Acquisition

3 Months Ended

Apr. 01, 2012

Acquisition [Abstract]

Acquisition

NOTE C – Acquisition

In January 2012, CTS acquired 100% of the common stock of Valpey-Fisher Corporation (“Valpey-Fisher”), a publicly held company located in Hopkinton, Massachusetts for approximately $18.3 million. Valpey-Fisher is a recognized technology leader in the design and manufacture of precision frequency crystal oscillators. This acquisition will expand CTS’ technology, and bring strong engineering capabilities and management leadership to support the Company’s strategic initiatives in CTS’ Component and Sensors’ segment.

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

	Estimated Fair Values
($ in thousands)	At January 23, 2012
Current assets	$	9,156
Property, plant and equipment		2,790
Goodwill		7,372
Amortizable intangible assets		4,915
Other assets		231
Fair value of assets acquired, including $3,578 cash acquired		24,464
Less fair value of liabilities acquired		(6,197	)
Net assets acquired		18,267
Cash acquired		3,578
Net cash paid	$	14,689

The following table summarizes the net sales and earnings before income taxes of CTS, Valpey-Fisher and consolidated since the acquisition date, January 23, 2012, that is included in the consolidated statement of earnings for the three months ended April 1, 2012:

	CTS		Valpey-Fisher		Consolidated
($ in thousands)	April 1, 2012		April 1, 2012		April 1, 2012
Net Sales	$	143,978	$	2,991	$	146,969
Earnings before income taxes	$	2,136	$	161	$	2,297

The following table summarizes the pro-forma net sales and earnings before income taxes of CTS, Valpey-Fisher and combined for the three months ended April 1, 2012 as if the acquisition date had occurred on January 1, 2011:

	CTS		Valpey-Fisher		Combined
($ in thousands)	April 1, 2012		April 1, 2012		April 1, 2012
Net Sales	$	143,978	$	4,107	$	148,085
Earnings before income taxes	$	2,136	$	130	$	2,266

The following table summarizes the pro-forma net sales and earnings before income taxes of CTS, Valpey-Fisher and combined for the three months ended April 3, 2011 as if the acquisition date had occurred on January 1, 2011:

	CTS		Valpey-Fisher			Combined
($ in thousands)	April 3, 2011		April 3, 2011			April 3, 2011
Net Sales	$	151,518	$	3,519		$	155,037
Earnings before income taxes	$	6,593	$	(133	)	$	6,460

The Valpey-Fisher acquisition will be accounted for using the acquisition method of accounting whereby the total purchase price will be allocated to tangible and intangible assets and liabilities based on the fair market values on the date of acquisition. CTS will determine the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired and liabilities assumed. These allocations are expected to be finalized by the end of 2012.

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 receivable, 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 expanded CTS’ frequency product portfolio from clock and crystals to highly-engineered precision ovenized oscillators. This acquisition added new customers and opened up new market opportunities for CTS.

The Fordahl acquisition was accounted for using the acquisition method of accounting whereby the total purchase price was 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. CTS finalized the purchase price allocation at December 31, 2011. 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.