.1	%		22.7	%		(3.6	)%

Selling, general and administrative expenses	$	36,429		$	37,832		$	(1,403	)
% of net sales		12.2	%		14.1	%		(1.9	)%

Research and development expenses	$	9,619		$	8,899		$	720
% of net sales		3.2	%		3.3	%		(0.1	)%

Restructuring charge	$	694		$	—		$	694

Operating earnings	$	10,286		$	14,088		$	(3,802	)
% of net sales		3.4	%		5.3	%		(1.9	)%

Interest and other income/(expense)	$	1,342		$	(1,150	)	$	2,492
% of net sales		0.4	%		(0.4	)%		0.8	%

Income tax expense	$	2,380		$	2,615		$	(235	)

Net earnings	$	9,248		$	10,323		$	(1,075	)
% of net sales		3.1	%		3.8	%		(0.7	)%

Net earnings per diluted share	$	0.26		$	0.30		$	(0.04	)

Net sales of $298.4 million in the first six months of 2011 increased $30.2 million, or 11.3%, from the first six months of 2010 attributable to higher EMS segment net sales of $35.8 million, offset by lower Component and Sensor segment net sales of $5.6 million. The decrease in net sales in our Components and Sensors segment was primarily driven by lower net sales in our automotive market of approximately $6.3 million as a result of production disruptions caused by the March 2011 earthquake in Japan and lower service parts sales, partially offset by higher net sales in electronic components of $1.4 million primarily driven by higher distribution sales.

Gross margin as a percent of net sales was 19.1% in the first six months of 2011, compared to 22.7% in the first six months of 2010, primarily due to a shift in segment mix as the percent of total company net sales from the Components and Sensors segment declined to 46.9% from 54.3% in the same period 2010. The reduction in gross margin also resulted from higher commodity and precious metal prices as well as program launch costs in preparation for new product introductions.

SG&A expenses were $36.4 million, or 12.2% of net sales, in the first six months of 2011 versus $37.8 million, or 14.1% of net sales, in the first six months of 2010. SG&A expenses as a percentage of net sales improved significantly, reflecting disciplined spending on higher net sales.

R&D expenses were $9.6 million, or 3.2% of net sales, in the first six months of 2011 versus $8.9 million, or 3.3% of net sales, in the first six months of 2010. The increase was primarily driven by spending to continue to develop and launch new products and growth initiatives. R&D expenses are incurred by the Components and Sensors segment and are primarily focused on expanded applications of existing products and new product development, as well as current product and process enhancements.

Operating earnings were $10.3 million in the first six months of 2011, including a restructuring charge of $0.7 million, compared to $14.1 million in the first six months of 2010. The decrease was primarily due to the reasons discussed above.

Interest and other income in the first six months of 2011 was $1.3 million versus an expense of $1.2 million in the same period of 2010 primarily due to foreign exchange gains.

The effective tax rate for the first six months of 2011 was 20.5% compared to 20.2% in the first six months of 2010. The increase in the effective tax rate was primarily due to changes in the mix of earnings by jurisdiction and discrete items.

Net earnings were $9.2 million, or $0.26 per diluted share, in the first six months of 2011 compared with $10.3 million, or $0.30 per share, in the first six months of 2010.

CTS Scotland Facility Fire

During the second quarter of 2011, a fire occurred at our Scotland EMS manufacturing facility. The fire damaged approximately $1.4 million of inventory and $0.3 million of machinery and equipment. We have property insurance coverage with a $100,000 deductible that is expected to cover the costs of repairing and/or replacing the damaged inventory and machinery and equipment. We also have business interruption insurance that is expected to cover the lost sales impact and fixed costs. Consequently, as of July 3, 2011, we wrote-off approximately $0.3 million of net book value of machinery and equipment, $1.4 million of inventory, deferred $0.8 million of recoverable fixed costs and $0.3 million of recoverable building restoration costs to other receivable. The total fire-related other receivable was $2.8 million as of July 3, 2011.

Acquisition

In January 2011, we acquired certain assets and assumed certain liabilities of Fordahl SA, a privately held company located in Brugg, Switzerland. This business was acquired with approximately $2.9 million, net of cash acquired. The assets acquired include accounts receivables, inventory, leasehold improvements, machinery and equipment, and certain intangible assets.

The Fordahl SA product line includes high-performance temperature compensated crystal oscillators and voltage controlled crystal oscillators. This product line is expected to expand our frequency product portfolio from clocks and crystals to highly-engineered precision ovenized oscillators. This acquisition is expected to add new customers and to open up new market opportunities for us.

This acquisition is accounted for using the acquisition method of accounting whereby the total purchase price will be allocated to tangible and intangible assets based on the fair market values on the date of acquisition. The pro forma effects of the results of this acquisition were not material to our results of operations or financial position.

2011 Outlook

Based on our first half results and the current outlook, management maintains its guidance of full-year 2011 sales increase in the range of 9% to 13% over 2010 and full-year 2011 earnings per share in the range of $0.70 to $0.75.

Liquidity and Capital Resources

Overview

Cash and cash equivalents were $75.1 million at July 3, 2011 and $73.3 million at December 31, 2010. Total debt on July 3, 2011 was $74.7 million, compared to $70.0 million at December 31, 2010, as we increased debt primarily to fund domestic working capital requirements. Total debt as a percentage of total capitalization was 20.7% at the end of the second quarter of 2011, compared with 20.3% at December 31, 2010. Total debt as a percentage of total capitalization is defined as the sum of notes payable and long-term debt as a percentage of total debt and shareholders’ equity.

Working capital increased by $10.7 million in the second quarter of 2011 versus year-end 2010, primarily due to increases in inventory and other current assets of $11.7 million and $3.4 million, respectively, and a decrease in other accrued liabilities of $4.0 million, partially offset by a decrease in accounts receivable of $8.1 million.

Cash Flow

Operating Activities

Net cash provided by operating activities was $8.8 million during the first six months of 2011. Components of net cash provided by operating activities included net earnings of $9.2 million, non-cash adjustments of depreciation and amortization expense of $8.8 million, amortization of retirement benefits of $2.5 million and equity-based compensation expense of $2.4 million which were partially offset by net changes in assets and liabilities of $10.5 million and prepaid pension assets of $4.3 million. The net changes in assets and liabilities were primarily due to increased inventories of $10.6 million, decreased accounts payable and accrued liabilities of $7.2 million, and increased other current assets of $1.4 million, which were partially offset by decreased accounts receivable of $10.2 million, all to support higher anticipated net sales.

Net cash provided by operating activities was $6.3 million during the first six months of 2010. Components of net cash provided by operating activities included net earnings of $10.3 million and depreciation and amortization expense of $8.8 million, which were partially offset by net changes in assets and liabilities of $13.0 million. The changes in assets and liabilities, which include the impact of foreign exchange, were primarily due to increased inventories of $14.7 million and increased accounts receivable of $13.8 million which were partially offset by increased accounts payable and accrued liabilities of $17.1 million, all to support higher net sales.

Investing Activities

Net cash used in investing activities for the first six months of 2011 was $9.5 million, of which $6.5 million was for capital expenditures and $2.9 million was for the acquisition of certain assets of Fordahl SA.

Net cash used in investing activities for the first six months of 2010 was $5.7 million of which $6.2 million was for capital expenditures, partially offset by proceeds of $1.0 million received from the sale of an idle facility.

Financing Activities

Net cash provided by financing activities for the first six months of 2011 was $3.0 million, consisting primarily of a net increase in long-term debt of $4.5 million, offset by $2.1 million in dividend payments. The additional debt was primarily used to meet domestic working capital requirements as net sales increased.

Net cash provided by financing activities for the first six months of 2010 was $13.5 million, consisting primarily of a net increase in long-term debt of $15.5 million, offset by $2.0 million in dividend payments. The additional debt was primarily used to meet domestic working capital requirements to support higher sales.

Capital Resources

Refer to Note E, “Debt,” to our unaudited consolidated financial statements for further discussion.

Long-term debt was comprised of the following:


	July 3,		December 31,
($ in thousands)	2011		2010
Revolving credit agreement, weighted-average interest rate of 1.8% (2011), and 1.1% (2010) due in 2015	$	74,500	$	70,000

Our principal sources of liquidity have been cash flow from operations and from our credit agreements. We historically have accessed various funding sources, including short-term and long-term unsecured bank lines of credit as well as the debt markets in the United States. We expect to have sufficient sources of liquidity to meet our future funding needs due to the multiple funding sources that have been, and continue to be, available to us.

On November 18, 2010, we entered into a $150 million, unsecured revolving credit agreement. Under the terms of the revolving credit agreement, we can expand the credit facility to $200 million, subject to participating banks’ approval. There was $74.5 million and $70.0 million outstanding under the revolving credit agreement at July 3, 2011 and December 31, 2010, respectively. At July 3, 2011 and December 31, 2010, we had $72.7 million and $77.2 million, respectively, available under this agreement, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon the London Interbank Offered Rate and our quarterly total leverage ratio. We pay a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.375 percent per annum at July 3, 2011. The revolving credit agreement requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Our failure to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. We were in compliance with all debt covenants at July 3, 2011. The revolving credit agreement requires us to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. The revolving credit agreement expires in November 2015.

In May 2008, our Board of Directors authorized a program to repurchase up to one million shares of our common stock in the open market at a maximum price of $13.00 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the second quarter of 2011, 35,500 shares were repurchased at a cost of approximately $326,000 or $9.19 per share under this program. No shares were repurchased under this program in 2010.

We have historically funded our capital and operating needs primarily through cash flows from operating activities, supported by available credit under our bank credit agreements. We believe that expected positive cash flows from operating activities and available borrowings under our current credit agreements will be adequate to fund our working capital, capital expenditures and debt service requirements for at least the next twelve months. However, we may choose to pursue additional equity and/or debt financing to provide additional liquidity and/or fund acquisitions.

Recent Accounting Pronouncements

ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 amends Accounting Standards Codification Topic 820, “Fair Value Measurements” (“ASC 820”) by: (1) clarifying that the highest-and-best-use and valuation-premise concepts only apply to measuring the fair value of non-financial assets; (2) allowing a reporting entity to measure the fair value of the net asset or net liability position in a manner consistent with how market participants would price the net risk position, if certain criteria are met; (3) providing a framework for considering whether a premium or discount can be applied in a fair value measurement; (4) providing that the fair value of an instrument classified in a reporting entity’s shareholders’ equity is estimated from the perspective of a market participant that holds the identical item as an asset; and (5) expanding the qualitative and quantitative fair value disclosure requirements. The expanded disclosures include, for Level 3 items, a description of the valuation process and a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. ASU 2011-4 also requires disclosures about the highest-and-best-use of a non-financial asset when this use differs from the asset’s current use and the reasons for such a difference. In addition, this ASU amends Accounting Standards Codification 820, “Fair Value Measurements,” to require disclosures to include any transfers between Level 1 and Level 2 of the fair value hierarchy. These amendments are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The amendments of ASU 2011-04, when adopted, are not expected to have a material impact on our consolidated financial statements.

ASU 2011-05, “Presentation of Comprehensive Income”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no other material changes in our market risk since December 31, 2010.

Item 4. Controls and Procedures

Pursuant to Rule 13a-15(e) of the Securities and Exchange Act of 1934, management, under the direction of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures. Based on such evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of July 3, 2011.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting for the quarter ended July 3, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We manufacture accelerator pedals for a number of automobile manufacturers, including subsidiaries of Toyota Motor Corporation (“Toyota”). In January 2010, Toyota initiated a recall of certain models of vehicles containing pedals manufactured by CTS. The pedal recall and associated events have led to us being named as a co-defendant with Toyota in certain litigation.

In February 2010, we entered into an agreement with Toyota whereby Toyota agreed that it will indemnify, defend, and hold us harmless from, and the parties will cooperate in the defense of, certain third-party civil claims and actions that are filed or asserted in the United States or Canada and that arise from or relate to alleged incidents of unintended acceleration of Toyota and Lexus vehicles. If it is determined that CTS acted negligently in selecting materials or processes where we had sole control over the selection process, in failing to meet Toyota’s specifications, or in making unapproved changes in component design or materials, and such negligence caused or contributed to a claim, we will be responsible for any judgment that may be rendered against us individually, or any portion of a judgment that may be allocated to us, but limited only to the extent of insurance collected from our insurers. Toyota would remain responsible to defend CTS in these actions and would remain responsible for any balance of the remaining liability over amounts recovered by insurance. The agreement also does not cover costs or liabilities in connection with government investigations, government hearings, or government recalls.

Presently, we have been served process and named as co-defendant with Toyota in approximately thirty-seven open lawsuits; we have been dismissed as a defendant from an additional twenty-one lawsuits. The claims brought generally fall into two categories, those that allege sudden unintended acceleration of Toyota vehicles led to injury or death, and those that allege economic harm to owners of Toyota vehicles related to vehicle defects. Some suits combine elements of both. Claims include demands for compensatory and special damages. To date, the only actions filed where we are aware we have been named as a co-defendant are civil actions filed in the Unites States or Canada. All currently open lawsuits are subject to the indemnification agreement described above. Some of these lawsuits arise out of incidents involving models for which we do not manufacture the pedal, such as all Lexus models, the Toyota Prius, and the Toyota Tacoma, or for which we manufacture only a portion of the pedals, such as the Toyota Camry. Many lawsuits have been consolidated in federal multidistrict litigation in the United States District Court, Southern District of California, though some remain in various other courts.

Item 1A. Risk Factors

There have been no significant changes to our risk factors since December 31, 2010.


		Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes the repurchases of CTS common stock made by the Company during the three-month period ending July 3, 2011:

(d)

(c)

Maximum Number

Total Number of Shares

of Shares

(a)

(b)

Purchased as Part of

That May Yet Be

Total Number of

Average Price

Plans or Programs

Purchased Under the

Shares Purchased

Paid per Share

(1)

Plans or Programs

977,500

June 21, 2011 — June 30, 2011

35,500

9.19

35,500

942,000

Total

35,500

Item 3. Default Upon Senior Securities

Not applicable

Item 4. (Removed and Reserved)

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits


(31)(a)		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31)(b)		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32)(a)		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32)(b)		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document


*		XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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 thereunto duly authorized.



CTS Corporation				CTS Corporation

/s/ Richard G. Cutter III				/s/ Donna L. Belusar
Richard G. Cutter III				Donna L. Belusar
Vice President, Law and Business Affairs, Corporate Secretary				Senior Vice President and Chief Financial Officer


Dated: July 26, 2011		Dated: July 26, 2011

EX-31.A 2 c65291exv31wa.htm EX-31.A exv31wa

CTS Corporation
Form 10-Q
Second Quarter 2011

EXHIBIT (31)(a)

CERTIFICATION

I, Vinod M. Khilnani, certify that:

I have reviewed this quarterly report on Form 10-Q of CTS Corporation:

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles; and

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2011		/s/ Vinod M. Khilnani
		Vinod M. Khilnani
		Chairman of the Board, President and Chief Executive Officer

EX-31.B 3 c65291exv31wb.htm EX-31.B exv31wb

CTS Corporation
Form 10-Q
Second Quarter 2011

EXHIBIT (31)(b)

CERTIFICATION

I, Donna L. Belusar, certify that:

I have reviewed this quarterly report on Form 10-Q of CTS Corporation:

(a)

(b)

(c)

(d)

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: July 26, 2011		/s/ Donna L. Belusar
		Donna L. Belusar
		Senior Vice President and Chief Financial Officer

EX-32.A 4 c65291exv32wa.htm EX-32.A exv32wa

CTS Corporation
Form 10-Q
Second Quarter 2011

EXHIBIT (32)(a)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of CTS Corporation (the Company) on Form 10-Q for the quarter ended July 3, 2011, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: July 26, 2011		/s/ Vinod M. Khilnani
		Vinod M. Khilnani
		Chairman of the Board, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to CTS Corporation and will be retained by CTS Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B 5 c65291exv32wb.htm EX-32.B exv32wb

CTS Corporation
Form 10-Q
Second Quarter 2011

EXHIBIT (32)(b)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



	(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: July 26, 2011		/s/ Donna L. Belusar
		Donna L. Belusar
		Senior Vice President and Chief Financial Officer

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<div align="left" style="font-family: 'Times New Roman',Times,serif">   <div align="left"> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE A — Basis of Presentation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. </div> </div>

<div align="left" style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE B — Equity-Based Compensation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">At July 3, 2011, CTS had five equity-based compensation plans: the 1996 Stock Option Plan (“1996 Plan”), the 2001 Stock Option Plan (“2001 Plan”), the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), and the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”). All of these plans, except the Directors’ Plan, were approved by shareholders. As of December 31, 2009, additional grants can only be made under the 2004 and 2009 Plans. CTS believes that equity-based awards align the interest of employees with those of its shareholders. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The 2009 Plan, and previously the 1996 Plan, 2001 Plan and 2004 Plan, provides for grants of incentive stock options or nonqualified stock options to officers, key employees, and nonemployee members of CTS’ board of directors. In addition, the 2009 Plan and the 2004 Plan allows for grants of stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock awards. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the compensation expense included in the Unaudited Condensed Consolidated Statements of Earnings for the three and six months ended July 3, 2011 and July 4, 2010 relating to these plans: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six Months Ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 3,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 4,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 3,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 4,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><i>($ in thousands)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock options </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Restricted stock units </div></td> <td> </td> <td> </td> <td align="right"><b>1,181</b></td> <td> </td> <td> </td> <td> </td> <td align="right">905</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>2,361</b></td> <td> </td> <td> </td> <td> </td> <td align="right">2,164</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>1,181</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">906</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>2,361</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,167</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the status of these plans as of July 3, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009 Plan</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2004 Plan</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2001 Plan</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>1996 Plan</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Awards originally available </div></td> <td> </td> <td> </td> <td align="right">3,400,000</td> <td> </td> <td> </td> <td> </td> <td align="right">6,500,000</td> <td> </td> <td> </td> <td> </td> <td align="right">2,000,000</td> <td> </td> <td> </td> <td> </td> <td align="right">1,200,000</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Stock options outstanding </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">257,200</td> <td> </td> <td> </td> <td> </td> <td align="right">505,500</td> <td> </td> <td> </td> <td> </td> <td align="right">75,350</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Restricted stock units outstanding </div></td> <td> </td> <td> </td> <td align="right">543,459</td> <td> </td> <td> </td> <td> </td> <td align="right">146,195</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Options exercisable </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">257,200</td> <td> </td> <td> </td> <td> </td> <td align="right">505,500</td> <td> </td> <td> </td> <td> </td> <td align="right">75,350</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Awards available for grant </div></td> <td> </td> <td> </td> <td align="right">2,512,140</td> <td> </td> <td> </td> <td> </td> <td align="right">268,500</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt"><u><b>Stock Options</b></u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Stock options are exercisable in cumulative annual installments over a maximum 10-year period, commencing at least one year from the date of grant. Stock options are generally granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The stock options generally vest over four years and have a 10-year contractual life. The awards generally contain provisions to either accelerate vesting or allow vesting to continue on schedule upon retirement if certain service and age requirements are met. The awards also provide for accelerated vesting if there is a change in control event. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company estimated the fair value of the stock option on the grant date using the Black-Scholes option-pricing model and assumptions for expected price volatility, option term, risk-free interest rate, and dividend yield. Expected price volatilities were based on historical volatilities of the Company’s stock. The expected option term is derived from historical data on exercise behavior. The dividend yield was based on historical dividend payments. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the status of stock options as of July 3, 2011 and July 4, 2010, and changes during the six-month periods then ended, is presented below: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted-Average</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted-Average</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year </div></td> <td> </td> <td> </td> <td align="right"><b>1,093,063</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>12.61</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,179,088</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">13.72</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Exercised </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(59,263 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>7.91</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(17,000 </td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">7.70</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expired </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(195,750 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>21.99</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(43,375 </td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">44.79</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at end of period </div></td> <td> </td> <td> </td> <td align="right"><b>838,050</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10.75</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,118,713</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12.61</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Exercisable at end of period </div></td> <td> </td> <td> </td> <td align="right"><b>838,050</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10.75</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,118,713</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12.61</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The total intrinsic value of share options exercised during the six-month periods ended July 3, 2011 and July 4, 2010 were $209,000 and $30,000, respectively. The weighted average remaining contractual life of options outstanding and options exercisable at July 3, 2011 and July 4, 2010 were 2.2 years and 2.8 years, respectively. The aggregate intrinsic value of options outstanding and options exercisable at July 3, 2011 and July 4, 2010 were approximately $378,000 and $341,000, respectively. There were no unvested stock options at July 3, 2011. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes information about stock options outstanding at July 3, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Options Outstanding</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Options Exercisable</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted Average</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b> </b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center"><b>Range of</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Number</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted Average</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Number</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted Average</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center"><b>Exercise</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Outstanding</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Contractual</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Exercisable</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Prices</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>at 7/3/11</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Life (Years)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>at 7/3/11</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">$7.70 — 11.11 </div></td> <td> </td> <td> </td> <td align="right">616,250</td> <td> </td> <td> </td> <td> </td> <td align="right">2.22</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">9.53</td> <td> </td> <td> </td> <td> </td> <td align="right">616,250</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">9.53</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">$13.68 — 16.24 </div></td> <td> </td> <td> </td> <td align="right">221,800</td> <td> </td> <td> </td> <td> </td> <td align="right">2.16</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14.13</td> <td> </td> <td> </td> <td> </td> <td align="right">221,800</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14.13</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><u><b>Service-Based Restricted Stock Units</b></u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Service-based restricted stock units (“RSUs”) entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers and key employees as compensation. Generally, the RSUs vest over a three to five-year period. A summary of the status of RSUs as of July 3, 2011 and July 4, 2010, and changes during the six-month periods then ended is presented below: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted-average</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted-average</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Grant-Date</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Grant-Date</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>RSUs</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>RSUs</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of year </div></td> <td> </td> <td> </td> <td align="right"><b>807,601</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>8.39</b></td> <td> </td> <td> </td> <td> </td> <td align="right">854,745</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8.47</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right"><b>219,100</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>11.89</b></td> <td> </td> <td> </td> <td> </td> <td align="right">271,500</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7.52</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Converted </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(297,104 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>8.52</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(280,495 </td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">8.97</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Forfeited </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(39,943 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>8.89</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(13,920 </td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">6.62</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at end of period </div></td> <td> </td> <td> </td> <td align="right"><b>689,654</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>9.42</b></td> <td> </td> <td> </td> <td> </td> <td align="right">831,830</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8.34</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted-average remaining contractual life </div></td> <td> </td> <td colspan="3" align="center"><b>6.7 years</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" align="center">5.32 years</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS recorded compensation expense of approximately $691,000 and $1,412,000 related to service-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $657,000 and $1,544,000 related to service-based restricted stock units during the three and six month periods ended July 4, 2010, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of July 3, 2011, there was $2.6 million of unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted-average period of 1.2 years. CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><u><b>Performance-Based Restricted Stock Units</b></u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 6, 2007, CTS granted performance-based restricted stock unit awards for certain executives. Executives received a total of 17,100 units based on achievement of year-over-year sales growth and free cash flow performance goals for fiscal year 2007. These units cliff vested and converted one-for-one to CTS common stock on December 31, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 2, 2010, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 78,000 units in 2012 subject to certification of the 2011 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 3, 2011, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 53,200 units in 2013 subject to certification of the 2012 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS recorded compensation expense of approximately $177,000 and $343,000 related to performance-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $74,000 and $177,000 related to performance-based restricted stock units during the three and six month periods ended July 4, 2010, respectively. As of July 3, 2011 there was approximately $748,000 of unrecognized compensation cost related to performance-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.0 year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><u><b>Market-Based Restricted Stock Units</b></u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On July 2, 2007, CTS granted a market-based restricted stock unit award for an executive officer. An aggregate of 25,000 units may be earned in performance years ending in the following three consecutive years on the anniversary of the award date. Vesting may occur in the range from zero percent to 150% of the target award on the end date of each performance period and is tied exclusively to CTS total stockholder return relative to 32 enumerated peer group companies’ total stockholder return rates. The vesting rate will be determined using a matrix based on a percentile ranking of CTS total stockholder return with peer group total shareholder return over a three-year period. During the year ended December 31, 2010, 12,500 units were earned and awarded to the executive officer. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 4, 2009, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 128,000 units in 2011. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates. No awards were vested as the vesting criterion was not met. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 2, 2010, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 117,000 units in 2012. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On February 3, 2011, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 79,800 units in 2013. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS recorded compensation expense of approximately $313,000 and $606,000 related to market-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. CTS recorded compensation expense of approximately $173,000 and $441,000 related to market-based restricted stock units during the three and six month periods ended July 4, 2010, respectively. As of July 3, 2011, there was approximately $1.3 million of unrecognized compensation cost related to market-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.0 year. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt"><u><b>Stock Retirement Plan</b></u> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Directors’ Plan provides for a portion of the total compensation payable to nonemployee directors to be deferred and paid in CTS stock. The Directors’ Plan was frozen effective December 1, 2004. All future grants will be from the 2009 Plan. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE C — Acquisition</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In January 2011, CTS acquired certain assets and assumed certain liabilities of Fordahl SA, a privately held company located in Brugg, Switzerland. This business was acquired for approximately $2.9 million, net of cash acquired. The assets acquired include inventory, accounts receivables, leasehold improvements, machinery and equipment, and certain intangible assets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Fordahl SA product line includes high-performance temperature compensated crystal oscillators and voltage controlled crystal oscillators. This product line is expected to expand CTS’ frequency product portfolio from clock and crystals to highly-engineered precision ovenized oscillators. This acquisition is expected to add new customers and to open up new market opportunities for CTS. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Estimated Fair</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Values</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>At January 24,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current assets </div></td> <td> </td> <td align="left">$</td> <td align="right">2,293</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Property, plant and equipment </div></td> <td> </td> <td> </td> <td align="right">2,141</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortizable intangible assets </div></td> <td> </td> <td> </td> <td align="right">1,084</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Fair value of assets acquired, including $59 cash acquired </div></td> <td> </td> <td> </td> <td align="right">5,518</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Less fair value of liabilities acquired </div></td> <td> </td> <td> </td> <td align="right">2,529</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net assets acquired </div></td> <td> </td> <td> </td> <td align="right">2,989</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cash acquired </div></td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net cash paid </div></td> <td> </td> <td align="left">$</td> <td align="right">2,930</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of the purchase agreement, CTS may pay a contingent earn out of up to $0.9 million in cash, based on the achievement of certain financial targets in 2011 through 2013. The fair value of this earn out contingency approximates $370,000, and was recorded as a liability at the acquisition date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">This acquisition is accounted for using the acquisition method of accounting whereby the total purchase price will be allocated to tangible and intangible assets based on the fair market values on the date of acquisition. CTS determined the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired and liabilities assumed. These estimates were arrived at using recognized valuation techniques. The Company is still finalizing the purchase price allocation. The land and building, machinery and equipment and intangible assets are classified as Level 3 under the fair value hierarchy. The pro forma effect of this acquisition is not material to CTS’ results of operations or financial position. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE D — Inventories, net</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Inventories consist of the following: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 3,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>11,606</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,594</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Work-in-process </div></td> <td> </td> <td> </td> <td align="right"><b>19,009</b></td> <td> </td> <td> </td> <td> </td> <td align="right">16,394</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials </div></td> <td> </td> <td> </td> <td align="right"><b>57,987</b></td> <td> </td> <td> </td> <td> </td> <td align="right">51,897</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total inventories, net </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>88,602</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">76,885</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE E — Debt</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Long-term debt was comprised of the following: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>July 3,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><i>($ in thousands)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Revolving credit agreement, weighted-average interest rate of 1.8% (2011), and 1.1% (2010) due in 2015 </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>74,500</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">70,000</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On November 18, 2010, CTS entered into a $150 million, unsecured revolving credit agreement. Under the terms of the revolving credit agreement, CTS can expand the credit facility to $200 million, subject to participating banks’ approval. There was $74.5 million and $70.0 million outstanding under the revolving credit agreement at July 3, 2011 and December 31, 2010, respectively. At July 3, 2011 and December 31, 2010, CTS had $72.7 million and $77.2 million, respectively, available under this agreement, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon the London Interbank Offered Rate and the Company’s quarterly total leverage ratio. CTS pays a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.375 percent per annum at July 3, 2011. The revolving credit agreement requires, among other things, that CTS comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure of CTS to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. CTS was in compliance with all debt covenants at July 3, 2011. The revolving credit agreement requires CTS to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting CTS’ ability to: dispose of assets, incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with CTS’ subsidiaries and affiliates; and make stock repurchases and dividend payments. The revolving credit agreement expires in November 2015. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE F — Retirement Plans</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Net pension income and postretirement expense for the three and six-months ended July 3, 2011 and July 4, 2010 include the following components: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six Months Ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>PENSION PLANS</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>722</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">744</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>1,444</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,491</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right"><b>3,230</b></td> <td> </td> <td> </td> <td> </td> <td align="right">3,310</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>6,457</b></td> <td> </td> <td> </td> <td> </td> <td align="right">6,642</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected return on plan assets <sup style="font-size: 85%; vertical-align: text-top"><b><i>(1)</i></b></sup> </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(6,062 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(6,079</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(12,121 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(12,162</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Settlement cost </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">234</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost </div></td> <td> </td> <td> </td> <td align="right"><b>153</b></td> <td> </td> <td> </td> <td> </td> <td align="right">153</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>306</b></td> <td> </td> <td> </td> <td> </td> <td align="right">510</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of loss </div></td> <td> </td> <td> </td> <td align="right"><b>1,120</b></td> <td> </td> <td> </td> <td> </td> <td align="right">991</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>2,239</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,990</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net pension income </div></td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(837 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(881</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(1,675 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,295</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96%"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"><i>(1)</i></sup></td> <td> </td> <td><i>Expected return on plan assets is net of expected investment expenses and certain administrative expenses.</i></td> </tr> </table> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six Months Ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>OTHER POSTRETIREMENT BENEFIT PLAN</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>4</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>8</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right"><b>72</b></td> <td> </td> <td> </td> <td> </td> <td align="right">75</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>144</b></td> <td> </td> <td> </td> <td> </td> <td align="right">150</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of gain </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(1 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(3 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Postretirement expense </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>75</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">78</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>149</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">156</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE G — Segments</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS reportable segments are grouped by entities that exhibit similar economic characteristics. The segments’ reporting results are regularly reviewed by CTS’ chief operating decision maker to make decisions about resources to be allocated to these segments and to evaluate the segments’ performance. CTS has two reportable segments: 1) Electronics Manufacturing Services (“EMS”) and 2) Components and Sensors. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">EMS includes the higher level assembly of electronic and mechanical components into a finished subassembly or assembly performed under a contract manufacturing agreement with an OEM or other contract manufacturer. Additionally, for some customers, CTS provides full turnkey manufacturing and completion including design, bill-of-material management, logistics, and repair. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Components and sensors are products which perform specific electronic functions for a given product family and are intended for use in customer assemblies. Components and sensors consist principally of automotive sensors and actuators used in commercial or consumer vehicles; electronic components used in communications infrastructure and computer markets; terminators, including ClearONE™ terminators, used in computer and other high speed applications, switches, resistor networks and potentiometers used to serve multiple markets; and fabricated piezo-electric materials and substrates used primarily in medical and industrial markets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in the Company’s annual report on Form 10-K. Management evaluates performance based upon segment operating earnings before interest expense, interest income, non-operating income/(expense), and income tax expense. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Summarized financial information concerning CTS’ reportable segments is shown in the following table: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Components and</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>EMS</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Sensors</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Second Quarter of 2011</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales to external customers </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>78,882</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>68,037</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>146,919</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment operating earnings </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>370</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>4,851</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>5,221</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>139,582</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>355,841</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>495,423</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Second Quarter of 2010</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales to external customers </div></td> <td> </td> <td align="left">$</td> <td align="right">66,624</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">72,227</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">138,851</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment operating (loss)/earnings </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(201</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">7,942</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,741</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right">128,248</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">319,199</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">447,447</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>First Six Months of 2011</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales to external customers </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>158,369</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>140,068</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>298,437</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment operating earnings </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>373</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>10,607</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>10,980</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>139,582</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>355,841</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"><b>495,423</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>First Six Months of 2010</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net sales to external customers </div></td> <td> </td> <td align="left">$</td> <td align="right">122,583</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">145,671</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">268,254</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment operating (loss)/earnings </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2,879</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">16,967</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14,088</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total assets </div></td> <td> </td> <td align="left">$</td> <td align="right">128,248</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">319,199</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">447,447</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Reconciling information between reportable segments’ operating earnings and CTS’ consolidated earnings before income taxes is shown in the following table for the three and six-month periods then ended: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six Months Ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total segment operating earnings </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>5,221</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,741</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10,980</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">14,088</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Restructuring charges </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(694 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(694 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest expense </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(511 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(228</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(1,003 </b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(463</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest income </div></td> <td> </td> <td> </td> <td align="right"><b>276</b></td> <td> </td> <td> </td> <td> </td> <td align="right">81</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>472</b></td> <td> </td> <td> </td> <td> </td> <td align="right">134</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other income/(expense) </div></td> <td> </td> <td> </td> <td align="right"><b>743</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(337</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right"><b>1,873</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(821</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Earnings before income taxes </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>5,035</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,257</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>11,628</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12,938</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE H — Contingencies</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Certain processes in the manufacture of CTS’ current and past products create hazardous waste by-products as currently defined by federal and state laws and regulations. CTS has been notified by the U.S. Environmental Protection Agency, state environmental agencies and, in some cases, generator groups, that it is or may be a potentially responsible party regarding hazardous waste remediation at several non-CTS sites. In addition to these non-CTS sites, CTS has an ongoing practice of providing reserves for probable remediation activities at certain of its manufacturing locations and for claims and proceedings against CTS with respect to other environmental matters. In the opinion of management, based upon presently available information relating to all such matters, either adequate provision for probable costs has been made, or the ultimate costs resulting will not materially affect the consolidated financial position, results of operations, or cash flows of CTS. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS manufactures accelerator pedals for a number of automobile manufacturers, including subsidiaries of Toyota Motor Corporation (“Toyota”). In January 2010, Toyota initiated a recall of approximately 2.3 million vehicles in North America containing pedals manufactured by CTS. The pedal recall and associated events have led to the Company being named as a co-defendant with Toyota in certain litigation. In February 2010, CTS entered into an agreement with Toyota whereby Toyota agreed that it will indemnify, defend, and hold the Company harmless from, and the parties will cooperate in the defense of, third-party civil claims and actions that are filed or asserted in the United States or Canada and that arise from or relate to alleged incidents of unintended acceleration of Toyota and Lexus vehicles. The limited exceptions to indemnification restrict CTS’ share of any liability to amounts collectable from its insurers. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Certain other claims are pending against CTS with respect to matters arising out of the ordinary conduct of the Company’s business. For all other claims, in the opinion of management, based upon presently available information, either adequate provision for anticipated costs has been accrued or the ultimate anticipated costs will not materially affect CTS’ consolidated financial position, results of operations, or cash flows. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the second quarter of 2011, a fire occurred at the Company’s Scotland EMS manufacturing facility. The fire damaged approximately $1.4 million of inventory and $0.3 million of machinery and equipment. CTS has property insurance coverage with a $100,000 deductible that is expected to cover the costs of repairing and/or replacing the damaged inventory and machinery and equipment. CTS also has business interruption insurance that is expected to cover the lost sales impact and fixed costs. Consequently, as of July 3, 2011, CTS wrote-off approximately $0.3 million of net book value of machinery and equipment, $1.4 million of inventory, deferred $0.8 million of recoverable fixed costs and $0.3 million of recoverable building restoration costs to other receivable. The total fire-related other receivable was $2.8 million as of July 3, 2011 and was included in Other Current Assets in CTS’ Unaudited Condensed Consolidated Balance Sheets. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE I — Fair Value Measurement</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The table below summarizes the financial liability that was measured at fair value on a recurring basis as of July 3, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Quoted Prices in</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Active Markets for</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Significant Other</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Significant</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Carrying Value at</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Identical</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Observable Inputs</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Unobservable Inputs</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Loss for Quarter</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 1)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 2)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 3)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Ended July 3, 2011</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term debt </div></td> <td> </td> <td align="left">$</td> <td align="right">74,500</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">74,500</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS’ long-term debt consists of a revolving debt agreement. There is a readily determinable market for CTS’ revolving credit debt and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt was measured using a market approach which uses current industry information. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE J —Earnings Per Share</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The table below provides a reconciliation of the numerator and denominator of the basic and diluted earnings per share (“EPS”) computations. Basic earnings per share is calculated using the weighted average number of common shares outstanding as the denominator and net earnings as the numerator. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the numerator. All anti-dilutive shares are excluded from the computation of diluted earnings per share. The calculations below provide net earnings, average common shares outstanding, and the resultant earnings per share for both basic and diluted EPS for the three and six-month periods ended July 3, 2011 and July 4, 2010. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Shares</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Net Earnings</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(in thousands)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in thousands, except per share amounts)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Numerator)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Denominator)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Per Share Amount</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Second Quarter 2011</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Basic EPS </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>4,132</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>34,375</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>0.12</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Equity-based compensation plans </div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>650</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted EPS </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>4,132</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>35,025</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>0.12</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Second Quarter 2010</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic EPS </div></td> <td> </td> <td align="left">$</td> <td align="right">5,892</td> <td> </td> <td> </td> <td> </td> <td align="right">34,048</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.17</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Equity-based compensation plans </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">826</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted EPS </div></td> <td> </td> <td align="left">$</td> <td align="right">5,892</td> <td> </td> <td> </td> <td> </td> <td align="right">34,874</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.17</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>First Six Months of 2011</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Basic EPS </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>9,248</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>34,334</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>0.27</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Equity-based compensation plans </div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>716</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted EPS </div></td> <td> </td> <td align="left">$</td> <td align="right"><b>9,248</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>35,050</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>0.26</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>First Six Months of 2010</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic EPS </div></td> <td> </td> <td align="left">$</td> <td align="right">10,323</td> <td> </td> <td> </td> <td> </td> <td align="right">34,001</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.30</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Equity-based compensation plans </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">810</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted EPS </div></td> <td> </td> <td align="left">$</td> <td align="right">10,323</td> <td> </td> <td> </td> <td> </td> <td align="right">34,811</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.30</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table shows the potentially dilutive securities which have been excluded from the three and six-month periods 2011 and 2010 dilutive earnings per share calculation because they are either anti-dilutive, or the exercise price exceeds the average market price. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three Months Ended</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six Months Ended</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>(Number of Shares in Thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 4, 2010</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Stock options where the assumed proceeds exceed the average market price </div></td> <td> </td> <td> </td> <td align="right"><b>402</b></td> <td> </td> <td> </td> <td> </td> <td align="right">602</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>402</b></td> <td> </td> <td> </td> <td> </td> <td align="right">602</td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE K — Treasury Stock</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Common stock held in treasury totaled 20,356,259 shares with a cost of $297.3 million at July 3, 2011 and 20,320,759 with a cost of $297.0 million at December 31, 2010. Approximately 6.5 million shares are available for future issuances. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In May 2008, CTS’ Board of Directors authorized a program to repurchase up to one million shares of its common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the second quarter of 2011, 35,500 shares were repurchased at a cost of approximately $326,000 or $9.19 per share, under this program. No shares were repurchased under this program in 2010. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE L — Goodwill and Other Intangible Assets</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">CTS has the following other intangible assets and goodwill as of: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>December 31, 2010</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross Carrying</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Gross Carrying</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><b><i>($ in thousands)</i></b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortized intangible assets: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Customer lists/relationships </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>51,477</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(21,189</b></td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">51,084</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(19,999 </td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Patents </div></td> <td> </td> <td> </td> <td align="right"><b>10,319</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(10,319</b></td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">10,319</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(10,319 </td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other intangibles </div></td> <td> </td> <td> </td> <td align="right"><b>1,190</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(251</b></td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(153 </td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right"><b>62,986</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(31,759</b></td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">61,903</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(30,471 </td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill </div></td> <td> </td> <td> </td> <td align="right"><b>500</b></td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">500</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total other intangible assets and goodwill </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>63,486</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(31,759</b></td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">62,403</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(30,471 </td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Of the net intangible assets at July 3, 2011, $6.8 million relates to the EMS segment and $24.9 million relates to the Components and Sensors segment. CTS recorded amortization expense of $0.7 million and $1.3 million during the three and six-month periods ended July 3, 2011, respectively. CTS recorded amortization expense of $0.6 million and $1.3 million during the three and six-month periods ended July 4, 2010, respectively. CTS estimates remaining amortization expense of $1.3 million in 2011, $2.5 million in 2012 through 2013, $2.4 million in years 2014 through 2015 and $20.1 million thereafter. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE M — Restructuring Charge</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During April 2011, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions resulted in the elimination of approximately 30 positions. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 3, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Actual incurred</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Planned</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>through</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in millions)</i>                         April 2011 Plan</b></td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b> </b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Costs</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>July 3, 2011</b></td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Workforce reduction </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.8</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right">0.7</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total restructuring charge </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.8</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right">0.7</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Of the restructuring charges incurred, $0.5 million relates to the Components and Sensors segment and $0.2 million relates to the EMS segment. Restructuring charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table displays the restructuring reserve activity related to the realignment for the period ended July 3, 2011: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b><i>($ in millions)</i>                         April 2011 Plan</b></td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b> </b></td> <td> </td> <td> </td> <td style="border-bottom: 1px solid #000000"> </td> <td style="border-bottom: 1px solid #000000"> </td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Restructuring liability at January 1, 2011 </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Restructuring charge </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>0.7</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cost paid </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(0.4</b></td> <td nowrap="nowrap"><b>)</b></td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Restructuring liability at July 3, 2011 </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>0.3</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE N — Recent Accounting Pronouncements</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 amends Accounting Standards Codification Topic 820, “Fair Value Measurements” (“ASC 820”) by: (1) clarifying that the highest-and-best-use and valuation-premise concepts only apply to measuring the fair value of non-financial assets; (2) allowing a reporting entity to measure the fair value of the net asset or net liability position in a manner consistent with how market participants would price the net risk position, if certain criteria are met; (3) providing a framework for considering whether a premium or discount can be applied in a fair value measurement; (4) providing that the fair value of an instrument classified in a reporting entity’s shareholders’ equity is estimated from the perspective of a market participant that holds the identical item as an asset; and (5) expanding the qualitative and quantitative fair value disclosure requirements. The expanded disclosures include, for Level 3 items, a description of the valuation process and a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. ASU 2011-4 also requires disclosures about the highest-and-best-use of a non-financial asset when this use differs from the asset’s current use and the reasons for such a difference. In addition, this ASU amends Accounting Standards Codification 820, “Fair Value Measurements,” to require disclosures to include any transfers between Level 1 and Level 2 of the fair value hierarchy. These amendments are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The amendments of ASU 2011-04, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>ASU 2011-05, “Presentation of Comprehensive Income”</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, and the second statement would include components of other comprehensive income. This ASU does not change the items that must be reported in other comprehensive income. These provisions are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The provisions of ASU 2011-05, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements. </div> </div>

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Document and Entity Information (USD $) In Millions, except Share data	6 Months Ended
	Jul. 03, 2011	Jul. 22, 2011	Jul. 02, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	CTS CORP
Entity Central Index Key	0000026058
Document Type	10-Q
Document Period End Date	Jul. 03, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 310
Entity Common Stock, Shares Outstanding		34,420,834

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Inventories, net

6 Months Ended

Jul. 03, 2011

Inventories, net [Abstract]

Inventories, net

NOTE D — Inventories, net

Inventories consist of the following:


	July 3,		December 31,
*($ in thousands)*	2011		2010
Finished goods	$	11,606	$	8,594
Work-in-process		19,009		16,394
Raw materials		57,987		51,897

Total inventories, net	$	88,602	$	76,885

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

+ References+ Details

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Debt

6 Months Ended

Jul. 03, 2011

Debt [Abstract]

Debt

NOTE E — Debt

Long-term debt was comprised of the following:


	July 3,		December 31,
($ in thousands)	2011		2010
Revolving credit agreement, weighted-average interest rate of 1.8% (2011), and 1.1% (2010) due in 2015	$	74,500	$	70,000

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Retirement Plans

6 Months Ended

Jul. 03, 2011

Retirement Plans [Abstract]

Retirement Plans

NOTE F — Retirement Plans

Net pension income and postretirement expense for the three and six-months ended July 3, 2011 and July 4, 2010 include the following components:


	Three Months Ended						Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
PENSION PLANS
Service cost	$	722		$	744		$	1,444		$	1,491
Interest cost		3,230			3,310			6,457			6,642
Expected return on plan assets ⁽¹⁾		(6,062	)		(6,079	)		(12,121	)		(12,162	)
Settlement cost		—			—			—			234
Amortization of prior service cost		153			153			306			510
Amortization of loss		1,120			991			2,239			1,990

Net pension income	$	(837	)	$	(881	)	$	(1,675	)	$	(1,295	)


⁽¹⁾		Expected return on plan assets is net of expected investment expenses and certain administrative expenses.


	Three Months Ended					Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010		July 3, 2011			July 4, 2010
OTHER POSTRETIREMENT BENEFIT PLAN
Service cost	$	4		$	3	$	8		$	6
Interest cost		72			75		144			150
Amortization of gain		(1	)		—		(3	)		—

Postretirement expense	$	75		$	78	$	149		$	156

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-URI http://asc.fasb.org/topic&trid=2235017

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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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+ Details

XML 17 R13.htm IDEA: XBRL DOCUMENT

Segments

6 Months Ended

Jul. 03, 2011

Segments [Abstract]

Segments

NOTE G — Segments

Summarized financial information concerning CTS’ reportable segments is shown in the following table:


				Components and
*($ in thousands)*	EMS			Sensors		Total
Second Quarter of 2011
Net sales to external customers	$	78,882		$	68,037	$	146,919
Segment operating earnings	$	370		$	4,851	$	5,221
Total assets	$	139,582		$	355,841	$	495,423

Second Quarter of 2010
Net sales to external customers	$	66,624		$	72,227	$	138,851
Segment operating (loss)/earnings	$	(201	)	$	7,942	$	7,741
Total assets	$	128,248		$	319,199	$	447,447

First Six Months of 2011
Net sales to external customers	$	158,369		$	140,068	$	298,437
Segment operating earnings	$	373		$	10,607	$	10,980
Total assets	$	139,582		$	355,841	$	495,423

First Six Months of 2010
Net sales to external customers	$	122,583		$	145,671	$	268,254
Segment operating (loss)/earnings	$	(2,879	)	$	16,967	$	14,088
Total assets	$	128,248		$	319,199	$	447,447


	Three Months Ended						Six Months Ended
*($ in thousands)*	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
Total segment operating earnings	$	5,221		$	7,741		$	10,980		$	14,088
Restructuring charges		(694	)		—			(694	)		—
Interest expense		(511	)		(228	)		(1,003	)		(463	)
Interest income		276			81			472			134
Other income/(expense)		743			(337	)		1,873			(821	)

Earnings before income taxes	$	5,035		$	7,257		$	11,628		$	12,938

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

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Contingencies	6 Months Ended
Contingencies	Jul. 03, 2011
Contingencies [Abstract]
Contingencies	NOTE H — Contingencies Certain processes in the manufacture of CTS’ current and past products create hazardous waste by-products as currently defined by federal and state laws and regulations. CTS has been notified by the U.S. Environmental Protection Agency, state environmental agencies and, in some cases, generator groups, that it is or may be a potentially responsible party regarding hazardous waste remediation at several non-CTS sites. In addition to these non-CTS sites, CTS has an ongoing practice of providing reserves for probable remediation activities at certain of its manufacturing locations and for claims and proceedings against CTS with respect to other environmental matters. In the opinion of management, based upon presently available information relating to all such matters, either adequate provision for probable costs has been made, or the ultimate costs resulting will not materially affect the consolidated financial position, results of operations, or cash flows of CTS. CTS manufactures accelerator pedals for a number of automobile manufacturers, including subsidiaries of Toyota Motor Corporation (“Toyota”). In January 2010, Toyota initiated a recall of approximately 2.3 million vehicles in North America containing pedals manufactured by CTS. The pedal recall and associated events have led to the Company being named as a co-defendant with Toyota in certain litigation. In February 2010, CTS entered into an agreement with Toyota whereby Toyota agreed that it will indemnify, defend, and hold the Company harmless from, and the parties will cooperate in the defense of, third-party civil claims and actions that are filed or asserted in the United States or Canada and that arise from or relate to alleged incidents of unintended acceleration of Toyota and Lexus vehicles. The limited exceptions to indemnification restrict CTS’ share of any liability to amounts collectable from its insurers. Certain other claims are pending against CTS with respect to matters arising out of the ordinary conduct of the Company’s business. For all other claims, in the opinion of management, based upon presently available information, either adequate provision for anticipated costs has been accrued or the ultimate anticipated costs will not materially affect CTS’ consolidated financial position, results of operations, or cash flows. During the second quarter of 2011, a fire occurred at the Company’s Scotland EMS manufacturing facility. The fire damaged approximately $1.4 million of inventory and $0.3 million of machinery and equipment. CTS has property insurance coverage with a $100,000 deductible that is expected to cover the costs of repairing and/or replacing the damaged inventory and machinery and equipment. CTS also has business interruption insurance that is expected to cover the lost sales impact and fixed costs. Consequently, as of July 3, 2011, CTS wrote-off approximately $0.3 million of net book value of machinery and equipment, $1.4 million of inventory, deferred $0.8 million of recoverable fixed costs and $0.3 million of recoverable building restoration costs to other receivable. The total fire-related other receivable was $2.8 million as of July 3, 2011 and was included in Other Current Assets in CTS’ Unaudited Condensed Consolidated Balance Sheets.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

XML 19 R15.htm IDEA: XBRL DOCUMENT

Fair Value Measurement

6 Months Ended

Jul. 03, 2011

Fair Value Measurement [Abstract]

Fair Value Measurement

NOTE I — Fair Value Measurement

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of July 3, 2011:

Quoted Prices in

Active Markets for

Significant Other

Significant

Carrying Value at

Identical

Observable Inputs

Unobservable Inputs

Loss for Quarter

($ in thousands)

July 3, 2011

(Level 1)

(Level 2)

(Level 3)

Ended July 3, 2011

Long-term debt

74,500

—

74,500

—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

XML 20 R16.htm IDEA: XBRL DOCUMENT

Earnings Per Share

6 Months Ended

Jul. 03, 2011

Earnings Per Share [Abstract]

Earnings Per Share

NOTE J —Earnings Per Share


			Shares
	Net Earnings		(in thousands)
*($ in thousands, except per share amounts)*	(Numerator)		(Denominator)		Per Share Amount
Second Quarter 2011
Basic EPS	$	4,132		34,375	$	0.12

Effect of dilutive securities:
Equity-based compensation plans		—		650

Diluted EPS	$	4,132		35,025	$	0.12


Second Quarter 2010
Basic EPS	$	5,892		34,048	$	0.17

Effect of dilutive securities:
Equity-based compensation plans		—		826

Diluted EPS	$	5,892		34,874	$	0.17


First Six Months of 2011
Basic EPS	$	9,248		34,334	$	0.27

Effect of dilutive securities:
Equity-based compensation plans		—		716

Diluted EPS	$	9,248		35,050	$	0.26


First Six Months of 2010
Basic EPS	$	10,323		34,001	$	0.30

Effect of dilutive securities:
Equity-based compensation plans		—		810

Diluted EPS	$	10,323		34,811	$	0.30

Three Months Ended

Six Months Ended

(Number of Shares in Thousands)

July 3, 2011

July 4, 2010

July 3, 2011

July 4, 2010

Stock options where the assumed proceeds exceed the average market price

402

602

402

602

- Definition

The entire disclosure for earnings per share.

+ References+ Details

XML 21 R17.htm IDEA: XBRL DOCUMENT

Treasury Stock	6 Months Ended
Treasury Stock	Jul. 03, 2011
Treasury Stock [Abstract]
Treasury Stock	NOTE K — Treasury Stock Common stock held in treasury totaled 20,356,259 shares with a cost of $297.3 million at July 3, 2011 and 20,320,759 with a cost of $297.0 million at December 31, 2010. Approximately 6.5 million shares are available for future issuances. In May 2008, CTS’ Board of Directors authorized a program to repurchase up to one million shares of its common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the second quarter of 2011, 35,500 shares were repurchased at a cost of approximately $326,000 or $9.19 per share, under this program. No shares were repurchased under this program in 2010.

XML 22 R18.htm IDEA: XBRL DOCUMENT

Goodwill and Other Intangible Assets

6 Months Ended

Jul. 03, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

NOTE L — Goodwill and Other Intangible Assets

CTS has the following other intangible assets and goodwill as of:


	July 3, 2011					December 31, 2010
	Gross Carrying		Accumulated			Gross Carrying		Accumulated
*($ in thousands)*	Amount		Amortization			Amount		Amortization
Amortized intangible assets:
Customer lists/relationships	$	51,477	$	(21,189	)	$	51,084	$	(19,999	)
Patents		10,319		(10,319	)		10,319		(10,319	)
Other intangibles		1,190		(251	)		500		(153	)

Total		62,986		(31,759	)		61,903		(30,471	)
Goodwill		500		—			500		—

Total other intangible assets and goodwill	$	63,486	$	(31,759	)	$	62,403	$	(30,471	)

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References+ Details

XML 23 R19.htm IDEA: XBRL DOCUMENT

Restructuring Charge

6 Months Ended

Jul. 03, 2011

Restructuring Charge [Abstract]

Restructuring Charge

NOTE M — Restructuring Charge


			Actual incurred
	Planned		through
($ in millions) April 2011 Plan	Costs		July 3, 2011
Workforce reduction	$	0.8	$	0.7

Total restructuring charge	$	0.8	$	0.7

The following table displays the restructuring reserve activity related to the realignment for the period ended July 3, 2011:


($ in millions) April 2011 Plan
Restructuring liability at January 1, 2011	$	—
Restructuring charge		0.7
Cost paid		(0.4	)

Restructuring liability at July 3, 2011	$	0.3

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References+ Details

XML 24 R2.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements of Earnings (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Condensed Consolidated Statements of Earnings [Abstract]
Net sales	$ 146,919	$ 138,851	$ 298,437	$ 268,254
Costs and expenses:
Cost of goods sold	119,051	108,511	241,409	207,435
Selling, general and administrative expenses	18,057	18,283	36,429	37,832
Research and development expenses	4,590	4,316	9,619	8,899
Restructuring charge - Note M	694		694
Operating earnings	4,527	7,741	10,286	14,088
Other (expense)/income:
Interest expense	(511)	(228)	(1,003)	(463)
Interest income	276	81	472	134
Other	743	(337)	1,873	(821)
Total other income/(expense)	508	(484)	1,342	(1,150)
Earnings before income taxes	5,035	7,257	11,628	12,938
Income tax expense	903	1,365	2,380	2,615
Net earnings	$ 4,132	$ 5,892	$ 9,248	$ 10,323
Net earnings per share - Note J
Basic	$ 0.12	$ 0.17	$ 0.27	$ 0.30
Diluted	$ 0.12	$ 0.17	$ 0.26	$ 0.30
Cash dividends declared per share	$ 0.03	$ 0.03	$ 0.06	$ 0.06
Average common shares outstanding:
Basic	34,375	34,048	34,334	34,001
Diluted	35,025	34,874	35,050	34,811

XML 25 R20.htm IDEA: XBRL DOCUMENT

Recent Accounting Pronouncements	6 Months Ended
Recent Accounting Pronouncements	Jul. 03, 2011
Recent Accounting Pronouncements [Abstract]
Recent Accounting Pronouncements	NOTE N — Recent Accounting Pronouncements ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 amends Accounting Standards Codification Topic 820, “Fair Value Measurements” (“ASC 820”) by: (1) clarifying that the highest-and-best-use and valuation-premise concepts only apply to measuring the fair value of non-financial assets; (2) allowing a reporting entity to measure the fair value of the net asset or net liability position in a manner consistent with how market participants would price the net risk position, if certain criteria are met; (3) providing a framework for considering whether a premium or discount can be applied in a fair value measurement; (4) providing that the fair value of an instrument classified in a reporting entity’s shareholders’ equity is estimated from the perspective of a market participant that holds the identical item as an asset; and (5) expanding the qualitative and quantitative fair value disclosure requirements. The expanded disclosures include, for Level 3 items, a description of the valuation process and a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. ASU 2011-4 also requires disclosures about the highest-and-best-use of a non-financial asset when this use differs from the asset’s current use and the reasons for such a difference. In addition, this ASU amends Accounting Standards Codification 820, “Fair Value Measurements,” to require disclosures to include any transfers between Level 1 and Level 2 of the fair value hierarchy. These amendments are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The amendments of ASU 2011-04, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements. ASU 2011-05, “Presentation of Comprehensive Income” In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, and the second statement would include components of other comprehensive income. This ASU does not change the items that must be reported in other comprehensive income. These provisions are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The provisions of ASU 2011-05, when adopted, are not expected to have a material impact on CTS’ consolidated financial statements.

- Definition

The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period.

+ References+ Details

XML 26 R3.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Jul. 03, 2011	Dec. 31, 2010
Current Assets
Cash and cash equivalents	$ 75,056	$ 73,315
Accounts receivable, less allowances (2011 - $1,253; 2010- $1,269)	87,792	95,930
Inventories, net - Note D	88,602	76,885
Other current assets	23,903	20,525
Total current assets	275,353	266,655
Property, plant and equipment, less accumulated depreciation (2011 - $242,471; 2010 - $244,662)	79,211	78,213
Other Assets
Prepaid pension asset	48,377	44,075
Goodwill - Note L	500	500
Other intangible assets, net - Note L	31,227	31,432
Deferred income taxes	59,050	59,956
Other	1,705	1,753
Total other assets	140,859	137,716
Total Assets	495,423	482,584
Current Liabilities
Notes payable	246	0
Accounts payable	77,087	75,384
Accrued liabilities	40,718	44,716
Total current liabilities	118,051	120,100
Long-term debt - Note E	74,500	70,000
Other long-term obligations	17,129	18,234
Shareholders' Equity
Preferred stock - authorized 25,000,000 shares without par value; none issued	0	0
Common stock - authorized 75,000,000 shares without par value; 54,788,197 shares issued at July 3, 2011 and 54,517,560 shares issued at December 31, 2010	287,635	285,515
Additional contributed capital	37,808	37,775
Retained earnings	342,709	335,524
Accumulated other comprehensive loss	(85,074)	(87,555)
Stockholders equity before treasury	583,078	571,259
Cost of common stock held in treasury - Note K (2011 - 20,356,259 and 2010 - 20,320,759 shares)	(297,335)	(297,009)
Total shareholders' equity	285,743	274,250
Total Liabilities and Shareholders' Equity	$ 495,423	$ 482,584

XML 27 R4.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data	Jul. 03, 2011	Dec. 31, 2010
Current Assets
Allowance for doubtful debts	$ 1,253	$ 1,269
Accumulated depreciation on property, plant and equipment	$ 242,471	$ 244,662
Shareholders' Equity
Preferred stock, without par value	$ 0	$ 0
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Common stock, no par value	$ 0	$ 0
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	54,788,197	54,517,560
Treasury stock, shares	20,356,259	20,320,759

XML 28 R5.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010
Cash flows from operating activities:
Net earnings	$ 9,248	$ 10,323
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	8,766	8,832
Prepaid pension asset	(4,302)	(3,905)
Equity-based compensation - Note B	2,361	2,167
Restructuring charge - Note M	694
Amortization of retirement benefit adjustments - Note F	2,542	2,500
Other	(1,481)	(538)
Changes in assets and liabilities, net of acquisitions
Accounts receivable	10,188	(13,770)
Inventories	(10,633)	(14,675)
Other current assets	(1,369)	(1,683)
Accounts payable and accrued liabilities	(7,174)	17,095
Total adjustments	(408)	(3,977)
Net cash provided by operating activities	8,840	6,346
Cash flows from investing activities:
Payment for acquisition, net of cash acquired	(2,930)
Earnout payment related to a 2008 acquisition		(500)
Capital expenditures	(6,526)	(6,207)
Proceeds from sales of assets		960
Net cash used in investing activities	(9,456)	(5,747)
Cash flows from financing activities:
Payments of long-term debt - Note E	(1,989,500)	(1,565,150)
Proceeds from borrowings of long-term debt - Note E	1,994,000	1,580,650
Payments of short-term notes payable	(2,203)	(1,631)
Proceeds from borrowings of short-term notes payable	2,449	1,631
Purchase of treasury stock	(326)
Dividends paid	(2,056)	(2,038)
Exercise of stock options	472	92
Other	204	(24)
Net cash provided by financing activities	3,040	13,530
Effect of exchange rate on cash and cash equivalents	(683)	(62)
Net increase in cash and cash equivalents	1,741	14,067
Cash and cash equivalents at beginning of year	73,315	51,167
Cash and cash equivalents at end of period	75,056	65,234
Cash paid during the period for:
Interest	885	398
Income taxes--net	$ 2,060	$ 2,303

XML 29 R6.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 03, 2011	Jul. 04, 2010	Jul. 03, 2011	Jul. 04, 2010
Condensed Consolidated Statements of Comprehensive Earnings [Abstract]
Net earnings	$ 4,132	$ 5,892	$ 9,248	$ 10,323
Other comprehensive earnings/(loss):
Cumulative translation adjustment	7	(203)	995	(1,636)
Amortization of retirement benefit adjustments (net of tax)	750	687	1,486	1,416
Comprehensive earnings	$ 4,889	$ 6,376	$ 11,729	$ 10,103

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e540-108580

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 30
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A5
-Appendix A

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 8, 9, 10, 11, 12, 13, 14
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6508144

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e557-108580

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.22)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6943989&loc=d3e3602-108585

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 225
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+ Details

- Definition

The increase (decrease) in accumulated comprehensive income during the period related to pension and other postretirement benefit plans, after tax. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

+ References+ Details

- Definition

Adjustment that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency of the reporting entity, net of tax.

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Basis of Presentation	6 Months Ended
Basis of Presentation	Jul. 03, 2011
Basis of Presentation [Abstract]
Basis of Presentation	NOTE A — Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

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XML 31 R8.htm IDEA: XBRL DOCUMENT

Equity-Based Compensation

6 Months Ended

Jul. 03, 2011

Equity-Based Compensation [Abstract]

Equity-Based Compensation

NOTE B — Equity-Based Compensation


	Three Months Ended				Six Months Ended
	July 3,		July 4,		July 3,		July 4,
($ in thousands)	2011		2010		2011		2010
Stock options	$	—	$	1	$	—	$	3
Restricted stock units		1,181		905		2,361		2,164

Total	$	1,181	$	906	$	2,361	$	2,167

The following table summarizes the status of these plans as of July 3, 2011:


	2009 Plan		2004 Plan		2001 Plan		1996 Plan
Awards originally available		3,400,000		6,500,000		2,000,000		1,200,000
Stock options outstanding		—		257,200		505,500		75,350
Restricted stock units outstanding		543,459		146,195		—		—
Options exercisable		—		257,200		505,500		75,350
Awards available for grant		2,512,140		268,500		—		—

Stock Options

A summary of the status of stock options as of July 3, 2011 and July 4, 2010, and changes during the six-month periods then ended, is presented below:


	July 3, 2011					July 4, 2010
				Weighted-Average					Weighted-Average
	Options			Exercise Price		Options			Exercise Price
Outstanding at beginning of year		1,093,063		$	12.61		1,179,088		$	13.72
Exercised		(59,263	)	$	7.91		(17,000	)	$	7.70
Expired		(195,750	)	$	21.99		(43,375	)	$	44.79

Outstanding at end of period		838,050		$	10.75		1,118,713		$	12.61

Exercisable at end of period		838,050		$	10.75		1,118,713		$	12.61

The following table summarizes information about stock options outstanding at July 3, 2011:


	Options Outstanding						Options Exercisable
			Weighted Average
Range of	Number		Remaining		Weighted Average		Number		Weighted Average
Exercise	Outstanding		Contractual		Exercise		Exercisable		Exercise
Prices	at 7/3/11		Life (Years)		Price		at 7/3/11		Price
$7.70 — 11.11		616,250		2.22	$	9.53		616,250	$	9.53
$13.68 — 16.24		221,800		2.16	$	14.13		221,800	$	14.13

Service-Based Restricted Stock Units


	July 3, 2011					July 4, 2010
				Weighted-average					Weighted-average
				Grant-Date					Grant-Date
	RSUs			Fair Value		RSUs			Fair Value
Outstanding at beginning of year		807,601		$	8.39		854,745		$	8.47
Granted		219,100		$	11.89		271,500		$	7.52
Converted		(297,104	)	$	8.52		(280,495	)	$	8.97
Forfeited		(39,943	)	$	8.89		(13,920	)	$	6.62

Outstanding at end of period		689,654		$	9.42		831,830		$	8.34

Weighted-average remaining contractual life	6.7 years					5.32 years

Performance-Based Restricted Stock Units

Market-Based Restricted Stock Units

Stock Retirement Plan

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

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Acquisition

6 Months Ended

Jul. 03, 2011

Acquisition [Abstract]

Acquisition

NOTE C — Acquisition

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition:


	Estimated Fair
	Values
	At January 24,
*($ in thousands)*	2011
Current assets	$	2,293
Property, plant and equipment		2,141
Amortizable intangible assets		1,084

Fair value of assets acquired, including $59 cash acquired		5,518
Less fair value of liabilities acquired		2,529

Net assets acquired		2,989
Cash acquired		59

Net cash paid	$	2,930

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

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+ Details

XML 33 report.css IDEA: XBRL DOCUMENT /* Updated 2009-11-04 */ /* v2.2.0.24 */ /* DefRef Styles */ ..report table.authRefData{ background-color: #def; border: 2px solid #2F4497; font-size: 1em; position: absolute; } ..report table.authRefData a { display: block; font-weight: bold; } ..report table.authRefData p { margin-top: 0px; } ..report table.authRefData .hide { background-color: #2F4497; padding: 1px 3px 0px 0px; text-align: right; } ..report table.authRefData .hide a:hover { background-color: #2F4497; } ..report table.authRefData .body { height: 150px; overflow: auto; width: 400px; } ..report table.authRefData table{ font-size: 1em; } /* Report Styles */ ..pl a, .pl a:visited { color: black; text-decoration: none; } /* table */ ..report { background-color: white; border: 2px solid #acf; clear: both; color: black; font: normal 8pt Helvetica, Arial, san-serif; margin-bottom: 2em; } ..report hr { border: 1px solid #acf; } /* Top labels */ ..report th { background-color: #acf; color: black; font-weight: bold; text-align: center; } ..report th.void { background-color: transparent; color: #000000; font: bold 10pt Helvetica, Arial, san-serif; text-align: left; } ..report .pl { text-align: left; vertical-align: top; white-space: normal; width: 200px; word-wrap: break-word; } ..report td.pl a.a { cursor: pointer; display: block; width: 200px; } ..report td.pl div.a { width: 200px; } ..report td.pl a:hover { background-color: #ffc; } /* Header rows... */ ..report tr.rh { background-color: #acf; color: black; font-weight: bold; } /* Calendars... */ ..report .rc { background-color: #f0f0f0; } /* Even rows... */ ..report .re, .report .reu { background-color: #def; } ..report .reu td { border-bottom: 1px solid black; } /* Odd rows... */ ..report .ro, .report .rou { background-color: white; } ..report .rou td { border-bottom: 1px solid black; } ..report .rou table td, .report .reu table td { border-bottom: 0px solid black; } /* styles for footnote marker */ ..report .fn { white-space: nowrap; } /* styles for numeric types */ ..report .num, .report .nump { text-align: right; white-space: nowrap; } ..report .nump { padding-left: 2em; } ..report .nump { padding: 0px 0.4em 0px 2em; } /* styles for text types */ ..report .text { text-align: left; white-space: normal; } ..report .text .big { margin-bottom: 1em; width: 17em; } ..report .text .more { display: none; } ..report .text .note { font-style: italic; font-weight: bold; } ..report .text .small { width: 10em; } ..report sup { font-style: italic; } ..report .outerFootnotes { font-size: 1em; } XML 34 Show.js IDEA: XBRL DOCUMENT /** * Rivet Software Inc. * * @copyright Copyright (c) 2006-2011 Rivet Software, Inc. All rights reserved. * Version 2.1.0.1 * */ var moreDialog = null; var Show = { Default:'raw', more:function( obj ){ var bClosed = false; if( moreDialog != null ) { try { bClosed = moreDialog.closed; } catch(e) { //Per article at http://support.microsoft.com/kb/244375 there is a problem with the WebBrowser control // that somtimes causes it to throw when checking the closed property on a child window that has been //closed. So if the exception occurs we assume the window is closed and move on from there. bClosed = true; } if( !bClosed ){ moreDialog.close(); } } obj = obj.parentNode.getElementsByTagName( 'pre' )[0]; var hasHtmlTag = false; var objHtml = ''; var raw = ''; //Check for raw HTML var nodes = obj.getElementsByTagName( '*' ); if( nodes.length ){ objHtml = obj.innerHTML; }else{ if( obj.innerText ){ raw = obj.innerText; }else{ raw = obj.textContent; } var matches = raw.match( /<\/?[a-zA-Z]{1}\w*[^>]*>/g ); if( matches && matches.length ){ objHtml = raw; //If there is an html node it will be 1st or 2nd, // but we can check a little further. var n = Math.min( 5, matches.length ); for( var i = 0; i < n; i++ ){ var el = matches[ i ].toString().toLowerCase(); if( el.indexOf( '= 0 ){ hasHtmlTag = true; break; } } } } if( objHtml.length ){ var html = ''; if( hasHtmlTag ){ html = objHtml; }else{ html = ''+ "\n"+''+ "\n"+' Report Preview Details'+ "\n"+' '+ "\n"+''+ "\n"+''+ objHtml + "\n"+''+ "\n"+''; } moreDialog = window.open("","More","width=700,height=650,status=0,resizable=yes,menubar=no,toolbar=no,scrollbars=yes"); moreDialog.document.write( html ); moreDialog.document.close(); if( !hasHtmlTag ){ moreDialog.document.body.style.margin = '0.5em'; } } else { //default view logic var lines = raw.split( "\n" ); var longest = 0; if( lines.length > 0 ){ for( var p = 0; p < lines.length; p++ ){ longest = Math.max( longest, lines[p].length ); } } //Decide on the default view this.Default = longest < 120 ? 'raw' : 'formatted'; //Build formatted view var text = raw.split( "\n\n" ) >= raw.split( "\r\n\r\n" ) ? raw.split( "\n\n" ) : raw.split( "\r\n\r\n" ) ; var formatted = ''; if( text.length > 0 ){ if( text.length == 1 ){ text = raw.split( "\n" ) >= raw.split( "\r\n" ) ? raw.split( "\n" ) : raw.split( "\r\n" ) ; formatted = "

"+ text.join( "

\n" ) +"

"; }else{ for( var p = 0; p < text.length; p++ ){ formatted += "

" + text[p] + "

\n"; } } }else{ formatted = '

' + raw + '

'; } html = ''+ "\n"+''+ "\n"+' Report Preview Details'+ "\n"+' '+ "\n"+''+ "\n"+''+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+' '+ "\n"+'

'+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+'

'+ "\n"+' '+ "\n"+'

'+ "\n"+'

'+raw+'

'+ "\n"+'

'+ "\n"+''+ "\n"+''; moreDialog = window.open("","More","width=700,height=650,status=0,resizable=yes,menubar=no,toolbar=no,scrollbars=yes"); moreDialog.document.write(html); moreDialog.document.close(); this.toggle( moreDialog ); } moreDialog.document.title = 'Report Preview Details'; }, toggle:function( win, domLink ){ var domId = this.Default; var doc = win.document; var domEl = doc.getElementById( domId ); domEl.style.display = 'block'; this.Default = domId == 'raw' ? 'formatted' : 'raw'; if( domLink ){ domLink.innerHTML = this.Default == 'raw' ? 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