10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For The Quarterly Period EndedJune 30, 2018

OR

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 incorporation or organization)	(IRS Employer Identification Number)
4925 Indiana Avenue, Lisle, IL	60532
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:630-577-8800

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  x No    ¨

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 for such shorter period that the registrant was required to submit and post such files).    Yes  x    No ¨

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 the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨ No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 23, 2018: 33,087,043.

CTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statements of Earnings (Unaudited) For the Three and Six Months Ended June 30, 2018 and June 30, 2017	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Six Months Ended June 30, 2018 and June 30, 2017	4
	Condensed Consolidated Balance Sheets As of June 30, 2018 (Unaudited) and December 31, 2017	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three and Six Months Ended June 30, 2018 and June 30, 2017	6
	Notes to Condensed Consolidated Financial Statements ‑ (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
SIGNATURES		37

2

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OFEARNINGS- UNAUDITED

(In thousands of dollars, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Net sales	$	118,021		$	105,686		$	231,551		$	205,840
Cost of goods sold	76,208			69,892			151,305			135,822
Gross Margin	41,813			35,794			80,246			70,018
Selling, general and administrative expenses	19,621			15,808			36,993			31,056
Research and development expenses	6,476			6,049			12,983			12,052
Restructuring charges	1,172			729			2,367			1,507
Operating earnings	14,544			13,208			27,903			25,403
Other income (expense):
Interest expense	(571		)	(752		)	(1,112		)	(1,436		)
Interest income	472			298			954			551
Other (expense) income, net	(2,874		)	1,170			(870		)	1,631
Total other (expense) income	(2,973		)	716			(1,028		)	746
Earnings before income taxes	11,571			13,924			26,875			26,149
Income tax expense	4,362			3,958			8,118			7,699
Net earnings	$	7,209		$	9,966		$	18,757		$	18,450
Earnings per share:
Basic	$	0.22		$	0.30		$	0.57		$	0.56
Diluted	$	0.21		$	0.30		$	0.56		$	0.55
Basic weighted – average common shares outstanding:	33,051			32,890			33,014			32,846
Effect of dilutive securities	513			461			513			493
Diluted weighted – average common shares outstanding	33,564			33,351			33,527			33,339
Cash dividends declared per share	$	0.04		$	0.04		$	0.08		$	0.08

See notes to unaudited condensed consolidated financial statements.

3

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME‑ UNAUDITED

(In thousands of dollars)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Net earnings	$	7,209		$	9,966		$	18,757		$	18,450
Other comprehensive income:
Changes in fair market value of derivatives, net of tax	67			(152		)	874			608
Changes in unrealized pension cost, net of tax	1,249			942			2,356			1,758
Cumulative translation adjustment, net of tax	(375		)	200			(132		)	288
Other comprehensive income	$	941		$	990		$	3,098		$	2,654
Comprehensive income	$	8,150		$	10,956		$	21,855		$	21,104

 See notes to unaudited condensed consolidated financial statements.

4

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)

	(Unaudited)
	June 30,			December 31,
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	102,861		$	113,572
Accounts receivable, net	75,597			70,584
Inventories, net	41,671			36,596
Other current assets	11,931			12,857
Total current assets	232,060			233,609
Property, plant and equipment, net	93,630			88,247
Other Assets
Prepaid pension asset	59,938			57,050
Goodwill	71,057			71,057
Other intangible assets, net	63,557			66,943
Deferred income taxes	20,188			20,694
Other	2,123			2,096
Total other assets	216,863			217,840
Total Assets	$	542,553		$	539,696
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	51,652			49,201
Accrued payroll and benefits	9,689			11,867
Accrued liabilities	43,805			41,344
Total current liabilities	105,146			102,412
Long-term debt	57,000			76,300
Long-term pension obligations	6,998			7,201
Deferred income taxes	3,572			3,802
Other long-term obligations	6,077			6,176
Total Liabilities	178,793			195,891
Commitments and Contingencies (Note 10)
Shareholders’ Equity
Common stock	306,570			304,777
Additional contributed capital	40,034			41,084
Retained earnings	436,274			420,160
Accumulated other comprehensive loss	(75,862		)	(78,960		)
Total shareholders’ equity before treasury stock	707,016			687,061
Treasury stock	(343,256		)	(343,256		)
Total shareholders’ equity	363,760			343,805
Total Liabilities and Shareholders’ Equity	$	542,553		$	539,696

See notes to unaudited condensed consolidated financial statements.

5

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ‑ UNAUDITED

(In thousands of dollars)

	Six Months Ended
	June 30,			June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	18,757		$	18,450
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	10,961			9,673
Pension and other post-retirement plan expense (income)	213			(893		)
Stock-based compensation	2,186			1,687
Deferred income taxes	(648		)	4,497
Loss on sales of fixed assets	2			1
(Gain) loss on foreign currency hedges, net of cash	(76		)	73
Changes in assets and liabilities:
Accounts receivable	(5,452		)	(1,950		)
Inventories	(5,275		)	(4,737		)
Other assets	1,280			(76		)
Accounts payable	4,779			1,616
Accrued payroll and benefits	(2,028		)	(4,735		)
Accrued expenses	247			(1,944		)
Income taxes payable	3,034			(347		)
Other liabilities	(101		)	2,115
Pension and other post-retirement plans	(158		)	(159		)
Net cash provided by operating activities	27,721			23,271
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(14,910		)	(9,110		)
Proceeds from sale of assets	1			1
Payments for acquisitions, net of cash acquired	—			(19,265		)
Net cash used in investing activities	(14,909		)	(28,374		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt	(749,200		)	(790,600		)
Proceeds from borrowings of long-term debt	729,900			794,300
Dividends paid	(2,638		)	(2,624		)
Taxes paid on behalf of equity award participants	(1,429		)	(1,569		)
Net cash used in financing activities	(23,367		)	(493		)
Effect of exchange rate changes on cash and cash equivalents	(156		)	(395		)
Net decrease in cash and cash equivalents	(10,711		)	(5,991		)
Cash and cash equivalents at beginning of period	113,572			113,805
Cash and cash equivalents at end of period	$	102,861		$	107,814
Supplemental cash flow information:
Cash paid for interest	$	995		$	1,053
Cash paid for income taxes, net	$	3,724		$	3,515

See notes to unaudited condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

(in thousands except for share and per share data)

June 30, 2018

NOTE 1—Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” "we", "our", "us" 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, 2017.

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.

Changes in Accounting Principles

Beginning in January 2018, CTS adopted the provisions of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required.

Beginning in April 2018, CTS elected to adopt the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings. Prior to adoption, the company measured hedge effectiveness for all cash flow hedges quarterly and recognized any ineffectiveness in earnings in the current period. Upon adoption the company elected to review hedge effectiveness qualitatively as described further in Note 12 - Derivative Financial Instruments. At the date of adoption there was no significant hedge ineffectiveness recorded in earnings for hedged assets existing as of January 1, 2018, and therefore no adjustment to the opening balance of retained earnings was required.

Subsequent Events

We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the consolidated financial statements are issued.

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NOTE 2 – Revenue Recognition

The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle:

• Identify the contract(s) with a customer

• Identify the performance obligations

• Determine the transaction price

• Allocate the transaction price

• Recognize revenue when the performance obligations are met

We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. None of our contracts as of June 30, 2018, contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Contract Assets and Liabilities

Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:

	As of
	June 30,			December 31,
	2018			2017
Contract Assets
Prepaid rebates included in Other current assets	$	64		$	52
Prepaid rebates included in Other assets	482			465
Total Contract Assets	$	546		$	517
Contract Liabilities
Customer discounts and price concessions included in Accrued liabilities	$	(2,323	)	$	(1,133	)
Customer rights of return included in Accrued liabilities	(341		)	(462		)
Total Contract Liabilities	$	(2,664	)	$	(1,595	)

During the three and six months ended June 30, 2018, we recognized a decrease of revenues of $46 and an increase in revenues of $86, respectively, that were included in contract liabilities at the beginning of the period.

The increase in contract liabilities as of June 30, 2018 is primarily due to net increases in estimated future discounts and price concessions, offset by net settlements of products sold with rights of return.

8

Disaggregated Revenue

The following table presents revenues disaggregated by the major markets we serve:

	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Aero & Defense	$	6,024	$	4,675	$	11,127	$	9,332
Industrial	22,773		19,214		43,129		36,326
Medical	9,793		7,474		19,034		14,288
Telecom & IT	5,525		5,602		10,050		10,780
Transportation	73,906		68,721		148,211		135,114
Total	$	118,021	$	105,686	$	231,551	$	205,840

NOTE 3 – Accounts Receivable

The components of accounts receivable are as follows:

	As of
	June 30,			December 31,
	2018			2017
Accounts receivable, gross	$	76,032		$	70,941
Less: Allowance for doubtful accounts	(435		)	(357		)
Accounts receivable, net	$	75,597		$	70,584

NOTE 4 – Inventories

Inventories consist of the following:

	As of
	June 30,			December 31,
	2018			2017
Finished goods	$	11,778		$	9,203
Work-in-process	12,008			12,065
Raw materials	23,529			21,150
Less: Inventory reserves	(5,644		)	(5,822		)
Inventories, net	$	41,671		$	36,596

9

NOTE 5 – Property, Plant and Equipment

Property, plant and equipment is comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Land	$	1,137		$	1,130
Buildings and improvements	68,778			64,201
Machinery and equipment	225,843			223,650
Less: Accumulated depreciation	(202,128		)	(200,734		)
Property, plant and equipment, net	$	93,630		$	88,247
Depreciation expense for the three months ended June 30, 2018				$	3,774
Depreciation expense for the six months ended June 30, 2018				$	7,537

NOTE 6 – Retirement Plans

Pension Plans

Net pension expense (income) for our domestic and foreign plans was as follows:

	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2018		2017			2018		2017
Net pension expense (income)	$	78	$	(491	)	$	157	$	(924	)

The components of net pension expense (income) for our domestic and foreign plans include the following: 

	DomesticPension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	11		$	12
Interest cost	1,781			2,068			11			9
Expected return on plan assets (1)	(3,225		)	(4,060		)	(6		)	(5		)
Amortization of loss	1,466			1,446			40			39
Expense (income), net	$	22		$	(546	)	$	56		$	55

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

	Domestic Pension Plans						Foreign Pension Plans
	Six Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	22		$	24
Interest cost	3,562			4,136			22			17
Expected return on plan assets (1)	(6,450		)	(8,121		)	(13		)	(10		)
Amortization of loss	2,932			2,892			82			77
Other cost due to retirement	—			61			—			—
Expense (income), net	$	44		$	(1,032	)	$	113		$	108

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

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Other Post-retirement Benefit Plan

Net post-retirement expense for our other post-retirement plan includes the following components:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	1		$	1
Interest cost	39			40			78			80
Amortization of gain	(11		)	(25		)	(23		)	(50		)
Expense, net	$	28		$	15		$	56		$	31

NOTE 7 – Other Intangible Assets

Intangible assets consist of the following components:

	As of
	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(35,387	)	$	28,936
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(12,039		)	32,421
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(57,745	)	$	63,557
Amortization expense for the three months ended June 30, 2018			$	1,704
Amortization expense for the six months ended June 30, 2018			$	3,424

	As of
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(33,685	)	$	30,638
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(10,355		)	34,105
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(54,359	)	$	66,943
Amortization expense for the three months ended June 30, 2017			$	1,613
Amortization expense for the three months ended June 30, 2017			$	3,149

11

Remaining amortization expense for other intangible assets as of June 30, 2018 is as follows: 

	Amortization expense
2018	$	3,377
2019	6,754
2020	6,624
2021	6,467
2022	6,230
Thereafter	34,105
Total amortization expense	$	63,557

NOTE 8 – Costs Associated with Exit and Restructuring Activities

Costs associated with exit and restructuring activities are recorded in the Condensed Consolidated Statement of Earnings as a separate component of Operating earnings. 

Total restructuring charges, all related to the June 2016 Plan described below, were as follows:

	Three Months Ended
	June 30, 2018		June 30, 2017
Restructuring charges	$	1,172	$	729

	Six Months Ended
	June 30, 2018		June 30, 2017
Restructuring charges	$	2,367	$	1,507

In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart facility by the end of 2018 and transitioning it into a research and development center supporting our global operations ("June 2016 Plan"). Additional organizational changes were also implemented in various other locations. During the third quarter of 2017, we revised the June 2016 Plan. The amendment added an additional $1,100 in planned costs related to the relocation of our corporate headquarters in Lisle, IL and our plant in Bolingbrook, IL, both of which will be consolidated into a single facility. The total cost of the plan is expected to be approximately $13,400. The total restructuring liability related to severance and other one-time benefit arrangements under the June 2016 Plan was $1,223 at June 30, 2018, and $1,460 at December 31, 2017. Additional costs related to production line movements, equipment charges, and other costs will be expensed as incurred.

The following table displays the planned restructuring charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through June 30, 2018:

			Actual costs
	Planned		incurred through
June 2016 Plan	Costs		June 30, 2018
Workforce reduction	$	3,075	$	3,211
Building and equipment relocation	9,025		5,518
Other charges	1,300		825
Total restructuring charges	$	13,400	$	9,554

In April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint (“April 2014 Plan”).  These restructuring actions were completed in 2015. The remaining restructuring liability related to the April 2014 Plan was $433 at June 30, 2018, and $453 at December 31, 2017.

12

The following table displays the restructuring liability activity for all plans for the six months ended June 30, 2018: 

Restructuring liability at January 1, 2018	$	1,913
Restructuring charges	2,367
Cost paid	(2,603		)
Other activity (1)	(21		)
Restructuring liability at June 30, 2018	$	1,656

(1) Other activity includes the effects of currency translation and other charges that do not flow through restructuring expense.

NOTE 9 – Accrued Liabilities

The components of accrued liabilities are as follows: 

	As of
	June 30,		December 31,
	2018		2017
Accrued product related costs	$	4,716	$	5,297
Accrued income taxes	8,512		5,475
Accrued property and other taxes	2,080		997
Accrued professional fees	3,055		2,228
Contract liabilities	2,664		1,595
Dividends payable	1,323		1,318
Remediation reserves	14,570		17,067
Other accrued liabilities	6,885		7,367
Total accrued liabilities	$	43,805	$	41,344

NOTE 10 – Contingencies

Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies, and in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently and formerly owned or operated by us. Some sites, such as Asheville, North Carolina and Mountain View, California, are designated National Priorities List sites under the U.S. Environmental Protection Agency’s Superfund program. We reserve for probable remediation activities and for claims and proceedings against us with respect to other environmental matters. We record reserves on an undiscounted basis. In the opinion of management, based upon presently available information relating to such matters, adequate provision for probable and estimable costs have been recorded. We do not have any known environmental obligations where a loss is probable or reasonably possible of occurring for which we do not have a reserve, nor do we have any amounts for which we have not reserved because the amount of the loss cannot be reasonably estimated. Due to the inherent nature of environmental obligations, we cannot provide assurance that our ultimate environmental liability will not materially exceed the amount of its current reserve. Our reserve and disclosures will be adjusted accordingly if additional information becomes available in the future.

A roll forward of remediation reserves included in accrued liabilities on the balance sheet is comprised of the following:

	As of
	June 30, 2018			December 31, 2017
Balance at beginning of period	$	17,067		$	18,176
Remediation expense	1,048			307
Net remediation payments	(3,545		)	(1,416		)
Balance at end of the period	$	14,570		$	17,067

Unrelated to the environmental claims described above, certain other claims are pending against us with respect to matters arising in the ordinary conduct of our business. Although the ultimate outcome of any potential litigation resulting from these claims cannot be predicted with certainty, and some may be disposed of unfavorably to us, we believe that adequate provision for anticipated costs have been established based upon all presently available information. Except as noted herein, we do not believe we have any pending loss contingencies that are probable or reasonably possible of having a material impact on our consolidated financial position, results of operations, or cash flows.

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NOTE 11 - Debt

Long-term debt was comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Total credit facility	$	300,000		$	300,000
Balance outstanding	$	57,000		$	76,300
Standby letters of credit	$	1,940		$	2,065
Amount available	$	241,060		$	221,635
Weighted-average interest rate	3.01		%	2.30		%
Commitment fee percentage per annum	0.25		%	0.25		%

On August 10, 2015, we entered into a five-year credit agreement (“Revolving Credit Facility”) with a group of banks in order to support our financing needs.  The Revolving Credit Facility originally provided for a credit line of $200,000. On May 23, 2016, we requested and received a $100,000 increase in the aggregate revolving credit commitments under the existing credit agreement, which increased the credit line from $200,000 to $300,000.  

The Revolving Credit Facility includes a swing line sublimit of $15,000 and a letter of credit sublimit of $10,000.  Borrowings under the Revolving Credit Facility bear interest, at our option, at the base rate plus the applicable margin for base rate loans or London Interbank Offered Rate ("LIBOR") plus the applicable margin for LIBOR loans.  We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility.  The commitment fee ranges from 0.20% to 0.40% based on the our total leverage ratio. 

The Revolving Credit Facility requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio.  Failure to comply with these covenants could reduce the borrowing availability under the Revolving Credit Facility.  We were in compliance with all debt covenants at June 30, 2018.  The Revolving Credit Facility requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the Revolving Credit Facility 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.  Interest rates on the Revolving Credit Facility fluctuate based upon the LIBOR and the Company’s quarterly total leverage ratio.  

We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. These costs are included in interest expense in our Condensed Consolidated Statement of Earnings. Amortization expense was approximately $46 for both the three months ended June 30, 2018 and June 30, 2017, respectively, and approximately $93 for both the six months ended June 30, 2018 and June 30, 2017, respectively. 

Note 12 - Derivative Financial Instruments

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks.

The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements.

The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other income (expense).

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On April 1, 2018, the company adopted the provisions of ASU 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". As a result, hedge effectiveness was reviewed qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Condensed Consolidated Statement of Earnings for the three months ended June 30, 2018.

Foreign Currency Hedges

In January of 2016, we began using forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheets at fair value.

We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At June 30, 2018, we had a net unrealized gain of $59 in accumulated other comprehensive (loss) income, of which $5 is expected to be reclassified to income within the next 12 months. At June 30, 2017 we had a net unrealized gain of $428 in accumulated other comprehensive (loss) income. The notional amount of foreign currency forward contracts outstanding was $21.1 million at June 30, 2018.

Interest Rate Swaps

We use interest rate swaps to convert the revolving credit facility’s variable rate of interest into a fixed rate. In the second quarter of 2012, CTS entered into four separate interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.

These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive (loss) income. The estimated net amount of the existing gains that are reported in accumulated other comprehensive (loss) income that are expected to be reclassified into earnings within the next twelve months is approximately $524. 

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of June 30, 2018, are shown in the following table:

	As of
	June 30,		December 31,
	2018		2017
Interest rate swaps reported in Other current assets	$	524	$	278
Interest rate swaps reported in Other assets	$	835	$	693
Foreign currency hedges reported in Other current assets	$	76	$	—
Foreign currency hedges reported in Accrued liabilities	$	—	$	(742	)

The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were foreign currency derivative assets of $301 and foreign currency derivative liabilities of $225.

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The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Foreign Exchange Contracts:
Gain (loss) recognized in Net sales	$	21		$	(57	)	$	(37	)	$	(59	)
Gain (loss) recognized in Cost of goods sold	32			58			140			(86		)
(Loss) gain recognized in Selling, general and administrative expense	(4		)	13			(5		)	10
Loss recognized in Other income	—			(1		)	(1		)	(9		)
Interest Rate Swaps:
Benefit recorded in Interest expense	$	105		$	—		$	170		$	—
Total gain (loss)	$	154		$	13		$	267		$	(144	)

NOTE 13 – Accumulated Other Comprehensive (Loss) Income

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

Unrealized gains (losses) on hedges relate to interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate and foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transactions occur, at which time amounts are reclassified into earnings.  Further information related to our derivative financial instruments is included in Note 12 - Derivative Financial Instruments and Note 16 – Fair Value Measurements.

Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized.  Amounts reclassified to income from AOCI are included in net periodic pension income / (expense).  Further information related to our pension obligations is included in Note 6 – Retirement Plans.

Cumulative translation adjustments relate to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income.  

Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses. Transaction losses for the three and six months ended June 30, 2018 were $2,194 and $918, respectively and transaction gains for the three and six months ended June 30, 2017 were $1,162 and $1,557, respectively, which have been included in other income (expense) in the Condensed Consolidated Statement of Earnings.

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The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2018			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	1,332		$	240		$	(154	)	$	1,418
Income tax (benefit) expense	(341		)	(54		)	35			(360		)
Net	991			186			(119		)	1,058
Changes in unrealized pension cost:
Gross	(128,672		)	—			1,617			(127,055		)
Income tax expense (benefit)	52,520			—			(368		)	52,152
Net	(76,152		)	—			1,249			(74,903		)
Cumulative translation adjustment:
Gross	(1,747		)	(368		)	—			(2,115		)
Income tax expense (benefit)	105			(7		)	—			98
Net	(1,642		)	(375		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(76,803	)	$	(189	)	$	1,130		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	1,308		$	(223	)	$	(15	)	$	1,070
Income tax (benefit) expense	(474		)	81			5			(388		)
Net	834			(142		)	(10		)	682
Changes in unrealized pension cost:
Gross	(150,322		)	—			1,466			(148,856		)
Income tax expense (benefit)	60,192			—			(524		)	59,668
Net	(90,130		)	—			942			(89,188		)
Cumulative translation adjustment:
Gross	(2,328		)	196			—			(2,132		)
Income tax expense	94			4			—			98
Net	(2,234		)	200			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(91,530	)	$	58		$	932		$	(90,540	)

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The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	289		$	1,397		$	(268	)	$	1,418
Income tax (benefit) expense	(105		)	(315		)	60			(360		)
Net	184			1,082			(208		)	1,058
Changes in unrealized pension cost:
Gross	(130,096		)	—			3,041			(127,055		)
Income tax expense (benefit)	52,837			—			(685		)	52,152
Net	(77,259		)	—			2,356			(74,903		)
Cumulative translation adjustment:
Gross	(1,985		)	(130		)	—			(2,115		)
Income tax expense (benefit)	100			(2		)	—			98
Net	(1,885		)	(132		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(78,960	)	$	950		$	2,148		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2016			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	116		$	819		$	135		$	1,070
Income tax benefit	(42		)	(297		)	(49		)	(388		)
Net	74			522			86			682
Changes in unrealized pension cost:
Gross	(151,618		)	—			2,762			(148,856		)
Income tax expense (benefit)	60,672			—			(1,004		)	59,668
Net	(90,946		)	—			1,758			(89,188		)
Cumulative translation adjustment:
Gross	(2,414		)	282			—			(2,132		)
Income tax expense	92			6			—			98
Net	(2,322		)	288			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(93,194	)	$	810		$	1,844		$	(90,540	)

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NOTE 14 – Shareholders’ Equity

Share count and par value data related to shareholders’ equity are as follows:

	As of
	June 30,	December 31,
	2018	2017
Preferred Stock
Par value per share	No par value	No par value
Shares authorized	25,000,000	25,000,000
Shares outstanding	—	—
Common Stock
Par value per share	No par value	No par value
Shares authorized	75,000,000	75,000,000
Shares issued	56,781,065	56,632,488
Shares outstanding	33,087,043	32,938,466
Treasury stock
Shares held	23,694,022	23,694,022

No common stock repurchases were made during the six months ended June 30, 2018. Through June 30, 2018, we had purchased an aggregate of $7,446 under a board-authorized share repurchase plan allowing for up to $25,000 in stock repurchases. Approximately $17,554 is available for future purchases.

A roll-forward of common shares outstanding is as follows:

	Six Months Ended
	June 30,	June 30,
	2018	2017
Balance at the beginning of the year	32,938,466	32,762,494
Repurchases	—	—
Shares issued upon exercise of stock options	—	—
Restricted share issuances	148,577	170,832
Balance at the end of the period	33,087,043	32,933,326

Certain potentially dilutive restricted stock units are excluded from diluted earning per share because they are anti-dilutive. The number of awards that were anti-dilutive at June 30, 2018 and June 30, 2017 were 72,658 and 122,511, respectively.

NOTE 15 - Stock-Based Compensation

At June 30, 2018, we had five active stock-based compensation plans: the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance & Incentive Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan").  Future grants can only be made under the 2018 Plan.

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The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings related to stock-based compensation plans:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Service-Based RSUs	$	563	$	465	$	1,018	$	1,015
Performance-Based RSUs	643		297		1,153		680
Cash-settled RSUs	57		46		15		(8		)
Total	$	1,263	$	808	$	2,186	$	1,687
Income tax benefit	285		304		494		634
Net	$	978	$	504	$	1,692	$	1,053

The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:

	Unrecognized
	Compensation		Weighted-
	Expense at		Average
	June 30, 2018		Period
Service-Based RSUs	$	1,973	1.94
Performance-Based RSUs	3,326		1.64
Total	$	5,299	1.75

We recognize 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.

The following table summarizes the status of these plans as of June 30, 2018:

	2018 Plan	2014 Plan	2009 Plan	2004 Plan	Directors' Plan
Awards originally available	2,500,000	1,500,000	3,400,000	6,500,000	N/A
Performance-based options outstanding	—	285,000	—	—	—
Maximum potential RSU and cash settled awards outstanding	—	732,975	92,600	35,952	5,522
Maximum potential awards outstanding	—	1,017,975	92,600	35,952	5,522
RSUs and cash settled awards vested and released	—	—	—	—	—
Awards available for grant	2,500,000	—	—	—	—

Stock Options

We have no stock options exercisable or outstanding as of June 30, 2018, other than the performance-based stock options described below.

Performance-Based Stock Options

During 2015 and 2016, the Compensation Committee of the Board of Directors of the Company (the “Committee”) granted a total of 350,000 performance-based stock option awards (“Performance-Based Option Awards”) for certain employees under the 2014 Plan, of which 285,000 remain outstanding after considering forfeitures.  The Performance-Based Option Awards have an exercise price of $18.37, a term of five years, and generally will become exercisable (provided the optionee remains employed by the Company or an affiliate) upon our attainment of at least $600,000 in revenues during any of our trailing four quarterly periods (as determined by the Committee) during the term.  We have not recognized any expense on these Performance-Based Option Awards

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for the six-month periods ended June 30, 2018 and 2017, since the revenue target was not deemed likely to be attained based on our current forecast.

Service-Based Restricted Stock Units

The following table summarizes the service-based RSU activity as of and for the six months ended June 30, 2018: 

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	399,347		$	14.60
Granted	74,222		26.31
Vested and released	(130,301	)	14.22
Forfeited	(1,938	)	20.86
Outstanding at June 30, 2018	341,330		$	17.26
Releasable at June 30, 2018	194,674		$	12.82

Performance and Market-Based Restricted Stock Units

The following table summarizes the performance and market-based RSU activity as of and for the six months ended June 30, 2018:

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	271,305		$	18.77
Granted	72,043		28.75
Attained by performance	18,600		17.66
Released	(72,456	)	18.66
Forfeited	(21,700	)	17.66
Outstanding at June 30, 2018	267,792		$	21.44
Releasable at June 30, 2018	—		$	—

The following table summarizes each grant of performance awards outstanding at June 30, 2018.

Description	Grant Date	Vesting Year	Vesting Dependency	Target Units Outstanding	Maximum Number of Units to be Granted
2016 - 2018 Performance RSUs	February 16, 2016	2018	35% RTSR, 35% sales growth, 30% operating cash flow	92,840	185,680
2017 - 2019 Performance RSUs	February 9, 2017	2019	35% RTSR, 35% sales growth, 30% operating cash flow	71,796	143,592
2017 - 2019 Performance RSUs	February 9, 2017	2018 - 2020	Operating Income	27,113	27,113
2018 - 2020 Performance RSUs	February 8, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	40,223	80,446
2018 - 2020 Performance RSUs	February 16, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	31,820	63,640
Single Crystal Performance RSUs	March 31, 2016	2018	Various	4,000	8,000

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Cash-Settled Restricted Stock Units

Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At June 30, 2018 and December 31, 2017 we had 17,248 and 14,082 cash-settled RSUs outstanding, respectively. At June 30, 2018 and December 31, 2017, liabilities of $184 and $241, respectively were included in Accrued liabilities on our Condensed Consolidated Balance Sheets.

NOTE 16 — Fair Value Measurements

We use interest rate swaps to convert our Revolving Credit Facility’s variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. These derivative financial instruments are measured at fair value on a recurring basis. 

The table below summarizes our financial assets that were measured at fair value on a recurring basis at June 30, 2018:

			Quoted
			Prices
	Asset		in Active		Significant
	Carrying		Markets for		Other		Significant
	Value at		Identical		Observable		Unobservable
	June 30,		Instruments		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Interest rate swaps	$	1,359	$	—	$	1,359	$	—
Foreign currency hedges	$	76	$	—	$	76	$	—

The table below summarizes the financial assets (liabilities) that were measured at fair value on a recurring basis as of December 31, 2017:

				Quoted
	Asset			Prices
	(Liability)			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	December 31,			Instruments		Inputs			Inputs
	2017			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	971		$	—	$	971		$	—
Foreign currency hedges	$	(742	)	$	—	$	(742	)	$	—

The fair value of our interest rate swaps and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy.

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The table below provides a reconciliation of the recurring financial assets (liabilities) for our derivative instruments:

				Foreign
	Interest			Currency
Total gains (losses) for the period:	Rate Swaps			Hedges
Balance at January 1, 2017	$	753		$	(601	)
Settled in cash	—			(132		)
Included in earnings	—			38
Included in other comprehensive earnings	218			(47		)
Balance at December 31, 2017	$	971		$	(742	)
Settled in cash	—			(21		)
Included in earnings	(170		)	97
Included in other comprehensive earnings	558			742
Balance at June 30, 2018	$	1,359		$	76

Our long-term debt consists of the Revolving Credit Facility which is recorded at its carrying value. There is a readily determinable market for our long-term 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 approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the Revolving Credit Facility.

NOTE 17 — Income Taxes

The effective tax rates for the three and six-month periods ended June 30, 2018 and 2017 were:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Effective tax rate	37.7	%	28.4	%	30.2	%	29.4	%

Our effective income tax rate was 37.7% and 28.4% in the second quarters of 2018 and 2017, respectively. The increase in the effective tax rate for the three months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by a reduction in our statutory tax rate as a result of the 2017 Tax and Jobs Act (the "Tax Act"). The tax rate in the second quarter of 2018 was higher than the U.S. statutory federal tax rate primarily due to foreign withholding taxes, state taxes and foreign earnings that are taxed at higher rates. The tax rate in the second quarter of 2017 was lower than the U.S. statutory federal tax rate primarily due to lower foreign tax rates applicable on foreign earnings.

Our effective income tax rate was 30.2% and 29.4% in the first half of 2018 and 2017, respectively. The increase in the effective tax rate for the six months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by the previously mentioned statutory tax rate reduction resulting from the Tax Act. The tax rate in the first half of 2018 was higher than the U.S. statutory federal tax rate primarily due to foreign withholding taxes, state taxes, and foreign earnings that are taxed at higher rates. The tax rate in the first half of 2017 was lower than the U.S. statutory federal tax rate primarily due to tax benefits recorded upon vesting of restricted stock units, a release of valuation allowances recorded against realizable foreign NOLs, and favorable tax rates on foreign earnings, offset by the impact of state taxes, tax expense for withholding taxes on the anticipated distribution of earnings in China, and other various permanent items.

We recognized the income tax effects of the Tax Act in the audited consolidated financial statements included in our 2017 Annual Report on Form 10-K. Staff Accounting Bulletin No. 118 provides Securities and Exchange Commission staff guidance for the application of ASC Topic 740, Income Taxes, which allows for a measurement period of up to one year from the enactment date for companies to complete their accounting for the U.S. tax law changes. As such, our 2017 financial results reflected a provisional amount of $6,267 that was recorded as deferred tax expense related to the revaluation of deferred tax assets and liabilities, and a provisional amount of $11,734 that was recorded as current tax expense related to the transition tax on the mandatory deemed repatriation of foreign earnings. During the three and six months ended June 30, 2018, we recognized measurement period adjustments that resulted in additional tax expense of $0 and $241, respectively. Any subsequent adjustments to our provisional estimated amounts will be recorded to tax expense in the quarter when the analysis is complete.

For the calendar year beginning in 2018, we are subject to several new provisions of the Tax Act including but not limited to the Global Intangible Low-Taxed Income (GILTI) tax. We have provisionally elected to account for any GILTI tax in the period in

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which it is incurred, and therefore have not provided any deferred tax impacts in our consolidated financial statements. For these computations, we have recorded an estimate in our effective tax rate for the three-months ended June 30, 2018. The company will continue to refine our estimates as additional guidance and information becomes available.

In general, outside of Canada and the U.K., it has been our historical practice to permanently reinvest the earnings of our non-U.S. subsidiaries into those operations. However, as a result of the Tax Act, we can repatriate our cumulative undistributed foreign earnings to the U.S. as needed with minimal U.S. income tax consequences other than the one-time deemed repatriation tax. We will continue to evaluate whether to repatriate all or a portion of the cumulative undistributed foreign earnings based on expansion needs and as circumstances change. We are still evaluating whether to change our indefinite reinvestment assertion in light of the Tax Act and consider that conclusion to be incomplete under guidance issued by SAB 118. If we subsequently change our assertion during the measurement period, we will account for the change in assertion as part of the Tax Act enactment.

Our continuing practice is to recognize interest and/or penalties related to income tax matters as income tax expense. For the three and six months ended June 30, 2018, and 2017, we recorded interest and penalties of $0 and $176, and $14 and $352, respectively.

NOTE 18 - Business Combinations

On May 15, 2017, we acquired 100% of the equity interest in Noliac A/S, a privately-held company, for $19.3 million in cash. Noliac A/S is a designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical, and defense industries. This acquisition enabled us to increase our product base within our ceramics product lines as well as expand our presence in the European market.

The purchase price of $19,121, net of cash acquired of $199, has been allocated to the assets acquired and liabilities assumed on the acquisition date based on their fair values.

	Fair Values at May 15, 2017
Current assets	$	2,836
Property, plant and equipment	580
Other assets	395
Goodwill	9,313
Intangible assets	9,142
Fair value of assets acquired	22,266
Less fair value of liabilities acquired	(3,145		)
Net cash paid	$	19,121

Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes.

We incurred $291 in transaction related costs during the six months ended June 30, 2017. These costs are included in selling, general and administrative costs in our Consolidated Statements of Earnings.

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NOTE 19 — Recent Accounting Pronouncements

ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income"

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for a reclassification from accumulated comprehensive income to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period for which financial statements have not been issued. We are evaluating the impact this ASU may have on our financial statements.

ASU 2017-12 "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities"

In August 2017, the FASB issued ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". This ASU is meant to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU also allows an entity to assess hedge effectiveness on a qualitative basis subsequent to the initial quantitative assessment if the facts and circumstances related to the hedging relationship have not changed such that the entity can assert qualitatively that the hedging relationship was and continues to be highly effective. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance. Any changes should be applied to all hedging relationships that exist at the date of adoption by applying a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year of adoption. Presentation and disclosure guidance is to be applied prospectively. We adopted the provisions of ASU 2017-12 as of April 1, 2018, see Note 1, Basis of Presentation.

ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost"

In March 2017, the FASB issued ASU No. 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and net Periodic Post-retirement Benefit Cost". This ASU is meant to improve the presentation of net periodic pension and net periodic post-retirement benefits costs. Currently, pension and post-retirement benefit costs are comprised of several components reflecting the different aspects of an employer's financial arrangements and cost of providing benefits to employees. These components are aggregated for reporting, but prior guidance does not prescribe where the net cost should be presented in the income statement or capitalized in assets. This ASU requires disaggregation of the service cost component from other components of net benefit cost and provides explicit guidance on how to present the service cost and other components in the income statement, allowing only the service cost component of net benefit costs to be eligible for capitalization. These amendments should be applied retrospectively for the presentation of service cost and other components of net periodic pension and net post-retirement benefit cost in the income statement and prospectively for the capitalization of service cost and net periodic pension cost and periodic post-retirement benefit in assets. We adopted this ASU as of January 1, 2018. It did not have a material impact on our financial statements because the service cost component of our pension cost is immaterial to our financial results on a prospective basis.

ASU 2017-04 "Intangibles -Goodwill and Other (Topic 305): Simplifying the Test for Goodwill Impairment"

In January 2017, the FASB issued ASU No. 2017-04 "Intangibles - Goodwill and Other (Topic 305): Simplifying the Test for Goodwill Impairment". This ASU is meant to simplify the subsequent measurement of goodwill for impairment by eliminating the current Step 2 analysis in computing the implied fair value of goodwill. In addition, this ASU requires an entity to consider income tax effects on any tax deductible goodwill on the carrying amount of the reporting unit when measuring an impairment loss, if applicable. Under this ASU, impairment is determined by comparing the reporting unit's fair value to the carrying value. This amendment is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect this guidance to have an impact on our financial statements.

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ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of Business"

In January 2017, the FASB issued ASU No. 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of Business". This ASU is meant to clarify the definition of a business to add guidance when determining when an acquisition or disposal should be accounted for as a sale of assets or business. This ASU provides a more robust framework to use in determining when a set of assets or activities should be classified as a business, providing more consistency in accounting for business or asset acquisitions. We adopted this ASU on January 1, 2018 and it will be applied to any business combinations subsequent to that date.

ASU 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory"

In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory". This ASU is meant to improve the accounting for the income tax effect of intra-entity transfers of assets other than inventory. Currently, U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset is sold to a third party. This ASU will now require companies to recognize the income tax effect of an intra-entity asset transfer (other than inventory) when the transaction occurs. This ASU is effective for public companies, for fiscal years beginning after December 15, 2019 and interim periods within those annual reporting periods. Early adoption is permitted and is to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements.

ASU 2016-15 "Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments"

In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments". This ASU reduces the diversity in reporting of eight specific cash flow issues due to accounting guidance that is unclear or does not exist. The eight issues relate to certain debt activities, business combination activities, insurance settlements and other various activities. We adopted this ASU as of January 1, 2018 and it did not have an impact on our financial statements.

ASU 2016-02 "Leases (Topic 842)"

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This amendment created a new Topic under the accounting standards codification to account for the provisions of the ASU. This amendment is meant to provide transparency and to improve comparability between entities. The ASU requires companies to record an asset and liability on the balance sheet for leases that were formerly designated as operating leases as well as leases designated as financing leases. The provisions of the ASU predominately change the recognition of leases for lessees; the provisions do not substantially change the accounting for lessors. This ASU will supersede the provisions of Topic 840 Leases.

The liability recorded for a lease is meant to recognize the lease payments and the asset as a right to use the underlying asset for the lease, including optional periods if it is reasonably certain the option will be exercised. Recording of the liability should be based on the present value of the lease payments. If a lease term is less than twelve months, a company is allowed to elect not to record the asset and liability. Expense related to these leases are to be amortized on a straight-line basis over the expected term of the lease.

Additionally, the provisions of this ASU provide additional guidance on separating lease terms from maintenance and other type of provisions that provide a good or service, accounting for sale-leaseback provisions, and leveraged leases.

Reporting in the cash flow statement remains virtually unchanged. Additional qualitative and quantitative disclosures are required.

These updates are required to be applied under a modified retrospective approach from the beginning of the earliest period presented in our financial statements upon adoption. The modified approach provides optional practical expedients that may be elected, which will allow companies to continue to account for leases under the previous guidance for leases that commenced prior to the effective date.

The provisions of this ASU are effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. We have begun the process of reviewing existing agreements and are evaluating the impact of this ASU on our financial statements. We expect certain operating leases to be recognized as assets and liabilities as a result of adopting the standard.

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

(in thousands, except percentages and per share amounts)

The following discussion should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and notes included under Item 1, as well as our Consolidated Financial Statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017.

Overview

CTS Corporation (“CTS”, “we”, “our” or “us”) is a leading designer and manufacturer of products that Sense, Connect and Move. We manufacture sensors, actuators, and electronic components in North America, Europe, and Asia, and provide engineered products to customers in the aerospace/defense, industrial, medical, telecommunications/IT, and transportation markets.

Results of Operations: Second Quarter 2018 versus Second Quarter 2017

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the quarters ended June 30, 2018, and June 30, 2017:

	Three Months Ended							Percent of		Percent of
	June 30,			June 30,		Percent		Net Sales –		Net Sales –
	2018			2017		Change		2018		2017
Net sales	$	118,021		$	105,686	11.7		100.0		100.0
Cost of goods sold	76,208			69,892		9.0		64.6		66.1
Gross margin	41,813			35,794		16.8		35.4		33.9
Selling, general and administrative expenses	19,621			15,808		24.1		16.6		15.0
Research and development expenses	6,476			6,049		7.1		5.5		5.7
Restructuring charges	1,172			729		60.8		1.0		0.7
Total operating expenses	27,269			22,586		20.7		23.1		21.4
Operating earnings	14,544			13,208		10.1		12.3		12.5
Total other (expense) income	(2,973		)	716		(515.2	)	(2.5	)	0.7
Earnings before income taxes	11,571			13,924		(16.9	)	9.8		13.2
Income tax expense	4,362			3,958		10.2		3.7		3.7
Net earnings	$	7,209		$	9,966	(27.7	)	6.1		9.5
Earnings per share:
Diluted net earnings per share	$	0.21		$	0.30

Sales were $118,021 in the second quarter of 2018, an increase of $12,335 or 11.7% from the second quarter of 2017. Sales to transportation markets increased $5,185 or 7.5%.  Other sales increased $7,150 or 19.3%. The Noliac acquisition, which was completed in May 2017, added $2,508 in sales in the second quarter of 2018 and $1,543 in the second quarter of 2017.  Changes in foreign exchange rates increased sales by $1,794 year-over-year due to the U.S. Dollar depreciating compared to the Euro and Chinese Renminbi and relating mostly to sales of transportation products.

Gross margin as a percent of sales was 35.4% in the second quarter of 2018 compared to 33.9% in the second quarter of 2017. Major drivers for the improvement include savings related to product line transfers and favorable foreign exchange impact. The second quarter of 2017 also included costs related to certain production rework issues resolved in the first quarter of 2017.

Selling, general and administrative ("SG&A") expenses were $19,621 or 16.6% of sales in the second quarter of 2018 versus $15,808 or 15.0% of sales in the second quarter of 2017. The 2018 SG&A costs include a $950 environmental charge, $525 for tax projects, a full quarter of amortization of intangibles and other operating costs associated with our Noliac acquisition, higher stock-based compensation, and non-cash pension expense versus income in 2017. The environmental charge relates to soil remediation at one of our older facilities in Asia.

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Research and development expenses were $6,476 or 5.5% of sales in the second quarter of 2018 compared to $6,049 or 5.7% of sales in the comparable quarter of 2017. Research and development expenses are focused on expanded applications of existing products and new product development as well as current product and process enhancements.

Restructuring charges were $1,172 or 1.0% of sales in the second quarter of 2018. The charges were mainly for building and equipment relocation, severance, and travel costs related to the restructuring of certain operations as part of the 2016 Restructuring Plan. Restructuring charges were $729 or 0.7% of sales in the first quarter of 2017.

Operating earnings were $14,544 or 12.3% of sales in the second quarter of 2018 compared to operating earnings of $13,208 or 12.5% of sales in the comparable quarter of 2017 as a result of the items discussed above.

Other income and expense items are summarized in the following table:

	Three Months Ended
	June 30,			June 30,
	2018			2017
Interest expense	$	(571	)	$	(752	)
Interest income	472			298
Other (expense) income, net	(2,874		)	1,170
Total other (expense) income	$	(2,973	)	$	716

Interest expense decreased mainly as a result of the reduction in debt year-over-year. Interest income increased due to higher interest rates. Other expense in the second quarter of 2018 was principally driven by foreign currency translation losses, mainly due to the appreciation of the U.S. Dollar compared to the Chinese Renminbi and Euro during the quarter.

	Three Months Ended
	June 30,		June 30,
	2018		2017
Effective tax rate	37.7	%	28.4	%

Our effective income tax rate was 37.7% and 28.4% in the second quarters of 2018 and 2017, respectively. The increase in the effective tax rate for the three months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by a reduction in our statutory tax rate as a result of the 2017 Tax and Jobs Act.

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Results of Operations: Six Months EndedJune 30, 2018 versus Six Months Ended June 30, 2017

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the six months ended June 30, 2018, and June 30, 2017:

	Six Months Ended							Percent of		Percent of
	June 30,			June 30,		Percent		Net Sales –		Net Sales –
	2018			2017		Change		2018		2017
Net sales	$	231,551		$	205,840	12.5		100.0		100.0
Cost of goods sold	151,305			135,822		11.4		65.3		66.0
Gross margin	80,246			70,018		14.6		34.7		34.0
Selling, general and administrative expenses	36,993			31,056		19.1		16.0		15.1
Research and development expenses	12,983			12,052		7.7		5.6		5.9
Restructuring charges	2,367			1,507		57.1		1.0		0.7
Total operating expenses	52,343			44,615		17.3		22.6		21.7
Operating earnings	27,903			25,403		9.8		12.1		12.3
Total other (expense) income	(1,028		)	746		(237.8	)	(0.4	)	0.4
Earnings before income taxes	26,875			26,149		2.8		11.6		12.7
Income tax expense	8,118			7,699		5.4		3.5		3.7
Net earnings	$	18,757		$	18,450	1.7		8.1		9.0
Earnings per share:
Diluted net earnings per share	$	0.56		$	0.55

Sales were $231,551 in the six months ended June 30, 2018, an increase of $25,711 or 12.5% from the six months ended June 30, 2017. Sales to transportation markets increased $13,097 or 9.7%. Other sales increased $12,614 or 17.8%. The Noliac acquisition, which was completed in May 2017, added $5,104 in sales in the first half of 2018 and $1,543 in the first half of 2017.  Changes in foreign exchange rates increased sales by $4,558 year-over-year due to the U.S. Dollar depreciating compared to the Euro and Chinese Renminbi and relating mostly to sales of transportation products.

Gross margin as a percent of sales was 34.7% in the first half of 2018 compared to 34.0% in the first half of 2017. Major drivers for the improvement include savings related to product line transfers and favorable foreign exchange impact. The first half of 2017 also included costs related to certain production rework issues resolved in the first quarter of 2017.

Selling, general and administrative expenses were $36,993 or 16.0% of sales in the six months ended June 30, 2018 versus $31,056 or 15.1% of sales in the comparable year-to-date period in 2017. The 2018 SG&A costs include a $950 environmental charge, $840 for tax projects, amortization of intangibles and other operating costs associated with our Noliac acquisition, higher stock-based compensation, and non-cash pension expense versus income in 2017. The environmental charge relates to soil remediation at one of our older facilities in Asia.

Research and development expenses were $12,983 or 5.6% of sales in the six months ended June 30, 2018 compared to $12,052 or 5.9% of sales in the comparable prior year period. Research and development expenses are focused on expanded applications of existing products and new product development as well as current product and process enhancements. 

Restructuring charges were $2,367 or 1.0% of sales in the first half of 2018. The charges were mainly for building and equipment relocation, severance, and travel costs related to the restructuring of certain operations as part of the 2016 Restructuring Plan. Restructuring charges were $1,507 or 0.7% of sales in the first half of 2017.

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Other income and expense items are summarized in the following table:

	Six Months Ended
	June 30,			June 30,
	2018			2017
Interest expense	$	(1,112	)	$	(1,436	)
Interest income	954			551
Other (expense) income, net	(870		)	1,631
Total other (expense) income	$	(1,028	)	$	746

Interest expense decreased in the first six months of 2018 versus the same period of 2017 mainly as a result of the reduction in debt year-over-year. Interest income increased due to higher interest rates. Other expense in the first six months of 2018 was principally driven by foreign currency translation losses, mainly due to the appreciation of the U.S. Dollar compared to the Chinese Renminbi and Euro during the first half of the year.

	Six Months Ended
	June 30,		June 30,
	2018		2017
Effective tax rate	30.2	%	29.4	%

Our effective income tax rate was 30.2% and 29.4% in the first half of 2018 and 2017, respectively. The increase in the effective tax rate for the six months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by a reduction in our statutory tax rate as a result of the 2017 Tax and Jobs Act.

Liquidity and Capital Resources

Cash and cash equivalents were $102,861 at June 30, 2018, and $113,572 at December 31, 2017, of which $94,507 and $112,531, respectively, were held outside the United States. The decrease in cash and cash equivalents of $10,711 was primarily driven by capital expenditures of $14,910 and net long-term debt payments of $19,300, which were partially offset by cash generated from operating activities of $27,721. Total long-term debt was $57,000 as of June 30, 2018 and $76,300 as of December 31, 2017. Total debt as a percentage of total capitalization, defined as long-term debt as a percentage of total debt and shareholders' equity, was 13.5% at June 30, 2018, compared to 18.2% at December 31, 2017.

Working capital decreased by $4,283 during the six months ended June 30, 2018, primarily due the decrease in cash and cash equivalents as well as the increase in accounts payable, which were partially offset by higher accounts receivable and inventory.

Cash Flows from Operating Activities

Net cash provided by operating activities was $27,721 during the first six months of 2018. Components of net cash provided by operating activities included net earnings of $18,757, depreciation and amortization expense of $10,961, other net non-cash items of $1,677, and a net cash outflow from changes in assets and liabilities of $3,674.

Cash Flows from Investing Activities

Net cash used in investing activities for the first six months of 2018 was $14,909, driven almost entirely by capital expenditures relating to our ongoing ERP project and production line movements.

Cash Flows from Financing Activities

Net cash used in financing activities for the first six months of 2018 was $23,367. These cash outflows were the result of net long-term debt payments of $19,300, dividend payments of $2,638, and taxes paid on behalf of equity award participants in the amount of $1,429.

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Capital Resources

Long‑term debt was comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Total credit facility	$	300,000		$	300,000
Balance outstanding	$	57,000		$	76,300
Standby letters of credit	$	1,940		$	2,065
Amount available	$	241,060		$	221,635
Weighted-average interest rate	3.01		%	2.30		%
Commitment fee percentage per annum	0.25		%	0.25		%

On August 10, 2015, we entered into a five-year credit agreement (“Revolving Credit Facility”) with a group of banks in order to support our financing needs.  The Revolving Credit Facility originally provided for a credit line of $200,000. On May 23, 2016, we requested and received a $100,000 increase in the aggregate revolving credit commitments under the existing credit agreement, which increased the credit line from $200,000 to $300,000. 

The Revolving Credit Facility requires, among other things, that CTS comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio.  Failure to comply with these covenants could reduce the borrowing availability under the Revolving Credit Facility.  We were in compliance with all debt covenants at June 30, 2018. 

We use interest rate swaps to convert the Revolving Credit Facility’s variable rate of interest into a fixed rate. In the second quarter of 2012, we entered into four separate interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional forward-starting interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.

In general, other than in Canada and the U.K., it has been our historical practice to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations. However, as a result of the Tax Cuts and Jobs Act (the "Act"), we can repatriate our cumulative undistributed foreign earnings to the U.S. when needed with minimal U.S. income tax consequences other than the one-time deemed repatriation charge. We will continue to evaluate whether to repatriate all or a portion of the cumulative undistributed foreign earnings based on our business needs. We are still evaluating whether to change our indefinite reinvestment assertion in light of the Act and consider that conclusion to be incomplete under guidance issued by SAB 118. If we subsequently change our assertion during the measurement period, we will account for the change in assertion as a change in estimate related to the enactment of the Act.

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

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Critical Accounting Policies and Estimates

Management prepared the consolidated financial statements of CTS under accounting principles generally accepted in the United States of America. These principles require the use of estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions we used are reasonable, based upon the information available.

Our estimates and assumptions affect the reported amounts in our financial statements. The following accounting policies comprise those that we believe are the most critical in understanding and evaluating our reported financial results.

Revenue Recognition

We recognize revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process specified in Accounting Standard Codification ("ASC") Topic 606:

• Identify the contract(s) with a customer

• Identify the performance obligations

• Determine the transaction price

• Allocate the transaction price

• Recognize revenue when the performance obligations are met

Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract. We recognize revenue when (or as) the performance obligation has been satisfied after considering the impact of variable consideration and other factors that may affect the transaction price. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

Product Warranties

Provisions for estimated warranty expenses related to our automotive products are made at the time products are sold. These estimates are established using a quoted industry rate. We adjust our warranty reserve for any known or anticipated warranty claims as new information becomes available. We evaluate our warranty obligations at least quarterly and adjust our accruals if it is probable that future costs will be different than our current reserve.

Accounts Receivable

We have standardized credit granting and review policies and procedures for all customer accounts, including:

• Credit reviews of all new customer accounts,

• Ongoing credit evaluations of current customers,

• Credit limits and payment terms based on available credit information,

• Adjustments to credit limits based upon payment history and the customer's current credit worthiness,

• An active collection effort by regional credit functions, reporting directly to the corporate financial officers, and;

• Limited credit insurance on the majority of our international receivables.

We reserve for estimated credit losses based on historical experience and specific customer collection issues. Over the last three years, accounts receivable reserves have been approximately 0.2% to 0.7% of total accounts receivable. We believe our reserve level is appropriate considering the quality of the portfolio. While credit losses have historically been within expectations and the reserves established, we cannot guarantee that our credit loss experience will continue to be consistent with historical experience.

Inventories

We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out ("FIFO") method, or net realizable value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on forecasts of product demand and production requirements.

Over the last three years, our reserves for excess and obsolete inventories have ranged from 11.9% to 20.1% of gross inventory. We believe our reserve level is appropriate considering the quantities and quality of the inventories.

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Retirement Plans

Actuarial assumptions are used in determining pension income and expense and our pension benefit obligation. We utilize actuaries from consulting companies in each applicable country to develop our discount rates that match high-quality bonds currently available and expected to be available during the period to maturity of the pension benefit in order to provide the necessary future cash flows to pay the accumulated benefits when due. After considering the recommendations of our actuaries, we have assumed a discount rate, expected rate of return on plan assets and a rate of compensation increase in determining our annual pension income and expense and the projected benefit obligation. During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. Changes in the actuarial assumptions could have a material effect on our results of operations.

Valuation of Goodwill

Goodwill of a reporting unit is tested for impairment annually, or more frequently, if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include, but are not limited to, the following:

• Significant decline in market capitalization relative to net book value,

• Significant adverse change in legal factors or in the business climate,

• Adverse action or assessment by a regulator,

• Unanticipated competition,

• More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of,

• Testing for recoverability of a significant asset group within a reporting unit, and

• Allocation of a portion of goodwill to a business to be disposed.

If we believe that one or more of the above indicators of impairment have occurred, we perform an impairment test. The test involves comparing the fair values of our reporting units with their carrying values. We recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, but only to the extent of goodwill recognized.

We generally determine the fair value of our reporting units using two valuation methods: "Income Approach — Discounted Cash Flow Method" and "Market Approach — Guideline Public Company Method". The approach defined below is based upon our last impairment test conducted as of October 1, 2017.

Under the "Income Approach — Discounted Cash Flow Method", the key assumptions include sales, cost of sales, and operating expense projections through the year 2021. These assumptions were determined by management utilizing our internal operating plan and assuming growth rates for revenues, operating expenses, and gross margin assumptions. The fourth key assumption under this approach is the discount rate, which is determined by looking at current risk-free rates, current market interest rates and the evaluation of risk premium relevant to the business segment. If any of our assumptions were to change or were incorrect, our fair value calculation may change, which could result in impairment.

Under the "Market Approach — Guideline Public Company Method", we identified eight publicly traded companies which we believe have significant relevant similarities to CTS. For these eight companies, we calculated a range of EBITDA multiples derived from the ratio of enterprise value to EBITDA and compared these multiples to the corresponding multiples for each of our reporting units. Similar to the income approach discussed above, sales, cost of sales, operating expenses and growth rates were key assumptions utilized in developing projected EBITDA levels for each of our reporting units. The market prices of CTS and the other guideline company's shares are also key assumptions as they are used to calculate enterprise value. The Market approach is based upon historical and current economic conditions, which might not reflect the long-term prospects or opportunities for our reporting units being evaluated.

The results of these two methods are weighted based upon management's determination.

If the carrying amount of a reporting unit exceeds the reporting unit's fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment loss, if any. This involves comparing the implied fair value of the affected reporting unit's goodwill with the carrying value of that goodwill.

There have not been any significant changes to our impairment testing methodology other than updates to the assumptions to reflect the current market environment. Based upon our latest assessment, we determined that our goodwill was not impaired as of October 1, 2017. We will monitor future results and will perform a test if indicators trigger an impairment review.

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Valuation of Other Intangible and Long-Lived Assets

We evaluate the impairment of identifiable intangibles and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that may trigger an impairment review consist of, but are not limited to, the following:

• Significant decline in market capitalization relative to net book value,

• Significant underperformance relative to expected historical or projected future operating results,

• Significant changes in the manner of use of the acquired assets or the strategy for the overall business,

• Significant negative industry or economic trends.

If we believe that one or more indicators of impairment have occurred, we perform a recoverability test by comparing the carrying amount of an asset or asset group to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value. No indicators of impairment were identified as of June 30, 2018.

Income Taxes

Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of its technical merits.  We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Our practice is to recognize interest and penalties related to income tax matters as part of income tax expense.

We earn a significant amount of our operating income outside of the U.S., which is generally deemed to be permanently reinvested in foreign jurisdictions except in Canada and the U.K. In 2015, as a result of changes in the business, the foreign earnings of these two subsidiaries were no longer permanently reinvested. Therefore, a provision for the expected taxes on repatriation of those earnings was recorded. However, as a result of the Tax Cuts and Jobs Act, we can repatriate our cumulative undistributed foreign earnings back to the U.S. when needed with minimal U.S. income tax consequences other than the one-time deemed repatriation charge. We will continue to evaluate whether to repatriate all or a portion of the cumulative undistributed foreign earnings based on expansion needs and as circumstances change. We are still evaluating whether to change our indefinite reinvestment assertion in light of the Act and consider that conclusion to be incomplete under guidance issued by SAB 118. If we subsequently change our assertion during the measurement period, we will account for the change in assertion as a change in estimate related to enactment of the Act.

34

Significant Customers

Our net sales to customers representing at least 10% of total net sales were as follows:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Cummins Inc.	14.0	%	13.2	%	14.1	%	13.0	%
Toyota Motor Corporation	10.8	%	10.0	%	11.0	%	10.4	%
Honda Motor Co.	9.7	%	10.7	%	10.3	%	10.3	%

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 and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. 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: changes in the economy generally and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition our business; 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 disasters or other events; the ability to protect our intellectual property; pricing pressures and demand for our products; unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters as well as any product liability claims; 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 1A. of CTS' Annual Report on Form 10‑K for the fiscal year ended December 31, 2017. 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.

35

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk since December 31, 2017.

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 June 30, 2018.

Changes in Internal Control Over Financial Reporting

Beginning January 1, 2018, we adopted ASC 606 "Revenue from Contracts with Customers". It is expected to have an immaterial impact on our ongoing net income; however, we implemented changes to our processes related to revenue recognition and related internal controls. These changes included the development of new policies related to the five-step model, training, ongoing contract review requirements, and gathering of information to comply with disclosure requirements.  

PART II - OTHER INFORMATION

Not applicable

Item 1. Legal Proceedings

From time to time we are involved in litigation with respect to matters arising from the ordinary conduct of our business, and currently certain claims are pending against us. In the opinion of management, based upon presently available information, either adequate provision for anticipated costs have been accrued or the ultimate anticipated costs will not materially affect our consolidated financial position, results of operations, or cash flows.

Item 1A. Risk Factors

There have been no significant changes to our risk factors since December 31, 2017.

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

On April 27, 2015, we announced that our Board of Directors authorized an expansion to its repurchase program by authorizing the purchase of an additional $25 million dollars of its common stock in the open market.   This authorization has no expiration. As shown in the following table, there were no stock repurchases during the quarter ended June 30, 2018.

			(c)
			Total Number	(d)
	(a)		of Shares	Maximum Dollar Value
	Total Number of	(b)	Purchased as	of Shares That May Yet Be
	Shares	Average Price	Part of Plans or	Purchased Under the
	Purchased	Paid per Share	Program	Plans or Programs(2)
Balance at December 31, 2017				$	17,554
January 1, 2018 - June 30, 2018	—	—	—	$	—
Total	—	—	—	$	17,554

36

Item 6.  Exhibits

(10)(a)	CTS Corporation Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on February 18, 2015).
(10)(b)	CTS Corporation 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on May 22, 2018).
(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.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/ William M. Cahill	/s/ Ashish Agrawal
William M. Cahill Chief Accounting Officer	Ashish Agrawal Vice President and Chief Financial Officer
(Principal Accounting Officer)	(Principal Financial Officer)
Dated: July 26, 2018	Dated: July 26, 2018

37

EX-31.A

EXHIBIT (31)(a)

CERTIFICATION

I, Kieran O’Sullivan, certify that:

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

2. 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;

3. 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;

4. 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

5. 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, 2018	/s/ Kieran O’Sullivan
	Kieran O’Sullivan
	Chairman, President and Chief Executive Officer

EX-31.B

EXHIBIT (31)(b)

CERTIFICATION

I, Ashish Agrawal, certify that:

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

2. 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;

3. 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;

4. 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

5. 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, 2018	/s/Ashish Agrawal
	Ashish Agrawal
	Vice President and Chief Financial Officer

EX-32.A

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 June 30, 2018, 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, 2018	/s/ Kieran O’Sullivan
	Kieran O’Sullivan
	Chairman, 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

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

In connection with the quarterly report of CTS Corporation (the Company) on Form 10-Q for the quarter ended June 30, 2018, 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, 2018	/s/Ashish Agrawal
	Ashish Agrawal
	Vice President and Chief Financial 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.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 23, 2018
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	CTS
Entity Registrant Name	CTS CORP
Entity Central Index Key	0000026058
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		33,087,043

XML

Consolidated Statements of Earnings - Unaudited - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Net sales	$ 118,021	$ 105,686	$ 231,551	$ 205,840
Cost of goods sold	76,208	69,892	151,305	135,822
Gross Margin	41,813	35,794	80,246	70,018
Selling, general and administrative expenses	19,621	15,808	36,993	31,056
Research and development expenses	6,476	6,049	12,983	12,052
Restructuring charges	1,172	729	2,367	1,507
Operating earnings	14,544	13,208	27,903	25,403
Other income (expense):
Interest expense	(571)	(752)	(1,112)	(1,436)
Interest income	472	298	954	551
Other income, net	(2,874)	1,170	(870)	1,631
Total other income	(2,973)	716	(1,028)	746
Earnings before income taxes	11,571	13,924	26,875	26,149
Income tax expense	4,362	3,958	8,118	7,699
Net earnings	$ 7,209	$ 9,966	$ 18,757	$ 18,450
Earnings per share:
Basic (in dollars per share)	$ 0.22	$ 0.30	$ 0.57	$ 0.56
Diluted (in dollars per share)	$ 0.21	$ 0.30	$ 0.56	$ 0.55
Basic weighted - average common shares outstanding (in shares):	33,051	32,890	33,014	32,846
Effect of dilutive securities (in shares)	513	461	513	493
Diluted weighted - average common shares outstanding (in shares)	33,564	33,351	33,527	33,339
Cash dividends declared per share (in dollars per share)	$ 0.04	$ 0.04	$ 0.08	$ 0.08

XML

Condensed Consolidated Statements of Comprehensive Earnings - Unaudited - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net earnings	$ 7,209	$ 9,966	$ 18,757	$ 18,450
Other comprehensive income:
Changes in fair market value of derivatives, net of tax	67	(152)	874	608
Changes in unrealized pension cost, net of tax	1,249	942	2,356	1,758
Cumulative translation adjustment, net of tax	(375)	200	(132)	288
Other comprehensive income	941	990	3,098	2,654
Comprehensive earnings	$ 8,150	$ 10,956	$ 21,855	$ 21,104

XML

Condensed Consolidated Balance Sheets - Unaudited - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 102,861	$ 113,572
Accounts receivable, net	75,597	70,584
Inventories, net	41,671	36,596
Other current assets	11,931	12,857
Total current assets	232,060	233,609
Property, plant and equipment, net	93,630	88,247
Other Assets
Prepaid pension asset	59,938	57,050
Goodwill	71,057	71,057
Other intangible assets, net	63,557	66,943
Deferred income taxes	20,188	20,694
Other	2,123	2,096
Total other assets	216,863	217,840
Total Assets	542,553	539,696
Current Liabilities
Accounts payable	51,652	49,201
Accrued payroll and benefits	9,689	11,867
Accrued liabilities	43,805	41,344
Total current liabilities	105,146	102,412
Long-term debt	57,000	76,300
Long-term pension obligations	6,998	7,201
Deferred Tax Liabilities, Net, Noncurrent	3,572	3,802
Other long-term obligations	6,077	6,176
Total Liabilities	178,793	195,891
Shareholders’ Equity
Common stock	306,570	304,777
Additional contributed capital	40,034	41,084
Retained earnings	436,274	420,160
Accumulated other comprehensive loss	(75,862)	(78,960)
Total shareholders’ equity before treasury stock	707,016	687,061
Treasury stock	(343,256)	(343,256)
Total shareholders’ equity	363,760	343,805
Total Liabilities and Shareholders’ Equity	$ 542,553	$ 539,696

XML

Condensed Consolidated Statements of Cash Flows - Unaudited - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 18,757	$ 18,450
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	10,961	9,673
Pension and Other Postretirement Expense (Income)	213	(893)
Stock-based compensation	2,186	1,687
Deferred income taxes	(648)	4,497
Gain (Loss) on Disposition of Assets	(2)	(1)
Gain on foreign currency hedges, net of cash	(76)	73
Changes in assets and liabilities:
Accounts receivable	(5,452)	(1,950)
Inventories	(5,275)	(4,737)
Other assets	1,280	(76)
Accounts payable	4,779	1,616
Accrued payroll and benefits	(2,028)	(4,735)
Accrued expenses	247	(1,944)
Income taxes payable	3,034	(347)
Other liabilities	(101)	2,115
Pension and other post-retirement plans	(158)	(159)
Net cash provided by operating activities	27,721	23,271
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(14,910)	(9,110)
Proceeds from sale of assets	1	1
Payments for acquisitions, net of cash acquired	0	(19,265)
Net cash used in investing activities	(14,909)	(28,374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt	(749,200)	(790,600)
Proceeds from borrowings of long-term debt	729,900	794,300
Dividends paid	(2,638)	(2,624)
Net cash (used in) provided by financing activities	(23,367)	(493)
Payments Related to Tax Withholding for Share-based Compensation	(1,429)	(1,569)
Effect of exchange rate changes on cash and cash equivalents	(156)	(395)
Net increase in cash and cash equivalents	(10,711)	(5,991)
Cash and cash equivalents at beginning of period	113,572	113,805
Cash and cash equivalents at end of period	102,861	107,814
Supplemental cash flow information:
Cash paid for interest	995	1,053
Cash paid for income taxes, net	$ 3,724	$ 3,515

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” "we", "our", "us" 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, 2017.

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.

Changes in Accounting Principles

Beginning in January 2018, CTS adopted the provisions of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required.

Beginning in April 2018, CTS elected to adopt the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings. Prior to adoption, the company measured hedge effectiveness for all cash flow hedges quarterly and recognized any ineffectiveness in earnings in the current period. Upon adoption the company elected to review hedge effectiveness qualitatively as described further in Note 12 - Derivative Financial Instruments. At the date of adoption there was no significant hedge ineffectiveness recorded in earnings for hedged assets existing as of January 1, 2018, and therefore no adjustment to the opening balance of retained earnings was required.

Subsequent Events

We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the consolidated financial statements are issued.

XML

Revenue Recognition (Notes)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue Recognition

The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle:

• Identify the contract(s) with a customer

• Identify the performance obligations

• Determine the transaction price

• Allocate the transaction price

• Recognize revenue when the performance obligations are met

We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. None of our contracts as of June 30, 2018, contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Contract Assets and Liabilities

Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:

	As of
	June 30,			December 31,
	2018			2017
Contract Assets
Prepaid rebates included in Other current assets	$	64		$	52
Prepaid rebates included in Other assets	482			465
Total Contract Assets	$	546		$	517
Contract Liabilities
Customer discounts and price concessions included in Accrued liabilities	$	(2,323	)	$	(1,133	)
Customer rights of return included in Accrued liabilities	(341		)	(462		)
Total Contract Liabilities	$	(2,664	)	$	(1,595	)

During the three and six months ended June 30, 2018, we recognized a decrease of revenues of $46 and an increase in revenues of $86, respectively, that were included in contract liabilities at the beginning of the period.

The increase in contract liabilities as of June 30, 2018 is primarily due to net increases in estimated future discounts and price concessions, offset by net settlements of products sold with rights of return.

Disaggregated Revenue

The following table presents revenues disaggregated by the major markets we serve:

	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Aero & Defense	$	6,024	$	4,675	$	11,127	$	9,332
Industrial	22,773		19,214		43,129		36,326
Medical	9,793		7,474		19,034		14,288
Telecom & IT	5,525		5,602		10,050		10,780
Transportation	73,906		68,721		148,211		135,114
Total	$	118,021	$	105,686	$	231,551	$	205,840

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Accounts Receivable

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

The components of accounts receivable are as follows:

	As of
	June 30,			December 31,
	2018			2017
Accounts receivable, gross	$	76,032		$	70,941
Less: Allowance for doubtful accounts	(435		)	(357		)
Accounts receivable, net	$	75,597		$	70,584

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Inventories

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	As of
	June 30,			December 31,
	2018			2017
Finished goods	$	11,778		$	9,203
Work-in-process	12,008			12,065
Raw materials	23,529			21,150
Less: Inventory reserves	(5,644		)	(5,822		)
Inventories, net	$	41,671		$	36,596

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment is comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Land	$	1,137		$	1,130
Buildings and improvements	68,778			64,201
Machinery and equipment	225,843			223,650
Less: Accumulated depreciation	(202,128		)	(200,734		)
Property, plant and equipment, net	$	93,630		$	88,247
Depreciation expense for the three months ended June 30, 2018				$	3,774
Depreciation expense for the six months ended June 30, 2018				$	7,537

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Retirement Plans

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Retirement Plans

Retirement Plans

Pension Plans

Net pension expense (income) for our domestic and foreign plans was as follows:

	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2018		2017			2018		2017
Net pension expense (income)	$	78	$	(491	)	$	157	$	(924	)

The components of net pension expense (income) for our domestic and foreign plans include the following: 

	DomesticPension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	11		$	12
Interest cost	1,781			2,068			11			9
Expected return on plan assets (1)	(3,225		)	(4,060		)	(6		)	(5		)
Amortization of loss	1,466			1,446			40			39
Expense (income), net	$	22		$	(546	)	$	56		$	55

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

	Domestic Pension Plans						Foreign Pension Plans
	Six Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	22		$	24
Interest cost	3,562			4,136			22			17
Expected return on plan assets (1)	(6,450		)	(8,121		)	(13		)	(10		)
Amortization of loss	2,932			2,892			82			77
Other cost due to retirement	—			61			—			—
Expense (income), net	$	44		$	(1,032	)	$	113		$	108

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

Other Post-retirement Benefit Plan

Net post-retirement expense for our other post-retirement plan includes the following components:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	1		$	1
Interest cost	39			40			78			80
Amortization of gain	(11		)	(25		)	(23		)	(50		)
Expense, net	$	28		$	15		$	56		$	31

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Other Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

Other Intangible Assets

Intangible assets consist of the following components:

	As of
	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(35,387	)	$	28,936
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(12,039		)	32,421
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(57,745	)	$	63,557
Amortization expense for the three months ended June 30, 2018			$	1,704
Amortization expense for the six months ended June 30, 2018			$	3,424

	As of
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(33,685	)	$	30,638
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(10,355		)	34,105
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(54,359	)	$	66,943
Amortization expense for the three months ended June 30, 2017			$	1,613
Amortization expense for the three months ended June 30, 2017			$	3,149

Remaining amortization expense for other intangible assets as of June 30, 2018 is as follows: 

	Amortization expense
2018	$	3,377
2019	6,754
2020	6,624
2021	6,467
2022	6,230
Thereafter	34,105
Total amortization expense	$	63,557

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Costs Associated with Exit and Restructuring Activities

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Costs Associated with Exit and Restructuring Activities

Costs Associated with Exit and Restructuring Activities

Costs associated with exit and restructuring activities are recorded in the Condensed Consolidated Statement of Earnings as a separate component of Operating earnings. 

Total restructuring charges, all related to the June 2016 Plan described below, were as follows:

	Three Months Ended
	June 30, 2018		June 30, 2017
Restructuring charges	$	1,172	$	729

	Six Months Ended
	June 30, 2018		June 30, 2017
Restructuring charges	$	2,367	$	1,507

In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart facility by the end of 2018 and transitioning it into a research and development center supporting our global operations ("June 2016 Plan"). Additional organizational changes were also implemented in various other locations. During the third quarter of 2017, we revised the June 2016 Plan. The amendment added an additional $1,100 in planned costs related to the relocation of our corporate headquarters in Lisle, IL and our plant in Bolingbrook, IL, both of which will be consolidated into a single facility. The total cost of the plan is expected to be approximately $13,400. The total restructuring liability related to severance and other one-time benefit arrangements under the June 2016 Plan was $1,223 at June 30, 2018, and $1,460 at December 31, 2017. Additional costs related to production line movements, equipment charges, and other costs will be expensed as incurred.

The following table displays the planned restructuring charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through June 30, 2018:

			Actual costs
	Planned		incurred through
June 2016 Plan	Costs		June 30, 2018
Workforce reduction	$	3,075	$	3,211
Building and equipment relocation	9,025		5,518
Other charges	1,300		825
Total restructuring charges	$	13,400	$	9,554

In April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint (“April 2014 Plan”).  These restructuring actions were completed in 2015. The remaining restructuring liability related to the April 2014 Plan was $433 at June 30, 2018, and $453 at December 31, 2017.

The following table displays the restructuring liability activity for all plans for the six months ended June 30, 2018: 

Restructuring liability at January 1, 2018	$	1,913
Restructuring charges	2,367
Cost paid	(2,603		)
Other activity (1)	(21		)
Restructuring liability at June 30, 2018	$	1,656

(1) Other activity includes the effects of currency translation and other charges that do not flow through restructuring expense.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2018

Other Liabilities Disclosure [Abstract]

Accrued Liabilities

Accrued Liabilities

The components of accrued liabilities are as follows: 

	As of
	June 30,		December 31,
	2018		2017
Accrued product related costs	$	4,716	$	5,297
Accrued income taxes	8,512		5,475
Accrued property and other taxes	2,080		997
Accrued professional fees	3,055		2,228
Contract liabilities	2,664		1,595
Dividends payable	1,323		1,318
Remediation reserves	14,570		17,067
Other accrued liabilities	6,885		7,367
Total accrued liabilities	$	43,805	$	41,344

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Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies, and in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently and formerly owned or operated by us. Some sites, such as Asheville, North Carolina and Mountain View, California, are designated National Priorities List sites under the U.S. Environmental Protection Agency’s Superfund program. We reserve for probable remediation activities and for claims and proceedings against us with respect to other environmental matters. We record reserves on an undiscounted basis. In the opinion of management, based upon presently available information relating to such matters, adequate provision for probable and estimable costs have been recorded. We do not have any known environmental obligations where a loss is probable or reasonably possible of occurring for which we do not have a reserve, nor do we have any amounts for which we have not reserved because the amount of the loss cannot be reasonably estimated. Due to the inherent nature of environmental obligations, we cannot provide assurance that our ultimate environmental liability will not materially exceed the amount of its current reserve. Our reserve and disclosures will be adjusted accordingly if additional information becomes available in the future.

A roll forward of remediation reserves included in accrued liabilities on the balance sheet is comprised of the following:

	As of
	June 30, 2018			December 31, 2017
Balance at beginning of period	$	17,067		$	18,176
Remediation expense	1,048			307
Net remediation payments	(3,545		)	(1,416		)
Balance at end of the period	$	14,570		$	17,067

Unrelated to the environmental claims described above, certain other claims are pending against us with respect to matters arising in the ordinary conduct of our business. Although the ultimate outcome of any potential litigation resulting from these claims cannot be predicted with certainty, and some may be disposed of unfavorably to us, we believe that adequate provision for anticipated costs have been established based upon all presently available information. Except as noted herein, we do not believe we have any pending loss contingencies that are probable or reasonably possible of having a material impact on our consolidated financial position, results of operations, or cash flows.

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

Long-term debt was comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Total credit facility	$	300,000		$	300,000
Balance outstanding	$	57,000		$	76,300
Standby letters of credit	$	1,940		$	2,065
Amount available	$	241,060		$	221,635
Weighted-average interest rate	3.01		%	2.30		%
Commitment fee percentage per annum	0.25		%	0.25		%

On August 10, 2015, we entered into a five-year credit agreement (“Revolving Credit Facility”) with a group of banks in order to support our financing needs.  The Revolving Credit Facility originally provided for a credit line of $200,000. On May 23, 2016, we requested and received a $100,000 increase in the aggregate revolving credit commitments under the existing credit agreement, which increased the credit line from $200,000 to $300,000.  

The Revolving Credit Facility includes a swing line sublimit of $15,000 and a letter of credit sublimit of $10,000.  Borrowings under the Revolving Credit Facility bear interest, at our option, at the base rate plus the applicable margin for base rate loans or London Interbank Offered Rate ("LIBOR") plus the applicable margin for LIBOR loans.  We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility.  The commitment fee ranges from 0.20% to 0.40% based on the our total leverage ratio. 

The Revolving Credit Facility requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio.  Failure to comply with these covenants could reduce the borrowing availability under the Revolving Credit Facility.  We were in compliance with all debt covenants at June 30, 2018.  The Revolving Credit Facility requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the Revolving Credit Facility 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.  Interest rates on the Revolving Credit Facility fluctuate based upon the LIBOR and the Company’s quarterly total leverage ratio.  

We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. These costs are included in interest expense in our Condensed Consolidated Statement of Earnings. Amortization expense was approximately $46 for both the three months ended June 30, 2018 and June 30, 2017, respectively, and approximately $93 for both the six months ended June 30, 2018 and June 30, 2017, respectively.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks.

The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements.

The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other income (expense).

On April 1, 2018, the company adopted the provisions of ASU 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". As a result, hedge effectiveness was reviewed qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Condensed Consolidated Statement of Earnings for the three months ended June 30, 2018.

Foreign Currency Hedges

In January of 2016, we began using forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheets at fair value.

We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At June 30, 2018, we had a net unrealized gain of $59 in accumulated other comprehensive (loss) income, of which $5 is expected to be reclassified to income within the next 12 months. At June 30, 2017 we had a net unrealized gain of $428 in accumulated other comprehensive (loss) income. The notional amount of foreign currency forward contracts outstanding was $21.1 million at June 30, 2018.

Interest Rate Swaps

We use interest rate swaps to convert the revolving credit facility’s variable rate of interest into a fixed rate. In the second quarter of 2012, CTS entered into four separate interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2012, we entered into four additional interest rate swap agreements to fix interest rates on $25,000 of long-term debt for the periods January 2013 to January 2017. In the third quarter of 2016, we entered into three additional interest rate swap agreements to fix interest rates on $50,000 of long-term debt for the periods August 2017 to August 2020. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.

These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive (loss) income. The estimated net amount of the existing gains that are reported in accumulated other comprehensive (loss) income that are expected to be reclassified into earnings within the next twelve months is approximately $524. 

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of June 30, 2018, are shown in the following table:

	As of
	June 30,		December 31,
	2018		2017
Interest rate swaps reported in Other current assets	$	524	$	278
Interest rate swaps reported in Other assets	$	835	$	693
Foreign currency hedges reported in Other current assets	$	76	$	—
Foreign currency hedges reported in Accrued liabilities	$	—	$	(742	)

The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 (Balance Sheet, Offsetting). On a gross basis, there were foreign currency derivative assets of $301 and foreign currency derivative liabilities of $225.

The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Foreign Exchange Contracts:
Gain (loss) recognized in Net sales	$	21		$	(57	)	$	(37	)	$	(59	)
Gain (loss) recognized in Cost of goods sold	32			58			140			(86		)
(Loss) gain recognized in Selling, general and administrative expense	(4		)	13			(5		)	10
Loss recognized in Other income	—			(1		)	(1		)	(9		)
Interest Rate Swaps:
Benefit recorded in Interest expense	$	105		$	—		$	170		$	—
Total gain (loss)	$	154		$	13		$	267		$	(144	)

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Accumulated Other Comprehensive (Loss) Income

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive (Loss) Income

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

Unrealized gains (losses) on hedges relate to interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate and foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transactions occur, at which time amounts are reclassified into earnings.  Further information related to our derivative financial instruments is included in Note 12 - Derivative Financial Instruments and Note 16 – Fair Value Measurements.

Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized.  Amounts reclassified to income from AOCI are included in net periodic pension income / (expense).  Further information related to our pension obligations is included in Note 6 – Retirement Plans.

Cumulative translation adjustments relate to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income.  

Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses. Transaction losses for the three and six months ended June 30, 2018 were $2,194 and $918, respectively and transaction gains for the three and six months ended June 30, 2017 were $1,162 and $1,557, respectively, which have been included in other income (expense) in the Condensed Consolidated Statement of Earnings.

The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2018			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	1,332		$	240		$	(154	)	$	1,418
Income tax (benefit) expense	(341		)	(54		)	35			(360		)
Net	991			186			(119		)	1,058
Changes in unrealized pension cost:
Gross	(128,672		)	—			1,617			(127,055		)
Income tax expense (benefit)	52,520			—			(368		)	52,152
Net	(76,152		)	—			1,249			(74,903		)
Cumulative translation adjustment:
Gross	(1,747		)	(368		)	—			(2,115		)
Income tax expense (benefit)	105			(7		)	—			98
Net	(1,642		)	(375		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(76,803	)	$	(189	)	$	1,130		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	1,308		$	(223	)	$	(15	)	$	1,070
Income tax (benefit) expense	(474		)	81			5			(388		)
Net	834			(142		)	(10		)	682
Changes in unrealized pension cost:
Gross	(150,322		)	—			1,466			(148,856		)
Income tax expense (benefit)	60,192			—			(524		)	59,668
Net	(90,130		)	—			942			(89,188		)
Cumulative translation adjustment:
Gross	(2,328		)	196			—			(2,132		)
Income tax expense	94			4			—			98
Net	(2,234		)	200			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(91,530	)	$	58		$	932		$	(90,540	)

The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	289		$	1,397		$	(268	)	$	1,418
Income tax (benefit) expense	(105		)	(315		)	60			(360		)
Net	184			1,082			(208		)	1,058
Changes in unrealized pension cost:
Gross	(130,096		)	—			3,041			(127,055		)
Income tax expense (benefit)	52,837			—			(685		)	52,152
Net	(77,259		)	—			2,356			(74,903		)
Cumulative translation adjustment:
Gross	(1,985		)	(130		)	—			(2,115		)
Income tax expense (benefit)	100			(2		)	—			98
Net	(1,885		)	(132		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(78,960	)	$	950		$	2,148		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2016			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	116		$	819		$	135		$	1,070
Income tax benefit	(42		)	(297		)	(49		)	(388		)
Net	74			522			86			682
Changes in unrealized pension cost:
Gross	(151,618		)	—			2,762			(148,856		)
Income tax expense (benefit)	60,672			—			(1,004		)	59,668
Net	(90,946		)	—			1,758			(89,188		)
Cumulative translation adjustment:
Gross	(2,414		)	282			—			(2,132		)
Income tax expense	92			6			—			98
Net	(2,322		)	288			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(93,194	)	$	810		$	1,844		$	(90,540	)

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Shareholders' Equity

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

Share count and par value data related to shareholders’ equity are as follows:

	As of
	June 30,	December 31,
	2018	2017
Preferred Stock
Par value per share	No par value	No par value
Shares authorized	25,000,000	25,000,000
Shares outstanding	—	—
Common Stock
Par value per share	No par value	No par value
Shares authorized	75,000,000	75,000,000
Shares issued	56,781,065	56,632,488
Shares outstanding	33,087,043	32,938,466
Treasury stock
Shares held	23,694,022	23,694,022

No common stock repurchases were made during the six months ended June 30, 2018. Through June 30, 2018, we had purchased an aggregate of $7,446 under a board-authorized share repurchase plan allowing for up to $25,000 in stock repurchases. Approximately $17,554 is available for future purchases.

A roll-forward of common shares outstanding is as follows:

	Six Months Ended
	June 30,	June 30,
	2018	2017
Balance at the beginning of the year	32,938,466	32,762,494
Repurchases	—	—
Shares issued upon exercise of stock options	—	—
Restricted share issuances	148,577	170,832
Balance at the end of the period	33,087,043	32,933,326

Certain potentially dilutive restricted stock units are excluded from diluted earning per share because they are anti-dilutive. The number of awards that were anti-dilutive at June 30, 2018 and June 30, 2017 were 72,658 and 122,511, respectively.

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Equity-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

-Based Compensation

At June 30, 2018, we had five active stock-based compensation plans: the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance & Incentive Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan").  Future grants can only be made under the 2018 Plan.

The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings related to stock-based compensation plans:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Service-Based RSUs	$	563	$	465	$	1,018	$	1,015
Performance-Based RSUs	643		297		1,153		680
Cash-settled RSUs	57		46		15		(8		)
Total	$	1,263	$	808	$	2,186	$	1,687
Income tax benefit	285		304		494		634
Net	$	978	$	504	$	1,692	$	1,053

The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:

	Unrecognized
	Compensation		Weighted-
	Expense at		Average
	June 30, 2018		Period
Service-Based RSUs	$	1,973	1.94
Performance-Based RSUs	3,326		1.64
Total	$	5,299	1.75

We recognize 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.

The following table summarizes the status of these plans as of June 30, 2018:

	2018 Plan	2014 Plan	2009 Plan	2004 Plan	Directors' Plan
Awards originally available	2,500,000	1,500,000	3,400,000	6,500,000	N/A
Performance-based options outstanding	—	285,000	—	—	—
Maximum potential RSU and cash settled awards outstanding	—	732,975	92,600	35,952	5,522
Maximum potential awards outstanding	—	1,017,975	92,600	35,952	5,522
RSUs and cash settled awards vested and released	—	—	—	—	—
Awards available for grant	2,500,000	—	—	—	—

Stock Options

We have no stock options exercisable or outstanding as of June 30, 2018, other than the performance-based stock options described below.

Performance-Based Stock Options

During 2015 and 2016, the Compensation Committee of the Board of Directors of the Company (the “Committee”) granted a total of 350,000 performance-based stock option awards (“Performance-Based Option Awards”) for certain employees under the 2014 Plan, of which 285,000 remain outstanding after considering forfeitures.  The Performance-Based Option Awards have an exercise price of $18.37, a term of five years, and generally will become exercisable (provided the optionee remains employed by the Company or an affiliate) upon our attainment of at least $600,000 in revenues during any of our trailing four quarterly periods (as determined by the Committee) during the term.  We have not recognized any expense on these Performance-Based Option Awards for the six-month periods ended June 30, 2018 and 2017, since the revenue target was not deemed likely to be attained based on our current forecast.

Service-Based Restricted Stock Units

The following table summarizes the service-based RSU activity as of and for the six months ended June 30, 2018: 

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	399,347		$	14.60
Granted	74,222		26.31
Vested and released	(130,301	)	14.22
Forfeited	(1,938	)	20.86
Outstanding at June 30, 2018	341,330		$	17.26
Releasable at June 30, 2018	194,674		$	12.82

Performance and Market-Based Restricted Stock Units

The following table summarizes the performance and market-based RSU activity as of and for the six months ended June 30, 2018:

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	271,305		$	18.77
Granted	72,043		28.75
Attained by performance	18,600		17.66
Released	(72,456	)	18.66
Forfeited	(21,700	)	17.66
Outstanding at June 30, 2018	267,792		$	21.44
Releasable at June 30, 2018	—		$	—

The following table summarizes each grant of performance awards outstanding at June 30, 2018.

Description	Grant Date	Vesting Year	Vesting Dependency	Target Units Outstanding	Maximum Number of Units to be Granted
2016 - 2018 Performance RSUs	February 16, 2016	2018	35% RTSR, 35% sales growth, 30% operating cash flow	92,840	185,680
2017 - 2019 Performance RSUs	February 9, 2017	2019	35% RTSR, 35% sales growth, 30% operating cash flow	71,796	143,592
2017 - 2019 Performance RSUs	February 9, 2017	2018 - 2020	Operating Income	27,113	27,113
2018 - 2020 Performance RSUs	February 8, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	40,223	80,446
2018 - 2020 Performance RSUs	February 16, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	31,820	63,640
Single Crystal Performance RSUs	March 31, 2016	2018	Various	4,000	8,000

Cash-Settled Restricted Stock Units

Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At June 30, 2018 and December 31, 2017 we had 17,248 and 14,082 cash-settled RSUs outstanding, respectively. At June 30, 2018 and December 31, 2017, liabilities of $184 and $241, respectively were included in Accrued liabilities on our Condensed Consolidated Balance Sheets.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We use interest rate swaps to convert our Revolving Credit Facility’s variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. These derivative financial instruments are measured at fair value on a recurring basis. 

The table below summarizes our financial assets that were measured at fair value on a recurring basis at June 30, 2018:

			Quoted
			Prices
	Asset		in Active		Significant
	Carrying		Markets for		Other		Significant
	Value at		Identical		Observable		Unobservable
	June 30,		Instruments		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Interest rate swaps	$	1,359	$	—	$	1,359	$	—
Foreign currency hedges	$	76	$	—	$	76	$	—

The table below summarizes the financial assets (liabilities) that were measured at fair value on a recurring basis as of December 31, 2017:

				Quoted
	Asset			Prices
	(Liability)			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	December 31,			Instruments		Inputs			Inputs
	2017			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	971		$	—	$	971		$	—
Foreign currency hedges	$	(742	)	$	—	$	(742	)	$	—

The fair value of our interest rate swaps and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy.

The table below provides a reconciliation of the recurring financial assets (liabilities) for our derivative instruments:

				Foreign
	Interest			Currency
Total gains (losses) for the period:	Rate Swaps			Hedges
Balance at January 1, 2017	$	753		$	(601	)
Settled in cash	—			(132		)
Included in earnings	—			38
Included in other comprehensive earnings	218			(47		)
Balance at December 31, 2017	$	971		$	(742	)
Settled in cash	—			(21		)
Included in earnings	(170		)	97
Included in other comprehensive earnings	558			742
Balance at June 30, 2018	$	1,359		$	76

Our long-term debt consists of the Revolving Credit Facility which is recorded at its carrying value. There is a readily determinable market for our long-term 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 approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the Revolving Credit Facility.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rates for the three and six-month periods ended June 30, 2018 and 2017 were:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Effective tax rate	37.7	%	28.4	%	30.2	%	29.4	%

Our effective income tax rate was 37.7% and 28.4% in the second quarters of 2018 and 2017, respectively. The increase in the effective tax rate for the three months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by a reduction in our statutory tax rate as a result of the 2017 Tax and Jobs Act (the "Tax Act"). The tax rate in the second quarter of 2018 was higher than the U.S. statutory federal tax rate primarily due to foreign withholding taxes, state taxes and foreign earnings that are taxed at higher rates. The tax rate in the second quarter of 2017 was lower than the U.S. statutory federal tax rate primarily due to lower foreign tax rates applicable on foreign earnings.

Our effective income tax rate was 30.2% and 29.4% in the first half of 2018 and 2017, respectively. The increase in the effective tax rate for the six months ended June 30, 2018, compared with the same period in 2017, was primarily attributed to tax expense of $1,703 related to a one-time cash distribution from Taiwan, offset by the previously mentioned statutory tax rate reduction resulting from the Tax Act. The tax rate in the first half of 2018 was higher than the U.S. statutory federal tax rate primarily due to foreign withholding taxes, state taxes, and foreign earnings that are taxed at higher rates. The tax rate in the first half of 2017 was lower than the U.S. statutory federal tax rate primarily due to tax benefits recorded upon vesting of restricted stock units, a release of valuation allowances recorded against realizable foreign NOLs, and favorable tax rates on foreign earnings, offset by the impact of state taxes, tax expense for withholding taxes on the anticipated distribution of earnings in China, and other various permanent items.

We recognized the income tax effects of the Tax Act in the audited consolidated financial statements included in our 2017 Annual Report on Form 10-K. Staff Accounting Bulletin No. 118 provides Securities and Exchange Commission staff guidance for the application of ASC Topic 740, Income Taxes, which allows for a measurement period of up to one year from the enactment date for companies to complete their accounting for the U.S. tax law changes. As such, our 2017 financial results reflected a provisional amount of $6,267 that was recorded as deferred tax expense related to the revaluation of deferred tax assets and liabilities, and a provisional amount of $11,734 that was recorded as current tax expense related to the transition tax on the mandatory deemed repatriation of foreign earnings. During the three and six months ended June 30, 2018, we recognized measurement period adjustments that resulted in additional tax expense of $0 and $241, respectively. Any subsequent adjustments to our provisional estimated amounts will be recorded to tax expense in the quarter when the analysis is complete.

For the calendar year beginning in 2018, we are subject to several new provisions of the Tax Act including but not limited to the Global Intangible Low-Taxed Income (GILTI) tax. We have provisionally elected to account for any GILTI tax in the period in which it is incurred, and therefore have not provided any deferred tax impacts in our consolidated financial statements. For these computations, we have recorded an estimate in our effective tax rate for the three-months ended June 30, 2018. The company will continue to refine our estimates as additional guidance and information becomes available.

In general, outside of Canada and the U.K., it has been our historical practice to permanently reinvest the earnings of our non-U.S. subsidiaries into those operations. However, as a result of the Tax Act, we can repatriate our cumulative undistributed foreign earnings to the U.S. as needed with minimal U.S. income tax consequences other than the one-time deemed repatriation tax. We will continue to evaluate whether to repatriate all or a portion of the cumulative undistributed foreign earnings based on expansion needs and as circumstances change. We are still evaluating whether to change our indefinite reinvestment assertion in light of the Tax Act and consider that conclusion to be incomplete under guidance issued by SAB 118. If we subsequently change our assertion during the measurement period, we will account for the change in assertion as part of the Tax Act enactment.

Our continuing practice is to recognize interest and/or penalties related to income tax matters as income tax expense. For the three and six months ended June 30, 2018, and 2017, we recorded interest and penalties of $0 and $176, and $14 and $352, respectively.

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Business Combinations

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Business Combinations

NOTE 18 - Business Combinations

On May 15, 2017, we acquired 100% of the equity interest in Noliac A/S, a privately-held company, for $19.3 million in cash. Noliac A/S is a designer and manufacturer of tape cast and bulk piezoelectric material as well as transducers for use in the telecommunications, industrial, medical, and defense industries. This acquisition enabled us to increase our product base within our ceramics product lines as well as expand our presence in the European market.

The purchase price of $19,121, net of cash acquired of $199, has been allocated to the assets acquired and liabilities assumed on the acquisition date based on their fair values.

	Fair Values at May 15, 2017
Current assets	$	2,836
Property, plant and equipment	580
Other assets	395
Goodwill	9,313
Intangible assets	9,142
Fair value of assets acquired	22,266
Less fair value of liabilities acquired	(3,145		)
Net cash paid	$	19,121

Goodwill recorded in connection with this acquisition represents the value we expect to be created by combining the operations of the acquired business with our existing operations, including the expansion into markets within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to this acquisition is expected to be deductible for tax purposes.

We incurred $291 in transaction related costs during the six months ended June 30, 2017. These costs are included in selling, general and administrative costs in our Consolidated Statements of Earnings.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Changes in Accounting Principles

Beginning in January 2018, CTS adopted the provisions of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required.

Beginning in April 2018, CTS elected to adopt the provisions of ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities" under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings. Prior to adoption, the company measured hedge effectiveness for all cash flow hedges quarterly and recognized any ineffectiveness in earnings in the current period. Upon adoption the company elected to review hedge effectiveness qualitatively as described further in Note 12 - Derivative Financial Instruments. At the date of adoption there was no significant hedge ineffectiveness recorded in earnings for hedged assets existing as of January 1, 2018, and therefore no adjustment to the opening balance of retained earnings was required.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” "we", "our", "us" 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, 2017.

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.

Recent Accounting Pronouncements

NOTE 19 — Recent Accounting Pronouncements

ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income"

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This ASU allows for a reclassification from accumulated comprehensive income to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period for which financial statements have not been issued. We are evaluating the impact this ASU may have on our financial statements.

ASU 2017-12 "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities"

In August 2017, the FASB issued ASU No. 2017-12 "Derivatives and Hedging (Topic 815): Target Improvements to Accounting for Hedging Activities". This ASU is meant to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU also allows an entity to assess hedge effectiveness on a qualitative basis subsequent to the initial quantitative assessment if the facts and circumstances related to the hedging relationship have not changed such that the entity can assert qualitatively that the hedging relationship was and continues to be highly effective. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance. Any changes should be applied to all hedging relationships that exist at the date of adoption by applying a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year of adoption. Presentation and disclosure guidance is to be applied prospectively. We adopted the provisions of ASU 2017-12 as of April 1, 2018, see Note 1, Basis of Presentation.

ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost"

In March 2017, the FASB issued ASU No. 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and net Periodic Post-retirement Benefit Cost". This ASU is meant to improve the presentation of net periodic pension and net periodic post-retirement benefits costs. Currently, pension and post-retirement benefit costs are comprised of several components reflecting the different aspects of an employer's financial arrangements and cost of providing benefits to employees. These components are aggregated for reporting, but prior guidance does not prescribe where the net cost should be presented in the income statement or capitalized in assets. This ASU requires disaggregation of the service cost component from other components of net benefit cost and provides explicit guidance on how to present the service cost and other components in the income statement, allowing only the service cost component of net benefit costs to be eligible for capitalization. These amendments should be applied retrospectively for the presentation of service cost and other components of net periodic pension and net post-retirement benefit cost in the income statement and prospectively for the capitalization of service cost and net periodic pension cost and periodic post-retirement benefit in assets. We adopted this ASU as of January 1, 2018. It did not have a material impact on our financial statements because the service cost component of our pension cost is immaterial to our financial results on a prospective basis.

ASU 2017-04 "Intangibles -Goodwill and Other (Topic 305): Simplifying the Test for Goodwill Impairment"

In January 2017, the FASB issued ASU No. 2017-04 "Intangibles - Goodwill and Other (Topic 305): Simplifying the Test for Goodwill Impairment". This ASU is meant to simplify the subsequent measurement of goodwill for impairment by eliminating the current Step 2 analysis in computing the implied fair value of goodwill. In addition, this ASU requires an entity to consider income tax effects on any tax deductible goodwill on the carrying amount of the reporting unit when measuring an impairment loss, if applicable. Under this ASU, impairment is determined by comparing the reporting unit's fair value to the carrying value. This amendment is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect this guidance to have an impact on our financial statements.

ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of Business"

In January 2017, the FASB issued ASU No. 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of Business". This ASU is meant to clarify the definition of a business to add guidance when determining when an acquisition or disposal should be accounted for as a sale of assets or business. This ASU provides a more robust framework to use in determining when a set of assets or activities should be classified as a business, providing more consistency in accounting for business or asset acquisitions. We adopted this ASU on January 1, 2018 and it will be applied to any business combinations subsequent to that date.

ASU 2016-16 "Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory"

In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory". This ASU is meant to improve the accounting for the income tax effect of intra-entity transfers of assets other than inventory. Currently, U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset is sold to a third party. This ASU will now require companies to recognize the income tax effect of an intra-entity asset transfer (other than inventory) when the transaction occurs. This ASU is effective for public companies, for fiscal years beginning after December 15, 2019 and interim periods within those annual reporting periods. Early adoption is permitted and is to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements.

ASU 2016-15 "Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments"

In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments". This ASU reduces the diversity in reporting of eight specific cash flow issues due to accounting guidance that is unclear or does not exist. The eight issues relate to certain debt activities, business combination activities, insurance settlements and other various activities. We adopted this ASU as of January 1, 2018 and it did not have an impact on our financial statements.

ASU 2016-02 "Leases (Topic 842)"

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This amendment created a new Topic under the accounting standards codification to account for the provisions of the ASU. This amendment is meant to provide transparency and to improve comparability between entities. The ASU requires companies to record an asset and liability on the balance sheet for leases that were formerly designated as operating leases as well as leases designated as financing leases. The provisions of the ASU predominately change the recognition of leases for lessees; the provisions do not substantially change the accounting for lessors. This ASU will supersede the provisions of Topic 840 Leases.

The liability recorded for a lease is meant to recognize the lease payments and the asset as a right to use the underlying asset for the lease, including optional periods if it is reasonably certain the option will be exercised. Recording of the liability should be based on the present value of the lease payments. If a lease term is less than twelve months, a company is allowed to elect not to record the asset and liability. Expense related to these leases are to be amortized on a straight-line basis over the expected term of the lease.

Additionally, the provisions of this ASU provide additional guidance on separating lease terms from maintenance and other type of provisions that provide a good or service, accounting for sale-leaseback provisions, and leveraged leases.

Reporting in the cash flow statement remains virtually unchanged. Additional qualitative and quantitative disclosures are required.

These updates are required to be applied under a modified retrospective approach from the beginning of the earliest period presented in our financial statements upon adoption. The modified approach provides optional practical expedients that may be elected, which will allow companies to continue to account for leases under the previous guidance for leases that commenced prior to the effective date.

The provisions of this ASU are effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. We have begun the process of reviewing existing agreements and are evaluating the impact of this ASU on our financial statements. We expect certain operating leases to be recognized as assets and liabilities as a result of adopting the standard.

Subsequent Events [Text Block]

Subsequent Events

We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the consolidated financial statements are issued.

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Revenue Recognition Contract Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Contract Assets and Liabilities [Abstract]

Contract with Customer, Asset and Liability [Table Text Block]

Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:

	As of
	June 30,			December 31,
	2018			2017
Contract Assets
Prepaid rebates included in Other current assets	$	64		$	52
Prepaid rebates included in Other assets	482			465
Total Contract Assets	$	546		$	517
Contract Liabilities
Customer discounts and price concessions included in Accrued liabilities	$	(2,323	)	$	(1,133	)
Customer rights of return included in Accrued liabilities	(341		)	(462		)
Total Contract Liabilities	$	(2,664	)	$	(1,595	)

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Revenue Recognition Disaggregated Revenue (Tables)

6 Months Ended

Jun. 30, 2018

Disaggregation of Revenue [Abstract]

Disaggregation of Revenue [Table Text Block]

The following table presents revenues disaggregated by the major markets we serve:

	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Aero & Defense	$	6,024	$	4,675	$	11,127	$	9,332
Industrial	22,773		19,214		43,129		36,326
Medical	9,793		7,474		19,034		14,288
Telecom & IT	5,525		5,602		10,050		10,780
Transportation	73,906		68,721		148,211		135,114
Total	$	118,021	$	105,686	$	231,551	$	205,840

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Components of Accounts Receivable

The components of accounts receivable are as follows:

	As of
	June 30,			December 31,
	2018			2017
Accounts receivable, gross	$	76,032		$	70,941
Less: Allowance for doubtful accounts	(435		)	(357		)
Accounts receivable, net	$	75,597		$	70,584

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Inventories (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Summary of Inventories

Inventories consist of the following:

	As of
	June 30,			December 31,
	2018			2017
Finished goods	$	11,778		$	9,203
Work-in-process	12,008			12,065
Raw materials	23,529			21,150
Less: Inventory reserves	(5,644		)	(5,822		)
Inventories, net	$	41,671		$	36,596

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

Property, plant and equipment is comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Land	$	1,137		$	1,130
Buildings and improvements	68,778			64,201
Machinery and equipment	225,843			223,650
Less: Accumulated depreciation	(202,128		)	(200,734		)
Property, plant and equipment, net	$	93,630		$	88,247
Depreciation expense for the three months ended June 30, 2018				$	3,774
Depreciation expense for the six months ended June 30, 2018				$	7,537

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Retirement Plans (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Net Pension Income or Postretirement Expense

Net pension expense (income) for our domestic and foreign plans was as follows:

	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2018		2017			2018		2017
Net pension expense (income)	$	78	$	(491	)	$	157	$	(924	)

The components of net pension expense (income) for our domestic and foreign plans include the following: 

	DomesticPension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	11		$	12
Interest cost	1,781			2,068			11			9
Expected return on plan assets (1)	(3,225		)	(4,060		)	(6		)	(5		)
Amortization of loss	1,466			1,446			40			39
Expense (income), net	$	22		$	(546	)	$	56		$	55

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

	Domestic Pension Plans						Foreign Pension Plans
	Six Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	22		$	24
Interest cost	3,562			4,136			22			17
Expected return on plan assets (1)	(6,450		)	(8,121		)	(13		)	(10		)
Amortization of loss	2,932			2,892			82			77
Other cost due to retirement	—			61			—			—
Expense (income), net	$	44		$	(1,032	)	$	113		$	108

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

Net post-retirement expense for our other post-retirement plan includes the following components:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Service cost	$	—		$	—		$	1		$	1
Interest cost	39			40			78			80
Amortization of gain	(11		)	(25		)	(23		)	(50		)
Expense, net	$	28		$	15		$	56		$	31

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Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of other intangible assets

Intangible assets consist of the following components:

	As of
	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(35,387	)	$	28,936
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(12,039		)	32,421
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(57,745	)	$	63,557
Amortization expense for the three months ended June 30, 2018			$	1,704
Amortization expense for the six months ended June 30, 2018			$	3,424

	As of
	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	64,323	$	(33,685	)	$	30,638
Patents	10,319		(10,319		)	—
Technology and other intangibles	44,460		(10,355		)	34,105
In process research and development	2,200		—			2,200
Other intangible assets, net	$	121,302	$	(54,359	)	$	66,943
Amortization expense for the three months ended June 30, 2017			$	1,613
Amortization expense for the three months ended June 30, 2017			$	3,149

Summary of amortization expense remaining for other intangible assets

mortization expense for other intangible assets as of June 30, 2018 is as follows: 

	Amortization expense
2018	$	3,377
2019	6,754
2020	6,624
2021	6,467
2022	6,230
Thereafter	34,105
Total amortization expense	$	63,557

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Costs Associated with Exit and Restructuring Activities (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring Reserve Activity

The following table displays the restructuring liability activity for all plans for the six months ended June 30, 2018: 

Restructuring liability at January 1, 2018	$	1,913
Restructuring charges	2,367
Cost paid	(2,603		)
Other activity (1)	(21		)
Restructuring liability at June 30, 2018	$	1,656

(1) Other activity includes the effects of currency translation and other charges that do not flow through restructuring expense.

June 2016 Plan

Restructuring and Restructuring Related Charges of Actual Costs

Total restructuring charges, all related to the June 2016 Plan described below, were as follows:

	Three Months Ended
	June 30, 2018		June 30, 2017
Restructuring charges	$	1,172	$	729

Schedule of Planned and Actual Costs Incurred to Date

The following table displays the planned restructuring charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through June 30, 2018:

			Actual costs
	Planned		incurred through
June 2016 Plan	Costs		June 30, 2018
Workforce reduction	$	3,075	$	3,211
Building and equipment relocation	9,025		5,518
Other charges	1,300		825
Total restructuring charges	$	13,400	$	9,554

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Other Liabilities Disclosure [Abstract]

Components of Accrued Liabilities

The components of accrued liabilities are as follows: 

	As of
	June 30,		December 31,
	2018		2017
Accrued product related costs	$	4,716	$	5,297
Accrued income taxes	8,512		5,475
Accrued property and other taxes	2,080		997
Accrued professional fees	3,055		2,228
Contract liabilities	2,664		1,595
Dividends payable	1,323		1,318
Remediation reserves	14,570		17,067
Other accrued liabilities	6,885		7,367
Total accrued liabilities	$	43,805	$	41,344

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Summary of Long-Term Debt

Long-term debt was comprised of the following:

	As of
	June 30,			December 31,
	2018			2017
Total credit facility	$	300,000		$	300,000
Balance outstanding	$	57,000		$	76,300
Standby letters of credit	$	1,940		$	2,065
Amount available	$	241,060		$	221,635
Weighted-average interest rate	3.01		%	2.30		%
Commitment fee percentage per annum	0.25		%	0.25		%

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of June 30, 2018, are shown in the following table:

	As of
	June 30,		December 31,
	2018		2017
Interest rate swaps reported in Other current assets	$	524	$	278
Interest rate swaps reported in Other assets	$	835	$	693
Foreign currency hedges reported in Other current assets	$	76	$	—
Foreign currency hedges reported in Accrued liabilities	$	—	$	(742	)

Derivative Instruments, Gain (Loss)

The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Foreign Exchange Contracts:
Gain (loss) recognized in Net sales	$	21		$	(57	)	$	(37	)	$	(59	)
Gain (loss) recognized in Cost of goods sold	32			58			140			(86		)
(Loss) gain recognized in Selling, general and administrative expense	(4		)	13			(5		)	10
Loss recognized in Other income	—			(1		)	(1		)	(9		)
Interest Rate Swaps:
Benefit recorded in Interest expense	$	105		$	—		$	170		$	—
Total gain (loss)	$	154		$	13		$	267		$	(144	)

The table below provides a reconciliation of the recurring financial assets (liabilities) for our derivative instruments:

				Foreign
	Interest			Currency
Total gains (losses) for the period:	Rate Swaps			Hedges
Balance at January 1, 2017	$	753		$	(601	)
Settled in cash	—			(132		)
Included in earnings	—			38
Included in other comprehensive earnings	218			(47		)
Balance at December 31, 2017	$	971		$	(742	)
Settled in cash	—			(21		)
Included in earnings	(170		)	97
Included in other comprehensive earnings	558			742
Balance at June 30, 2018	$	1,359		$	76

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Accumulated Other Comprehensive (Loss) Income (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Schedule of Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2018			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	1,332		$	240		$	(154	)	$	1,418
Income tax (benefit) expense	(341		)	(54		)	35			(360		)
Net	991			186			(119		)	1,058
Changes in unrealized pension cost:
Gross	(128,672		)	—			1,617			(127,055		)
Income tax expense (benefit)	52,520			—			(368		)	52,152
Net	(76,152		)	—			1,249			(74,903		)
Cumulative translation adjustment:
Gross	(1,747		)	(368		)	—			(2,115		)
Income tax expense (benefit)	105			(7		)	—			98
Net	(1,642		)	(375		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(76,803	)	$	(189	)	$	1,130		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the three months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	March 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	1,308		$	(223	)	$	(15	)	$	1,070
Income tax (benefit) expense	(474		)	81			5			(388		)
Net	834			(142		)	(10		)	682
Changes in unrealized pension cost:
Gross	(150,322		)	—			1,466			(148,856		)
Income tax expense (benefit)	60,192			—			(524		)	59,668
Net	(90,130		)	—			942			(89,188		)
Cumulative translation adjustment:
Gross	(2,328		)	196			—			(2,132		)
Income tax expense	94			4			—			98
Net	(2,234		)	200			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(91,530	)	$	58		$	932		$	(90,540	)

The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2018, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2017			in OCI			to Income			2018
Changes in fair market value of hedges:
Gross	$	289		$	1,397		$	(268	)	$	1,418
Income tax (benefit) expense	(105		)	(315		)	60			(360		)
Net	184			1,082			(208		)	1,058
Changes in unrealized pension cost:
Gross	(130,096		)	—			3,041			(127,055		)
Income tax expense (benefit)	52,837			—			(685		)	52,152
Net	(77,259		)	—			2,356			(74,903		)
Cumulative translation adjustment:
Gross	(1,985		)	(130		)	—			(2,115		)
Income tax expense (benefit)	100			(2		)	—			98
Net	(1,885		)	(132		)	—			(2,017		)
Total accumulated other comprehensive (loss) income	$	(78,960	)	$	950		$	2,148		$	(75,862	)

The components of accumulated other comprehensive (loss) income for the six months ended June 30, 2017, are as follows:

							Gain (Loss)
	As of			Gain (Loss)			Reclassified			As of
	December 31,			Recognized			from AOCI			June 30,
	2016			in OCI			to Income			2017
Changes in fair market value of hedges:
Gross	$	116		$	819		$	135		$	1,070
Income tax benefit	(42		)	(297		)	(49		)	(388		)
Net	74			522			86			682
Changes in unrealized pension cost:
Gross	(151,618		)	—			2,762			(148,856		)
Income tax expense (benefit)	60,672			—			(1,004		)	59,668
Net	(90,946		)	—			1,758			(89,188		)
Cumulative translation adjustment:
Gross	(2,414		)	282			—			(2,132		)
Income tax expense	92			6			—			98
Net	(2,322		)	288			—			(2,034		)
Total accumulated other comprehensive (loss) income	$	(93,194	)	$	810		$	1,844		$	(90,540	)

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Summary of Share Count and Par Value Data Related to Shareholders' Equity

Share count and par value data related to shareholders’ equity are as follows:

	As of
	June 30,	December 31,
	2018	2017
Preferred Stock
Par value per share	No par value	No par value
Shares authorized	25,000,000	25,000,000
Shares outstanding	—	—
Common Stock
Par value per share	No par value	No par value
Shares authorized	75,000,000	75,000,000
Shares issued	56,781,065	56,632,488
Shares outstanding	33,087,043	32,938,466
Treasury stock
Shares held	23,694,022	23,694,022

Summary of Common Shares Outstanding

A roll-forward of common shares outstanding is as follows:

	Six Months Ended
	June 30,	June 30,
	2018	2017
Balance at the beginning of the year	32,938,466	32,762,494
Repurchases	—	—
Shares issued upon exercise of stock options	—	—
Restricted share issuances	148,577	170,832
Balance at the end of the period	33,087,043	32,933,326

Certain potentially dilutive restricted stock units are excluded from diluted earning per share because they are anti-dilutive. The number of awards that were anti-dilutive at June 30, 2018 and June 30, 2017 were 72,658 and 122,511, respectively.

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Equity-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Equity-Based Compensation Expense

The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings related to stock-based compensation plans:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Service-Based RSUs	$	563	$	465	$	1,018	$	1,015
Performance-Based RSUs	643		297		1,153		680
Cash-settled RSUs	57		46		15		(8		)
Total	$	1,263	$	808	$	2,186	$	1,687
Income tax benefit	285		304		494		634
Net	$	978	$	504	$	1,692	$	1,053

Schedule of Unrecognized Equity-Based Compensation Expense

The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:

	Unrecognized
	Compensation		Weighted-
	Expense at		Average
	June 30, 2018		Period
Service-Based RSUs	$	1,973	1.94
Performance-Based RSUs	3,326		1.64
Total	$	5,299	1.75

Summary of Status of Equity-Based Compensation Plans

The following table summarizes the status of these plans as of June 30, 2018:

	2018 Plan	2014 Plan	2009 Plan	2004 Plan	Directors' Plan
Awards originally available	2,500,000	1,500,000	3,400,000	6,500,000	N/A
Performance-based options outstanding	—	285,000	—	—	—
Maximum potential RSU and cash settled awards outstanding	—	732,975	92,600	35,952	5,522
Maximum potential awards outstanding	—	1,017,975	92,600	35,952	5,522
RSUs and cash settled awards vested and released	—	—	—	—	—
Awards available for grant	2,500,000	—	—	—	—

Summary of Service-Based Restricted Stock Units

summarizes the service-based RSU activity as of and for the six months ended June 30, 2018: 

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	399,347		$	14.60
Granted	74,222		26.31
Vested and released	(130,301	)	14.22
Forfeited	(1,938	)	20.86
Outstanding at June 30, 2018	341,330		$	17.26
Releasable at June 30, 2018	194,674		$	12.82

Schedule of Components of Performance-Based RSU's

The following table summarizes the performance and market-based RSU activity as of and for the six months ended June 30, 2018:

	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	271,305		$	18.77
Granted	72,043		28.75
Attained by performance	18,600		17.66
Released	(72,456	)	18.66
Forfeited	(21,700	)	17.66
Outstanding at June 30, 2018	267,792		$	21.44
Releasable at June 30, 2018	—		$	—

The following table summarizes each grant of performance awards outstanding at June 30, 2018.

Description	Grant Date	Vesting Year	Vesting Dependency	Target Units Outstanding	Maximum Number of Units to be Granted
2016 - 2018 Performance RSUs	February 16, 2016	2018	35% RTSR, 35% sales growth, 30% operating cash flow	92,840	185,680
2017 - 2019 Performance RSUs	February 9, 2017	2019	35% RTSR, 35% sales growth, 30% operating cash flow	71,796	143,592
2017 - 2019 Performance RSUs	February 9, 2017	2018 - 2020	Operating Income	27,113	27,113
2018 - 2020 Performance RSUs	February 8, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	40,223	80,446
2018 - 2020 Performance RSUs	February 16, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow	31,820	63,640
Single Crystal Performance RSUs	March 31, 2016	2018	Various	4,000	8,000

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Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Summary of Financial Liability Measured at Fair Value on a Recurring Basis

The table below summarizes our financial assets that were measured at fair value on a recurring basis at June 30, 2018:

			Quoted
			Prices
	Asset		in Active		Significant
	Carrying		Markets for		Other		Significant
	Value at		Identical		Observable		Unobservable
	June 30,		Instruments		Inputs		Inputs
	2018		(Level 1)		(Level 2)		(Level 3)
Interest rate swaps	$	1,359	$	—	$	1,359	$	—
Foreign currency hedges	$	76	$	—	$	76	$	—

The table below summarizes the financial assets (liabilities) that were measured at fair value on a recurring basis as of December 31, 2017:

				Quoted
	Asset			Prices
	(Liability)			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	December 31,			Instruments		Inputs			Inputs
	2017			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	971		$	—	$	971		$	—
Foreign currency hedges	$	(742	)	$	—	$	(742	)	$	—

Reconciliation of Recurring Financial Liability Related to Interest Rate Swaps

The effect of derivative instruments on the Condensed Consolidated Statements of Earnings is as follows:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
Foreign Exchange Contracts:
Gain (loss) recognized in Net sales	$	21		$	(57	)	$	(37	)	$	(59	)
Gain (loss) recognized in Cost of goods sold	32			58			140			(86		)
(Loss) gain recognized in Selling, general and administrative expense	(4		)	13			(5		)	10
Loss recognized in Other income	—			(1		)	(1		)	(9		)
Interest Rate Swaps:
Benefit recorded in Interest expense	$	105		$	—		$	170		$	—
Total gain (loss)	$	154		$	13		$	267		$	(144	)

The table below provides a reconciliation of the recurring financial assets (liabilities) for our derivative instruments:

				Foreign
	Interest			Currency
Total gains (losses) for the period:	Rate Swaps			Hedges
Balance at January 1, 2017	$	753		$	(601	)
Settled in cash	—			(132		)
Included in earnings	—			38
Included in other comprehensive earnings	218			(47		)
Balance at December 31, 2017	$	971		$	(742	)
Settled in cash	—			(21		)
Included in earnings	(170		)	97
Included in other comprehensive earnings	558			742
Balance at June 30, 2018	$	1,359		$	76

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Reconciliation of Effective Income Taxes Rate

The effective tax rates for the three and six-month periods ended June 30, 2018 and 2017 were:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2018		2017		2018		2017
Effective tax rate	37.7	%	28.4	%	30.2	%	29.4	%

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Revenue Recognition Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Contract Assets and Liabilities [Abstract]
Contract with Customer, Liability, Revenue Recognized	$ 0	$ (86)
Contract with Customer, Asset, Net, Current	64	64	$ 52
Contract with Customer, Asset, Net, Noncurrent	482	482	465
Contract with Customer, Asset, Net	546	546	517
Customer Contract Liability Discounts	(2,323)	(2,323)	(1,133)
Customer Contract Liability Rights of Return	(341)	(341)	(462)
Contract with Customer, Liability, Current	$ (2,664)	$ (2,664)	$ (1,595)

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Revenue Recognition Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Revenues	$ 118,021	$ 105,686	$ 231,551	$ 205,840
Aerospace and Defense [Member]
Disaggregation of Revenue [Line Items]
Revenues	6,024	4,675	11,127	9,332
Industrial [Member]
Disaggregation of Revenue [Line Items]
Revenues	22,773	19,214	43,129	36,326
Medical [Member]
Disaggregation of Revenue [Line Items]
Revenues	9,793	7,474	19,034	14,288
Telecommunications & IT [Member]
Disaggregation of Revenue [Line Items]
Revenues	5,525	5,602	10,050	10,780
Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 73,906	$ 68,721	$ 148,211	$ 135,114

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Accounts Receivable - Components of Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accounts Receivable
Accounts receivable, gross	$ 76,032	$ 70,941
Less: Allowance for doubtful accounts	(435)	(357)
Accounts receivable, net	$ 75,597	$ 70,584

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Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventories
Finished goods	$ 11,778	$ 9,203
Work-in-process	12,008	12,065
Raw materials	23,529	21,150
Less: Inventory reserves	(5,644)	(5,822)
Inventories, net	$ 41,671	$ 36,596

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Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Property, plant and equipment
Less: Accumulated depreciation	$ (202,128)	$ (202,128)	$ (200,734)
Property, plant and equipment, net	93,630	93,630	88,247
Depreciation	3,774	7,537
Land
Property, plant and equipment
Property, plant and equipment gross	1,137	1,137	1,130
Buildings and improvements
Property, plant and equipment
Property, plant and equipment gross	68,778	68,778	64,201
Machinery and equipment
Property, plant and equipment
Property, plant and equipment gross	$ 225,843	$ 225,843	$ 223,650

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Retirement Plans - Net Pension Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Pension Plans
Defined Benefit Plan Disclosure
Net pension expense (income)	$ 78	$ (491)	$ 157	$ (924)

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Retirement Plans - Net Pension Income Domestic and Foreign (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Pension Plans
Net pension expense (income)
(Income) expense, net	$ 78	$ (491)	$ 157	$ (924)
Foreign Plan [Member]
Net pension expense (income)
Service cost	11	12	22	24
Interest cost	11	9	22	17
Defined Benefit Plan, Expected Return on Plan Assets, Net of Expenses	(6)	(5)	(13)	(10)
Amortization of loss	40	39	82	77
(Income) expense, net	56	55	113	108
Domestic Plan [Member]
Net pension expense (income)
Interest cost	1,781	2,068	3,562	4,136
Defined Benefit Plan, Expected Return on Plan Assets, Net of Expenses	(3,225)	(4,060)	(6,450)	(8,121)
Amortization of loss	1,466	1,446	2,932	2,892
Other cost due to retirement			0	61
(Income) expense, net	$ 22	$ (546)	$ 44	$ (1,032)

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Retirement Plans - Other Postretirement Benefit Plan (Details) - Other Postretirement Benefits Plan [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Defined Benefit Plan Disclosure
Service cost	$ 0	$ 0	$ 1	$ 1
Interest cost	39	40	78	80
Amortization of gain	(11)	(25)	(23)	(50)
(Income) expense, net	$ 28	$ 15	$ 56	$ 31

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Other Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Other Intangible Assets
Gross Carrying Amount	$ 121,302		$ 121,302		$ 121,302
Accumulated Amortization	(57,745)		(57,745)		(54,359)
Total amortization expense	63,557		63,557		66,943
Amortization expense	1,704	$ 1,613	3,424	$ 3,149
Customer lists/relationships
Other Intangible Assets
Gross Carrying Amount	64,323		64,323		64,323
Accumulated Amortization	(35,387)		(35,387)		(33,685)
Total amortization expense	28,936		28,936		30,638
Patents
Other Intangible Assets
Gross Carrying Amount	10,319		10,319		10,319
Accumulated Amortization	(10,319)		(10,319)		(10,319)
Total amortization expense	0		0		0
Technology and other intangibles
Other Intangible Assets
Gross Carrying Amount	44,460		44,460		44,460
Accumulated Amortization	(12,039)		(12,039)		(10,355)
Total amortization expense	32,421		32,421		34,105
In process research and development
Other Intangible Assets
Gross Carrying Amount					2,200
Total amortization expense	2,200		2,200		$ 2,200
Indefinite-Lived Intangible Assets (Excluding Goodwill)	$ 2,200		$ 2,200

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Other Intangible Assets - Summary of Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule
2016	$ 3,377
2017	6,754
2018	6,624
2019	6,467
2020	6,230
Thereafter	34,105
Total amortization expense	$ 63,557	$ 66,943

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Costs Associated with Exit and Restructuring Activities - Summary (Details) - Operating Earnings - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
June 2013 Plan, April 2014 Plan and June 2016 Plan
Total restructuring, impairment and restructuring related charges
Restructuring and impairment charges	$ 1,172		$ 2,367
June 2013 Plan, April 2014 Plan and June 2016
Total restructuring, impairment and restructuring related charges
Restructuring and impairment charges		$ 729		$ 1,507

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Costs Associated with Exit and Restructuring Activities Costs Associated with Exit and Restructuring Activities - June 2016 Plan (Details) - June 2016 Plan - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Actual costs incurred	$ 5,518
Total restructuring, impairment and restructuring related charges
Restructuring Reserve	1,223	$ 1,460
Operating Earnings
Restructuring Cost and Reserve [Line Items]
Planned Costs	13,400
Actual costs incurred	9,554
Equipment relocation
Restructuring Cost and Reserve [Line Items]
Planned Costs	9,025
Other charges
Restructuring Cost and Reserve [Line Items]
Planned Costs	1,300
Other charges | Operating Earnings
Restructuring Cost and Reserve [Line Items]
Actual costs incurred	825
Workforce reduction
Restructuring Cost and Reserve [Line Items]
Planned Costs	3,075
Workforce reduction | Operating Earnings
Restructuring Cost and Reserve [Line Items]
Actual costs incurred	3,211
Minimum
Restructuring Cost and Reserve [Line Items]
Planned Costs	$ 13,400

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Costs Associated with Exit and Restructuring Activities - April 2014 Plan (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
April 2014 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve	$ 433	$ 453

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Costs Associated with Exit and Restructuring Activities - Restructuring Reserve Activity (Details) - June 2013 Plan, April 2014 Plan and June 2016 Plan $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Restructuring reserve activity
Restructuring liability at beginning	$ 1,913
Restructuring and restructuring-related charges	2,367
Cost paid	(2,603)
Restructuring liability at ending	1,656
Restructuring Reserve, Translation and Other Adjustment	$ (21)

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Accrued Liabilities - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Accrued Liabilities
Accrued product related costs	$ 4,716	$ 5,297
Accrued income taxes	8,512	5,475
Accrued property and other taxes	2,080	997
Accrued professional fees	3,055	2,228
Contract with Customer, Liability	2,664	1,595
Dividends payable	1,323	1,318
Remediation reserves	14,570	17,067	$ 18,176
Other accrued liabilities	6,885	7,367
Total accrued liabilities	$ 43,805	$ 41,344

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Contingencies Remediation Liability (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Accrued Environmental Loss Contingencies, Current	$ 14,570	$ 17,067	$ 18,176
Accrual for Environmental Loss Contingencies, Charges to Expense for New Losses	1,048	307
Accrual for Environmental Loss Contingencies Payments, Net of Reimbursements	$ (3,545)	$ (1,416)

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Debt - Long-Term Debt (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	May 23, 2016	May 22, 2016	Aug. 10, 2015
Long-term debt
Total credit facility	$ 300,000,000
Amount available	241,060,000	$ 221,635,000
Long-term Line of Credit, Noncurrent	57,000,000	76,300,000
Letters of Credit Outstanding, Amount	1,940,000	2,065,000
Line of Credit | Revolving Credit Facility Due 2020
Long-term debt
Total credit facility		300,000,000	$ 300,000,000	$ 200,000,000	$ 200,000,000
Long-term Line of Credit, Noncurrent	$ 57,000,000	$ 76,300,000
Weighted-average interest rate	3.00%	2.30%
Commitment fee percentage per annum	0.25%	0.25%

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Debt - Narratives (Details) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 10, 2015	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	May 23, 2016	May 22, 2016
Line of Credit Facility
Line of credit maximum borrowing amount		$ 300,000,000		$ 300,000,000
Debt amortization expense		46,000	$ 46,000	93,000	$ 0
Long-term Line of Credit, Noncurrent		57,000,000		$ 57,000,000		$ 76,300,000
Line of Credit | Revolving Credit Facility Due 2020
Line of Credit Facility
Debt instrument, term	5 years
Line of credit maximum borrowing amount	$ 200,000,000					$ 300,000,000	$ 300,000,000	$ 200,000,000
Line of credit facility contingent increase to maximum borrowing capacity							$ 100,000,000
Commitment fee percentage per annum				0.25%		0.25%
Long-term Line of Credit, Noncurrent		$ 57,000,000		$ 57,000,000		$ 76,300,000
Line of Credit | Revolving Credit Facility Due 2020 Swingline Sublimit
Line of Credit Facility
Line of credit maximum borrowing amount	15,000,000
Line of Credit | Revolving Credit Facility Due 2020 Letter Of Credit Sublimit
Line of Credit Facility
Line of credit maximum borrowing amount	$ 10,000,000
Minimum | Line of Credit | Revolving Credit Facility Due 2020
Line of Credit Facility
Commitment fee percentage per annum	0.20%
Maximum | Line of Credit | Revolving Credit Facility Due 2020
Line of Credit Facility
Commitment fee percentage per annum	0.40%

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Derivative Financial Instruments - Narratives (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($) instrument	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2012 USD ($) instrument	Jun. 24, 2012 USD ($) instrument
Derivative
Unrealized Gain (Loss) on Foreign Currency Derivatives, Net, before Tax	$ 59	$ 0
Foreign exchange derivative
Derivative
Derivative Asset	301
Derivative Liability	225
Cash Flow Hedge | Designated As Hedging | Foreign currency forward contracts
Derivative
Foreign currency cash flow hedge gain to be reclassified during next 12 months	5
Derivative, notional amount	21,100
Derivative Asset	76
Derivative Liability			$ (742)	$ (601)
Cash Flow Hedge | Designated As Hedging | Interest rate swap
Derivative
Derivative, notional amount					$ 25,000	$ 50,000
Number of derivative instruments held | instrument		3			4	4
Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months	524
Derivative Asset	$ 1,359		$ 971	$ 753

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Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) - Cash Flow Hedge - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest rate swap | Other Current Assets [Member]
Derivative Liability
Derivative Asset	$ 524	$ 278
Interest rate swap | Other Noncurrent Assets [Member]
Derivative Liability
Derivative Asset	835	693
Foreign currency hedges | Other Current Liabilities [Member]
Derivative Liability
Derivative Liability	0	(742)
Foreign currency hedges | Other Current Assets [Member]
Derivative Liability
Derivative Asset	76	0
Designated as Hedging Instrument [Member] | Interest rate swap
Derivative Liability
Derivative Asset	1,359	971	$ 753
Designated as Hedging Instrument [Member] | Foreign currency hedges
Derivatives, Fair Value [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	5
Derivative Liability
Derivative Liability		$ (742)	$ (601)
Derivative Asset	$ 76

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Derivative Financial Instruments - Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	$ 154	$ 13	$ 267	$ (144)
Foreign exchange derivative | Net sales | Designated As Hedging
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	21	(57)	(37)	(59)
Foreign exchange derivative | Cost of goods sold | Designated As Hedging
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	32	58	140	(86)
Foreign exchange derivative | Selling, general and administrative expenses | Designated As Hedging
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	(4)	13	(5)	10
Foreign exchange derivative | Other income and expenses | Designated As Hedging
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	0	(1)	(1)	(9)
Interest rate swap | Interest expense | Designated As Hedging
Derivative, Gain (Loss) on Derivative, Net
Derivative, Gain (Loss) on Derivative, Net	$ 105	$ 0	$ 170	$ 0

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Accumulated Other Comprehensive (Loss) Income - Summary of Components of Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Foreign currency transaction loss
Foreign currency transaction gain (loss)	$ 2,194	$ (1,162)	$ 918	$ (1,557)
AOCI Attributable to Parent, Net of Tax
Total accumulated other comprehensive (loss) income, beginning of period			(78,960)
Total accumulated other comprehensive (loss) income, end of period	(75,862)		(75,862)
Accumulated other comprehensive (loss) income
AOCI Attributable to Parent, Net of Tax
Total accumulated other comprehensive (loss) income, beginning of period	(76,803)	(91,530)	(78,960)	(93,194)
Gain (Loss) recognized in OCI, Net	(189)	58	950	810
Gain (Loss) reclassified from AOCI to income, Net	1,130	932	2,148	1,844
Total accumulated other comprehensive (loss) income, end of period	(75,862)	(90,540)	(75,862)	(90,540)
Changes in fair market value of hedges
Changes in AOCI, Gross
Gross, beginning of the period	1,332	1,308	289	116
Other Comprehensive Income (Loss), before Reclassifications, before Tax	240	(223)	1,397	819
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	(154)	(15)	(268)	135
Gross, ending balance	1,418	1,070	1,418	1,070
Changes in AOCI, Income tax (benefit)
Income tax (benefit), beginning of period	(341)	(474)	(105)	(42)
Income tax (benefit), Gain (Loss) recognized in OCI	(54)	81	(315)	(297)
Income tax (benefit), Gain (Loss) reclassified from AOCI to income	35	5	60	(49)
Income tax (benefit), ending of period	(360)	(388)	(360)	(388)
AOCI Attributable to Parent, Net of Tax
Total accumulated other comprehensive (loss) income, beginning of period	991	834	184	74
Gain (Loss) recognized in OCI, Net	186	(142)	1,082	522
Gain (Loss) reclassified from AOCI to income, Net	(119)	(10)	(208)	86
Total accumulated other comprehensive (loss) income, end of period	1,058	682	1,058	682
Changes in unrealized pension cost
Changes in AOCI, Gross
Gross, beginning of the period	(128,672)	(150,322)	(130,096)	(151,618)
Other Comprehensive Income (Loss), before Reclassifications, before Tax	0	0	0	0
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	1,617	1,466	3,041	2,762
Gross, ending balance	(127,055)	(148,856)	(127,055)	(148,856)
Changes in AOCI, Income tax (benefit)
Income tax (benefit), beginning of period	52,520	60,192	52,837	60,672
Income tax (benefit), Gain (Loss) recognized in OCI	0	0	0	0
Income tax (benefit), Gain (Loss) reclassified from AOCI to income	(368)	(524)	(685)	(1,004)
Income tax (benefit), ending of period	52,152	59,668	52,152	59,668
AOCI Attributable to Parent, Net of Tax
Total accumulated other comprehensive (loss) income, beginning of period	(76,152)	(90,130)	(77,259)	(90,946)
Gain (Loss) recognized in OCI, Net	0	0	0	0
Gain (Loss) reclassified from AOCI to income, Net	1,249	942	2,356	1,758
Total accumulated other comprehensive (loss) income, end of period	(74,903)	(89,188)	(74,903)	(89,188)
Cumulative translation adjustment
Changes in AOCI, Gross
Gross, beginning of the period	(1,747)	(2,328)	(1,985)	(2,414)
Other Comprehensive Income (Loss), before Reclassifications, before Tax	(368)	196	(130)	282
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	0	0	0	0
Gross, ending balance	(2,115)	(2,132)	(2,115)	(2,132)
Changes in AOCI, Income tax (benefit)
Income tax (benefit), beginning of period	105	94	100	92
Income tax (benefit), Gain (Loss) recognized in OCI	(7)	4	(2)	6
Income tax (benefit), Gain (Loss) reclassified from AOCI to income	0	0	0	0
Income tax (benefit), ending of period	98	98	98	98
AOCI Attributable to Parent, Net of Tax
Total accumulated other comprehensive (loss) income, beginning of period	(1,642)	(2,234)	(1,885)	(2,322)
Gain (Loss) recognized in OCI, Net	(375)	200	(132)	288
Gain (Loss) reclassified from AOCI to income, Net	0	0	0	0
Total accumulated other comprehensive (loss) income, end of period	$ (2,017)	$ (2,034)	$ (2,017)	$ (2,034)

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Shareholders' Equity - Summary of Share Count and Par Value Data Related to Shareholders' Equity (Details) - $ / shares	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Preferred Stock
Preferred stock, par value per share
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares outstanding	0	0
Common Stock
Common stock, par value per share
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	56,781,065	56,632,488
Common stock, shares outstanding	33,087,043	32,938,466	32,933,326	32,762,494
Treasury stock
Treasury stock, shares held	23,694,022	23,694,022

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Shareholders' Equity - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Stockholders' Equity Note [Abstract]
Common stock repurchased, shares	0	0
Common stock repurchased, value	$ 7,446
Shares are available for future issuances	$ 17,554
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures	0	0
Antidilutive securities excluded from computation of earnings per share (shares)	72,658	122,511

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Shareholders' Equity - Summary of Common Shares Outstanding (Details) - shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Roll forward of common shares outstanding
Balance at the beginning of the year	32,938,466	32,762,494
Restricted share issuances	148,577	170,832
Balance at the end of the period	33,087,043	32,933,326

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Equity-Based Compensation - Summary of Equity-Based Compensation Expense (Details) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) plan $ / shares shares	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) plan $ / shares shares	Jun. 30, 2017 USD ($)	Dec. 31, 2017 $ / shares shares
Share-based Compensation
Number of Equity-Based Compensation Plans | plan	5		5
Restricted stock units			$ 2,186	$ 1,687
Allocated Share-based Compensation Expense, Net of Tax	$ 978	$ 504	1,692	1,053
Service-Based RSUs
Share-based Compensation
Restricted stock units	563	465	1,018	1,015
Performance and market-based RSU's
Share-based Compensation
Restricted stock units	$ 643	297	$ 1,153
Restricted stock expense (reversal)				(680)
Cash Settled Awards
Share-based Compensation
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | shares	17,248		17,248		14,082
Restricted stock expense (reversal)	$ (57)	(46)	$ (15)	(8)
RSUs
Share-based Compensation
Restricted stock units	1,263	808	2,186	1,687
Income tax benefit	$ 285	$ 304	$ 494	$ 634
Officers, key employees, and non-employee directors | Service-Based RSUs
Share-based Compensation
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Forfeitures | shares			1,938
Releasable - weighted average fair value | $ / shares	$ 12.82		$ 12.82
Granted - shares | shares			74,222
Forfeited - weighted average fair value | $ / shares			$ 20.86
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Released Number | shares			130,301
Granted - weighted average fair value | $ / shares			$ 26.31
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ / shares	$ 17.26		17.26		$ 14.60
Converted - weighted average fair value | $ / shares			$ 14.22
Releasable - shares | shares	194,674		194,674
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | shares	341,330		341,330		399,347

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Equity-Based Compensation - Summary of Equity-Based Compensation Expense related to Non-Vested RSUs (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Service-Based RSUs
Share-based Compensation
Unrecognized compensation cost	$ 1,973
Weighted average period	1 year 11 months 10 days
Performance and market-based RSU's
Share-based Compensation
Unrecognized compensation cost	$ 3,326
Weighted average period	1 year 7 months 20 days
RSUs
Share-based Compensation
Unrecognized compensation cost	$ 5,299
Weighted average period	1 year 8 months 29 days

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Equity-Based Compensation - Summary of Status of Equity-Based Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Summary of Status of Equity-Based Compensation Plans
Other accrued liabilities	$ 6,885	$ 7,367
2018 Plan
Summary of Status of Equity-Based Compensation Plans
Awards originally available	2,500,000
Shares outstanding	0
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Released Number	0
Awards available for grant	2,500,000
2014 Plan
Summary of Status of Equity-Based Compensation Plans
Awards originally available	1,500,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Released Number	0
2009 Plan
Summary of Status of Equity-Based Compensation Plans
Awards originally available	3,400,000
2004 Plan
Summary of Status of Equity-Based Compensation Plans
Awards originally available	6,500,000
RSUs | 2014 Plan
Summary of Status of Equity-Based Compensation Plans
Shares outstanding	732,975
RSUs | 2009 Plan
Summary of Status of Equity-Based Compensation Plans
Shares outstanding	92,600
RSUs | 2004 Plan
Summary of Status of Equity-Based Compensation Plans
Shares outstanding	35,952
RSUs | Directors' Plan
Summary of Status of Equity-Based Compensation Plans
Shares outstanding	5,522
Performance-Based Stock Options | 2018 Plan
Summary of Status of Equity-Based Compensation Plans
Stock options outstanding	0
Performance-Based Stock Options | 2014 Plan
Summary of Status of Equity-Based Compensation Plans
Awards originally available	350,000
Shares outstanding	285,000
Stock options outstanding	285,000
Cash Settled Awards
Summary of Status of Equity-Based Compensation Plans
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	17,248	14,082
Other accrued liabilities	$ 184	$ 241
Officers, key employees, and non-employee directors | Service-Based RSUs
Share-based Compensation
Releasable - weighted average fair value	$ 12.82
Summary of Status of Equity-Based Compensation Plans
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	341,330	399,347

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Equity-Based Compensation - Performance-Based Stock Options (Details) - USD ($)		6 Months Ended
	May 26, 2015	Jun. 30, 2018
Performance and Market-based Restricted Stock Units
Share-based Compensation
Attained by performance - weighted average fair value		$ 17.66
2014 Plan
Share-based Compensation
Awards granted (in shares)		1,500,000
2014 Plan | Performance-Based Stock Options
Share-based Compensation
Awards granted (in shares)		350,000
Grant date fair value (in dollars per share)	$ 18.37
Option term (in years)	5 years
Revenue threshold for award	$ 600,000

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Equity-Based Compensation - Summary of Service-Based Restricted Stock Units (Details) - Officers, key employees, and non-employee directors - Service-Based RSUs	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Units
Outstanding at beginning of year - shares | shares	399,347
Granted - shares | shares	74,222
Released - shares | shares	(130,301)
Forfeited - shares | shares	(1,938)
Outstanding at end of year - shares | shares	341,330
Releasable - shares | shares	194,674
Weighted Average Grant Date Fair Value
Beginning of year - weighted average fair value | $ / shares	$ 14.60
Granted - weighted average fair value | $ / shares	26.31
Converted - weighted average fair value | $ / shares	14.22
Forfeited - weighted average fair value | $ / shares	20.86
End of year - weighted average fair value | $ / shares	17.26
Releasable - weighted average fair value | $ / shares	$ 12.82

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Equity-Based Compensation - Schedule of Performance-Based RSUs (Details) - shares	Jun. 30, 2018	Feb. 16, 2018	Feb. 08, 2018	Feb. 09, 2017	Mar. 31, 2016	Feb. 16, 2016
Performance and Market-based Restricted Stock Units
Share-based Compensation
Maximum potential units outstanding at June 30, 2016 - shares	0
Performance-Based RSUs
Share-based Compensation
Target Units Outstanding		31,820	40,223	71,796	4,000	92,840
Shared Based Compensation Maximum Potential Awards		63,640	80,446	143,592	8,000	185,680
Performance Shares [Member]
Share-based Compensation
Target Units Outstanding				27,113
Shared Based Compensation Maximum Potential Awards				27,113

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Equity-Based Compensation Equity-Based Compensation - Performance and Market Based RSUs (Details) - Performance and Market-based Restricted Stock Units	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Units
Outstanding at beginning of year - shares | shares	271,305
Granted - shares | shares	72,043
Attained by performance - shares | shares	18,600
Vested and released - shares | shares	(72,456)
Forfeited - shares | shares	(21,700)
Outstanding at end of year - shares | shares	267,792
Maximum potential units outstanding at June 30, 2016 - shares | shares	0
Weighted Average Grant Date Fair Value
Beginning of year - weighted average fair value | $ / shares	$ 18.77
Granted - weighted average fair value | $ / shares	28.75
Attained by performance - weighted average fair value | $ / shares	17.66
Vested and released - weighted average fair value | $ / shares	18.66
Forfeited - weighted average fair value | $ / shares	17.66
End of year - weighted average fair value | $ / shares	21.44
Maximum potential units outstanding at June 30, 2016 - weighted average fair value | $ / shares	$ 0.00

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Fair Value Measurements - Summary of Financial Liability Measured at Fair Value on a Recurring Basis (Details) - Designated As Hedging - Cash Flow Hedge - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest rate swap
Recurring financial liability that was measured at carrying value
Realized gain (loss) on cash flow hedge	$ (170)	$ 0
Derivative Asset	1,359	971	$ 753
Foreign currency hedges
Recurring financial liability that was measured at carrying value
Derivative liability		742	$ 601
Realized gain (loss) on cash flow hedge	97	38
Derivative Asset	76
Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap
Recurring financial liability that was measured at carrying value
Derivative liability	(1,359)	(971)
Recurring | Significant Other Observable Inputs (Level 2) | Foreign currency hedges
Recurring financial liability that was measured at carrying value
Derivative liability		742
Derivative Asset	76
Recurring | Carrying Value | Interest rate swap
Recurring financial liability that was measured at carrying value
Derivative liability	(1,359)	(971)
Recurring | Carrying Value | Foreign currency hedges
Recurring financial liability that was measured at carrying value
Derivative liability		$ 742
Derivative Asset	$ 76

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Fair Value Measurements - Reconciliation of Recurring Financial Liability Related to Interest Rate Swaps (Details) - Designated As Hedging - Cash Flow Hedge - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Interest rate swap
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Cost of Hedge Net of Cash Received	$ 0
Reconciliation of the recurring financial derivatives
Beginning balance, derivative asset	971	$ 753
Total gains/(losses) for the period:
Included in earnings	(170)	0
Included in other comprehensive income	558	218
Ending balance, derivative asset	1,359	971
Foreign currency hedges
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Cost of Hedge Net of Cash Received	(21)	(132)
Reconciliation of the recurring financial derivatives
Beginning balance, derivative liability	742	601
Total gains/(losses) for the period:
Included in earnings	97	38
Included in other comprehensive income	742	(47)
Ending balance, derivative liability		$ 742
Ending balance, derivative asset	$ 76

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Income Taxes - Schedule of Effective Income Tax Rate (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Effective income tax rate	37.70%	28.40%	30.20%	29.40%

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reconciliation of effective income taxes rate
Effective income tax rate	37.70%	28.40%	30.20%	29.40%
Accrued for interest and penalties related to uncertain income tax	$ 0	$ 176,000	$ 14,000	$ 352,000
U.S. Federal Tax and Jobs Act [Member]
Income Taxes [Line Items]
Tax Adjustments, Settlements, and Unusual Provisions	$ 0		$ 241

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Business Combinations - Narratives (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	May 15, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Business Acquisition
Net cash paid				$ 0	$ 19,265
Cost of goods sold		$ 76,208	$ 69,892	$ 151,305	$ 135,822
Noliac A/S
Business Acquisition
Net cash paid	$ 19,121
Cash acquired in acquisition	199
Acquisition related cost	$ 291

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Business Combinations - Acquisition (Details) - USD ($) $ in Thousands		6 Months Ended
	May 15, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Business Acquisition
Goodwill		$ 71,057		$ 71,057
Net cash paid		$ 0	$ 19,265
Noliac A/S
Business Acquisition
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	$ 9,142
Current assets	2,836
Property, plant and equipment	580
Other assets	395
Goodwill	9,313
Fair value of assets acquired	22,266
Less fair value of liabilities acquired	(3,145)
Net cash paid	$ 19,121