Fair Value Measurement

9 Months Ended

Sep. 30, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

NOTE I—Fair Value Measurement

Goodwill represents the excess of the cost of businesses acquired over the fair value of the assets acquired and liabilities assumed. CTS does not amortize goodwill, but tests it for impairment annually using a fair value approach at the reporting unit level. A reporting unit is the operating segment, or a business one level below that operating segment or the component level if discrete financial information is prepared and regularly reviewed by senior management. However, components are aggregated as a single reporting unit if they have similar economic characteristics.

The table below summarizes the non-financial assets that were measured and recorded at fair value on a non-recurring basis as of September 30, 2012 and the loss recorded during the nine months ended September 30, 2012 on those assets:

($ in thousands)
Description	Carrying Value at September 30, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Nine Months Ended September 30, 2012
Goodwill	$	6,759	$	—	$	—	$	6,759	$	—
Intangible assets, other than goodwill	$	30,346	$	—	$	—	$	30,346	$	—
Long-lived assets	$	89,721	$	—	$	—	$	89,721	$	1,435

The fair value of these assets were measured and recorded using an income approach. Projected future cash flows related to these assets were used under this approach to determine their fair values. CTS recorded an impairment charge of approximately $1,435,000 for the nine months ended September 30, 2012. The impairment charge was recorded under “Restructuring and Impairment Charge” on the Company’s Condensed Consolidated Statements of Earnings.

The following table reconciles the beginning and ending balance of CTS’ goodwill for the period ended September 30, 2012:

($ in thousands)	C&S		EMS		Total
Balance at January 1, 2012	$	—	$	500	$	500
2012 activity – Note C, “Acquisitions”		6,259		—		6,259
Balance at September 30, 2012	$	6,259	$	500	$	6,759

See Note L, “Goodwill and Other Intangible Assets,” for further discussion.

The following table reconciles the beginning and ending balances of CTS’ intangible assets, other than goodwill for the period ended September 30, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	29,886
2012 addition – Note C, “Acquisitions”		2,820
2012 amortization expense		(2,210	)
2012 intangible asset write-off		(150	)
Balance at September 30, 2012	$	30,346

See Note L, “Goodwill and Other Intangible Assets,” for further discussion.

The following table reconciles the beginning and ending balances of CTS’ long-lived assets for the period ended September 30, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	84,860
Capital expenditures		9,779
Capital expenditures to replace property, plant & equipment damaged in Thailand flood		2,859
Fixed assets acquired in Valpey-Fisher acquisition – Note C		6,231
Depreciation expense		(12,373	)
Transfer to asset held for sale		(350	)
Impairment charge		(1,435	)
Foreign exchange impact and other		150
Balance at September 30, 2012	$	89,721

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of September 30, 2012:

($ in thousands)	Carrying Value at September 30, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Nine Months Ended September 30, 2012
Interest rate swap – cash flow hedge	$	1,547	$	—	$	1,547	$	—	$	—

The fair value of CTS’ interest rate swaps were measured using a market approach which uses current industry information. There is a readily determinable market and these swaps are classified within level 2 of the fair value hierarchy. $198,000 of the fair value of these swaps are classified as Accrued liabilities and the remaining $1,349,000 are classified as Other liabilities on CTS’ Consolidated Balance Sheets.

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 and approximates carrying value.