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 Ended July 1, 2012

OR

¨ 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)
905 West Boulevard North,                 Elkhart, IN	46514
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  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 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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 20, 2012: 33,939,275.

CTS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I.    FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Statements of Earnings - For the Three and Six Months Ended July 1, 2012 and July 3, 2011		3
	Unaudited Condensed Consolidated Statements of Comprehensive Earnings - For the Three and Six Months Ended July 1, 2012 and July 3, 2011		4
	Unaudited Condensed Consolidated Balance Sheets - As of July 1, 2012 and December 31, 2011		5
	Unaudited Condensed Consolidated Statements of Cash Flows - For the Six Months Ended July 1, 2012 and July 3, 2011		6
	Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		30
Item 4.	Controls and Procedures		30
PART II.   OTHER INFORMATION
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		31
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3	Defaults Upon Senior Securities		31
Item 4	Mine Safety Disclosures		31
Item 5	Other Information		31
Item 6.	Exhibits		31
SIGNATURES			33

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS—UNAUDITED

(In thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Net sales	$	154,294		$	146,919		$	301,263		$	298,437
Costs and expenses:
Cost of goods sold		128,356			119,051			253,276			241,409
Insurance recovery for business interruption — casualties		(7,423	)		—			(11,050	)		—
Selling, general and administrative expenses		19,378			18,057			38,782			36,429
Research and development expenses		5,131			4,590			11,240			9,619
Insurance recovery for property damage — casualties		—			—			(1,769	)		—
Restructuring and impairment charge — Note M		3,139			694			3,139			694
Operating earnings		5,713			4,527			7,645			10,286
Other (expense)/income:
Interest expense		(626	)		(511	)		(1,285	)		(1,003	)
Interest income		467			276			916			472
Other		(1,041	)		743			(466	)		1,873
Total other (expense)/income		(1,200	)		508			(835	)		1,342
Earnings before income taxes		4,513			5,035			6,810			11,628
Income tax expense		1,212			903			1,226			2,380
Net earnings	$	3,301		$	4,132		$	5,584		$	9,248
Net earnings per share — Note J
Basic	$	0.10		$	0.12		$	0.16		$	0.27
Diluted	$	0.10		$	0.12		$	0.16		$	0.26
Cash dividends declared per share	$	0.035		$	0.03		$	0.07		$	0.06
Average common shares outstanding:
Basic		34,022			34,375			34,064			34,334
Diluted		34,574			35,025			34,647			35,050

See notes to unaudited condensed consolidated financial statements.

3

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS—UNAUDITED

(In thousands of dollars)

	Three Months Ended					Six Months Ended
	July 1, 2012			July 3, 2011		July 1, 2012			July 3, 2011
Net earnings	$	3,301		$	4,132	$	5,584		$	9,248
Other comprehensive earnings/(loss):
Cumulative translation adjustment		(917	)		7		245			995
Amortization of retirement benefit adjustments (net of tax)		1,311			750		2,269			1,486
Unrealized loss on cash flow hedges (net of tax)		(507	)		—		(507	)		—
Comprehensive earnings	$	3,188		$	4,889	$	7,591		$	11,729

See notes to unaudited condensed consolidated financial statements.

4

CTS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars except share amounts)

	(Unaudited) July 1, 2012			December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	83,039		$	76,412
Accounts receivable, less allowances (2012 — $1,116; 2011 — $1,100)		90,604			88,345
Inventories — Note D		78,664			92,540
Other current assets		24,083			26,089
Total current assets		276,390			283,386
Property, plant and equipment, less accumulated depreciation (2012 - $241,634; 2011 — $241,585)		91,171			84,860
Other Assets
Prepaid pension asset		7,767			4,359
Goodwill — Note L		5,855			500
Other intangible assets, net — Note L		31,911			29,886
Deferred income taxes		75,045			76,200
Other		1,950			1,624
Total other assets		122,528			112,569
Total Assets	$	490,089		$	480,815
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	66,477		$	80,468
Accrued liabilities		42,901			43,769
Total current liabilities		109,378			124,237
Long-term debt — Note E		97,000			74,400
Other long-term obligations		18,241			18,881
Shareholders’ Equity
Preferred stock — authorized 25,000,000 shares without par value; none issued		—			—
Common stock — authorized 75,000,000 shares without par value; 55,208,565 shares issued at July 1, 2012 and 54,790,110 shares issued at December 31, 2011		291,024			287,661
Additional contributed capital		38,402			39,161
Retained earnings		355,410			352,205
Accumulated other comprehensive loss		(113,139	)		(115,146	)
		571,697			563,881
Cost of common stock held in treasury (2012 — 21,296,593 and 2011 — 20,724,106 shares)		(306,227	)		(300,584	)
Total shareholders’ equity		265,470			263,297
Total Liabilities and Shareholders’ Equity	$	490,089		$	480,815

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
	July 1, 2012			July 3, 2011
Cash flows from operating activities:
Net earnings	$	5,584		$	9,248
Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities:
Depreciation and amortization		9,646			8,766
Prepaid pension asset		(3,408	)		(4,302	)
Equity-based compensation — Note B		2,171			2,361
Restructuring and impairment charges — Note M		3,139			694
Amortization of retirement benefit adjustments — Note F		3,467			2,542
Insurance recovery for business interruption and property damage — casualties		(12,819	)		—
Insurance proceeds for business interruption and property damage other than property, plant and equipment — casualties		13,280			—
Other		(1,198	)		(1,481	)
Changes in assets and liabilities, net of acquisition
Accounts receivable		(383	)		10,188
Inventories		15,252			(10,633	)
Other current assets		1,218			(1,369	)
Accounts payable and accrued liabilities		(23,964	)		(7,174	)
Total adjustments		6,401			(408	)
Net cash provided by operating activities		11,985			8,840
Cash flows from investing activities:
Capital expenditures		(6,877	)		(6,526	)
Capital expenditures to replace property, plant and equipment damaged in casualties		(2,859	)		—
Insurance proceeds for property, plant and equipment damaged in casualties		2,250			—
Proceeds from sale of assets held for sale		350			—
Payment for acquisition, net of cash acquired		(14,689	)		(2,930	)
Net cash used in investing activities		(21,825	)		(9,456	)
Cash flows from financing activities:
Payments of long-term debt — Note E		(2,718,850	)		(1,989,500	)
Proceeds from borrowings of long-term debt — Note E		2,741,450			1,994,000
Payments of short-term notes payable		(1,666	)		(2,203	)
Proceeds from borrowings of short-term notes payable		1,666			2,449
Purchase of treasury stock		(5,643	)		(326	)
Dividends paid		(2,385	)		(2,056	)
Exercise of stock options		1,401			472
Other		199			204
Net cash provided by financing activities		16,172			3,040
Effect of exchange rate on cash and cash equivalents		295			(683	)
Net increase in cash and cash equivalents		6,627			1,741
Cash and cash equivalents at beginning of year		76,412			73,315
Cash and cash equivalents at end of period	$	83,039		$	75,056
Supplemental cash flow information — outstanding
Cash paid during the period for:
Interest	$	974		$	885
Income taxes — net	$	2,788		$	2,060

See notes to unaudited condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

July 1, 2012

NOTE A — Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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

NOTE B — Equity-Based Compensation

At July 1, 2012, CTS had five equity-based compensation plans: the 1996 Stock Option Plan (“1996 Plan”), the 2001 Stock Option Plan (“2001 Plan”), the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), and the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”). All of these plans, except the Directors’ Plan, were approved by shareholders. As of December 31, 2009, additional grants can only be made under the 2004 and 2009 Plans. CTS believes that equity-based awards align the interest of employees with those of its shareholders.

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

The following table summarizes the compensation expense included in the Unaudited Condensed Consolidated Statements of Earnings for the three and six months ended July 1, 2012 and July 3, 2011, respectively, relating to these plans:

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Restricted stock units		957		1,181		2,171		2,361

The following table summarizes the status of these plans as of July 1, 2012:

	2009 Plan		2004 Plan		2001 Plan		1996 Plan
Awards originally available		3,400,000		6,500,000		2,000,000		1,200,000
Stock options outstanding				257,200		246,450		48,500
Restricted stock units outstanding		545,551		107,823
Options exercisable				257,200		246,450		48,500
Awards available for grant		2,160,455		270,800

7

Stock Options

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

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

A summary of the status of stock options as of July 1, 2012 and July 3, 2011, and changes during the six-month periods then ended, is presented below:

	July 1, 2012					July 3, 2011
	Options			Weighted- Average Exercise Price		Options			Weighted- Average Exercise Price
Outstanding at beginning of year		728,050		$	10.24		1,093,063		$	12.61
Exercised		(154,750	)	$	8.71		(59,263	)	$	7.91
Expired		(11,000	)	$	16.22		(195,750	)	$	21.99
Forfeited		(10,150	)	$	9.41		—		$	—
Outstanding at end of period		552,150		$	10.57		838,050		$	10.75
Exercisable at end of period		552,150		$	10.57		838,050		$	10.75

The total intrinsic value of share options exercised during the six-month periods ended July 1, 2012 and July 3, 2011, were $255,000 and $209,000, respectively.

The weighted average remaining contractual life of options outstanding and options exercisable at July 1, 2012 and July 3, 2011 were 1.7 years and 2.2 years, respectively. The aggregate intrinsic values of options outstanding and options exercisable at July 1, 2012 and July 3, 2011 were approximately $182,000 and $378,000, respectively.

There were no unvested stock options at July 1, 2012.

The following table summarizes information about stock options outstanding at July 1, 2012:

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding And Exercisable at 7/1/12		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 7.70 – 11.11		450,350		1.48		9.81
$ 13.68 – 16.24		101,800		3.34		13.93

Service-Based Restricted Stock Units

Service-based restricted stock units (“RSUs”) entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers and key employees as compensation. Generally, the RSUs vest over a three to five-year period. A summary of the status of RSUs as of July 1, 2012 and July 3, 2011, and changes during the six-month periods then ended is presented below:

	July 1, 2012					July 3, 2011
	RSUs			Weighted-average Grant-Date Fair Value		RSUs			Weighted-average Grant-Date Fair Value
Outstanding at beginning of year		701,449		$	9.35		807,601		$	8.39
Granted		231,750		$	10.41		219,100		$	11.89
Converted		(252,964	)	$	8.51		(297,104	)	$	8.52
Forfeited		(26,861	)	$	9.06		(39,943	)	$	8.89
Outstanding at end of period		653,374		$	10.07		689,654		$	9.42
Weighted-average remaining contractual life		8.3 years					6.7 years

8

CTS recorded compensation expense of approximately $496,000 and $1,249,000 related to service-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $691,000 and $1,400,000 related to service-based restricted stock units during the three and six month periods ended July 3, 2011, respectively.

As of July 1, 2012, there was $2.6 million of unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted-average period of 1.2 years. CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

Performance-Based Restricted Stock Units

On February 2, 2010, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 78,000 units in 2012 subject to certification of the 2011 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets and, as a result, 49,320 units were awarded and vested.

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

On February 8, 2012, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 45,850 units in 2014 subject to certification of the 2013 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets.

On February 8, 2012, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 39,300 units in 2014 subject to certification of the 2013 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of free cash flow targets.

CTS recorded compensation expense of approximately $229,000 and $459,000 related to performance-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $177,000 and $343,000 related to performance-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. As of July 1, 2012 there was approximately $1,036,000 of unrecognized compensation cost related to performance-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.1 year.

Market-Based Restricted Stock Units

On July 2, 2007, CTS granted a market-based restricted stock unit award for an executive officer. An aggregate of 25,000 units may be earned in performance years ending in the following three consecutive years on the anniversary of the award date. Vesting may occur in the range from zero percent to 150% of the target award on the end date of each performance period and is tied exclusively to CTS total stockholder return relative to 32 enumerated peer group companies’ total stockholder return rates. The vesting rate will be determined using a matrix based on a percentile ranking of CTS total stockholder return with peer group total shareholder return over a three-year period. During the year ended December 31, 2010, 12,500 units was earned and awarded to the executive officer. There were no units awarded in 2011.

On February 2, 2010, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 117,000 units in 2012. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates and, as a result, 67,130 units were awarded and vested.

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

9

On February 8, 2012, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 45,850 units in 2014. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates.

CTS recorded compensation expense of approximately $232,000 and $463,000 related to market-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $313,000 and $606,000 related to market-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. As of July 1, 2012, there was approximately $782,000 of unrecognized compensation cost related to market-based RSUs. That cost is expected to be recognized over a weighted-average period of 0.9 year.

Stock Retirement Plan

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

NOTE C — Acquisition

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

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

	Estimated Fair Values
($ in thousands)	At January 23, 2012
Current assets	$	9,077
Property, plant and equipment		6,231
Goodwill		5,355
Amortizable intangible assets		3,570
Other assets		231
Fair value of assets acquired, including $3,578 cash acquired		24,464
Less fair value of liabilities acquired		(6,197	)
Net assets acquired		18,267
Cash acquired		3,578
Net cash paid	$	14,689

Included in current assets is the fair value of accounts receivable of $2,479. Goodwill recorded in connection with the above acquisition is primarily attributable to the synergies expected to arise after the Company’s acquisition of the business and the assembled workforce of the acquired business. None of the goodwill is expected to be deductible for tax purposes.

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

	Three Months Ended			Six Months Ended
($ in thousands)	July 1, 2012			July 1, 2012
Net Sales	$	3,955		$	6,946
Loss before income taxes	$	(272	)	$	(111	)

The following table summarizes the combined net sales and earnings before income taxes of CTS and Valpey-Fisher on a pro forma basis as if the acquisition date had occurred at the beginning of the reporting period:

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
	(Proforma)		(Proforma)		(Proforma)		(Proforma)
Net Sales	$	154,294	$	150,804	$	302,379	$	305,841
Earnings before income taxes	$	4,528	$	5,136	$	6,812	$	11,617

10

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

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

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

The Fordahl acquisition was accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets based on the fair market values on the date of acquisition. CTS determined the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired and liabilities assumed. CTS finalized the purchase price allocation at December 31, 2011. The land and building, machinery and equipment and intangible assets are classified as Level 3 under the fair value hierarchy. The pro forma effect of this acquisition is not material to CTS’ results of operations or financial position.

NOTE D — Inventories

Inventories consist of the following:

($ in thousands)	July 1, 2012		December 31, 2011
Finished goods	$	13,592	$	14,697
Work-in-process		17,827		20,602
Raw materials		47,245		57,241
Total inventories	$	78,664	$	92,540

NOTE E — Debt

On January 10, 2012, CTS amended its November 18, 2010 unsecured revolving credit agreement. This amendment provided for an increase in the revolving credit facility to $200 million and increased the accordion feature, whereby CTS can expand the facility to $300 million, subject to participating banks’ approval. Additionally, among other covenants, the amendment reduced the applicable margin by 25 basis points, increased the total consideration the company may pay for non-U.S. based acquisitions, and extended the term of the credit agreement through January 10, 2017.

Long-term debt was comprised of the following:

($ in thousands)	July 1, 2012		December 31, 2011
Revolving credit agreement, weighted-average interest rate of 1.8% (2012), and 1.9% (2011) due in 2017 and 2015, respectively	$	97,000	$	74,400

There was $97.0 million outstanding under the $200 million revolving credit agreement at July 1, 2012, and $74.4 million outstanding under the $150 million revolving credit agreement at December 31, 2011. The Company had $100.4 million available under the $200 million credit agreement at July 1, 2012, net of standby letters of credit of $2.6 million, and $72.8 million available under the $150 million credit agreement at December 31, 2011, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon London Interbank Offered Rate and the Company’s quarterly total leverage ratio. CTS pays a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.35 percent per annum at July 1, 2012. The revolving credit agreement requires, among other things, that CTS comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure of CTS to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. CTS was in compliance with all debt covenants at July 1, 2012. The

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revolving credit agreement requires CTS to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting CTS’ ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with CTS’ subsidiaries and affiliates; and make stock repurchases and dividend payments.

CTS uses interest rate swaps to convert the line of credit’s variable rate of interest into a fixed rate. During the second quarter of 2012, CTS entered into four separate interest rate swap agreements to fix interest rates on $50 million of long-term debt for the periods January 2013 to January 2017. The difference to be paid or received under the terms of the swap agreement will be accrued as interest rates change and recognized as an adjustment to interest expense for the related line of credit. Changes in the variable interest rates to be paid or received will have a corresponding effect on future cash flows.

These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in Other Comprehensive Income. During the second quarter of 2012, an unrealized loss of approximately $832,000 was recorded in Other Comprehensive Income with approximately $79,000 recorded as accrued liabilities section and the remaining $753,000 recorded as a non-current liability in Other Long-term Obligations on the Condensed Consolidated Balance Sheets.

As a result of the use of these derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors. CTS’ established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties.

NOTE F — Retirement Plans

Net pension expense/(income) for the three months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	683		$	687		$	31		$	35
Interest cost		2,987			3,078			143			152
Expected return on plan assets (1)		(5,376	)		(5,916	)		(111	)		(146	)
Amortization of prior service cost		151			153			—			—
Amortization of loss		1,517			1,050			74			70
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	244		$	(948	)	$	137		$	111

Net pension expense/(income) for the six months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	1,367		$	1,374		$	62		$	70
Interest cost		5,978			6,156			285			301
Expected return on plan assets (1)		(10,753	)		(11,832	)		(220	)		(289	)
Amortization of prior service cost		302			306			—			—
Amortization of loss		3,037			2,100			148			139
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	213		$	(1,896	)	$	275		$	221

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

Net post retirement expense for the three and six months ended July 1, 2012 and July 3, 2011 for our post-retirement plan includes the following components:

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
OTHER POSTRETIREMENT BENEFIT PLAN
Service cost	$	2		$	4		$	4		$	8
Interest cost		64			72			128			144
Amortization of gain		(10	)		(1	)		(20	)		(3	)
Postretirement expense	$	56		$	75		$	112		$	149

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NOTE G —  Segments

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

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

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

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

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

($ in thousands)	Components and Sensors			EMS			Total
Second Quarter of 2012
Net sales to external customers	$	76,823		$	77,471		$	154,294
Segment operating earnings before corporate and shared services charges	$	8,398		$	6,086		$	14,484
Corporate and shared services charges		(3,034	)		(1,906	)		(4,940	)
Segment operating earnings	$	5,364		$	4,180		$	9,544
Total assets	$	361,483		$	128,606		$	490,089
Second Quarter of 2011
Net sales to external customers	$	68,037		$	78,882		$	146,919
Segment operating earnings before corporate and shared services charges	$	8,846		$	2,259		$	11,105
Corporate and shared services charges		(3,995	)		(1,889	)		(5,884	)
Segment operating earnings	$	4,851		$	370		$	5,221
Total assets	$	355,841		$	139,582		$	495,423
First Six Months of 2012
Net sales to external customers	$	153,241		$	148,022		$	301,263
Segment operating earnings before corporate and shared services charges	$	15,742		$	6,541		$	22,283
Corporate and shared services charges		(7,358	)		(3,449	)		(10,807	)
Segment operating earnings(1)	$	8,384		$	3,092		$	11,476
Total assets	$	361,483		$	128,606		$	490,089
First Six Months of 2011
Net sales to external customers	$	140,068		$	158,369		$	298,437
Segment operating earnings before corporate and shared services charges	$	18,651		$	4,089		$	22,740
Corporate and shared services charges		(8,044	)		(3,716	)		(11,760	)
Segment operating earnings	$	10,607		$	373		$	10,980
Total assets	$	355,841		$	139,582		$	495,423

(1) EMS segment’s operating earnings of $3,092 includes $1,769 of insurance recovery for property damage related to the flood at CTS Thailand’s manufacturing facility.

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

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Total segment operating earnings	$	9,544		$	5,221		$	11,476		$	10,980
Restructuring charges		(3,831	)		(694	)		(3,831	)		(694	)
Interest expense		(626	)		(511	)		(1,285	)		(1,003	)
Interest income		467			276			916			472
Other (expense)/income		(1,041	)		743			(466	)		1,873
Earnings before income taxes	$	4,513		$	5,035		$	6,810		$	11,628

NOTE H — Contingencies

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

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

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

Scotland EMS Manufacturing Facility Fire

During the second quarter of 2011, a fire occurred at the Company’s Scotland EMS manufacturing facility. The fire damaged approximately $1.6 million of inventory and $0.2 million of machinery and equipment at net book value. Property insurance coverage with a $0.1 million deductible had substantially covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. Business interruption insurance had substantially covered the lost sales impact and related fixed costs in 2011.

During the second quarter of 2012, CTS recorded a recovery of approximately $0.2 million for business interruption in CTS’ Condensed Consolidated Statements of Earnings for the three months ended July 1, 2012. This recovery reflects the final settlement with CTS’ insurance carrier.

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In the first half of 2012, CTS recovered approximately $1.0 million from the Company’s insurance carriers and recorded a recovery of approximately $0.9 million for business interruption, after deducting approximately $0.1 million for certain expenses, in CTS’ Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012.

Thailand EMS Manufacturing Facility Flood

During the fourth quarter of 2011, CTS’ Thailand EMS manufacturing facility was flooded. Based on preliminary estimates, the flood damaged approximately $0.5 million of inventory and $0.5 million of fixed assets at net book value. The Company also incurred approximately $2.5 million of fixed costs at this facility. Local and global property insurance coverage covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. CTS also has business interruption insurance under these policies that covers the lost sales impact and fixed costs.

During the second quarter of 2012, CTS received cash of approximately $7.5 million from the Company’s insurance carriers. Out of the $7.5 million cash, approximately $7.2 million was for business interruption and the remaining $0.3 million was for the reimbursement of costs related to inventory.

In the first half of 2012, CTS received cash of approximately $14.7 million from the Company’s insurance carriers. Out of the $14.7 million cash, approximately $11.6 million was for business interruption and the remaining $3.1 million was for the reimbursement of costs related to property damage. Part of the cash received was to relieve the insurance receivable balance of $2.4 million recorded at December 31, 2011.

CTS recorded a recovery of approximately $10.2 million for business interruption and $1.8 million for property damage in CTS’ Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012. CTS continues to incur costs related to the flood and process the appropriate claim with the Company’s insurance carrier related to increased expenses and lost sales impact.

NOTE I — Fair Value Measurement

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

The table below summarizes the non-financial assets that were measured and recorded at fair value on a non-recurring basis as of July 1, 2012 and the loss recorded during the six months ended July 1, 2012 on those assets:

($ in thousands)
Description	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Six Months Ended July 1, 2012
Goodwill	$	5,855	$	—	$	—	$	5,855	$	—
Intangible assets, other than goodwill	$	31,911	$	—	$	—	$	31,911	$	—
Long-lived assets	$	91,171	$	—	$	—	$	91,171	$	1,278

The fair value of these assets were measured and recorded using an income approach. Projected future cash flows related to these assets were used under this approach to determine their fair values.

The following table reconciles the beginning and ending balance of CTS’ goodwill for the period ended July 1, 2012:

($ in thousands)
	C&S		EMS		Total
Balance at January 1, 2012	$	—	$	500		$	500
2012 first half activity — Note C, “Acquisitions”		5,355		—			5,355
Balance at July 1, 2012	$	5,355	$	500		$	5,855

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

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The following table reconciles the beginning and ending balances of CTS’ intangible assets, other than goodwill for the period ended July 1, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	29,886
2012 addition — Note C, “Acquisitions”		3,570
2012 first half amortization expense		(1,545	)
Balance at July 1, 2012	$	31,911

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

The following table reconciles the beginning and ending balances of CTS’ long-lived assets for the period ended July 1, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	84,860
Capital expenditures		6,877
Capital expenditures to replace property, plant & equipment damaged in Thailand flood		2,859
Fixed assets acquired in Valpey-Fisher acquisition — Note C		6,231
Depreciation expense		(8,101	)
Transfer to asset held for sale		(350	)
Impairment charge		(1,239	)
Foreign exchange impact and other		34
Balance at July 1, 2012	$	91,171

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of July 1, 2012:

($ in thousands)	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Quarter Ended July 1, 2012
Interest rate swap — cash flow hedge	$	832	$	—	$	832	$	—	$	—

The fair value of CTS’ interest rate swaps were measured using a market approach which uses current industry information. There is a readily determinable market and these swaps are classified within level 2 of the fair value hierarchy. $79,000 of the fair value of these swaps are classified as Accrued liabilities and the remaining $753,000 are classified as Other liabilities on CTS’ Consolidated Balance Sheets.

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

NOTE J — Earnings Per Share

The table below provides a reconciliation of the numerator and denominator of the basic and diluted earnings per share (“EPS”) computations. Basic earnings per share is calculated using the weighted average number of common shares outstanding as the denominator and net earnings as the numerator. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the numerator. All anti-dilutive shares are excluded from the computation of diluted earnings per share. The calculations below provide net earnings, weighted average common shares outstanding, and earnings per share for both basic and diluted EPS for the three and six month periods ended July 1, 2012 and July 3, 2011.

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($ in thousands, except per share amounts)	Net Earnings (Numerator)		Shares (in thousands) (Denominator)		Per Share Amount
Second Quarter 2012
Basic EPS	$	3,301		34,022		0.10
Effect of dilutive securities:
Equity-based compensation plans		—		552
Diluted EPS	$	3,301		34,574		0.10
Second Quarter 2011
Basic EPS	$	4,132		34,375	$	0.12
Effect of dilutive securities:
Equity-based compensation plans		—		650
Diluted EPS	$	4,132		35,025	$	0.12
First Six Months of 2012
Basic EPS	$	5,584		34,064		0.16
Effect of dilutive securities:
Equity-based compensation plans		—		583
Diluted EPS	$	5,584		34,647		0.16
First Six Months of 2011
Basic EPS	$	9,248		34,334	$	0.27
Effect of dilutive securities:
Equity-based compensation plans		—		716
Diluted EPS	$	9,248		35,050	$	0.26

The following table shows the potentially dilutive securities which have been excluded from the three and six-month periods 2012 and 2011 dilutive earnings per share calculation because they are either anti-dilutive, or the exercise price exceeds the average market price.

	Three Months Ended				Six Months Ended
(Number of Shares in Thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Stock options where the assumed proceeds exceed the average market price		282		402		282		402

NOTE K — Treasury Stock

Common stock held in treasury totaled 21,296,593 shares with a cost of $306.2 million at July 1, 2012 and 20,724,106 shares with a cost of $300.6 million at December 31, 2011. Approximately 7.5 million shares are available for future issuances.

In May 2008, CTS’ Board of Directors authorized a program to repurchase up to one million shares of its common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the first half of 2012, 572,487 shares were repurchased at a cost of approximately $5.6 million or $9.86 per share.

NOTE L — Goodwill and Other Intangible Assets

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

	July 1, 2012					December 31, 2011
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	53,923	$	(23,730	)	$	51,424	$	(22,390	)
Patents		10,319		(10,319	)		10,319		(10,319	)
Other intangibles		2,291		(573	)		1,220		(368	)
Total		66,533		(34,622	)		62,963		(33,077	)
Goodwill		5,855		—			500		—
Total other intangible assets and goodwill	$	72,388	$	(34,622	)	$	63,463	$	(33,077	)

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Of the net intangible assets excluding goodwill at July 1, 2012, $26.5 million relates to the Components and Sensors segment and $5.4 million relates to the EMS segment. Of the goodwill at July 1, 2012, $5.4 million relates to Components and Sensors segment and $0.5 million relates to the EMS segment. The goodwill at December 31, 2011 relates to the EMS segment. CTS recorded amortization expense of $0.7 million and $1.5 million during the three and six-month periods ended July 1, 2012, respectively. CTS recorded amortization expense of $0.7 million and $1.3 million during the three and six-month periods ended July 3, 2011, respectively. The weighted average remaining amortization period for the amortizable intangible assets is 13.2 years. The weighted average remaining amortization period for customer lists/relationships is 13.7 years and for the other intangibles is 4.2 years. CTS estimates remaining amortization expense of $1.6 million in 2012, $3.1 million in 2013, $3.0 million in 2014, $2.9 million in 2015, $2.8 million in 2016 and $18.5 million thereafter.

NOTE M — Restructuring Charges

During June of 2012, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions will result in the elimination of approximately 260 positions. These actions are expected to be substantially complete by the middle of the fourth quarter of 2012. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 1, 2012:

($ in millions)             June 2012 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	2.1	$	1.8
Asset impairment charge		1.2		1.2
Other charge		0.1		0.1
Restructuring and impairment charges	$	3.4	$	3.1
Inventory write-down	$	0.6	$	0.6
Equipment relocation		0.5		0.1
Other charges		0.5		—
Restructuring-related charges	$	1.6	$	0.7
Total restructuring and restructuring-related charges		5.0		3.8

Of the restructuring and restructuring-related charges incurred, $1.2 million relates to the Components and Sensors segment and $2.6 million relates to the EMS segment. Restructuring and impairment charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings. Restructuring-related charges are reported as a component of Cost of Goods Sold on the Unaudited Consolidated Statements of Earnings.

The following table displays the restructuring reserve activity related to the realignment for the period ended July 1, 2012:

($ in millions)             June 2012 Plan
Restructuring liability at April 1, 2012	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		2.0
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	1.3

Included in the restructuring activities discussed above, CTS will consolidate its operations from the United Kingdom (“UK”) EMS manufacturing facility and the Tucson, AZ Components and Sensors facility into other facilities. The EMS operations at the UK EMS facility are currently being transferred to CTS’ EMS facilities located in Londonderry, New Hampshire and Matamoros, Mexico. The Components and Sensors operations at the Tucson, AZ facility are currently being transferred to CTS’ Components and Sensors facility located in Albuquerque, New Mexico.

During April of 2011, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions resulted in the elimination of approximately 30 positions. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 1, 2012:

($ in millions)             April 2011 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	0.8	$	0.7
Total restructuring and impairment charge	$	0.8	$	0.7

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Of the restructuring charges incurred, $0.5 million relates to the Components and Sensors segment and $0.2 million relates to the EMS segment. Restructuring charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings. These restructuring actions ended in second quarter 2011.

The following table displays the restructuring reserve activity related to the realignment for the period ended July 1, 2012:

($ in millions)             April 2011 Plan
Restructuring liability at January 1, 2011	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		0.7
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	—

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

Forward-Looking Statements

This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. Forward-looking statements are based on management’s expectations, certain assumptions and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof 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 businesses in which CTS operates; 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 such as the Japan earthquake and the Thailand flood; the ability to protect our intellectual property; pricing pressures and demand for our products; and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1.A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Overview

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

As discussed in more detail throughout the MD&A:

• Net sales in the second quarter of 2012 of $154.3 million were reported through two segments, Components and Sensors and Electronic Manufacturing Services (“EMS”). Net sales increased by $7.4 million, or 5.0%, in the second quarter of 2012 from the second quarter of 2011. Net sales in the Components and Sensors segment increased by 12.9% versus the second quarter of 2011, while net sales in the EMS segment decreased by 1.8%.

• Gross margin as a percent of net sales was 16.8% in the second quarter of 2012 compared to 19.0% in the second quarter of 2011. Approximately 3 percentage points of the decrease in gross margin resulted from approximately $5 million of expenses and losses related primarily to the flood at our Thailand facility. This was partially offset by lower commodity prices and favorable segment mix as the Components and Sensors segment percent of total sales increased to 49.8% of consolidated sales from 46.3% in the same period of 2011.

• Insurance recovery for business interruption primarily due to the flood at our Thailand facility totaled $7.4 million in the second quarter of 2012. This recovery offsets related expenses and losses that negatively impacted our gross margin.

• Selling, general and administrative (“SG&A”) expenses were $19.4 million, or 12.6% of net sales, in the second quarter of 2012 versus $18.1 million, or 12.3% of net sales, in the second quarter of 2011.

• Research and development (“R&D”) expenses were $5.1 million, or 3.3% of net sales, in the second quarter of 2012 compared to $4.6 million, or 3.1% of net sales, in the second quarter of 2011.

• During the quarter we initiated certain restructuring actions to reorganize certain operations to further improve our cost structure. The cost of these actions was approximately $3.8 million.

• Pension expense was $0.4 million in the second quarter of 2012 compared to pension income of $0.8 million in the second quarter of 2011. This non-cash increase in pension expense was driven by changes in certain actuarial assumptions related to our defined benefit plans.

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• Interest and other expense was $1.2 million in the second quarter of 2012 compared to income of $0.5 million in the same quarter of 2011. The unfavorable impact of $1.7 million was primarily due to foreign exchange losses as the United States Dollar strengthened compared to the European currencies in which we do business and the Chinese Renminbi.

• Income tax expense was $1.2 million and the effective tax rate was 26.9% in the second quarter of 2012 versus expense of $0.9 million and effective tax rate of 17.9% in the same quarter of 2011. The increase in tax rate was primarily due to changes in the mix of earnings by jurisdiction and the expiration of certain tax benefits.

• Net earnings were $3.3 million, or $0.10 per diluted share, in the second quarter of 2012. This compares with $4.1 million, or $0.12 per diluted share, in the second quarter of 2011. The second quarter 2012 diluted earnings per share included a restructuring and related charge of $0.08 per diluted share. The second quarter 2011 diluted earnings per share included a restructuring charge and additional legal costs of $0.02 per diluted share.

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Critical Accounting Policies

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

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

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

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

• Income taxes

• Retirement plans

• Equity-based compensation

In the second quarter of 2012, there were no changes in the above critical accounting policies.

Results of Operations

Comparison of Second Quarter 2012 and Second Quarter 2011

Segment Discussion

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

The following table highlights the segment results for the quarters ended July 1, 2012 and July 3, 2011:

($ in thousands)	Components and Sensors			EMS			Total
Second Quarter of 2012
Net sales to external customers	$	76,823		$	77,471		$	154,294
Segment operating earnings before corporate and shared services charges	$	8,398		$	6,086		$	14,484
Corporate and shared services charges		(3,034	)		(1,906	)		(4,940	)
Segment operating earnings	$	5,364		$	4,180		$	9,544
% of Net sales		7.0	%		5.4	%		6.2	%
Second Quarter of 2011
Net sales to external customers	$	68,037		$	78,882		$	146,919
Segment operating earnings before corporate and shared services charges	$	8,846		$	2,259		$	11,105
Corporate and shared services charges		(3,995	)		(1,889	)		(5,884	)
Segment operating earnings	$	4,851		$	370		$	5,221
% of Net sales		7.1	%		0.5	%		3.6	%

Net sales in the Components and Sensors segment increased $8.8 million, or 12.9%, from the second quarter of 2011. The increase in net sales was primarily attributable to higher net sales of $7.0 million in the automotive market as our Japanese customers recovered from last year’s earthquake, and higher net sales in electronic components of $1.8 million driven by sales from the acquisition of Valpey-Fisher Corporation (“Valpey-Fisher”) which were partially offset by lower net sales of certain electronic components.

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The Components and Sensors segment recorded operating earnings of $5.4 million in the second quarter of 2012 versus $4.9 million in the second quarter of 2011. The favorable earnings change resulted primarily from higher net sales volume and lower commodity prices partially offset by unfavorable product mix and a shift from pension income to pension expense of approximately $1.2 million.

Net sales in the EMS segment decreased $1.4 million, or 1.8%, in the second quarter of 2012 from the second quarter of 2011. The decrease in net sales was primarily due to the impact of the October 2011 flood at our Thailand EMS manufacturing facility. The lower net sales by market were $4.2 million in the defense and aerospace market, $4.0 million in the communications market and $3.1 million in the computer market partially offset by higher net sales of $6.9 million in the industrial market and $3.0 million in the medical market.

EMS segment operating earnings were $4.2 million in the second quarter of 2012 versus $0.4 million in the second quarter of 2011. The favorable earnings change was primarily due to the timing of insurance recoveries related to the flood at our Thailand facility. In the quarter we had approximately $5 million of expenses and losses primarily related to the flood at our Thailand facility while we recorded $7.4 million of insurance recoveries related to business interruption.

Total Company Discussion

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the quarters ended July 1, 2012 and July 3, 2011:

	Quarter ended
($ in thousands, except net earnings per share)	July 1, 2012			July 3, 2011			Increase (Decrease)
Net sales	$	154,294		$	146,919		$	7,375
Restructuring-related costs	$	692		$	—		$	692
% of net sales		0.4	%		—	%		0.4	%
Gross margin	$	25,938		$	27,868		$	(1,930	)
% of net sales		16.8	%		19.0	%		(2.2	)%
Insurance recovery for business interruption .	$	(7,423	)	$	—		$	(7,423	)
Operating expenses:
Selling, general and administrative expenses	$	19,378		$	18,057		$	1,321
% of net sales		12.6	%		12.3	%		0.3	%
Research and development expenses	$	5,131		$	4,590		$	541
% of net sales		3.3	%		3.1	%		0.2	%
Restructuring and impairment charge	$	3,139		$	694		$	2,445
% of net sales		2.0	%		0.5	%		1.5	%
Operating earnings	$	5,713		$	4,527		$	1,186
% of net sales		3.7	%		3.1	%		0.6	%
Interest and other (expense)/ income	$	(1,200	)	$	508		$	(1,708	)
% of net sales		(0.8	)%		0.3	%		(1.1	)%
Income tax expense	$	1,212		$	903		$	309
Net earnings	$	3,301		$	4,132		$	(831	)
% of net sales		2.1	%		2.8	%		(0.7	)%
Net earnings per diluted share	$	0.10		$	0.12		$	(0.02	)

Net sales of $154.3 million in the second quarter of 2012 increased $7.4 million, or 5.0%, from the second quarter of 2011 attributable to higher Components and Sensors segment net sales of $8.8 million, offset by lower EMS segment net sales of $1.4 million.

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Gross margin as a percent of net sales was 16.8% in the second quarter of 2012 compared to 19.0% in the second quarter of 2011. Approximately 3 percentage points of the decrease in gross margin resulted from approximately $5 million of expenses and losses related primarily to the flood at our Thailand facility. This was partially offset by lower commodity prices and favorable segment mix as the Components and Sensors segment percent of total sales increased to 49.8% of consolidated sales from 46.3% in the same period of 2011.

Insurance recovery for business interruption primarily due to the flood at our Thailand facility totaled $7.4 million in the second quarter of 2012. This recovery offsets related expenses and losses that have negatively impacted our gross margin. We continue to work with our insurance carrier to process our claim for expenses and losses in the next two to three quarters. The timing of insurance recoveries generally lag the actual incurrence of expenses or margin losses by several months.

SG&A expenses were $19.4 million, or 12.6% of net sales, in the second quarter of 2012 versus $18.1 million, or 12.3% of net sales, in the second quarter of 2011. SG&A expenses as a percentage of net sales increased primarily due to the Valpey-Fisher acquisition and a shift from pension income to pension expense.

R&D expenses were $5.1 million, or 3.3% of net sales, in the second quarter of 2012 compared to $4.6 million, or 3.1% of net sales, in the second quarter of 2011. The increase was primarily driven by spending to develop and launch new products and growth initiatives. R&D expenses are incurred by the Components and Sensors segment and are primarily focused on expanded applications of existing products and new product development, as well as current product and process enhancements.

Operating earnings were $5.7 million in the second quarter of 2012, including a restructuring and related charge of $3.8 million, compared to $4.5 million in the second quarter of 2011 which included a restructuring charge of $0.7 million.

Interest and other expense was $1.2 million in the second quarter of 2012 versus income of $0.5 million in the same quarter of 2011. The unfavorable impact of $1.7 million was primarily due to foreign exchange losses as the United States Dollar strengthened compared to the European currencies in which we do business and the Chinese Renminbi.

The effective tax rate in the second quarter of 2012 was 26.9% compared to 17.9% in the second quarter of 2011. The increase in tax rate was primarily due to changes in the mix of earnings by jurisdiction and the expiration of certain tax benefits.

Net earnings were $3.3 million, or $0.10 per diluted share, in the second quarter of 2012 compared with net earnings of $4.1 million, or $0.12 per diluted share, in the second quarter of 2011.

Comparison of First Six Months 2012 and First Six Months 2011

Segment Discussion

The following table highlights the segment results for the six-month periods ended July 1, 2012 and July 3, 2011:

($ in thousands)	Components and Sensors			EMS			Total
First Six Months of 2012
Net sales to external customers	$	153,241		$	148,022		$	301,263
Segment operating earnings before corporate and shared services charges	$	15,742		$	6,541		$	22,283
Corporate and shared services charges		(7,358	)		(3,449	)		(10,807	)
Segment operating earnings(1)	$	8,384		$	3,092		$	11,476
% of Net sales		5.5	%		2.1	%		3.8	%
First Six Months of 2011
Net sales to external customers	$	140,068		$	158,369		$	298,437
Segment operating earnings before corporate and shared services charges	$	18,651		$	4,089		$	22,740
Corporate and shared services charges		(8,044	)		(3,716	)		(11,760	)
Segment operating earnings	$	10,607		$	373		$	10,980
% of Net sales		7.6	%		0.2	%		3.7	%

(1) EMS segment’s operating earnings of $3,092 includes $1,769 of insurance recovery for property damage related to the flood at CTS Thailand’s manufacturing facility.

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Net sales in the Components and Sensors segment increased $13.2 million, or 9.4% from the first six months of 2011, primarily attributable to higher net sales of $8.8 million in the automotive market primarily as our Japanese customers recovered from last year’s earthquake, and higher net sales in electronic components of $4.4 million driven by incremental sales from the acquisition of Valpey-Fisher which were partially offset by lower sales of certain electronic components.

The Components and Sensors segment operating earnings were $8.4 million in the first six months of 2012 versus $10.6 million in the first six months of 2011. The unfavorable earnings change resulted primarily from a shift from pension income to pension expense of approximately $2.2 million, unfavorable product mix and higher research and development costs partially offset by higher sales volume.

Net sales in the EMS segment decreased $10.3 million, or 6.5%, in the first six months of 2012 from the first six months of 2011. The decrease in net sales was primarily due to the impact of a October 2011 flood at our Thailand EMS manufacturing facility. The lower net sales by market were $15.2 million in the communications market, $8.5 million in the computer market and $4.3 million in the defense and aerospace market, partially offset by higher net sales of $14.9 million in the industrial market and $2.8 million in the medical market.

EMS segment operating earnings were $3.1 million in the first six months of 2012 versus operating losses of $0.4 million in the first six months of 2011. The favorable earnings change was primarily due to the timing of insurance recoveries related to the flood at our Thailand facility. During the first six months of 2012 we had approximately $11.3 million of expenses and losses related to the flood at our Thailand facility and the fire at our Scotland facility while we recorded $12.8 million of insurance recoveries.

Total Company Discussion

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of Earnings for the six-month periods ended July 1, 2012 and July 3, 2011:

	Six months ended
($ in thousands, except net earnings per share)	July 1, 2012			July 3, 2011			Increase (Decrease)
Net sales	$	301,263		$	298,437		$	2,826
Restructuring-related costs	$	692		$	—		$	692
% of net sales		0.2	%		—	%		0.2	%
Gross margin	$	47,987		$	57,028		$	(9,041	)
% of net sales		15.9	%		19.1	%		(3.2	)%
Insurance recovery for business interruption	$	(11,050	)	$	—			(11,050	)
Operating expenses:
Selling, general and administrative expenses	$	38,782		$	36,429		$	2,353
% of net sales		12.9	%		12.2	%		0.7	%
Research and development expenses	$	11,240		$	9,619		$	1,621
% of net sales		3.7	%		3.2	%		0.5	%
Insurance recovery for property damage	$	(1,769	)	$	—		$	(1,769	)
Restructuring and impairment charge	$	3,139		$	694		$	2,445
% of net sales		1.0	%		0.2	%		0.8	%
Operating earnings	$	7,645		$	10,286		$	(2,641	)
% of net sales		2.5	%		3.4	%		(0.9	)%
Interest and other (expense)/income	$	(835	)	$	1,342		$	(2,177	)
% of net sales		(0.3	)%		0.4	%		(0.7	)%
Income tax expense	$	1,226		$	2,380		$	(1,154	)
Net earnings	$	5,584		$	9,248		$	(3,664	)
% of net sales		1.9	%		3.1	%		(1.2	)%
Net earnings per diluted share	$	0.16		$	0.26		$	(0.10	)

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Net sales of $301.3 million in the first six months of 2012 increased $2.8 million, or 0.9%, from the first six months of 2011 attributable to higher Components and Sensors segment net sales of $13.2 million, mostly offset by lower EMS segment net sales of $10.3 million.

Gross margin as a percent of net sales was 15.9% in the first six months of 2012 compared to 19.1% in the first six months of 2011. The decrease in gross margin primarily resulted from approximately $11.3 million of expenses and losses related to the flood at our Thailand facility and the fire at our Scotland facility and a shift from pension income to pension expense partially offset by lower commodity prices and favorable segment mix as the Components and Sensors segment percent of total sales increased to 50.9% of consolidated sales from 46.9% in the same period of 2011.

SG&A expenses were $38.8 million, or 12.9% of net sales, in the first six months of 2012 versus $36.4 million, or 12.2% of net sales, in the first six months of 2011. SG&A expenses as a percentage of net sales increased primarily due to the Valpey-Fisher acquisition and a shift from pension income to pension expense.

R&D expenses were $11.2 million, or 3.7% of net sales, in the first six months of 2012 versus $9.6 million, or 3.2% of net sales, in the first six months of 2011. The increase was primarily driven by spending to develop and launch new products and growth initiatives. R&D expenses are incurred by the Components and Sensors segment and are primarily focused on expanded applications of existing products and new product development, as well as current product and process enhancements.

Operating earnings were $7.6 million in the first six months of 2012, including a restructuring and related charge of $3.8 million, compared to $10.3 million in the first six months of 2011 which included a restructuring charge of $0.7 million.

Interest and other expense in the first six months of 2012 was $0.8 million versus income of $1.3 million in the same period of 2011 due to foreign exchange losses primarily due to foreign exchange losses as the United States Dollar strengthened compared to the European currencies in which we do business and the Chinese Renminbi.

The effective tax rate for the first six months of 2012 was 18.0% compared to 20.5% in the first six months of 2011. The overall tax rate decreased as the increase in rate due to changes in the mix of earnings by jurisdiction was offset by the $0.7 million discrete tax benefit recorded during first quarter of 2012.

Net earnings were $5.6 million, or $0.16 per diluted share, in the first six months of 2012 compared with $9.2 million, or $0.26 per share, in the first six months of 2011.

Scotland EMS Manufacturing Facility Fire

During the second quarter of 2011, a fire occurred at our Scotland EMS manufacturing facility. The fire damaged approximately $1.6 million of inventory and $0.2 million of machinery and equipment at net book value. Property insurance coverage with a $0.1 million deductible has substantially covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. Business interruption insurance had substantially covered the lost sales impact and related fixed costs in 2011.

During the second quarter of 2012 we recorded a recovery of approximately $0.2 million for business interruption in our Condensed Consolidated Statements of Earnings for the three months ended July 1, 2012. This recovery reflects the final settlement with our insurance carrier.

In the first six months of 2012, we recovered approximately $1.0 million from our insurance carrier and recorded a recovery of approximately $0.9 million for business interruption, after deducting approximately $0.1 million for certain expenses, in our Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012.

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Thailand EMS Manufacturing Facility Flood

During the fourth quarter of 2011, our Thailand EMS manufacturing facility was flooded. Based on preliminary estimates, the flood damaged approximately $0.5 million of inventory and $0.5 million of fixed assets at net book value. We also incurred approximately $2.5 million of fixed costs at this facility. Local and global property insurance coverage covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. We also have business interruption insurance under these policies that cover the lost sales impact and fixed costs.

During the second quarter of 2012, we received cash of approximately $7.5 million from our insurance carrier. Out of the $7.5 million cash, approximately $7.2 million was for business interruption and the remaining $0.3 million was for the reimbursement of costs related to inventory.

In the first six months of 2012, we received cash of approximately $14.7 million from our insurance carrier. Out of the $14.7 million cash, approximately $11.6 million was for business interruption and the remaining $3.1 million was for the reimbursement of costs related to property damage. Part of the cash received was to relieve the insurance receivable balance of $2.4 million recorded at December 31, 2011.

We recorded a recovery of approximately $10.2 million for business interruption and $1.8 million for property damage in our Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012. We continue to incur costs related to the flood and process the appropriate claims with our insurance carrier related to increased expenses and the lost sales impact.

Acquisition

In January 2012, we acquired 100% of the common stock of Valpey-Fisher, a publicly held company located in Hopkinton, Massachusetts, for approximately $14.7 million, net of cash acquired. Valpey-Fisher is a recognized technology leader in the design and manufacture of precision frequency crystal oscillators. This acquisition will expand our technology, and bring strong engineering capabilities and management leadership to support strategic initiatives in our Components and Sensors’ segment.

2012 Outlook

As a result of weaker global economic conditions and lower defense and aerospace spending, primarily affecting EMS sales, management is lowering full-year sales guidance to a range of 4% to 7% increase over 2011. However, as a result of expected savings in the balance of the year due to second quarter restructuring actions management is maintaining full-year 2012 adjusted earnings per share guidance of $0.75 to $0.80.

The following table provides a reconciliation of full-year 2012 diluted earnings per share to full-year 2012 adjusted earnings per share:

	Full-year 2012
Diluted earnings per share	$	0.65 - $0.70
Restructuring and restructuring-related charges		0.10
Adjusted earnings per share	$	0.75 - $0.80

Adjusted earnings per share is a term not recognized by Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). The most directly comparable U.S. GAAP financial measure is diluted earnings per share. We calculate adjusted earnings per share to exclude restructuring and restructuring-related charge.

We use the adjusted earnings per share measure to evaluate overall performance, establish plans and perform strategic analyses. We believe using adjusted earnings per share avoids distortion in the evaluation of operating results by eliminating the impact of events that are not related to operating performance. These measures are based on the exclusion of specific items, and, as such, they may not be comparable to measures used by other companies that have similar titles. Our management compensates for this limitation when performing peer company comparisons by evaluating both GAAP and non-GAAP financial measures reported by peer companies. We believe that adjusted earnings per share is useful to our management, investors and stakeholders in that it:

• provides a better measure of our operating performance;

• reflects the results used by management in making decisions about the business; and

• helps to review and project our performance over time.

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We recommend that investors and stakeholders consider both diluted earnings per share and adjusted earnings per share, which are both GAAP and non-GAAP measures in evaluating our performance with peer companies.

Liquidity and Capital Resources

Overview

Cash and cash equivalents were $83.0 million at July 1, 2012 and $76.4 million at December 31, 2011. Total debt on July 1, 2012 was $97.0 million compared to $74.4 million at December 31, 2011, as we increased debt for the Valpey-Fisher acquisition and to meet usual working capital requirements. Total debt as a percentage of total capitalization was 26.8% at the end of the second quarter of 2012, compared with 22.0% at December 31, 2011. Total debt as a percentage of total capitalization is defined as the sum of notes payable and long-term debt as a percentage of total debt and shareholders’ equity.

Working capital increased by $7.9 million in the second quarter of 2012 versus year-end 2011, primarily due to a decrease in accounts payable of $14.0 million and an increase in cash and cash equivalents of $6.6 million partially offset by a decrease in inventory of $13.9 million.

Cash Flow

Operating Activities

Net cash provided by operating activities was $12.0 million during the first six months of 2012. Components of net cash provided by operating activities included net earnings of $5.6 million, depreciation and amortization expense of $9.6 million, restructuring and asset impairment charges of $3.1 million and add-backs of other non-cash items such as equity-based compensation, amortization of retirement benefit and net insurance recovery totaling $6.1 million which were partially offset by net changes in assets and liabilities of $7.9 million and an increase in prepaid pension asset of $3.4 million. The changes in assets and liabilities were primarily due to decreased accounts payable and accrued liabilities of $24.0 million partially offset by decreased inventories of $15.3 million.

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

Investing Activities

Net cash used in investing activities for the first six months of 2012 was $21.8 million for the Valpey-Fisher acquisition of $14.7 million, net of cash acquired, capital expenditures of $6.9 million, and capital expenditures to replace property damaged by casualty of $2.9 million partially offset by insurance proceeds for property damage due to casualty of $2.3 million.

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

Financing Activities

Net cash provided by financing activities for the six months of 2012 was $16.2 million, consisting primarily of a net increase in long-term debt of $22.6 million, offset by $5.6 million in Treasury stock purchases and $2.4 million in dividend payments. The additional debt was primarily used to meet usual working capital requirements and to fund the Valpey-Fisher acquisition.

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

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Capital Resources

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

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

On January 10, 2012, we amended our November 18, 2010 unsecured revolving credit agreement. This amendment provided for an increase in our revolving credit facility to $200 million and increased the accordion feature, whereby we can expand the facility to $300 million, subject to participating banks’ approval. Additionally, among other covenants, the amendment reduced the applicable margin by 25 basis points, increased the total consideration we may pay for non-U.S. based acquisitions, and extended the term of the credit agreement through January 10, 2017.

Long-term debt was comprised of the following:

($ in thousands)	July 1, 2012		December 31, 2011
Revolving credit agreement, weighted-average interest rate of 1.8% (2012), and 1.9% (2011) due in 2017 and 2015, respectively	$	97,000	$	74,400

There was $97.0 million outstanding under the $200 million revolving credit agreement at July 1, 2012, and $74.4 million outstanding under the $150 million revolving credit agreement at December 31, 2011. We had $100.4 million available under the $200 million credit agreement at July 1, 2012, net of standby letters of credit of $2.6 million, and $72.8 million available under the $150 million credit agreement at December 31, 2011, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon London Interbank Offered Rate and our quarterly total leverage ratio. We pay a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.35 percent per annum at July 1, 2012. The revolving credit agreement requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Our failure to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. We were in compliance with all debt covenants at July 1, 2012. The revolving credit agreement requires us to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments.

We use interest rate swaps to convert the line of credit’s variable rate of interest into a fixed rate. During the second quarter of 2012, we entered into four separate interest rate swap agreements to fix interest rates on $50 million of long-term debt for the periods January 2013 to January 2017. The difference to be paid or received under the terms of the swap agreement will be accrued as interest rates change and recognized as an adjustment to interest expense for the related line of credit. Changes in the variable interest rates to be paid or received will have a corresponding effect on future cash flows.

These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in Other Comprehensive Income. During the second quarter of 2012, an unrealized loss of approximately $832,000 was recorded in Other Comprehensive Income with approximately $79,000 recorded as accrued liabilities section and the remaining $753,000 recorded as a non-current liability in Other Long-term Obligations on the Condensed Consolidated Balance Sheets.

As a result of the use of these derivative instruments, we are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we have a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors. Our established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties.

In May 2008, our Board of Directors authorized a program to repurchase up to one million shares of CTS common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the first six months of 2012, 572,487 shares were repurchased at a cost of approximately $5.6 million or $9.86 per share. There were 1,666 shares remaining as of July 1, 2012 which were settled in July 2012.

29

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no other material changes in our market risk since December 31, 2011.

Item 4. Controls and Procedures

Pursuant to Rule 13a-15(e) of the Securities and Exchange Act of 1934, management, under the direction of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures. Based on such evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of July 1, 2012, provided that the evaluation did not include an evaluation of the effectiveness of the internal control over financial reporting for the acquired business, as described further below.

Since the date of acquisition of Valpey-Fisher Corporation, our management has not completed an evaluation of the business’s internal controls over financial reporting for the acquired entity, whose results are included in the financial statements and notes filed in this Form 10-Q.

Changes in Internal Control Over Financial Reporting

Other than the changes resulting from the acquisition described above, there were no changes in our internal control over financial reporting for the quarter ended July 1, 2012 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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

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

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

30

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

Certain other claims are pending against us with respect to matters arising out of the ordinary conduct of our business. For all other claims, 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, 2011.

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

The following table summarizes the repurchases of CTS common stock made by the Company during the three-month period ending July 1, 2012:

	(a) Total Number  of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of  Shares Purchased as Part of Plans or Programs (1)		(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
								302,077
April 2, 2012 – April 29, 2012		43,055	$	10.35		43,055		259,022
April 30, 2012 – May 27, 2012		109,552	$	9.88		109,552		149,470
May 28, 2012 – July 1, 2012		147,804	$	9.34		147,804		1,666
Total		300,411				300,411

Item 3. Default Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

(31)(a)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31)(b)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32)(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document

31

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

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

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CTS Corporation	CTS Corporation
/s/ John R. Dudek	/s/ Thomas K Kroll
John R. Dudek Vice President, General Counsel and Secretary	Thomas K. Kroll Vice President and Chief Financial Officer
Dated: July 24, 2012	Dated: July 24, 2012

33

EX-31.(A)

CTS Corporation

Form 10-Q

Second Quarter 2012

EXHIBIT (31)(a)

CERTIFICATION

I, Vinod M. Khilnani, 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 24, 2012
	/s/ Vinod M. Khilnani
	Vinod M. Khilnani
	Chairman of the Board, President and Chief Executive Officer

EX-31.(B)

CTS Corporation

Form 10-Q

Second Quarter 2012

EXHIBIT (31)(b)

CERTIFICATION

I, Thomas A. Kroll, 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 24, 2012
	/s/ Thomas A. Kroll
	Thomas A. Kroll
	Vice President and Chief Financial Officer

EX-32.(A)

CTS Corporation

Form 10-Q

Second Quarter 2012

EXHIBIT (32)(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of CTS Corporation (the Company) on Form 10-Q for the quarter ended July 1, 2012, 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 24, 2012
	/s/ Vinod M. Khilnani
	Vinod M. Khilnani
	Chairman of the Board, President and Chief Executive Officer

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

EX-32.(B)

CTS Corporation

Form 10-Q

Second Quarter 2012

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 July 1, 2012, 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 24, 2012
	/s/ Thomas A. Kroll
	Thomas A. Kroll
	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

Acquisition (Details 2) (CTS [Member], Valpey-Fisher [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
CTS [Member] | Valpey-Fisher [Member]
Summary of pro-forma net sales and earnings before income taxes
Net Sales	$ 154,294	$ 150,804	$ 302,379	$ 305,841
Earnings before income taxes	$ 4,528	$ 5,136	$ 6,812	$ 11,617

XML

Fair Value Measurement (Details 4) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012
Financial liability measured at fair value on a recurring
Interest rate swap - cash flow hedge	$ 832
Quoted Prices in Active Markets for Identical (Level 1) [Member]
Financial liability measured at fair value on a recurring
Interest rate swap - cash flow hedge
Significant Other Observable Inputs (Level 2) [Member]
Financial liability measured at fair value on a recurring
Interest rate swap - cash flow hedge	832
Significant Unobservable Inputs (Level 3) [Member]
Financial liability measured at fair value on a recurring
Interest rate swap - cash flow hedge
Loss during the period [Member]
Financial liability measured at fair value on a recurring
Interest rate swap - cash flow hedge

XML

Segments (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012 Segment	Jul. 03, 2011
Segments (Textual) [Abstract]
Segment operating earnings	$ 9,544	$ 5,221	$ 11,476	$ 10,980
Insurance recovery for property damage - casualties			1,769
Segments (Additional Textual) [Abstract]
Number of Reportable Segments			2
EMS [Member]
Segments (Textual) [Abstract]
Segment operating earnings	4,180	370	3,092	373
Insurance recovery for property damage - casualties			$ 1,769

XML

Fair Value Measurement (Details Textual) (Level 2 [Member], Interest Rate Swap [Member], USD $)	Jul. 01, 2012
Level 2 [Member] | Interest Rate Swap [Member]
Fair Value Measurement (Textual) [Abstract]
Accrued Liabilities	$ 79,000
Other Liabilities	$ 753,000

XML

Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011	Dec. 31, 2011
Summarized Segment Financial Information
Net sales to external customers	$ 154,294	$ 146,919	$ 301,263	$ 298,437
Segment operating earnings before corporate and shared services charges	14,484	11,105	22,283	22,740
Corporate and shared services charges	(4,940)	(5,884)	(10,807)	(11,760)
Segment operating earnings	9,544	5,221	11,476	10,980
Total assets	490,089	495,423	490,089	495,423	480,815
Components and Sensors [Member]
Summarized Segment Financial Information
Net sales to external customers	76,823	68,037	153,241	140,068
Segment operating earnings before corporate and shared services charges	8,398	8,846	15,742	18,651
Corporate and shared services charges	(3,034)	(3,995)	(7,358)	(8,044)
Segment operating earnings	5,364	4,851	8,384	10,607
Total assets	361,483	355,841	361,483	355,841
EMS [Member]
Summarized Segment Financial Information
Net sales to external customers	77,471	78,882	148,022	158,369
Segment operating earnings before corporate and shared services charges	6,086	2,259	6,541	4,089
Corporate and shared services charges	(1,906)	(1,889)	(3,449)	(3,716)
Segment operating earnings	4,180	370	3,092	373
Total assets	$ 128,606	$ 139,582	$ 128,606	$ 139,582

XML

Equity-Based Compensation (Details 2) (USD $)	6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Dec. 31, 2010
Summary of the status of stock options
Outstanding, Options at beginning of year	728,050		1,093,063
Outstanding, Weighted-Average Exercise Price at beginning of year	$ 10.24		$ 12.61
Exercised, Options	(154,750)	(59,263)
Exercised, Weighted-Average Exercise Price	$ 8.71	$ 7.91
Expired, Options	(11,000)	(195,750)
Expired, Weighted-Average Exercise Price	$ 16.22	$ 21.99
Forfeited, Options	(10,150)
Forfeited, Weighted-Average Exercise Price	$ 9.41
Outstanding, Options at end of period	552,150	838,050	1,093,063
Outstanding, Weighted-Average Exercise Price at end of period	$ 10.57	$ 10.75	$ 12.61
Exercisable, Options at end of period	552,150	838,050
Exercisable, Weighted-Average Exercise Price at end of period	$ 10.57	$ 10.75

XML

Earnings Per Share (Details 1) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Potentially dilutive securities earnings per share
Stock options where the assumed proceeds exceed the average market price	282	402	282	402

XML

Retirement Plans (Tables)

3 Months Ended

Jul. 01, 2012

Retirement Plans [Abstract]

Net pension expense/(income)

Net pension expense/(income) for the three months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	683		$	687		$	31		$	35
Interest cost		2,987			3,078			143			152
Expected return on plan assets (1)		(5,376	)		(5,916	)		(111	)		(146	)
Amortization of prior service cost		151			153			—			—
Amortization of loss		1,517			1,050			74			70
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	244		$	(948	)	$	137		$	111

Net pension expense/(income) for the six months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	1,367		$	1,374		$	62		$	70
Interest cost		5,978			6,156			285			301
Expected return on plan assets (1)		(10,753	)		(11,832	)		(220	)		(289	)
Amortization of prior service cost		302			306			—			—
Amortization of loss		3,037			2,100			148			139
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	213		$	(1,896	)	$	275		$	221

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

Net post retirement expense for our post-retirement plan

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
OTHER POSTRETIREMENT BENEFIT PLAN
Service cost	$	2		$	4		$	4		$	8
Interest cost		64			72			128			144
Amortization of gain		(10	)		(1	)		(20	)		(3	)
Postretirement expense	$	56		$	75		$	112		$	149

XML

Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified				6 Months Ended
	Jul. 01, 2012	Dec. 31, 2011	Jul. 01, 2012 Significant Unobservable Inputs (Level 3) [Member]	Jul. 01, 2012 Loss during the period [Member]
Non-financial assets measured and recorded at fair value on a non-recurring
Goodwill	$ 5,855	$ 500	$ 5,855
Intangible assets, other than goodwill	31,911	29,886	31,911
Long-lived assets	91,171	84,860	91,171
Long-lived assets				$ 1,278

XML

Debt (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Long-term debt
Revolving credit agreement	$ 97,000	$ 74,400

XML

Acquisition (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		0 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jan. 23, 2012 Estimated Fair Values [Member]
Summarizes fair values of the assets acquired and the liabilities assumed
Current assets			$ 9,077
Property, plant and equipment			6,231
Goodwill			5,355
Amortizable intangible assets			3,570
Other assets			231
Fair value of assets acquired, including $3,578 cash acquired			24,464
Less fair value of liabilities acquired			(6,197)
Net assets acquired			18,267
Cash acquired	3,578		3,578
Net cash paid	$ 14,689	$ 2,930	$ 14,689

XML

Fair Value Measurement (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Table reconciles intangible assets, other than goodwill
Beginning balance			$ 29,886
2012 first half amortization expense	700	700	1,500	1,300
Ending balance	31,911		31,911
Estimated Fair Values [Member]
Table reconciles intangible assets, other than goodwill
Beginning balance			29,886
2012 addition, Note C, - Acquisitions	3,570		3,570
2012 first half amortization expense			(1,545)
Ending balance	$ 31,911		$ 31,911

XML

Restructuring Charges (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jul. 01, 2012
June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	$ 5.0
Actual cost incurred	3.8
June 2012 Plan [Member] | Restructuring-related charges [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	1.6
Actual cost incurred	0.7
April 2011 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.8
Actual cost incurred	0.7
Asset impairment charge [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	1.2
Actual cost incurred	1.2
Workforce reduction [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	2.1
Actual cost incurred	1.8
Workforce reduction [Member] | April 2011 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.8
Actual cost incurred	0.7
Other charge [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.1
Actual cost incurred	0.1
Restructuring and impairment charges [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	3.4
Actual cost incurred	3.1
Inventory write-down [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.6
Actual cost incurred	0.6
Equipment relocation [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.5
Actual cost incurred	0.1
Other charges [Member] | June 2012 Plan [Member]
Restructuring and restructuring-related charges of actual costs
Planned Costs	0.5
Actual cost incurred	$ 0

XML

Segments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Reconciling information between reportable segments' operating earnings and consolidated earnings before income taxes:
Total segment operating earnings	$ 9,544	$ 5,221	$ 11,476	$ 10,980
Restructuring charges	(3,831)	(694)	(3,831)	(694)
Interest expense	(626)	(511)	(1,285)	(1,003)
Interest income	467	276	916	472
Other income/(expense)	(1,041)	743	(466)	1,873
Earnings before income taxes	$ 4,513	$ 5,035	$ 6,810	$ 11,628

XML

Acquisition

3 Months Ended

Jul. 01, 2012

Acquisition [Abstract]

Acquisition

NOTE C — Acquisition

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

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

	Estimated Fair Values
($ in thousands)	At January 23, 2012
Current assets	$	9,077
Property, plant and equipment		6,231
Goodwill		5,355
Amortizable intangible assets		3,570
Other assets		231
Fair value of assets acquired, including $3,578 cash acquired		24,464
Less fair value of liabilities acquired		(6,197	)
Net assets acquired		18,267
Cash acquired		3,578
Net cash paid	$	14,689

Included in current assets is the fair value of accounts receivable of $2,479. Goodwill recorded in connection with the above acquisition is primarily attributable to the synergies expected to arise after the Company’s acquisition of the business and the assembled workforce of the acquired business. None of the goodwill is expected to be deductible for tax purposes.

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

	Three Months Ended			Six Months Ended
($ in thousands)	July 1, 2012			July 1, 2012
Net Sales	$	3,955		$	6,946
Loss before income taxes	$	(272	)	$	(111	)

The following table summarizes the combined net sales and earnings before income taxes of CTS and Valpey-Fisher on a pro forma basis as if the acquisition date had occurred at the beginning of the reporting period:

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
	(Proforma)		(Proforma)		(Proforma)		(Proforma)
Net Sales	$	154,294	$	150,804	$	302,379	$	305,841
Earnings before income taxes	$	4,528	$	5,136	$	6,812	$	11,617

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

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

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

The Fordahl acquisition was accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets based on the fair market values on the date of acquisition. CTS determined the purchase price allocations on the acquisition based on estimates of the fair values of the assets acquired and liabilities assumed. CTS finalized the purchase price allocation at December 31, 2011. The land and building, machinery and equipment and intangible assets are classified as Level 3 under the fair value hierarchy. The pro forma effect of this acquisition is not material to CTS’ results of operations or financial position.

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Restructuring Charges (Details 1) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012 June 2012 Plan [Member]	Jul. 01, 2012 April 2011 Plan [Member]	Jan. 01, 2011 April 2011 Plan [Member]
Restructuring reserve activity
Restructuring liability at beginning
Restructuring and restructuring-related charges, excluding asset impairments and write-offs	3,139,000	694,000	3,139,000	694,000	2,000,000	700,000
Cost paid					(700,000)	(700,000)
Restructuring liability at ending					$ 1,300,000

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Debt (Details Textual) (USD $)	0 Months Ended	3 Months Ended
	Jan. 10, 2012	Jul. 01, 2012	Dec. 31, 2011
Debt (Additional Textual) [Abstract]
Increase in revolving credit facility	$ 200,000,000
Revolving credit facility expand	300,000,000
Reduced the applicable margin by basis points Percentage	0.25%
Revolving credit agreement, weighted-average interest rate		1.80%	1.90%
Revolving credit agreement current		100,400,000	72,800,000
Revolving credit agreement		97,000,000	74,400,000
Maximum revolving credit agreement		200,000,000	150,000,000
Percentage of commitment fee		0.35%
Amount of swap agreement		50,000,000
Accrued liability		79,000
Non-current liability		753,000
Unrealized loss on cash flow hedges		832,000
Letter of credit [Member]
Debt (Textual) [Abstract]
Standby letters of credit		$ 2,600,000	$ 2,800,000

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Jul. 01, 2012

Goodwill and Other Intangible Assets [Abstract]

Other intangible assets and goodwill

	July 1, 2012					December 31, 2011
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	53,923	$	(23,730	)	$	51,424	$	(22,390	)
Patents		10,319		(10,319	)		10,319		(10,319	)
Other intangibles		2,291		(573	)		1,220		(368	)
Total		66,533		(34,622	)		62,963		(33,077	)
Goodwill		5,855		—			500		—
Total other intangible assets and goodwill	$	72,388	$	(34,622	)	$	63,463	$	(33,077	)

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Earnings Per Share (Tables)

3 Months Ended

Jul. 01, 2012

Earnings Per Share [Abstract]

Earnings per share

($ in thousands, except per share amounts)	Net Earnings (Numerator)		Shares (in thousands) (Denominator)		Per Share Amount
Second Quarter 2012
Basic EPS	$	3,301		34,022		0.10
Effect of dilutive securities:
Equity-based compensation plans		—		552
Diluted EPS	$	3,301		34,574		0.10
Second Quarter 2011
Basic EPS	$	4,132		34,375	$	0.12
Effect of dilutive securities:
Equity-based compensation plans		—		650
Diluted EPS	$	4,132		35,025	$	0.12
First Six Months of 2012
Basic EPS	$	5,584		34,064		0.16
Effect of dilutive securities:
Equity-based compensation plans		—		583
Diluted EPS	$	5,584		34,647		0.16
First Six Months of 2011
Basic EPS	$	9,248		34,334	$	0.27
Effect of dilutive securities:
Equity-based compensation plans		—		716
Diluted EPS	$	9,248		35,050	$	0.26

Potentially dilutive securities earnings per share

	Three Months Ended				Six Months Ended
(Number of Shares in Thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Stock options where the assumed proceeds exceed the average market price		282		402		282		402

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Earnings per share
Net Earnings	$ 3,301	$ 4,132	$ 5,584	$ 9,248
Basic EPS, Shares	34,022	34,375	34,064	34,334
Diluted EPS, Shares	34,574	35,025	34,647	35,050
Equity-based compensation plans, Shares	552	650	583	716
Basic EPS, Per Shares Amount	$ 0.10	$ 0.12	$ 0.16	$ 0.27
Diluted EPS, Per Shares Amount	$ 0.10	$ 0.12	$ 0.16	$ 0.26

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Retirement Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Domestic Pension Plans [Member]
Net pension expense/(income)
Service cost	$ 683	$ 687	$ 1,367	$ 1,374
Interest cost	2,987	3,078	5,978	6,156
Expected return on plan assets	(5,376)	(5,916)	(10,753)	(11,832)
Amortization of prior service cost	151	153	302	306
Amortization of loss	1,517	1,050	3,037	2,100
Additional cost due to retirement	282		282
Expense/(income), net	244	(948)	213	(1,896)
Foreign Pension Plans [Member]
Net pension expense/(income)
Service cost	31	35	62	70
Interest cost	143	152	285	301
Expected return on plan assets	(111)	(146)	(220)	(289)
Amortization of loss	74	70	148	139
Expense/(income), net	$ 137	$ 111	$ 275	$ 221

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Restructuring Charges (Tables)

3 Months Ended

Jul. 01, 2012

Restructuring Cost And Reserve [Line Items]

Restructuring reserve activity

($ in millions)             June 2012 Plan
Restructuring liability at April 1, 2012	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		2.0
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	1.3

($ in millions)             April 2011 Plan
Restructuring liability at January 1, 2011	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		0.7
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	—

UK EMS facility [Member]

Restructuring Cost And Reserve [Line Items]

Restructuring and restructuring-related charges of actual costs

($ in millions)             June 2012 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	2.1	$	1.8
Asset impairment charge		1.2		1.2
Other charge		0.1		0.1
Restructuring and impairment charges	$	3.4	$	3.1
Inventory write-down	$	0.6	$	0.6
Equipment relocation		0.5		0.1
Other charges		0.5		—
Restructuring-related charges	$	1.6	$	0.7
Total restructuring and restructuring-related charges		5.0		3.8

Tucson, AZ Sensors facility consolidation [Member]

Restructuring Cost And Reserve [Line Items]

Restructuring and restructuring-related charges of actual costs

($ in millions)             April 2011 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	0.8	$	0.7
Total restructuring and impairment charge	$	0.8	$	0.7

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Equity-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Summarizes the equity-based compensation expense
Restricted stock units	$ 957	$ 1,181	$ 2,171	$ 2,361

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Equity-Based Compensation

3 Months Ended

Jul. 01, 2012

Equity-Based Compensation [Abstract]

Equity-Based Compensation

NOTE B — Equity-Based Compensation

At July 1, 2012, CTS had five equity-based compensation plans: the 1996 Stock Option Plan (“1996 Plan”), the 2001 Stock Option Plan (“2001 Plan”), the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), and the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”). All of these plans, except the Directors’ Plan, were approved by shareholders. As of December 31, 2009, additional grants can only be made under the 2004 and 2009 Plans. CTS believes that equity-based awards align the interest of employees with those of its shareholders.

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

The following table summarizes the compensation expense included in the Unaudited Condensed Consolidated Statements of Earnings for the three and six months ended July 1, 2012 and July 3, 2011, respectively, relating to these plans:

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Restricted stock units		957		1,181		2,171		2,361

The following table summarizes the status of these plans as of July 1, 2012:

	2009 Plan		2004 Plan		2001 Plan		1996 Plan
Awards originally available		3,400,000		6,500,000		2,000,000		1,200,000
Stock options outstanding				257,200		246,450		48,500
Restricted stock units outstanding		545,551		107,823
Options exercisable				257,200		246,450		48,500
Awards available for grant		2,160,455		270,800

Stock Options

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

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

A summary of the status of stock options as of July 1, 2012 and July 3, 2011, and changes during the six-month periods then ended, is presented below:

	July 1, 2012					July 3, 2011
	Options			Weighted- Average Exercise Price		Options			Weighted- Average Exercise Price
Outstanding at beginning of year		728,050		$	10.24		1,093,063		$	12.61
Exercised		(154,750	)	$	8.71		(59,263	)	$	7.91
Expired		(11,000	)	$	16.22		(195,750	)	$	21.99
Forfeited		(10,150	)	$	9.41		—		$	—
Outstanding at end of period		552,150		$	10.57		838,050		$	10.75
Exercisable at end of period		552,150		$	10.57		838,050		$	10.75

The total intrinsic value of share options exercised during the six-month periods ended July 1, 2012 and July 3, 2011, were $255,000 and $209,000, respectively.

The weighted average remaining contractual life of options outstanding and options exercisable at July 1, 2012 and July 3, 2011 were 1.7 years and 2.2 years, respectively. The aggregate intrinsic values of options outstanding and options exercisable at July 1, 2012 and July 3, 2011 were approximately $182,000 and $378,000, respectively.

There were no unvested stock options at July 1, 2012.

The following table summarizes information about stock options outstanding at July 1, 2012:

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding And Exercisable at 7/1/12		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 7.70 – 11.11		450,350		1.48		9.81
$ 13.68 – 16.24		101,800		3.34		13.93

Service-Based Restricted Stock Units

Service-based restricted stock units (“RSUs”) entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers and key employees as compensation. Generally, the RSUs vest over a three to five-year period. A summary of the status of RSUs as of July 1, 2012 and July 3, 2011, and changes during the six-month periods then ended is presented below:

	July 1, 2012					July 3, 2011
	RSUs			Weighted-average Grant-Date Fair Value		RSUs			Weighted-average Grant-Date Fair Value
Outstanding at beginning of year		701,449		$	9.35		807,601		$	8.39
Granted		231,750		$	10.41		219,100		$	11.89
Converted		(252,964	)	$	8.51		(297,104	)	$	8.52
Forfeited		(26,861	)	$	9.06		(39,943	)	$	8.89
Outstanding at end of period		653,374		$	10.07		689,654		$	9.42
Weighted-average remaining contractual life		8.3 years					6.7 years

CTS recorded compensation expense of approximately $496,000 and $1,249,000 related to service-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $691,000 and $1,400,000 related to service-based restricted stock units during the three and six month periods ended July 3, 2011, respectively.

As of July 1, 2012, there was $2.6 million of unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized over a weighted-average period of 1.2 years. CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

Performance-Based Restricted Stock Units

On February 2, 2010, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 78,000 units in 2012 subject to certification of the 2011 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets and, as a result, 49,320 units were awarded and vested.

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

On February 8, 2012, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 45,850 units in 2014 subject to certification of the 2013 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of sales growth targets.

On February 8, 2012, CTS granted performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount of 39,300 units in 2014 subject to certification of the 2013 fiscal year results by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of free cash flow targets.

CTS recorded compensation expense of approximately $229,000 and $459,000 related to performance-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $177,000 and $343,000 related to performance-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. As of July 1, 2012 there was approximately $1,036,000 of unrecognized compensation cost related to performance-based RSUs. That cost is expected to be recognized over a weighted-average period of 1.1 year.

Market-Based Restricted Stock Units

On July 2, 2007, CTS granted a market-based restricted stock unit award for an executive officer. An aggregate of 25,000 units may be earned in performance years ending in the following three consecutive years on the anniversary of the award date. Vesting may occur in the range from zero percent to 150% of the target award on the end date of each performance period and is tied exclusively to CTS total stockholder return relative to 32 enumerated peer group companies’ total stockholder return rates. The vesting rate will be determined using a matrix based on a percentile ranking of CTS total stockholder return with peer group total shareholder return over a three-year period. During the year ended December 31, 2010, 12,500 units was earned and awarded to the executive officer. There were no units awarded in 2011.

On February 2, 2010, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 117,000 units in 2012. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates and, as a result, 67,130 units were awarded and vested.

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

On February 8, 2012, CTS granted market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount of 45,850 units in 2014. Vesting is dependent upon CTS total stockholder return relative to 28 enumerated peer group companies’ stockholder return rates.

CTS recorded compensation expense of approximately $232,000 and $463,000 related to market-based restricted stock units during the three and six month periods ended July 1, 2012, respectively. CTS recorded compensation expense of approximately $313,000 and $606,000 related to market-based restricted stock units during the three and six month periods ended July 3, 2011, respectively. As of July 1, 2012, there was approximately $782,000 of unrecognized compensation cost related to market-based RSUs. That cost is expected to be recognized over a weighted-average period of 0.9 year.

Stock Retirement Plan

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

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Equity-Based Compensation (Details 1)	Jul. 01, 2012
2009 Plan [Member]
Status of equity-based compensation plans
Awards originally available	3,400,000
Restricted stock units outstanding	545,551
Awards available for grant	2,160,455
2004 Plan [Member]
Status of equity-based compensation plans
Awards originally available	6,500,000
Stock options outstanding	257,200
Restricted stock units outstanding	107,823
Options exercisable	257,200
Awards available for grant	270,800
2001 Plan [Member]
Status of equity-based compensation plans
Awards originally available	2,000,000
Stock options outstanding	246,450
Options exercisable	246,450
1996 Plan [Member]
Status of equity-based compensation plans
Awards originally available	1,200,000
Stock options outstanding	48,500
Options exercisable	48,500

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Acquisition (Details Textual) (USD $)	6 Months Ended
	Jul. 01, 2012	Jul. 01, 2012 Valpey-Fisher [Member]	Jan. 31, 2012 Valpey-Fisher [Member]	Jan. 31, 2011 Fordahl SA [Member]
Acquisition (Textual) [Abstract]
Percentage of common stock acquired			100.00%
Business acquisition price			$ 18,300,000	$ 2,900,000
Date of acquisition		Jan. 23, 2012
Acquisition (Additional Textual) [Abstract]
Fair value of accounts receivable	2,479,000
Cash acquired	3,578,000
Goodwill is expected to be deductible for tax purposes	$ 0

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Fair Value Measurement (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Table reconciles long-lived assets
Beginning balance	$ 84,860
Capital expenditures	6,877	6,526
Capital expenditures to replace property, plant and equipment damaged in Thailand flood	2,859
Ending balance	91,171
Estimated Fair Values [Member]
Table reconciles long-lived assets
Beginning balance	84,860
Capital expenditures	6,877
Capital expenditures to replace property, plant and equipment damaged in Thailand flood	2,859
Fixed assets acquired in Valpey-Fisher acquisition-Note C	6,231
Depreciation expense	(8,101)
Transfer to asset held for sale	(350)
Impairment Charge	(1,239)
Foreign exchange impact and other	34
Ending balance	$ 91,171

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Condensed Consolidated Statements of Earnings (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Condensed Consolidated Statements of Earnings [Abstract]
Net sales	$ 154,294	$ 146,919	$ 301,263	$ 298,437
Costs and expenses:
Cost of goods sold	128,356	119,051	253,276	241,409
Insurance recovery for business interruption - casualties	(7,423)		(11,050)
Selling, general and administrative expenses	19,378	18,057	38,782	36,429
Research and development expenses	5,131	4,590	11,240	9,619
Insurance recovery for property damage - casualties			(1,769)
Restructuring and impairment charges - Note M	3,139	694	3,139	694
Operating earnings	5,713	4,527	7,645	10,286
Other (expense)/income:
Interest expense	(626)	(511)	(1,285)	(1,003)
Interest income	467	276	916	472
Other	(1,041)	743	(466)	1,873
Total other income/(expense)	(1,200)	508	(835)	1,342
Earnings before income taxes	4,513	5,035	6,810	11,628
Income tax expense	1,212	903	1,226	2,380
Net earnings	$ 3,301	$ 4,132	$ 5,584	$ 9,248
Net earnings per share - Note J
Basic	$ 0.10	$ 0.12	$ 0.16	$ 0.27
Diluted	$ 0.10	$ 0.12	$ 0.16	$ 0.26
Cash dividends declared per share	$ 0.035	$ 0.03	$ 0.07	$ 0.06
Average common shares outstanding:
Basic	34,022	34,375	34,064	34,334
Diluted	34,574	35,025	34,647	35,050

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Retirement Plans (Details 1) (Post-retirement Plan [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Post-retirement Plan [Member]
Net post retirement expense for our post-retirement plan
Service cost	$ 2	$ 4	$ 4	$ 8
Interest cost	64	72	128	144
Amortization of loss	(10)	(1)	(20)	(3)
Postretirement expense	$ 56	$ 75	$ 112	$ 149

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Cash flows from operating activities:
Net earnings	$ 5,584	$ 9,248
Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities:
Depreciation and amortization	9,646	8,766
Prepaid pension asset	(3,408)	(4,302)
Equity-based compensation - Note B	2,171	2,361
Restructuring and impairment charges - Note M	3,139	694
Amortization of retirement benefit adjustments - Note F	3,467	2,542
Insurance recovery for business interruption and property damage - casualties	(12,819)
Insurance proceeds for business interruption and property damage other than property, plant and equipment - casualties	13,280
Other	(1,198)	(1,481)
Changes in assets and liabilities, net of acquisition
Accounts receivable	(383)	10,188
Inventories	15,252	(10,633)
Other current assets	1,218	(1,369)
Accounts payable and accrued liabilities	(23,964)	(7,174)
Total adjustments	6,401	(408)
Net cash provided by operating activities	11,985	8,840
Cash flows from investing activities:
Capital expenditures	(6,877)	(6,526)
Capital expenditures to replace property, plant and equipment damaged in casualties	(2,859)
Insurance proceeds for property, plant and equipment damaged in casualties	2,250
Proceeds from sale of assets held for sale	350
Payment for acquisition, net of cash acquired	(14,689)	(2,930)
Net cash used in investing activities	(21,825)	(9,456)
Cash flows from financing activities:
Payments of long-term debt - Note E	(2,718,850)	(1,989,500)
Proceeds from borrowings of long-term debt - Note E	2,741,450	1,994,000
Payments of short-term notes payable	(1,666)	(2,203)
Proceeds from borrowings of short-term notes payable	1,666	2,449
Purchase of treasury stock	(5,643)	(326)
Dividends paid	(2,385)	(2,056)
Exercise of stock options	1,401	472
Other	199	204
Net cash provided by financing activities	16,172	3,040
Effect of exchange rate on cash and cash equivalents	295	(683)
Net increase in cash and cash equivalents	6,627	1,741
Cash and cash equivalents at beginning of year	76,412	73,315
Cash and cash equivalents at end of period	83,039	75,056
Cash paid during the period for:
Interest	974	885
Income taxes - net	$ 2,788	$ 2,060

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Other intangible assets and goodwill
Gross Carrying Amount	$ 72,388	$ 63,463
Accumulated Amortization	(34,622)	(33,077)
Customer lists/relationships [Member]
Other intangible assets and goodwill
Gross Carrying Amount	53,923	51,424
Accumulated Amortization	(23,730)	(22,390)
Patents [Member]
Other intangible assets and goodwill
Gross Carrying Amount	10,319	10,319
Accumulated Amortization	(10,319)	(10,319)
Other intangibles [Member]
Other intangible assets and goodwill
Gross Carrying Amount	2,291	1,220
Accumulated Amortization	(573)	(368)
Total [Member]
Other intangible assets and goodwill
Gross Carrying Amount	66,533	62,963
Accumulated Amortization	(34,622)	(33,077)
Goodwill [Member]
Other intangible assets and goodwill
Gross Carrying Amount	5,855	500
Accumulated Amortization

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Equity-Based Compensation (Details 4) (RSUs [Member], USD $)	6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Dec. 31, 2010
RSUs [Member]
summary of the status of RSUs
Outstanding at beginning of year, RSUs	701,449		807,601
Outstanding at beginning of year, Weighted-average Grant-Date Fair Value	$ 9.35		$ 8.39
Granted, RSUs	231,750	219,100
Granted, Weighted-average Grant-Date Fair Value	$ 10.41	$ 11.89
Converted, RSUs	(252,964)	(297,104)
Converted, Weighted-average Grant-Date Fair Value	$ 8.51	$ 8.52
Forfeited, RSUs	(26,861)	(39,943)
Forfeited, Weighted-average Grant-Date Fair Value	$ 9.06	$ 8.89
Outstanding at end of period, RSUs	653,374	689,654	807,601
Outstanding at end of period, Weighted-average Grant-Date Fair Value	$ 10.07	$ 9.42	$ 8.39
Weighted-average remaining contractual life	8 years 3 months 18 days	6 years 8 months 12 days

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Acquisition (Tables)

3 Months Ended

Jul. 01, 2012

Acquisition [Abstract]

Summarizes fair values of the assets acquired and the liabilities assumed

	Estimated Fair Values
($ in thousands)	At January 23, 2012
Current assets	$	9,077
Property, plant and equipment		6,231
Goodwill		5,355
Amortizable intangible assets		3,570
Other assets		231
Fair value of assets acquired, including $3,578 cash acquired		24,464
Less fair value of liabilities acquired		(6,197	)
Net assets acquired		18,267
Cash acquired		3,578
Net cash paid	$	14,689

Summary of net sales and earnings before income taxes

	Three Months Ended			Six Months Ended
($ in thousands)	July 1, 2012			July 1, 2012
Net Sales	$	3,955		$	6,946
Loss before income taxes	$	(272	)	$	(111	)

Summary of pro-forma net sales and earnings before income taxes

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
	(Proforma)		(Proforma)		(Proforma)		(Proforma)
Net Sales	$	154,294	$	150,804	$	302,379	$	305,841
Earnings before income taxes	$	4,528	$	5,136	$	6,812	$	11,617

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Equity-Based Compensation (Details Textual) (USD $)	6 Months Ended														3 Months Ended		6 Months Ended		0 Months Ended	3 Months Ended		6 Months Ended		0 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Feb. 08, 2012 Enumerated	Feb. 03, 2011 Enumerated	Feb. 02, 2010 Enumerated	Jul. 02, 2007 Enumerated	Feb. 08, 2012 Minimum [Member]	Feb. 03, 2011 Minimum [Member]	Feb. 02, 2010 Minimum [Member]	Jul. 02, 2007 Minimum [Member]	Feb. 08, 2012 Maximum [Member]	Feb. 03, 2011 Maximum [Member]	Feb. 02, 2010 Maximum [Member]	Jul. 02, 2007 Maximum [Member]	Jul. 01, 2012 Service Based Restricted Stock Units [Member]	Jul. 03, 2011 Service Based Restricted Stock Units [Member]	Jul. 01, 2012 Service Based Restricted Stock Units [Member]	Jul. 03, 2011 Service Based Restricted Stock Units [Member]	Feb. 02, 2010 Performance Based Restricted Stock Units [Member]	Jul. 01, 2012 Performance Based Restricted Stock Units [Member]	Jul. 03, 2011 Performance Based Restricted Stock Units [Member]	Jul. 01, 2012 Performance Based Restricted Stock Units [Member]	Jul. 03, 2011 Performance Based Restricted Stock Units [Member]	Feb. 02, 2010 Market Based Restricted Stock Units [Member]	Jul. 01, 2012 Market Based Restricted Stock Units [Member]	Jul. 03, 2011 Market Based Restricted Stock Units [Member]	Jul. 01, 2012 Market Based Restricted Stock Units [Member]	Jul. 03, 2011 Market Based Restricted Stock Units [Member]	Dec. 31, 2010 Market Based Restricted Stock Units [Member]
Equity-Based Compensation (Textual) [Abstract]
Vesting performance-based restricted stock unit							0.00%	0.00%	0.00%		200.00%	200.00%	200.00%
Vesting market-based restricted stock unit							0.00%	0.00%	0.00%	0.00%	200.00%	200.00%	200.00%	150.00%
Compensation expense															$ 496,000	$ 691,000	$ 1,249,000	$ 1,400,000		$ 229,000	$ 177,000	$ 459,000	$ 343,000		$ 232,000	$ 313,000	$ 463,000	$ 606,000
Unrecognized compensation cost															2,600,000		2,600,000			1,036,000		1,036,000			782,000		782,000
Weighted average period																	1 year 2 months 12 days					1 year 1 month 6 days					10 months 24 days
Earned and awarded market-based restricted stock unit																			49,320					67,130					12,500
Equity Based Compensation (Additional Textual) [Abstract]
Intrinsic value of share options exercised	255,000	209,000
Weighted average remaining contractual life of options outstanding and options exercisable	1 year 8 months 12 days	2 years 2 months 12 days
Aggregate intrinsic values of options outstanding and options exercisable	$ 182,000	$ 378,000
Target based Vesting of performance-based restricted stock unit			45,850	53,200	78,000
Target based performance-based restricted stock unit cash flow			39,300
Aggregate market-based restricted stock unit						25,000
Stockholder return rates			28	28	28	32
Target based Vesting of market-based restricted stock unit			45,850	79,800	117,000

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Debt (Tables)

3 Months Ended

Jul. 01, 2012

Debt [Abstract]

Long-term debt

($ in thousands)	July 1, 2012		December 31, 2011
Revolving credit agreement, weighted-average interest rate of 1.8% (2012), and 1.9% (2011) due in 2017 and 2015, respectively	$	97,000	$	74,400

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Basis of Presentation

3 Months Ended

Jul. 01, 2012

Basis of Presentation [Abstract]

Basis of Presentation

NOTE A — Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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.

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Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Condensed Consolidated Statements of Comprehensive Earnings [Abstract]
Net earnings	$ 3,301	$ 4,132	$ 5,584	$ 9,248
Other comprehensive earnings/(loss):
Cumulative translation adjustment	(917)	7	245	995
Amortization of retirement benefit adjustments (net of tax)	1,311	750	2,269	1,486
Unrealized loss on cash flow hedges (net of tax)	(507)		(507)
Comprehensive earnings	$ 3,188	$ 4,889	$ 7,591	$ 11,729

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Treasury Stock

3 Months Ended

Jul. 01, 2012

Treasury Stock [Abstract]

Treasury Stock

NOTE K — Treasury Stock

Common stock held in treasury totaled 21,296,593 shares with a cost of $306.2 million at July 1, 2012 and 20,724,106 shares with a cost of $300.6 million at December 31, 2011. Approximately 7.5 million shares are available for future issuances.

In May 2008, CTS’ Board of Directors authorized a program to repurchase up to one million shares of its common stock in the open market at a maximum price of $13 per share. The authorization has no expiration. Reacquired shares will be used to support equity-based compensation programs and for other corporate purposes. During the first half of 2012, 572,487 shares were repurchased at a cost of approximately $5.6 million or $9.86 per share.

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Document and Entity Information	6 Months Ended
	Jul. 01, 2012	Jul. 20, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CTS CORP
Entity Central Index Key	0000026058
Document Type	10-Q
Document Period End Date	Jul. 01, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,939,275

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Goodwill and Other Intangible Assets

3 Months Ended

Jul. 01, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

NOTE L — Goodwill and Other Intangible Assets

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

	July 1, 2012					December 31, 2011
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists/relationships	$	53,923	$	(23,730	)	$	51,424	$	(22,390	)
Patents		10,319		(10,319	)		10,319		(10,319	)
Other intangibles		2,291		(573	)		1,220		(368	)
Total		66,533		(34,622	)		62,963		(33,077	)
Goodwill		5,855		—			500		—
Total other intangible assets and goodwill	$	72,388	$	(34,622	)	$	63,463	$	(33,077	)

Of the net intangible assets excluding goodwill at July 1, 2012, $26.5 million relates to the Components and Sensors segment and $5.4 million relates to the EMS segment. Of the goodwill at July 1, 2012, $5.4 million relates to Components and Sensors segment and $0.5 million relates to the EMS segment. The goodwill at December 31, 2011 relates to the EMS segment. CTS recorded amortization expense of $0.7 million and $1.5 million during the three and six-month periods ended July 1, 2012, respectively. CTS recorded amortization expense of $0.7 million and $1.3 million during the three and six-month periods ended July 3, 2011, respectively. The weighted average remaining amortization period for the amortizable intangible assets is 13.2 years. The weighted average remaining amortization period for customer lists/relationships is 13.7 years and for the other intangibles is 4.2 years. CTS estimates remaining amortization expense of $1.6 million in 2012, $3.1 million in 2013, $3.0 million in 2014, $2.9 million in 2015, $2.8 million in 2016 and $18.5 million thereafter.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Current Assets
Cash and cash equivalents	$ 83,039	$ 76,412
Accounts receivable, less allowances (2012 - $1,116; 2011 - $1,100)	90,604	88,345
Inventories - Note D	78,664	92,540
Other current assets	24,083	26,089
Total current assets	276,390	283,386
Property, plant and equipment, less accumulated depreciation (2012 - $241,634; 2011 - $241,585)	91,171	84,860
Other Assets
Prepaid pension asset	7,767	4,359
Goodwill - Note L	5,855	500
Other intangible assets, net - Note L	31,911	29,886
Deferred income taxes	75,045	76,200
Other	1,950	1,624
Total other assets	122,528	112,569
Total Assets	490,089	480,815
Current Liabilities
Accounts payable	66,477	80,468
Accrued liabilities	42,901	43,769
Total current liabilities	109,378	124,237
Long-term debt - Note E	97,000	74,400
Other long-term obligations	18,241	18,881
Shareholders' Equity
Preferred stock - authorized 25,000,000 shares without par value; none issued
Common stock - authorized 75,000,000 shares without par value; 55,208,565 shares issued at July 1, 2012 and 54,790,110 shares issued at December 31, 2011	291,024	287,661
Additional contributed capital	38,402	39,161
Retained earnings	355,410	352,205
Accumulated other comprehensive loss	(113,139)	(115,146)
Total shareholder's equity before treasury	571,697	563,881
Cost of common stock held in treasury (2012 - 21,296,593 and 2011 - 20,724,106 shares)	(306,227)	(300,584)
Total shareholders' equity	265,470	263,297
Total Liabilities and Shareholders' Equity	$ 490,089	$ 480,815

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Retirement Plans

3 Months Ended

Jul. 01, 2012

Retirement Plans [Abstract]

Retirement Plans

NOTE F — Retirement Plans

Net pension expense/(income) for the three months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	683		$	687		$	31		$	35
Interest cost		2,987			3,078			143			152
Expected return on plan assets (1)		(5,376	)		(5,916	)		(111	)		(146	)
Amortization of prior service cost		151			153			—			—
Amortization of loss		1,517			1,050			74			70
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	244		$	(948	)	$	137		$	111

Net pension expense/(income) for the six months ended July 1, 2012 and July 3, 2011 for our domestic and foreign plans include the following components:

	Domestic Pension  Plans						Foreign Pension  Plans
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Service cost	$	1,367		$	1,374		$	62		$	70
Interest cost		5,978			6,156			285			301
Expected return on plan assets (1)		(10,753	)		(11,832	)		(220	)		(289	)
Amortization of prior service cost		302			306			—			—
Amortization of loss		3,037			2,100			148			139
Additional cost due to retirement		282			—			—			—
Expense/(income), net	$	213		$	(1,896	)	$	275		$	221

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

Net post retirement expense for the three and six months ended July 1, 2012 and July 3, 2011 for our post-retirement plan includes the following components:

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
OTHER POSTRETIREMENT BENEFIT PLAN
Service cost	$	2		$	4		$	4		$	8
Interest cost		64			72			128			144
Amortization of gain		(10	)		(1	)		(20	)		(3	)
Postretirement expense	$	56		$	75		$	112		$	149

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Debt

3 Months Ended

Jul. 01, 2012

Debt [Abstract]

Debt

NOTE E — Debt

On January 10, 2012, CTS amended its November 18, 2010 unsecured revolving credit agreement. This amendment provided for an increase in the revolving credit facility to $200 million and increased the accordion feature, whereby CTS can expand the facility to $300 million, subject to participating banks’ approval. Additionally, among other covenants, the amendment reduced the applicable margin by 25 basis points, increased the total consideration the company may pay for non-U.S. based acquisitions, and extended the term of the credit agreement through January 10, 2017.

Long-term debt was comprised of the following:

($ in thousands)	July 1, 2012		December 31, 2011
Revolving credit agreement, weighted-average interest rate of 1.8% (2012), and 1.9% (2011) due in 2017 and 2015, respectively	$	97,000	$	74,400

There was $97.0 million outstanding under the $200 million revolving credit agreement at July 1, 2012, and $74.4 million outstanding under the $150 million revolving credit agreement at December 31, 2011. The Company had $100.4 million available under the $200 million credit agreement at July 1, 2012, net of standby letters of credit of $2.6 million, and $72.8 million available under the $150 million credit agreement at December 31, 2011, net of standby letters of credit of $2.8 million. Interest rates on the revolving credit agreement fluctuate based upon London Interbank Offered Rate and the Company’s quarterly total leverage ratio. CTS pays a commitment fee on the undrawn portion of the revolving credit agreement. The commitment fee varies based on the quarterly leverage ratio and was 0.35 percent per annum at July 1, 2012. The revolving credit agreement requires, among other things, that CTS comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure of CTS to comply with these covenants could reduce the borrowing availability under the revolving credit agreement. CTS was in compliance with all debt covenants at July 1, 2012. The

revolving credit agreement requires CTS to deliver quarterly financial statements, annual financial statements, auditors certifications and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the revolving agreement contains restrictions limiting CTS’ ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with CTS’ subsidiaries and affiliates; and make stock repurchases and dividend payments.

CTS uses interest rate swaps to convert the line of credit’s variable rate of interest into a fixed rate. During the second quarter of 2012, CTS entered into four separate interest rate swap agreements to fix interest rates on $50 million of long-term debt for the periods January 2013 to January 2017. The difference to be paid or received under the terms of the swap agreement will be accrued as interest rates change and recognized as an adjustment to interest expense for the related line of credit. Changes in the variable interest rates to be paid or received will have a corresponding effect on future cash flows.

These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in Other Comprehensive Income. During the second quarter of 2012, an unrealized loss of approximately $832,000 was recorded in Other Comprehensive Income with approximately $79,000 recorded as accrued liabilities section and the remaining $753,000 recorded as a non-current liability in Other Long-term Obligations on the Condensed Consolidated Balance Sheets.

As a result of the use of these derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors. CTS’ established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties.

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Inventories (Tables)

3 Months Ended

Jul. 01, 2012

Inventories [Abstract]

Inventories

($ in thousands)	July 1, 2012		December 31, 2011
Finished goods	$	13,592	$	14,697
Work-in-process		17,827		20,602
Raw materials		47,245		57,241
Total inventories	$	78,664	$	92,540

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Restructuring Charges

3 Months Ended

Jul. 01, 2012

Restructuring Charges [Abstract]

Restructuring Charges

NOTE M — Restructuring Charges

During June of 2012, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions will result in the elimination of approximately 260 positions. These actions are expected to be substantially complete by the middle of the fourth quarter of 2012. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 1, 2012:

($ in millions)             June 2012 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	2.1	$	1.8
Asset impairment charge		1.2		1.2
Other charge		0.1		0.1
Restructuring and impairment charges	$	3.4	$	3.1
Inventory write-down	$	0.6	$	0.6
Equipment relocation		0.5		0.1
Other charges		0.5		—
Restructuring-related charges	$	1.6	$	0.7
Total restructuring and restructuring-related charges		5.0		3.8

Of the restructuring and restructuring-related charges incurred, $1.2 million relates to the Components and Sensors segment and $2.6 million relates to the EMS segment. Restructuring and impairment charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings. Restructuring-related charges are reported as a component of Cost of Goods Sold on the Unaudited Consolidated Statements of Earnings.

The following table displays the restructuring reserve activity related to the realignment for the period ended July 1, 2012:

($ in millions)             June 2012 Plan
Restructuring liability at April 1, 2012	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		2.0
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	1.3

Included in the restructuring activities discussed above, CTS will consolidate its operations from the United Kingdom (“UK”) EMS manufacturing facility and the Tucson, AZ Components and Sensors facility into other facilities. The EMS operations at the UK EMS facility are currently being transferred to CTS’ EMS facilities located in Londonderry, New Hampshire and Matamoros, Mexico. The Components and Sensors operations at the Tucson, AZ facility are currently being transferred to CTS’ Components and Sensors facility located in Albuquerque, New Mexico.

During April of 2011, CTS initiated certain restructuring actions to reorganize certain operations to further improve its cost structure. These actions resulted in the elimination of approximately 30 positions. The following table displays the planned restructuring and restructuring-related charges associated with the realignment, as well as a summary of the actual costs incurred through July 1, 2012:

($ in millions)             April 2011 Plan	Planned Costs		Actual  incurred through July 1, 2012
Workforce reduction	$	0.8	$	0.7
Total restructuring and impairment charge	$	0.8	$	0.7

Of the restructuring charges incurred, $0.5 million relates to the Components and Sensors segment and $0.2 million relates to the EMS segment. Restructuring charges are reported on a separate line on the Unaudited Consolidated Statements of Earnings. These restructuring actions ended in second quarter 2011.

The following table displays the restructuring reserve activity related to the realignment for the period ended July 1, 2012:

($ in millions)             April 2011 Plan
Restructuring liability at January 1, 2011	$	—
Restructuring and restructuring-related charges, excluding asset impairments and write-offs		0.7
Cost paid		(0.7	)
Restructuring liability at July 1, 2012	$	—

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Fair Value Measurement

3 Months Ended

Jul. 01, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

NOTE I — Fair Value Measurement

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

The table below summarizes the non-financial assets that were measured and recorded at fair value on a non-recurring basis as of July 1, 2012 and the loss recorded during the six months ended July 1, 2012 on those assets:

($ in thousands)
Description	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Six Months Ended July 1, 2012
Goodwill	$	5,855	$	—	$	—	$	5,855	$	—
Intangible assets, other than goodwill	$	31,911	$	—	$	—	$	31,911	$	—
Long-lived assets	$	91,171	$	—	$	—	$	91,171	$	1,278

The fair value of these assets were measured and recorded using an income approach. Projected future cash flows related to these assets were used under this approach to determine their fair values.

The following table reconciles the beginning and ending balance of CTS’ goodwill for the period ended July 1, 2012:

($ in thousands)
	C&S		EMS		Total
Balance at January 1, 2012	$	—	$	500		$	500
2012 first half activity — Note C, “Acquisitions”		5,355		—			5,355
Balance at July 1, 2012	$	5,355	$	500		$	5,855

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

The following table reconciles the beginning and ending balances of CTS’ intangible assets, other than goodwill for the period ended July 1, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	29,886
2012 addition — Note C, “Acquisitions”		3,570
2012 first half amortization expense		(1,545	)
Balance at July 1, 2012	$	31,911

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

The following table reconciles the beginning and ending balances of CTS’ long-lived assets for the period ended July 1, 2012:

($ in thousands)	Total
Balance at January 1, 2012	$	84,860
Capital expenditures		6,877
Capital expenditures to replace property, plant & equipment damaged in Thailand flood		2,859
Fixed assets acquired in Valpey-Fisher acquisition — Note C		6,231
Depreciation expense		(8,101	)
Transfer to asset held for sale		(350	)
Impairment charge		(1,239	)
Foreign exchange impact and other		34
Balance at July 1, 2012	$	91,171

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of July 1, 2012:

($ in thousands)	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Quarter Ended July 1, 2012
Interest rate swap — cash flow hedge	$	832	$	—	$	832	$	—	$	—

The fair value of CTS’ interest rate swaps were measured using a market approach which uses current industry information. There is a readily determinable market and these swaps are classified within level 2 of the fair value hierarchy. $79,000 of the fair value of these swaps are classified as Accrued liabilities and the remaining $753,000 are classified as Other liabilities on CTS’ Consolidated Balance Sheets.

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

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Goodwill and Other Intangible Assets (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011	Dec. 31, 2011
Other intangible assets and goodwill (Textual) [Abstract]
Goodwill - Note L	$ 5,855,000		$ 5,855,000		$ 500,000
The weighted average remaining amortization period for the amortizable intangible assets			P13Y2M12D
Goodwill And Other Intangible Assets (Additional Textual) [Abstract]
Recorded Amortization Expense	700,000	700,000	1,500,000	1,300,000
Estimates remaining amortization expense in 2012	1,600,000		1,600,000
Estimates remaining amortization expense in 2013	3,100,000		3,100,000
Estimates remaining amortization expense in 2014	3,000,000		3,000,000
Estimates remaining amortization expense in 2015	2,900,000		2,900,000
Estimates remaining amortization expense in 2016	2,800,000		2,800,000
Estimates remaining amortization expense, thereafter	18,500,000		18,500,000
Components and Sensors segment [Member]
Other intangible assets and goodwill (Textual) [Abstract]
Net intangible assets excluding goodwill	26,500,000		26,500,000
Goodwill - Note L	5,400,000		5,400,000
EMS segment [Member]
Other intangible assets and goodwill (Textual) [Abstract]
Net intangible assets excluding goodwill	5,400,000		5,400,000
Goodwill - Note L	$ 500,000		$ 500,000
Customer lists/relationships [Member]
Other intangible assets and goodwill (Textual) [Abstract]
The weighted average remaining amortization period for the amortizable intangible assets			P13Y8M12D
Other intangibles [Member]
Other intangible assets and goodwill (Textual) [Abstract]
The weighted average remaining amortization period for the amortizable intangible assets			P4Y2M12D

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Segments

3 Months Ended

Jul. 01, 2012

Segments [Abstract]

Segments

NOTE G —  Segments

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

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

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

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

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

($ in thousands)	Components and Sensors			EMS			Total
Second Quarter of 2012
Net sales to external customers	$	76,823		$	77,471		$	154,294
Segment operating earnings before corporate and shared services charges	$	8,398		$	6,086		$	14,484
Corporate and shared services charges		(3,034	)		(1,906	)		(4,940	)
Segment operating earnings	$	5,364		$	4,180		$	9,544
Total assets	$	361,483		$	128,606		$	490,089
Second Quarter of 2011
Net sales to external customers	$	68,037		$	78,882		$	146,919
Segment operating earnings before corporate and shared services charges	$	8,846		$	2,259		$	11,105
Corporate and shared services charges		(3,995	)		(1,889	)		(5,884	)
Segment operating earnings	$	4,851		$	370		$	5,221
Total assets	$	355,841		$	139,582		$	495,423
First Six Months of 2012
Net sales to external customers	$	153,241		$	148,022		$	301,263
Segment operating earnings before corporate and shared services charges	$	15,742		$	6,541		$	22,283
Corporate and shared services charges		(7,358	)		(3,449	)		(10,807	)
Segment operating earnings (1)	$	8,384		$	3,092		$	11,476
Total assets	$	361,483		$	128,606		$	490,089
First Six Months of 2011
Net sales to external customers	$	140,068		$	158,369		$	298,437
Segment operating earnings before corporate and shared services charges	$	18,651		$	4,089		$	22,740
Corporate and shared services charges		(8,044	)		(3,716	)		(11,760	)
Segment operating earnings	$	10,607		$	373		$	10,980
Total assets	$	355,841		$	139,582		$	495,423

(1) EMS segment’s operating earnings of $3,092 includes $1,769 of insurance recovery for property damage related to the flood at CTS Thailand’s manufacturing facility.

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

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Total segment operating earnings	$	9,544		$	5,221		$	11,476		$	10,980
Restructuring charges		(3,831	)		(694	)		(3,831	)		(694	)
Interest expense		(626	)		(511	)		(1,285	)		(1,003	)
Interest income		467			276			916			472
Other (expense)/income		(1,041	)		743			(466	)		1,873
Earnings before income taxes	$	4,513		$	5,035		$	6,810		$	11,628

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Contingencies

3 Months Ended

Jul. 01, 2012

Contingencies [Abstract]

Contingencies

NOTE H — Contingencies

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

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

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

Scotland EMS Manufacturing Facility Fire

During the second quarter of 2011, a fire occurred at the Company’s Scotland EMS manufacturing facility. The fire damaged approximately $1.6 million of inventory and $0.2 million of machinery and equipment at net book value. Property insurance coverage with a $0.1 million deductible had substantially covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. Business interruption insurance had substantially covered the lost sales impact and related fixed costs in 2011.

During the second quarter of 2012, CTS recorded a recovery of approximately $0.2 million for business interruption in CTS’ Condensed Consolidated Statements of Earnings for the three months ended July 1, 2012. This recovery reflects the final settlement with CTS’ insurance carrier.

In the first half of 2012, CTS recovered approximately $1.0 million from the Company’s insurance carriers and recorded a recovery of approximately $0.9 million for business interruption, after deducting approximately $0.1 million for certain expenses, in CTS’ Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012.

Thailand EMS Manufacturing Facility Flood

During the fourth quarter of 2011, CTS’ Thailand EMS manufacturing facility was flooded. Based on preliminary estimates, the flood damaged approximately $0.5 million of inventory and $0.5 million of fixed assets at net book value. The Company also incurred approximately $2.5 million of fixed costs at this facility. Local and global property insurance coverage covered the costs of repairing and/or replacing the damaged inventory and machinery and equipment. CTS also has business interruption insurance under these policies that covers the lost sales impact and fixed costs.

During the second quarter of 2012, CTS received cash of approximately $7.5 million from the Company’s insurance carriers. Out of the $7.5 million cash, approximately $7.2 million was for business interruption and the remaining $0.3 million was for the reimbursement of costs related to inventory.

In the first half of 2012, CTS received cash of approximately $14.7 million from the Company’s insurance carriers. Out of the $14.7 million cash, approximately $11.6 million was for business interruption and the remaining $3.1 million was for the reimbursement of costs related to property damage. Part of the cash received was to relieve the insurance receivable balance of $2.4 million recorded at December 31, 2011.

CTS recorded a recovery of approximately $10.2 million for business interruption and $1.8 million for property damage in CTS’ Condensed Consolidated Statements of Earnings for the six months ended July 1, 2012. CTS continues to incur costs related to the flood and process the appropriate claim with the Company’s insurance carrier related to increased expenses and lost sales impact.

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Earnings Per Share

3 Months Ended

Jul. 01, 2012

Earnings Per Share [Abstract]

Earnings Per Share

NOTE J — Earnings Per Share

The table below provides a reconciliation of the numerator and denominator of the basic and diluted earnings per share (“EPS”) computations. Basic earnings per share is calculated using the weighted average number of common shares outstanding as the denominator and net earnings as the numerator. Diluted earnings per share is calculated by adding all potentially dilutive shares to the weighted average number of common shares outstanding for the numerator. All anti-dilutive shares are excluded from the computation of diluted earnings per share. The calculations below provide net earnings, weighted average common shares outstanding, and earnings per share for both basic and diluted EPS for the three and six month periods ended July 1, 2012 and July 3, 2011.

($ in thousands, except per share amounts)	Net Earnings (Numerator)		Shares (in thousands) (Denominator)		Per Share Amount
Second Quarter 2012
Basic EPS	$	3,301		34,022		0.10
Effect of dilutive securities:
Equity-based compensation plans		—		552
Diluted EPS	$	3,301		34,574		0.10
Second Quarter 2011
Basic EPS	$	4,132		34,375	$	0.12
Effect of dilutive securities:
Equity-based compensation plans		—		650
Diluted EPS	$	4,132		35,025	$	0.12
First Six Months of 2012
Basic EPS	$	5,584		34,064		0.16
Effect of dilutive securities:
Equity-based compensation plans		—		583
Diluted EPS	$	5,584		34,647		0.16
First Six Months of 2011
Basic EPS	$	9,248		34,334	$	0.27
Effect of dilutive securities:
Equity-based compensation plans		—		716
Diluted EPS	$	9,248		35,050	$	0.26

The following table shows the potentially dilutive securities which have been excluded from the three and six-month periods 2012 and 2011 dilutive earnings per share calculation because they are either anti-dilutive, or the exercise price exceeds the average market price.

	Three Months Ended				Six Months Ended
(Number of Shares in Thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Stock options where the assumed proceeds exceed the average market price		282		402		282		402

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Restructuring Charges (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012 Person	Jul. 03, 2011 Person
Restructuring Charges (Textual) [Abstract]
Restructuring and restructuring-related charges, excluding asset impairments and write-offs	$ 3,139	$ 694	$ 3,139	$ 694
Restructuring and Related Cost, Positions Eliminated [Abstract]
Elimination of workforce			260	30
Components and Sensors segment [Member]
Restructuring Charges (Textual) [Abstract]
Restructuring and restructuring-related charges, excluding asset impairments and write-offs			1,200	500
E M S Segment [Member]
Restructuring Charges (Textual) [Abstract]
Restructuring and restructuring-related charges, excluding asset impairments and write-offs			$ 2,600	$ 200

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Equity-Based Compensation (Details 3) (USD $)	6 Months Ended
	Jul. 01, 2012
$ 7.70 - 11.11 [Member]
Summarizes information about stock options
Number Outstanding And Exercisable	450,350
Weighted Average Remaining Contractual Life (Years)	1 year 5 months 23 days
Weighted Average Exercise Price	$ 9.81
$ 7.70 - 11.11 [Member] | Maximum [Member]
Summarizes information about stock options
Range of Exercise Prices, Upper Range Limit	$ 11.11
$ 7.70 - 11.11 [Member] | Minimum [Member]
Summarizes information about stock options
Range of Exercise Prices, Lower Range Limit	$ 7.7
$ 13.68 - 16.24 [Member]
Summarizes information about stock options
Number Outstanding And Exercisable	101,800
Weighted Average Remaining Contractual Life (Years)	3 years 4 months 2 days
Weighted Average Exercise Price	$ 13.93
$ 13.68 - 16.24 [Member] | Maximum [Member]
Summarizes information about stock options
Range of Exercise Prices, Upper Range Limit	$ 16.24
$ 13.68 - 16.24 [Member] | Minimum [Member]
Summarizes information about stock options
Range of Exercise Prices, Lower Range Limit	$ 13.68

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Fair Value Measurement (Details 1) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Table reconciles goodwill, intangible assets
Beginning balance	$ 5,855	$ 500
Ending balance	5,855	500
Estimated Fair Values [Member]
Table reconciles goodwill, intangible assets
Beginning balance	5,855	500
2012 first half activity, Note C, - Acquisitions	5,355
Ending balance	5,855	500
Estimated Fair Values [Member] | Components and Sensors [Member]
Table reconciles goodwill, intangible assets
Beginning balance	5,355
2012 first half activity, Note C, - Acquisitions	5,355
Ending balance	5,355
Estimated Fair Values [Member] | EMS [Member]
Table reconciles goodwill, intangible assets
Beginning balance	500	500
Ending balance	$ 500	$ 500

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Equity-Based Compensation (Tables)

3 Months Ended

Jul. 01, 2012

Equity-Based Compensation [Abstract]

Summarizes the equity-based compensation expense

	Three Months Ended				Six Months Ended
($ in thousands)	July 1, 2012		July 3, 2011		July 1, 2012		July 3, 2011
Restricted stock units		957		1,181		2,171		2,361

Status of equity-based compensation plans

	2009 Plan		2004 Plan		2001 Plan		1996 Plan
Awards originally available		3,400,000		6,500,000		2,000,000		1,200,000
Stock options outstanding				257,200		246,450		48,500
Restricted stock units outstanding		545,551		107,823
Options exercisable				257,200		246,450		48,500
Awards available for grant		2,160,455		270,800

Summary of the status of stock options

	July 1, 2012					July 3, 2011
	Options			Weighted- Average Exercise Price		Options			Weighted- Average Exercise Price
Outstanding at beginning of year		728,050		$	10.24		1,093,063		$	12.61
Exercised		(154,750	)	$	8.71		(59,263	)	$	7.91
Expired		(11,000	)	$	16.22		(195,750	)	$	21.99
Forfeited		(10,150	)	$	9.41		—		$	—
Outstanding at end of period		552,150		$	10.57		838,050		$	10.75
Exercisable at end of period		552,150		$	10.57		838,050		$	10.75

Summarizes information about stock options

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding And Exercisable at 7/1/12		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 7.70 – 11.11		450,350		1.48		9.81
$ 13.68 – 16.24		101,800		3.34		13.93

Summary of Service-Based Restricted Stock Units

	July 1, 2012					July 3, 2011
	RSUs			Weighted-average Grant-Date Fair Value		RSUs			Weighted-average Grant-Date Fair Value
Outstanding at beginning of year		701,449		$	9.35		807,601		$	8.39
Granted		231,750		$	10.41		219,100		$	11.89
Converted		(252,964	)	$	8.51		(297,104	)	$	8.52
Forfeited		(26,861	)	$	9.06		(39,943	)	$	8.89
Outstanding at end of period		653,374		$	10.07		689,654		$	9.42
Weighted-average remaining contractual life		8.3 years					6.7 years

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Segments (Tables)

3 Months Ended

Jul. 01, 2012

Segments [Abstract]

Summarized Segment Financial Information

($ in thousands)	Components and Sensors			EMS			Total
Second Quarter of 2012
Net sales to external customers	$	76,823		$	77,471		$	154,294
Segment operating earnings before corporate and shared services charges	$	8,398		$	6,086		$	14,484
Corporate and shared services charges		(3,034	)		(1,906	)		(4,940	)
Segment operating earnings	$	5,364		$	4,180		$	9,544
Total assets	$	361,483		$	128,606		$	490,089
Second Quarter of 2011
Net sales to external customers	$	68,037		$	78,882		$	146,919
Segment operating earnings before corporate and shared services charges	$	8,846		$	2,259		$	11,105
Corporate and shared services charges		(3,995	)		(1,889	)		(5,884	)
Segment operating earnings	$	4,851		$	370		$	5,221
Total assets	$	355,841		$	139,582		$	495,423
First Six Months of 2012
Net sales to external customers	$	153,241		$	148,022		$	301,263
Segment operating earnings before corporate and shared services charges	$	15,742		$	6,541		$	22,283
Corporate and shared services charges		(7,358	)		(3,449	)		(10,807	)
Segment operating earnings (1)	$	8,384		$	3,092		$	11,476
Total assets	$	361,483		$	128,606		$	490,089
First Six Months of 2011
Net sales to external customers	$	140,068		$	158,369		$	298,437
Segment operating earnings before corporate and shared services charges	$	18,651		$	4,089		$	22,740
Corporate and shared services charges		(8,044	)		(3,716	)		(11,760	)
Segment operating earnings	$	10,607		$	373		$	10,980
Total assets	$	355,841		$	139,582		$	495,423

(1) EMS segment’s operating earnings of $3,092 includes $1,769 of insurance recovery for property damage related to the flood at CTS Thailand’s manufacturing facility.

Reconciling information between reportable segments' operating earnings before income taxes

	Three Months Ended						Six Months Ended
($ in thousands)	July 1, 2012			July 3, 2011			July 1, 2012			July 3, 2011
Total segment operating earnings	$	9,544		$	5,221		$	11,476		$	10,980
Restructuring charges		(3,831	)		(694	)		(3,831	)		(694	)
Interest expense		(626	)		(511	)		(1,285	)		(1,003	)
Interest income		467			276			916			472
Other (expense)/income		(1,041	)		743			(466	)		1,873
Earnings before income taxes	$	4,513		$	5,035		$	6,810		$	11,628

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Contingencies (Details Textual) (USD $) In Millions, unless otherwise specified	6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended				6 Months Ended	24 Months Ended	3 Months Ended
	Jul. 01, 2012 Inventory [Member]	Jul. 01, 2012 Scotland EMS Manufacturing Facility [Member] Damage from fire [Member]	Jul. 01, 2012 Scotland EMS Manufacturing Facility [Member] Damage from fire [Member]	Jul. 03, 2011 Scotland EMS Manufacturing Facility [Member] Damage from fire [Member]	Jul. 03, 2011 Scotland EMS Manufacturing Facility [Member] Damage from fire [Member] Inventory [Member]	Jul. 03, 2011 Scotland EMS Manufacturing Facility [Member] Damage from fire [Member] Machinery and equipment [Member]	Jul. 01, 2012 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member]	Dec. 31, 2011 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member]	Jul. 01, 2012 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member]	Dec. 31, 2011 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member]	Jul. 01, 2012 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member] Inventory [Member]	Dec. 31, 2011 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member] Inventory [Member]	Dec. 31, 2011 Thailand EMS Manufacturing Facility [Member] Damage from flood [Member] Machinery and equipment [Member]
Contingencies (Textual) [Abstract]
Net book value of assets damaged					$ 1.6	$ 0.2					$ 0.3	$ 0.5	$ 0.5
Value of insurance converge deducted				0.1
Reimbursement for business interruption		0.2	1.0				7.2		11.6
Reimbursement for business interruption incurred in earnings		0.2	0.9				7.2		10.2
Insurance consultation fees			0.1
Fixed costs incurred at facility								2.5
Reimbursement of costs related to property damage	0.3								3.1
Reimbursement of insurance claim by cash							7.5		14.7	2.4
Reimbursement of costs related to property damage incurred in earnings									$ 1.8

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Inventories
Finished goods	$ 13,592	$ 14,697
Work-in-process	17,827	20,602
Raw materials	47,245	57,241
Total inventories	$ 78,664	$ 92,540

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jul. 01, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Allowance for doubtful debts	$ 1,116	$ 1,100
Accumulated depreciation on property, plant and equipment	$ 241,634	$ 241,585
Preferred stock, without par value
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued
Common stock, without par value
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	55,208,565	54,790,110
Common stock held in treasury, shares	21,296,593	20,724,106

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Inventories

3 Months Ended

Jul. 01, 2012

Inventories [Abstract]

Inventories

NOTE D — Inventories

Inventories consist of the following:

($ in thousands)	July 1, 2012		December 31, 2011
Finished goods	$	13,592	$	14,697
Work-in-process		17,827		20,602
Raw materials		47,245		57,241
Total inventories	$	78,664	$	92,540

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Treasury Stock (Details) (USD $)	1 Months Ended	6 Months Ended
	May 31, 2008	Jul. 01, 2012	Dec. 31, 2011
Treasury Stock (Textual) [Abstract]
Common stock held in treasury		$ 306,227,000	$ 300,584,000
Common stock held in treasury, shares		21,296,593	20,724,106
Approximate shares available for future issuances		7,500,000
Shares repurchased under Board of Directors authorized program	1,000,000
Shares repurchased		572,487
Shares repurchased under Board of Directors authorized program, value		$ 5,600,000
Shares repurchased under Board of Directors authorized program, per share	$ 13	$ 9.86

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Fair Value Measurement (Tables)

3 Months Ended

Jul. 01, 2012

Fair Value Measurement [Abstract]

Non-financial assets measured and recorded at fair value on a non-recurring

($ in thousands)
Description	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Six Months Ended July 1, 2012
Goodwill	$	5,855	$	—	$	—	$	5,855	$	—
Intangible assets, other than goodwill	$	31,911	$	—	$	—	$	31,911	$	—
Long-lived assets	$	91,171	$	—	$	—	$	91,171	$	1,278

Schedule of recorded goodwill

($ in thousands)
	C&S		EMS		Total
Balance at January 1, 2012	$	—	$	500		$	500
2012 first half activity — Note C, “Acquisitions”		5,355		—			5,355
Balance at July 1, 2012	$	5,355	$	500		$	5,855

Schedule of intangible assets, other than goodwill

($ in thousands)	Total
Balance at January 1, 2012	$	29,886
2012 addition — Note C, “Acquisitions”		3,570
2012 first half amortization expense		(1,545	)
Balance at July 1, 2012	$	31,911

Schedule of reconciliation of long-lived assets

($ in thousands)	Total
Balance at January 1, 2012	$	84,860
Capital expenditures		6,877
Capital expenditures to replace property, plant & equipment damaged in Thailand flood		2,859
Fixed assets acquired in Valpey-Fisher acquisition — Note C		6,231
Depreciation expense		(8,101	)
Transfer to asset held for sale		(350	)
Impairment charge		(1,239	)
Foreign exchange impact and other		34
Balance at July 1, 2012	$	91,171

Financial liability measured at fair value on a recurring

($ in thousands)	Carrying Value at July 1, 2012		Quoted Prices in Active Markets for Identical (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Loss for Quarter Ended July 1, 2012
Interest rate swap — cash flow hedge	$	832	$	—	$	832	$	—	$	—

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Acquisition (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 01, 2012	Jul. 03, 2011	Jul. 01, 2012	Jul. 03, 2011
Summary of net sales and earnings before income taxes
Net sales	$ 154,294	$ 146,919	$ 301,263	$ 298,437
Loss before income taxes	4,513	5,035	6,810	11,628
Valpey-Fisher [Member]
Summary of net sales and earnings before income taxes
Net sales	3,955		6,946
Loss before income taxes	$ (272)		$ (111)

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Basis of Presentation (Policies)

3 Months Ended

Jul. 01, 2012

Basis of Presentation [Abstract]

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS” or “the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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.